Pranav case analysis by Dr. Jemer A

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From: Jose emerson Afable
Sent: Wednesday, March 6, 2013 11:20 PM
Subject: Pranav case analysis

Pranav Case Analysis

Entrepreneurship

AGSB MBAH 10B

Jose Emerson T. Afable

Pranav New York was initially conceptualized as a pure male salon-spa business venture and is a very attractive proposition but perhaps the Philippine market is not yet mature enough for such an endeavor. If we look into the business of salon-spa in the Philippines, majority of them are unisex, implying that catering to a single gender only, most especially male only, in this type of business is not that lucrative and profitable. 

As mentioned in this case, to succeed in the salon-spa venture, there had to be a right market, strategic location and ambience, appropriate service offering and hiring the right people, not to mention the right tools of the trade. 

In this case, the entrepreneurs failed to consider several findings revealed by their research on this business, some of which are: 1) for pure barber shops, of course 95% were male, 5% were female  2) for salons, 75% were female, 25% were male  3) for spas, 70& were female, 30% were male. It was very obvious that if you combine barbershop cum salon with spas, females should be included because they comprise majority of the customers.  4) Under pressure, the entrepreneurs missed out on one very crucial point, that is, failure to do proper location study and not gathering sufficient market data on customer dynamics. They practically committed into Robinson's Galleria's offer because it was the first one to offer them, due mainly to Robinson's own reasons for the location, but not because of the entrepreneurs' study results or lack of it. The entrepreneurs were not aware that approximately 60% of mall goers in Robinson's Galleria were females. and that females spent approximately 91% more than males in grooming services. Not including the females was a very costly mistake.  5) An all female crew was also unwarranted since skills like shaving is usually associated with men for they do it everyday  6) An important tool that they omitted even if expensive is the barber's chair. It is so important because it provides a venue for the customer to avail of high margin services without changing location, a vital tool for a customer's convenience & satisfaction, and a very relevant tool for a barbershop's productivity and profitability.  7) The entrepreneurs were also late in analyzing the cost structure as compared to similar businesses/competitors, determining the break-even point of operations, how many customers are needed to pay for the overhead, and also late in realizing that they should have minimized fixed cost early on by adjusting percentage commission based on customer traffic, that is, giving more incentives to staff based on their ability to convince their customers to avail the high value service. They could have minimized fixed costs and unnecessary losses in times of low customer traffic. 

It is therefore very urgent that they immediately open Pranav New York to females, concentrate their services on the more lucrative and often used services like styling haircut, hot oil, hair color treatments, nail services and foot spa to immediately increase the volume of business . At the same time cut the fixed cost by giving the very basic salary and offer incentives if the staff can convince the customers to avail of more high value services, encourage the staff to establish long-term service relationship with their customer to lead to customer loyalty and last but not the least, discontinue their spa services to reduce leased space and eliminate unnecessary cost.