1. The Indian Pyramid

2. Concentration of Disposable Income 3. Bangalore 28Yamuna Nagar1 Mumbai 20 Rajamundry 1 Madurai1Mumbai23 Delhi 22 Karnal1 Delhi13 Vijaywada1 Pondicherry1Delhi 18 Hyderabad 13 Panipat 1 Bengaluru10 Vizag1 Tirupur1Hyderabad 12Faridabad 1 Kolkata 9 Jorhat 1 Trichy 1 Mumbai12Chennai 11Gurgaon 1 Hyderabad 8 Muzzafarpur1 Agra 1 Kolkata8Lucknow4Gobind garh 1 Pune8 Bhilai 1 Aligarh1 Bangalore4Ahmedabad3Ajmer 1 Chennai 4 Bilaspur 1 Allahabad1 Patiala3Gurgaon3Kota1 Guwahati3 Raipur 1 Bareilly 1 Agra 3 Ahmedabad 3 Anand1 Ghaziabad1Kolkata3Bikaner 1 Ahmedabad3 Gurgaon 3 Rajkot 1 Gorakhpur1Pune 3Patna 1 Lucknow2 Chandigarh3 Surat1 Kanpur 1Secunderabad 3Varnasi 1 Ludhiana 2 Jaipur3 Baroda 1 Mathura1Amritsar 2Vishakapatnam 1 Jammu2 Lucknow 3 Karnal 1 Muradabad1Chandigarh 2Vijayawada1 Jaipur 2 Patna 2 Panipat1 Haridwar 1Indore 2Mysore1 VLCCKanpur 2 Udaipur2 Ambala2 Yamuna nagar 1 Goa2 Chennai 1 Faridabad 2 Jammu1Ludhiana 2 Nagpur 2 Cochin1 Sonipat 2 Mysore 1Noida2 Baroda 2 Anand 1 Goa 2 Calicut1Thane2 Surat2 Navsari 1 Amritsar2 Cochin 1Agra 1 Aurangabad 2 Rajkot1 Bhatinda2 Trivandrum 1Allahabad1 Raipur 2 Bharuch 1 Jalandhar 2 Bhopal 1Baroda 1 Jamshedpur 2 Gandhi nagar1 Ludhiana2 Gwalior1GeographicalBhatinda 1 Bhubaneswar 2Indore1 Patiala 2 Indore 1Dehradun 1 Guwahati 2 Latur 1 Phagwara2 Jabalpur 1FootprintGhaziabad1 Kanpur 1 Nasik 1 Coimbatore2 Aurangabad 1Guwhati1 Aligarh1 Pune1 Meerut2 Kohlapur 1Jaipur 1Bhilai1 Noida 2 Nagpur 1Jalandhar1 Mathura1Bilaspur1 Varanasi2 Nasik1Jammu1 Chandigarh 1Siliguri1 Dehradun2 Shillong 1Mangalore1 Panchkula1Durgapur1 Siliguri2 Kathmandu1Mohali 1 Bhatindar1 Guntur1 Bhubaneshwar 1Nagpur 1 Jalandar 1 Ranchi1Kakinada1 Rourkela 1Nasik1 Sonepat1 Silchar 1Nellore 1 Mandi1Panchkula1 Hissar 1 Asansol 1Ranchi1 Moga 1PatialaPondicherry 1 1 HABIBS Belgaum 1 Panchkula1Hubli 1 Ajmer1Varanasi 1Vishakapatnam1 LAKMEMangalore 1 Udaipur1 4. The HUB & Spoke chakraCV 5. 3%All urban52% 13%20%14% All urban 97% SEC E 5% 48% 13% 22% 17% SEC E95% SEC D 53% 12%20%14%3% SEC D 97% SEC C 54% 13%20% 14% 2% SEC C 98% SEC B 52% 15%20% 13%3% SEC B 97% SEC A 57% 14% 18%11%2% SEC A 98%0% 20% 40% 60% 80% 100%120%Up to 1 lakh above 5 lakh1 to 5 lakhMetros 0% 20% 40%60% 80% 100%Female Male All urban6% 23% 68%3% SEC E6% 10% 81%3%SEC D 6% 24% 68%2%34% of spare cash was spent on Holidays and vacations SEC C7% 20% 71%2%31.5% of the spare cash was spent on spent on New clothesSEC B 7% 30%60% 3%SEC A 6% 26% 65%3% 0%20% 40% 60% 80%100%120% Single/unmarriedMarried without children Married with children Others40% usually does something with other members of the family38% prefers to go out with other members of the family 6. The Indian Women segment1.2 billion peopleHousewives have higher family incomesthan households with working wives/moms Housewives show better SEC profiles than other segments 567.3 million women Women students168 million Self-education Working maidensStatus/fameBrand & trend consciousWorking wives75 million HealthWorking moms Children educationHousewives FamilyPrice conscious 280 millionHousewives momsChildren educationWorking wives have the lowest self perceptions of their attractiveness and claim to use the beautyproducts the least 7. It should fulfillHow do I choosepromises my products? Products promise a lotthese days to wootrialsIt shouldnt It shouldntsmell WEIRD harm my skinDoesnt necessarilyChemicals are harsh onneed to smell good, butsensitive skin and a big just not bad. Smelling NO NOgood is a plus of course 8. 