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NCRD’S Sterling Institute of Management Studies
An innovative approach to increase BRAND VALUE OF LAKME PRODUCT
Submitted to:Prof. D.R.KAMRAJ
Submitted by:DEEPAK R GORADROLL NO.- C-9:
Emerging Trends At Present
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5
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2005 2015 2025
Agg
rega
te D
isp
osa
ble
In
com
e(T
rilli
on
, IN
R) Globals (>1000)
Strivers (500-1000)
Seekers (200-500)
Aspirers (90-200)
Deprived (<90)
Rising Disposable Income
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1995 2005 2015 2025
Shar
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ou
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Co
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, Th
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NR
)
Health Care
Education & Recreation
Communication
Transportation
Personal Products & Services
Household Products
Housing & Utilities
Apparel
Food, Beverages & Tobacco
Shift in India’s Wallet Share
Best in ClassInternational
Quality Offerings
Shift in Wallet Share
LargestYouth
Population
Proliferation of Media
Attention to Grooming & Looking Good
RISING CONSUMERISM
IN INDIA
Dedicated Shows, Events,
Celebrity Association
SOURCE : Mckinsey Global Institute
Expected Growth Potential For Segments & Sub Segments In Wellness Space
Slimming CentresSalons
Spas
Alternative TreatmentsAyurvedic Treatment
Centres
Non Surgical Cosmetic Procedures
Gyms
Alternative Medicines
Ayurvedic Medicines & Products
Cosmetic SurgeryCosmetics & Fragrances Skin & Hair Care
Products
Treatment BasedBeauty Products
Dietary SupplementsHealth Food
& Drinks
0
5
10
15
20
25
30
35
40
0 1000 2000 3000 4000 5000 6000 7000
Gro
wth
Rat
e (
%)
-Ti
ll 2
01
2
Approximate Market Share as of 2009 ( Crs, INR)
Double Digit Growth Segments drivenby increasing Consumer Awarenessand demand for such types ofServices
Course of Action for targeting Lower LSM
LSM 8 +
LSM 12+
CUSTOMER BASE PYRAMID( Actual & Potential )
x
10 x
Below LSM 8
POA FRAMEWORK
Metrics for Success Measurement
Promotional Strategies
Customer Service Proposition
Training & Development Module
Choice of Location for Setup of Salon
Choice of Business Establishment & Expansion Model
Choice of Brand Elements & Vertical Extension of Brand LAKME
Identification of Key Drivers for Footfall Improvement
HUGE Business
Opportunity
Association of LAKME with Brand Imagery Statements
(N = 60)NON - USERS USERS
(N = 72)
75%
73%
68%
66%
57%
55%
52%
52%
52%
47%
43%
40%
37%
26%
26%
9%
3%
Popular brand
Premium brand
Most associated with females
Best known for skin care/ hygiene
I would NOT recommend this brand …
Brand leader
For young people
Gives me a perfect look for an …
Up market and stylish brand
Best understands Indian environment
Brand I love
Value for money
Unique offerings
Offers best hair care & styling …
Offers one stop solution
For someone like me
Brand for old people
84%
76%
76%
75%
74%
73%
73%
70%
67%
66%
64%
62%
59%
35%
30%
15%
10%
Popular brand
Premium brand
Most associated with females
Best known for skin care/ hygiene
Brand I love
For young people
For someone like me
Up market and stylish brand
Brand leader
Gives me a perfect look for an …
Value for money
Best understands Indian environment
Offers best hair care & styling services
Unique offerings
Offers one stop solution
I would NOT recommend this brand …
Brand for old people
Brand Personality & Positioning of LAKME
LAKME : Unique Combination of Local Roots with Global Scale
Beautiful ,Confident and Independent Women
On top of the world
Source of Radiant Beauty
Beauty Expert of Indian Women
Trendy and Stylish complete Range of products for Skin and Beauty Care
