NCRD’S Sterling Institute of Management Studies

An innovative approach to increase BRAND VALUE OF LAKME PRODUCT

Submitted to:Prof. D.R.KAMRAJ

Submitted by:DEEPAK R GORADROLL NO.- C-9:

Emerging Trends At Present

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2005 2015 2025

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R) Globals (>1000)

Strivers (500-1000)

Seekers (200-500)

Aspirers (90-200)

Deprived (<90)

Rising Disposable Income

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Health Care

Education & Recreation

Communication

Transportation

Personal Products & Services

Household Products

Housing & Utilities

Apparel

Food, Beverages & Tobacco

Shift in India’s Wallet Share

Best in ClassInternational

Quality Offerings

Shift in Wallet Share

LargestYouth

Population

Proliferation of Media

Attention to Grooming & Looking Good

RISING CONSUMERISM

IN INDIA

Dedicated Shows, Events,

Celebrity Association

SOURCE : Mckinsey Global Institute

Expected Growth Potential For Segments & Sub Segments In Wellness Space

Slimming CentresSalons

Spas

Alternative TreatmentsAyurvedic Treatment

Centres

Non Surgical Cosmetic Procedures

Gyms

Alternative Medicines

Ayurvedic Medicines & Products

Cosmetic SurgeryCosmetics & Fragrances Skin & Hair Care

Products

Treatment BasedBeauty Products

Dietary SupplementsHealth Food

& Drinks

0

5

10

15

20

25

30

35

40

0 1000 2000 3000 4000 5000 6000 7000

Gro

wth

Rat

e (

%)

-Ti

ll 2

01

2

Approximate Market Share as of 2009 ( Crs, INR)

Double Digit Growth Segments drivenby increasing Consumer Awarenessand demand for such types ofServices

Course of Action for targeting Lower LSM

LSM 8 +

LSM 12+

CUSTOMER BASE PYRAMID( Actual & Potential )

x

10 x

Below LSM 8

POA FRAMEWORK

Metrics for Success Measurement

Promotional Strategies

Customer Service Proposition

Training & Development Module

Choice of Location for Setup of Salon

Choice of Business Establishment & Expansion Model

Choice of Brand Elements & Vertical Extension of Brand LAKME

Identification of Key Drivers for Footfall Improvement

HUGE Business

Opportunity

Association of LAKME with Brand Imagery Statements

(N = 60)NON - USERS USERS

(N = 72)

75%

73%

68%

66%

57%

55%

52%

52%

52%

47%

43%

40%

37%

26%

26%

9%

3%

Popular brand

Premium brand

Most associated with females

Best known for skin care/ hygiene

I would NOT recommend this brand …

Brand leader

For young people

Gives me a perfect look for an …

Up market and stylish brand

Best understands Indian environment

Brand I love

Value for money

Unique offerings

Offers best hair care & styling …

Offers one stop solution

For someone like me

Brand for old people

84%

76%

76%

75%

74%

73%

73%

70%

67%

66%

64%

62%

59%

35%

30%

15%

10%

Popular brand

Premium brand

Most associated with females

Best known for skin care/ hygiene

Brand I love

For young people

For someone like me

Up market and stylish brand

Brand leader

Gives me a perfect look for an …

Value for money

Best understands Indian environment

Offers best hair care & styling services

Unique offerings

Offers one stop solution

I would NOT recommend this brand …

Brand for old people

Brand Personality & Positioning of LAKME

LAKME : Unique Combination of Local Roots with Global Scale

Beautiful ,Confident and Independent Women

On top of the world

Source of Radiant Beauty

Beauty Expert of Indian Women

Trendy and Stylish complete Range of products for Skin and Beauty Care

On the JENNIFER AAKER BRAND PERSONALITY CHART ,Lakme’s Brand Personality comes out to be that of an‘Exciting’, ‘Competent’ and ‘Sophisticated’ Person

EXCITING

COMPETENT

SOPHISTI --CATED

Daring and Spirited Brand, mostof the products are trendsettersand the Brand has lived up to itsposition as Market Leader

Reliable & Intelligent, has nevercompromised on quality therebyTHE Brand Indian Women trustfor their skin

