MASTER OF BUSINESS ADMINISTRATION

Assignment Mark Sheet

Student ID Number: Llllll Cohort: September 2007

Assignment: Marketing

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Assignment: Marketing
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Student ID Number: 0747380

 Kingston University Business School

MARKETING

Marketing Plan for Dog Beauty Shops Chain

Kingston Student ID No: 0747380

Word count: 3059

Moscow, 2008

2
3
Contents

1. Executive summary………………….…………………………………………………….…..5

2. “TWINS” overall position and corporate strategy………………………………………….6

3. External and Internal Analysis……………………………………………………………….7

3.1. Market overview…………………………………………………………………….7

3.2. Competitor Analysis and Future Trends………………………………………….9

3.3. SWOT……………………………………………………………………………….11

4. Marketing Objectives..…………………………………………………………………….…12

4.1. Financial Objectives………………………………………………………………..12

4.2. Marketing Objectives………………………………………………………….…...12

5. Marketing strategy…………………………...…………………………………………….....12

5.1. Market Segmentation………………………………………………………….…...12

5.2. Positioning and Competitive Advantage……………………………………….…13

5.3. Marketing Strategy Pyramid……………………………………………………....14

5.4. Specific Marketing Programmes………………………………………………..…14

6. Implementation………………………………………………………………………………..18

6.1. Schedule of Key Tasks………………………………………………………...……18

6.2. Resource Allocation………………………………………………………………...18

6.3. Budgets………………………………………………………………………….…..18

6.4. Contingency………………………………………………………………………...19

7. Control and Forecasting………………………………………………………………….…..19

7.1. Critical Success Factors……………………………………………………………19

7.2. Benchmarking……………………………………………………………………...20

7.3. Financial Forecasts………………………………………………………………...20

References……………………………………………………………………………………….21
Appendix 1……………………………………………………………………………………....22
Appendix 2………………………………………………………………………………………24
Appendix 3……………………………………………………………………………....25
Appendix 4………………………………………………………………………………26
Appendix 5………………………………………………………………………………27

4
Executive summary

The given marketing plan for dog beauty shops chain was worked out by marketing consulting
firm “XYZ” for “TWINS”, the largest holding which operates on the Russian pets market.

“TWINS” corporate strategy is oriented to concentric diversification that allows to achieve

synergy effect, use economy of scale and spread risks.

The research of outer dynamics showed that market is far from saturation (in 2007 – 25% of
market capacity), fast-growing and economically attractive.

The research of inner dynamics showed that holding “TWINS” has all necessary resources to
penetrate this market:

- financial resources;
- brand loyalty;
- significant customer base, etc.

The recommended marketing strategy for 3 years consists in quick entrance and aggressive
expansion in the market aimed at conquest of leading market share and achieving leading sales
position.

To achieve this goal company needs to have unique positioning which consists in offering the
most wide range of high quality services which includes not only traditional services but also
services which are not provided in other beauty shops (the complex dog preparation to the show
with regard to all special features of the breed, correction of bite (braces), SPA procedures, etc.).

The plan is drawn for three years period. According to the plan five beauty shops should be
opened during 3 years; the assumed market share by the end of year 2010 is 20%.

Report includes all supporting calculations.

5
2. “TWINS” overall position and corporate strategy

The holding «TWINS», one of the leaders of the Russian pets market, has been operating since
year 1995. The holding is the owner of the popular trade mark “TWINS” (houses, birdcages,
clothes, accessories, toys, dainties and grooming ads).

The holding also includes wholesaling business, veterinaries and pharmacies chains “TWINS”
and retail pet shops chain “TWINS”.

“TWINS” corporate mission is to take care about the quality and the length of pets’ life, creating
a culture of relations between people and their faithful friends.

The holding has strong financial position:

- “TWINS” is the most dynamically developing holding on pets market;
- Taking into account that the significant part of holding’s activity is accounted for trading
activity it can be assumed that holing generates sufficient and stable cash flows1.

“TWINS”’ corporate objectives are:

- To be the largest and best branded provider of high quality goods and services on the Russian
pets market;
- To increase market share in existing businesses;
- To diversify “TWINS”’ activity on pets market through development of dog beauty shops
chain;
- To find the ways of achieving a synergy effect that allows to gain competitive advantage;
- To provide an attractive return on investment to the investors;
- To continue the drive for increased margins through effective utilization of resources.

