Hair salon marketing plan

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Table Of Contents

1.0 1.0

Exec Execut utiv ive e Summ Summar ary y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2.0 2.0

Situ Situat atio ion n Anal Analys ysis is . . . . . . . . . . . . 2.1 2.1 Mark Market et Summ Summar ary y . . . . . . . . 2.1.1 2.1.1 Market Market Demogr Demograph aphics ics . 2.1.2 Market Market Needs Needs . . . . . 2.1. 2.1.3 3 Mark Market et Tren Trends ds . . . . 2.1.4 2.1.4 Market Market Growth Growth . . . . 2.2 2.2 SWOT SWOT Anal Analys ysis is . . . . . . . . . 2.2. 2.2.1 1 Stre Streng ngth ths s . . . . . . 2.2. 2.2.2 2 Weak Weakne ness sses es . . . . . 2.2.3 2.2.3 Opport Opportuni unitie ties s . . . . . 2.2.4 2.2.4 Threat Threats s. . . . . . . . 2.3 2.3 Comp Compet etit itio ion n and and Buyi Buying ng Patt Patter erns ns . 2.4 2.4 Serv Servic ices es . . . . . . . . . . . . 2.5 2.5 Keys Keys to Succ Succes ess s . . . . . . . . . 2.6 2.6 Crit Critic ical al Issu Issues es . . . . . . . . . .

3.0 3.0

Mark Market etin ing g Stra Strate tegy gy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.1 3.1 Miss Missio ion n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 3.2 3.2 Mark Market etin ing g Obje Object ctiv ives es . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.3 3.3 Fina Financ ncia iall Obje Object ctiv ives es . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3.4 3.4 Targ Target et Mark Market etin ing g . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 3.5 3.5 Posi Positi tion onin ing g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 3.6 3.6 Stra Strate tegy gy Pyra Pyrami mids ds . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 3.7 3.7 Mark Market etin ing g Mix Mix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.8 3.8 Mark Market etin ing g Rese Resear arch ch . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4.0 4.0

Fina Financ ncia ials ls,, Budg Budget ets, s, and and Fore Foreca cast sts s . . . . . . . . . . . . . . . . . . . . . . 10

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. . . . . . . . . . . . . .2 . . . . . . . . . . . . . .2 . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . .4 . . . . . . . . . . . . . .5 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .6 . . . . . . . . . . . . . .7 . . . . . . . . . . . . . . 7 . . . . . . . . . . . . . .7

Cranium Filament Reductions 1.0 Executive Summary Cranium Filament Reductions is a hair salon located in Shaker Hts., Ohio that allows the entire family to have their hair needs satisfied in o ne convenient location. Cranium serves men, women, and children and accepts appointments as well as walk-ins. Cranium also sells retail hair care products. Cranium is able to serve the entire family in one quick, convenient visit. While there are many "quick salons" like Cranium, Cranium will excel due to its attention to detail regarding customer service. Through unheralded customer attention, Cranium will slowly but surely gain market share as it services the entire family, creating long-term relationships. Lastly Cranium's location will allow it to attract a lot of walk in traffic. After month four, sales will grow steadily for Cranium. Profitability will be reached by month nine and $443,000 in revenue will be earned during year three with $61,000 in profits.

Annual Sales Forecast

$600,000 $500,000 $400,000 $300,000

Males Females Women with young children

$200,000 $100,000

Retail hair care products

Cranium Filament Reductions 2.0 Situation Analysis Cranium Filament Reductions is in its first year of business as a start-up company. Cranium recognizes the fact that a comprehensive, strategic marketing plan is required to ensure profitability and success. Cranium offers a wide range of hair cutting services. The market need is for a one-stop, convenient, hair salon that is skilled and reasonably priced, serving the entire family.

2.1 Market Summary Cranium Filament Reductions possess good information about the market and knows a great deal about the common attributes of its most prized customers. Cranium will leverage this information to understand who is served, their specific needs, and how Cranium can better serve them.

Target Markets

Males Females Mothers w/children

Cranium Filament Reductions 2.1.1 Market Demographics The profile for Cranium Filament Reductions consists of the following geographic, demographic, and behavior factors: Geographics • • •

The immedi immediate ate geograp geographic hic target target is the the city of Shaker Shaker Hts. Hts. and the the surroundi surrounding ng communities with a total population of 112,000. A 20 mile mile geogra geographic phic radius radius is is in need need of the offere offered d services. services. The tota totall target targeted ed popu populat lation ion is is 46,00 46,000. 0.

