Service Experience For Local Consumers - Case Study Example

Business Report: Tony & Guy Hair Salon 300 Lonsdale St, Vic, 3000, Melbourne Name: Lecturer: Course: Date: Table of Contents Table of Contents 2 Introduction 3 2. Target market and positioning of the firm 4 2.1 Demographic outline 5 2.2 Geographic outline 5 2.3 Socioeconomic status 6 2.4 Gender 7 3. The 7P’s of Marketing 8 3.1 Product 8 3.2 Price 9 3.3 Promotion 9 3.4 Place 9 3.5 Processes 9 3.6 People 9 3.7 Physical evidence 10 4. Marketing Mix: Four of the 7Ps of marketing 10 4.1 Product 10 4.2 Price 11 4.3 Place/ Distribution 13 4.4 People 14 Conclusion 16 References 17 Introduction Tony & Guy is an international hair and beauty care business that started first operation in 1963 in London, United Kingdom before spreading globally to have more than 400 salons and academies across the globe, including in Australia. The company manufactures own hair care products, including hair irons, styling and shampoo (Tony&Guy 2014a). The company is dedicated to providing excellent services in hairdressing. The company has more than 200,000 employees across the globe. Tony & Guy’s Melbourne subsidiary at Lonsdale Street provides hair-care services, beauty products and a beauty shop with pleasurable atmosphere customers. The Melbourne shop’s core range of products are mainly hair care services such as hair cut, weaving, curling, conditioning, hair colouring, reconstructing and perms. Tony & Guy also provide other services such as sculptured nails, manicure, pedicure, nail polish. The company also retails a wide variety of hair, nail and skin care products such as nail polish, shampoos, hair conditioners, hair spray, facial masks and mousse. The company’s mission is to make sure that hair care services are accessible to all people across the globe. Its corporate objective is to expand its services across parts of the world, through quality service provision. It also strives to ensure that customers are provided with first-rate services that are consistent and universally acceptable. Since it was launched in Melbourne, the salon’s main goal has been to become the leading service provider in hair dressing and beauty care services (Tony&Guy 2014a). Currently, it is among the leading international hair-care companies globally, which has indicated continues service improvement. This has allowed it to expand its customer base and increase its profitability. This report concentrates on hair-care service, mainly hair cut, provided by the company. It further determines the target market and describes its features. Further, four potential clients who fit the target market and their perceived needs of the hair care service based on the 7 P of the marketing mix, are assessed. Next, four of the 7Ps are critically examined in terms of the hair care service. Lastly, two recommendations are provided on how the company can adjust the product. 2. Target market and positioning of the firm Tony & Guy targets the entire Melbourne area. To realise its objective of becoming a market leader, it targets everybody in the market, regardless of their nationality, gender, age, religion, tribe and ethnic group. Different salons across Melbourne cater for different target segments. While some are focused on women, others target men, children and students. While some are family oriented, others are focused on individuals. Depending on the services and atmosphere, the target market can be distinguished depending on the services offered. For instance, almost all nail salons target women, since more women tend to get their nails done compared to the women (Ko et al. 2007). 2.1 Demographic outline Demographic encompass the target market’s background information. The demographic profile includes eco-conscious college-educated males and females. They should also be city-dwellers who have jobs in creative, social services and the corporate world. The target group consists of male and females in Australia, aged between the ages of 20 and 45 years. The 20 and 45 age group is likely to be working class individuals or students, who may be married or not married. Those targeted should also maintain some degree of interests in looking good, using high-end products, working in the corporate world, or travelling. The targeted customers are also likely to be people who are middle-income or upper-income earners (Noel 2004). 2.2 Geographic outline The target market for the salon is also circumscribed by geography. The targeted customers should be residents of the Melbourne area, although not necessarily so, since travellers are also targeted. The location plays a big role on the customers the business attracts. Since the salon is situated in Melbourne, near many corporate businesses, the marketing will have to appeal to the professional workers in the neighbouring offices who need to be served during business hours. Across Australia, hundreds of hair salons are cropping up to serve all different kinds of people. The reflected growth in the hair and beauty industry is attributed to the growing demand for personal pampering in Australia. Indeed, some studies have established that the daily commotions of the corporate world are currently at their highest peak, and more and more people are seeking for ways to make them feel good in order to overcome the high-stress environment in urban places (IBISWorld 2011). Hence, workers in the corporate world in Melbourne’s business district should be targeted. Since it is also situated at close proximity to upscale shopping centres, it also focuses on women and the entire family. To cater maximally to this group, the salon is open on weekends. 