The Makeover Beauty Salon Marketing Essay

The Makeover Beauty Salon Marketing Essay Introduction The Makeover Beauty Salon is a beauty salon that aims at rendering maximum customer satisfaction by providing the best service, using high quality products, and building a pleasant environment at an affordable price, to meet the needs of customers of all social status. I am the owner of The Makeover Beauty Salon and I perceive an unsatisfied customer need for a low-cost salon that provides maximum flexibility and great customer attention. Using this strategy, The Makeover Beauty Salon will gain much reputation and create long-term relationships with its customers. The Makeover Beauty Salon is the only area salon to be online and fully automated and will have the most aggressive marketing campaign of any other area salon. The Makeover Beauty Salon will target two different market segments: Youngsters will typically make up 70-75% of the clientele.   Young mothers with children.   http://www.bplans.com/hair_salon_business_plan/images/bc49aab41b914ef99dca65af1ff71a82.png Future Opportunities The main segment of the population that is targeted by the salon is the younger generation, which is the youth. It has been noticed that adolescents like different and new looks, which are apart from others. They like to look very special and The Makeover Beauty Salon has all the means to satisfy the needs of the main targeted group. This opportunity will be researched and developed on a trial basis. For example, every weekend, people can go to the salon and i will do their makeup or hair. If successful, it could become a major new source of income without creating the need for additional staff or production space. The management team of The Makeover Beauty Salon I will be the only manager of the salon. I will have as assistant, Miss Shazia. The latter takes the responsibility of supervising the workers when I will not be present at the salon. Miss Shazia has a degree in management of salon and she has two years of experience from another salon. I have also appointed two caretakers, Mrs Aisha and Miss Dolly, who will take care of customers children when the customers will be pampering themselves. Growth opportunities improve employee retention within our industry. The salon acknowledges the need for growth of the individual. II The Business The company After a tedious search for a suitable place for the salon, finally one was found at the centre of the island. The location of the salon would be perfect, as it can welcome customers from all over Mauritius. The exact location is in the centre of Curepipe. The recently completed highway in the surrounding offers  hundreds of thousands of local residents, shoppers from outside the area, and travelers that use this new highway.  With this high concentration of customers there  is no big and sophisticated salon in the locality. This is one of the main advantages of opening the salon at that particular location. Services and products offered The Makeover Beauty Salon is considered an innovating beauty salon which offers a wide range of services that include: Hair:  cuts, relaxers, perms, colors, shampoo, conditioning, curling, reconstructing, weaving, and waving Nails:  manicures, pedicures, polish, sculptured nails Skin Care:  European facials, body waxing, massage Makeup: bridal makeup, casual makeup, formal makeup, amongst others Service is offered on a walk-in basis or by appointment. The Makeover Beauty Salon will emphasize a customer-centric service where the customers needs are always the priority. The Makeover Beauty Salon will also sell hair care products, which is forecasted to account for about 15% of sales. These professional-quality supplies will include shampoos, conditioners, brushes, combs, and other styling aids. Company Overview The Makeover Beauty Salon is located in Curepipe and will offer affordable priced, convenient hair styling. The Makeover Beauty Salon will accept walk-ins as well as appointments for the entire family. The salon will grow its market share based on superior customer attention. The Salon is a family hair salon, also known as a quick hair salon and this new salon has everything to set up a new path and disguise people in an unexpected way. It is owned by Miss Chellen, who has recently returned from the United States, with innovative ideas, after advanced studies about the fashion and makeup line, and also in beauty salon management. Company Ownership The Makeover Beauty Salon will be entirely owner by me. I have done a degree in Beauty Salon management and a degree in General Cosmetology in the United States. I also worked in a salon for more than 5 years there. I have a very friendly approach in the salon and when I am tutoring. Salons motto: The trend begins here Vision Mission The Makeover Beauty Salons vision is to create a harmonious, productive, and profitable salon environment, supplying the community with Avon cosmetology. The mission statement is very clear: The Makeover Beauty Salon has been established to set a new path in the beauty line by providing an exceptional service which aims at satisfying people of all age. Through its services, the salon aims at exceeding customers expectations. Objectives To cater for