Demographics • • • • • •

Male Male,, fema female le,, and chi child ldre ren. n. Ages 3-55. The women women are individua individuals ls who are concerned concerned about about getting getting quality quality hair cuts/styl cuts/styling, ing, but are unwilling to pay the exorbitant charges associated with women-only hair salons. The men are are concerned concerned about about getting getting a reasonab reasonably ly priced, priced, conveni convenient, ent, haircut. haircut. The childre children n do not have have any major major preferen preferences ces other other than having having toys toys to play with with while while they wait. Have an indiv individual idual income income of at least least $30,000 $30,000..

Behavior Factors • •

Are always always on the the lookout lookout for convenien convenience ce factors factors in regard regards s to service service provider providers. s. Attempt Attempt to get all of the the family's family's needs needs service serviced d at the same same time time if possibl possible. e.

2.1.2 Market Needs Cranium Filament Reductions is providing families with a one-stop option for providing a wide

Cranium Filament Reductions 2.1.3 Market Trends The market trend for the hair cutting industry is one of consolidation. Consolidation can be seen with the high-end hair salons as well as the full-service, full-family full-family companies such as Best Cuts. Over the last five years there have been an expansion of upscale chain salons in major metropolitan areas. The expansion takes the form of opening new stores, as well as purchasing independently-owned independently-owned salons and transferring them over to the chain. Additionally, this trend has occurred with the full-service, family hair cutting stores. The reason for this trend is similar to other industries that are consolidating; cost saving measures. Cranium is not participating in this trend of aligning itself with a chain. Cranium believes that it has better insight to its local market and would rather apply this specialized insight to its market instead of adopting the procedures of a national chain.

Market Forecast 160,000 140,000 120,000 100,000

Males

80,000

Females

60,000

Mothers w/children

40,000

Cranium Filament Reductions 2.1.4 Market Growth For the last seven years the hair cutting industry has grown steadily at 5% a year. The industry is generally unaffected by economic upturns or downturns. While in upturns, women are more likely to purchase extra services such as hair coloring or perms, although generally the consumption pattern is unchanged. This is somewhat intuitive as most people need and get a haircut based on an elapsed amount of time, independent of the economic environment that they are in.

Target Market Growth

10.00%

8.00%

6.00%

4.00%

2.00%

0.00% Males

Females

Mothers w/children

Cranium Filament Reductions 2.2 SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Cranium Filament Reductions.

2.2.1 Strengths • • • •

Excellent Excellent retail retail space space in a well-tra well-travele veled d mall. mall. Well-tra Well-trained ined employ employees ees with good good hair cutting cutting skills skills with a wide style style reperto repertoire, ire, and customer-focused business practices. A wide wide range range of serv service ices s offer offered. ed. Comp Compet etit itiv ive e pric prices es..

2.2.2 Weaknesses • • •

As a new entrant entrant to the the market, market, Cranium Cranium lacks lacks brand brand equity equity that many many of its competit competitors ors have earned over years of service. The struggl struggle e to appear appear continua continually lly on the the edge in terms terms of fashion fashion and style. style. Large Large costs costs associ associate ated d with with a start-u start-up p company. company.

2.2.3 Opportunities • • •

A steady growin growing g market market that is traditiona traditionally lly unaffecte unaffected d by the economic economic environme environment. nt. The ability ability to decre decrease ase marginal marginal fixed fixed costs costs as the customer customer base base grows. grows. Increasing Increasing sales sales opportuni opportunities ties as more people people from from an individual individual family family frequent frequents s Cranium. Cranium.

Cranium Filament Reductions convenience sensitive. Men typically care less about the task of getting their haircut. For them whatever is easiest works best. Women are more concerned with hair styling and tend to bond more with their stylists. This bond creates loyalty to their stylist. Once a stylist has earned their trust they are more willing to blindly put their hair in the stylists hands.

2.4 Services Cranium Filament Reductions provides hair styling for the entire family. This includes haircuts for men and women, permanents and hair coloring for women, as well as haircuts for children. c hildren. Shampoos will be offered for all adult services. Service is offered on a walk in basis or by appointment. Cranium Filament Reductions will emphasize a customer-centric service where the customer's needs are always the priority. Cranium Filament Reductions will also sell hair care products that are forecasted to account for 15% of sales. These professional quality supplies will include shampoos, conditioners, reconstructors, brushes, combs, and other s tyling aids.

2.5 Keys to Success Keys to success include: • • •

Prof Profes essi sion onal alis ism. m. Convenience. Cust Custom omer er atte attent ntio ion. n.

2.6 Critical Issues

Cranium Filament Reductions Sun Press is much smaller than the Plain Dealer, it is more geographically targeted. •

In-store and Store Front Displays: These displays will be visible to the large walkthrough traffic base.

