Executive Summary

This is a preliminary outline report on a A Cut-Above hairdressing salon is being planned to be opened in South-East London. In this report, the different areas of marketing that have discussed are all extremely important and relevant to set up the hairdressing salon. The areas are the external analysis, mainly the PEST analysis, market segmentation, role of marketing communications, pricing strategies and importance of customer service. The external analysis gives you an insight of the overall macro-environmental factors- legal (political), economical, socio-cultural and technological that the salon needs to take into consideration. The market segmentation allows you to identify and differentiate you customers into different groups based on demographic segmentation and psychographic segmentation. The role of marketing communication focuses on the different mediums which can be used by the owners to make the people of South-East London aware of their salon, in other words promotion their hair salon. Pricing strategies mainly deal with the different pricing techniques that the salon will implement to ensure profitability as well as a greater market share. The strategies based on which the strategies will be determined are price discrimination, penetrating pricing and cost-plus pricing. The last part of the report highlight the importance of the customer service in the hairdressing business and what the owners should do to ensure high quality customer services.

The hairdressing business is a competitive one since it falls under a perfect competition market. A perfect competition market is where you produce or provide a service that is homogeneous and there are many buyers and sellers. At the same time, there are no barriers to entry and exit. To ensure success, a strong business plan and a good strategy is required along with the will and determination of becoming successful by providing the best services. The A Cut-Above hairdressing salon is planning to be set up at South-East London. This part truly highlights the fact of London being a multicultural city since you witness a wide range of people from different cultures, society and religion. The income distribution is quite uneven since you have people from both ends (rich and poor) residing within that locality. There are quite a few large shopping malls and many well-established town centres (Think London, 2009). External Analysis (PEST) The area for setting up a hair-dressing salon is ideal since you have a mixed crowd who would be interested in getting their hair done in a fashionable style while having a crowd who would just prefer to go with the simple and basic haircut. However, before setting up, a macroenvironmental analysis also known as an external analysis should be carried out. This is known as the PEST analysis- Political, Economical, Socio-cultural and Technological factors (Marketing Teacher Ltd, 2009). For the hair salon business, instead of the political aspect, the legal aspects are taken into more consideration. United Kingdom is a country that believes in discipline, rules and regulations and abiding them are obligatory for the general public as well as different business and corporate. Following the adequate health and safety measures are extremely important for a hair salon business. This is because as a hair dresser you are given the responsibility of styling the hair of another individual, so you have to be extremely clean and hygiene- the premises, equipments and even the hands, clothes, overalls (if worn) should be dirt free and hygiene. If not, then legal action can be taken. Thus, A Cut-Above hairdressing salon must ensure that they have a proper and standard set of heath and safety measures (Tameside, 2008). Another legal aspect that the owners should take into consideration is the Employment Law that mainly deals around paying a minimum wage rate or above to the employees. Offering someone a job on a salary which is lower than the minimum wage rate is regarded as a criminal offence. Along with the
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implementation of the national minimum wage, the Employment Law deals with the working hours which should not exceed 48 hours and breaks and holidays should be provided accordingly (Crown, 2008). When considering the economical environment, the first thing that comes to our mind is the current global recession and credit crunch that the whole world is a prey off. The global recession has affected business and economies all over the world. Global Recession reduces the level of investments within the country bringing about rise in both inflation and unemployment. At the same time it increases the uncertainty that revolves around newly set up businesses and even old ones. Therefore, when making decisions the owners of A Cut-Above hairdressing salon should take into consideration the effects of the global recession. Due to the current economic conditions, consumer confidence is also deteriorating. This will affect the hairdressing salon company adversely as it may fail to receive the support that it had expected from the consumers when plans were being made (Economic News, 2009). A Cut-Above hair salon has been decided to be set up at South-East London. This is the part of London which reflects a diverse community and culture. As a result, the lifestyle and fashion sense of each individual will be varied and therefore the segmentation of the market has to be done with utmost care so profits are able to be maximized and success can reach the skies. Apart from that, other socio-cultural factors that might affect the salon are the levels of income in South-East London because based on the level of income, a reasonable price on hair cuts can be determined which will help them attain a larger market share along with maximum profits. Technology is also important in the hairdressing business since technology helps stylists to come up with new and innovative hairstyles via the internet. At the same time, advancement in technology allows the discovery of different hair-related equipments that not only help you get the look you want but at the same time is ideal for the hair. This can be done through research and development. Market Segmentation Once the external analysis is carried out, another important and crucial decision that revolves around market segmentation. Basically the decision that needs to be taken is whether the A Cut3

