Pranav Case by Jopet Pineda AGSB Clark Entrepreneurship

Hi Prof. Jorge,

Below is my Pranav case analysis.

Thanks and regards.

Jopet

PRANAV Case

Situation:

Marc Orbos and Karlo Nisce opened up Pranav New York at Robinsons Galleria in November 2004 . It was a part of their Management Research Report to complete their requirements for their MBA graduation at the Asian Institute of Management. Pranav New York was envisioned to be the first male spa in the Philippines integrating grooming and wellness services for Filipino men. After three months of operations, Pranav New York already incurred losses amounting to P825,568.

Issues:

<![if !supportLists]>1.       <![endif]>Pranav New York was not able to attract its target market due to its inaccessible location. It lacked the much needed high traffic incidence since its location inside Robinson’s Galleria was not accessible unlike the other barber shops who were located at the ground floor of Robinsons Galleria. It was also located at the opposite side of the area where male working professionals are concentrated and the demographic mix at Robinson’s Galleria skewed towards the female segment which comprised 60% of the mall goers.

<![if !supportLists]>2.       <![endif]>Profitable and high value services such as the massage and oil treatments were not maximized which led to a net loss in their first three months of operation.

<![if !supportLists]>3.       <![endif]>Pranav was not able to maximize the floor area and its ability to offer a wider variety of services to customers was limited.

Action Plans:

<![if !supportLists]>1.       <![endif]>Pranav New York should find a new location inside Robinsons Galleria that would be easily accessed by its target market. It should locate where there is high foot traffic like in the ground floor of the mall or near traffic inducers such as popular dining establishments and famous retail stores. In one of the surveys conducted, they found out that the primary reason of customers in selecting barbershop was convenient location. Locating inside the mall is still preferable given the constant foot traffic generated by the mall. If it decides to stay in Robinsons Galleria, it should also tap the female market given the predominance of females in the said mall. It was also found out that females spend more over males on grooming services. To effectively attract the female market, Pranav should adjust their products and marketing efforts to get the attention of the female segment in Robinsons Galleria.

<![if !supportLists]>2.       <![endif]> If Pranav cannot find an accessible location inside Robinsons Galleria, it should consider moving out to another mall or area where there is an abundance of male working professionals who goes to barber shops and salons for their grooming needs after all, Robinsons Galleria’s mall goers skewed towards the female segment.

<![if !supportLists]>3.       <![endif]>Pranav should also maximize its high values services such as the oil treatments and massage by giving staffs additional incentives if they get customers availing on these products. This is to encourage the staff to push these highly profitable services. It can also bundle grooming services with massage and provide discounts to customers who avail of the promo. The staff should encourage every customer to stay longer inside Pranav and patronize other services especially the high value ones.

<![if !supportLists]>4.       <![endif]>Pranav should also maximize its floor space by using barber’s chair to enable its staff to do a wider array of services such as shaving and massage to their customers more efficiently using the barber chair.

Pranav case analysis by Dr. Jemer A

----- Forwarded Message -----
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.

Pranav Case Analysis by Sherwinism

From: Sherwin Pontanilla <sdpontanilla@zuelligfoundation.org>
Date: Fri, 08 Mar 2013 23:39:36 +0800
To: Jorge Saguinsin <profjorge.entrep@gmail.com>, <profjorge.entrep.sentrep@blogger.com>, "jorge.saguinsin.sentrep@blogger.com" <jorge.saguinsin.sentrep@blogger.com>, "jorge.saguinsin@blogspot.com" <jorge.saguinsin@blogspot.com>
Cc: Sherwin Pontanilla <sdpontanilla@zuelligfoundation.org>, Sherwin Pontanilla <spontanillamd@yahoo.com>
Subject: Pranav Case Analysis

-->

Pranav New York

Case Analysis

Ateneo Graduate School of Business

MBA in Health Program

Entrepreneurship

Submitted to: 

Prof. Jorge Saguinsin

Submitted by:

Dr. Sherwin D. Pontanilla

PROBLEM STATEMENT:

How can Karlo Nisce and Mark Orbos keep their venture, Pranav New York, alive? How can they turn around or reposition their male spa venture?

