New Business Proposal: Ivy Hair Salon - Iloka Benneth Chiemelie, Kueh Yi Kia, Teng King Wee
http://ilokabenneth.blogspot.com/2013/11/new-business-proposal-ivy-hair-salon.html
0.1 ABSTRACT
Purpose – To develop a business proposal based on results found with the primary research done to identify the problems faced by Ivy hair salon.
Design / Methodology / Approach – Primary research – based on questionnaire distribution, data collection and analysis. Secondary research - from research papers which are related to the main objective of this research paper.
Findings – It was found that the two major problems faced by Ivy hair salon are lack of quality service and differentiation. These problems were found to negatively affect the company’s growth, customer attraction and retention and competitiveness in the market.
Research Limitations/Implications – Correspondent’s unreliability and unwillingness, times and cost management, secondary research reliability and transportation were the main limitations to this research paper. Thus, recommendations on how to cub this limitations where developed because it has a negative impact on the overall findings in this research.
Originality/Value – The primary research was asked directly to the loyal customers and the staffs, therefore they are deemed to be original. Nevertheless, data from the secondary research were obtained from journals and the credibility as well as reliability of these journals is not certain since they are performed by other researchers rather than the researchers that developed this research paper. Thus the data and findings from the secondary research are deemed to be voidable in cases where they apply, otherwise stated.
Keywords – Ivy hair salon, situational analysis, environmental analysis, primary research, questionnaire, likert’s scale.
Paper type – Research paper.
1.0 INTRODUCTION
Researchers have done less about SME, both in product improvement strategy, quality management and branding. Much research has focused on big companies like Coca Cola, Nike, and Philips, Shell, Unilever, or other big companies across the world. This totally neglects the fact that 95 percent of all businesses belong to the small medium enterprises (Storey, 1994).
The first clear and generally acceptable definition of an SME was defined by The Bolton Report (Bolton, 1971). Wynarcyk et al (1993) and Storey (1994) offered criticism on Bolton’s idea. Nevertheless, the European union offers the best and current definition of an SME as belonging to the category of middle sized, small and micro companies, with employees between 10 to 250 (EU, 2005). Have understood what and SME is, we then point our focus towards identifying the main issue of this research paper as to developing a business proposal to solve the problems of poor quality hair style and market differentiation in Ivy hair salon.
This research paper comprises of three parts. The first part is the literature review details analysis of the company background, and business problem. The second part is the methodology which explains the means of data collection, justification of selected data, limitation, critical evaluation and suggestion to minimize any problem. Finally, the conclusion part summarizes the arguments based on data and information contained in the research.
The objectives of this proposal are basically to identify the main causes of low quality service and differentiation in Ivy hair salon. Research has shown that they are main reasons for loss in company, and failure in maintaining customer loyalty stands out as the most important. The issue of failure in customer loyalty has its route mainly from customers not being satisfied with what they are offers. Another objective of this research proposal is to recommend solutions to this problem through understanding what customers want more and developing strategies to meet this requirements.
To meet these objectives, a primary research was undertaken using questionnaire to basically know – what customers want, how they want it, whether they are satisfied with what they are offered or not (if not satisfied why?), and their recommendations on how to resolve the problem. The primary research was analyzed using SPSS.
2.0 LITERATURE
2.1 COMPANY BACKGROUND
Ivy Hair Salon was founded by Ivy Chan Mee of Malaysia in 2003, three years after graduating from Massey University in New Zealand with degree in hair styling. The salon initially started with a 200,000 Malaysian Ringgit loan from the bank. As a sole proprietorship business, the management system is well coordinated given the experiences of the founder and CEO Ivy Chan Mee. “Experience the Ivy Hair Salon and we promise you will come back”. This is the mission Ivy hair salon created to meet their target unisex hair care market. Ivy hair salon is modern, light; friendly and always offers complimentary drinks to their customers. It offers the latest work station for customer’s comfort as well as full range of L’Oreal products.