“TWINS” corporate strategy is oriented to concentric diversification (according to Ansoff

product-market matrix (1988), which is the least risky form of diversification, since it involves
the company’s looking for new products and new markets that have synergies with its existing
products and markets: costs may be lower or marketing effectiveness improved (Lomax, W.,
Rettie, R. and Stokes, D. (2006).

1
None of Russian companies operating on pets market has published financial statements.

6
3. External and Internal Analysis

3.1. Market Overview

Consulting firm “XYZ” carried out the analysis of dog beauty shops market2.
It is important to highlight that average household income increase for the several recent years in
Russia accounted for 10%. In 2007 income of Muscovites increased by more than 25%3. One in
five Muscovites has a dog and the number of dog owners is growing. There is a dog almost in
every private house near Moscow. There is a trend among Muscovites to buy highbred dogs and
to take part in dog shows which are becoming more and more popular. Several international dog
shows such as “Eurasia” are organized in Moscow. The number of kennels is also increasing.

2
For market analysis the information provided by consulting center “Invest-Project” was used.
http://marketing.rbc.ru/rev_short/31705155.shtml
3
Source: http://www.gks.ru/bgd/regl/b07_13/IssWWW.exe/Stg/d02/06-07.htm,
http://www.rb.ru/news/economics/2007/12/19/163833.html

7
If 10 years ago grooming services were perceived by the majority as a whim of rich men or an
urgent necessity for “show dogs”, now a lot of “typical owners” prefer profession care and such
services are in high demand. It is also confirmed by a relatively high number of private groomers
working at home and emergence of new beauty shops on the market. It should be noted that dog
owners increasingly prefer to visit saloons with their pets as the difference in price is not so
significant, but the level of service is incomparable. Beauty shops operate at full capacity and
only by previous appointment. Customers demonstrate interest not only in traditional services
but also in “luxury” services such as SPA procedures.

The sample of the research included all Moscow beauty shops and hairdressing saloons
providing services for dogs. Veterinaries were not included in the sample as it is another model
of consumption: they do not offer model haircut and in most cases send dogs to sleep in order to
save time.

The range of services which is provided by saloons includes:

- grooming;
- trimming;
- stripping;
- coloring;
- manicure;
- other non-medical services.

According to expert evaluation Moscow market capacity accounts for $ 24 million. Average cost
of 1 visit is RUR 5000. The average number of visits is two times a year. Thus potential capacity
of the market accounts for 125 000 visits a year. In 2007 market size according to saloons
revenue was $ 6.1 million that means 25% of market capacity. Despite the market growing

8
actively, market size will probably reach 50% of potential market capacity not sooner than in
2010.

Table 1. Dynamics of market size (2005-2009)

Year Market Size (USD millions) Market Size as % of Market

Capacity

2005 1.9 7.9

2006 3.8 16.0
2007 6.1 25.3
2008 (forecast) 8.2 34.3
2009 (forecast) 10.6 44.0

The market is fast-growing and economically attractive for new players.

3.2. Competitor Analysis and Future Trends

The most serious players on the market are: “Milord”, “Charley”, “Black Dog”, “Iv San
Bernard”, “Zoomart”, “Airis”, “Boncherry”. These saloons are popular among Russian
politicians and businessmen. “Amaravati”, “Bastet”, “Bim”, “Zoobeauty Saloon”, “Infant”,
“Magic Dog” also should be mentioned.

Diagram 1. Market Shares of Players in 2007

Market Shares of Players

(2007)

Milord
14%
Charley
8%

Black Dog
Other Players 7%
59%
Iv San Bernard
6%
Zoomart
6%

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Table 2. Market Shares of Players and Number of visits in 2007

Market share Number of visits

No. Company (USD millions) (thousands/year)

1. Milord 0.85 3.5

2. Charley 0.47 2.1
3. Black Dog 0.43 2.1
4. Iv San Bernard 0.39 2.8
5. Zoomart 0.36 3.0
Other Players 3.59 25
Total: 6.09 39

High attractiveness of the market for entrance is also confirmed by continual revenue growth of
all market players (See also Appendix 1, Graph 1 and 3).

