Great Clips: New Product, Marketing Plan

By: Emily, Juli,

Osama

I. Executive Summary
As a group we decided we would work with the company Great Clips. Great Clips
wanted the group to come up with an idea to gain more clientele from different
ethnicities. Great Clips is a well-known chain salon that is convenient for their customers
and because of their convenience Great Clips serves many people. The Providence
Center, Great Clips in Cedar City noticed they were not serving many ethnicity clients
and were not comfortable with this. Great Clips found that the different ethnicity groups
were not going to Great Clips because they do not sell products that pertain to their hair.
Being in the hair care industry Great Clips knows there are many different hair types and
it is hard to satisfy all of the different hair type needs.
To fulfill the wants of Great Clips the group thought about creating a new product for
ethnic hair and the product the group came up with was a shampoo and conditioner. The
shampoo and conditioners main ingredients will contain argan oil, avocado oil, walnut
oil, collagen, vitamin A, vitamin C, and vitamin E.
The argan oil will be used to help the hair absorb the oil quickly without leaving any oil
residue. Argan oil also acts as a leave-in conditioner that makes the hair easier to style
and keeping hair ends healthy. With argan oil as an ingredient it will help to keep the flyaways down and smooth the frizz.
The avocado oil will help as an ingredient to improve the appearance of the hair. The oil
can strengthen and moisturize the hair. When the avocado oil is massaged on the scalp it
can penetrate the scalp, provide beneficial nutrients, clean clogged and blocked follicles,
and help with hair growth.
The walnut oil ingredient helps to fight hair loss, dandruff, and also promotes growth.
The ingredient of collagen can act as a sun block and prevent the hair from damage. With
all of the ingredients in the shampoo and condition, they work together to keep the hair
from being damaged.

In the environment of the different ethnicities it might be humid, dry, cold, or hot and can
damage the hair. Especially in Utah, the weather is hot, cold, and dry. The conditions of
the weather have a great impact on the hair and the group thought if Great Clips could
promote this product it would help to protect ethnic hair and will increase their ethnicity
clientele.
For this new product the group gathered information on Great Clips situational analysis.
In the situational analysis the group found that Great Clips continues to grow by opening
new stores and when individual people by a share of the name for a new franchise. The
group also looked at all the competition that the Providence Center, Cedar City Great
Clips has. Within Cedar City alone there are 25 or more salons that Great Clips has to
compete against.
Because of the competition, Great Clips needs to make sure they have the best strengths,
and opportunities that will allow them to grow. Like any other salon Great Clips has their
own weaknesses and also threats. Once the group found information on Great Clips
SWOT analysis the objectives/goals were determined. The group thought of three
objectives/goals.
The first objective/goal is to reach out to those who have ethnic hair to create a new
clientele while maintaining the current clientele. The second objective/goal is to sell
enough of the new products to expand. We want the product to be in all Great Clips stores
and also expand the product line. The third objective/goal is to make sure that Great Clips
is selling the new product efficiently and effectively. In order for these objectives to be
completed the group needed to come up with the market segmentation and target market
for the new product.
We established that the segmentation would be the residents of Cedar City, and the target
would be the people with ethnic backgrounds who live in Cedar City. For the positioning
the group thought the product would be different and unique and that would be a place in
the consumers mind. This will help people know that Great Clips is the only place the
product will be sold and will give Great Clips an advantage.
The group already established what the product would be and where the product would
be placed. The group worked on finding what price the products would be, and how the
products would be promoted. After all the information was gathered, the group put
together a financial report of the outcomes they would like to see from this product being
sold. From the financial statement the group hopes to monitor the progress of the new
product.
In the rest of this marketing plan there is more in depth information on what was covered
above.

II. Situational Analysis

Great Clips is strategized on a growing basis that is driven by continually opening stores
in the right locations and markets. In order for this to be accomplished, Great Clips must
identify their locations based on requirements for the potential customer and
demographic base, and the sales impact on the existing franchise. Great Clips is a fastpaced, goal oriented, fun, positive, and team oriented environment. The average cost of
Great Clips is between $114,150.00$216,000.00. It is required to have a net worth of
$300,000.00 and a minimum of $50,000.00 in liquid funds. These amounts are only for
the startup of a new franchise.
You would think that being in a smaller town Great Clips would not have that much
competition. False. In Cedar City alone there are at least twenty five other hair salons.
That is a lot of competition for a small town. To name a few of those competing salons
are Smart Style, Super Cuts, and Creative touch. Great Clips operates in the hair industry,
also known as the barbering or cosmetology industry.

III. SWOT Analysis

Strengths
o A strength of Great Clips is their name. Their name is one of the fastest growing
and largest franchised hair salon in America. Every Great Clips salon provides
convenience, low prices, and quality experiences for their customers. At Great
Clips there is a skilled work force and great flexibility. Great Clips is a great
startup business for the domestic market and low labor costs. Monetary assistance
is provided at Great Clips as well as an existing distribution and sales networks.
Weaknesses
o Like every company Great Clips too has weaknesses. Great Clips franchises are in
small business units. There is not a lot of investments in research and
development. Promotion and advertising such as discount coupons, online media,
or newspaper can be another weakness of Great Clips. On a regular day there are
usually only two to three stylists working in the salon which can be a weakness on
a busy day. There is another weakness with provided products and services at
Great Clips. Products and services are limited because Great Clips does not carry
exclusive products, or offer all services.

