lakme salon to be printed version1 (1)

7/28/2019 LAKME SALON to Be Printed Version1 (1)

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Aeshna Ambardar Ankit Kumar

Esha Shah Gaurav Bagla

Kedar Amladi Piyush Kadoo

Namrata Shah Vibhuti MhatreRahul Patil Rohan Jadhav

Amit Kumar Singh Shraddha Sonawane

Saiprasad Sale

Team Members

Marketing Application & Practices


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Higher disposable incomes of the middle class

Women becoming more and more beauty conscious

Availability ofmore retail solutionsRising penetration of Indian beauty salons

Competition from both Indian and International players

Branded Salons,

1500

Fitness Center,

1500

Cosmetics and

Skincare, 7750Spas, 200

Estimated Size (Rs. Crore)

Market Drivers

Indian Beauty Services Market


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India's per capita consumption of branded cosmetics and toiletries is only

$0.68, much lower than Hong Kong ($40), Malaysia and Taiwan ($10 each)

[Assocham]

Between 1995 and 2005, household spending on personal care products

doubled from 4% of total income to 8% and is expected to grow to 11% by

2025 [McKinsey]

84% of Indians felt greater pressure to look better than the generation

before them [Nielsen] 77 million Indians will enter the working-class population between 2005

and 2015 [Census]

Indians will be richer and youngerSource: Outlook India

Salons In India Size: Rs 1,500 crore

Growth Rate 25% per year

Avg. Customer Spend: Rs 1,000-1,500/visitSource: Industry Reports

Indian Market in Perspective



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C

V

The HUB & Spoke chakra


Lakme Hub & Spoke Model


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57%

52%

54%

53%

48%

52%

14%

15%

13%

12%

13%

13%

18%

20%

20%

20%

22%

20%

11%

13%

14%

14%

17%

14%

SEC A

SEC B

SEC C

SEC D

SEC E

All urban

0% 20% 40% 60% 80% 100% 120%

Up to 1 lakh above 5 lakh 1 to 5 lakh Metros 0% 20% 40% 60% 80% 100%

SEC A

SEC B

SEC C

SEC D

SEC E

All urban

98%

97%

98%

97%

95%

97%

2%

3%

2%

3%

5%

3%

Female Male

6%

7%

7%

6%

6%

6%

26%

30%

20%

24%

10%

23%

65%

60%

71%

68%

81%

68%

3%

3%

2%

2%

3%

3%

0% 20% 40% 60% 80% 100% 120%

SEC A

SEC B

SEC C

SEC D

SEC E

All urban

Single/unmarried Married without children

Married with children Others

34% of spare cash was spent on Holidays and vacations

31.5% of the spare cash was spent on spent on New clothes

40% usually does something with other members of the family

38% prefers to go out with other members of the family

Consumer Behavior


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1.2 billion people

567.3 million women

Women students

Working maidens

Working wives

Housewives

Housewives moms

Working moms

75 million

168 million

280 million

Self-education

Status/fame

Health

Children

education

FamilyChildren

education

Brand & trend consciou

Price conscious

Housewives have higher famil

than households with working

Housewives show better SEC profile

segments

Working wives have the lowest self perceptions of their attractiveness

and claim to use the beauty

products the leastThe Indian Women se mentThe Indian Women segment


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BEAUTY INDUSTRY CURRENT TRENDS

THE BEAUTY SALON MARKET

OPPORTUNITY

Opportunity for up-gradation at

a relatively lower LSM (SEC B) ishuge as number of women inthat strata is large. The numberof women in LSM 8+ to LSM 12is ten times that of LSM 12+

Being a service business,customer retention is driven

largely through quality ofexperience, products used andspecific operators towardswhom customers have loyaltyhence, huge scope forcustomer loyalty programs

TRENDS

Evolved lifestyle

The explosion of Media Growing availability of salons

offering basic and innovativehair and skin services

RESULTS

Up-gradation of women fromunorganised sector to brandedsalons

More women looking at salonsas centres of expertise andauthority

Women expecting salons towork with product lines which

are professional New retail destinations

adopting salons to addresscustomer footfall


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LAKME SALON CURRENT SCENARIO

CURRENT MARKET POSITION-SWOT

Market leader in organised beauty services -LakmeSalons and Lakme Studios across 130+ centers in 25

cities

Mix of franchisee salons (105) and company salons

(25)

Grown at a (CAGR) of over 35% for the past 4 years,

ahead of market growth, estimated

between 25 to 30%.