the fast changing trends of makeup and hairstyles. To make people look more special and different from others. To supply services and products that enhances our clients physical appearance and mental relaxation. Keys to Success Set up the salon in a location easily accessible to everyone. The environment should be very appealing, friendly and relaxing. Try to be as innovative as possible in styles. Dare to try something new. Aim at complete customer satisfaction by offering the best service at affordable prices. The Makeover Beauty Salon can best be described as presently being in the business of cosmetology, education, and wellness. In recent times our key strengths have been customer service. The Makeover Beauty Salon will use automation to keep hold of clients. According to studies, it takes 3 times the amount of effort to attract a new client than the effort to retain a satisfied client. at present, 10% of all salons are automated. in the vicinity, 3 salons are automated and none use the technology to market and track clients. Automation is a key to growing and maintaining our target market. Goals and Objectives It is the goal of The Makeover Beauty Salon to provide the community with an institution of cosmetology that targets all socioeconomic standings and is a model for the industry nationally. Startup Summary After several months of search for a salon to purchase, the owner decided to start a salon from the ground up. The Makeover Beauty Salon will incur the following start-up costs: Computer with point of sale terminal. Computer with printer for back office. Five cutting stations, each station requires a barber chair, cabinet, large mirror, blow dryer, curling iron, electric razor, several pairs of scissors, spray bottle, two sided mirror, and assorted combs and brushes. Desk for reception area. Three couches for the reception area. Display shelf for sale of retail products. Assorted plants. Assorted toys for the children. Legal fees for business formation and generation/review of contracts. http://www.bplans.com/hair_salon_business_plan/images/6ff2aec4851d460cb0a964e4122e4fa2.png Startup funding Start-up Expenditure to Fund $2000 Start-up Assets to Fund $104,000 Total Funding Required $106,000 Assets Non-cash Assets from Start-up $8,450 Cash Requirements from Start-up $89,720 Additional Cash Raised $0 Cash Balance on Starting Date $89,720 Total Assets $98,170 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $40,000 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $40000 Capital Planned Investment Chellen $100,000 Investor 2 $0 Other $0 Additional Investment Requirement $0 Total Planned Investment $100,000 Loss at Start-up (Start-up Expenses) ($1,100) Total Capital $98,900 Total Capital and Liabilities $104,000 Total Funding $106,000 Start-up Requirements Start-up Expenses Legal $1,000 Stationery etc. $100 Other $0 Total Start-up Expenses $2,000 Start-up Assets Cash Required $89,720 Other Current Assets $0 Long-term Assets $7,000 Total Assets $104,000 Total Requirements $106,000 III Management Team I will be working full time at the Makeover Beauty Salon. She will be in charge of all recruitment and training, purchasing, and retail sales. Apart from the assistant manager and the two caretakers, I will also employ a receptionist to  take care of all of the appointments as well as the people who walk in, and be responsible for the point of sale.  The receptionist will be paid an hourly wage. I even plan to hire some part-time hair stylists during wedding periods and the eves of festivals, which will operate on an hourly/commission basis.   I thought of using a partial commission basis to create incentives for greater customer attention. The better service employees provide to their customers, the greater customer satisfaction will be derived and the more money they will make off commissions. Miss Chellen will be pleased to pay for this type of performance. IV Organizational Structure The organisational structure of The Makeover Beauty The New Looking salon will be like a flat organisation structure. It is supervised closely by the founder. Thus, efficiency is maintained and so is the satisfaction of customers. The salon is structured as follows in the diagram below. Director Children Caretakers Manager of salon Assisstant Manager Part-timers Part-timers Part-timers Diagram 1: This represents the business structure. Intellectual Property The patent license, trademark and copyright agreements have already been applied for approval. V Industry Analysis SWOT Analysis Strengths à ¢Ã¢â€š ¬Ã‚ ¢outstanding location. à ¢Ã¢â€š ¬Ã‚ ¢Well-qualified employees with good hair cutting skills with a wide style collection, and Customer-focused business practices. à ¢Ã¢â€š ¬Ã‚ ¢A wide range of services offered. à ¢Ã¢â€š ¬Ã‚ ¢ Cutthroat prices. Weaknesses à ¢Ã¢â€š ¬Ã‚ ¢As a new entrant to the market, The Makeover Beauty Salon lacks brand equity that many other salons have gained over years of service. à ¢Ã¢â€š ¬Ã‚ ¢Large costs related with a start-up company. Opportunities à ¢Ã¢â€š ¬Ã‚ ¢A steady growing market that is traditionally unaffected by the economic environment. à ¢Ã¢â€š ¬Ã‚ ¢The ability to decrease marginal fixed costs as the customer base grows. à ¢Ã¢â€š ¬Ã‚ ¢Increasing sales opportunities