Opportunities
o There are many opportunities that Great Clips provides. One of those is a
complete manager training for all of their management members. Great Clips also
provides training for all of their employed hair stylists. Great Clips has the
opportunity to keep income at a steady and consistent increase. Their growth rates
and profitability have proven to rapid growth. Another opportunity for Great Clips
is their franchise members and global markets.
Threats
o There is no doubt that there are threats for every hair salon. Great Clips knows of
the competition out there. In the local market in Cedar City there are at least
twenty five competitors. Due to this competition a threat to Great Clips is price
changes. Great Clips has a huge threat in having short term relationship with
customers because of the convenience that people may not appreciate.

IV. Goals and Objectives

Our main goal in this marketing plan is to provide an ethnic hair care product line. While
creating this goal we have three objectives that we would like to complete.
Objective One
o Our first objective is to attract new clients while maintaining regular visiting
clients. The new clients that we would like to attract are those who have ethnic
hair. Once we gain these new clients we will need to show our clients the new
product line for ethnic hair. After knowing the market trends we will have to
prove to our new clients the new ethnic hair care product line is better than the
existing products that are already selling. We will advertise this product line by
personal selling, word of mouth, and, if permitted, advertise promotions during
events held at Southern Utah Universitys campus.
Objective Two
o The second objective is to expand the product line throughout the Great Clips
Company. This objective may take a little work and may take a little longer. In
order for the product to perform well and to expand, it needs to sell and be sold a
lot. If it does not have a high percentage of sales it would not be worth it for Great
Clips to sell the product line. Knowing this we will have to make sure that this
product line sells enough to expand. We want the expanding product line will
need to be increased in numbers of customers, increased by new product
satisfaction, and create a high demand of the product line in the market.

Objective Three
o Lastly, the third objective we would like to complete is to run the company
effectively, and efficiently overtime. In order to do this we need to create a high
demand of the product line in the market by continuously understanding the
customers needs and wants. Another way is to provide a high quality product line
by developing new products for specific preferences of different hair types. We
hope this new product line will profitable opportunities.
V. Marketing Strategies
Segmentation
o The market segment for this new product will be for the people of Cedar City. The
population of Cedar City is 29,162. This does not include those who live outside
of Cedar City and travel to do their shopping or errands. This is a good number to
work with for the segmentation. Cedar City is our segmentation because mostly
everyone living in Cedar City has hair and takes care of their hair.
Targeting
o The target market for this product can be those who have ethnic hair. This is a
good target because not all hair is the same. There are many different types of hair
like coarse and very curly, or thin and very dry. Wavy and too oily, or super
straight and coarse. All ethnicities have different hair types, and this product
would be for those ethnicities with problem hair. This could be a segment because
there is a lot of different ethnicities within Cedar City, and hair salons or even
other stores may not have a product specified for their hair.
Positioning
o Great Clips has been offering fast and convenient hair services for a reasonable
price. The hairstylists are experienced and helpful. In the marketing mix we have
put together the product line we would like to market. The price we would like the
product line to sell for. The promotion in how we want to get the product out there
and known. We also put together the distribution place we would like the product
line to be placed.
Marketing Mix
o Product
The product line we are selling is ethnic hair care products, we would like
to mainly focus on shampoo and conditioner. With so many competitors
products on the shelves we thought the product line should be priced about
the same.

o Price
The market price range is usually around $5-$20, but we would like to
offer a sustainably better price for the ethnic hair care product line at $25
because they are quality products. On average salon would spend about
5% of the profits on marketing and promotion.
o Promotion
We want to promote the new ethnic hair care product line by offering
discounts and coupons. Also social network to get public attention and to
receive feedback.
o Place/Distribution
The Great Clips in Cedar City is where most of the ethnic hair care
product line will be placed. We would like to sell at this location to see if
the product will be successful.
VI. Financial Projections
We decided to create a one year quarterly financial report that involves summarizing the
performance of our new idea for the ethnic hair care shampoo and conditioner in a fourmonth period. The dollar amounts are estimated per month. Below is an example of the
performance report.

Great Clips Financial Statement (Not a real Financial Statement only a projected/estimate)

Sept-Dec

Jan-Apr

May-Aug

COGS

$2500
(100 products
sold)
10% of net sales

$3750
(150 products
sold)
15% of net sales

$5000
(200 products
sold)
25% of net sales

Gross Margin

$2250

$3187.50

$3750

Advertising

$500

$450

$400

Salaries

$200

$200

$200

Supplies

$150

$150

$150

Insurance

$90

$90

$90

Memberships

$10

$10

$10

Total operating
expenses
Net operating
Profits

$950

$900

$850

$1300

$2287.50

$2900

Net sales

Expenses:

As you can see in the chart above we are looking for an estimate of two thousand and five
hundred dollars in sales for the first quarter. We wanted to keep this estimate low, due to
the fact that it is a new product and it may not sell as fast as other products.
For the projections of the revenue, Great Clips will take thirty percent and the other
seventy percent of revenue will go to the product. On the next page is an example of the
revenue chart that we would like to see.

Sept-Dec

Jan-Apr

May-Aug

COGS

$2500
(100 products
sold)
10% of net sales

$3750
(150 products
sold)
15% of net sales

$5000
(200 products
sold)
25% of net sales

Gross Margin

$2250

$3187.50

$3750

Revenue

$1575

$2231.25

$2625

Great Clips
Revenue

$675

$956.25

$1125

Net sales

VII. Performance Monitoring

Working with the financial statement and projections is how we will measure and monitor
the performance of the products being sold. The financial statement and the revenue
received will also help us in evaluating the marketing performance of this new product.