Page 28 - DMGT522_SERVICES MANAGEMENT

Unit 1: Service Operation Management

The fatal attraction: Just look at the margins in the business. “It is like drinking coffee at Notes
home and having it at Barista,” says D Shivakumar, business head, Hair care at HLL. While
margins in the traditional FMCG business hover in the 8 per cent to 15 per cent band for
most companies, the sky is the limit for salons. For instance, a box of good hair color
retails at around ` 350. Go in for a cut, wash and coloring and you shell out anything from
` 1,500 to ` 3,000. “It’s all in the nature of services offered,” says a marketer.
Also, consumer brand loyalty, say companies, is much more for services than products. In
an age, where brands of all hues are fighting for shelf space, affiliated salons become an
ideal channel to route your products through. That’s why Lakme is trying to make its
presence heavily felt in the marketplace. “There are points of time when consumer habits
and lifestyles are changing, so you look at opportunities to grow your existing business,”
says Anil Chopra, managing director of Lakme Lever. So while Lakme salons not only stock
a range of products that go under its brand name, it also showcases part of the HLL
portfolio. In fact, it is this lifestyle change and the need to ‘look good,’ that has motivated
Chennai-based CavinKare to set up a group company – Trends in Vogue. The company is
opening three separate chains, catering to assorted wallet sizes that are all targeted at 20 to
35 years old. At the lower end is Fyne Cut, a budget salon for men. Positioned as an
‘amazing value for money’ offering, it competes with the friendly neighborhood barber.

Green Trends will have a range of men’s and women’s salons aimed at the middle class.
The recently launched Limelite is the premium brand targeting upper crust men, women
and kids. To ensure that it offers ‘an international standard beauty care’, CavinKare has tied
up with German hair major Wella of Germany and Beaubelle of Switzerland.

Says Sanjay Gupta, general manager, Trends in Vogue, “We realised that there was a need
gap in the grooming industry. We use various brands of products at these salons, including
those that do not belong to us. The objective is to give the consumer a service suitable for
him. “That’s why even HLL is bonding with consumers through the Sunsilk salons.” The
objective is to build the event and the association of giving customised answers to Sunsilk
users. Consumers are moving from product to experience,” says HLL’s Shivakumar.
He denies that his company is making yet another attempt to bond with consumers, but
industry experts say that HLL would never invest in anything that didn’t have a long term
potential. So to woo customers, on offer are free haircuts and beauty treatments by Habib
and beauty specialist Samantha Kochhar. Marico’s Kaya trip is more an attempt to lessen its
reliance on cash cows Saffola and Parachute. Over the years, the brands, which have
gained market share, have also been milked dry with various extensions, many of which
have failed.
In fact, unlike other players where the service foray has synergies with their brand portfolio,
Kaya is absolutely out of sync with Marico’s platter. For Wella, it has been a year of
‘reinventing the wheel’ according to Sebastian Zachariah, head, creatives and
communication at European Hair cosmetics, the wholly owned subsidiary of Wella AG.
After calling off its two-year-old marketing tie-up with J L Morrison of Nivea fame in
February, 2003, it is looking at the salon business with enthusiasm.
Wella, which has no retail division and sells only through the parlor route, has plans to
open 150 salons by this fiscal end. “We have to evolve given the scenario. That’s the only
way to penetrate the market,” says Zachariah. “For us, it is a perfect extension,” says
Vismay Sharma, general manager, professional products division at L’Oreal. Having
tied up with parlours three years ago to call them Prestige outlets, its recent foray into
HFX is a completely new initiative. “Salons as a channel are by far the most interesting,”
he adds.

Contd...

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