ENTREPRENEURSHIP Submitted by:
PROF. JORGE SAGUINSIN Abel M. Villamayor BUSINESSMAN / ENTREPRENEUR AGSB – MBAH 10B
CASE ANALYSIS ON PRANAV NEW YORK
Pranav New York was the first male salon and spa in the Philippines that offered fusion of the modern ambiance, amenities and style of a full service salon and spa with the masculine atmosphere of a barbershop. The establishment was the project of Mark Obson and Karlo Nisce, both students of Asian Institute of Management (AIM) taking up Masters in Business Management (MBA). Together with their two partners, the salon and spa was formally opened to the public on November 2004 and was located at the 3rd floor of Robinson’s Galleria mall fronting the west wing along EDSA.
If one will look back to the groups’ venture in putting up this business, we can say that they were able to do the proper procedures. First was the development of idea, then its conceptualization and preparation with viability verification processes like general scanning, interview with industry experts, exploratory focused group discussion and general immersion exercises wherein Mark and Karlo personally observed and experienced the service delivery of their would be competitors. After they gather the data and address the issues raised, they were able to formulate the groups’ vision and mission. Finding the business location was not smooth sailing because their Management Research Report (MRR) mentors at AIM did not give them the approval because they did not have the proper location study. They also admitted that no sufficient market data was gathered on the customer dynamics even though they were able to do selected location analysis on the following: 1) foot traffic, 2) demographic mix, 3) micro-market competitors, 4) exploratory micro-market survey and 5) male market concentration. However, the partners push through with the plan so they could open Pranav New York to the public by December which they believe is a good month for opening new businesses. Just before the opening, one of the professors, Dr. Morato Jr. made several comments, 1) can an all female crew would appeal to the “macho” psychographic target customer of Pranav, if they are trained in shaving men? 2) The chairs are not barber chairs. 3) The spaces between the chairs are too narrow. 4) The spa was too cold. 5) The office space blocked some of the frontal window and 6) the location in the third floor did not seem conducive to an all male patronage.
The initial euphoria on the business results soon faded three months from its opening with Pranav New York losses amounting to Php825, 568.Analysis of the data on existing operations was mainly due to weak sales and not enough generation of the volume it needed to finance its operations. After realization that they were losing, Mark and Karlo did an analysis based on the data they have from the existing operations. These data includes their offered services to the customers as to what were mostly availed of as well as differentiation if the service was salon related or spa related. They also studied the demographics (age bracket and status level classification) of clientele and found out that they were gaining ground from the male customers’ age 20-49years belonging in the working professional segment. It was also noted that from these data that the same age group of clients avail of both salon and spa services. Salon services were from males within 20-29 years old (53.63%) and spa services were from 30-39 years old (40.45%). Combined salon and spa segments services were most frequently rendered to the 20 – 29 year old bracket which made up 65.5% of the total number of customers. They also did aCustomer loyalty assessment with a combined 13.49% (visit of two or more times) and could be the only factor that made an impact on the number of customers they had, that is through “word of mouth” campaign because no marketing nor advertisement was done after the initial survey or after the viability verification research as disclosed to them by the Leasing Officer of Robinsons Galleria. The profitability assessment also was not very good for it yielded a negative profit/cost ratio for the first three months which depleted the enterprises’ resources. Initially, the given location of the enterprise was not frequently visited by their target market as noticed by their mentor. Personally speaking I would not go out of my way if I’ll go to a mall for a haircut or a spa treatment. I’d rather go to a barbershop near where I live to be able to take a shower right away after the haircut because remnants of cut hair are itchy and very annoying. If a spa treatment is needed, I’ll have it at home where I can relax very much longer in the comfort of my own room instead of having it in a shopping center and be stressed out again battling the traffic.
SUGGESTIONS:
1. First and foremost, they should have listened to their mentors, but the damage has been done so….
2. Relocating the shop to a more frequently visited area in the mall by the male population (if they will hold on to this concept) will help the business even if there is not enough marketing and advertisement done.
3. Consider a mixed demographic clientele instead of targeting only the male population. After all, females spend more than males on grooming services by more than 90% on the average.
4. The partners should consider on adjusting their prices to a sensitive level and not concentrate on the high end customers for them to be competitive in the micro- market at Robinsons’ Galleria.
5. If they would still hold on to the all male clientele, barber’s chair should be placed instead of the narrow, immovable lounge chair. Together with this concept, they should drop the spa services mainly because it occupies much of the rented space and the profit/cost ratio on this segment of the business is not favorable.
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