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Aeshna Ambardar Ankit Kumar
Esha Shah Gaurav Bagla
Kedar Amladi Piyush Kadoo
Namrata Shah Vibhuti MhatreRahul Patil Rohan Jadhav
Amit Kumar Singh Shraddha Sonawane
Saiprasad Sale
Team Members
Marketing Application & Practices
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Higher disposable incomes of the middle class
Women becoming more and more beauty conscious
Availability ofmore retail solutionsRising penetration of Indian beauty salons
Competition from both Indian and International players
Branded Salons,
1500
Fitness Center,
1500
Cosmetics and
Skincare, 7750Spas, 200
Estimated Size (Rs. Crore)
Market Drivers
Indian Beauty Services Market
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India's per capita consumption of branded cosmetics and toiletries is only
$0.68, much lower than Hong Kong ($40), Malaysia and Taiwan ($10 each)
[Assocham]
Between 1995 and 2005, household spending on personal care products
doubled from 4% of total income to 8% and is expected to grow to 11% by
2025 [McKinsey]
84% of Indians felt greater pressure to look better than the generation
before them [Nielsen] 77 million Indians will enter the working-class population between 2005
and 2015 [Census]
Indians will be richer and youngerSource: Outlook India
Salons In India Size: Rs 1,500 crore
Growth Rate 25% per year
Avg. Customer Spend: Rs 1,000-1,500/visitSource: Industry Reports
Indian Market in Perspective
Indian Beauty Services Market
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C
V
The HUB & Spoke chakra
Indian Beauty Services Market
Lakme Hub & Spoke Model
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57%
52%
54%
53%
48%
52%
14%
15%
13%
12%
13%
13%
18%
20%
20%
20%
22%
20%
11%
13%
14%
14%
17%
14%
SEC A
SEC B
SEC C
SEC D
SEC E
All urban
0% 20% 40% 60% 80% 100% 120%
Up to 1 lakh above 5 lakh 1 to 5 lakh Metros 0% 20% 40% 60% 80% 100%
SEC A
SEC B
SEC C
SEC D
SEC E
All urban
98%
97%
98%
97%
95%
97%
2%
3%
2%
3%
5%
3%
Female Male
6%
7%
7%
6%
6%
6%
26%
30%
20%
24%
10%
23%
65%
60%
71%
68%
81%
68%
3%
3%
2%
2%
3%
3%
0% 20% 40% 60% 80% 100% 120%
SEC A
SEC B
SEC C
SEC D
SEC E
All urban
Single/unmarried Married without children
Married with children Others
34% of spare cash was spent on Holidays and vacations
31.5% of the spare cash was spent on spent on New clothes
40% usually does something with other members of the family
38% prefers to go out with other members of the family
Consumer Behavior
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1.2 billion people
567.3 million women
Women students
Working maidens
Working wives
Housewives
Housewives moms
Working moms
75 million
168 million
280 million
Self-education
Status/fame
Health
Children
education
FamilyChildren
education
Brand & trend consciou
Price conscious
Housewives have higher famil
than households with working
Housewives show better SEC profile
segments
Working wives have the lowest self perceptions of their attractiveness
and claim to use the beauty
products the leastThe Indian Women se mentThe Indian Women segment
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BEAUTY INDUSTRY CURRENT TRENDS
THE BEAUTY SALON MARKET
OPPORTUNITY
Opportunity for up-gradation at
a relatively lower LSM (SEC B) ishuge as number of women inthat strata is large. The numberof women in LSM 8+ to LSM 12is ten times that of LSM 12+
Being a service business,customer retention is driven
largely through quality ofexperience, products used andspecific operators towardswhom customers have loyaltyhence, huge scope forcustomer loyalty programs
TRENDS
Evolved lifestyle
The explosion of Media Growing availability of salons
offering basic and innovativehair and skin services
RESULTS
Up-gradation of women fromunorganised sector to brandedsalons
More women looking at salonsas centres of expertise andauthority
Women expecting salons towork with product lines which
are professional New retail destinations
adopting salons to addresscustomer footfall
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LAKME SALON CURRENT SCENARIO
CURRENT MARKET POSITION-SWOT
Market leader in organised beauty services -LakmeSalons and Lakme Studios across 130+ centers in 25
cities
Mix of franchisee salons (105) and company salons
(25)
Grown at a (CAGR) of over 35% for the past 4 years,
ahead of market growth, estimated
between 25 to 30%.
