External environmental factors affecting the new business
External environment is constituted by factors that are external to the business. There is a close relation between the market and its surroundings and the success of a business is highly influenced by the external factors. All business enterprises are controlled by their environmental factors. Consumer behaviour and organization’s development is affected by the external forces. The external marketing environment is of two types. They are micro-environment and macro-environment. The operational strategy of hairdressers are greatly influenced by the external business environment. In the external business environment the major factors affecting the hair dressing business are attitude and behavior of the customers, suppliers etc. The A Cut Above business have to introduce new type of cutting and styling method to improve the good appearance and confidence of customers. Salon work more concentrated on men, women and children. Before formulating the operating strategy, greater awareness about the forces affecting the business also have to be identified and analyzed by the new business.
“Every business needs to consider a range of external forces in order to take decisions. For many people imagination is very limited and is coloured solely by their own experience and personal beliefs. This can lead to wish fulfilment or a refusal to see reality or recognise the critical changes that are happening in the world around them.” (Pest analysis 2009).
Micro environment consists of the factors of the company’s immediate environment and affecting the performance of the company. These include the following factors:
- marketing intermediaries,
- customers and
In the hair cutting service business, suppliers are mainly related to advanced technology as well as advanced customer care products. In the UK haircutting business field, suppliers are an essential factor for the effective functioning of the business. In order to maintain the operating costs relating to the business and application of advanced technologies and products greater relation with the customers is essential. The suppliers are of limited in nature and thus they have bargaining power over their customers in the industry.
Customer is considered as the king of every business enterprise. The important task of every business is to create and sustain customers. The customers are of attracted by the latest trends in the hair styles. New innovative products are mainly preferred by them. Most of them are greater interesting towards the beauty concept. The customers in the industry provide greater opportunity for successful launching of business in the hair cutting industry offering advanced products and services. The businessmen should be aware of the up to date trend in the life style of the customers carefully for the success of the business.
Competitors is an essential factor that has to be considered by every business enterprises. Business has to adjust various activities according to the behaviour of the competitors. There are different types of competitors such as desire competitors, product form competitors and brand competitors etc. In the hair cutting salon business, there are mainly three types of competitors, namely, traditional barbers, franchised quick salons and independent salons. In order to sustain in the business profitably, better understanding of the competitors and their business strategy is essential.
Macro environment is more uncontrollable than the micro environment. It consists of following factors:
- Economic conditions prevailing in the market
- Socio-Cultural features existing in the community
- Demographic features in the selected market place
Many factors affect the economic environments of a business. The present economic conditions in the UK are characterized by recession and thus it affects the spending habit among the customers negatively. People will prefer to save money than spending for luxury purpose. It will restrict the marketability of the advanced products and services at premium pricing. But when considering the personal self esteem needs of individuals, the spending habit on advanced hair styling trends seems to be continuing in nature.
The socio cultural environment existing in the UK is supportive for starting new business. The customers are of mostly attracted by the quality of the products and services. Customer loyalty can be achieved by the new business through providing good quality products and services at most friendly business environment. Along with the quality of the services, better customer relations also have to be developed by the business as it is essential for maintaining the customers on along term basis.
Demographic factors include the size and growth of population. It explains that the relationship between birth-rate and death rate, age compositions of population, family size, education level, caste and religion, occupation, income, gender etc. Demographic environment is the most important part of a business because it includes customers and customers improve the market.
In order formulate appropriate business policies and strategies, for the ‘A Cut Above’ business, the entrepreneurs are required to analyse the external as well as internal environment of the proposed business. The economic conditions, political and legal environment, socio cultural factors and demographic features of the selected business region have to be clearly identified. These are crucial for getting successful entry in the market as well as profitable growth with increasing customer base.
The main task of every business enterprise is to provide good customer service. Customer is considered as the king of every business enterprises. In order to attract and sustain the customers, good services should be ensured to them. The services should be capable of attaining maximum customer satisfaction. In the hair cutting salon business, customers’ visits are regular in nature. Thus their retention is a major task for the businessmen to gain success. The very important thing involved in better customer service is that there arises a good relationship between businessman and customer through better customer service. And this will help to create loyalty customers which are essential in the hair cutting salon business.
“The key to customer retention is good customer service. Regardless of whichever industry one is a part of, customer care is of utmost importance. An increasing number of organizations are realizing that with growing competition, new technological innovations and constantly improving services and products, consumers are being pulled in different directions.” (Outsourcing good consumer service to O21 2008).
Importance of customer service in hair cutting salon business
Hairdressing salon business requires provision of customer service at the optimum manner in order to increase the customer loyalty. People always seek to improve their style and look. It is a part of their self esteem needs. They always prefer new fashion and beauty trends suitable for keeping their individuality. In order to increase the customer base better customer service is essential. The main role of every business man is to satisfy the customer. This business provides more satisfaction to the customers. Hair cutting salon business is one of the important services among the customers. In this business the new business has to introduce valuable products and provide a pleasant situation to the people with reasonable price. “Customers will be blown away with the level of service that they receive. They have expectations of average at best customer service from a quick salon, based on past experiences.” (Hair salon business plan 2009).