2.3 Socioeconomic status The salon also targets young affluent professionals. They should also be categorised under the AB socio-economic group. The targeted group should also have the propensity to participate or just enjoy watching outdoor activities. Additionally, their household earning should be averagely from AUS$38,000 to AUS$120,000 per annum. Disregarding their relatively unstrained spending, the targeted group should be price-conscious. The group should also be interested in the services offered. Noel (2004) argues that the hair and beauty care industry is highly elastic, as there is always a market for the salons. According to IBISWorld (2011) more and more people are becoming accustomed to luxuriant indulgences in today’s society. Additionally, the business is rapidly experiencing a paradigm shift. A decade ago, most beauty salons mainly provided regular services such as threading, waxing, facials, and bleaching. Today, they offer specialised services such as visible radiance lightening facials, skin toning facials, intense glow facials, hair revitalising, hair reviving, botox injections, and scalp conditioning programs. Therefore, irrespective of whether they are younger than 18 years or older than 35 years old, the target group should tend to have an inclination for living effective lifestyles. The target group should also tend to use road transport, which allows them to view advertisement billboards, or drive in their cars, which allow them listen to radio ads. To some considerable extent, the target group should also be status-oriented. The group should also prefer to be associated with premium services and products, despite the fact that they may not always be willing to spend ostentatiously. The salon should offer the latest styling, trendy cuts and hair colouring techniques to attract the audience that is interested in keeping with the latest trends. 2.4 Gender Despite the idea that the salon targets people of all genders, women should mostly be targeted, since they spend the most money on salon services (Noel 2004). Therefore, some marketing efforts will focus on women, while others focus on men who are conscious about their appearance. The customers targeted should therefore include the males and females who look for cutting-edge salon that provide latest styles. They should also like hairdos that are in vogue, and tend to read trendy magazines and websites. Statistics indicate that between 70 and 75 percent of men use hair make ups. This signifies that men form a significant customer potential for Tony & Guy. The company targets the three groups separately. The biggest fraction of the company’s revenues comes from the female clientele. Consequently, the company should target women, both upper- and lower-end women markets tend to identify themselves with chic and expensive hair care services. The young children are the emerging market. The company needs to use marketing strategies aimed at the young mothers who visit its shop with children. Tony & Guy should therefore target three main market segments, namely the males who make up 55 percent of the customer base, women who make up 24 percent of the customer base and can afford upscale salon and women with children who comprise 21 percent. Figure 1: Market analysis of the target segment 3. The 7P’s of Marketing Rafiq and Ahmed (1995) state that when three new Ps mainly physical evidence, people and process is added to the 4 P’s of the marketing mix, which are place, price, promotion and product, the 7 P’s is created. From a survey of four (4) people who fit the same target market, the following was conceived of what they would require from the 7 Ps. 3.1 Product The participants in the survey said they wish to be served by trained or professional hair stylists. They also wished the salon to provide hair loss therapy. The participants also want a separate styling section that can provide them with catalogues of hair styles and designs. 3.2 Price The participants in the survey consider price as a huge factor in choosing a salon. The participants want the company to provide buddy discounts, where customers who come with friends are given discounts. They also want family discounts to families that come together for hair care. 3.3 Promotion The participants in the survey recommended that the company could provide free packages, such as free haircut during public holidays to promote its public image. The participants also stated that they normally use the internet, car radio, posters and magazines and would wish to see the company’s ads in these media. 3.4 Place The participants agreed that salons should give a high priority to where they situate their business. They stated that they would go for hair care in salons situated in places that are accessible and convenient, such as near residential areas or places of work. 3.5 Processes Yasanallah and Vahid (2012) define processes as the quality of processes used in delivering the service. The participants in the survey stated they would go to a salon with first-rate hygiene and safety standards. The quality of the hair care service and products also mattered. They also stated they would hate to wait for long hours in order to be served. 3.6 People The participants said they would be motivated to go to a salon that has friendly and caring staffs, who are also informed on hair care, and would freely recommend to customers specific hairstyles. 3.7 Physical evidence Jain (2013) defines physical evidence as the features that tend to give a service firm some form of tangibility. These include interior and exterior decors and staff uniform. The participants said they would love to frequent a salon with light colours for the exterior. On the other hand, they would shy from going to salons with colourful and ostentatious exterior decoration, as it would appear luxurious and expensive. They also want interior décor and toys that could appeal to children. 4. Marketing Mix: Four of the 7Ps of marketing 4.1 Product Product describes the goods and services offered by a business. Rafiq and Ahmed (1995) advice that an important element a business should consider in developing an effective marketing mix is acquiring knowledge on the target market, along with the competitors in the market. The business may then use the knowledge it has acquired to attract customers. Indeed, Tony & Guy’s marketing strategy is incomplete without the element of ‘product.’ The company also offers a range of products and services to attract and maintain a large customer base. These include hair styling, hair cut, hair straightening, hair extension, colouring, pedicures, manicures, waxing, and facials. To ensure it serves diverse customer needs, the company blends its hair treatment services with products. The company also believes that while the female clientele may be discriminated by prices and class, their quality services greatly attracts this segment to the market (Tony Guy 2014a). The women therefore provide a significant market base for Tony & Guy. To the women, the company considers that since they prefer the glamour associated with classy salons, while essentially not the entire target group can meet the expense of the luxury, the company provides a range of hair treatment services, although within the normal price range. The company has focused its marketing strategies on women by emphasising on making its premises look classy and providing ultra hype styling at the Melbourne outlet. In its advertisements, the company sends the message out that hair treatment services and products are no longer secondary needs. Rather, they are basic needs that every woman is entitled to. The salon has playing facilities for the children, where the children can safely play while waiting for their parents or to be provided with hair care. The company focuses on marketing strategies aimed at the young mothers who visit its salon with children, through investing in playing facilities, kids’ toys and hairdressing services tailored to the children. Additionally, the children are given special rates to entice families to come with the children to the salon. Accordingly, the salon has earned a reputation for its dedication to research and development, so as to improve the quality of products and services. Among the key strategies it uses, includes taking the customer’s interests into account, and giving a broad range of hair care products to give customers a broad list of services to choose from. To remain competitive, the company keeps up with the latest trends in hair fashion. To ensure this, it continuously updates its brands and seeks to respond to the dynamic hair and beauty care industry. 4.2 Price Price describes the amount of money charged for goods or services (Watershoot & Van Den Bulte 1992). According to Kotler (2003), the pricing strategy of a business should ensure the right position of its products and services in the market. The strategy should as well propose a price that covers the profit-margin and rely on customer demand, current competition and competitor products. Tony & Guy salon uses a pricing strategy in line with Kotler’s (2003) suggestion. The company’s pricing system is based on the competitive pricing model, so as to ensure that services and products remain affordable while at the same tome remaining relatively competitive to the competitor prices. While the company’s pricing strategy relies on the current price range in the market and those offered by the competitors, the company seeks to ensure it offers affordable prices that attract customers in Melbourne, yet yield significant returns (Tony&Guy 2014b). While the company acknowledges that pricing is its most influential element that influences customers and ensures that the company remains profitable, the company has put policies in place to help the management set optimum prices that are attractive to customers. The pricing is therefore strategic and is intended to influence overall organisational performance and competition in the market. The prices of the services and products are designed to fit the needs of all customers that although geographically separated, become united by the company’s services and products. Fixed price is used in Melbourne, since on average, it has similar market segment in terms economic and demographic situations. In other areas such as Sydney, the company charges higher prices. The policy entails establishing the proof for the customers who are willing to buy the product at the same prices based on similar market conditions. While this may appear to be discriminatory in nature, the prices are fixed in a way that the nature of pricing can maintain goodwill in the consumers. The strategies enable the company to employ higher pricing in markets it views to be better economically, and to compensate for the reduced rates it charges in Melbourne, whose average income and economic levels are lower. 4.3 Place/ Distribution Constantinides (2006) describes promotion as the channels for conveying the product to the places or locations where the end-customers can access them. Being a multinational company in the hair and beauty care industry, the company uses a strategic marketing plan for its products and services that can meet diverse global demands and needs. Indeed, compatible with its mission to ensure global reach, Tony & Guy has always been aware of its global base of customers. Therefore, its strategy has always been to create and invest products and services that exceed the demand and preferences of customers, in spite of their location across the globe (Tony&Guy 2014a). In Melbourne, the company is aware of the diverse customer base it services, including customers originating from Islamic Middle East, to the Chinese, Africans, Italians, English, Jews, Irish and the Aboriginal Australians. To ensure it meets the diverse customer background, the company invests heavily in continual research and development and keep at par with the changing customer needs and special demands. The company also trains its large pool of customer base on multicultural aspects to ensure that they can serve the diverse customers satisfactorily. The company has also continually reiterates sensitively to racism and strives to conform to beauty concepts of each culture in Melbourne, through continual surveys, and research and development. Situated in Melbourne’s business district, the interior design of the salon also appeals to the men, women and children. Since the salon seeks to portray itself as a high-end men’s salon. The interior design of the salon also appeals to the men, women and children. Since the salon seeks to portray itself as a high-end unisex salon, it provides décor that appeals to both genders such as sections with dark wood and leather furniture, so as to encourage the male and female customers to hand around. Additionally, since it also targets young women with children it provides comfortable furniture with bright colours. 