Table 2. Dynamics of revenue and market shares of 5 Top-Players (2005-2009)

2005 2006 2007 2008 2009

Company USD % USD % UDS % USD % USD %
mln/year mln/year mln/year mln/year mln/year
Milord 0.42 22.2 0.61 15.9 0.85 14.0 1.20 14.5 1.55 14.6
Charley 0.00 0.0 0.32 8.5 0.47 7.7 0.66 8.1 0.86 8.1
Black Dog 0.17 8.7 0.28 7.4 0.43 7.0 0.62 7.5 0.80 7.6
Iv San 0.20 10.3 0.28 7.4 0.39 6.4 0.53 6.4 0.68 6.4
Bernard
Zoomart 0.16 8.5 0.25 6.5 0.36 5.9 0.50 6.1 0.65 6.1
5 leaders 0.94 49.7 1.76 45.7 2.5 41.1 3.51 42.6 4.53 42.8
Other 0.95 50.3 2.09 54.3 3.59 58.9 4.73 57.4 6.04 57.2
Players

It is also important to highlight a decrease of the leaders’ market share and increase in other
players’ share (See also Appendix 1, Graph 2 and 4). However taking into account leaders’
intention to expand it can be assumed that their position will improve gradually.

In 2005, 2006 and 2007 companies demonstrated very high rate of revenue increase, however
there is a tendency of its slowdown.

Table 3. Revenue increase of 5 Top-Players and Market as a whole (2005-2009)

Company 2005 2006 2007 2008 2009

Milord 47.1% 45.5% 39.5% 39.9% 29.3%
Charley 0.0% 0.0% 44.7% 41.4% 29.3%
Black Dog 0.0% 71.8% 50.4% 44.4% 29.6%
Iv San 50.3% 44.9% 36.7% 36.0% 28.6%
Bernard
Zoomart 0.0% 56.3% 42.7% 39.5% 29.0%
All players 195.3% 102.6% 58.4% 35.2% 28.4%
Average
number of 4 11 18 24 25
players

10
Let’s apply Porter’s five force model in order to describe the competitive situation and industry
attractiveness:

Picture 1. Porter’s five force model

Porter’s model also confirms rationality of entrance to the market.

3.3. SWOT

In order to understand “TWINS” strength and weaknesses against competitors and potential
changes in the external environment let’s apply SWOT analysis (Picture 2):

11
Despite listed weaknesses and threats, it can be concluded, that holding “TWINS” can be
strongly competitive, take advantage of the opportunities and minimize threats.

4. Marketing Objectives

4.1. Marketing objectives for dog beauty shops chain for mid-term (3 years):

- To enter 5 Top-Players on the market in 2009;

- To have at least 12% market share by the end of 2009, 20% - by the end of 2010;
- To open 5 beauty shops by the end of 2010;
- To achieve 85% customer awareness of the brand in the target market;
- To inform target audience about benefits of company’s services and its competitive
advantage, leading to increase in sales;
- To provide customers with wide range of services and also specific services which are
not available in other saloons.

4.2. Financial objectives for 3 years:

- To generate revenue of US$ 1,3 million by the end of 2009 (3 saloons);

- To generate revenue of US$ 2,8 million by the end of 2010 (5 saloons) ;
- To achieve annual gross profit margin at least 30% in 2009, 2010 and net profit margin at
least 12%.

5. Marketing Strategy

5.1. Market Segmentation

According to executed at the end of 2007 analysis of consumers it can be concluded that with
current level of prices for cosmetic services for dogs (US$ 120-240) people living in Moscow or
around Moscow with more than RUR 34 000 income per capita (US$ 1360) can visit such
saloons. This category of people accounts for 2,6 million of people thus 2,6 million of potential
consumers. However in fact only 0.76% of them visit dog saloons, that means 20 000 of visitors.

The dog beauty shops market may be segmented according to:

- income (from US$ 1360 to 2000; from 2000 to 4000; more than 4000);
- status in “dogs’ industry” (kennel owners; owners of pedigree dogs taking part in dog
shows; owners of pedigree dogs not taking part in dog shows, owners of non-pedigree
dogs);
- social class (middle-class; well-to-do people; “stars” (politicians, show business stars,
oligarchs, etc).