Ivy offers an extensive range of services (Haksaver et al., 2000), this includes anything to do with hair care and specialized hair services for special occasions, which includes:
Bridal Hair – this is a special package for brides during their wedding days, it includes hair style, costuming and make ups, manicure and pedicure.
Wedding Packages – this includes retail stockiest of the full range of L’Oreal products for body washing, facial cleaning and body toning to make the day more perfect.
Formal occasion to a party night – this includes a complete hair makeover with help from one of the stylist. All you need to do is to tell them where you want to go, and how you want to look then leave the rest for them.
Occupying a double storey shop lot of 4000sq ft big car park beside the shop, Ivy is situated at choice 101 commercial center, making it easily accessible and one of the biggest hair salon in Kuching. Employing a total of 60 workers, Ivy salon mainly target customers in the hair styling, manicure, pedicure and facial treatment market. Through a price skimming strategy, they have been able to penetrate the market at a fast rate, and on the positive side, the recognition offered to Ivy hair salon by L’Oreal Paris helps the salon in position its brand as a quality symbol in their customers mind. The salon plans to expand more within Kuching and other out sketches of Kuching and parts of Malaysian within 2012. This expansion will further be implemented with company profit and bank loans.
3.0 COMPANY ANALYSIS
3.1 COMPANY GOAL
The main company goal is to always respond effectively and efficiently to customer needs (Potter-Brotman, 1994). In modern day market, efficient and effective management system determines how far and how well an organization can go and that is why time management is very important in maintaining loyalty between customers and company. Ivy hair salon sees the need to not just satisfy customers, but delight them by offering unique and valuable products and service at a lower cost than their competitors.
3.2 TARGET MARKET
Planning and flexibility are likely the two most important words in a successful business (White, 1999). Ivy hair salon primarily targets customers with hair styling, manicure, pedicure and facial treatment market.
3.3 CULTURE
Many authors have defined culture as something related to people, unique quality and organization style ( Kilman et al, 1985), or the way we do thing within a given environment (Deal and Kennedy, 1982). Ivy’s culture is built on a “just do it now approach”. This means they always desire to attend to every single customer immediately without having them to wait, this in turn reduces inconveniences that arises from ineffective time management.
4.0 BUSINESS ANALYSIS
4.1 CUSTOMERS
Ivy hair salon has a customer group of mainly teenagers, with an average in the region of 15 to 25 customers per working day and 20 to 35 customers per weekend. These customers mainly come for hair and skin care with few coming for wedding and bridal packages. Ivy customers make decisions based on what they want and sometimes on stylists convincing advices. Research revealed that majority of the customers (80%) mainly concentrates on L’Oreal products for their skin and body care.
4.2 COMPETITOR
Market position: there is no escaping the harsh reality of increasing competition in consumer markets today. The term positioning means a firm’s decision to determine the places its corporate image and brand occupies in a particular market, including the type of benefit to be stressed and the targeted segments (Douglas and Crai, 1995; Ries and Trout, 1986; Ries, 1996). Ivy hair salon uses optimization strategy to position itself; through understand customer’s attitude and usage, and micro-culture. This increases customer loyalty and gives them a competitive edge against competitors. Ivy hair salon is currently positioned as one of the hair salons in Kuching that offer quality service at a lower cost and the main objective is to one day become one of the market leaders in salon industry, within Kuching and the whole of Malaysia.
Market Shares: with growing demand and increasing customer loyalty, Ivy hair salon has an average profit margin of RM 300,000.00 per annum. This is thrice that of the second largest earner (E-Kia barbers) in Stampin Kuching. The above profit margin makes Ivy hair salon one of the market leaders in hair styling industries in Stampin Kuching, and some part of Sarawak. The growing market share is largely attributed to their target market of Unisex Teens, as compared to their competitors.
5.0 SITUATIONAL ANALYSIS
Schendel et al (1976), found that the structure-conduct-performance paradigm; ways to determine factors that influence organizational productivity or loose lies in the organization’s environment. Organizational environment can basically be classified into two, internal and external.