4.4 People Rafiq and Ahmed (1995) argue that people are the most significant element of any service. This is since services are produced and consumed simultaneously (Grönroos 1994). Additionally, elements of the customer experience are changed to meet the specific needs of the individual consuming the service. Tony & Guy salon also believes that the role played by people in ensuring the effectiveness of its marketing strategies cannot be taken too lightly (Tony&Guy 2014a). As seen in the company, the people element covers its customer service and frontline sales workforce. These tow directly impact the way the company’s services are perceived. Rafiq and Ahmed (1995) suggest that businesses need to consider the knowledge and skills of the staff and what motivates them to support the brand. The company also leverages customer service to deliver quality services to its customers in Melbourne. Additionally, the company’s staffs are trained to provide excellent customer services at its academy in Melbourne. The company believes that its customers buy from people they can trust. Hence, the company ensures that the skills, attitude and appearance of its staff are first-rate. The company has frequent internal employee training programs through the Tony & Guy academy, through which the employees are trained on quality customer service. This is since the company believes that people play an important role in ensuring quality service delivery and customer satisfaction. Additionally, they have to be relied on to deliver and uphold transactional marketing. The company’s people also play a critical role in ensuring customer relationship (Kotler 2001). The salon’s employees also provide diversity. Essentially therefore, the company believes that embracing people’s cultures is the best strategy to reach and serve consumer interests. Since the majority of the employees are women from different racial backgrounds, they represent a symbol of the global market. The company’s outlet in Melbourne prepares staff to provide fast and reliable services to the male clientele. The outlet closes late at night in the high-traffic area. Security to the premises is provided by the private security company hired. Recommendations For Tony & Guy to maximize return from the market, it needs to adjust the product element of the 7 P’s of the marketing mix. This will ensure that its brand is appropriately positioned. It also ensures that the value proposition is appropriately identified. Product Kotler (2003) suggests that the product is the first element customers examine before deciding whether they can benefit from the product or not. In the case of Tony & Guy, the product is the service. According to Jain (2013), the product should be made up of varied elements that comprise quality and variety that can both be applied to the service. Tony & Guy already has a range of hair care services. However, in order to fuse its services into the mind of the customers, it needs to consider using ecological products. Studies have showed that more and more Australian consumers are showing interest in eco-friendly products and strong willingness to pay some extra cash on eco-labelled products (Langley 2013; Lawrence 2009). The company should undertake researches on the proper nutrition for hair through the use of natural products. Studies have indicated that more Australian consumers are increasingly becoming eco-conscious. By selling organic make up products, the salon will appeal to the diverse needs of eco-conscious women, who are concerned with the impacts of chemicals on the skin and the environment. Additional recommendation includes a comfortable separate styling section. The separate styling section should comprise a separate section where customers could sit and the company staffs responsible for the section provides them with magazines and catalogue, through which they can select a style that fits their taste. The style at the section could afterwards set their hair based on what the customer select. This will enable the shop to earn extra revenue, and when quality work is the outcome, the company would gain popularity, as well as recommend the company to friends and other acquaintances. These changes will enable the company to differentiate its products from its key competitors. Conclusion Tony & Guy uses target market as part of its strategies to reach varied market segments. The company targets each one in the market despite the age, religion, gender, tribe and nationality. By targeting everyone in the market, it ensures that no potential client is discriminated and that each customer feels satisfied. It targets three main market segments, namely the males who make up 55 percent of the customer base, women who make up 24 percent of the customer base and can afford upscale salon and women with children who comprise 21 percent. The company has effectively made use of the 4 P’s to boost its uphold strategy. This ensures that the company gains competitive advantage over its competitors. The company has also set different prices for its hair care services to ensure that customers from different economy and income status are served. The company positions itself by offering high-quality products services at affordable price. However, to maximize return from the market, Tony & Guy salon needs to adjust its product element. This will ensure that its brand is appropriately positioned and that the value proposition is appropriately identified. It is recommended that the company needs to consider using ecological products since more Australian consumers are showing interest in eco-friendly products. It also needs to set up a comfortable separate styling section at its Melbourne shop. 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