SUMMER PROJECT REPORT ON A RESEARCH TO IDENTIFY THE MAJOR FACTORS THAT INFLUENCE THE SALES OF HAIR COLOURS IN THE PROFESSIONAL SEGMENT FOR Under the guidance of Mr. Kunal Koushik Mr. Raja Varatharaju Category Manager Director, Strategy and Business Development Schwarzkopf Professional, Chennai. Identiti Design Pvt. Ltd., Chennai Submitted in partial fulfilment of the requirement for the award of Degree of Master of Business Administration By W. ANNE SHARON Roll No.: 26065
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SUMMER PROJECT REPORT
ON
A RESEARCH TO IDENTIFY THE MAJOR FACTORS THAT INFLUENCE THE SALES OF
HAIR COLOURS IN THE PROFESSIONAL SEGMENT
FOR
Under the guidance of
Mr. Kunal Koushik Mr. Raja Varatharaju
Category Manager Director, Strategy and Business Development
Schwarzkopf Professional, Chennai. Identiti Design Pvt. Ltd., Chennai
Submitted in partial fulfilment of the requirement for the award of Degree of
Master of Business Administration
By
W. ANNE SHARON
Roll No.: 26065
BHARATHIDASAN INSTITUTE OF MANAGEMENT
(School of Excellence of Bharathidasan University)
TIRUCHIRAPALLI 620014
DECLARATION
I hereby declare that the project report titled “A research to identify the major factors that
influence the sales of hair colours in the professional segment” submitted in the partial fulfilment of the
requirement for the award of degree of MBA, is my original work.
This has not been submitted in part or full towards any other degree or diploma.
W. ANNE SHARON
ROLL. NO.: 26065
BHARATHIDASAN INSTITUTE OF MANAGEMENT
(SCHOOL OF EXCELLENCE OF BHARATHIDASAN UNIVERSITY)
TIRUCHIRAPPALLI
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ACKNOWLEDGEMENTS
I sincerely thank Mr. Raja Varatharaju, Director-Strategy and Business development, Identity Design Pvt Ltd., for his continuous guidance and moral support throughout the phase of my project.
My thanks to Mr. Murali Sundar, General Manager (India), Schwarzkopf Professional for his valuable inputs and feedback for the project.
I am very grateful to Mr. Kunal Koushik, Category Manager, Schwarzkopf Professional, for having guided me through every small step in my project. I thank him for having been very supportive of my work and also for providing valuable suggestions which helped to take my project to successful completion.
I also thank the respondents to the survey for having taken time out to help me with my work.
W.ANNE SHARON
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CONTENTS:
1. INTRODUCTION
1.1 SCHWARZKOPF – CURRENT MARKET SHARE AND ADVERTISING 8
2. INITIAL PILOT STUDY: RESULTS 9
3. RESEARCH OBJECTIVE 9
4. PROJECT SCOPE
4.1 TARGET GROUP 10
4.2 POPULATION SIZE 10
4.3 SAMPLE SIZE 10
5. SAMPLING TECHNIQUE:
5.1 SYSTEMATIC JUDMENTAL SAMPLING 11
6. TYPE OF RESEARCH:
6.1 EXPLORATORY / QUALITATIVE: 11
7. RESEARCH METHODOLOGY:
7.1. INTERVIEW THE TARGET GROUPS
7.1.1. HAIR DRESSERS 12
7.1.2. CONSUMERS 13
7.2. STUDY IN-SALON ADVERTISING 13
7.3. TRACK ADVERTISING 13
8. DISCUSSION AND ANALYSIS:
8.1. HAIRDRESSERS 14
8.2. CUSTOMERS 20
8.3. IN-SALON ADVERTISING 23
9. MARKETING STRATEGY
4
10. QUESTIONNAIRE:
10.1. HAIR DRESSERS 27
10.2. CONSUMERS 29
11. LIST OF SALONS SURVEYED: 30
12. REFERENCES 32
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LIST OF TABLES AND FIGURES:
TABLES
TABLE 1: INITIAL FINDINGS 9
TABLE 2: BRAND AVAILABILITY 15
TABLE 3: CUSTOMER PREFERENCE 16