5.1 S.W.O.T
SWOT analysis became a popular environmental analysis platform after Jack Welch tripled General Motors’s growth rate in productivity (Slocum et al., 1994). The model was further developed into a well structure matrix by Weihrich in 1982. SWOT analysis is used in this research to determine the external and internal influences that affects the salon’s management, productivity, branding, and customer’s behavior.
5.1.1 STRENGTH
Initiator / innovator – Ivy was the first hair care salon opened in Stampin Kuching, Sarawak in 2003. Along the way, they have created a brand image that visions customers coming back after a short while, and gaining loyal customers. This is an opportunity because their customers have come to trust not just the way they handle their business but also their brand image (Koo, 1998).
The Management: the management of Ivy hair salon is strength because compared with other hair salons in Kuching, the management of Ivy hair salon is made up of well educated staffs. The CEO is a degree holder in hair dressing from Massey University in New Zealand. There is a close customer relationship maintained by the powerful and talented marketing team that search for the best ways to keep Ivy customers delighted.
Culture: the just do it now approach the salon uses in undertaking their day to day business management, is of great strength because customers are made to believe that the main goal of the salon is not just to offer them hair dressing services (Ko and Lee, 2000), but also to ensure that they carry on with their day to day activities without any delay due to the salon’s ineffective or inefficient management.
L’Oreal Paris: Ivy hair salon is the only licensed company (distributor) in Kuching that distributes L’Oreal Paris products. This is strength to the salon in terms of brand image (Vroman, 1997). L’Oreal Paris is an award winning beauty company that has its main branch in New York, U.S.A. Being the only licensed distributor of L’Oreal Paris products in Kuching will help the company in gaining a brand image as a world class salon offering quality service.
5.1.2 WEAKNESS
Low service quality: our research shows that 60 percent of Ivy hair salon customers interviewed thinks that the service offered at Ivy hair salon is low and does not measure up with the value and cost of offering the service. This is a weakness to the salon because it can reduce customer loyalty and open a competitive edge for their competitors who would offer high quality service at the same or lesser cost (Chen, 1994).
Local media advertising: advertisement is a very effective way of attracting customers, but the number of customers an advert can reach depends on the form of advertisement used (Wing, 1988). The use of local advertisement media like news papers is a weakness to the hair salon because of the developing trend of e-commerce used by other hair salons to attract new customers. Rarick (1996), the local media makes it difficult to reach the mass market of teenagers, whom are the main target of Ivy hair salon.
Market size: with just one branch in the whole of Kuching, Ivy hair salon’s market size is a weakness towards attracting new customer. Customers would probably prefer to go to a nearby hair salon than driving far to Ivy hair salon. This gives their competitors an edge to penetrate the market faster than Ivy with every new branch opened (Griffith, 1982) in Kuching.
Choice varieties: with limited packages, Ivy customers tend to get used to the same kind of product and services. Lack of research and development (McNeilly, 1996) could pose as one of the salon’s weakness compared to other salons that invest in developing new packages and service to attract more customers.
5.1.3 OPPORTUNITIES
Entry barriers: With fewer individuals, willing to invest in the salon or establish a new hair salon due to the start-up and maintenance cost, a barrier of entry is created by this financial factor. This is an opportunity (Chang, 1976) to explore the market, conduct research to understand customers need, develop new product, gain competitive edge against intending competitors who wish to enter the market and expand their market to attract more loyal customer.
Brand image: as the only licensed distributor of L’Oreal Paris products in Kuching, Ivy hair salon has gained a brand image in the heart of the Kuching market as a world class hair salon industry. Kaplan and Norton (1996) revealed that brand image is a message a company portrays in their customers mind, as a reason why they are better than their competitors. By portraying the brand image of being a world class hair salon industry, and offering quality services at a lower cost, this is an opportunity for Ivy hair salon to increase and maintain a closer customer relationship.
