Company and Marketing Strategy Application

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Capella University published the current paper about a company and marketing strategy application in 2019. As stated in other postings, marketing, and corporate strategy are industry independent (they may have some industry flavors, though). The current author picked a hair salon as a target for a company and marketing strategy implementation, .and successfully built the plan.

Introduction

Salon X is a new hair, skin, and nail salon created in Phoenix, AZ. The company competes against low-cost hair salon chains such as Supercuts or Great Clips, higher-ends salons (Regis Salon), and local niche salons, such as Salon RO5. The newly created salon will operate in Nothern Phoenix, in Desert Ridge Mall, close to entertainment attractions. The salon aims at attracting mid to higher-end clientele. The primary target clientele will be professional women. The company will use massively social media for customer penetration (Facebook, Twitter, Instagram, YouTube), and will use personalized services such as Yelp and Angie’s List.

The company offers standard hair, skin, and nail services, and will provide products for sale in the salon. The company will use rebates for services rendered in slower days (Tuesday and Wednesday), will deliver the possibility to register online and schedule appointments, and set personal style preferences. The salon will schedule periodically special events, advertised via social media. The company will create metrics for tracking customers, such as using social media, repeat visits to the website and social media, and reward the customers promoting the business with gift certificates for products and services.

Industry Competitive Analysis

The hair & nail industry (NAIC:  81211) in the U.S. is $61.4b worth, with a $6.8b profit in 2018 (Kelsey, 2019). There are 1.2m businesses in the U.S., and the industry will slow down between 2019 and 2024 to 1.2%, from 2.2% growth between 2014 and 2019. The industry is mature, with a medium level of regulation and low barriers of entry. The salons offer haircuts, hair coloring, styling services, makeup, and nail services. The industry stands to benefit from a booming economy, generating increased customer spending, a growth in population, and per capita disposable income. The industry does not rely heavily on technology advances, except for marketing on social media, and relies heavily on suppliers of products for hair, skin, and nail care.

The industry has professional organizations. The Professional Beauty Organization (“Professional beauty,” 2019) has over 100,000 members and is a non-profit organization promoting the industry and its professionals. The organization sends a newsletter containing news and trends, offers opportunities for scholarships, has an annual conference, and provides group medical insurance services for its members. The organization offers webinars and online training to its members and offers yearly awards during its international salon & spa exposition. The Associated Skin Care Professionals (“Associated skin,” 2019) is a more professionalized organization, having over 16,000 members in the U.S., having a similar charter to the one of the Professional Beauty Organization.

A competitive landscape in the industry shows the top ten dominant hair and nail chain salons in the U.S. (“Rankings of the best hair,” 2019). In this list, Great Clips (“Haircuts & haircare products | Great Clips,” 2019) and Supercuts (“Haircuts | Supercuts hair salon | Supercuts,” 2019) are already operating in Phoenix, AZ area. Another big hair and nails organization competing in the area is Regis Salon (“Regis Salons, “2019). Yelp (“Yelp,” 2019) provided a list of top competitors in Phoenix, AZ. At the top of the list is Salon RO5 (“Salon RO5,” 2019), competing on the same clientele and the same location as Salon X.

An analysis of the digital marketing strategies and planning used by these competitors shows that all of them use social media as part of their marketing planning activities (Kaufman, 2015; Shyu, Chiang, Chien, & Wang, 2015; Verma & Singh, 2017). Regis Salon offers promotions and coupons online, same as Great Clips and Supercuts. Salon RO5 is successful because they actively encourage customer engagement and advocacy online.

The analysis of these competitors reveals that none of them uses social media to the maximum extent, and Salon X could penetrate this market successfully. The census data (“U.S. Census Bureau,” 2019) shows that the city of Phoenix had a 1.6m population on July 1st, 2017. The median housing income between 2013 and 2017 was $52,080. The town had in 2012 44,294 women-owned businesses. The data provided does not contain the Phoenix suburbs. The whole metropolitan area had a population of 4.7M in 2017 (“Census profile,” 2019). The competitive analysis shows that the hair and nail industry will continue to expand. Phoenix, AZ, shows potential for a new hair and nail salon due to a lower penetration by large corporations in the field, and the potential competitors do not have definite marketing plans.

Service Marketing Plan for Salon X

The marketing plan presented next fulfills the objective of setting up Salon X inside its intended market (North of Phoenix, AZ), for the intended audience (professional women), and set the conditions for a sustainable business. The sections presented next show every element of the marketing plan (Kaufman, 2015). The first element given is the target customer base.

