Executive Summary Cranium Filament Reductions is a hair salon situated in Shaker Hts., Ohio, offering a convenient solution for the whole family’s hair needs. Cranium caters to men, women, and children, accepting both appointed visits and walk-ins. Additionally, Cranium retails hair care products. By providing comprehensive services in a timely manner, Cranium distinguishes itself from other “quick salons,” emphasizing its commitment to exceptional customer service.
Through providing attentive customer service, Cranium will gradually increase its market share by catering to the needs of the entire family, fostering long-term relationships. Additionally, the strategic location of Cranium will attract a significant amount of walk-in customers, thereby bolstering sales growth steadily after the fourth month. By the ninth month, profitability will be attained, and over the course of the third year, Cranium anticipates generating $443,000 in revenue resulting in $61,000 in profits. At present, as a newly established start-up company, Cranium Filament Reductions acknowledges the imperative nature of developing a comprehensive and strategic marketing plan to ensure success and profitability.
Cranium offers a wide range of hair cutting services, aiming to be a convenient one-stop hair salon that is skilled and reasonably priced, catering to the entire family. With good knowledge about the market and its most valued customers, Cranium will utilize this information to better understand their customers’ specific needs and find ways to serve them better. The target market for Cranium Filament Reductions includes the city of Shaker Hts. and surrounding communities, with a population of 112,000. The services are also sought within a 20-mile radius, targeting a population of 46,000. The demographic profile includes males, females, and children aged 3-55 who are looking for quality haircuts/styling at affordable prices. The women prefer to avoid expensive women-only salons while the men seek convenience and reasonable prices. The children simply desire toys to play with while waiting. The target market also prioritizes convenience and prefers to have all their family’s needs serviced at the same time if possible.Cranium Filament Reductions aims to meet the market needs by offering a variety of hair cutting/styling options in one convenient location. With no appointment necessary, families can easily access Cranium’s services, which is conveniently located in a central area. The company is committed to providing excellent customer service and ensuring that customers receive superior attention. In terms of pricing, Cranium offers competitive rates that are slightly higher than traditional barbers but much lower than dedicated women’s hair salons. In line with the market trend of consolidation, both high-end hair salons and full-service family companies like Best Cuts have seen significant growth in recent years, particularly in major cities.
The expansion of Cranium involves the opening of new stores and acquiring independently-owned salons, which are then integrated into the chain. This trend is also observed in full-service, family hair cutting stores. The reason for this trend is cost-saving measures, similar to other industries undergoing consolidation. However, Cranium chooses not to align itself with a chain. Instead, it believes in its superior understanding of the local market and prefers to apply this specialized insight rather than adopting the protocols of a national chain.
The hair cutting industry has experienced consistent growth of 5% per year in the past seven years, regardless of economic conditions. During economic upturns, women tend to opt for additional services like hair coloring or perms, but overall consumption patterns remain stable. This can be attributed to the fact that most people schedule haircuts based on time elapsed rather than economic factors. However, it is important to conduct a SWOT analysis to fully understand market dynamics.
The presented SWOT analysis outlines Cranium Filament Reductions’ key strengths, weaknesses, opportunities, and threats.
2.2.1 Strengths include excellent retail space in a popular mall, well-trained employees with diverse hair cutting skills, a wide range of services offered, and competitive prices.
2.2.2 Weaknesses encompass the lack of brand equity compared to established competitors due to being a new entrant in the market, the need to maintain a cutting-edge fashion and style perception, and high startup costs.
2.2.3 Opportunities involve a steadily growing market unaffected by economic fluctuations, potential reduction in fixed costs as customer base expands, and increased sales through the patronage of multiple individuals from the same family.
2.2.4 Threats consist of competition from established chains and potential changes in traffic patterns affecting the mall where Cranium is located.
Competition and buying patterns for Cranium Filament Reductions involve traditional barbers who primarily provide walk-in services without appointments.
While barbers typically offer a variety of haircuts, they tend to lean towards more traditional and conservative styles. They provide affordable and convenient services. However, their styling options may be limited and there may be a wait time. Another option is franchised “Quick Salons” like Supercuts or Best Cuts, which are essentially a franchised version of Cranium Filament Reductions. The advantage of these salons is that they provide a consistent experience across different locations, which some people appreciate. Lastly, there are independent salons.
