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.