The growth of Lakme is made up of an average

organic growth of 20 % with the rest coming from

inorganic addition

Currently Lakme Salons and Studios interact with

more than 150,000 active customers every year

The majority (90%+) of the customers are in the

bracket LSM 10+ and 70% are in LSM 12+ (SEC A+)

STRENGTH

Established presence High Brand Recall

Customer LoyaltyPrograms

WEAKNESS

High employee training& education cost

OPPORTUNITY

Leverage UnileversPan India Presence

LSM 8+ to LSM 12untapped market

THREAT

Vast Un-organizedBeauty market

International BoutiqueSalon Chains

Continuous escalationin real estate costs

Attrition


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LAKME SALON SERVICE PORTFOLIO

CURRENT SERVICE PORTFOLIO

CUSTOMER LOYALTY PROGRAMS :

Lakme Salons has a mix of owned andfranchised outlets

In non-metros, the lakme 'adopts'

unbranded outlets once they reach a

certain size as franchise partners

They then help them with training and to

achieve the look and feel of a Lakme Salon

Loyalty program are run to help servecustomers better and discount cards

offered

Such repeat walk-ins constitute as much as

80% of the customer base of Lakme Salon

SALON SERVICEHair

Hair style

MassagesHair Therapy

Skin

Face Treatments

Full Body Massage

Hands & Feet

Specialized Pedicures &Manicures

Bridal Services

Catering to Nine Cultures

Co created with Make up experts

LAKME ACADEMY

Lakm Academy

offers certificationin courses ranging

from foundation

to Masters Level in

hair and beauty

LAKME

ABSOLUTE

SALONThe premium

services offering

customized

beauty packages

LAKME IVANA

Lakm Ivana for

grooming, skinand hair care

services to both,

men and women


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Indian Pyramid


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Concentration of Disposable Income

Income Analysis


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Footwear,

38.40%

Equipment,pap

er & Stationery,

29.70%

Household

appliances,

24.80%

Cloting and

textiles, 21.70%

Communication

, 11.40%

Home dcor

and furnishing,

5%

Beauty,Personal

and Healthcare,

4.90%

500635

806

1024

1301

1652

0

200

400

600

800

1000

1200

1400

1600

1800

2010 2011 2012 2013 2014 2015

For every branded salon,

there are 4 neighboring

salons present

500 rs

2000 r

1000 rs10000

Neighborhood salon

Typical spend

Branded salon

Typical spend

Why I prefer my

neighborhood

saloon?

Footprint in a branded salon15 to 40Footprint in a neighbor salon 10 to 15

The Market


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0

2

4

6

8

10

Lack of

convenience

Expensive

services

Lack of

standardization

8.17.4

6.3

Mean Score : 10

No service @ home

Proximity of the store

Flexible hours

Price

Lavish set-up

Beauty Services Need Gaps


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Online flash sales in Indiaare the next big thing aftere-commerce

Population in India is tech-savvy with around 100million online shoppers

Huge market potential for

Lakmes salon service

Flash Promotions for Salons

Secondary Research


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05

10

152025303540

Ahmedabad

Baroda

Jodhpur

Pune

Jaipur

Nasik

15-17 yrs

17 -19 yrs

19-21yrs

21-23 yrs

23-25 yrs

Source Indian Journal of Marketing nov12

The graph shows the population

sampled - age wise

0

10

20

30

40

Ahmedabad

Baroda

Jodhpur

Pune

Jaipur

Nasik

Student

Employed

EntrepenuerHome maker

#REF!

