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Marketing Champs : Princessa Case

Princessa Case
by

Keegan Boulineau

on 15 October 2012

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Transcript of Marketing Champs : Princessa Case

Questions? - Retailer of beauty products
- Established in 1984
- Located on Dollard Avenue in LaSalle
- Sale of beauty products (hair extensions,
wigs, hair and skin care products, cosmetics
and other beauty accessories)
- Serves the black community in Montreal Summary Problem Statement and Company Profile SWOT Analysis Decision Factors Controllable and Uncontrollable Variables Marketing Alternatives Potential plans and strategies including quantitative analysis Princessa Beauty Products Group 2
Karim Habbari, Keegan Boulineau, Guillaume Girard, Sherry Javaid, Adam Singer, Isabella Johnson Recommendations Marketing strategy suggested by our team of consultants Questions What marketing strategy can Princessa implement to increase its annual sales by 5% each year over the next few years, given the current conditions (competition, rising prices)? Problem Statement One sole male shareholder


Three part-time female employees Strengths Strong customer loyalty due to its first-mover advantage

Use of a loyalty program aimed at increasing switching costs

Attractive layout and appearance of the store, as opposed to the main competitors

Located in a strip mall, with many outlets catering to a black clientele.

Covers a wide range of products for the black community (wigs, hair treatment) Internal Weaknesses The owner only speaks English

Part-time and unqualified staff (lack of sales training)

Weak Financial backing and poor budget Internal Opportunities There is a broader audience to target, a potential to expand the segment.

Opportunity to create a brand image, which promotes the cosmetics’ value (desire to be beautiful, admired).

Use of social media tools (facebook, twitter, linkedin).

Competitors don’t use strong advertising programs External Threats Emergence of competitors, A-plus and Beauty Palace

Department stores and pharmacies offer targeted products for the same community

Canada sliding into a recession affecting the purchasing power of consumers and the price charged by suppliers External Decision Factors Product Price Place Promotion Major sellers: hair extensions and wigs

Bath and shower products

Men’s grooming products

Colour Cosmetics Between $5 and $25 for most of the products

Around $15 for
synthetic hair

More than $100
for human hair Large concentration
of black people

Located in a
low-income
neighbourhood

In a strip mall Word of mouth
based on
networking

Advertising: biweekly newspaper, local LaSalle newspaper, local radio

Discounts bins

Loyalty
Program Controllable Segmentation: Demographic Decision Factors Controllable Segmentation: Geographic Decision Factors Controllable Segmentation: Decision Factors Controllable - Women are concerned about their
physical appearance


- They have a strong interest for physical
beauty Psychographic -Benefits Sought: Reasonable price, convenience, desire to be beautiful

- Usage: Customers usually do their purchases during the weekends (regular basis)

- Decision-Making: Individual basis (Women) Behavioral Decision Factors Uncontrollable Trends: growth in anti–aging and natural products on the market.

Rising competition and difficult economic conditions (recession)

Seasonal peaks of sales: Summer, Spring and during holidays

Limited budget and funds as opposed to the main competitors Alternative 1 Keep the same target segment and expand within the black community Step-down Market Share Analysis: 1) Princessa market share relative to the hair care segment in the surrounding area:

530 309 / 1 854 442 = 28.6% = Proportion of the surrounding areas’ population relative to Montreal’s population

0.286 x 85 737 220 = $24 520 844.92 = Sales in $ of the hair care segment in the surrounding area

n.b: Approximately 60% comes from wigs and hair extensions and 30% comes from hair care

509 249 x 0.90 = 458 324

$458 324 / $24 520 844.92 = 1.90% : Princessa’s Market Share in the hair care segment of the surrounding Areas

2) Princessa market share relative to the hair care segment in the black community of the surrounding area:

41 640 / 1 854 442 = 2.25% = Proportion of the black community’s population relative to Montreal’s population

0.0225 x 85 737 220 = $1 929 087.45 = Sales in $ of the hair care segment in the black community of the surrounding area
Approximately 90% comes from hair care in general: 509 249 x 0.90 = 458 324

Since 95% of the customers are black people:
458 324 x 0.95 = $435 407.8  = Sales in $ of hair products to the black community

$435 407.8  / $1 929 087.45 = 22.57% : Princessa’s Market Share in the hair care segment of the Black community 22.57% market share implies that there is still a potential and an opportunity to expand the market within the black community area Methods:

Use of social media
Improve the advertising campaign: promote and connect people within the community


Pros:

Enhance its presence in the niche market
Become more visible due to social media and advertisement
Increase the loyalty of current black customers, of which 30% shop at competitor stores
Social Media Advertising is free


Cons:

The owner does not have enough time to manage a social platform (website)
Not enough resources to undertake an advertising campaign Keep the same target segment and expand within the black community Alternative 2 Target the white community Princessa market share relative to the hair care segment in the white community of the surrounding areas:

530,309 x 0.713 = 378,110 = White population of the surrounding areas

378,110 / 1,854,442 = 20.39% = Proportion of the white community population in the surrounding areas relative to Montreal’s total population

0.2039 x $85,737,220 = $17,481,819.16 = Sales in $ of the hair care segment in the white community of the surrounding area

Approximately 90% comes from hair care in general:
509,249 x 0.90 = 458,324

Since 5% of the customers are white people: 458,324 x 0.05 = $22 916.20  = Sales in $ of hair products to the white community

$22,916.20  / $1,929,087.45 = 1.188% Market Share of hair products in the White community. Target the white community Methods:

Diversify the offerings to include beauty products tailored the white community (n.b: available space in the basement)
Expand its original segment to position itself and earn additional market share
 
Pros:

Enlarge the customer base
Expand market share in the white community
Satisfies more wants and needs

Cons:

Holding more product is expensive
Risk of losing a portion of its current base market Alternative 3 Hire a Bilingual Manager Anglophone community in the local area = 180,805 people
Total population of the local area = 530,309
Therefor Francophone community = 530,309 – 180,805 = 349,504 There is a strong concentration of Francophones in the surround area. Hire a Bilingual Manager Ways:

Advertise job offering
Require complete documentation
Implement interview rounds.

Pros:

This will provide better efficiency and better productivity
Saves time
Offer valuable services in french
Better capacity planning
Cons:

Expensive
Difficult to find qualified person
Does not guarantee better effectiveness and better management Recommendations Given Princessa’s current economic situation, our consulting group suggests: Keep offering the same products targeted to the black community
Maintain loyalty marketing philosophy
Ensure base market fidelity Tap into the Caucasian hair care market:
Convert the current untapped basement to a second selling floor
Diversify the products by offering new products tailored to the White community
Increase this stock of products over time with the revenues generated by the first sales Use Social Media
Continue advertising in Community Contact
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