Hair Salon Business Plan

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Market Analysis Summary

Cranium Filament Reductions will be targeting three diverse groups of customers. Cranium will work hard to distinctly appeal to each of these groups. By focusing on more than one group, Cranium is lowering their risk that in a downturn one group will negatively effect the company.

4.1 Market Segmentation

Cranium Filament Reductions will target three different market segments:

  • Men will typically make up 70-75% of the clientele. Men have shorter hair requiring a faster, simpler job.

  • Females who cannot afford an upscale salon. Women tend to favor a female specific upscale salon if they can afford it. There is not often a difference in quality of an upscale salon  relative to a family hair salon other than a upscale salon will tend to pamper you more, only accepts appointments, and the facility is generally a bit plusher. Someone who is fiscally responsible as opposed to someone who likes opulence will favor a family style salon.

  • Young mothers with children. Most young children are notoriously difficult when it comes to getting haircuts. A family style salon is a more laid-back place that allows the children to play while they are waiting and then will work with the parents in calming the kids nerves when they are ready for their shearing.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Males 9% 54,000 58,860 64,157 69,931 76,225 9.00%
Females 10% 28,000 30,800 33,880 37,268 40,995 10.00%
Mothers with young children 9% 23,400 25,506 27,802 30,304 33,031 9.00%
Total 9.27% 105,400 115,166 125,839 137,503 150,251 9.27%

4.2 Target Market Segment Strategy

Cranium Filament Reductions will target each of the three groups separately. The males will be targeted by offering a quick, convenient, service. Because men tend to have shorter hair, they usually require haircuts more often. If they are getting a cut every four weeks and work normal business hours, most barbers are closed when the male customers have free time. Cranium Filament Reductions will cater to males with evening hours, no appointments necessary, and quick turn around times.

Generally females prefer the allure of upscale salons, however, not everyone can afford this luxury. For this reason Cranium Filament Reductions will provide the same quality hair styling, without the expensive price. Cranium will target these customers by emphasizing the sophisticated, ultra-hip styling that Cranium can offer.

Cranium Filament Reductions will also target mothers with children by offering the kids toys to play with while they wait and child-friendly hair stylists. Additionally, children receive a special rate reflecting the fact that children's hair grows so fast that it can be expensive to keep up with regular cuts, as well as the recognition that it generally takes a lot less time to cut a child's hair so it should be inherently less expensive.

4.3 Service Business Analysis

The "hair" service industry is fairly diverse. On one end of the spectrum you have the traditional barber, on the other end you have the fashionable boutique salons. Somewhere in between there are independent hair stylists, franchise barbers and stylists, and beauty salons. 

4.3.1 Competition and Buying Patterns

Cranium Filament Reductions' competitors include:

  1. Traditional barbers. They rarely serve appointments, it is generally a walk-in service. While barbers are usually willing to provide whatever cut you are interested, they are generally providing straight forward haircuts, typically on the conservative side. The advantages of a barber is they are inexpensive and easy to use. Their disadvantages is often conservative styling capacities, sometimes a long wait as the barber may be an old timer who enjoys to chit chat.

  2. Franchised "quick salons."  An example of this would be Supercuts or Best Cuts. In essence this is a franchised version of Cranium Filament Reductions. The advantage of this style is the store will be the same from location to location and some people like this predictability. 

  3. Independent salons. These shops typically focus on a specific niche and do not serve a wide group of customers. The advantages to these could be an independent salon that fulfills all of your needs. The disadvantage is that because they tend to be more focused, more often than not this type of salon will not offer exactly what customers are looking for.

The buying patterns of men and women are quite different. Typically men are more price or convenience sensitive. Men typically care less about the task of getting their hair cut. For them whatever is easiest works best. Women on the other hand are more caught up in hair styling and tend to bond more with their stylists. Because they bond more, they are much more loyal to their stylist. Once a stylist has earned their trust they are more willing to blindly put their hair in the stylists hands.