The growth of Lakme is made up of an average
organic growth of 20 % with the rest coming from
inorganic addition
Currently Lakme Salons and Studios interact with
more than 150,000 active customers every year
The majority (90%+) of the customers are in the
bracket LSM 10+ and 70% are in LSM 12+ (SEC A+)
STRENGTH
Established presence High Brand Recall
Customer LoyaltyPrograms
WEAKNESS
High employee training& education cost
OPPORTUNITY
Leverage UnileversPan India Presence
LSM 8+ to LSM 12untapped market
THREAT
Vast Un-organizedBeauty market
International BoutiqueSalon Chains
Continuous escalationin real estate costs
Attrition
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LAKME SALON SERVICE PORTFOLIO
CURRENT SERVICE PORTFOLIO
CUSTOMER LOYALTY PROGRAMS :
Lakme Salons has a mix of owned andfranchised outlets
In non-metros, the lakme 'adopts'
unbranded outlets once they reach a
certain size as franchise partners
They then help them with training and to
achieve the look and feel of a Lakme Salon
Loyalty program are run to help servecustomers better and discount cards
offered
Such repeat walk-ins constitute as much as
80% of the customer base of Lakme Salon
SALON SERVICEHair
Hair style
MassagesHair Therapy
Skin
Face Treatments
Full Body Massage
Hands & Feet
Specialized Pedicures &Manicures
Bridal Services
Catering to Nine Cultures
Co created with Make up experts
LAKME ACADEMY
Lakm Academy
offers certificationin courses ranging
from foundation
to Masters Level in
hair and beauty
LAKME
ABSOLUTE
SALONThe premium
services offering
customized
beauty packages
LAKME IVANA
Lakm Ivana for
grooming, skinand hair care
services to both,
men and women
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Indian Pyramid
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Concentration of Disposable Income
Income Analysis
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Footwear,
38.40%
Equipment,pap
er & Stationery,
29.70%
Household
appliances,
24.80%
Cloting and
textiles, 21.70%
Communication
, 11.40%
Home dcor
and furnishing,
5%
Beauty,Personal
and Healthcare,
4.90%
500635
806
1024
1301
1652
0
200
400
600
800
1000
1200
1400
1600
1800
2010 2011 2012 2013 2014 2015
For every branded salon,
there are 4 neighboring
salons present
500 rs
2000 r
1000 rs10000
Neighborhood salon
Typical spend
Branded salon
Typical spend
Why I prefer my
neighborhood
saloon?
Footprint in a branded salon15 to 40Footprint in a neighbor salon 10 to 15
The Market
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0
2
4
6
8
10
Lack of
convenience
Expensive
services
Lack of
standardization
8.17.4
6.3
Mean Score : 10
No service @ home
Proximity of the store
Flexible hours
Price
Lavish set-up
Beauty Services Need Gaps
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Online flash sales in Indiaare the next big thing aftere-commerce
Population in India is tech-savvy with around 100million online shoppers
Huge market potential for
Lakmes salon service
Flash Promotions for Salons
Secondary Research
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05
10
152025303540
Ahmedabad
Baroda
Jodhpur
Pune
Jaipur
Nasik
15-17 yrs
17 -19 yrs
19-21yrs
21-23 yrs
23-25 yrs
Source Indian Journal of Marketing nov12
The graph shows the population
sampled - age wise
0
10
20
30
40
Ahmedabad
Baroda
Jodhpur
Pune
Jaipur
Nasik
Student
Employed
EntrepenuerHome maker
#REF!