3.1 Mission Cranium Filament Reductions' mission is to provide reasonably priced, convenient hair styling. We exist to attract and maintain cu stomers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives • • •

Increa Increase se repea repeatt custome customers rs by 7% 7% per quar quarter ter.. Decrease Decrease customer customer acquis acquisition ition costs by 8% 8% per per year. year. Mainta Maintain in positi positive, ve, stead steady y growth growth each each month month..

3.3 Financial Objectives • • •

Increase Increase the the amount amount of retail retail products products sold by 10% 10% per per year. year. Grow Grow the the profi profitt margi margin n by 3% per per year year.. Prof Profit itab abil ilit ity y by year year one one..

3.4 Target Marketing

Cranium Filament Reductions hip styling that Cranium can offer. Cranium Filament Reductions will also target mothers with children by offering kids toys to play with while they wait and child-friendly child-friendly hair stylists. Additionally, children receive a special rate reflecting the fact that children's hair grows so fast that it can be expensive to keep up with regular cuts as well as the recognition that it generally takes a lot less time to cut a child's hair so it should be inherently less expensive.

3.5 Positioning Cranium Filament Reductions will position itself as a convenient, full service, family hair salon. Cranium will offer one-stop service offerings. Cranium will leverage its competitive edge to achieve its desired positioning: •

Cranium Cranium Filament Filament Reductions Reductions'' competitive competitive edge edge is based on superior superior customer customer service. service. Cranium Filament Reductions recognizes that the hair cutting/styling market is crowded so it is difficult to stand out. Cranium Filament Reductions will be able to by providing superior customer attention. This is particularly important in the "quick salon" space that Cranium operates in because margins are lower and the goal of a quick salon is to crank through a large number of people each day.

•

Cranium Cranium will invest invest time time and money money into traini training ng to ensure ensure that clients clients receive receive the the best experience possible making it is easier to turn them into a long-term customer. By providing superior customer service, Cranium will be able to effectively compete against and outlast larger chains and independent stores.

3.6 Strategy Pyramids The single objective is to position Cranium as the premier, full service, family salon in the Shaker

Cranium Filament Reductions 3.7 Marketing Mix Cranium's marketing mix is comprised of the following approaches to pricing, distribution, advertising and promotion, and customer service. •

Pricing: Cranium's pricing scheme will be based on a competitive pricing model with other similar service providers.

•

Distribution: All of Cranium's services and products will be dispensed from its centrally located store.

•

Advertising and Promotion: Locating the store in a high traffic mall will significantly increase visibility. A targeted advertising campaign will also communicate Cranium's desired messages.

•

Customer Service: All of Cranium's employees have been trained in exceptional customer service. All employees have discretion to remedy any problems encountered on their own without having to first receive permission from a supervisor.

3.8 Marketing Research During the initial phases of the marketing plan construction, several focus groups were held to gain insight into the buying patterns of prospective customers. The focus groups drew a wide range of  people from women to men to mothers. The participants were asked what type of service they typically use and why. They were also asked how their current service could be improved and what it would take to get them to switch to a new salon. They were given a bit of information regarding Craniums offerings and they evaluated this. The focus groups provided invaluable information and feedback. While some of the information gathered was already known to Cranium, other information were things that made perfect sense but had not been thought of.

Cranium Filament Reductions

Break-even Analysis $30,000 $20,000 $10,000 $0 ($10,000) ($20,000) ($30,000) $0

$10,770

$21,540

$32,310

$43,080

Monthly break-even point Break-even point = where line intersects with 0

Table 4.1: Break-even Analysis

Break-even Analysis: Monthly Units Break-even Monthly Sales Break-even

2,156 $32,340

Assumptions: Average Per-Unit Revenue Average Per-Unit Variable Cost Estimated Monthly Fixed Cost

$15.00 $1.80 $28, 45 459

$53,850

Cranium Filament Reductions 4.2 Sales Forecast The first month will be used to set up the store and hire and train the employees. The store will be officially open the second month. Sales for month two through will four will be somewhat slow, as Cranium will be building up a customer base. From month four on sales will grow steadily.

Monthly Sales Forecast

$40,000 $35,000 $30,000 $25,000

Males

$20,000

Females Women with young children

$15,000

Retail hair care products $10,000 $5,000 $0 Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep Sep Oct Oct Nov Nov Dec

Table 4.2: Sales Forecast

Cranium Filament Reductions 4.3 Expense Forecast Marketing expenses are to be budgeted so that they are high during th e first quarter in order to raise visibility for the start-up organization. They will then settle down a bit until the winter months when they will ramp up as the winter months are a time when there is an increase in spending on hair care in preparation for the winter holidays.

