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
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