Portrayal of Indian Women inLakme Ads is that of an UpperClass charming girl who isSmart, Confident & Independent

LAKME Celebrity Associations

LAKME NEXT – The Concept

Vertical extension of the ‘Lakme’ Brand Positioning in line with Image of Lakme – Premium Brand delivering Trendy

and Quality services at Economical Cost Salons to offer Basic In-Demand Services (Both Skin & Hair) Cost saving through Lower Training Cost, Lower Investments (Tier II & Tier II

cities), Lower Infrastructure Requirements

Lakme

Next

Lakme

Salon

Lakme

Studio

TARGET SEGMENT :

-Premium Class

- SEC A1, A2

- 16 to 25 year old

women

TARGET SEGMENT :

- Upper Middle

Income Class

- SEC A2, B1

- 16 to 25 year old

women

TARGET SEGMENT :

- Lower Middle Income Class

- SEC B2, C1

- 16 to 25 year old

women ( Student &

Working class)

Business Establishment & Expansion Model for LAKME NEXT

STRATEGY : Operations via COCO Model in Short Term & HYBRID Model in Long Term ( Economies of Scale & Economies of Skill)

Parameter COCO Model Franchise Model

Setup CostHigh Capital Requirement

Low

Operational Cost

Upfront Costs & Ongoing CostsCost incurred on Training

Cost incurred onTraining No Product or Inventory Holding Cost

GrowthProgress

High Investmentsinvolved in expanding reach

Rapid Expansion Greater Spread

Return on Investment

(ROI)

Lower due to High Capital Investment

Higher ( Royalty to the extent of 10-15%)

Reach to TGLower due to limited Operational Spread

Better Proximity to Potential Users

Profit Gain Higher Profit Margin

Lower Absolute Profit per FranchiseGreater Cumulative Profit

Hypothetical Profit Margin Model ( COCO Vs Franchise)

Rs in Thousands Assumptions Involved COCO Model Franchise Model

Sales/Revenue Generated Avg. Annual Footfall : 12000 3000000 600000

Bill Generated Per Customer : 250

( Commission on Sales)

Revenue through Brand Fee 0 100000

Revenue via Sales to Franchise

SP lower than MRP offered to Franchise 0 200000

Variable Cost

Products CostMfg. Cost (COCO), Sales(Franchise) 360000 0

Includes Equipment & Beauty Product Cost

Maintenance Cost 20 % of Rent 120000 0

Training CostIncurred only by COCO (5000

per Employee) 10000 0

10 Employees trained every 6 Months

Advertising CostBrand Fee received from

Franchise 100000 60000

Fixed Cost

Salaries10 Employees Overall, 9000 per

Month 108000 0

Rent Rs 100 per sq ft monthly 600000 0

Total 1298000 60000

Profit 1702000 540000

After taking Taxation into account Profit Margin for COCO : 30-40% , Profit Margin for Franchise : 6-8%

2011

• Launch of LAKME NEXT • Initiation with

COCO Model• Target Group :

- Age : 16-25 yrs oldwomen

- Region: Tier II & Tier III Cities- Socioeconomic: SEC B2, C1

• Expected No. of Outlets – 2 to3

• Initiation of FranchiseModel

• Increased Spread of COCO Outlets to expand Reach

• Expected No. of COCOOutlets – 10 to 12 ( PanIndia)

• Co-Existence of COCO & FranchiseModels (Hybrid)

• More emphasis onFranchise model toenhance scalability

2013 2015

Investment Rs 50 lac–1 crBrand Fee Rs 20-30 lacFloor Space 2500-4000 sq ftRoyalty 10%