DATA ANALYSIS:

Venture Idea

“A seamless fusion of the modern amenities, ambience and style of a full-service salon and spa, with the masculine atmosphere and experience of a barbershop providing the best service in the grooming and relaxation market emanating from a comprehensive knowledge and understanding of its customers” was how Karlo and Mark conceptualized Pranav New York to be. Yet as would be presented, a dismal consideration of various factors from assessment to the commencement of the venture led to its failure.

In just 3 months of operations from November 2004 to January 2005 Pranav New York already incurred losses amounting to Php 825,568. Alongside this, the owners are already finding it difficult to finance leasehold dues and other operational expenses. Likewise, investments for marketing efforts are placed on hold for more pressing financial obligations.

Venture Conceptualization and Preparation

During the preparatory phase of the venture, in the Concept Viability Verification, the owners had over a year of lead-time to draw-up conclusions and concoct generalizations that would contribute to Pranav New York’s success yet some important points were missed and certain assumptions falsely made. 

In the General Scanning done, records coming from DTI were erroneously interpreted as already a trend where in fact only the data from that year/period was seen. From those records alone as indicated in the case, it cannot be assumed that there is already a changing grooming behavior of urban Filipino males. Had it included records from the past 3-5 years, a trend would have been established. The data showing 82% of hair establishments were salons compared to the 18% barbershops do not conclude anything. They are merely the number of establishments. And even given the approximate female to male ratio of 1.0363, no trend could be established unless it is compared to previous data and unless it is pitted with data showing male/female utilization of these establishments. If male utilization of salons is high, then this is a possible market to tap for the “male-spa venture”. And if the barbershop utilization by male customers still exceeds that of the salons, then the potential for the establishment of the usual barbershops would be more apt.

Analyzing the Exploratory Interview conducted with the Industry Experts in grooming, wellness, and styling/personal care products, it was a good way of familiarizing themselves with the current trend and support FGDs conducted later on. Indeed, it was necessary obtaining information on the behavior of the male market from these three perspectives in establishing the presence of a market for their concept. 

Although salon experts from the grooming industry confirmed the increasing number of males among their customers, it would be wrong to conclude that this was already a captured clientele for Pranav New York. Other takeaways from the industry revealed that in order to succeed in the salon industry, there had to be a right market, strategic location and ambience, appropriate service offerings and the right people hired. Analyzing this, salons, although targeting more the females, basically offer services for both sexes. Male customers who avail of their services are those who generally prefer salons to barbershops. It may be because of services offered in salons which are not offered in barbershops, preference of female/gay stylists over male barbers, or the ambience of salons which is far from the usual barbershops. It would be more certain to say that the male market of salons is totally different from that of the barbershops. Taking a step back, Karlo and Mark might not have identified the right market yet for Pranav New York.

From the wellness industry point of view, spa owners and managers interviewed noted of the increasing value that the market attached to health and wellness both for males and females and that there was indeed an increasing number of male clients slightly surpassing the females at 52%. Other takeaways were that key success factors in the spa industry included the right location, comfortable ambience for the target market and superior delivery of services. If Pranav New York was to become a Barbershop essentially, with some spa services, then it will probably not capture the market of the regular spa goers who go to spas for their services and its “spa ambience” which is totally different from that of a barbershop.

As noted by experts from the styling/personal care products industry, there is an increasing number of males who put value on grooming and wellness, particularly the “metrosexual” trend. Another takeaway is that this male segment market would take another 2-5 years before it fully develops. Again this is still a raw market for Pranav New York to target.

The Exploratory Focused Group Discussion conducted by Karlo and Mark with their classmates at AIM for me had no bearing and even the two knew that it was not meant to be conclusive. If at all, I believe they just did it to appease their building anxiety over the business concept. They were not able to obtain any additional inputs here that they were not aware of before.

The General Immersion Exercise they conducted, again, I believe was not worth their while. It would have turned out more fruitful had they conducted this in the location where Pranav New York was already to be put up. And this would later be seen in the Micro-Market Analysis they did in Robinsons Galleria. If it all, false generalizations were again made after this exercise. Not much can be drawn from 1 observational visit to a certain establishment. And looking closely at the observed establishments, 5 of the 10 barbershops visited were not in Ortigas Center, 7 of the 10 spas visited were again not in Ortigas Center, and only the salons visited had the most number, 7 of the 10, in the Ortigas Center area. If at all, my personal take on this activity was that each of the establishments visited: the barbershop, the salon, and the spa, had their own market captures. Trying to capture the three markets in one establishment would entail diverse innovative strategizing and marketing.