On the JENNIFER AAKER BRAND PERSONALITY CHART ,Lakme’s Brand Personality comes out to be that of an‘Exciting’, ‘Competent’ and ‘Sophisticated’ Person
EXCITING
COMPETENT
SOPHISTI --CATED
Daring and Spirited Brand, mostof the products are trendsettersand the Brand has lived up to itsposition as Market Leader
Reliable & Intelligent, has nevercompromised on quality therebyTHE Brand Indian Women trustfor their skin
Portrayal of Indian Women inLakme Ads is that of an UpperClass charming girl who isSmart, Confident & Independent
LAKME NEXT – The Concept
Vertical extension of the ‘Lakme’ Brand Positioning in line with Image of Lakme – Premium Brand delivering Trendy
and Quality services at Economical Cost Salons to offer Basic In-Demand Services (Both Skin & Hair) Cost saving through Lower Training Cost, Lower Investments (Tier II & Tier II
cities), Lower Infrastructure Requirements
Lakme
Next
Lakme
Salon
Lakme
Studio
TARGET SEGMENT :
-Premium Class
- SEC A1, A2
- 16 to 25 year old
women
TARGET SEGMENT :
- Upper Middle
Income Class
- SEC A2, B1
- 16 to 25 year old
women
TARGET SEGMENT :
- Lower Middle Income Class
- SEC B2, C1
- 16 to 25 year old
women ( Student &
Working class)
Business Establishment & Expansion Model for LAKME NEXT
STRATEGY : Operations via COCO Model in Short Term & HYBRID Model in Long Term ( Economies of Scale & Economies of Skill)
Parameter COCO Model Franchise Model
Setup CostHigh Capital Requirement
Low
Operational Cost
Upfront Costs & Ongoing CostsCost incurred on Training
Cost incurred onTraining No Product or Inventory Holding Cost
GrowthProgress
High Investmentsinvolved in expanding reach
Rapid Expansion Greater Spread
Return on Investment
(ROI)
Lower due to High Capital Investment
Higher ( Royalty to the extent of 10-15%)
Reach to TGLower due to limited Operational Spread
Better Proximity to Potential Users
Profit Gain Higher Profit Margin
Lower Absolute Profit per FranchiseGreater Cumulative Profit
Hypothetical Profit Margin Model ( COCO Vs Franchise)
Rs in Thousands Assumptions Involved COCO Model Franchise Model
Sales/Revenue Generated Avg. Annual Footfall : 12000 3000000 600000
Bill Generated Per Customer : 250
( Commission on Sales)
Revenue through Brand Fee 0 100000
Revenue via Sales to Franchise
SP lower than MRP offered to Franchise 0 200000
Variable Cost
Products CostMfg. Cost (COCO), Sales(Franchise) 360000 0
Includes Equipment & Beauty Product Cost
Maintenance Cost 20 % of Rent 120000 0
Training CostIncurred only by COCO (5000
per Employee) 10000 0
10 Employees trained every 6 Months
Advertising CostBrand Fee received from
Franchise 100000 60000
Fixed Cost
Salaries10 Employees Overall, 9000 per
Month 108000 0
Rent Rs 100 per sq ft monthly 600000 0
Total 1298000 60000
Profit 1702000 540000
After taking Taxation into account Profit Margin for COCO : 30-40% , Profit Margin for Franchise : 6-8%
2011
• Launch of LAKME NEXT • Initiation with
COCO Model• Target Group :
- Age : 16-25 yrs oldwomen
- Region: Tier II & Tier III Cities- Socioeconomic: SEC B2, C1
• Expected No. of Outlets – 2 to3
• Initiation of FranchiseModel
• Increased Spread of COCO Outlets to expand Reach
• Expected No. of COCOOutlets – 10 to 12 ( PanIndia)
• Co-Existence of COCO & FranchiseModels (Hybrid)
• More emphasis onFranchise model toenhance scalability
2013 2015
Investment Rs 50 lac–1 crBrand Fee Rs 20-30 lacFloor Space 2500-4000 sq ftRoyalty 10%
Investment Rs 30–50 lacBrand Fee Rs 3 lacFloor Space 1500 sq ftRoyalty 15%
Investment Rs 10–20 lacBrand Fee Rs 5 lacFloor Space 100 -400 sq ftRoyalty 15%
Investment Rs 5 –10 lacBrand Fee Floor SpaceRoyalty 10%
Investment Rs 30–50 lacBrand FeeFloor Space 1000-1600 sq ft
Royalty 15%