The graph shows the population

sampled - occupation wise

Flash Promotions for Salons - Research


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Qualitative research Steps1. Word association test

2. Sentence completion test

3. Depth interviews

Conclusions Young Indian female consumers are eager to

experiment with the flash sales

15-17 yrs. group decisions influenced by their parents

and friends

Increased awareness about technology is a good sign

for online flash sales

Responses to cosmetics prevalent

Flash Sales a New Arena for promotions


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Lakme Salon presence - Ahmedabad


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Major Competitors of Lakme Salon

Started by renowned hairstylist Jawed Habib

A total of 322 outlets in 83 cities of India Has very high brand loyalty especially in tier 2/

tier 3 cities

Started by famous beautician Shahnaz Husain

Over 200 Salons all over the world

Leader and pioneer in herbal care providing

herbal beauty treatments

Fastest growing salon chain in India popularizing

the concept of Unisex salons

A total of 114 salons and at-least 4 new

branches getting operational every month

Has a strong foothold in South India and

recipient of Best Salon chain in India award

Brand LOreal has high recall and people

instantly connect with the brand

Hair care, makeup, skin care all are provided by

expert beauticians

Expanding into smaller cities providing qualityservices at affordable prices

Hair and Beauty Salon industry in India is estimated at Rs 7,000 crore

However, current market share of unorganized sector is 77 %Thus, apart from major established players, local beauty parlors are also a

