Case Study Quiz — American Beauty Salon Industry

Which of the following statements about the beauty (hair) salon industry in 2008 are true?

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✗The industry was already consolidated by large multinational companies such as Toni & Guy and Vidal Sassoon. ✗The industry largely enjoyed economies of scale. ✓The industry faced strong competition with the rise of home haircare products and appliances rose in popularity. ✓The industry was segmented in order to customize offerings to the various needs of the customers. ✓There was little product differentiation across hair salons.

The industry players were competing by:

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✓Positioning themselves as either high-end luxury hair salons or basic hair salons. ✓Targeting a specific group of people. ✓Selling salon-exclusive hair products. ✗Focusing on product innovation through R&D. ✗Differentiating their service offerings.

Which of the following statements describe the nature of the beauty salon industry?

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✓Beauty salons have long been a place for social interaction. ✓Customers seek emotional satisfaction through the service. ✓People's aspiration to look good and be pampered has been increasing. ✗Customer loyalty has more to do with functional features, such as location and promotions, than emotions. ✗Word of mouth is a major marketing channel, so salon owners do not need to invest in advertising.

In 2008, the American beauty salon industry:

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✗Projected a prosperous future with high growth forecasts. ✗Was not threatened by do-it-yourself (DIY) products as they could not produce the same outcomes as salon services. ✓Was easy to enter. ✗Was hardly influenced by social media.

If you were an experienced freelance hairdresser planning to launch your own business in 2009, what would your choice be?

Select one — open for class discussion

I would wait until the market weathered the economic recession. I would enter this market by contracting with an established franchise. I would acquire one of the hair salons for sale. I would start up a new business from scratch and become a differentiator or a cost leader. I would come up with a different idea. (Think and explain in class.)

💬 There is no single correct answer to this question — it links to Discussion Question 3 in Part A. Be prepared to share and defend your reasoning in class!

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The American Beauty Salon Industry

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