as more people from an individual family visits The Makeover Beauty Salon. Threats à ¢Ã¢â€š ¬Ã‚ ¢Competition from already established salons. à ¢Ã¢â€š ¬Ã‚ ¢A change in traffic patterns as they relate to the mall where The Makeover Beauty Salon is located. The hair styling industry is highly divided with national chains, some of which operates diverse franchises catering to all the market segments, and also including thousands of mom and pop salons that are very limited in scale and services. This makes for an extremely aggressive market that has low barriers to entry and exit. Moreover, the customers of hair styling have considerable control due to the low switching costs they have. However, most companies have tried to pursue only one general strategy in gaining more reputation. The Makeover Beauty Salon is of the view that that it is possible to offer a differentiated service through superior customer service at no greater considerable cost if the right employee incentives are provided. With this strategy in mind, the salons purpose is to boost the number of clients served by at least 30% per year. Target Market The Makeover Beauty Salon will be targeting two different groups of customers, but will lay more emphasis on the youths. It will work hard to distinctly appeal to each of these groups. By focusing on more than one group, the salon is minimizing its risk that in a downturn one group will negatively affect the company. Market Segmentation The Makeover Beauty Salon will target three different market segments: Youngsters will normally make up 70-75% of the clientele, as they are very conscious about looking good, having perfectly trimmed eyebrows and they like to keep changing their styles regularly. Young mothers with children. Most young children are notoriously difficult when it comes to getting haircuts. A family style salon is a more laid-back place that allows the children to play while they are waiting and then will work with the parents in calming the kids nerves when they are ready for their shearing. Target Market Segment Strategy The Makeover Beauty Salon will target each of the two groups separately. The youngsters will be pampered in a very bright, appealing, colorful and attractive atmosphere. Employees will use the latest equipment available with them, which would suit their preferences and with which they will feel at ease. The Makeover Beauty Salon will also  target mothers with children by offering the kids toys to play with while they wait and child-friendly hair stylists. Moreover, children will receive a special rate reflecting the fact that childrens hair grows so fast that it can be costly to keep up with regular cuts, as well as the recognition that it generally takes lesser time to cut a childs hair so it should be naturally less expensive. Competition and Buying Patterns The Makeover Beauty Salon competitors include: Traditional barbers. They do not work on appointments as it offers an open door service. While barbers are willing to give you whatever cut you want, they are generally providing straight forward haircuts, typically on the conservative side. The advantages of a barber are they are low-cost and easy to use. Their disadvantages is often conservative styling capacities, sometimes a long wait as the barber may be an old timer who enjoys to chit chat. Franchised quick salons.   An example of this would be Supercuts or Best Cuts. In essence this is a franchised version of The Makeover Beauty Salon. The advantage of this style is the store will be the same from location to location and some people like this predictability.   Independent salons. These salons typically focus on a specific niche and do not serve a large group of customers. The advantages to these could be an independent salon that caters for all of your needs. The disadvantage is that because they tend to be more focused, more often than not this type of salon will not offer exactly what  customers are looking for. Competitive Edge The Makeover Beauty Salon aims to be very different from the beauty salons which offer only one or two services. From surveys, it has been concluded that customers often get frustrated as they have to get their hair done at one place and facial and makeup done at another place. This becomes very annoying for clients as they have to travel a lot and it is tiresome as well. Therefore the Makeover Beauty Salon plans to offer all these services under the same roof. As such, clients will be more at ease to make themselves beautiful. There exist several salons that are already proving the same services as the Makeover Beauty Salon, but they charge very high prices which everybody cannot afford as these salons are situates mostly in towns, where high rent have to be paid. Therefore, to attract the maximum number of customers, the Makeover Beauty Salon plans to offer better quality service than the other salons, but at affordable prices so that everyone can afford making then look beautiful, especially the youngsters, as they are the one that the salon is targeting at. Basically the atmosphere prevailing at the Makeover Beauty Salon will be very cozy and relaxing, where clients would love to be pampered. A welcoming drink will be served to clients as they enter