Target Customers

The target customers are professional women. This category of customers is usually college-educated, more than 21 years of age, residing on the north side of Phoenix, AZ. This category of customers usually works regular business hours and have some difficulties accessing hair, skin, and nail services in the timeframe they need (they get off work after 5 or 6 pm, and the majority of salons are open during the day and close the latest at 7 pm. This category of customers are generally digital savvy, and they appear to be underserved in the way of setting appointments online, setting appointments at their residence, or setting appointments at their chosen time.

Value Proposition

The target customer base already has access to a high-quality professional hair, nails, and skin services. They do not have access to these services in their conditions, though (at the home, office, events, outside business hours). The value proposition constitutes offering professional women quality services at the location and time they want it, and facilitate the scheduling of quality services.

Pricing & Positioning Strategy

The pricing offered depends on the service required and the condition the service is provided. The introductory price for a haircut at Regis Salon in Phoenix is about $40. This price is the reference for a higher-end service. Salon X will adopt the base price. For the remainder of the services, Salon X will match the price of the competition for the same customer base. The price will be adjusted based on the day of the week (will have discounts on days with low occupancies, such as Tuesday and Wednesday), and based on special arrangements (if the service is delivered in the salon or at a location at the choice of the customer). The stylist will travel on a range of 10 miles around the salon for special arrangements, and there will be a fee associated with the travel of $10.

Distribution Plan

The customer will log in on the salon’s website or the native application provided by Apple or Google stores. They would be able to schedule an appointment at their choice with their preferred stylist. Few salons offer this option of scheduling an appointment (usually, the customer calls the salon to set or cancel an appointment). The client would maintain a profile, indicating potential allergies to product and their service preferences (for example, the color of hair or nails). The customer preferences would be valuable if the client chooses to have an appointment to another location than the salon. The customers could choose skin, nail, or hair products and place them in a basket, with delivery in the store during business hours or via mail.

Special Offers

Any new or returning customer will receive a discount of 20% at the first use of the base services (a returning customer is a customer who has not used the service in over a year). The customers will get a 20% discount in the month of their birthday (the salon collects only the month). The services rendered on Tuesdays and Wednesdays have a 5% discount to encourage occupancy. Salon X will set a loyalty program, as well. If existing customers refer to five new customers, they receive a skin, hair, or nail product for free (a $20 value).

Marketing Materials

The company will use its website and social media to maintain contact with its customer base. The salon will issue a monthly newsletter via Constant Contact (“Constant Contact,” 2019) containing news about the salon (new services, advice about hair, skin, or nail care, promotions of products). The business will post periodically new content on its social media to maintain customer engagement (e.g., educational videos on the use of products, pictures with new hairstyles offered by the salon, promotions on sales of products). Salon X will monitor its social media frequently and answer postings.

The salon will try to resolve complaints quickly. The ethical aspects of the business can be resolved only in the condition the company has a good knowledge of customer preferences and known allergies to skin products. The company would avoid conflicts if, during appointments, the stylists would require feedback from the customer on the work performed and solve all the issues before the work is over. The salon could resolve issues with defective products sold by replacing or reimbursing the faulty product. The business should pay particular consideration to complaints appearing on social media. The company would monitor its website automatically to measure the emotions of the customers via qualitative analysis and answer the audience accordingly. If dissent appears via Facebook postings, the company would take the discussion offline, understand the conflict, resolve it, and post on the same social media a posting on how the company resolves disputes of a certain kind.

Promotions Strategy

The topic of the promotions strategy is already covered in the section concerning special offers. All the promotions initiated by the company will be distributed via newsletter mail, on the company website, and on social media.

Online Marketing Strategy

Salon X will have its marketing strategy centered exclusively around online activities. Besides the presence on the traditional social media, the company would use Yelp, Angie’s list, and Groupon to attract customers, similar to the manner its competition uses these services (the customers could rate the experience and provide comments and feedback). The keywords to use for optimizations are “hair salon,” “manicure,” “pedicure,” “hairstyle,” and Phoenix. The company may use occasionally LinkedIn ad creator for reaching the target audience (professional females in Phoenix), as a sponsored mail or banners on LinkedIn feeds of the target audience.