The graph shows the population
sampled - occupation wise
Flash Promotions for Salons - Research
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Qualitative research Steps1. Word association test
2. Sentence completion test
3. Depth interviews
Conclusions Young Indian female consumers are eager to
experiment with the flash sales
15-17 yrs. group decisions influenced by their parents
and friends
Increased awareness about technology is a good sign
for online flash sales
Responses to cosmetics prevalent
Flash Sales a New Arena for promotions
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Lakme Salon presence - Ahmedabad
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Major Competitors of Lakme Salon
Started by renowned hairstylist Jawed Habib
A total of 322 outlets in 83 cities of India Has very high brand loyalty especially in tier 2/
tier 3 cities
Started by famous beautician Shahnaz Husain
Over 200 Salons all over the world
Leader and pioneer in herbal care providing
herbal beauty treatments
Fastest growing salon chain in India popularizing
the concept of Unisex salons
A total of 114 salons and at-least 4 new
branches getting operational every month
Has a strong foothold in South India and
recipient of Best Salon chain in India award
Brand LOreal has high recall and people
instantly connect with the brand
Hair care, makeup, skin care all are provided by
expert beauticians
Expanding into smaller cities providing qualityservices at affordable prices
Hair and Beauty Salon industry in India is estimated at Rs 7,000 crore
However, current market share of unorganized sector is 77 %Thus, apart from major established players, local beauty parlors are also a
serious competition to Lakme
Competitor Analysis
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LAKME
Bangalore 28
Mumbai 23
Delhi 18
Hyderabad 12
Chennai 11
Lucknow 4
Ahmedabad 3
Gurgaon 3
Kolkata 3
Pune 3
Secunderabad 3
Amritsar 2
Chandigarh 2
Indore 2
Kanpur 2
Ludhiana 2
Noida 2
Thane 2
Agra 1
Allahabad 1
Baroda 1Bhatinda 1
Dehradun 1
Ghaziabad 1
Guwhati 1
Jaipur 1
Delhi 22
Hyderabad 13
Mumbai 12
Kolkata 8
Bangalore 4
Patiala 3
Agra 3
Ahmedabad 3
Lucknow 2
Ludhiana 2
Jammu 2
Jaipur 2Udaipur 2
Goa 2
Nagpur 2
Baroda 2
Surat 2
Mathura 1
Chandigarh 1
Panchkula 1
Bhatindar 1Jalandar 1
Sonepat 1
Hissar 1
Yamuna Nagar 1
Karnal 1
Panipat 1
Faridabad 1
Gurgaon 1
Gobind garh 1
Ajmer 1
Kota 1
Bikaner 1
Patna 1
Varnasi 1
Vishakapatnam 1Vijayawada 1
Mysore 1
Chennai 1
Cochin 1
Anand 1
Navsari 1
Rajkot 1
Bharuch 1
Gandhi nagar 1Indore 1
Latur 1
Nasik 1
Pune 1
Bhilai 1
Bilaspur 1
Mumbai 20
Delhi 13
Bengaluru 10
Kolkata 9Hyderabad 8
Pune 8
Chennai 4
Guwahati 3
Ahmedabad 3
Gurgaon 3
Chandigarh 3
Jaipur 3
Lucknow 3Patna 2
Ambala 2
Faridabad 2
Sonipat 2
Goa 2
Amritsar 2
Bhatinda 2
Jalandhar 2
Ludhiana 2Patiala 2
Phagwara 2
Coimbatore 2
Meerut 2
Noida 2
Varanasi 2
Rajamundry 1
Vijaywada 1
Vizag 1
Jorhat 1Muzzafarpur 1
Bhilai 1
Bilaspur 1
Raipur 1
Anand 1
Rajkot 1
Surat 1
Baroda 1
Karnal 1Panipat 1
Yamuna nagar 1
Jammu 1
Mysore 1
Calicut 1
Cochin 1
Trivandrum 1
Bhopal 1
Gwalior 1Indore 1
Jabalpur 1
Aurangabad 1
Kohlapur 1
Nagpur 1
Nasik 1
Shillong 1
Udaipur 1
Madurai 1
Pondicherry 1
Tirupur 1
Trichy 1
Agra 1
Aligarh 1
Allahabad 1
Bareilly 1
Ghaziabad 1
Gorakhpur 1
Kanpur 1
Mathura 1
Muradabad 1
Haridwar 1
HABIBS
Unisex
Geograph
icalFootprint
Competitor Analysis
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Challenges
Beauty Salonmarket
dominated byUnorganized
sector
Low entrybarrier for
new players
ManyMultinationals
like JeanClaude Biguineseeking entry
into Indianmarket
Price war withother
establishedplayers leading
to lowermargins
Gaining afoothold in
smaller citiesand towns
Indian consumer is
becoming more beauty
conscious and hence a
major shift is expectedfro m unorganized to
organized beauty salons
Lakme should leverage on
its positive brand image
and high credibility to gain
edge over new entrants
In-order to compete with
them, Lakme should
ensure it has competent
staff and equipments at
par with competitors
Making services affordable
by lowering prices to some
extent can attract more
customers and help inwidening consumer base
Discounts and promotional
vouchers offering combodeals can be used to gain
