Selling Secondary Services: ���A Strategic Recommendation

Group 5: Salvatore D’Elia Emilie Demichele Yuner Teh Giacomo BarlettaJacopo Solimene

New Entrants Small probability of new competitors due to strong entry barriers. These include: - High investments in promotion, distribution channels and research and development - High inventory costs

Rivalry Between Competitors -  Few small companies and MNCs -  Competition is very intense -  MNCs have larger capital resources for marketing of their products and cross selling in several countries -  Most important factor is advertisement

Customer’s Bargaining Power

(Hairstyle Salons)

-  Bigger distribution chains have high bargaining power and influence prices - Small retailers have low bargaining power due to small purchase volume

Substitute Products -  No real substitutes or future innovations that can pose a successful threat -  Only minor threat are self-care retail products that are unable to give equal benefit

Suppliers -  Many suppliers but none of them represent a threat as a new entrant -  Easily differentiated and thus easily changeble. - No real risk in price nor for critical supplies

Low risk

No risk

High risk

Low risk

+ Many suppliers + Commodities market + Low differentiation

+ Focus on product quality + High brand power on domestic market + Constant product innovation

+ Brand loyalty + High listing costs - Evolution of private labels

+ Possible switches to the product portfolio

+ Lack of product differentiation + Concentration of players - Global competition

Average risk

PORTER’S MODEL MARKET ANALYSIS

Sampling

Pre-Screening a mixture of salons were sampled randomly all over Milan. This was done so as to gain a precise undestanding of the general demographics and background of all hair salon goers. From the pre-screening, it was discovered that woman from age 20 to 25 and 35 to 50 went to the hair salon more often and would also spend more.Furthermore, women were also highly influenced by their peers in their hairstyling choices.

Sampling for Interviews Random women in the relevant age groups were chosen while they waited for the hairdresser in various hair salons around Milan. This ensured that they were within our target age group and hair salon goers.

Sampling for Focus Groups We chose women with homogeneous attributes (age, status, purchase behavior) and grouped them together in order to understand how they influence each other. There were two focus groups, one for each age range. * The group unanimous decision was to use both focus group and in-depth interview because each method has some advantages that fills in what the other method lacks. Above all the union of both data makes them more pertinent. .

Focus Group Data Analysis

Beauty is extremely important in lifestyle context for both age groups and

hairstyle plays an important part in beauty.

Hair is also important for reputation.

The hairdresser is a friend and influencer for all.

Cost is a crucial factor for all age groups.

There are unmet needs and unsatisfied wants for secondary products, especially in longevity of effect.

In Depth Interview Data Analysis

For the those who do not purchase any secondary services, the most important barrier is disinformation.

In fact, most of these women have no information about benefits and uses of these services

and products and thus do not feel the need to try them.

Price is also a discriminating element; high price is often cited as a reason for non-purchase.

However, looking at their spending range on their ideal product, it is immediately clear that their

hypothetical range of price (20 to 30 Euros) is the same as the range of women who do purchase secondary services regularly.

Your Average Consumer Spends 35 to 50 Euros per

visit

Cares about beauty and preventing

aging

Uninformed about and

rarely purchases secondary services

Visits once a week

Spends 20 to 35 Euros per

visit

Visits every 2 to 3 weeks

Knows about and purchases

secondary services

Cares about beauty and

social position

Influenced by hairdresser

Sensitive to price relative

to quality

20 to 25 year old women

35 to 50 year old women

Consumers who do not purchase are often uninformed despite having unmet needs

Concept A

Title: Hair Image Consulting (Consulente di Immagine) Benefit: The professional hairstylist (parruchiere professionista) will help you to improve your hair health and beauty. Reason to Believe: Our hairstylist is truly a professional, who will evaluate your hair and image personally, explain to you how the products and services work for you and show you the results on your hair immediately.

Hair Image Consulting }  Have hair as healthy and

beautiful as the stars, courtesy of their own hairstylist.

Ever wish you could have hair like a celebrity? Ever wish you could discover what your true hair problems are from a professional? Ever wish you knew and understood what types of products and services will work for your hair and your personality? Now you can, with a free appointment with our professional hairstylist at your own hair salon. Through personal contact with you and your hair, he/she will evaluate your hair and image. Then he/she will choose the best products and services for you and show you first-hand how to use them. Immediately, you will see the health and beauty produced on your hair. Interested? Your personal hairstylist will inform you of the date the professional hairstylist will visit your hair salon when appointments become available. Make an appointment with them for absolutely no cost! Love how your hair looks after the appointment? You will have the opportunity to purchase whatever products and services used by our professional from your hair salon.