serious competition to Lakme

Competitor Analysis


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LAKME

Bangalore 28

Mumbai 23

Delhi 18

Hyderabad 12

Chennai 11

Lucknow 4

Ahmedabad 3

Gurgaon 3

Kolkata 3

Pune 3

Secunderabad 3

Amritsar 2

Chandigarh 2

Indore 2

Kanpur 2

Ludhiana 2

Noida 2

Thane 2

Agra 1

Allahabad 1

Baroda 1Bhatinda 1

Dehradun 1

Ghaziabad 1

Guwhati 1

Jaipur 1

Delhi 22

Hyderabad 13

Mumbai 12

Kolkata 8

Bangalore 4

Patiala 3

Agra 3

Ahmedabad 3

Lucknow 2

Ludhiana 2

Jammu 2

Jaipur 2Udaipur 2

Goa 2

Nagpur 2

Baroda 2

Surat 2

Mathura 1

Chandigarh 1

Panchkula 1

Bhatindar 1Jalandar 1

Sonepat 1

Hissar 1

Yamuna Nagar 1

Karnal 1

Panipat 1

Faridabad 1

Gurgaon 1

Gobind garh 1

Ajmer 1

Kota 1

Bikaner 1

Patna 1

Varnasi 1

Vishakapatnam 1Vijayawada 1

Mysore 1

Chennai 1

Cochin 1

Anand 1

Navsari 1

Rajkot 1

Bharuch 1

Gandhi nagar 1Indore 1

Latur 1

Nasik 1

Pune 1

Bhilai 1

Bilaspur 1

Mumbai 20

Delhi 13

Bengaluru 10

Kolkata 9Hyderabad 8

Pune 8

Chennai 4

Guwahati 3

Ahmedabad 3

Gurgaon 3

Chandigarh 3

Jaipur 3

Lucknow 3Patna 2

Ambala 2

Faridabad 2

Sonipat 2

Goa 2

Amritsar 2

Bhatinda 2

Jalandhar 2

Ludhiana 2Patiala 2

Phagwara 2

Coimbatore 2

Meerut 2

Noida 2

Varanasi 2

Rajamundry 1

Vijaywada 1

Vizag 1

Jorhat 1Muzzafarpur 1

Bhilai 1

Bilaspur 1

Raipur 1

Anand 1

Rajkot 1

Surat 1

Baroda 1

Karnal 1Panipat 1

Yamuna nagar 1

Jammu 1

Mysore 1

Calicut 1

Cochin 1

Trivandrum 1

Bhopal 1

Gwalior 1Indore 1

Jabalpur 1

Aurangabad 1

Kohlapur 1

Nagpur 1

Nasik 1

Shillong 1

Udaipur 1

Madurai 1

Pondicherry 1

Tirupur 1

Trichy 1

Agra 1

Aligarh 1

Allahabad 1

Bareilly 1

Ghaziabad 1

Gorakhpur 1

Kanpur 1

Mathura 1

Muradabad 1

Haridwar 1

HABIBS

Unisex

Geograph

icalFootprint

Competitor Analysis


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Challenges

Beauty Salonmarket

dominated byUnorganized

sector

Low entrybarrier for

new players

ManyMultinationals

like JeanClaude Biguineseeking entry

into Indianmarket

Price war withother

establishedplayers leading

to lowermargins

Gaining afoothold in

smaller citiesand towns

Indian consumer is

becoming more beauty

conscious and hence a

major shift is expectedfro m unorganized to

organized beauty salons

Lakme should leverage on

its positive brand image

and high credibility to gain

edge over new entrants

In-order to compete with

them, Lakme should

ensure it has competent

staff and equipments at

par with competitors

Making services affordable

by lowering prices to some

extent can attract more

customers and help inwidening consumer base

Discounts and promotional

vouchers offering combodeals can be used to gain

foothold in smaller cities

Challenges faced by Lakme


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KeyFactors

Regional

differences

Increase

in inputcostsShortag

e of

skilledpeople

Competition from

unorgani

zedplayersPrice

Sensitivity

Investm

ent

costs

and

Paybackperiod

Customers need differsrestricting standardized offerings

Rentals, advertizing & promotion

Lack of integrated strategyand motivation

Lag in brand creation &yalty with long gestation period

Demanding more value withprice consciousness

Access to target market

On-the-spot decisions

Key Factors affecting Lakme Brand in Mumbai


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0

50

100

150

200

250

0

5

10

15

20

25

30

35

0

5

10

15

20

0

10

20

30

40

50

0

1000

2000

3000

4000

5000

0

1

2

3

4

Territory rights Given by 60% of Franchisor

Performance Guarantees NOT given by 70% of Franchisor

Operating Manuals Given by 70% of Franchisor

Franchise training options Mumbai, New Delhi, Centralized, I

Field Assistance Given by 90% of Franchisors

Head Office assistance Given by 90% of Franchisors

Lakme Vs Competition in Franchising

Analysis of

27 leading

franchisors

of beauty

care Salon

Services


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Big ticket Idea Visual Merchandising

Lakme Beauty Wall at salons

The Lakme products visual merchandising The SKUs should be made available in small packages to

increase the trials


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Big ticket Ideas

Happy hours for Housewives

Franchise to local players and after that training the staff there inlakme academy

Franchise related financial accountability issues ERP system

implementationOnline booking from the salons so that the data is sent to the datacenter (the main salon in the city ) the moment a customer payshis/her bill

Better performing franchises should be given incentives

A customer availing 500 Rs. Worth of services should be givendiscounts on lakme prouct purchses


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Market Drivers

Implementation Plan

Build core competencies

Grow distribution network

Identify additional product attributes Identify promotion channels

Customer Management

Classify salons into different prioritygroups based on sales potential

Up-sell and Cross-sell/ Convert

Increase Brand visibility

Brand Lakme Salon as a completerange of salon solutions

Leverage on the product range

F hi M d l


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Convertingexisting localsalons

Opening newcompany owned

Salons

There are currently 122 LakmeSalons in India which includes 10

Lakme studios

Jawed Habib Hair & Beauty

Salon operates 322 salons acrossIndia which is 3 times of Lakme

Lakme needs to concentrate on

opening more studios in tier 1

cities and salons in tier 2 cities

Franchise Model

Franchise Selection Criteria


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Past experience (>3 years)

Type of business associated with (beauty, wellness,

grooming, cosmetics) Location (catchment area, sync with brand imagery,

cost-benefit)

SelectionCriteria

Financial strength

Investment capacity

Reputation

Attitude (service & growth oriented)

EssentialCriteria

Certification levels Number of professionals

Size of the store (600sq ft+)

Services

Equipments

SituationalCriteria

Franchise Selection Criteria


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Phase-1

(Inception)

Objective:Awareness &

trial generation

Spontaneous

awareness Number of

activations/hoardings

Quality ofdisplays

Phase-2

(Verve)

Objective:Acceptance

Metrics

Revenue

Number ofcustomers

Number ofcomplaints

Speed ofhandling

complaints

Phase-3(Permanence)

