Princessa Beauty Products Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

CRITICAL ISSUES

1. How will the Princess a expand its business and improve brand awareness?

2. How to create an effective product mix so that the company can cater to the customer’s needs and demands?

3. How Princess a will create product differentiation that will lead to repeat the sales?

4. How will the company increase the financial and human resource opportunity to increase the growth?

SITUATION ANALYSIS

Princess a beauty products, established in 1984, is one of the oldest beauty stores located in Dollard Avenue in LaSalle. It is the retailer of beauty products catered to the black community in Montreal[1]. The biggest competitors of Princess a is A-plus and Beauty Palace, these competitors targeted the same consumer segment and sold the same variety of products. George Richard managed the Princess a beauty products stores for two years and purchased the stores from the original owners by using life-savings. Princess a beauty products are in a highly competitive market and, therefore, faced many challenges in the marketplace. From 2002 to 2006, the store shows growth in its sales and increase in the revenue of the company. In 2005, two new stores entered the niche market and affected the sales of the Princess a. Moreover, in the year 2007, the sales of Princess drop by 16% or $509,000[2].

Furthermore, the customers have low switching costs due to the similarity of the retailers. Therefore, the company needs to differentiate its products, to keep its sales and competitive edge. Moreover, 15% increase in prices of wigs and extensions from one of its major suppliers is predicted as loss in the future. Princessa needs to understand and forecast the needs and demands of its customers effectively, to gain customer satisfaction. Besides this, Princessa’s product mix strategy is towards black people, but Princessa needs to differentiate its product. The company can also expand its market in the area of skin care and baby care products. Apart from that the company needs to utilize its human resource and financial and operating costs effectively to maximize its growth.

DECISION CRITERIA

Decision options	Option 1	Option 2	Option 3
Increase annual sales	Yes	No	Yes
Customer loyalty and brand awareness	Yes	Yes	Yes
Differentiation products	Yes	No	Yes
Optimizing inventory system	No	Yes	Yes

OPTIONS

Option 1: Create effective segmentation plan and offer more promotions

It is recommended to Richards to create an effective segmentation plan that will help define for the Princessa where the beauty market is going and where the potential markets are[3]; to Target the right market and increase the revenue of the company in the long run. Moreover, it should offer the promotions to its customers, by offering free gifts with reasonable purchases.

Moreover, the focus should be on expanding the color cosmetics and skin care products through promotions and providing services that can help increase the revenues. However, the cons of this option is that it requires time and money to get implement effectively. The method to segment the market and then target is the use of social and advertising campaigns.

Option 2: Effective human resource department

It is suggested to the Richards to create the proper human resource department that hires qualified candidates[4]. The effective human resource department will hire the qualified and talented store managers that will manage the beauty products. The salary provided to these managers should be $30,000.

Moreover, the employees should be trained fully about each product. The benefit of this option is that the managers by being knowledgeable about the cosmeticscan offer good customer service. However, the cons of this option are that the costs and time in hiring the store managers and employees.

Option 3: Expanding bath and baby products and new anti-aging products

Bath and baby products and anti-aging products are profitable sectors in Canada. The company should make sure that these products are creatively displayed. Moreover, the rate of birth per women in 2007 is relatively high; this will present the company with opportunities in the baby products. Moreover, the baby products are emerging in the skin care segment as well and has increased by 37% in 2002.

[1] Situation analysis refer to exhibit 1 and 3

[2] Sales drop by 16%

[3]Smith, Wendell R. "Product differentiation and market segmentation as alternative marketing strategies." The Journal of Marketing (1956): 3-8.

[4]Huselid, Mark A. "The impact of human resource management practices on turnover, productivity, and corporate financial performance." Academy of management journal 38.3 (1995): 635-672.

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