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Semi Final: The Lakme Lever Case Study

LAKME LEVER CASE STUDY

About the Category/Brand
Lakme is the market leader in beauty services with its offering through Lakme Salons and Lakme Studios across 130+ centers in about 25 major cities. The above salons are made up of a mix of franchisee salons (105) and company salons (25). It enjoys leadership in the organized beauty services market Lakme is India's biggest and oldest beauty brand. The Lakme business expanded into beauty services in 2002 to leverage the brand in the services arena The Lakme salons business has grown at a (CAGR) of over 35% for the past 4 years, ahead of market growth, estimated between 25 to 30%. The growth of Lakme is made up of an average organic growth of 20 % with the rest coming from inorganic addition. The size of the organised beauty services market for women is currently estimated at Rs 500 Crores Currently Lakme Salons and Studios interact with more than 150,000 active customers every year. The majority (90%+) of the customers are in the bracket LSM 10+ and 70% are in LSM 12+ (SEC A+)

About the Trend

The following trends impact the Beauty Salons market 1. Growing disposable income & evolved lifestyle are encouraging women to look at out of home salon solutions to address their beauty needs. The explosion of media related to looking good and the growing availability of salons offering basic and innovative hair and skin services works as a draw for women. 2. This is also resulting in an upgradation of women moving from the unorganised sector (mom & pop owners) to organised/ branded salons. The opportunity for upgradation at a relatively lower LSM (SEC B), is huge as the number of women in that strata is large. 3. More women are also looking at salons as centers of expertise and authority. They are more comfortable with their beauty needs being in the hands of well trained resources. 4. Women are expecting salons to work with product lines which are professional, carrying a source of authority which is not available in the normal retail market products. 5. Being a service business, customer retention is driven largely through quality of experience, products used and specific operators towards whom customers have loyalty. 6. New retail destinations (developing malls, high street, and good residential) and legacy locations are adopting salons to address customer footfall.

Project Objective
The beauty salons market has currently been exploited by organised players more at the upper end of the price range and demographics. This includes Lakme, VLCC and several other regional players like Looks, Affinity, Enrich, Juice, Madonna, Naturals and YLG. The number of women in LSM 8+ to LSM 12 is ten times that of LSM 12+. There is a large business opportunity in this segment which HUL/Lakme is not addressing, nor has competition looked at it seriously. 1. What should be the key levers of a business strategy to extend footprint into the lower LSM, addressing a value added proposition of services, along with an appropriate brand? 2. What should the expansion model include in terms of company owned, franchised and geographical spread? 3. What should be the customer service proposition and the service mix, keeping in mind the current positioning of Lakme products and that of Lakme Salons and Studios as a premium destination? 4. Should the Lakme Salon brand extend itself to the lower LSM? Or should it be a different brand, if so, recommendations. 5. What is the best model to align other support functions like training and marketing to service a larger business spread

LAKME LEVER CASE STUDY

5. What is the best model to align other support functions like training and marketing to service a larger business spread both numerically and geographically? 6. Recommend an appropriate business model that is exciting from a financial and customer/ consumer perspective.

Expected Methodology
Consumer groups, salon visits, discussion with industry professionals. Design qualitative & quantitative research for salon & customer/consumer needs for the segment in question. Extrapolate the observations into 2015 Scan competition and professional product companies (L'Oreal, Schwarzkopf, Wella, etc.) Study marketing and customer service strategies of regional and good local players in driving customer acquisitions, retention and services. Study footfall and average bill value trends Study available training and education support models Study various COCO (company owned company operated) and franchising models

Expected Output
1. Building a consumer/brand/service proposition for the future. 2. Suggesting a business model addressing the target segment.

Mentor within the Organisation

Anil Chopra CEO - Lakme Lever

Risks
Serious & a prolonged slow-down in the economy may adversely affect trend 1 Continuous escalation in real estate costs will hurt trend 6 making models unviable Inability to develop training and education back keeping in mind attrition will affect trend 3

Success Criteria
Breadth of research & depth of business understanding Rigour in information synthesis Prediction: Scenario building - approach, assumptions & modelling Relevance: feasibility & applicability of the idea(s) Impact & Measurement: How would we measure success?