Above hairdressing salon will cater for men, women or both sexes. In this case, the owners have decided that the salon will be unisex; however a further segmentation will be done to ensure highest return for marketing and sales expenditures. Keeping the geographical location in mind, the market segmentation should be done. The initial market segmentation was done under the basis of gender, which is general for a hairdressing salon. In this business, catering for both genders is ideal since it gives you the opportunity to grasp a large proportion of the population. However, you need to have a large and efficient workforce to fulfill and satisfy the customers. From segmenting on the basis of gender, A CutAbove hairdressing salon can further segment their business on the basis of age. This means apart from cutting adults hair; they can also cut the hair of young children between the ages of 6-12. Also apart from segmenting it on the basis of children and adult, they can add another group called the retired or senior citizens who fall between the age group of 60 and above. Segmenting the business on the basis of age and gender refers to demographic segmentation (Kotler, 2003, p288). Another form of effective segmentation A Cut-Above hairdressing salon can implement to ensure overall success is via psychographic segmentation. This revolves segmenting the market on the basis of lifestyle and personality (Kotler, 2003, p288, p291). Since different people from various walks of life have their different lifestyle patterns, while having different behavioral norms and attitude towards life. This tends to influence the type of hair-style they prefer when they go for a cut. So based on this, the owners can set up a meeting for 10-15 minutes, prior to the cut to get to up-close and personal with their customer so that the stylist can have a rough idea on the customers interest, hobbies and personality. After this, the stylist and customer can draft out a style that will suit and blend with their looks, attitude, personality and lifestyle and highlight what the customers traits. However, sometimes customer might not be comfortable talking to the stylist; therefore the owners can have another option to make the segmentation more effective. Without having any kind of prior discussion, they can just use their style sense to cut the customers hair or can ask the customer what kind of hairstyle he would like and follow his guidance. Segmentation can also be done on the type of stylist you want your hair to be cut by ranging from a professional all the way to an amateur.
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Segmentation on the basis of personality and lifestyle can also be implemented by having computer generated software. Basically this software will upload a picture of the customer and then the customer can experiment different haircuts before finalising one. Once a hair-cut has been finalised, the stylist will style him/her in that particular hair style. The hair style basically reflects his lifestyle and personality. The purpose of this software is to give customers a sneak peek at how they would look in different hairstyles assisting them into coming to a final decision. Segmenting their hairdressing salon on the basis of gender, age and lifestyle and personality gives A Cut-Above hairdressing salon a wide range of options to put forward in front of their customers. Segmenting the market effectively will not only increase the market share. As a hairdressing salon, because you are being able to satisfy the needs, want and preference of the customer, the customer is bound to knock on your door. Segmentation also allows you to earn greater return as well as be profitable. This is because they can charge both reasonable average prices for basic cuts and a higher price for more stylish and trendy cuts via a professional stylist (Kotler, 2003, p286). Marketing Communications After the segmentation is complete, the owners should put their focus on the different marketing techniques they will use to make the hairdressing salon successful. Marketing communication tools mainly refer to the different instruments that a business uses to make the business successful in the future. Marketing communications refer to messages and related media used to communicate with a market. Promotion which is last element of the four elements of the marketing mix can be termed as marketing communication. It is the element that actually becomes the source of introducing the product/service to the customer and attracting him/her towards it so that the customer is motivated to know about it even more. The role of marketing communication is very important as it is the basic source that informs the consumer about the existence of the product or service on a general basis. The different types of marketing communicating tools that exist are different form of advertisements, branding, selling, sales promotion, word of mouth, direct marketing and public
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relations amongst many (12Manage, 2009). Since this business is being set up by two friends, it is quite evident that the amount of capital invested in the business will be from personal funds. As a result, their finances will be minimal. Keeping this in mind, they need to select the right kind of marketing communication tools, which will be effective and at the same time lower their cost. In order to inform and make the people of South-East London aware about A Cut-Above hairdressing salon, the type of advertisement that can be done is via leaflets. By distributing attractive leaflets, the salon can highlight its location along with the wide range of facilities it provides to their customer along with the prices. Printing leaflets is reasonably cheap which helps the owners stay within the budget. Along with leaflets, the salon can place an attractive advertisement in the newspaper that will catch the eye of their target audience. In the advertisement they can briefly explain the wide range of services they provide and talk about their expertise and experience in customer service. Also by providing the best customer service and pleasing the customers, the owners can promote their salon. This is done by word of mouth. Basically, this does not cost anything. If someone is satisfied with their hair cut and the service they received then they can recommend that salon to their relatives, friends and closed ones. Another very basic and general marketing communication tool is sales promotion. By providing discounts, vouchers, premiums, free trials amongst many A Cut-Above hairdressing salon can motivate and influence customer to come to the salon and make the most of the facilities and services provided by the salon (Kotler, 2003, p580). In the future, once the salon is set up properly, the owners can implement other means of promotion such as going online and having a website with the complete company profile of A Cut-Above hairdressing salon and also have other effecting means of promotions such as a televised advertisements as well as billboards.