These shops typically focus on a specific market and do not serve a wide range of customers. Men and women have distinct purchasing habits. Generally, men prioritize price and convenience when getting their hair cut. Conversely, women place more importance on hair styling and tend to develop stronger relationships with their stylists. This bond fosters loyalty towards the stylist, leading them to entrust full control over their hair. Cranium Filament Reductions provides hair styling services for the whole family.
Cranium Filament Reductions provides a range of services including haircuts for men and women, permanents and hair coloring for women, and haircuts for children. Shampoos are offered for all adult services. Customers can either walk in or make an appointment. Customer satisfaction is the main focus at Cranium Filament Reductions. In addition to services, the salon also sells hair care products which are expected to make up 15% of sales. These products include professional quality shampoos, conditioners, reconstructors, brushes, combs, and other styling aids. 2. 5 Keys to Success
Keys to success include: •Professionalism. •Convenience. •Customer attention. 2. 6 Critical Issues Cranium Filament Reductions is currently a start-up company. Its critical issues are to maintain a cautious financial approach and expand at a reasonable rate, not solely for the purpose of expansion, but because it is financially sensible to do so. 3. 0 Marketing Strategy Cranium Filament Reductions will have a relatively small marketing budget, as some of the funds that would be allocated for marketing will be used for rent.
Locating Cranium in a popular, frequently-visited mall ensures a steady flow of foot traffic. However, this prime location comes with the drawback of higher-than-average rent. While part of this expense is simply the cost of setting up shop in a sought-after commercial property, some of the rent also covers mall association dues. These dues contribute to marketing efforts aimed at boosting the mall’s overall visibility and attracting more visitors.
The funds allocated for marketing activities will be utilized for various initiatives, such as advertisements.
Advertisements will be placed in two local newspapers: the Plain Dealer and the Sun Press. The Plain Dealer serves the entire Cleveland metropolitan area, making it a good investment to increase visibility as many people in Cleveland subscribe to it. However, not all readers are willing to travel across Cleveland to go to Cranium. On the other hand, the Sun Press is a regional paper serving specific areas such as Shaker Hts., Cleveland Hts., University Hts., and Warrensville Hts. Although its reader base is smaller than the Plain Dealer, it offers more targeted geographic coverage.
In-store and Store Front Displays: These displays will be visible to a large walk-through traffic base.
3.1 Mission
Cranium Filament Reductions’ mission is to provide reasonably priced, convenient hair styling services that exceed customer expectations. We exist to attract and maintain customers because when we adhere to this maxim, everything else falls into place.
3.2 Marketing Objectives
– Increase repeat customers by 7% per quarter.
– Decrease customer acquisition costs by 8% per year.
– Maintain positive, steady growth each month.
Financial Objectives
– Increase retail product sales by 10% per year.
– Grow the profit margin by 3% per year.
– Achieve profitability within one year.3.4 Target Marketing Cranium Filament Reductions aims to cater to three distinct market segments:
– Men: This segment is expected to make up around 70% – 75% of the customer base. The primary reason for this dominance is that men generally have shorter hair, which calls for a quicker and simpler hairstyle.
– Women: Although women who cannot afford a high-end salon might opt for a family hair salon, those with the means usually prefer an upscale salon specifically tailored towards females. While both types of salons provide similar quality services, upscale salons offer a more luxurious experience, require appointments, and boast more lavish facilities.
Someone who values financial responsibility instead of luxury would prefer a family style salon. Young mothers with children will find a family style salon more suitable for their needs. Children can be difficult when it comes to getting haircuts, so this type of salon allows them to play while they wait. The salon also helps calm the children’s nerves when it’s time for their haircut. Cranium Filament Reductions will specifically target each of these groups. They will provide a quick and convenient service for men since they tend to require haircuts more frequently due to their shorter hair.