Business Location

The choice for the business location was done half-baked. They pushed through with the venture without actually finishing yet their venture research and location study, they settled for just 4 commercial centers in 2 areas, and they mainly wanted to start the business as soon as possible because of the requirements for their venture MRR class. 

In the end, they actually had nothing to choose from with regards to location because only 1 of the 4 establishments approved of their concept and they settled for that. It did not even earn the approval of their MRR mentors at AIM yet they refused to be sidetracked. 

This was their initial pitfall.

Selected Location Analysis

As a compromise for settling in Robinsons Galleria without actually finishing their location study, the owners continued to study their chosen location. As for the Foot Traffic and Demographic Mix studied, if the target market of Pranav New York is clear, it would not really matter. If at all, affected would just be the marketing strategies.

Incidental traffic was not their main target market, so it would not really matter much if they were located on a less visited wing. They would have to rely on their marketing strategies. Point-in-view being that the mall foot traffic at Robinson’s Galleria generally skewed to the female segment, then part of the marketing strategy to get to the male population would have to go through them. Flyers indicating services and promos by Pranav New York would have to be given to these female mall-goers which are intended for their husbands, boyfriends, male siblings or children. When it comes to wellness and grooming, the female counterparts, after all, are still the best influences the male segment could get. 

For the Micro-market Analysis of the competitors done, again, if at all, what they gained was the area standards of the prices for the main services they had to offer. And since they already had a target market in mind, then given the range of prices of possible competitors, they would just have to keep their prices within the range. No other rationalizations could be conclusively drawn here since they already have a location.

Pre-opening Assessment

As was stated in the case, one of their professors made several disparaging comments prior to the opening of Pranav New York. Pointed out were the following: an all-female barber crew who didn’t know how to shave men; using lounge chairs instead of the regular barbers’ chairs; narrow spaces between chairs; spa was too cold; office space blocking the frontal windows; a non-conducive location at the third floor. Judging alone from what Dr. Morato pointed out, I can’t help but also belittle Karlo and Mark’s knowledge of a barbershop, a spa and its customers. And with only those 6 points raised by Dr. Morato, it seems that they’re still at a loss regarding their main concept and their target market.

Data Analysis on Existing Operations

As reported in the case, Karlo and Mark did a very intensive demographic study of their customers after 3 months of poor business operations, an analysis which they should have completed prior to their venture. Alongside, they were able to do a Demographic Dissection by Business Segment, which proved to be very useful in demarcating the male market further, and assess which had critical mass and profitability potential in moving the operations of Pranav New York and assure positive returns for the enterprise.

ALTERNATIVES:

From the readings on the case of Pranav New York A, the following are my two cents worth as alternatives:

Specific Target Marketing

Given the assessment of the initial 3 months of operations, it would point to the male age bracket of 20-29 that brings in the money skewed to the salon services being offered by Pranav New York. Next to this is the 30-39-age bracket leaning more towards the spa and the regular barbershop services. The owners would have to decide if they keep on targeting both male segments or concentrate on the 20-29-segment leaning to the male salon services.

Repositioning

Pranav New York can open to female clients as well. Given that more of its male segment is availing of salon services, then they could open to female customers as well. This would take advantage of the higher female traffic in the area.

The owners would also have to decide of the main concept of Pranav New York. Decide on whether it’s more of a grooming center first and next a wellness place or market it as a wellness area first with grooming services. It’s hard to comment without actually seeing the place, but leaning more on the grooming side, then they would have to put up a Barber’s section with actual male barbers and real barber’s chairs and a salon section with the choice of female stylists and other salon services. The façade being that of a grooming area, where people could clearly see the barbers and salon section. 

Leaning more on the wellness market, then the façade would have to be of a regular spa and inside have rooms for grooming services again both of the barbers and the salon side. If the owners want to retain all the services, I believe this would be more apt since they already capture the spa-goers market and offer to them the grooming services once captured. Regular spa customers have a high regard for ambience of the spa and it would be easier to sell the services if the actual establishment has the feel of an actual spa and just create grooming rooms within the spa. 

