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Executive Summary
The demand for the services of a mobile salon in Silicon Valley has increased tremendously. Most employees working in this region prefer to deal with businesses that offer convenient services. Customers are willing to pay premium prices for quality services. It underlines the reason we intend to establish a mobile salon in the area, which will mainly target clients aged between 20 and 35 years. The clients do not get adequate time to visit salons due to the nature of their jobs and are conscious of their physical appearance.
The salon will provide hair, manicure, pedicure, and makeup services. We intend to leverage innovation and personalized services as the primary competitive advantages of the salon. The salon will use both penetration and premium pricing strategies and will use campers to distribute services. We anticipate that Elegant Mobile Salon will capture 12% of the market by the end of the first year and earn $1,722,500 in revenues. In the first year, we intend to spend $600,000 on marketing.
Advertising will require $200,000, and the rest will go into financing direct marketing, sales promotion, and personal selling. We expect the revenues in the second and third years to be $2,895,100 and $3,793,400, respectively.
The Service Idea
Mission and SMART Objectives
The primary purpose of Elegant Mobile Salon is to offer services to employees who do not get time to visit their hairstylists, barbers, or makeup artists. The SMART objectives of the mobile salon will be elaborated further.
- Specific: Our salon seeks to ensure employees have adequate time to serve their clients without worrying about when to visit salons or barbershops. The salon will achieve this by making sure that employees get the services in the comfort of their working places.
- Measurable: Our salon hopes to capture 12% of the market by the end of the first year. We intend to hire a significant number of stylists, barbers, and makeup artists to enables us to cover many corporations across Silicon Valley.
- Attainable: We have identified ten companies within Silicon Valley that have a high number of employees. The companies will serve as our primary target markets.
- Relevant: To ensure that we offer quality services, Elegant Mobile Salon will hire employees with vast experience. The salon will also offer manicure and pedicure services.
- Time-Bound: The salon aims to start operating in two months. We will first target five companies and approach others with time.
Service Description
Elegant Mobile Salon intends to offer cosmetic services and haircut and hairdressing to employees who cannot get a chance to visit salons or barbershops. It is a traveling salon comprising a team of makeup artists, barbers, and hairstylists. We understand that convenience is a luxury for most employees. Thus, Elegant Mobile Salon aims at ensuring that workers meet their cosmetic needs at a premium. We intend to target technology companies because employees in this industry do not have adequate free time. They always leave offices late such that it is hard to find any salon opened. Mostly, they are forced to spare some time, particularly on weekends, to visit their stylists. The salon will guarantee the clients have adequate time to rest during their free time.
Positioning Statement
The salon will provide the employees with the handiness that they always yearn for by making sure that they get all the beauty services in the comfort of their working places. Elegant Mobile Salon will offer 90 nail polish colors, which include Chanel in Particulière and Essie in Ballet Slippers. It will also provide varied styles of hairdo. The services will be tailored to the needs of individual customers, and our employees will make sure that they are not only enjoyable but also relaxing.
Market Analysis
Target Market
Demographics
Elegant Mobile Salon will target all employees working in the Silicon Valley. The company will mainly target women aged between 20 and 35 years as they are conscious of their physical appearance. The salon will also target male engineers who work for long hours such that they cannot get time for haircuts.
Behavioral
Tournois (2014) posits, “Style is a target market determinant that is less tangible than gender or region but arguably as important” (p. 5). Elegant Mobile Salon will target women who value fashion. The salon will comprise experienced hair stylists and makeup artists to ensure that they offer advanced services. Customers who value style are willing to pay premium prices as long as they are guaranteed of quality services.
Geographic
Elegant Mobile Salon will initially target individuals working in the Silicon Valley. The majority of employees in this region are wealthy, thus can afford our services. Additionally, they require looking stylish at all times, hence the high demand for cosmetic and haircut services. The Salon will expand to other geographical regions later.
Market Size
Currently, the population of the Silicon Valley is approximately three million people. At least 70% of the population comprises employees who work in the technology companies (Hyde, 2015). Thus, they have a high level of disposable income. Moreover, they do not have adequate time to visit local salons and barbershops. They require a mobile beauty parlor that can offer services at their convenience.
Elegant Mobile Salon is expected to serve at least thirty clients per day. Each year, more people, particularly the millennials are relocating to Silicon Valley in search of employment. Therefore, the demand for cosmetic and haircut services is bound to rise. Indeed, the target market is projected to grow at a rate of 5% due to immigration. With time, the company will hire more employees to cater to the growing market.