foothold in smaller cities
Challenges faced by Lakme
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KeyFactors
Regional
differences
Increase
in inputcostsShortag
e of
skilledpeople
Competition from
unorgani
zedplayersPrice
Sensitivity
Investm
ent
costs
and
Paybackperiod
Customers need differsrestricting standardized offerings
Rentals, advertizing & promotion
Lack of integrated strategyand motivation
Lag in brand creation &yalty with long gestation period
Demanding more value withprice consciousness
Access to target market
On-the-spot decisions
Key Factors affecting Lakme Brand in Mumbai
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0
50
100
150
200
250
0
5
10
15
20
25
30
35
0
5
10
15
20
0
10
20
30
40
50
0
1000
2000
3000
4000
5000
0
1
2
3
4
Territory rights Given by 60% of Franchisor
Performance Guarantees NOT given by 70% of Franchisor
Operating Manuals Given by 70% of Franchisor
Franchise training options Mumbai, New Delhi, Centralized, I
Field Assistance Given by 90% of Franchisors
Head Office assistance Given by 90% of Franchisors
Lakme Vs Competition in Franchising
Analysis of
27 leading
franchisors
of beauty
care Salon
Services
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Big ticket Idea Visual Merchandising
Lakme Beauty Wall at salons
The Lakme products visual merchandising The SKUs should be made available in small packages to
increase the trials
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Big ticket Ideas
Happy hours for Housewives
Franchise to local players and after that training the staff there inlakme academy
Franchise related financial accountability issues ERP system
implementationOnline booking from the salons so that the data is sent to the datacenter (the main salon in the city ) the moment a customer payshis/her bill
Better performing franchises should be given incentives
A customer availing 500 Rs. Worth of services should be givendiscounts on lakme prouct purchses
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Market Drivers
Implementation Plan
Build core competencies
Grow distribution network
Identify additional product attributes Identify promotion channels
Customer Management
Classify salons into different prioritygroups based on sales potential
Up-sell and Cross-sell/ Convert
Increase Brand visibility
Brand Lakme Salon as a completerange of salon solutions
Leverage on the product range
F hi M d l
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Convertingexisting localsalons
Opening newcompany owned
Salons
There are currently 122 LakmeSalons in India which includes 10
Lakme studios
Jawed Habib Hair & Beauty
Salon operates 322 salons acrossIndia which is 3 times of Lakme
Lakme needs to concentrate on
opening more studios in tier 1
cities and salons in tier 2 cities
Franchise Model
Franchise Selection Criteria
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Past experience (>3 years)
Type of business associated with (beauty, wellness,
grooming, cosmetics) Location (catchment area, sync with brand imagery,
cost-benefit)
SelectionCriteria
Financial strength
Investment capacity
Reputation
Attitude (service & growth oriented)
EssentialCriteria
Certification levels Number of professionals
Size of the store (600sq ft+)
Services
Equipments
SituationalCriteria
Franchise Selection Criteria
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Phase-1
(Inception)
Objective:Awareness &
trial generation
Spontaneous
awareness Number of
activations/hoardings
Quality ofdisplays
Phase-2
(Verve)
Objective:Acceptance
Metrics
Revenue
Number ofcustomers
Number ofcomplaints
Speed ofhandling
complaints
Phase-3(Permanence)
Objective:Retention &
customeracquisition
through theretained base
Metrics
Number ofretained
customers
Number oflapsers
Evaluation of Franchise
Lakme Elite Program
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Lakme Salon
Average Yrs of Experience
4 6 years
Unorganized Salon owners
Average existence
6 8 years
Need for growth
Need for new clientele
Need for specialty training
160000 unorganized salons
Penetrated all tier locations
Have a loyal set of consumers
Need for career path
Need for personal growth
Need for Autonomy
38000 beauticians every year
80% of states with beauty coursesEmployees come from