It would be hard to create a spa ambience in an establishment marketed initially as a grooming area having the front as a grooming areas with the spa located inside. It would be harder to sell spa services to people coming in initially just for grooming services.

Marketing Strategy

Knowing the target age bracket frequenting Pranav New York in the past 3 months then it would definitely matter how this information is translated into marketing strategies such that it brings in the sales. Since the main target is the young 20-39 working age group, then possible collaborations with stores in Robinson’s Galleria also catering to these age group would have to be explored. Examples being discount promos with male clothing stores. Flyers would also have to be distributed in areas where there is a high concentration of male specialty stores. 

Banking on the predominantly female crowd of the mall, as was previously mentioned, then they would also have to be targeted by having discounted gift cheques which they could give as wellness/grooming gifts to their husbands, boyfriends, children or siblings.

Also, since the target are the working male market, then marketing strategies would also have to offered to offices around the Ortigas Center, from promotional flyers given in working areas after office hours to offering promos to HR departments of the various offices in the area. I believe this would be a more captured market than banking on the incidental traffic within the mall.  This is what knowing your specific target market and being purposive on the marketing strategies mean.

Relocate

Relocating the establishment is also another alternative. The leasehold dues in the mall are very high. If the target market is established and targeted well, then it wouldn’t matter if your inside a mall or not. The owners could probably get a bigger and a cheaper place but still within the area

Close Shop

The last alternative of course is to close shop, but being entrepreneurs, then this would have to be the least considered choice.

RECOMMENDATION:

Working with the data given regarding the case and the alternatives I gave above, my final recommendation would be to reposition Pranav New York as an exclusive male grooming establishment. There would be both the barbers and the salon area as discussed above offering both regular barbershop services and salon services. The spa would have to be closed. This would mean lesser leased space and lesser operational costs. The spa is expensive to maintain plus it’s bringing in the least revenue, if any. 

Also the marketing strategies mentioned in the alternatives discussion above would have to be considered to ensure that sales turn around and Pranav New York stays afloat.

< late po, due Wednesday March 6;  the analysis though was great;  the action was not aligned with the analysis>  we are getting there.....