5.1.4 THREATS
Differentiation: Ivy hair salon has no strategic differentiation measure such as high value at lower cost or more unique products and services than their customers that they use to differentiate their products and services. This could be a threat to them if their competitors are to develop more unique products and services because the customers would go for a high value with lower price which could result in loss of potential customers (Valentin, 2001).
Lack of quality service: the low quality of services provided by Ivy hair salon alters changes in the consumer behavior and this can increase consumer dynamics (Deloitte Touche, 1995; Hughes, 1994; Hughes, 2001; Melewae and Bains, 2002). This could become a threat in the loss of loyal customers and message it creates on their brand image.
Competitors: if not the major threat, competitors are of great threat to Ivy hair salon because new salon trend will consequently increase customer’s choice while the idea of implementing a competitive price would subsequently reduce their market shares and profit margin (Hill and Westbrook, 1997).
6.0 ENVIRONMENTAL ANALYSIS
6.1 PEST
The external contexts of strategic decisions in business management are very broad. They can include government policies, competitors, technological and social changes, and the dynamic buyer and suppliers market. PEST analysis is one of the ways companies and managers can analyze their exposure to set of potential factors within its environment (McGee et al., 2005, p. 13).
6.1.1 POLITICAL AND LEGAL ENVIRONMENT
One of the main reasons why price of hair dressing is high in Ivy hair salon is because of high taxation on imported products. Ivy’s products are mainly imported from US (L’Oreal Paris), and therefore they face the political and legal action of taxation (Hawawini, 2005). By trying to meet up with their expenditures, they impose high prices on their services as well as products and this is how politics affects the saloon.
6.1.2 ECONOMIC ENVIRONMENT
With Malaysian being declared recession free in later February 2010 (The Borneo Post, 2010), they have been an increased number of package demand in all Ivy hair salon branches across Sarawak. This is increase in demand is due to confident customer spending and attractive discount prices offered by the saloon. Nevertheless, the prices of Ivy packages are seriously affecting customer’s desire to purchase any of their services. If not fully controlled, the growing number of new entries could strike a volatile competitive advantage which Ivy could probably loose.
6.1.3 SOCIAL AND CULTURAL ENVIRONMENT
The desire to be the best is high in Malaysian culture, especially when it involves beauty. As much other Asian markets, individuals do whatever it takes to appear smart and nice before others. This culture is one of the key reasons why they are high turn up in Ivy hair salon. Research has it that, as an Islamic nation, the desire to appear beautiful before others is not high when compared to non-Islamic countries like China and Japan (Vesper and Gartner, 1997). This is because must Islamic women always cover their head and sometimes their face, reducing the need to go for a hair or skin care. This is one of the reasons why maintaining deep company-customer relationship is advised.
6.1.4 TECHNOLOGICAL ENVIRONMENT
With increased technological advancement and upgrade in the Ivy hair salon system, customers have found it a very relaxing place to be. Ivy hair salon offers one of the best technologically advances hair care facilities in Kuching, and this gives them a competitive advantage over their rival companies. As revealed by our research, 80 percent of Ivy customers return to the salon because of how comfortable it is, due to advanced equipments that provided relaxation (The Economist, 2006, p. 9).
7.0 IVY HAIR SALON’S BUSINESS PROBLEMS
In recent years, service quality has developed into a major area of concern for practitioners, managers, and researchers due it its strong impact on performance of business, cost management, customer loyalty and satisfaction, and profitability (Leonard and Sasser, 1982; Cronin and Taylor, 1992; Gammie, 1992; Hallowell, 1996; Chang and Chen, 1998; Gummesson, 1998; Lasser et al., 2003).
The first problem faced by Ivy hair salon according to our research is low quality service. Customers complained that they service they receive in Ivy hair salon is lower than expected and the effect of this problem could include customer dissatisfaction and change of brand desire, with increasing number of new hair salon trends entering the market. On the other hand, loss of loyal customers could lead to loss of market shares, reduced profit and increased expenses for competition by Ivy hair salon.