Concept B Title: The Hair Bible for Real Women Benefit: You will understand what products and services can improve your specific hair type as you grow older and the real effects on real women like you. Reason to Believe: With before and after pictures, you can fully understand the true effects of the products and services over time. Also, with our expansive sections of different hair types and problems, you will find the best solution for your own hair. Your personal hairdresser will also assist you in understanding your problems and the products. Best of all, all our women are real women just like you and your best friend.

The Hair Bible for Real Women }  You don’t grow older alone;

learn how other women just like you keep their hair beautiful with products and services you can buy

Your hair is changing but no one seems to tell you what to do. Even with generic advice, you have no clue what works for your particular hair type and or problem. What is everyone else doing? The Hair Bible for Real Women is divided into many many sections for each and every hair type and hair problem. You will see pictures of real women at your age with the same problematic hair as you. But you will also see pictures of real women after treatment, with beautiful hair you can have. The products and services they used are easily found at the bottom of each after picture. Best of all, you can purchase those products and services with a special discount coupon at the end of the Hair Bible. The Hair Bible for Real Women is available at your hair salon, free for perusal while you wait during your hair appointment.

Concept Test Survey Design

Two surveys were created, one for each concept. Each survey had 10 questions, divided over each of the 4 criteria (Distinctiveness, Likeability, Believability and Probability to Purchase) so as to measure the performance of each concept in each criteria.

A Likert Scale was used to answer each

question. The survey was delivered face to face to 50 respondents for each concept,

totaling 100 respondents.

Data Analysis: Comparing Scores This graph compares the mean scores of each concept in each criteria. The vertical axis

represents the score (1=Strongly Disagree and 5 =Strongly Agree)

3.76 3.96

3.3

4.306667

3.135

3.46

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Likeability Believability Purchase

Series1

Series2

Concept 1 Concept 2

Graph 1.1: Mean Scores for Three Criteria

In the above three categories, scoring higher (more strongly-agrees) represents better performance in that criteria. Thus, Concept 2 performs better in the criteria of likeability and probability of purchase, while concept 1 performs better in believability.

Data Analysis: Comparing Scores

2.64

2.66

2.68

2.7

2.72

2.74

2.76

2.78

1 2

Concept

Distinctiveness

This graph compares the means score of each concept in distinctiveness. The criteria of distinctiveness was graphed separately because the nature of its questions resulted in an inverse indication of performance; a lower score is higher performance. The vertical axis

represents the score (1=Strongly Disagree and 5 =Strongly Agree). Thus, as Concept 2

has a lower mean score, Concept 2 performs better in distinctiveness.

Graph 1.2: Mean Scores for Distinctiveness

Strategic Recommendation

Based on the three more important criteria of Probability to Purchase, Distinctiveness and Likeability, Concept B “The Hair Bible for Real Women” performs higher and should be selected.

Cost effective: The publication of this book will have low costs as it is a simple publication.

Brand Equity: P&G and/or its products and services will sustain an increase in brand equity as this book is well-liked by the target population as found in this study.

Improved Relations with

Hairdressers: Through book distribution, P&G will indirectly gain more

personal contact with hairdressers. This will secure their loyalty and provide insight

that can improve P&G products, services and thus, overall sales.

Furthermore, there are several business advantages…

Month Tasks

1 2 3 4 5 6 7 8 9 10 11

Book Creation and Publication • Acquisition of Photos • Creating problem sections and product descriptions • Publication

X

X

Educating the hairdressers to use the book and how to present it to consumers • P&G to hold workshops for hairdressers • For hairdressers who are unable to attend, P&G representatives should visit salons

X

X

X

Distributions in all the salons X X Awareness of consumers X X X à à à

Evaluation of concept effectiveness through sales metrics

Specific Recommendations

Recommended Timeline of Implementation

Further recommendations…

Personal contact and personalized information from the hairdresser along with the Hair Bible will increase sales significantly.

Special care must be taken in choosing women who truly look like the average Italian

woman.