Pranav New York, A case Analysis by Peaches

PRANAV NEW YORK
Situational  Analysis:
Karlo Nisce and Mark Orbos, first year MBA students at the AIM, year 2003, decided to adopt a business concept on the first male spa in the Philippines for their venture MRR as arequirement for graduation. They agreed together with an affirmation from their professors to set up this spa which was a new idea and with optimism that it was a promising business venture. The spa opened in 2004 at Robinson's Galleria, which was named Pranav New York.
Prior to the opening of Pranav New York, Karlo and Mark made a conceptualization and preparation for almost one year and considered the following:
1.) Validated the viability of their business concept in the local market and conducted a general screeningof the grooming industry in Metro Manila. They found out that salons outnumbered barber shops and more males go to salons for their grooming services.
2.)  They conducted an exploratory interview with industry experts to familiarize themselves with current trends in the industry. They found out an increase in number of males who went to salons for hair styling services. Some males were hesitant to to go to salons because it connoted a female-biased motif. Salons started to offer spa services for health and wellness.
3.)  They conducted Focused Group Discussion (FGD), a tool to test the acceptability of Pranav as a male spa concept. Spa was regarded as a venue to relax, relieve stress and be pampered.
4,) They conducted general immersion exercise, observing establishments on basis of location convenience and market prominence, customer behaviour and profile.
With these information gathered, they realized the male market's need for grooming and wellness was not sufficiently addressed by barbershops. And filipino urban males were not ready to patronize female-centric salons and spas. Thus a clear opportunity for Pranav to capitalize on with a vision of, Pranav would be a seamless fusion of the modern amenities, ambience and style of a full service salon and spa, with a masculine atmosphere and experience of a barbershop.
Hurriedly with enthusiasm, Mark and Karlo decided to work out on Pranav for reasons of completion of a requirement in MBA and considered December a perfect month to open the spa.
Robinson's Galleria was thought of to be an ideal location (a thorough location study and customer dynamics was not made).  A 153 sqm space, west wing, fronting main walkway  of the mall which revealed good foot traffic, demographic mix of generally female segment, with micro-market competitors of several grooming and wellness shops. Frustratingly, two months after  Pranav opened, end of January 2005, it incurred losses amounting to Php 825,568.00    Problem Analysis:
The incurred losses did not stop Karlo and Marc to pursue the bussiness. They were determined to analyze and investigate the reasons for the loss and were positive on regaining and reposition- ing Pranav to eventually succeed. It was evident that the losses were due to weak sales. Why?
The reasons: client patronage of spa services declined from November to January; auxillary services (nail, hot oil) were increasingly availed by the male; dominant demographic profile were aged 20-29 (47%) were on salon services and 30-39 (35%) more on spa hence ratio of 76:42; dominant was haircut services, styling more favored by 37.1%  loyal customers; Regarding profitability assessment: negative profit to cost ratios; negative income/sqm; revenue/sqm and variancee/revenue sqm was significantly lower in spa; not generating enough customer volume.
The decline in spa massage patronage is a big factor since this service carried the larger cost burden. The predominance of females with higher spending level on grooming services in the micromarket of Robinson Galleria is also a big factor. Pranav would certain loose if it is male exclusive. Another contributing factor is loyalty-building initiatives. And  to consider too is the location of Pranav in which high traffic incidence is not experienced, not accessible and not a direct catchment area. Pranav did not have essential equipment to achieve revenue maximization.
Decision Analysis:
The first three months of Pranav was on the verge of failure. Mark and Karlo have to act fast, signals urgency! The next steps will be very crucial to save the business and their MBA after a thorough analysis of the problem, they decided:
1.) Study and analyze the operations of Roberto's barber shop, a leading competitor which caters to the male market. The main objective was to identify critical factors for it's success hence establish a benchmark, gain insights on in-mall/stand alone market, operations, manpower/shop size, market behaviour (did interview of clients, employees and observe "walk by the branch). All findings were aligned with the data of Pranav.
2.) Analyze a direct competitor, a unisex spa which specializes in massage and wellness services.
Findings: customers were motivated to go to a shop primarily because of a convenient location which was the main factor which dictated volume and demographic mix; changing foot traffic results to propensity of customers due to convenience; older segment, higher income because of availment of high value services. *more important too, it was not only the share of the male market but the size and viability within the micromarket that woud ensure success. In summary, it was very important to heed the advice of their AIM mentors and carefully, slowly go back to understanding the logic of the business they are engaging in.
Opportunity Analysis:
1.)  Good to be in-mall location with high, constant foot  traffic,  hence higher probability of in-
cidental walk-in customers. Ground floor more ideal for accessibility and catchment area.
2.)  Maximize floor area and at the same time more working space, convenient and comfortable
barber's chair. Observe cleanliness and system.
3.)  Seriously consider female market (female spent 90% more on grooming services)*targetting the male segment exclusively will be detrimental to the succes*, therefore for both gender.
4.)  If  Pranav targets female, repositioning must be done with addition of more services.
5.)  Cultivate customer loyalty for sustainability and they sure will bring in more customers.
6.)  Hire Skilled employees to be continously trained and give incentives for them to be  motivated hence their dedication contributes to  Pranav's profitability.
7.)  Consider volume and value driven services which are main contributors to profitability
not to forget fair prices. ( all services of a salon and spa). 
Submitted: Cecilia Ann Barretto Ching, MD FPOGS,    MBAH 10B,  Entrepreneurship
Submitted to:  Professor Jorge Saguinsin                         Date:  March 06, 2013

      
                 

  

  

 

    

Pranav assignment from the POKER QUEEN

hi sir... im not quite sure that you received my assignment in PRANAV (sent it all to your addresses)....im sending it again po...

thank

----- Forwarded Message -----
From: janice saraza <janice.saraza@yahoo.com>
To: "profjorge.entrep.sentrep@blogger.com" <profjorge.entrep.sentrep@blogger.com>; "profjorge.entrep@gmail.com" <profjorge.entrep@gmail.com>
Cc: "janice.saraza@yahoo.com" <janice.saraza@yahoo.com>
Sent: Wednesday, March 6, 2013 6:12 PM
Subject: pranav assignment from the POKER QUEEN