TABLE 4: REASONS FOR HAIR COLORING 18
TABLE 5: PRICE 19
TABLE 6: HAIR DRESSERS’ INFLUENCE 19
TABLE 7: BRAND AWARENESS 20
TABLE 8: CONSUMER TOUCHPOINTS 21
TABLE 9: REASONS TO EXPERIMENT WITH NEW BRANDS 22
TABLE 10: MARKETING PLANS 25
FIGURES
FIGURE 1: BRAND POPULARITY 14
FIGURE 2: HAIR DRESSER TRAINING 15
FIGURE 3: CUSTOMER PREFERENCE 16
FIGURE 4: REASONS FOR HAIR COLOURING 17
FIGURE 5: REASONS TO EXPERIMENT WITH NEW BRANDS 21
FIGURE 6: HAIR DRESSERS’ INFLUENCE 22
FIGURE 7: SEGMENTATION BREAKDOWN: L’OREAL vs. SCHWARZKOPF 24
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1. INTRODUCTION – BACKGROUND:
The hair color market in the country is worth around 100 crores and is known to be rapidly growing at a rate
of 25% every year. Gone are the days when the predominant reason to color your hair was when it starts to
grey. With major advertising campaigns by leading fashion houses in the country and rising acceptance
among working professionals, hair color has now become a symbol of one’s personality. Several hair color
brands including Schwarzkopf, L’Oreal, Wella, Matrix etc. have cashed in on this trend.
Schwarzkopf is the cosmetics brand of multinational company, Henkel. The brand is 112 years old has many
innovations and almost 7600 patents to its credit. Schwarzkopf Professional is the in-salon hair care product
range and was launched in India in 2001. The business has four verticals namely:
1. Care
2. Form
3. Color
4. Finish
The professional hair colors under “Color” vertical come by the brand names “IGORA” (IGORA ROYAL,
IGORA VIBRANCE, IGORA ROYALE INTENSE, and IGORA ROYALE FASHION+).
Igora Royal is the largest selling hair color in the country for Schwarzkopf. It is a permanent hair color well
known among the customers for its vibrancy and long lasting nature. IGORA Royal represents a new, total
approach to colour products and services, designed from a colourist’s perspective to bring out quintessential
colour talent.
The range includes:
• IGORA Royal 12- Series
• IGORA Royal 10- Series
• IGORA Royal 9.5- Series
• IGORA Royal Extract E-00
• IGORA Royal Extract E-111
• IGORA Royal Concentrates
• IGORA Royal Colourist’s Colour & Care Developer
Base shades - 1-0, 2-0, 3-0, 4-0, 5-0, 5-00 etc.
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These base shades account for more than 50% of the market share for Schwarzkopf.
1.1 SCHWARZKOPF – CURRENT MARKET SHARE AND ADVERTISING
The market share of SKP currently stands at around 25 crores and growing. Schwarzkopf Professional,
being an in-salon brand, is not mass advertised. It caters to the niche market of permanent hair color users in
the higher end of the value chain. The product mainly drives its brand awareness through in-salon
advertising, offering world-class training to hair dressers through its professional institute ASK (Academy
Schwarzkopf) and signing up grade A+ salons across the country as exclusive Schwarzkopf franchisees.
Schwarzkopf has also had tie-ups with various salon ranges including Naturals and Lakme at different times
to promote their products and also to offer their expertise to other salons.
2. INITIAL PILOT STUDY: RESULTS
As the aim of project is to study the existing hair color market, a pilot study was conducted covering 20 A+
grade salons in Chennai, India. The leading hair dressers in each of these parlors were interviewed and their
views and perceptions were recorded.