Objective:Retention &

customeracquisition

through theretained base

Metrics

Number ofretained

customers

Number oflapsers

Evaluation of Franchise

Lakme Elite Program


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Lakme Salon

Average Yrs of Experience

4 6 years

Unorganized Salon owners

Average existence

6 8 years

Need for growth

Need for new clientele

Need for specialty training

160000 unorganized salons

Penetrated all tier locations

Have a loyal set of consumers

Need for career path

Need for personal growth

Need for Autonomy

38000 beauticians every year

80% of states with beauty coursesEmployees come from

lower tier cities

Lakme Elite

Program

Operational Model 1 Operational M

Access to professional products

Niche and Specialty training

Marketing efforts

In Store Branding

Access to personnel

Access to CRMAccess to upgradation to Studio/Salon

Invite and engage Salon owners to

get endorsed by the Lakme Elite Brand

Invite and engage Lakme employees to

be entrepreneurs under the Lakme Elite BrandAccess after 5 years of service

Incentive to reduce attrition

Continuity in career path

Reduction in training costs

Brand ambassadors

Ease in increase of footprint

Lakme Elite Program

M S i


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Pickup folks

from tier 2/3

colleges who

teach fashion

and beauty

stuff1 month

training

program

regarding

soft skills,

quality

standards

etc

Empower

them with

more training

and courses

based on

their interest

Sign them up

with

management

education

courses,

provide

percentage

of profits

based on thenumber and

the quality of

the clients

Given them

entrepreneuri

al

opportunity

First

Year

Second

Year

Fourth

Year

Fifth

Year

Five Year Plan

Manpower Sourcing

Ser ice Mi Prod ct


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All basic & a few specialized services

Store-services & limited home-services(daytime, fewer customized services)

A balanced mix of trendy & classicofferings

Service Mix: Product

Service Mix

S i Mi Pl & P i


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A Platinum store can be COCO/FOFO, rest

FOFO

Location Analysis Criteria: Catchment Area,

Sync with brand imagery & Cost-Benefit

Criteria Platinum Silver

Number of trainees &

junior stylists8 6

Advanced

stylists/beauticians6 3

Experienced/senior

stylist/beauticians

2 1

Manager 1 1

Areas (sq ft) 1000+ 600-

700

Services (in addition to

all basic services) 8+


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Phase-1 (Inception)

Objective: Awareness& trial generation

Ms. Confidence

campaign, Campus &Mall activation

Local celebrity store-visit

OOH hoardings,Pamphlets/Coupons

Phase-2 (Verve)

Objective: Acceptance

Testimonials on OOH

hoardings, in-storedisplay & magazinescommunicatingexpertise & serviceefficiency to buildconfidence

PR activities

Phase-3(Permanence)

Objective: Retention &customer acquisition

through the retainedbase

Loyalty cards(confidence card)

Testimonials

Service Mix: Promotions

Service Mix

Implementation Plan

S i Mi P


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Guideline/Service manuals

Clearly laid down guidelines for franchise to follow

Employee

Database of employees (Lakme Elite network) across all geographies

Rotation Between some-services & store services

To ensure bond with the organization, and not personal bonds

Work hours

2 shifts : 10 am 6 pm & 12 noon 8 pm

Flexibility for employees

Leveraging peak afternoon hours

Customer relationship management

Loyalty cards

Permission marketing

Service Mix

Implementation PlanService Mix: Process

Service Mix: People as Confidence Agents


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StaffProfile

Current talent pool in the town

New recruit through Lakme Academy

Training

3-4 workshops in town for entry level-trainees & professionals,organized every 3 months

Higher level professionals to visit for further training

Compensa-tion

At par with the organized competitors

Additional motivation due to flexibility (working hours) & job securityowing to the Lakme Elite network of stores across geographies

Service Mix

Service Mix: People as Confidence Agents

Branding: Other Opportunities


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Bundled Product: HUL products under other brands shall be bundled

with Lakme products which have complimentary usage and promote

salons through offers Product Example: Moisturizer with soaps

Packaging Theme: Indian Actress with Western Looks

Tagline: Lakme Celebrating the Gorgeous Indian Women

Coupons to visit Lakme Salon: We care for You HUL is trying hard to promote sustainability and have developed

system to convert plastic into fuel oil. Collection of containers in lieu

of coupons, as loyalty program for customers

Bundledproductsto attractcustomers

Referral schemesto bring new

customers andretain old

Different Strategies forDifferent Seasons to

sustain equal employeecontribution throughout

year

A properstrategy to

locate salons inareas with

maximum reach




39/43






year

A properstrategy to


maximum reach

Brand Referral Schemes and Brand Recalls- A focus on the

importance of Word of Mouth in Beauty services; reaching towards

lower strata in the Pyramid, by bundling other Unilever brands withLakme Products and spreading awareness about Salon