The important factor of marketing mix is price. Pricing is an important strategic problem that is related to product features, positioning, promotion etc. Efficient pricing strategy can improve the profitability of the business. To introduce new technologies and applying pricing practices are the strategies in many companies. The important pricing strategy is competitive pricing. A growing enterprise always thinks about rise in price. In this business the customer is not bothered about the pricing, because they want to develop their beauty. “Deliberate planning of the pricing structure in relation to factors such as consumer wants, product attributes and competition in such a way as to ensure overall profitability.” (Pricing strategy)
Adoptable Pricing strategy for the new business
- Premium pricing for advanced products and services
- Economy pricing for common services
- Special rate for services to children
The new business, A Cut Above, can provide special rate to the children. A child needs regular cuts and in order to attract them competitive pricing can be adopted. In case of services on latest trends in the hair style, A cut above can charge premium pricing strategy. Customers will be ready to receive the service without considering the costs as it is related to their self esteem needs. In case of common styles, services can be offered at competition pricing.It will helps to attract and sustain customers on a long term basis. When modern trend introduce in hairstyle, then hairdresser can also increase the price though customers willing to pay that price for good appearance and new style.
Market segmentation strategies
Market segmentation is the marketing tools that indicate a collection of customers with particular characteristics. Market segmentation can help the new business to operate more effectively by focusing on different customer groups. “The purpose of segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are “most likely” to purchase your offering; if done properly this will help to insure the highest return for your marketing/sales expenditures.” (Market segmentation 2009).
Importance of market segmentation in the business
Customer segmentation will allow the new business to establish service differentiation among different customer groups. The need and interest of each category of customers can be clearly identified through this process. It will help to attain maximum customer satisfaction. Market segmentation will help to follow appropriate pricing and business promotional strategies. In the hair cutting salon business, personal esteem needs have to be satisfied. The most experience of the customers’ specific need is essential for pleasing and sustaining the customers. Market segmentation strategy will help the business to provide maximum customer satisfaction through identifying and satisfying the specific needs of the customers. It will provide increased customer base and customer loyalty on a long term basis. Diverse group of customers have diverse needs. In order to appeal these customers distinctly, the company is required to focus on their specific needs and interests.
In the case of ‘A Cut Above’ Hair salon, it is better to follow customer segmentation on three distinctive groups involving men, females and young mothers with children. In the men category, frequent servicing is required on a periodical basis. In case of females, they prefer affordable specific upscale salon. In case of young mothers with children, a family style salon is preferred which allows the children to play. In target market segment strategy, each of the three groups discussed above have to be treated separately. Quick and convenient service is required by the men category and thus they have to be provided with such facilities. Upscale preferred female clients can be attracted through offering of quality hair styling at affordable prices. In case of young mothers with children, in order to attract the kids, toys and play tools can be arranged. Children friendly hair stylists can be appointed. The buying pattern between men and women customers in the hair salon industry is quite different. Men are more price and convenience sensitive than women, whereas women customers prefer trendy hair styling and they have strong bond with their hair stylists. Thus customer loyalty can be seen more among the women category. By earning trust, a long term relation can be established.
Adoptable customer segmentation for the new business:
- Category A : Men
- Category B: Women
- Category C: Young mothers with Children
Cultural communication is an important field that deals with communication between various ethnic groups. To learn about the cultural peculiarities in the region affecting the business, it has to take much effort. A better understanding of the needs is the basic factor that helps to provide maximum satisfaction by fulfilling the needs of customers. “Some of the barriers that can cause communication breakdowns are physical barriers resulting from people not getting to know each other, perceptual barriers because we all view things differently, emotional barriers which are based on fear and lack of trust, cultural barriers from a lack of understanding, language barriers, gender barriers, and interpersonal barriers which are based on your thoughts and your feelings.” (The importance of business communication 2009).
Importance of communication in Hair cutting salon business
The hair cutting salon business requires caring the individual needs of each customer as it is related to their esteem personality goals. The clients have their own diagnosis with the services. In order to sustain customers with loyalty, the business requires dedicated quality service. Face to face meeting with customers is a part of the business. Effective communication will help to identify specific needs and interests of the customers. Ineffective communication is a major obstacle in the haircutting salon business. Communication is a critical factor that determines the success of the business.
In hair cutting business the consultation of customers is required for maintaining individuality. They have to provide adequate consultation regarding the hairstyle features that suits to the lifestyle of the customers. For providing ultimate look to the customers, understanding about the customers is essential. For providing better collaborative atmosphere, open and friendly approach towards customers is necessary. For ensuring excellent results and happiness, communication will help well. As a highly personalised service, in hair cutting salon business effective communication is necessary to improve the confidence level of the customers with the services. “Success in this venture depends on the ability to provide a consistently high customer satisfaction. The successful hair and salon business is one that offers excellent service, use quality products, and provide an enjoyable atmosphere at an acceptable price.” (Fulbright 2004).
Customers in the hair salon business prefer satisfactory service which provides improved physical appearance and mental relaxation without considering the cost. Better communication will lead to create trust, respect and comfort together with long term relationship.
The external business environment in UK is supporting for starting of the new business. By implementing the above discussed strategies in the sections of customer relations, pricing, customer segmentation and effective communication the new business A Cut Above can profitably launch in the UK market.
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