Competitive strategies are actions taken or resources used in general development process, and are increasingly important for managers looking to differentiate their products and services from other trends within a particular market (Porter, 1980; Day and Wensley, 1988; Bharadwaj et al., 1993; Campbell-Hunt, 2000). Many researchers have linked competitive management methods such as product and service differentiation with cost management, market leadership and improved performance within an organization (Hambrick, 1983; Des and Davis, 1984; Robinson and Pearce, 1988; Bush and Sinclair, 1992; Kumar et al., 1997; Fahy and Smithee, 1999). Differentiation strategies are pervasive in market economies, powerful means of obtaining competitive advantage and value creation (Porter, 1985). Differentiation can be in the form of offering same product and value at a lower price of offering a more unique product or service that is different from other competitors (Porter, 1985, p. 3)
The second major problem faced by Ivy hair salon is service differentiation. Ivy hair salon find it difficult to either differentiate their products and services by pricing strategy or offering unique products due to increasing number of salon trends penetrating the market and price war imposed on the market with fewer customer with more choices. This is a problem to the salon because it makes customer-company relationship had to maintain and build in a market where customer have different products and service with unique value and lesser price to choose from.
8.0 METHODOLOGY
- Case Processing SummaryN%CasesValid60100.0Excludeda0.0Total60100.0a. Listwise deletion based on all variables in the procedure.
- Reliability StatisticsCronbach's AlphaN of Items.66652
Multiplying the reliable by 100 gives us 66 percent reliability for our primary research.
Figure 1 The graph shows that majority of Ivy hair salon's customers are female not withstanding their age group.
8.1 PRIMARY RESEARCH
Kent (1993) stated that primary research is a form of data collection, specifically for a given study. It can be obtained either by observation or communication. By observation it means studying the object or phenomenon and by communication it means directly or indirectly requesting for ideas from the object or phenomenon. The author also argued that primary research is important due to its specificity, relevance and updated data. Nevertheless, conducting a primary research can be difficult, expensive and time consuming. According to Chisnall (2004), it may also provide misleading results if the sample is too large or small and the questionnaires are not designed properly. The method of primary research used in this research paper includes questionnaires, interviews and observation and all were in form of direct communication.
By using Likert’s method of summated ratting, a questionnaire was constructed for the problems faced by Ivy hair salon. The rating was in form of “strongly agree’, “agree”, “uncertain”, “disagree”, and “strongly disagree”. A total of 60 customers were selected among the company’s loyal customer. The data was analyzed using SPSS data analyzer. The main reasons why likert’s method of summated rating was used in this research include: effectiveness, easy data entry, reducing the amount of materials needed in performing a survey, eliminating problems of interpreting information written on hand, and ease of data interpretation (Lasser et al., 2003).
8.2 SECONDARY RESEARCH
Stewart & Kamins (1993) argued that secondary research consisted of sources of data and other information collected by others and archived in some form. Secondary research includes government reports, industry studies, archived data sets, syndicated information services, books, journals and others.
In relation, according to Hair et al. (2000), secondary data can also be named as historical data from previously collected or assembled sources to help researchers in problem solving and opportunity situation other than the current situation. The author also stressed that secondary data should be applied based on the six fundamental principles such as purpose, accuracy, consistency, credibility, methodology and bias.
Purpose – the purpose of secondary data collected must be analyzed and evaluated in order to find out how they relate to the current research objective.
Accuracy – researchers must determine whether the data’s accuracybefore application and also assess the generalization of the data.
Consistency – when evaluating the source of the data, a good strategy is to seek out multiple sources of the same data to ensure consistency.
Credibility – researchers should always question the credibility of the data in ensuring credible data usage.
Methodology – researchers must understand that the quality of the secondary data is only as good as the methodology employed to gather them.
Bias – researchers must try to determine whether the data collected is reliable or is it bias with a hidden agenda. Only data that are not bias can be used in the research.