Wants and Needs
Silicon Valley comprises individuals working in different technology companies like Google, Apple, Facebook, and Yahoo. Employees working in these businesses require looking elegant at all times (Hyde, 2015). Thus, the demand for haircut, hairdressing, manicure, and pedicure is high. Elegant Mobile Salon will offer hair services to male employees. It will also provide the full face of makeup and specialty styling to women at a premium.
Customers will benefit not only from quality but also flexible services. The salon will offer different modes of payment that include debit, credit, and cash. It will give clients an opportunity to use their preferred method of payment. Elegant Mobile Salon will ensure that customers do not have to squeeze some hours in their hard-earned weekends or free time to visit stylists or barbers. They will have sufficient time to spend with their families or attend to other essential duties.
Price Willingness
Despite the individuals working in Silicon Valley having high levels of disposable income, setting ridiculous prices may discourage them from paying for certain services. Elegant Mobile Salon will offer its services at a premium. However, the prices will be set based on the value of the services provided to customers. Customers are not ready to pay over $80 for blow-dry (Jackson-Cannady, 2012,). Thus, Elegant Mobile Salon will charge $75 for the service. Additionally, it will cost $175 and $180 for specialty styling and a full face of makeup respectively. The prices for haircuts will range from $45 to $70 depending on the style.
Competitor Assessment
Porter’s Five Forces
Elegant Mobile Salon falls under the hair-beauty industry, which specializes in hairdressing and cosmetic services. Currently, many people have invested in brick-and-mortar salons. The number of mobile salons is limited across the United States.
- Bargaining power of suppliers: The number of vendors who sell hair and beauty products is high. Thus, the supplier bargaining power in the hair-beauty industry is little (Tournois, 2014). Elegant Mobile Salon’s suppliers will have little bargaining power over the company. The salon will source products based on their quality and cost.
- Bargaining power of customers: The bargaining power of clients will be little. Elegant Mobile Salon will target wealthy clients who do not have adequate time to visit hairstylists or makeup artists. The customers are not price-sensitive and seek for convenient services. They will be willing to pay premium prices for the services.
- The threat of new entrants: The threat of new entrants in the mobile salon business is little. Most insurance companies are unwilling to insure mobile lounges. Additionally, the hair-beauty industry operates under stringent safety and health regulations. They discourage many investors from venturing into the industry. Elegant Mobile Salon will face a limited threat of new entrants.
- The threat of substitutes: The threat of substitute in the hair-beauty industry is weak. Elegant Mobile Salon will offer differentiated services and leverage first mover advantage. The target market is in need of quality and efficient services. Currently, few businesses can fulfill these requirements. Despite the low switching cost for our target customers, the closest alternative to the services that Elegant Mobile Salon offers is the brick-and-mortar salons and barbershops located in Silicon Valley. Luckily, the target consumers do not have time to visit them, thus leaving our salon is the best choice.
- Competitive rivalry: The competitive rivalry in the hair-beauty industry is high. The industry is fragmented and comprises many small and medium businesses. Elegant Mobile Salon will encounter competition from numerous mobile salons that operate in Silicon Valley. However, the salon will use pricing strategy and quality service delivery to overcome competition.
Direct and Indirect Competition
Currently, numerous companies offer mobile services to employees across the United States. Many investors have realized the demand for hair and makeup services amid workers in Silicon Valley. Consequently, multiple companies offer the services in the area. Elegant Mobile Salon will encounter direct competition from Onsite and Hair I Am on Wheels, which are the major mobile salons that offer services in the area. They have already established themselves in the market and built their brand images. Our salon will face indirect competition from the various brick-and-mortar salons and barbershops located in the region. However, they will not be a significant threat to Elegant Mobile Salon because most employees may not get sufficient time to visit them.
Competitive Advantages
Understanding the competitive benefits and disadvantages of a business helps to overcome competition. Companies exploit the competitive disadvantages of their rivals to gain market control. On the other hand, companies strive to improve their competitive disadvantages to stay competitive and avoid possible closure (Abraham, 2012). Firms like Onsite and Hair I Am on Wheels have been in the industry for many years.
Thus, one of their competitive advantages is brand loyalty. The companies are famous in Silicon Valley and have established stable market shares. Elegant Mobile Salon will face challenges in trying to dislodge them from the market. Another competitive advantage of the two companies is the experience. The companies understand the dynamics of the business as they have been on the market for many years. Thus, they know how to react in the case of unanticipated changes. Elegant Mobile Salon will have to learn the industry as fast as possible to cope with its dynamics.