lower tier cities
Lakme Elite
Program
Operational Model 1 Operational M
Access to professional products
Niche and Specialty training
Marketing efforts
In Store Branding
Access to personnel
Access to CRMAccess to upgradation to Studio/Salon
Invite and engage Salon owners to
get endorsed by the Lakme Elite Brand
Invite and engage Lakme employees to
be entrepreneurs under the Lakme Elite BrandAccess after 5 years of service
Incentive to reduce attrition
Continuity in career path
Reduction in training costs
Brand ambassadors
Ease in increase of footprint
Lakme Elite Program
M S i
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Pickup folks
from tier 2/3
colleges who
teach fashion
and beauty
stuff1 month
training
program
regarding
soft skills,
quality
standards
etc
Empower
them with
more training
and courses
based on
their interest
Sign them up
with
management
education
courses,
provide
percentage
of profits
based on thenumber and
the quality of
the clients
Given them
entrepreneuri
al
opportunity
First
Year
Second
Year
Fourth
Year
Fifth
Year
Five Year Plan
Manpower Sourcing
Ser ice Mi Prod ct
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All basic & a few specialized services
Store-services & limited home-services(daytime, fewer customized services)
A balanced mix of trendy & classicofferings
Service Mix: Product
Service Mix
S i Mi Pl & P i
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A Platinum store can be COCO/FOFO, rest
FOFO
Location Analysis Criteria: Catchment Area,
Sync with brand imagery & Cost-Benefit
Criteria Platinum Silver
Number of trainees &
junior stylists8 6
Advanced
stylists/beauticians6 3
Experienced/senior
stylist/beauticians
2 1
Manager 1 1
Areas (sq ft) 1000+ 600-
700
Services (in addition to
all basic services) 8+
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Phase-1 (Inception)
Objective: Awareness& trial generation
Ms. Confidence
campaign, Campus &Mall activation
Local celebrity store-visit
OOH hoardings,Pamphlets/Coupons
Phase-2 (Verve)
Objective: Acceptance
Testimonials on OOH
hoardings, in-storedisplay & magazinescommunicatingexpertise & serviceefficiency to buildconfidence
PR activities
Phase-3(Permanence)
Objective: Retention &customer acquisition
through the retainedbase
Loyalty cards(confidence card)
Testimonials
Service Mix: Promotions
Service Mix
Implementation Plan
S i Mi P
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Guideline/Service manuals
Clearly laid down guidelines for franchise to follow
Employee
Database of employees (Lakme Elite network) across all geographies
Rotation Between some-services & store services
To ensure bond with the organization, and not personal bonds
Work hours
2 shifts : 10 am 6 pm & 12 noon 8 pm
Flexibility for employees
Leveraging peak afternoon hours
Customer relationship management
Loyalty cards
Permission marketing
Service Mix
Implementation PlanService Mix: Process
Service Mix: People as Confidence Agents
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StaffProfile
Current talent pool in the town
New recruit through Lakme Academy
Training
3-4 workshops in town for entry level-trainees & professionals,organized every 3 months
Higher level professionals to visit for further training
Compensa-tion
At par with the organized competitors
Additional motivation due to flexibility (working hours) & job securityowing to the Lakme Elite network of stores across geographies
Service Mix
Service Mix: People as Confidence Agents
Branding: Other Opportunities
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Bundled Product: HUL products under other brands shall be bundled
with Lakme products which have complimentary usage and promote
salons through offers Product Example: Moisturizer with soaps
Packaging Theme: Indian Actress with Western Looks
Tagline: Lakme Celebrating the Gorgeous Indian Women
Coupons to visit Lakme Salon: We care for You HUL is trying hard to promote sustainability and have developed
system to convert plastic into fuel oil. Collection of containers in lieu
of coupons, as loyalty program for customers
Bundledproductsto attractcustomers
Referral schemesto bring new
customers andretain old
Different Strategies forDifferent Seasons to
sustain equal employeecontribution throughout
