Pranav New York Case Analysis - Nyel Berroya

Nyel Berroya

Pranav New York Case Analysis

Strategic or functional?

The primary problem of the case is strategic. Mark and Karlo missed the appropriate location which should be the east wing and center position of Robinsons Galleria instead of the west wing. Location is the key here since the primary target market of Pranav are the male working professional surrounding the mall. Pranav failed to anticipate the flow of their PTM such as mall habits and behaviour. 3^rd level as a location has a low foot traffic and inconvenient for PTM male professionals and mall goers to go to which is less accessible to potential customers. Male by nature prioritize flexibility and convenience. The salon is doing well as it progress which is contrary to its SPA due to space expense and limited customers. The sales of SPA was declining monthly although it's auxiliary services such as hot oil and nail are progressing but not enough to cover the total customer base. Majority of the salon customers are availing the basic services instead of stylish and trendy look which is a premium grooming services. In the 3 months of operation, less than 15% are loyal customers specifically in haircut services which are dominated by customers concern more of their urban and classy look, aged 20-39. Spa segment was unsuccessful hitting their PTM due to low share of total customer based segment and loyalty is an issue as well. Basically, spa segment is greatly eating up the revenue of the salon due to fixed expenses such as rent and having low sales. Essential equipments are not maximizing instead of being multi-purpose such as chairs and others. Employees are de-motivated especially on the sales aspect such as absence of commission for all goods and services. Up-selling and cross-selling the spa and salon for every customer may significantly increase sales volume. Promotional activities such as loyal cards, discounts, GC's and other groupon sites may actually create awareness and intensify loyalty for existing and potential customers.

Basically, Spa is not sustainable and feasible considering the poor location and low foot traffic of PTM-males. Female market is more dominant especially paying on premium services. Pranav failed to study its competitor which is getting more clients than their usual rather than focusing only of being unique.

Split salon and spa?

Looking at profitability and sales trend of the both segment of Pranav, splitting and retaining the salon is a wise decision especially on the expense aspect. Salon is manageable and may potentially go bigger in a short span of time especially if its relocated at the ground east wing level where it's dominated by their target PTM. Redesigning the concept of the salon as UNISEX may capture female market share from the competition. Or Pranav-salon may stay on their existing PTM but finding a competitive edge over competition by offering certain hair-styles which is trendy so they can be deemed different yet fashionable, fresh and unique in the industry. It may also be a salon offering pampering services as additional feature like a one-stop shop for their PTM. However, the equipments must be changed especially the chairs should be functional yet comfortable. Chairs can be reclined or may turn to SPA bed instantly.  

Closing the PRANAV-SPA may be an better option due lack of sales, high maintenance and poor loyalty and location. However, it can also be remodel and relocated to a high end market such as Makati, the fort or Alabang area. I think having a unisex PTM is a best option offering a new SPA flavour to be distinctive yet attractive. Remodel like having different rooms w/ unique themes, mixing traditional massages or just offering a totally new SPA service which it is the first in the industry. The object is to give an excellent, premium and one-of-a-kind services to its customers which will make a milestone and hopefully be the new trend.

SR: Business Model Innovation by Lloyd Tan

http://www.slideshare.net/lloyd3486/bmi-14535995

Bmi from Lloyd Tan

Analysis of the Pranav Case by Mariko Franca

[Good day Prof Jorge.  I am re-sending my Analysis on the Pranav Case just in case you did not receive last time.  Thank you!]

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1.  Tell whether the problem is strategic or functional and then explain why.

     The Pranav case is a strategic problem because the main problem of owners Karlo Nisce and Mark Orbos is very low sales.  There were already tell-tale signs of failure based on their observations prior to putting up their store and from their professors which they did not heed.  Two main reasons stated in the case are their target customers and their location.

    First, let us look at their target customers who are men.  Personal care industry experts said that it will take 2-3 or 5 years before the male segment will fully develop.  There were some stores they identified that were "For Men" that already closed down.  The men they saw who went to the salon and spa usually went with females.

      Second is their location.  Their professor already told them that their location in Galleria is bad.  Not only is it not part of the traffic flow, many of their competitors are at the Ground Floor and therefore much more visible than Pranav which is at the 3^rd floor.

2.  Should you separate the business into two – spa and salon?

     Separating the business into two will mean changing the business model of the company.  If I was the owner and I would like to stick to my goal which is to have a one-stop shop for men personal care then I will not divide my business.  Pranav is the first of its kind in the Philippines and is considered a pioneer.  Being a one-stop shop is Pranav's competitive advantage so Nisce and Orbos should find a way to emphasize this to the customers.  If the personal care experts' predictions are true, then Pranav would be at the advantage in 3 to 5 years because they already have the technology, the space, and the system.  In addition, the owners have a deadline to meet if they want to graduate so they just need to come up with strategies that will turn the business around.  As stated in the case, both are "strapped of resources and in deep need of working capital" so they have to make use of what they have and probably try to cut down on some expenses.  This being said, I therefore recommend the following alternatives:

a)  Increase focus on the salon services and decreasing those for spa.  By only cutting down resources for the spa, the owners will still be able to provide spa service to the customers who want to have this experience while increasing the profit they can generate from the salon services.  In time, the demand for spa service might grow and because they already have the system in place it will be easier for them to rehabilitate this portion of their business.

b)  Do better bundling of the salon services with those of spa.  For example, Pranav can offer free classic haircut if a customer will avail of a spa service.  Or they can have a free 15-minute spa experience for first time customers who go in to avail of any of the salon services.  By having an attractive package deal, customers will see more value for their money and will be tempted to try it at least once.  This will attract those who want to also experience spa but does not have enough money for it.  If the customer loves the experience then he will be sure to come back despite the competition at the ground floor.

c)  If they want to stick to an all-male target market then they can offer a seasonal package deal of a "Bring One Pay One" for couples, father-daughter, mother-son, boy-girl friends.  The condition is that if the male customer brings a female with him, they only need to pay for one service, a 50% rate, the equivalent of the service charge of 10%, etc.  They can probably offer their cheapest spa service to the female but if the latter wants to avail of a more expensive service then they will pay more.  This way, they are retaining their "for men" image but using the female sex as the factor to attract the male customers.