Discussion

Table 1 shows the differences between the marketing plans of products and services. In many ways, the service marketing plans have particular flexibility at implementation due to the intangible character of services. The services could receive customizations, making them easier to adapt to various customer segments, to apply discounts. At the same time, the overall quality of the service is harder to assess (subjective and depending on the opinion of the customer). The service, in many instances, has limitations about the location of the delivery and the personnel delivering it, while a company could sell products via multiple marketing channels, and the sale may not require specialized personnel. A particular marketing plan would need to take into account the differences between products and services.

Table 1

Differences Between Marketing Plans for Products and Services

Service

·       The deliverable is usually intangible.

·       The deliverable if usually not perishable (except for when technology or fashion changes)

·       The perceived quality of the deliverable is relatively subjective for some services (such as hair styling or tailoring clothes)

·       Could be customized highly

Product

·       The deliverable is usually tangible, except intangible assets, such as Intellectual Property (I.P.).

·       Could be highly perishable

·       The quality of the product is usually deterministic (the product could be measured or tested)

·       The product has limited customization.

Promotion
Service

·       The service could be advertised via the outcome

·       The service could receive customizations for discounts

Product

·       The product could be promoted by demonstrating the features

·       The company can offer limited discounts for products sold due to lack of customization

Distribution
Service

·       The service usually requires specialized personnel working either in a point of use or traveling to the customer location.

Product

·       In many cases, a company could sell products via multiple marketing channels, and the sale does not require a specialized workforce.

Market Segments
Service

·       The service could receive tailoring for various market segments.

Products

·       The product has limited tailoring to use by various market segments.

Conclusions

The current paper presented the marketing plan of Salon X, composed based on a competitive assessment of the industry and location. The marketing plan included measures to take advantage of the issues noted when analyzing the competitors (lack of ease of scheduling appointments, and lack of availability at the time and location required by the target audience). The plan is generally reliable. However, changes in spending patterns and economic downturns could impact the approach used by Salon X. In that case, the company could simplify the offering and offer discounts at services to preserve the client base.

The marketing plan depends heavily on a digital imprint via marketing e-mails and presence on social media. The company would engage the customer base with announcements of new services and products, education videos about the hair, skin, nail care, and promotions. The company plans to convert prospects into customers by offering a discount to try to service, use the service on slow days, return to the service, or special events. The pricing schema used by Salon X matches the pricing of the main competitors, with the value-added service convenience for the customer base.

Dr. George Gafencu, DBA, PMP, DTM

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References for Company and Marketing Strategy

Associated skin care professionals. (2019). Retrieved from https://www.ascpskincare.com/

Census profile: Phoenix-Mesa-Scottsdale, AZ metro area. (2019). Retrieved from http://censusreporter.org/profiles/31000US38060-phoenix-mesa-scottsdale-az-metro-area/

Constant Contact. (2019). Retrieved from https://www.constantcontact.com/account-home

Haircuts & haircare products | Great Clips. (2019). Retrieved from http://www.greatclips.com/

Haircuts | Supercuts hair salon | Supercuts. (2019).

Kaufman, I. (2015). Digital marketing. New York, NY: Routledge.

Kelsey, O. (2019). IBISWorld industry report 81211: Hair & nail salons in the U.S. Retrieved from IBISWorld database

Professional beauty association. (2019). Retrieved from https://probeauty.org/

Rankings of best hair salon franchises. (2019). Retrieved from https://www.franchiserankings.com/reviews-and-ratings-of-best-hair-salon-franchises

Regis Salons | Luxury hair salon | Haircuts, hair color, balayage & more. (2019). Retrieved from https://www.regissalons.com/

Salon RO5. (2019). Retrieved from http://www.salonro5.com/

Shyu, M.-L., Chiang, W.-J., Chien, W.-Y., & Wang, S.-L. (2015). Key success factors in digital marketing in the service industry and the development strategies: A case study on Fleur de Chine at Sun Moon Lake. International Journal of Organizational Innovation (Online), 8(1), 171-185.

U.S. Census Bureau quickfacts Phoenix city, Arizona. (2019). Retrieved from https://www.census.gov/quickfacts/fact/table/phoenixcityarizona/PST045217

Verma, Y., & Singh, M. R. P. (2017). The marketing mix, customer satisfaction, and loyalty: An empirical study of the telecom sector in Bhutan. Indian Journal of Commerce and Management Studies, 8(2), 121-129. http://dx.doi.org/10.18843/ijcms/v8i2/17

Yelp. (2019). Retrieved from https://www.yelp.com/

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