1800 1600 1652Home dcorBeauty,Personaland and1400 furnishing, 5% Footwear, 38.40Healthcare, 4.91301%0%1200Communication , 11.40%1000 1024800806600 635 500400Cloting and 200textiles, 21.70%0 20102011 2012 201320142015 Household appliances, 24.8 0% Equipment,paper &Stationery, 29.7 For every branded salon,there are 4 neighboringThe Market 0%Why I prefer my neighborhoodsalons present saloon? Neighborhood salon Typical spend 500 rs 2000 rsBranded salon Typical spendFootprint in a branded salon 15 to 40 1000 rs Footprint in a neighbor salon 10 to 15 10000 rs 9. BrandedSalons ConvenienceDistance from Home Products used Trendy HaircutsPersonalized attention & Recommendations SmootheningTrained professionalFacials Past Experience Cleanliness Relationships Value for moneyVisual Cues from adsVisual Cues from peerNeighbor Start SalonsWord of Mouth 10. Access to target market On-the-spot decisionsCompetition Demanding more value with fromCustomers need differsprice consciousnessunorganized restricting standardized offeringsplayers Price Regional Sensitivitydifferences Challenges Investmentcosts and Increase in Paybackinput costs Lag in brand creation &periodShortage of Rentals, advertizing & promotionLoyalty with long gestation periodskilledpeopleLack of integrated strategyand motivation 11. LOral Paris Gant ClarinsElizabeth ArdenLactocalamine AzzureChristian DiorClinique Salvatore FerragamoAyurClinique The Body ShopCalvin KleinAvianceNina RicciFair One Oriflame Ever Yuth Schwarzkopf EmamiWellaOriflame LOral ProfessionnelFaireverAmwayLakm LOral Paris Fair & LovelyRetail footprint of0 5 10 15 200 10 20304050 60Beauty ProductsDanrufOthersThe Body Shop CliniqueClarinsNizoral AvianceOriflame AmwayLivonThe Body Shop EssensualSchwarzkopfDiana of LondonWellaMacRevlonAvonColorbarLOral ProfessionnelLOral Paris Super Vasmol Oriflame Chik Elle 18Gemey/Maybelline/JadeGodrejLakm LOral ParisRevlon Dabur0510152025 0 2 4 68 10 12 14 12. 250 3520302002515150 2010100 1510 505 5 0 0 04505000404000330300022020001101000000Lakme Vs Competition in FranchisingTerritory rights Given by 60% of Franchisor Analysis of 27 Performance Guarantees NOT given by 70% of Franchisor leadingOperating Manuals Given by 70% of Franchisor franchisors of Franchise training options Mumbai, New Delhi, Centralized, In premises (1 to 60 days)beauty careField Assistance Given by 90% of Franchisors Salon ServicesHead Office assistance Given by 90% of Franchisors 13. LITENature of service Value for money Nature of Branding Line Extension Target Segment SEC B (LSM 8-10)Business Strategy Using the Lakme brand awareness to tap into consumer aspirations while minimizing brand dilutionLong term business goal To create strong Lakme beauty service loyalistsVision Empowerment to all through value based beauty servicesMission Beauty care is for everybodyPhilosophy Changing the face of unorganized beauty services in IndiaEconomic Viability To reach out and expand to lower SECS and lower tier locations in a cost effective manner. Activation - Sourcing and communicating the brand through existing players & employees; These centers become centers of communication; Lending the Lakme brand associationsMarketing Easy WoM; Local cable channels , newspaper flyers, Community Radio, Drive by Vehicles and mobile studios;Focus Strong hold today, Long term returns tomorrow. Branding Customizable by end user Royalty Ensuring a win-win partnership with a focus on long term engagement and loyalty Quality of Service Regular trainings through centralized hub and diverging spoke model Audit Regular runs to ensure compliance to products and service 14. Need for growthNeed for career path Need for new clientele Need for personal growthNeed for specialty trainingNeed for AutonomyUnorganized Salon owners 160000 unorganized salons 38000 beauticians every yearLakme SalonAverage existencePenetrated all tier locations 80% of states with beauty coursesHave a loyal set of consumersEmployees come from Average