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SKS 5001-8

Week 3 Assignment XYZ Nail Spa, Inc.

LOC X. PHAN
Course Instructor: Milton Kabia, PhD
3/19/2017
Introduction

XYZ nail spa is a professional service nail salon located in the San Francisco Bay Area.

The salon opened for business in September 2016. It has been six months since the spa opened

and revenue has not climbed to at least a break-even point. A current situation analysis will show

where or what areas the nail salon should focus on to generate more sales revenue. The spa and

salon market is very dynamic with as many salons opening as salons closing. Currently, the nail

salon business is experiencing some growth stagnations. As demonstrated in Figure 1, revenue

growth between years 2014 and 2015 is $8.5B to $9.0B annually. Figure 1.

Figure 2. Sales Revenue for Nail Spa Industry

It is evident then that the customer segmentation is changing as well. Since from 2014 to

2015, the total US nail salon market stayed flat, a current situation analysis will support a change

in the positioning of the salon might be necessary. Repositioning the nail spa in the market will

require changing the marketing plan and new tactics for executing the program.
Sales Revenue & Analysis of the Problems

The sales revenue for XYZ nail spa is improving very slowly. Since opening, there has

been just enough funds from sales to cover the nail technician salaries. The principles are not

taking a salary at this time. The other expenses such as rent and utilities are coming from the

reserve account. The nail spa and salon business are seasonal in that during the fall, and the

winter months; it is almost dead of activities. Thus, business is expected to be slow during these

times. Before starting out there was fear and hope that grand opening would not be during these

months, but as Murphy would have it, the grand opening was in September. One might say that

there was the holiday season which would have been helpful in generating some revenue before

everything becomes frozen from the cold. It did not help much, only because XYZ nail spa was

so new on the block that there was not enough time to build up a clientele.

Spring is coming, and business is picking up slowly. However, there is one dilemma, and

that is the timing of when to invest in adding new nail technicians to the salon. There are two

technicians plus one manager working on most days currently. It means that the maximum

capacity of the spa is three clients at any one time. It usually takes one hour per client. Thus,

often potential clients will not sit and wait for their turn. It means that if the timing is wrong,

XYZ nail spa will lose these potential clients.

Clearly then, XYZ nail spa is not able to generate revenue because (1) potential clients

are not making it into the salon, once they are in the salon, if the timing is bad, (2) they leave

because there are not enough available technicians to work on the potential new clients. (3) Often

the nail technicians are sitting around doing nothing because there are no customers.
Customer Segmentation

The salon and spa business customer profile are complicated because of the potential for

multilevel segmentation. That is, a client might travel miles out of his or her way just to see that

favorite aesthetician, nail technician or hairdresser. Almost no one in the world has exactly the

same taste for what looks good; therefore, it is difficult to segment all the customers in this

market clearly. That is understandable because personal care is very personal. Thus, to build up

a large clientele base is hard and takes a long time. Once done, these clients are usually loyal

and would continue the relationship for many years. For a salon that already has a large

customer base firmly established, old retail rules such as location, location, location is no

longer applicable. To maintain sustainability, all that a salon needs to do is to continue the same

level of expected services. It goes without saying that to offer excellent customer service does

not mean doing everything the customer wants, rather it is about being helpful to the client

through being perceptive and paying attention to be there in a supporting role.

Customers of nail spa and salons might be segmented using criteria such as trendy

versus conservative and pampering services versus cost-consciousness. XYZ nail spa

priced their services competitive with the other the other nail spas located nearby. The clients of

XYZ nail spa are fashionable and prefers to be pampered over being an old-fashion frugal penny

pincher. Since business is slow for XYZ nail spa, they have the time to pamper their clients.

The potential customers exist, and that they are readily convertible to regular clients.
Competitive Analysis

The Competitive Matrix Table below compares XZY nail spa against the (1) the top 5 nail

spas in the same city (Yelp!, 2017) (2) and the top 5 nail spas in the greater community area

(Yelp!, 2017).