Cranium Filament Reductions aims to cater to males with convenient evening hours, no appointments required, and fast service. While upscale salons may appeal more to females, not everyone can afford their high prices. That’s why Cranium Filament Reductions offers the same quality hair styling without the hefty cost. The salon targets these customers by highlighting the sophisticated and ultra-hip styles they can provide. Additionally, Cranium Filament Reductions also focuses on attracting mothers with children, providing kids toys for entertainment during the wait and ensuring the presence of child-friendly hair stylists.
Additionally, children receive a special rate recognizing that their hair grows quickly and it can be costly to maintain regular haircuts. It is also acknowledged that it generally takes less time to cut a child’s hair, making it inherently less expensive.
3.5 Positioning Cranium Filament Reductions as a convenient, full-service, family hair salon. Cranium will provide comprehensive services in one location. The competitive advantage of Cranium Filament Reductions lies in its superior customer service.
Cranium Filament Reductions acknowledges the competitive nature of the hair cutting/styling industry and understands the challenge of differentiating itself. However, Cranium Filament Reductions intends to stand out from its competitors by offering exceptional customer service. This becomes even more crucial in the “quick salon” segment where profit margins are narrower and the objective is to serve a large number of clients daily. To achieve this, Cranium will allocate resources in terms of both time and money for training its staff, ensuring that clients receive the ultimate experience. This strategy will facilitate the transformation of clients into loyal, repeat customers.
By offering excellent customer service, Cranium aims to compete with and outlast bigger chains and independent stores. The overarching goal is to establish Cranium as the leading family salon in the Shaker Heights area. The marketing strategy consists of creating awareness about the available services, expanding the customer base, and fostering customer loyalty and referrals. Cranium wants to convey the message that they can efficiently serve the entire family with professionalism, superior customer service, and affordable prices.
The message will be communicated through different methods, including in-store and storefront displays, as well as advertisements in two local newspapers. These approaches aim to attract customers and reach a large audience. Cranium’s marketing mix consists of strategies related to pricing, distribution, advertising and promotion, and customer service. The pricing model is based on competitiveness with other similar service providers, while all services and products will be available at the centrally located store. The high traffic mall location enhances visibility, and a targeted advertising campaign conveys the desired messages. Exceptional customer service is a priority for Cranium, with all employees trained to handle any problems independently. Marketing research involved conducting focus groups to gain insights into buying patterns of potential customers, attracting a diverse range of participants who shared their preferences and reasons for using certain services.The participants were also given the opportunity to provide feedback on how their existing service could be enhanced and what factors would motivate them to switch to a different salon. In addition, they received some information about the services offered by Craniums and assessed it.
The focus groups provided valuable information and feedback, some of which was already known to Cranium and some that offered new insights. The 4.0 Financials, Budgets, and Forecasts section will provide an overview of Cranium’s finances in relation to their marketing activities. This will include a break-even analysis, sales forecasts, expense forecasts, and how they align with the marketing strategy. Additionally, the 4.1 section specifically focuses on the break-even analysis.
The break-even analysis reveals that $32,340 is needed in monthly revenue to achieve the break-even point. The Sales Forecast indicates that the initial month will be dedicated to store setup, employee hiring, and training. The store will officially open in the second month. Sales in the second to fourth month will be relatively slow as Cranium works on establishing a customer base. However, sales will steadily increase from the fourth month onwards. The Expense Forecast includes high marketing expenses during the first quarter to enhance visibility for the start-up organization.
They will then settle down a bit until the winter months when they will ramp up as the winter months are a time when there is an increase in spending on hair care in preparation for the winter holidays.
Controls The purpose of Cranium’s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:
•Revenue: monthly and annual.
•Expenses: monthly and annual.
•Repeat business.
•Customer satisfaction.
5.1 Implementation Milestones The following milestones identify key marketing programs. It is important to accomplish each one on time, and on budget.
Marketing Organization: Susan Sever, the owner, will have the main responsibility for marketing activities. She may seek outside assistance for certain creative tasks.
5.3 Contingency Planning Difficulties and Risks:
- Problems with generating sufficient daily sales.
- A notably slow first and second quarter that could greatly impact cash flow.
- Road construction near the mall, which could significantly affect customer traffic.
Potential Worst Case Risks:
- Determining that the business cannot sustain itself over time.
- Having to sell off equipment to handle liabilities.