One of the competitive disadvantages of the two mobile salons is pricing. The businesses charge high prices for their services. Even though they have a significant market share, they are likely to lose clients to any entrant that offers quality services at competitive prices (Hinterhuber & Liozu, 2012). The salons are slow in innovation and take the time to introduce new hair styles. Customers have to select from a limited number of hair styles and designs. A mobile salon that is innovative in hair styles and designs would easily dislodge Onset and Hair I Am on Wheels from the Silicon Valley Market.
One of the competitive advantages of Elegant Mobile Salon is personal touch with customers. The firm will offer customized services to individual clients to boost relationship. Innovation is essential in the hair-beauty industry. For a company to be competitive, it requires coming up with novel styles and hair designs on a regular basis. A major competitive advantage of Elegant Mobile Salon will be innovation.
The salon will introduce new hair designs, colors, and styles after every one month. We have not operated in the Silicon Valley before. Thus, our principal competitive disadvantage will be a lack of sufficient information about the forces that impact this market segment. However, we will endeavor to study the market as fast as possible to enable us to cope with its dynamics. Brand loyalty will be another disadvantage for Elegant Mobile Salons. Onset and Hair I Am on Wheel have established themselves in the market. Thus, Elegant Salon will require introducing something unique to convince customers to pay for its services.
Marketing Strategy
Overall Marketing Strategy
Elegant Mobile Salon targets to satisfy the needs of busy employees who do not have adequate time to visit hairstylists or makeup artists. The business aims to offer convenient services by visiting the workers in their workplaces. It will also provide specialized services that meet the needs of individual clients. Elegant Mobile Salon will comprise a team of experienced hair stylists, barbers, and makeup artists.
Thus, it will be easy for the workers to offer quality services that fulfill the needs of individual clients. The salon will establish an online platform to allow customers to order for the services. Moreover, it will offer different modes of payment to enable customers to pay via their preferred means. Elegant Mobile Salon will position itself as a leading hair and beauty salon that delivers quality services. As its name suggests, the company will endeavor to offer refined services.
Service Decisions
For a company to be competitive, it must provide unique or differentiated services. Elegant Mobile Salon will leverage differentiation to boost the quality of its services. Apart from hiring experienced employees, the company will invest in market research to ensure that it introduces innovative hair styles and designs into the market regularly. It will offer a range of nail polish colors to meet the needs of many customers. Additionally, it will source its braids and weaves from renowned suppliers. The salon will make sure that consumers get value for their money. The reason for hiring a team of experienced hair stylists, barbers, and makeup artists is to ensure that the salon meets the needs of all customers.
Elegant Mobile Salon will be the brand name of our business. We arrived at the brand name based on the mission of the firm. The salon aims at offering refined services to high-end customers who are conscious of their physical appearance. The nature of competition will influence the branding strategy of the salon. We will use the high-tech method of service delivery. The salon will invest in technology to enhance service delivery.
For instance, we will have a website that allows online booking. Maintaining consistency will be essential to brand success. We will ensure that all interactions that customers have with our salon via the website, advertisement, and experience are steady and fashioned to enhance brand image. The salon will engage clients in brand promotion. Provision of quality services will encourage clients to act as our brand ambassadors.
Pricing Decisions
Elegant Mobile Salon will target high-end consumers with high levels of disposable income. The customers are beauty-conscious and willing to pay more for quality services. The salon will set its prices compared to those of the competitors. It will offer services at premium costs to instill a notion of quality in the mind of the target customers. The company will use penetration pricing strategy to establish itself in the market and gain a significant market share. Later, it will use premium pricing to instill a perception of quality in consumers. Most consumers believe that expensive services are reliable, superior, and exceptional (Allender & Richards, 2012).
Thus, the salon will take advantage of this perception to build its image and increase profitability. Initially, the salon will offer blow-dry services at $55 and later increase the charges to $75 after gaining market share. The cost of specialty styling will be $160 and then increased to $175 after the salon becomes popular. We will offer 10% discount to customers who order for both specialty styling and a full face of makeup.