Monthly Expense Budget

$1,600 $1,400 $1,200 $1,000

Store front displays $800

Plain Dealer advertisements

$600

Sun Press advertisements

$400 $200 $0 Jan Jan Feb Feb Mar Mar Apr Apr May Jun Jun Jul Jul Aug Aug Sep Oct Nov Nov Dec

Cranium Filament Reductions 5.0 Controls The purpose of Cranium's marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: • • • •

Reve Revenu nue: e: mont monthl hly y and and annu annual al.. Expe Expens nses es:: mont monthl hly y and and annua annual. l. Rep Repeat eat busi busine ness ss.. Cust Custom omer er sati satisf sfac acti tion on..

5.1 Implementation Implementati on Milestones The following milestones identify key marketing programs. It is important to accomplish each one on time, and on budget.

Milestones

Marketing plan completion

Storefront design and shop set up finished

Advertising campaign #1

Cranium Filament Reductions 5.2 Marketing Organization Susan Sever, the owner, will be primarily responsible for the marketing activities. Susan will use outside assistance for some of the creative activities.

5.3 Contingency Planning Difficulties and Risks • • •

Problems Problems generatin generating g enough enough sales throughout throughout the day. An usually usually slow first first and second second quarter quarter that that could have have a significa significant nt effect effect on cash flow. flow. Road construct construction ion near the the mall which which would would have a signific significant ant effect effect on customer customer traffic. traffic.

Worst Case Risks May Include • •

Determini Determining ng that the the business business cannot cannot support support itsel itselff on an ongoing ongoing basis. basis. Having Having to liquidat liquidate e equipm equipment ent to to cover cover liabil liabilitie ities. s.

Appendix: Cranium Filament Reductions Table 4.2 Sales Forecast

Sales Forecast Sales Males Females Women with young children Retail hair care products Total Sales

Plan Jan $0 $0 $0 $0 $0

Feb $5,484 $548 $55 $913 $7,000

Mar $6,254 $625 $63 $1,041 $7,983

Apr $8,547 $855 $85 $1,423 $10,910

May $16,545 $1,646 $165 $2,740 $21,096

Jun $18,545 $1,855 $185 $3,088 $23,673

Jul $21,545 $2,155 $215 $3,587 $27,502

Aug $23,555 $2,356 $236 $3,922 $30,069

Sep $26,874 $2,687 $269 $4,475 $34,305

Oct $28,745 $2,875 $287 $4,786 $36,693

Nov $29,854 $2,985 $299 $4,971 $38,109

Dec $31,254 $3,125 $313 $5,204 $39,896

Direct Cost of Sales Males Females Women with young children Retail hair care products Subtotal Cost of Sales

Jan $0 $0 $0 $0 $0

Feb $658 $66 $7 $365 $1,096

Mar $750 $75 $8 $416 $1,249

Apr $1,026 $103 $10 $569 $1,708

May $1,985 $198 $20 $1,096 $3,299

Jun $2,225 $223 $22 $1,235 $3,705

Jul $2,585 $259 $26 $1,435 $4,305

Aug $2,827 $283 $28 $1,569 $4,706

Sep $3,225 $322 $32 $1,790 $5,370

Oct $3,449 $345 $34 $1,914 $5,743

Nov $3,582 $358 $36 $1,988 $5,965

Dec $3,750 $375 $38 $2,082 $6,245

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Appendix: Cranium Filament Reductions Table 4.3 Marketing Expense Budget

Marketing Expense Budget Store front displays Plain Dealer advertisements Sun Press advertisements Total Sales and Marketing Expenses Percent of Sales Contribution Margin Contribution Margin / Sales

Jan $600 $500 $400 - --- --- --- ---- --$1,500 0.00% ($1,500) 0.00%

Feb $0 $500 $400 - --- --- ---- --- --$900 12.86% $5,004 71.49%

Mar $0 $500 $400 - --- ---- --- ---- $900 11.27% $5,834 73.07%

Apr $0 $500 $400 - ---- --- ---- --- $900 8.25% $8,302 76.10%

May $0 $150 $100 -- --- ---- --- ---$250 1.19% $17,547 83.18%

Jun $500 $150 $100 - --- --- --- ---- --$750 3.17% $19,218 81.18%

Jul $0 $150 $100 - --- --- ---- --- --$250 0.91% $22,947 83.44%

Aug $0 $150 $100 - --- --- --- --- ---$250 0.83% $25,113 83.52%

Sep $0 $500 $400 - --- --- --- ---- --$900 2.62% $28,035 81.72%

Oct $0 $500 $400 - --- --- ---- --- --$900 2.45% $30,050 81.90%

Nov $0 $500 $400 - --- ---- --- --- --$900 2.36% $31,244 81.99%

Dec $0 $500 $400 - --- --- ---- --- --$900 2.26% $32,751 82.09%

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