the salon they can chose amongst tea, coffee, juice, soft drink. A television will be located in the waiting room and a radio in the hair-drying area, as this may take some time. VI Marketing Plan Marketing Strategy The Makeover Beauty Salon has a very simple marketing strategy: satisfying its clients. Miss Chellen is of the view that when a customer leaves her salon, he/she should have a new look which would be perfect for the occasion the latter would be attending, and the latter should also be representing the Makeover Beauty Salon through his/her makeup and hairstyle the client should be a medium of portraying the salons qualities, service and image. Miss Chellen has no plans to advertise her new salon. According to researches, a satisfied customer is able to influence 11 14 people positively. Therefore, the owner of the salon is of the view that its the satisfied customers that will bring new customers to her salon and her business grows. She has, in her mind, a strategy to reward her potential clients who are able to attract new customer into the salon. Sales Strategy The Makeover Beauty Salon sales approach will be based on exceptionally professional communications with the customer. Normally the quick salons lay emphasis on being quick and inexpensive, often at the cost of customer service. Anytime that a potential customer will talk with someone at the Makeover Beauty Salon, the owner/employee will have an opportunity to impress the customer. Employee training will emphasize seizing these opportunities. The Makeover Beauty Salon will also have the chance to increase sales of its retail hair care products every time it has a customer in the chair. The Makeover Beauty Salon offers interesting discounts on the hair care products for employees to use these products, so that they can explain to the customer about their personal experiences. Additionally, the Makeover Beauty Salon offers a product-based commission structure for the hair care products where they give away the product to the employee for commissions for selling the items to their customers. These personal testimonials and commission structure will allow  the salon to generate good sales from the retail hair care products. Sales forecasts The first diagram above depicts the first years forecast of the Makeover Beauty Salon sales. In the first 4 months, sales will be very steady as the salon will experience new customers, who will get to know about the services that the salon offers. During the subsequent months, an increase in all the services offered is expected, as the customers will be satisfied with the service of the salon. Sales Forecast Year 1 Year 2 Year 3 Sales Youngsters $20,150 $35,260 $41,100 Women with small children $2,015 $3,526 $4,110 Retail hair care products $29,225 $32,975 $40,500 Total Sales $51,390 $71,761 $85,710 Direct Cost of Sales Year 1 Year 2 Year 3 Youngsters $2,600 $4,750 $4,900 Women with small children $260 $475 $490 Retail hair care products $14,500 $26,000 $27,500 Subtotal Direct Cost of Sales $17,360 $31,225 $32,890 VII Operation Plan Facilities The salon will be offering home styling and makeup for brides or any other special weekends, but for that, an appointment is compulsory this should be done at least 3 weeks before the due date. Potential clients will not be charged with the travelling costs. Hours of operation The salon will be open week from 8 am to 5pm on Monday to Saturday. However, on Saturdays and public holidays, it will be opened from 10 am to 1 pm. Employee Training Education Employees will be trained not only in their specific styling duties but in the philosophy and applications of our concept. They will receive extensive information from the owner and be kept informed of the latest information concerning styling and makeup applications through continuous training. Systems Controls A big emphasis is being placed on extensive research into the quality and integrity of our products. They will constantly be tested for our own high standards of effectiveness and professionalism. Cosmetic products costs and inventory control will be handled by our computer system and checked daily by management. Facilities The salon will be offering home styling and makeup for brides or any other special weekends, but for that, an appointment is compulsory this should be done at least 3 weeks before the due date. Potential clients will not be charged with the travelling costs. Hours of operation The salon will be open week from 8 am to 5pm on Monday to Saturday. However, on Saturdays and public holidays, it will be opened from 10 am to 1 pm. Employee Training Education Employees will be trained not only in their specific styling duties but in the philosophy and applications of our concept. They will receive extensive information from the owner and be kept informed of the latest information concerning styling and makeup applications through continuous training. Systems Controls A big emphasis is being placed on extensive research into the quality and integrity of our products. They will constantly be tested for our own high standards of effectiveness and professionalism. Cosmetic products costs and inventory control will be handled by our computer system and checked daily by management. VIII