Marta Freitheim's Pranav case analysis

Pranav New York

Strategic or functional?

The main problem of Pranav is that they are not aggregating enough customers, not even to cover the minimum costs. Though an increasing number of males went to the salon for contemporary hair styling services the mall had mostly females. As well as the location inside the mall did not have enough foot traffic. The mall has more than 60% females and they spend more money in the salons. Targeting both genders is a strategic decision. The question about discontinuing the Spa is also a strategic decision as it affects the target market. I will discuss this further below.

This being said, I also think there are operational actions to be made. Like getting barber chairs in order to increase efficiency (research shows that the price leaders in Robinson`s are also the ones with the highest market shares). And changing the cost structure to a commission based salary in order to constrain fewer resources and motivate the staff to sell more of their products.

Split salon and spa?

Pranav NY is experiencing losses and is struggling to make ends meet. They are out of cash and in a hurry to gain profit for their graduation. The Spa is tying up a lot of capital and has the highest negative variance with 241 customers compared to the minimum monthly break even of 308. According to the research done post-opening, the Spa users are also the ones getting the classic cut. They do not see the need to spend additional money for the styling services. But spend money on basic grooming and wellness needs for men. So they do not leave much money in the salon and compromise a significantly smaller percentage of Pranav NY`s customers. Since they are lacking time and the Spa service is costing more than it is earning as well as there is a lack of critical mass, I would advise them to discontinue their Spa service and reduce their lease. This way they can focus on their salon services in order to post positive returns.

by Marta Fretheim