Pricing Strategy One of the major aspects that need to be taken into consideration properly by the owners of A Cut-Above hairdressing salon is regarding the pricing of their services. Pricing is one of the other major elements of the marketing mix along with promotions. This basically revolved around putting a price tag around the different services provided by the salon. Price is the only revenue generating element amongst the four elements of the marketing mix and the only source of being profitable since the rest of the elements are cost centres. The strategy of price discrimination is used when it comes to placing a price for hair-cuts given to adults, children and the senior citizens. Since a part of the market has been segmented on the basis of age, you are likely to charge three different prices for the three different groups (Kotler, 2003, p 491-492). Now if the adults ask for a basic and simple hair cut, then the pricing strategy that can be implemented is penetration pricing. Basically this strategy involves deliberately charging a lower price to attract new customers and gain a wider market share. Since A Cut-Above hairdressing salon is a new business, by charging a reasonably low price people will be easily attracted to their services and hence will come to their salon. However, this pricing strategy does not allow the business to make a profit since its main aim to increase market share. In order to ensure that they make profits, the owners of A Cut-Above hairdressing salon can apply the cost-plus pricing strategy. Since they are having an opportunity to sit with a stylist and determine a look while at the same time can have a sneak preview on how they look with a new hairstyle the owners can add up an addition amount (the profit margin) to the cost of producing that service. By adopting this technique, not only are they able to absorb and cover all their cost of production but at the same time is able to earn a reasonable profit which can be used by the business in the future. Importance of Customer Service A Cut-Above is a hairdressing salon and hence customer service is a really important and vital factor for them. Customer service simply refers to the series of activities that is performed by an
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individual or even an automated machine to increase the level of customer satisfaction and expectations. Good customer service is the lifeblood of any business and it contributes to the profit margin significantly (About, 2009) Since a hairdressing salon is a service orientated business, providing the finest form of customer service is mandatory to ensure both success and customer loyalty. Customer loyalty helps you satisfy your customers and retain them for the future. At the same time providing high quality and good customer service, will send away the customers happy and they will think about the salon positively and will give it a positive feedback. This positive feedback will ensure and attract new customers, increasing your customer based and market share at the same time. This will also allow the business to earn a great return on the business. One of the major requirements needed to provide the quality customer service is a good salesperson. In this case we are talking about hairstylist. Since the essence of good customer service is forming relationship with customer, the stylist must be good at what he does and at the same time be professional and friendly so that s/he can build up a good rapport with the customer, so the customer comes back in the future. Hence, in can be seen that one of the major importance of customer services is maintaining customer loyalty and customer relationship. Customer service is also very important because it helps you to create a guideline on the types of employees you want for you company. Since hairdressing salons are highly based on providing the best customer service, the owners by keeping in mind the essence and importance of customer service can decide on the type of people they want to recruit as their stylist and customer sales representatives, since it has been mentioned earlier that in order to provide good customer service you need good salesperson. Several marketing areas have been discussed in this preliminary report. This report is highly important for A Cut-Above hairdressing salon since it has all the information regarding the marketing strategies that the owners must take into consideration. By following the pricing and promotional strategies mentioned earlier, along with earning profits they will also be able to have low costs. Keeping the external factors in mind, they can make wise decisions regarding the present and future of their business and can further segment their market. An effective market
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segmentation will ensure success and to a certain extent uniqueness since they will be the only one for the time being implementing a software for styling the hair. And finally by understanding the importance of customer service, they will be able select employees who have the right set of customer service skills and be aware of where their focus should be during training. Going by this report, setting up A Cut-Above hairdressing salon will not be difficult and success will be guaranteed.

Bibliography

Kotler, P 2003, Marketing Management, 11th Edition, Pearson Education, Upper Saddle Riverm NJ. Think London, South-East London, viewed on 1 April 2009, <http://www.thinklondon.com/business_facts/london_by_area/south.html>. Marketing Teacher Ltd, PEST Analysis, viewed on 1 April 2009 <http://www.marketingteacher.com/Lessons/lesson_PEST.htm>. Tameside, Hairdressers Information, viewed on 2 April 2009, <http://www.tameside.gov.uk/healthsafety/hairdressers/index.htm>. Crown, Employment Terms and Conditions, viewed on 2 April 2009, <http://www.direct.gov.uk/en/Employment/Employees/index.htm>. 12manage- The Executive Fast Track, Marketing Mix (4Ps), viewed on 4 April 2009, <http://www.12manage.com/methods_marketing_mix.html>. Economic News, Global Recession, viewed on 2 April 2009 <http://www.economicnews.ca/cepnews/wire/article/133502>. About, 8 Rules for Good Customer Service, viewed on 4 April 2009 <http://sbinfocanada.about.com/od/customerservice/a/custservrules.htm>.

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