Yrs of Experience6 8 years4 6 yearslower tier citiesOperational Model 1Lakme Liberation ProgramOperational Model 2Invite and engage Salon owners toInvite and engage Lakme employees toget endorsed by the LakmeLITE brand be entrepreneurs under the LakmeLITE brand Access to professional productsAccess after 5 years of service Niche and Specialty trainingIncentive to reduce attrition Marketing effortsContinuity in career path In Store Branding Reduction in training costs Access to personnelBrand ambassadors Access to CRM Ease in increase of footprint Access to upgradation to Studio/Salon 15. Reach to the high aspiration-low availability segment ImpactProviding opportunities for employment to youth Social Impact Raising LSM levels in smaller towns & cities Disruptive InnovationExtracting money from customers in Measurementthose services where price sensitivity Metrics Unique positioningis low Footfall of Brand adoption Additional revenue Franchisee profits Building relationships for Customer satisfactionthe future DefaultsDifferentiated service+= Competitive AdvantageLarge consumer base 16. Training modelNorth WestProduct Experts + In The franchise owners will gethouse Lakme team +South trained at hub by the trainers Soft Skill Trainers EastTrain A Trainer Program: Trainers will be placed at the hubs who willin turn get trained by the expertsChallenges No specialized training (Eg: Hair styling) Bossy Salon owners who are demoralizing the workersOur Solutions With Train A Trainer Program, Lakme can invite trainers of international standards and train trainers at a low cost Softskill, Leadership training for Salon owners 17. Manpower Sourcing First YearSecond YearFourth Year Fifth YearPickup folks from tier empower them withSign them up with2/3 colleges whomore training and management educationteach fashion and courses based on courses, provide Given them beauty stuff their interest percentage of profitsentrepreneurial based on the numberopportunity and the quality of the1 month training programclients regarding soft skills, quality standards etc 18. Financials and Revenues Financing modelFranchisors Average Leasing Amount: Capital required to set up1 Lakh the parlor: 1 Lakh Banks Projections Considerations and assumptions for revenue and profit projectionsCost of Capital: 12%Average Revenue Per User: 250Average Footfall Per Day Per Salon: 8 Royalty to Lakme: 15% Average Footage of the Salon: 500 SqftProfit from products channelized through Lakme: 20% 19. Average Footfall Per Day 8Revenue Per User 250Working days per year312Total Revenue for Frachisee 624000Franchise LakmeRent @ 6000/Month 72000 Margin from channelizing products 37440Salary for an employee @ 4000/Month 48000 Royalty 51480Cost of products used @ 30% of Revenues 187200Cost of capital 12000Interest amount for the salon setup costs12000Profit Per Salon Per year 76920Sundry expenses such as Electricity @ 2000 PM24000343200Total Profit Before Royalty 280800Royalty to Lakme @ 15% of Profits51480Total Profit after Royalty229320No of Salons 30 250400700 2000Profits 230760019230000 30768000 53844000153840000Cost of Training + Ads4000000 4000000 4000000 40000004000000Total Profit -169240015230000 26768000 49844000149840000 20. Projections for 5 years Total number of Salons at the end of yearTotal number of cities/Towns ventured into2500120100 2000 2000100 80 1500 70 60501000 40700 30500 20400 10 250 0 0 30 1 2345123 4 5YearsYearsProfits (In Lakhs)16001498.4140012001000 800 600 498.44 400267.68 200152.3 0-16.924-2001 2 3 4 5Years 21. From LITELITE---- LITE 22. LITE 23. Big Salon bills? Or little sister for a hairdresser?LITEsalon next to your doorstepWalk into aCertifiedFor upscale style at affordable prices !! 24. naturalLITE .