In order to achieve high market share it makes sense to choose targeting strategy of differentiated
marketing which target the following segments:

- kennel owners and all owners of pedigree dogs from all listed classes with income more than
US$ 2000).

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5.2. Positioning and Competitive Advantage

“TWINS” can be positioned as dog beauty shops chain which offers the most wide range of high
quality services which includes not only traditional services but also services which are not
provided in other beauty shops, in particular, the complex preparation of your dog to the show
with regard to all special features of the breed and new services such as correction of bite
(different kind of braces) or SPA procedures.

Let’s apply perceptual map of the dog saloons market (major players) in order to understand
customer perception of competitors and potential perception of “TWINS”:

Picture 3. Perceptual Map of Dog Beauty Shops Market

Reasonable Price/Quality Relationship

Black Dog Milord TWINS

Zoomart Charley
Iv San Bernard
Airis
Narrow range Wide range
of services of services
Boncherry

Unreasonable Price/Quality Relationship

According to Perceptual Map “Milord”4 can be considered as the most serious competitor of
“TWINS”. “Milord” provides relatively wide range of quality services and has competitive
prices. “TWINS” competitive advantage consists in:
- brand loyalty and significant customer base;
- lower costs (from one had holding produces grooming ads “TWINS” and includes trade
companies which deal with all necessary input, from the other hand beauty shops will be
used as distribution channel for holding’s goods);
- availability of exclusive services;
- accumulative system of discounts (discount cards work in all holding’s companies, i.e.
veterinaries, pharmacies, retail pet shops + beauty shops) may become a driver for
building beauty shops’ customer base;
- strong cash flow that allows aggressive expansion in the market.

4
At the beginning of 2008 its 3rd saloon was opened.

13
5.3. Marketing Strategy Pyramid

Marketing strategy for 3 years should consist in quick entrance and aggressive expansion in the
market aimed at conquest of leading market share and achieving leading sales position.

Picture 4. “TWINS” Strategy Pyramid

5.4. Specific Marketing Programmes

Product

“TWINS” is a famous brand name which is associated with high quality. Thus services provided
by beauty shop “TWINS” should correspond with this level. That means not only using high
quality beauty ads but first of all creation of pleasant air and owner understanding that his dog is
treated with care. It also means possibility of owners to communicate with each other like in club
(every saloon should have bar-room where dog owners can have a cup of tie, coffee, etc.).

“TWINS” saloons have differentiated assortment policy: they provide traditional services such as
haircut and new services such as SPA-procedures5. According to research such new procedures

5
Treatment and reparative procedures for skin and hair are especially important for white dogs such as

Dogo Argentino or West Highland White Terrier.

14
will be in demand, especially concerning correction of bite (even if one tooth grows incorrectly,
a dog will never win in show). “TWINS” services are listed in Appendix 2, Table 1.
Additionally saloons may sell accompanying goods (cosmetics, toys, accessories, clothes).

Before After

Place

The beauty shops should be located in prestigious districts where people with high income live.
It is recommended to locate 2 saloons in the center of Moscow, 1 – south-west, 1 – west. The
fifth VIP-saloon should be located near “Rublevka” – the place where live Russian oligarchs and
millionaires. It ought to be noted that price of services may change depending on what place the
saloon has and what the price of rent is.

Average room space of each beauty shop is about 110-130 m². It includes: reception zone (with
mini-shop), working area, back office zone and special rest area for clients.

Price

“TWINS” goal is to maximize market penetration and it could be reasonable to establish lower
prices. However taking into account the deficit of such services on the market and demand
exceeds supply, it makes sense to have the following differential pricing: for traditional services
to set a competitor-based price and for luxury services to set premium price as luxury service
consumers are not sensitive to prices.

The prices are listed in Appendix 2, Table 1.

Promotion

15
 It should be noted that “TWINS” beauty shops can use synergy effect in promotion as “TWINS”
has strong brand image. Holding carries out active brand advertising campaign (sponsorship of
dog shows, etc). However beauty shops need to have promotion plan in order to inform target
audience about benefits of company’s services and its competitive advantage, attract attention,
arouse interest, desire and led to purchase of services.