REPORT ON THE PRANAV NEW YORK

Submitted by: POKER QUEEN

Date submitted: March 6, 2013

SITUATIONAL ANALYSIS:  The case was about the business venture of Karlo Nisce and Mark Orbos with two other partners, who were taking up their Masters in Business Management at the Asian Institute of Management in 2003. The group went into the salon/spa industry by putting up their own salon/spa service whose concept catered to male customers at the Robinson's Galleria addressing the need for an integrated grooming and wellness establishment with the appropriate male ambience. (A salon/spa cum barbershop experience)  They felt that they have conducted a relatively sufficient feasibility study with the following good points favoring their concept:

1.       Novelty concept as there are limited service providers that combines the different "core values" for male grooming and wellness services as a "one stop shop"

2.       The emergence of the " health and wellness trend" which was correlated with salons and spas.

3.       The  "Metro Sexual" male culture is gaining ground in the urban setting as seen in the comments under Exploratory Interview with Industry Experts.

4.       The urgency to start the business for the partners' compliance in school

5.       Validation from their mentors that their concept was refreshing and promising. This was also supported by Focus Group Discussion activity with prospective clients, as well as interviews with leaders in the industry and suppliers.

PROBLEM ANALYSIS: However,  after three months of operations, the group found themselves losing money from leasehold dues and operational expenses due to weak sales.  And upon careful review of their current position, the following where the observations:

A.      Poor functional practices like:

1.       Hiring an "all-female"crew

2.       barbers chair was not used by the business

3.       the placing of the chairs was too crowded to prevent simultaneous services to be done conveniently

4.       the air conditioning was too cold

5.       the office space blocked some of the frontal window

B.      Poor strategic practices:

1.       Despite their initial knowledge of the malls general population, the group failed to recognize other possible market segments: FEMALES which is 60.8% of the mall's gender distribution.

2.       poor location choice: PRANAV was at the third floor which made it far from the part of the mall where establishments catering to men was far (opposite side of the mall), and far from general foot traffic

3.       Questionable PTM:  What would be the value proposition of their salon/spa?  they later on identified that Classical Haircut customers characteristics include those who are price conscientious and availing of basic pedicure and massage whereas those who are Style Cut customers are motivated differently by the value of the services they can get from the spa.

DECISION ANALYSIS:  The entrepreneurs decided to breakdown the information they have based on their three months experience as well as do a benchmarking review with Roberto's (which was an apparent frontrunner in the male grooming services) and a study with several low and high end unisex service providers.

RECOMMENDATIONS:

I would recommend that the concerned entrepreneurs re-organize their business to maximize on the following opportunities:

1.       They may focus on their core business which is hair cutting (classical or style) and do a cost analysis in the pricing of their services giving consideration to their break even cost

2.       With the current gender distribution of clientele of Robinsons Galleria, they may enhance their services by providing services for women/females. They already have confirmation from their studies that women spend more than males. Their fixed expenses (rent, utilities, salary) will be the same anyway, so adding products that caters to women would increase the potential for their spa to get more women customers who are more willing to spend on styling and or relaxing services than males.

3.       Just like in those food fads ( pearlshakes, Shwarma, milk teas) that appears in the market, trends might not be a good basis for a solid long term business. The "metrosexual" trend in the 90's did not actually hit big because it is very dependent on the capacity of a person to spend on luxury items or how they will prioritize their expenses.

Pranav Case Analysis by Dr. Lorelie Perez-Miranda

PRANAV  REPORT

By: Loralie  Perez-Miranda

AGSB  MBAH  10B

Submitted March 6, 2013, 10:58pm 

Initially when the owners opened Pranav, they thought they had found an emerging market in Male Spas. Their innovation was to offer spa services in a masculine atmosphere. Services would be rendered by women offering haircuts, massages, manicure, pedicure, etc. Their set-up was completely different from the traditional barbershop which men have grown accustomed to.
 
Market research done by the owners was generally incomplete. And what they did have, they did not address all angles despite the suggestions of their mentors.
 