year
A properstrategy to
locate salons inareas with
maximum reach
Branding: Other Opportunities
Branding: Other Opportunities
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Bundledproductsto attractcustomers
Referral schemesto bring new
customers andretain old
Different Strategies forDifferent Seasons to
sustain equal employeecontribution throughout
year
A properstrategy to
locate salons inareas with
maximum reach
Brand Referral Schemes and Brand Recalls- A focus on the
importance of Word of Mouth in Beauty services; reaching towards
lower strata in the Pyramid, by bundling other Unilever brands withLakme Products and spreading awareness about Salon
Referral and Feedback System:
Activate website login to have beauty tips
New login only by: Invitation from existing user
By visiting salon
Customer Engagement by offering benefits to star participants
Branding: Other Opportunities
B di O h O i i
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Salons are used mostly during marriages which under Hindu
culture do not occur all the year around
Generally marriage months do not coincide with rainy seasons, andautumn festival season
We will have to identify lean periods where most of the offers shall
concentrate, rest of the times there shall be a premium to the
services This will ensure utilization of employee contribution throughout
the year
Bundledproductsto attractcustomers
Referral schemesto bring new
customers andretain old
Different Strategies forDifferent Seasons to
sustain equal employeecontribution throughout
year
A properstrategy to
locate salons inareas with
maximum reach
Branding: Other Opportunities
Year Planner for Offers 2013
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End of Wedding
Season for the Year
Rainy Season/ Autumn Festival
Seasonal Offers
20132013
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013
Major SummerWeddingSeason
24th April 4th June
Marriage
Season Start
1/16/13
Summer OffersOffers for:Valentines DayWomens DayCollege FestsLohri
SpecialBridalMake-up; afocus onhot andhumidIndianSummers
Bridal Make-up Offers
Winter
Premium on:SteamtreatmentsMoisturizingtreatmentsHeena w/o coldeffect
Advertisementson:Harmful effectsof rain on hair
Special skinTreatment inSalon
Offers DuringFestiveSeason:NavratriDussehraDeepawali
Year Planner for Offers 2013
Financials (Staff Requirement & Investments)
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Financial Summary
Financials (Staff Requirement & Investments)
Radiance Silver Radiance Platinum
Space Required (in sq. ft) 600 1000
Rent per sq. ft per month 40 40
Capital Investments
Machinery and Equipments 8,00,000 12,00,000
Project Cost (Renovation, Furniture, Fixtures and Fittings)
(Rs. 800 per square feet)4,80,000 8,00,000
Licensing Fees 3,00,000 5,00,000
Working capital 3,00,000 3,00,000
Total (in Rs.) 18,80,000 28,00,000
INVESTMENTS
S.No Position Salary Range
Hired at
Amount (in Rs.)
Radiance
Silver Nos
Total
Amount
Radiance
Platinum Nos
Total
Amount
1 Manager 25000 - 10000 20000 1 20000 1 20000
2 Experienced/senior stylist/beauticians 20000 - 15000 20000 1 20000 2 40000
3 Advanced stylists/beauticians 15000 - 10000 15000 3 45000 5 75000
4 Number of trainees & junior stylists 5000 - 4000 5000 6 30000 8 40000
11 115000 16 175000TOTAL
Details of Staff Required
Financials Summary: Lakme Elite
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Financials Summary: Lakme Elite
Year Cash Inflow Cash Outflow Net Cashflow
Year on Year
Reciepts
Year 0 1880000 -1880000
Year 1 6,57,948 657948 657948
Year 2 8,05,059 57685 747374 1405322
Year 3 10,34,587 63813 970774 2376096
Year 4 11,98,589 70608 1127981 3504077
Year 5 14,97,748 78145 1419603 4923680
TOTAL 51,93,932 2150251 3043680
NPV Rs. 7,19,641.08
IRR 37%
Estimated IRR in 5 Years Positive NPV and IRR
Please
refer to
f inancials
attached
for more
detai ls.
2011 2012 2013 2014 2015 IRR NPV
Net Sales from 1 Lakme Elite Silver 4220040 4666044 5160248 5708013 631531640%
822552
Net Sales from 1 Lakme Elite Platinum 6471240 7148364 7897700 8727145 9645486 37% 995936
Average Revenue for Lakme from Royalty 48110760 62025642 77694795 98159079 127686414
Average Revenue from Franchises 320738400 413504280 457028208 577406347 638432072
Summary