Based on these six principles, the data used in this research paper were critically analyzed to ensure the meet up with the required standards before application. The main source of information for the secondary research was obtained through extensive research on journals and articles based on the research objectives and main issue.
9.0 JUSTIFICATION OF THE SELECTED METHOD
9.1 SPSS
SPSS was used in analyzing the collected data. This is because of the software’s capabilities in data mining, data collection, and business management and growth projection. Haven understood the importance of the software in today’s business world, it is justifiable to note that there is currently no other software that would have given us as much data analysis and reliability, coupled with ease of use and business projection than SPSS and that is the major reason it was used for analyzing the data in this research paper than any other software. The questionnaire aided in accurate data collection and this is why it is justifiable to select it as one of the methods for data collection and analysis in this research paper.
9.2 LIKERT’S SCALE
According to Hair et al. (2000), likert scale is a special rating scale format that asks respondents to indicate the extent to which they agree or disagree with a series of mental belief or behavioral statements about a given object. For this research, a set of questionnaire was designed and distributed to 60 loyal customers and 60 employees of Ivy hair salon. The ranges from ‘1 – strongly agree’ to ‘5 – strongly disagree’ must choose from based on their rating of each question. It was found justifiable enough to use this system of rating because of its accuracy and precision in data mining, collection and analysis.
9.3 QUESTIONNAIRE
Hair et al. (2000) defined questionnaire as a set of questions or scales constructed to gather raw data for information processing that is related to a given research objectives. Besides that, Chisnall (1997) stated that questionnaire involves obtaining specific information about a defined problem through questions before further analysis and interpretation can be done in order to rectify the problem. Burns & Bush (1998) confirmed that the use of questionnaire is important as questionnaire serves six key functions in conducting a research. These functions includes: translation of research objective into specific questions that can be asked of from the respondents, it standardizes those questions and the response categories so that every respondent can respond to an identical stimuli, by wordings, question flow and appearance, it fosters cooperation and keeps respondents motivated throughout the interview, questionnaire serve as permanent records of the research, speed up the process of data analysis and contain the information upon which reliability assessments may be made based on respondents validation.
9.4 INTERVIEW
Chisnall (1997) defined interview as a conversation directed to a definite purpose other than satisfaction in the conversation itself. For this research, an interview session was conducted in order to know the internal management process involved in Ivy hair salon’s management system. The interview consists of few unstructured questions which require staffs to give their opinions or views about the salon and recommendations for improvement. The interviews were appropriate in understanding the internal management system of Ivy hair salon.
10.0 LIMITATION OF THE SELECTED METHOD
Customers unreliability: this is a limitation to the research because we are not so sure how the customers answered the question, whether they answered it justifiably or just for the sake of answering it.
Customer’s unwillingness: some customers refused to answer the questionnaire either because they believe it was a waste of their time or because they did not know what to answer. This is also a limitation because the higher the number of customers who answered the question, the better the reliability.
Market unpredictability: the idea that a single second can change the shape and size of a market is a limitation to this research because further research in future could be totally different from this research based on the marketing environment.
Secondary research credibility: the credibility is the secondary data used in this research paper is a doubt and could be a limitation to the findings and recommendations. This is due to the idea that the secondary researches was performed by other researchers unknown to the researchers that performed this research paper and the credibility of their primary data is a limitation because of the fact that sometimes researchers used data manipulation to output research findings and errors such as this could limit the reliability of the secondary findings and recommendations used in this research paper.
Market size: the small size of Kuching market is another limitation to this research because the bigger the markets size the better the reliability. This idea is interpreted in the limited number of workers and customers found in Ivy hair salon. An increase in the number of correspondents, could means an increase in the reliability and a closer look towards proving a much better solution for a mass market.