Location
 
Their location di not have enough traffic within the mall. It was placed on the 3rd floor, which would not encourage men from the outside to walk in. Based on their research, clients went to spas and barbershops based on accessibility. And since their target was men, this provided less visibility and accessibility. Men in general walking within the mall are usually accompanied by their wives / girlfriends or families and are rarely alone.

 Ignoring the Female Market

Since men are usually accompanied by their female partners, most of the time they would want to spend the time together. It is usually the women who direct a large part of spending power.

 But since their focus and objective was to open a spa for men inside a mall, they failed to consider the behaviour of the men.

 In addition, the female market spends more than the men on spa services therefore the possibility of this income has been lost. The business would have fared better as a unisex spa.


Removing Familiar Comforts

Although in general they wanted a "masculine" look for the spa, there were comforts men usually gain from a barber shop that were removed or taken for granted.

 Comfortable barber chairs that swivel and allows for more than 1 treatment to be done were replaced with cheaper and less versatile chairs with less space available. Women were placed to do all treatments with hardly any experience in shaving men and giving real barber type haircuts..


What happened next

 Eventually, the owners of Pranav had to close shop. Their cash flow was not enough to cover their expenditures.

Location and the untapped female market would have drastically turned their business around were they willing to change their strategy.


--
Loralie E.M. Perez-Miranda,M.D.,DPAFP

Pranav Case Analysis by Dr. Dimaano

PRANAV CASE ANALYSIS

Ma. Elsie M. Dimaano, MD

MBAH 10B

Submitted to Prof Jorge Saguinsin

SITUATION.

The two articles about Pranav NY in Prof Jorge's casebook describes Karlo Nisce and Mark Orbos, both MBA students at the Asian Institute of Management, embarking on a salon-spa business, a one stop shop for grooming and wellness for the male market as part of their Management Research Report (MRR) which they had to complete prior to graduation.  Unfortunately, after three months of operation, it posted a PhP 825,568.00 loss instead of profits.

The status of the company was examined in detail in the articles and a number of problems were revealed.

PROBLEMS.

After conducting research, the following were identified as reasons why Pranav NY was losing:

1.  Pranav NY's PTM.
The micro- market analysis showed that focusing solely on the male market and neglecting the female market segment was not a good idea because it was this market segment that spends more (91%) on grooming services.  Adding to this, there is predominance of females in Galleria (61 females :39 males) hence there will be real difficulty in acquiring the critical mass of male customers.

2.  Location of Pranav NY in Galleria.
It was only Robinson's Galleria who approved Pranav NY's application in July 2004 because Galleria management found the Pranav NY concept unique, promising, and with a potential of becoming one of their main features in the Body Senses section of the mall.
Maybe Karlo and Mark got excited because of what Galleria management said or maybe they did not have any other choice but put up Pranav NY where management offered because they were pressed for time and wanted to graduate. 

They should have looked at the whole place first, observed, and gathered data on customer dynamics and demography.  In short, they should have done a meticulous micro-market analysis before they talked to Galleria management.
I was just wondering why they did not know that their PTM was on the opposite end of where they located Pranav NY.

3.  Pricing.
If the two entrepreneurs really did their homework well before they ventured into the business, they should have observed that there is a higher market share of establishments with lower prices and those with high-end positioning lagged behind.  This should have given them an idea about the price sensitivity of Galleria's micro-market.

4.  Cost Structure.
Pranav NY's cost structure was also flawed.  Their fixed cost was a whopping 96% of which 36% was attributed to fixed salaries.  As was explicitly said in the articles, this implied that Pranav NY had to shoulder the fixed cost regardless of customer volume levels thereby straining working capital and cash flow. 

Corollary to this, Pranav NY's employees will not really be motivated to sell the high volume services because whether they do or not, they will get the same compensation anyway.  Where is the incentive at that?

ALTERNATIVES.
1.  To put a stop to further losses, the two entrepreneurs can close the whole business entirely. 

2.  Discontinue the spa since it is incurring about PhP 24,270.00 monthly.  Maintaining it will mean additional losses because Pranav NY did not have the critical volume they need and has not established itself in the micro-market of Galleria.

3.  Re-evaluate the vision and address the loopholes or flaws seen after research and re-evaluation.

DECISION.