Investment Rs 30–50 lacBrand Fee Rs 3 lacFloor Space 1500 sq ftRoyalty 15%

Investment Rs 10–20 lacBrand Fee Rs 5 lacFloor Space 100 -400 sq ftRoyalty 15%

Investment Rs 5 –10 lacBrand Fee Floor SpaceRoyalty 10%

Investment Rs 30–50 lacBrand FeeFloor Space 1000-1600 sq ft

Royalty 15%

Investment Rs 15 –25 lacBrand Fee Rs 10 lacFloor Space 500-600 sq ft

Royalty 15%

Competitor Arena

Strategic Road Map

AT THE LEVEL OF KNOWLEDGE

FACTORS

1 Growth in Personal Disposable Income

Real Estate Costs 2

3Competitive Analysis to understand

Saturation level

Proximity to Training Academy/Operational Costs

4

5 Consumer Behaviour in terms ofSpending Patterns

Choice of Location for LAKME NEXT Salons

Current Spread of Lakme Salons & Studios Pan India

TARGET CITIES: Tier II and Tier III cities suchas Surat, Vadodara ,Ahmedabad , Nagpur, Pune in WestZone, Jaipur, Ghaziabad, Gurgaon, Noida in North

REASONS• Booming destinations for businesses and experiencinga skyrocketing growth in Infrastructure and Real Estate• Experiencing high influx of people and improving standards of living• Lesser Spread of Competition in these states• Proximity to Training academies in Mumbai and Delhi

Key Locations to set up salon: HIGH STREET• High popularity of high street shopping concept• High conversions as people visiting are generally serious buyers

Customer Service Proposition

• Trimming

• Hair Styling

• Shampooing

• Dying

• Highlighting

HAIR CARE

• Threading

• Face Cleansing

• Bleaching, Waxing

• Body/Face Massages

SKIN & BODYCARE • Pedicure

• Manicure

• Nail Treatments

NAIL CARE

Loyalty Programs : Get a Service Package free after 5 services

Gift Vouchers, Employee Award Coupons and Discounts

Seasonal or Festive Discount Packages

Tie ups with Megastores and Departmental Stores like Shopper’s Stop, Globus & Westside

USPHolistic Beauty

Experience for THE Woman of today at an

Affordable Cost

Holistic Marketing of LAKME NEXT

LAKME

EMPLOYEESCUSTOMERS

EXTERNAL MARKETING

Pricing DistributionPromoting

Service

INTERACTIVE MARKETING

TechnicalMarketing

Functional Marketing

INTERNAL MARKETING

Employee Training

Motivating to serve

customers well

SALONBUSINESS

Sources of Awareness

From a friend or relative

Advertisement in newspaper/ magazine

Advertisement on hoarding

Advertisement on the internet

Events -(Lakme fashion week, fashion shows at colleges,etc)

Pamphlets

Advertisement on television

Advertisement displays at shop/supermarket/ shopping mall

Advertisement displays at a gym/ fitness center/ social club

Advertisement on radio

Advertisement displays at a multiplex / cinema hall

72%

64%

57%

53%

47%

45%

32%

23%

17%

13%

9%

(N = 132)

• Study conducted by the Keller Fay Group revealed that members of generation Y have about 145 conversations a week just about BRANDS which is twice the rate of adults

Importance of Role of Word of

Mouth Marketing, Social

Media, Print Media

Promotional Strategies

ABOVE

THE

LINE

On Air Contests and Sponsorships

Promotion through Local Television

Channels

Newspaper Inserts and Pamphlets

BELOW

THE

LINE

Road Show Promotions, Entertainment Events, Retail Displays, Trials in Malls and moving Vans of Lakme

Hoardings/Flexes in Malls, Screens outside the Malls playing advertisements of the Brand

In-Shop and Shop Front Activities & Display Units

Distributing pamphlets, Brochures and service Catalogues

Holding Seminars, Product Launches, Competitions/Events in Colleges in Fashion shows

http://www.mckinsey.com/- India’s Urban Awakening : Building Inclusivecities, Sustaining economic growth April 2010.

http://www.mckinsey.com/- Indian Consumer Trends www.euromonitor.com/ www.indiastat.com/ www.lakmeindia.com www.schwarzkopf.com www.loreal.co.in www.vlcc.co.in www.shahnaz.in Primary Survey (online) of 132 respondents across India (urban cities) Interviews with industry Professionals and Experts Study of various salons like Lakme Salons , Naturals, VLCC, Sprat, Bounce, Affinity,

Looks ,Harry and training academies like ASK, Lakme training academy spread acrossMumbai, Bangalore and Delhi

BIBLIOGRAPHY

Thank You

DEEPAK R GORADC-9