11.0 CRITICALLY EVALUATION
11.1 POSITIVE IMPACT OF THE SELECTED METHOD
Error free: by the use of likert’s method of scaling in data collection and SPSS in data analysis, it makes our research error free since the SPSS software dictates errors as they occur and allows correction before general analysis. This on the other hand positively impacts the research by increasing the reliability of the primary research.
Time and cost reduction: The selected methods are easy to use, analysis and interpret, thereby reducing the time required in conducting major surveys as well as the materials need to conduct a major survey. Therefore, they positively contributes to cost management, and on time delivery of the required output from the primary research.
11.2 NEGATIVE IMPACT OF THE SELECTED METHOD
Lack of expression: the selected method does not allow the customers and workers to answer the question based on their idea but based on ticking in form of either strongly agree, agree, uncertain, disagree or strongly this agree. This impacts the research paper negatively because it does not give room to critically understand what customers and workers think about the questions being asked.
Stress: analyzing data using SPSS is stressful and this can negatively impact the output from the data either due to error from fatigue or frustration. This is because for an SPSS to be deemed useful in a research paper, it must at least me more than 60 % to be seen as being reliable enough. This percentage is very hard to attain especially in situation where the questions are answered based on options later than answerer’s mind.
12.0 PROBLEM MINIMIZATION
Time: to minimize the problem of time consumption or lack of efficient which could arise from inadequate time for data collection and analysis, the research was carried on earlier than planned to ensure that time doesn’t have any negative effect on the research outcome.
Customer unreliability: a replica of the same question was asked to the same group of customers within a specified period of 7 days intervals for 14 days. This means those customers were asked the same question twice to ensure accuracy and consistency in their answer. This way, the negative effect of unreliability if not totally eliminated, was reduced to a considerable level and it helped in increasing the reliability of this research paper.
Customer’s unwillingness: a 5RM coupon was issued to customers that answered the questionnaire. This was geared towards increasing the number of customer who is willing to answer the question. By increasing the number of customers that answered the question, this research paper was deemed reliable enough with the amount of information gathered from Ivy customers.
Cost: in other to limit the cost of carrying out this research, all the questionnaires were printed using recycled paper, a single questionnaire was printed and photocopied into the required number needed for the research, and the salon chosen is located near the college. This helped in cubing down the cost of printing paper, printing and transportation.
13.0 CONCLUSION
The research paper basically identified two main problems associated with Ivy hair salon as lack of quality service, and lack of differentiation. The main purpose of this business proposal which is to recommend solutions for the problems faced by Ivy hair salon was achieved through data collection in the form of questionnaires and data analysis using SPSS.
From the primary research, it was found that majority of the Ivy customers thinks that the cost per service does not match the value of the service. And with increasing market entries, it has been a tough job trying to differentiate their products and service from other salon trends in Kuching. This research paper thus, sees the proper implementation of the strategies stated above as the key to restoring quality service and differentiating their products from that of the general market and this includes training of new recruits, research and development to basically understand what their customers need and creativity in the products and services offered to give customers a reason to come back.
The situational analysis vividly showed that Ivy hair salon has many opportunities which they can turn into a competitive edge against their competitors. Some of these being the only licensed L’Oreal Paris distributor in Kuching. This is a perfect opportunity of branding their product as the best in terms of quality to attract new customers and retain their current customers. Nevertheless, this opportunity if not fully utilized due to lack of quality service in the management and staff team and this could pose as a threat to them since their competitors could see that a means to dissect their weakness and parcel them as a threat against Ivy hair salon in terms of market penetration and competition.
The environmental analysis on the other hand, highlighted availability of choice to customers as a major threat to Ivy hair salon. With new salons entering the market, the lack of differentiation is a major threat to the company. This is because customers have different salon trends to choice to make within the small market of Kuching and for Ivy salon to stand out, attract more customers and retain their current customers; they have to differentiate their products. The proposal suggested quality service at a low cost as the main differentiation strategy Ivy hair salon can use towards differentiating their products from other trends in the market and this can help them gain competitive edge, attract new customers, and increase their market shares.
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