Referral and Feedback System:

Activate website login to have beauty tips

New login only by: Invitation from existing user

By visiting salon

Customer Engagement by offering benefits to star participants


B di O h O i i


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Salons are used mostly during marriages which under Hindu

culture do not occur all the year around

Generally marriage months do not coincide with rainy seasons, andautumn festival season

We will have to identify lean periods where most of the offers shall

concentrate, rest of the times there shall be a premium to the

services This will ensure utilization of employee contribution throughout

the year






year

A properstrategy to


maximum reach


Year Planner for Offers 2013


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End of Wedding

Season for the Year

Rainy Season/ Autumn Festival

Seasonal Offers

20132013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013

Major SummerWeddingSeason

24th April 4th June

Marriage

Season Start

1/16/13

Summer OffersOffers for:Valentines DayWomens DayCollege FestsLohri

SpecialBridalMake-up; afocus onhot andhumidIndianSummers

Bridal Make-up Offers

Winter

Premium on:SteamtreatmentsMoisturizingtreatmentsHeena w/o coldeffect

Advertisementson:Harmful effectsof rain on hair

Special skinTreatment inSalon

Offers DuringFestiveSeason:NavratriDussehraDeepawali

Year Planner for Offers 2013

Financials (Staff Requirement & Investments)


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Financial Summary

Financials (Staff Requirement & Investments)

Radiance Silver Radiance Platinum

Space Required (in sq. ft) 600 1000

Rent per sq. ft per month 40 40

Capital Investments

Machinery and Equipments 8,00,000 12,00,000

Project Cost (Renovation, Furniture, Fixtures and Fittings)

(Rs. 800 per square feet)4,80,000 8,00,000

Licensing Fees 3,00,000 5,00,000

Working capital 3,00,000 3,00,000

Total (in Rs.) 18,80,000 28,00,000

INVESTMENTS

S.No Position Salary Range

Hired at

Amount (in Rs.)

Radiance

Silver Nos

Total

Amount

Radiance

Platinum Nos

Total

Amount

1 Manager 25000 - 10000 20000 1 20000 1 20000

2 Experienced/senior stylist/beauticians 20000 - 15000 20000 1 20000 2 40000

3 Advanced stylists/beauticians 15000 - 10000 15000 3 45000 5 75000

4 Number of trainees & junior stylists 5000 - 4000 5000 6 30000 8 40000

11 115000 16 175000TOTAL

Details of Staff Required

Financials Summary: Lakme Elite


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Financials Summary: Lakme Elite

Year Cash Inflow Cash Outflow Net Cashflow

Year on Year

Reciepts

Year 0 1880000 -1880000

Year 1 6,57,948 657948 657948

Year 2 8,05,059 57685 747374 1405322

Year 3 10,34,587 63813 970774 2376096

Year 4 11,98,589 70608 1127981 3504077

Year 5 14,97,748 78145 1419603 4923680

TOTAL 51,93,932 2150251 3043680

NPV Rs. 7,19,641.08

IRR 37%

Estimated IRR in 5 Years Positive NPV and IRR

Please

refer to

f inancials

attached

for more

detai ls.

2011 2012 2013 2014 2015 IRR NPV

Net Sales from 1 Lakme Elite Silver 4220040 4666044 5160248 5708013 631531640%

822552

Net Sales from 1 Lakme Elite Platinum 6471240 7148364 7897700 8727145 9645486 37% 995936

Average Revenue for Lakme from Royalty 48110760 62025642 77694795 98159079 127686414

Average Revenue from Franchises 320738400 413504280 457028208 577406347 638432072

Summary

lakme salon to be printed version1 (1)

Documents