Picture 5. “TWINS” Beauty Shops Promotional Mix

Own web-site Direct marketing

development Personal prospects and invitations
sending to all kennels owners and
Sales Promotion through kennels to dogs owners
*“TWINS” receive
discount cards that Advertising
work in all holding’s *Ads in special magazines
division; PM (“Dog and Me”, “Dog
* Holiday discount Magazine”);
(New Year, etc.)
* Gifts for loyal
customers (dogs
birthdays)
* Special events (Dogs
Beauty Parade, Dogs
Fashion Show)
* Advertising though
“TWINS’” veterinaries,
Public Relations pharmacies, retail pets shops.
Participation in TV dog show “Me and
My Dog” (Dog-Winner receives free
visit to “TWINS” beauty shop)

People

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The most important issue of the project is to find highly skilled staff as for service company it is
the key diver of success. The company should work out standards of staff qualification for each
position and strong motivation system. It should be also necessary to have developed system of
personal training and qualification upgrade.

It should be stressed in “TWINS” promotional material that company’s employees have high
qualification and pass through hard selection.

Process

Taking into account that the majority of dogs badly bear any procedures, the aim of specialist is
to create quiet and comfortable atmosphere, and first of all for the owner, as the owner will
decide whether he will come again or not.

The owner may have a choice: to overwatch how his pet is treated or to have a rest in bar-room.

Physical Evidence

Each saloon should have attractive, luxury design. The saloons should be designed in one style
and one colour scale that will makes them recognizable.

6. Implementation

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6.1. Schedule of Key Tasks

To illustrate action plan Gantt chart is applied (Appendix 3, Table 1).

6.2. Resource Allocation

One beauty shop needs the following set of resources:

Material resources:

- premise;
- equipment (tables for grooming, washers, hairdryers, clippers for trimming, different
kinds of scissors, brushes, combs; special dental appliances);
- special pets cosmetics.

Human resources:

- 4 groomers (work in relays, two by two);

- dentist;
- 2 cosmetologist (work in relays);
- 2 administrator (work in relays);
- manager.

6.3. Budgets

Initial Costs

According to experts’ evaluation the full preparation for saloon opening including equipment of
premise will cost on the average USD 1000 per 1 m². Thus 120 m² premise preparation will cost
USD 120 000.

Marketing Budget

Marketing budget for 2008 is calculated using objective-task method taking into account
company’s objectives and goals (market penetration and quick growth of customer base).

Company will avoid a significant amount of marketing costs as a part of advertising campaign is
executed centralized and paid by Holding (participation in TV dog show; advertising in
“TWINS” veterinaries, pharmacies, retail shops).

18
 Marketing budget for year 2008 (one saloon is opened) will include initial costs (e.g.web-site)
and will be equal to USD 14 100 (Appendix 4, Talbe 1). For years 2009 and 2010 average
monthly budget per 1 saloon will be equal to USD 2000.

Work force budget

Work force budget will be equal to USD 11 800 per month (50% of plan) and USD 22 375 per
month (100% of plan) (Appendix 4, Table 2).

6.4. Contingency

Table 6. Contingency Planning

Contingency Effect Measures

*Economic risks connected
with high inflation, customers
inability to pay, demand
fluctuation, competitors’
prices decreasing
*Increase of raw material
prices
* Operational risk
* Financial risk
Income decrease Continuous work with clients,
services perfection, flexible
price policy, costs reduction
Costs increase Conclusion of long-term
contracts with fixed prices
Income decrease Accurate scheduling of work,
continuous staff retraining
Income decrease Working out investment
strategy as part of Holding

7. Control and Forecasting

7.1. Critical Success Factors Opportunity to have package of services

Price-Quality Relationship KPI: % of customers who want to have complex of

services (e.g. complex preparation for dog show)
KPI: Revenue growth rate due
to growth of customer base

Critical Highly skilled staff

Club System
KPI: Frequency of collective rest
area visits (bar-room)
Success
Factors
KPI: Index of client satisfaction;
% of employees conforming to
qualification standards

Individual approach
Prestige Value
KPI: Number of loyal customers;
KPI: Number of famous customers Number of repeated visits + Customer
(politicians, show business stars, etc.); feedback, SERQUAL questionnaire
Number of mass media publications
7.2. Benchmarking

19
For effective company management it is very important to take into account not only dynamics
of own indicators but also analyze them in comparison with competitors6. It allows to control
performance, revise duly development strategy and operate successfully.