Distribution Decisions
Elegant Mobile Salon is a high-end enterprise that will target affluent employees who are conscious of their beauty. The salon will offer services in Silicon Valley as the region comprises many employees who do not have a lot of free time due to the nature of their work. The salon will extend its services to other cities in the future. We will use vans to distribute our services. The salon will purchase five vans and customize them to resemble brick-and-mortar salons and barbershops.
The campers will be visiting different companies to offer services to employees. We will liaise with target customers to establish a schedule that will guarantee consistency in service delivery. Customers will be required to book for services in advance via our website. Elegant Mobile Salon will use a pull strategy to attract and retain consumers. The salon will use integrated marketing communication to market its brand. Additionally, it will invest in customer relationship management to enhance loyalty.
Promotional Strategy
An efficient promotional strategy is paramount for the success of business. Elegant Mobile Salon will use a promotional mix that comprises sales promotion, advertising, personal selling, and internet marketing. The internet marketing will entail the utilization of the business’ website to popularize its services. The website will contain information about the services rendered and their costs. Moreover, the salon will use social media platforms like Facebook, Twitter, and YouTube to popularize its brand. It will also advertise its services on a few television channels with massive viewership. We will use Facebook and Twitter to gather customer feedback regarding the quality of our services. The salon will only use MTV and ESPN to advertise its services.
For the case of consumer promotion, we will use coupons, which will be available at the receptions of the various companies and selected grocery stores. The tickets will also be accessible on the salon’s website. Elegant Mobile Salon will offer discounts to customers who pay for more than one service to encourage them to come back in the future. Personal selling will involve the hair stylists and makeup artists visiting clients in their workplaces and encouraging them to use our services.
Marketing Budget
Marketing Budget
Elegant Mobile Salon as a high-end hair and beauty business will require a marketing budget of $600,000 in the first year. The salon will spend $200,000 on advertising. The remaining $400000 will be shared amid personal selling, internet marketing, and sales promotion.
Budget Spending by Category
Elegant Mobile Salon marketing expenses will comprise electronic advertising, sales promotion, personal selling, and internet marketing. The marketing budget will be distributed as follows:
- Advertising will spend $200,000. Electronic advertising will entail popularizing the salon through MTV and ESPN television channels. The company will run television advertisements in the first three months. The ads will occur at night as it is the only time that the target consumers have an opportunity to watch television.
- The salon will spend $5,500 on internet marketing. It will constitute social media and website marketing. The salon will develop a website that it will use to popularize services. Customers will have an opportunity to order and pay for services through the website. Elegant Mobile Salon will use Facebook, Twitter, and YouTube to market its services. Facebook and Twitter will help us to inform customers about existing and latest services. We will also use the platforms to interact with customers and gather feedback. On the other hand, YouTube will comprise short videos of satisfied customers narrating about the quality of our services. The videos will go a long way towards encouraging many clients to try our services.
- Sales Promotion will spend $294, 500. It will comprise coupons featured on the salon’s website, target companies, and specific grocery stores. Only customers who order for more than one service will get the coupons.
- The salon will spend $100,000 on personal selling. Our team of hair stylists and makeup artists will visit the target companies and interact with customers. They will use their knowledge in hair and beauty services to convince customers to try our salon.
Effectiveness and Efficiency of Marketing Strategies
We expect personal selling to be the most efficient marketing strategy. Our team will have a chance to interact with many customers and inform them about our services. Internet marketing will also be effective in reaching the target customers as all clients have access to the web. Elegant Mobile Salon will conduct sales promotion once per month, which will run for a whole week. The objective is to attract many customers. Advertising will not be very effective as the target consumers do not spend a lot of time on television. Nevertheless, it will help us to reach some clients. The highest response rate is expected to come from personal selling and internet marketing.
Forecasting
References
Abraham, S. (2012). Strategic planning: A practical guide for competitive success. London, UK: Emerald Group Publishing Limited.
Allender, W., & Richards, T. (2012). Brand loyalty and price promotional strategies: An empirical analysis. Journal of Retailing, 88(3), 323-342.
Hinterhuber, A., & Liozu, S. (2012). Is it time to rethink your pricing strategy? MIT Sloan Management Review, 53(4), 69-77.
Hyde, A. (2015). Working in Silicon Valley: Economic and legal analysis of a high-velocity labor market. New York, NY: Routledge.
Jackson-Cannady, A. (2012). Beauty salons to go. The New York Times. Pp. C3-C5.
Tournois, L. (2014). Too many products? Reaching the next billion customers of the beauty market. Journal of Business Strategy, 35(5), 3-13.
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