The categories of comparison were:

1. The Yelp! 5* rating


2. The service pricing
3. On-line appointment capability
4. Website
5. Social media presence
6. A superstar nail technician

C O MP E T I T I V E M ATR I X
Top 5 in Campbell CA Top 5 in SF Bay Area
Categories/
XYZ TV FS CN SS CS TT1 P10 SB TT2 DN
Names
Yelp! Top 5 7 1 2 3 4 5 1 2 3 4 5
Yelp! 5* Rating 4.0 4.5 4.5 4.5 5 5 5 5 5 4.5 5
$$$
Service
$$ $$ $$ $$ $$ $$ $$ $$ $$ $$
Pricing
$ $ $
On-Line Appt. N N Y N Y Y Y Y Y Y Y
Web Site Y Y N N Y N Y Y Y Y Y
Social Media N N N N N N Y Y Y Y Y
Super NailTech N Y Y Y N Y Y Y Y Y Y

Figure 2 Map of XYZ Nail Spa & Other Nail Spa Competitors
The marketing mix for businesses where service is the product, there are seven elements

(7ps). Figure 4 shows the seven elements of the services business marketing mix.

Figure 3 the Services Business Marketing Mix (7P's)

Analysis of the competitive matrix table using the 7ps shows that XYZ nail spa is lacking in

three out of the seven elements. Two of the three elements are from the service marketing mix,

and one of the three elements is the product marketing mix. These are people and process

for one, and promotions for the other, respectively. Table 1 shows the results of the marketing

mix analysis using the data supplied by the competitive matrix table.

Table 1 Competitive Matrix and Marketing Mix Analysis

M A R K E T I N G M I X A N A LYS I S
Categories/ Areas of
XYZ
Names Ineffectiveness
Yelp! 5* Rating 4.0 Process
On-Line Appt. N Process
Social Media N Promotions
Super NailTech N People The People.

In light of the people part of the mix, XYZ nail spa is missing a super nail technician.

Many spa owners will overlook this area of deficiency, or they will deny that it even existed.

The fact that clients in their online reviews would discuss over and over how much they prefer

one nail techs technique over another should be enough for the owners to sit-up and take notice.

XYZ nail spa needs a super tech to keep the customers coming back time after time. XYZ nail
spa techs have the potential to develop into super techs. They are not super techs yet and they

will be.

The Process.

This area has two parts to it. One part is to use the technicians available times more

efficiently. Clients come into the spa when at the wrong time because they are unable to see

when there is availability, so they just come hoping to get lucky. Luck is not a good thing to rely

on when it comes to running a business. To have available, an online calendar for salon where

clients find an open time slot that they could select and book or cancel an appointment to come

in to have their nails done should be a good solution for the current problem of overlapping.

XYZ nail spa has the potential score a 5* on the Yelp! Review scale, but they have not

been able to do so because of the unethical practices of Yelp!. They deleted many 5* reviews

legitimately given to XYZ nail spa by clients citing that they felt or their automatic software that

they those reviews were not legitimate. Nevertheless, once XYZ nail spa fine tunes the

operational processes, Yelp!s unethical practices will be ineffective.

The Promotions.

The people who are hard-core nail enthusiasts most likely spends much of their times

doing research about nails. XYZ nail spa might learn from these people as well as be able to

convert this selective group of customers by participating in social media having to do with nail

topics. This group might be small, but they have a large following because they know so much

and are well respected.

Conclusions
The present situation analysis and analysis involving the competitive matrix together with

the marketing mix for services related product, the 7ps brought to light many revealing issues.

These problems are: people, process and promotions. Maybe these are the issues

negatively affecting the revenue ramp for XYZ nail spa. Nevertheless, implementations to fix

those problems should yield answers soon, and hopefully, the revenue will begin to head upward.

References

Bhasin, H. (2016, December 4). Service Marketing Mix - 7Ps of marketing mix. Retrieved from

http://www.marketing91.com/service-marketing-mix/

Drummy, C. (2015). Industry Outlook. Retrieved from http://files.nailsmag.com/Feature-

Articles-in-PDF/NABB2015-16stats.pdf

Keating, M. (2017, January 22). Tips for Improving Your Yelp Ratings - business.com.

Retrieved from https://www.business.com/articles/falling-amongst-the-stars-tips-for-

improving-your-yelp-ratings/

Patrick, B. (2017). 4 Ways to Increase Your Positive Yelp Reviews | AllBusiness.com. Retrieved

from https://www.allbusiness.com/4-ways-increase-positive-yelp-reviews-11679-1.html

Yelp!. (2017). The Best 10 Nail Salons in Campbell, CA. Retrieved from

https://www.yelp.com/search?cflt=othersalons&find_loc=Campbell%2C+CA

Yelp!. (2017). The Best 10 Nail Salons in San Francisco Bay Area, CA. Retrieved from

https://www.yelp.com/search?cflt=othersalons&find_loc=San+Francisco+Bay+Area

%2C+CA

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