Page 20 - DMGT510_SERVICES_MARKETING

Unit 1: Introduction to Services Marketing

Marketing strategies: The newest stalls in 10 branches of Shopper’s Stops around the Notes
country are temporary salons being set up by top-selling shampoo Sunsilk, a product of
Lakme Lever. Hair stylists like Jawed Habib demonstrate their skills. The aim: to boost
awareness in the run-up to the Miss World pageant where Sunsilk was the official sponsor
of the beauty show.
Hindustan Lever, which makes Sunsilk, insists that the salons are only a temporary affair
but it believes they can give tremendous publicity mileage. And it is only following in the
footsteps of other fast moving consumer goods companies – like CavinKare, L’Oreal,
Marico and Wella – which are opening exclusive salons and clinics in a bid to reach out to
end users.

Lakme has had four salons for the past 25 years. In the last 18 months it had gone into
overdrive and opened 42 outlets in different parts of the country. And there is no stopping
– it plans 200 salons by the next two years.
Why are corporate houses on a beauty binge? For years now, companies which had a
range of personal care products have been hard-selling their products to hairdressers and
beauty salons. Now, some are looking at forward integration and getting into the beauty
business themselves. Arvind Mahajan, partner at IBM Business Consulting Services says,
“A lot of value is shifting to services. In that context, it helps them maintain a relationship
with customers and capture value downstream.” Adds Harsh Mariwala, chairman and
managing director of the ` 696-crore Marico Industries: “It is one way of going up the
value chain.”

So let’s look at the industry makeover that is taking place. In August, for the first time
since French cosmetic major L’Oreal entered India a decade ago, it has collaborated with
entrepreneurs to set up an upscale salon – HFX (Hair effects). New business opportunities
for Marico imply setting up Kaya skincare clinics, currently being test-marketed in Mumbai.
CavinKare has a range of salons targeting different wallet sizes. And Wella began this year
tying up with 30 outlets that have been rebranded as Esteem parlours. Similarly, Godrej
Consumer Products, which makes ColourSoft hair colours, has toyed with the idea of
sprucing up in salons. It seems to have abandoned these plans for the moment.
These ambitions are also driven by the fact that tough economic conditions have put
profitability under pressure for many companies. And the growth potential in the service
industry is tremendous. Even though there are no audited numbers, players peg the salon
business at around ` 800 crore (` 8 billion) and say that it is growing at 25 per cent. What’s
more, it is largely unorganized. But with brand awareness and higher purchasing power,
corporates hope to change the complexion of the game.
The fatal attraction: Just look at the margins in the business. “It is like drinking coffee at
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 colour
retails at around ` 350. Go in for a cut, wash and colouring 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.

Contd...

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