It was seen that L’Oreal dominated the hair color market. Almost 70% of the hair color services done were
L’Oreal. The popular perceptions seemed to be so because of the ubiquitous presence of L’Oreal as this
brand has a large retailing service as well which covers a whole range of cosmetics and toiletries.
Thought L’Oreal does not advertise its in-salon “Professional” brand just like Schwarzkopf-Professional, the
former seems to have the advantage of popular public awareness, aided largely by its retailing products.
Schwarzkopf retains its brand image as an exclusive high-end fashion color and lately it seems to be
benefitting from increased customer awareness about hair colors in general. As more and more people visit
salons these days for hair color services, customer awareness about SKP is definitely increasing.
It was also seen that when it comes to choosing a hair color, customers primarily look for testimonials from
others users, usually their friends or they look for comments posted in on-line communities. L’Oreal, having
a huge customer base, seems to have an advantage in this area. Also, few people are die-hard fans of the
former and would not change to any other brand. But a sizeable chunk of those who walk into parlors do
seek the hair dressers advice and also might want to try new brands based on the hair dressers
recommendations.
All the hair dressers interviewed, do have a very good opinion of Schwarzkopf and said they would
definitely recommend it. if the customers asked for it. Hence customers seem to be prime factor to be
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influenced, in case of designing a marketing campaign. The following is a brief description of the
findings.
TABLE 1 : INITIAL FINDINGS:
FACTOR OBSERVATION
BRAND/S
PREDOMINANT L’OREAL
USAGE OF SKP LOW BUT INCREASING
PULL FACTOR CUSTOMER’S DEMAND / CUSTOMERS ARE MORE
AWARE OF COLORS / BRANDS.
HAIR DRESSERS (HD) LITTLE INFLUENCE
HD PREFERENCENONE / BUT THEY START WITH L’OREAL BECAUSE
PPL ARE AWARE OF IT
COLORS PREFERREDGROWING PREFERENCE FOR GRADE 4 AND ABOVE
(FASHION COLORS)
PRICE ALL BRANDS / SAME PRICE FOR COLORING
BRAND USAGE 1. L’OREAL 2. SKP 3. WELLA
3. RESEARCH OBJECTIVE:
The aim of this study is to understand the existing hair color market and what influences people to choose
between different brands of hair colors. Briefly, the following are the objectives of the study.
1. To study the hair color market in the city in terms of predominant brands, customer preference and the
dynamics of demand that influence the market share for each brand.
2. To identify the reasons for brand preference (SKP vs others) among consumers and design a pilot in-salon
marketing strategy to increase the sales of SKP.
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4. PROJECT SCOPE:
The project scope is as follows:
1. What influences decisions on hair coloring?
a. Reviews from friends / Hair dressers’ recommendation?
b. Magazines / Internet?
c. Repeat users / Brand loyalty?
A detailed questionnaire is prepared for this purpose which captures the key decision variables of customers
for decisions on hair color. The key influencing factors are also studied. Information regarding the frequency
of hair coloring, cost factors, quality of each hair color brand and the hair dressers recommendations are also
captured through the questionnaire.
2. Construct a customer decision tree to understand the key aspects that drive customers’ decision on the
choice of hair color brands.
A customer decision tree is a step-wise procedure taking into account the key influencing factors for a
decision by a customer and it helps to identify the key factors in this process which marketers can in turn
exploit for designing effective marketing campaigns.
3. Design a pilot in-salon marketing strategy to enhance sales of SKP.
4. Analyze / Evaluate results.
4.1 TARGET GROUP:
1. Hair stylists
2. Consumers
4.2 POPULATION SIZE: 350
4.3 SAMPLE SIZE : 51 Hair Stylists
25 Consumers
5. SAMPLING TECHNIQUE:
5.1 SYSTEMATIC JUDMENTAL SAMPLING:
Judgement sampling involves the choice of subjects who are most advantageously placed or in the best
position to provide the information required. Purposive sampling is used in cases where the specialty of an 10
From the findings above it can be noted that consumers are increasingly becoming the decision makers.