Financial Plan Start-up Funding Start-up Expenses to Fund $1,817 Start-up Assets to Fund $60,600 Total Funding Required $62,417 Assets Non-cash Assets from Start-up $60,100 Cash Requirements from Start-up $500 Additional Cash Raised $0 Cash Balance on Starting Date $500 Total Assets $60,600 Liabilities and Capital Liabilities Current Borrowing $0 Long-term Liabilities $61,917 Accounts Payable (Outstanding Bills) $0 Other Current Liabilities (interest-free) $0 Total Liabilities $61,917 Capital Planned Investment Owner $500 Investor $0 Additional Investment Requirement $0 Total Planned Investment $500 Loss at Start-up (Start-up Expenses) ($1,817) Total Capital ($1,317) Total Capital and Liabilities $60,600 Total Funding $62,417 Important Assumptions The following section will detail important Financial Assumptions. General Assumptions Year 1 Year 2 Year 2 Plan Month 1 2 3 Current Interest Rate 10.00% 10.00% 10.00% Long-term Interest Rate 10.00% 10.00% 10.00% Tax Rate 30.00% 30.00% 30.00% Other 0 0 0 Projected Cash Flow The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected same-day collections are critical, and are reasonable and customary in the salon industry. We do not expect to need significant additional support even when we reach the less profitable months, as they are expected. http://www.bplans.com/hair_salon_business_plan/images/d5e510e0cfe04c2484123f1575a810dc.png Projected Cash Flow Year 1 Year 2 Year 3 Cash Received Cash from Operations Cash Sales $277,143 $504,802 $525,337 Subtotal Cash from Operations $277,143 $504,802 $525,337 Additional Cash Received Sales Tax, VAT, HST/GST Received $0 $0 $0 New Current Borrowing $0 $0 $0 New Other Liabilities (interest-free) $0 $0 $0 New Long-term Liabilities $0 $0 $0 Sales of Other Current Assets $0 $0 $0 Sales of Long-term Assets $0 $0 $0 New Investment Received $0 $0 $0 Subtotal Cash Received $277,143 $504,802 $525,337 Expenditures Year 1 Year 2 Year 3 Expenditures from Operations Cash Spending $251,600 $275,200 $279,200 Bill Payments $101,816 $172,090 $181,489 Subtotal Spent on Operations $353,416 $447,290 $460,689 Additional Cash Spent Sales Tax, VAT, HST/GST Paid Out $0 $0 $0 Principal Repayment of Current Borrowing $0 $0 $0 Other Liabilities Principal Repayment $0 $0 $0 Long-term Liabilities Principal Repayment $0 $0 $0 Purchase Other Current Assets $0 $0 $0 Purchase Long-term Assets $0 $0 $0 Dividends $0 $0 $0 Subtotal Cash Spent $353,416 $447,290 $460,689 Net Cash Flow ($76,273) $57,513 $64,648 Cash Balance $20,307 $77,820 $142,467 Projected Balance Sheet of The Makeover Beauty Salon Year 1 Year 2 Year 3 Assets Current Assets Cash $20,307 $77,820 $142,467 Other Current Assets $0 $0 $0 Total Current Assets $20,307 $77,820 $142,467 Long-term Assets Long-term Assets $7,320 $7,320 $7,320 Accumulated Depreciation $1,464 $2,928 $4,392 Total Long-term Assets $5,856 $4,392 $2,928 Total Assets $26,163 $82,212 $145,395 Liabilities and Capital Year 1 Year 2 Year 3 Current Liabilities Accounts Payable $11,945 $14,341 $14,968 Current Borrowing $0 $0 $0 Other Current Liabilities $0 $0 $0 Subtotal Current Liabilities $11,945 $14,341 $14,968 Long-term Liabilities $45,000 $45,000 $45,000 Total Liabilities $56,945 $59,341 $59,968 Paid-in Capital $60,000 $60,000 $60,000 Retained Earnings ($1,100) ($90,782) ($37,130) Earnings ($89,682) $53,652 $62,557 Total Capital ($30,782) $22,870 $85,427 Total Liabilities and Capital $26,163 $82,212 $145,395 Net Worth ($30,782) $22,870 $85,427 IX Critical Risk factors Management Risks: It can be considered the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate event or to maximize the realization of opportunities. Risks can come from uncertainty in financial markets, project failures and legal liabilities in the Makeover Beauty Salon. Other potential Management risks may be: Defective products/services. Health and safety incidents. Faulty equipment.(e.g. damaged wires or sockets) Environmental risks (e.g. noise pollution and the use of eco-friendly product) Technological obsolescence. Theft of assets Marketing Risks: Marketing is a risk and you cant go on happily thinking that whatever youre doing is working for the best of the organization. By the time you do so, the market will have shifted from under your feet. Some marketing risks may be: Government action ( pass law to limit the time for using salon till late night) Rival (imitation of ideas is done quickly by competitors) Operating Risks: It is a risk arising from execution of a companys business functions. As such, it is a very broad concept including e.g fraud risks, legal risks, physical or environmental risks in the Makeover Beauty Salon. Other forms of operating risks may be: the type of product received from suppliers the neighbourhood problem which can halt work the defect that hairstyle is not done according to customer wish regulation which employee dont accept culture for where on a day some worker have to leave for prayer Financial Risks: It is basically any risk related with any form of financing. Risk is probability of unfavorable condition; in financial sector it is the probability of actual return being less than expected return for a business company. Intellectual Property Infringement: It is the infringement of an intellectual prop