Investment Rs 15 –25 lacBrand Fee Rs 10 lacFloor Space 500-600 sq ft
Royalty 15%
Competitor Arena
Strategic Road Map
AT THE LEVEL OF KNOWLEDGE
FACTORS
1 Growth in Personal Disposable Income
Real Estate Costs 2
3Competitive Analysis to understand
Saturation level
Proximity to Training Academy/Operational Costs
4
5 Consumer Behaviour in terms ofSpending Patterns
Choice of Location for LAKME NEXT Salons
Current Spread of Lakme Salons & Studios Pan India
TARGET CITIES: Tier II and Tier III cities suchas Surat, Vadodara ,Ahmedabad , Nagpur, Pune in WestZone, Jaipur, Ghaziabad, Gurgaon, Noida in North
REASONS• Booming destinations for businesses and experiencinga skyrocketing growth in Infrastructure and Real Estate• Experiencing high influx of people and improving standards of living• Lesser Spread of Competition in these states• Proximity to Training academies in Mumbai and Delhi
Key Locations to set up salon: HIGH STREET• High popularity of high street shopping concept• High conversions as people visiting are generally serious buyers
Customer Service Proposition
• Trimming
• Hair Styling
• Shampooing
• Dying
• Highlighting
HAIR CARE
• Threading
• Face Cleansing
• Bleaching, Waxing
• Body/Face Massages
SKIN & BODYCARE • Pedicure
• Manicure
• Nail Treatments
NAIL CARE
Loyalty Programs : Get a Service Package free after 5 services
Gift Vouchers, Employee Award Coupons and Discounts
Seasonal or Festive Discount Packages
Tie ups with Megastores and Departmental Stores like Shopper’s Stop, Globus & Westside
USPHolistic Beauty
Experience for THE Woman of today at an
Affordable Cost
Holistic Marketing of LAKME NEXT
LAKME
EMPLOYEESCUSTOMERS
EXTERNAL MARKETING
Pricing DistributionPromoting
Service
INTERACTIVE MARKETING
TechnicalMarketing
Functional Marketing
INTERNAL MARKETING
Employee Training
Motivating to serve
customers well
SALONBUSINESS
Sources of Awareness
From a friend or relative
Advertisement in newspaper/ magazine
Advertisement on hoarding
Advertisement on the internet
Events -(Lakme fashion week, fashion shows at colleges,etc)
Pamphlets
Advertisement on television
Advertisement displays at shop/supermarket/ shopping mall
Advertisement displays at a gym/ fitness center/ social club
Advertisement on radio
Advertisement displays at a multiplex / cinema hall
72%
64%
57%
53%
47%
45%
32%
23%
17%
13%
9%
(N = 132)
• Study conducted by the Keller Fay Group revealed that members of generation Y have about 145 conversations a week just about BRANDS which is twice the rate of adults
Importance of Role of Word of
Mouth Marketing, Social
Media, Print Media
Promotional Strategies
ABOVE
THE
LINE
On Air Contests and Sponsorships
Promotion through Local Television
Channels
Newspaper Inserts and Pamphlets
BELOW
THE
LINE
Road Show Promotions, Entertainment Events, Retail Displays, Trials in Malls and moving Vans of Lakme
Hoardings/Flexes in Malls, Screens outside the Malls playing advertisements of the Brand
In-Shop and Shop Front Activities & Display Units
Distributing pamphlets, Brochures and service Catalogues
Holding Seminars, Product Launches, Competitions/Events in Colleges in Fashion shows
http://www.mckinsey.com/- India’s Urban Awakening : Building Inclusivecities, Sustaining economic growth April 2010.
http://www.mckinsey.com/- Indian Consumer Trends www.euromonitor.com/ www.indiastat.com/ www.lakmeindia.com www.schwarzkopf.com www.loreal.co.in www.vlcc.co.in www.shahnaz.in Primary Survey (online) of 132 respondents across India (urban cities) Interviews with industry Professionals and Experts Study of various salons like Lakme Salons , Naturals, VLCC, Sprat, Bounce, Affinity,
Looks ,Harry and training academies like ASK, Lakme training academy spread acrossMumbai, Bangalore and Delhi
BIBLIOGRAPHY