Hence a customer-centric initiative must be designed to boost sales.
Four strategies were designed and tested with the consumers.
Short term strategies
1. One free hair color service
2. Gift Coupons for other hair salon services like haircuts, etc.
Long term strategies:
1. A computerized system which takes in the customers’ profile photo and displays the various hair
colours on it. This will enable the customers to see and decide first hand on the choice of colour. The
colour palette will have exclusive Schwarzkopf colours only.
2. A one-year package with 2 colour services and 1 touchup service. The first two of these will have
a particular discount.
The following are the results:
One free hair colour service 72%A one-year package with 2 colour services and 1 touchup service. The first two of these will have a particular discount. 12%
Display systems which use your photo to show you in-system images of various hair colours so you can choose which one looks best on you, in real time. 10%
A colour service with a free fixed rate coupon to avail any other regular salon service of choice. 28%
TABLE 10: MARKETING PLANS
Consumers seem to prefer one short term initiative to try a different brand of hair colour. A activity can be
designed as follows.
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STRATEGY DESIGN:
Consumer data like phone number and email ID can be collected to track their satisfaction levels with the
product.
28
A visual at the door of the salon announcing the new offer. This would help to get the consumer’s attention The hair dresser must ensure that a consumer who has come for a hair colour service is aware of the offer.Once the consumer decides to opt for it, he/she must be given a flyer/leaflet which details the offer available.
10. QUESTIONNAIRE:
10.1. HAIR DRESSERS:
PARLOR NAME: AREA: CATEGORY:
1. Why do people generally color their hair for? [Check Box]
a. Grey Coverage
b. Fashion coloring
c. People with grey hair are now increasingly opting for fashion colors.
2. Brands available in the salons.[Check Box]
a. Schwarzkopf
b. L’Oreal
c. Matrix
d. Wella
3. Based on training, how would you rate the various brands?
a. Schwarzkopf
b. L’Oreal
c. Matrix
d. Wella
4. How do people make a decision about hair colors? [Check Box]
a. Ask for the hairdressers’ opinion only
b. Ask for a particular hair color brand.
c. Both of the above.
5. Which brand would you recommend strongly to customers?
a. Schwarzkopf
b. L’Oreal
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c. Matrix
d. Wella
6. Are customers increasing aware of hair color brands and the technicalities of hair color these days?
a. Yes
b. No
7. How many hair color services does your salon do in a month?
a. 5-10 b. 10-15 c. 15 and above
8. What is the cost for each of the brands? How much does a touch-up service cost?
9. Is there any technical problem with any of the products? (e.g. Does not last long, shine not to the desirable
extent etc.)
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10.2. CONSUMERS
NAME: AGE: GENDER: VOCATION:
1. What brands in the in-salon professional hair color category are you aware of?
a. Schwarzkopf
b. L’Oreal
c. Matrix
d. Wella
2. How often do you color your hair?
a. Once a year
b. Twice a year
c. More than twice a year
3. Which brands have you used so far?
a. Schwarzkopf
b. L’Oreal
c. Matrix
d. Wella
4. How do you decide on a hair color brand?
a. Ask hair dressers’ opinion
b. Consult friends
c. Read reviews online and in magazines
d. In-salon visuals
5. What would prompt you to try new hair color brand?
a. Free samples
b. In-Salon visuals
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c. Hair stylists’ recommendations
d. Friends
e. Others
6. On a scale of 1-5, how much weightage would you give to hair dressers’ recommendation?
7. Is price a deciding factor for choosing a hair color?
a. Yes
b. No
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11. LIST OF SALONS SURVEYED:
1 Green Trends, Parrys 18 Glos 35 Naturals, AnnaNagar