I can hear my FINMAN professor telling our class, closing shop is not an option if you come from AGSB.  We only need to evaluate and think of solutions.  We should not be disheartened by failures for they are learning experiences.  Make sure the first thing you do in the morning is look and analyze the balance sheet in the office so you will not be caught off guard and so that you can address problems even before they come up.

This being said, the best option then is number 3, re-evaluate and address the loopholes and flaws seen after research and evaluation.

ACTION.

The following are action plans, recommendations / suggestions to Mark and Karlo:

1.  Pranav NY should look back and re-evaluate their vision of catering to only the male market because the female market is too big and profitable to ignore. Corollary to this, they should not be too gender-specific with regards to staffing.  The entrepreneurs should provide equal rights to everyone so long as they have the technical expertise, right frame of mind, love of work, honesty, and other qualities employers look for in employees.  Who knows maybe getting blind people for the spa business will project a better image for them because they are helping PWDs to earn a living. 

2.  Relocating Pranav NY in Galleria where there is high foot traffic is ideal but I am not sure if there is a provision regarding this in their contract with Galleria.  They have to know the stipulations in the contract before deciding if they can shoulder relocation costs. If the entrepreneurs do not have any other option but to stay where they are, then Mark and Karlo should make sure that people know about them. Market! Market! Market! This maybe done through flyers, website, social networking media to cut on costs or probably redesign their place so people will get curious and would want to take a look. 
Maybe Pranav NY can differentiate itself from the rest and make people go to them through innovative promotions or gimmicks or value-added services like home service.
The owners might also gain from asking their staff who have been in the grooming and wellness business for quite some time for suggestions.

3.  Pranav NY's prices should be re-evaluated to make prices more competitive in a price sensitive market. Preparing bundle packages, student discounts, barkada or family packages might do wonders.
It is likewise advisable that Mark and Karlo think about ways to maintain and earn customer loyalty.  Loyalty cards, Pranav NY rewards card, gift certificates, buy 1 take 1 promos or sending customers e-greeting cards during special occasions are some examples of winning them.

4.  The current cost structure of Pranav NY should be restructured.  The variable compensation structure will help Pranav NY address two problems, namely: their high fixed costs and unmotivated staff/employees.
The variable compensation structure in which the staff/ employees are given a fixed percentage commission for the service customers avail gives incentive and motivation to the staff/ employees to push for the high value services because the more they are able to sell, the more compensation they will get.  This structure will likewise help Pranav NY minimize and lower fixed cost especially in times of low sales.

5.  Equipment evaluation and the floor area should likewise be assessed.
Salon chairs that were immovable and quite restricting were used in Pranav NY instead of barbers' chairs because they were cheap.  But, it should be taken into consideration that this is where you get customers in the mood to try out the other services Pranav NY has to offer.  I think they should just auction the salon chairs and buy barbers' chairs because the barbers' chairs are crucial for the business.  Or, they can have a custom-built chair-massage bed made exclusively for Pranav NY.  The custom built chair-bed can either be used in the salon or spa section, whatever section will be needing more and depending on what customers want.

In order to minimize costs and maximize profits, Karlo and Mark should start computing revenue per sqm.  Efficient use of space maximizes sales hence profits.  This does not mean putting more chairs per square inch because we now that that will mean narrow working areas in between chairs and customers will not like that.  We want our customers relaxed and the longer they stay in the establishment, the higher the probability that they will avail of other services.

I am not sure why the article said that the spa was too cold because this should not have been a problem in the first place if the owners are hands-on in the business. If they conducted market research before venturing to the business, they would know what kind of scent, ambience, temperature customers want.

6.  Partnership with another company for the spa business is another thing to consider if Mark and Karlo can no longer handle everything on their own.

In conclusion, Karlo and Mark can learn from one of the teachings of an ancient Chinese military general, philosopher, and strategist, Sun Tzu.  He said, "the general who wins the battle makes many calculations in his temple before the battle is fought.  The general who loses makes but few calculations beforehand."

The two entrepreneurs though should not be disheartened and should remember Steve Jobs when he said, "sometimes when you innovate, you make mistakes. It is best to admit them quickly and get on with improving your other innovations."


Sent from my iPad