Picture 6. Marketing control process

Source: Kingston Business School

Indicators recommended for benchmarking are listed in Appendix 5, Table 1.

7.3. Financial Forecasts

Indicator (USD) 2008 2009 2010

Sales 140,920 1,305,510 2,888,860
Costs 121,868 889,872 1,968,696
Gross Profit 19,052 413,638 920,164
Cross Profit Margin 13.5% 31.7% 31.8%

The calculations are included in Appendix 5, Tables 2,3,4.

References

6
Indicators for financial benchmarking are applied as most of Russian companies have high level of protection and
it is very difficult to receive any information.

20
1. Lomax, W., Rettie, R., Stokes, D. (2006) “Marketing”. Kingston University Business School

2. Lipsits, I.V. (2007), “Marketing for Top-Managers”. Moscow. “ECSMO”

3. Nozdreva, R.B., Grechkov, V.U. (2003) “Marketing”. Moscow. “Economist”

4. Westwood J., (2004) “How to White a Marketing Plan”, Saint Petersburg. “Neva”

5. Mihalsky, A.V. (2008) “Marketing Plan”. Saint Petersburg “Piter Press”

6. Consulting Center “Invest-Project” (2007) Market research of dog beauty shops market
(demo-version) available at http://marketing.rbc.ru/rev_short/31705155.shtml

7. http://www.vkb.ru (“TWINS” web-site)

8. http://en.wikipedia.org/wiki/Benchmarking

9. http://marketing.rbc.ru/research/demo_965574/2005/03/14/13152110651.ppt

10. http://www.irbp.ru/files/120456Calon_krasots_dly_sobak.doc

11. http://www.bre.ru/risk/20709.html

Appendix 1

Graph 1. Dynamics of market size (2005-2009)

21
 12 1. Dynamics of market size (2005-2009)
Graph

10,6
10

8 8,2
USD millions

Market size
6 6,1 6 Revenue of 5 Top-Players
Revenue of Other Players
4,7 4,5
4 3,8 3,6 3,5

2,5
2 1,9 2,1
1,8
1
0,9
0
2005 2006 2007 2008 2009
Year

Graph 2. Dynamics of market shares (2005-2009)

70

60 58,9 57,4 57,2

1,6 50,3 54,3
50 49,7 1,55
45,7 Dynamics of market size (as
1,4 42,6 44
41,1 a % of market capacity)
40
42,8 Dynamics of 5 Top-Players
%

1,2 34,3 1,2

30
Dynamics of Other Players
1 25,3 Milord
USD millions

20 Charley
16 0,85 0,86
0,8 0,8 Black Dog
10
8 0,66 0,68 Iv San Bernard
0,6 0,61 0,62 0,65
Zoomart
0 3. 5 Top-Players Revenue Dynamics (2005-2009)0,53
Graph 0,47 0,5
0,4 2005 0,42 2006 2007 0,43
2008 2009
0,39
0,32
Year
0,2 0,28
Graph 3. 5 Top-Players Revenue Dynamics 0,36
(2005-2009)
0,2 0,17 0,25
0,16
0 0
2005 2006 2007 22 2008 2009
Year
Graph 4. Dynamics of 5 Top-Players Market Shares (2005-2009)

25

22,2
20

15,9 Milord
15 14,5 14,6
14 Charley
%

Black Dog
10 10,3 Iv San Bernard
7,7 8,1 8,1
8,7 8,5 Zoomart
8,5 7,4 7,5 7,6
6,5 76,4 6,4 6,4
5 5,9 6,1 6,1

0 0
2005 2006 2007 2008 2009
Year

Appendix 2

Table 1. Provided services and monthly revenue of one beauty shop

23
 Service Price Times a Monthly Material Material Profit
(USD)7 day Revenue8 Consumption Consumption
(average) (USD) (%) (USD)
*Professional 20 2 1200 - - 1200
consultation on
dog care
(considering
special features
of breed)
*Haircut and 70 (ave- 5 21000 15% 3150 17850
trimming (2 rage)
groomers)
*Wash of 45 2 2700 10% 270 2430
smooth-haired
dogs
* Cut and comb- 40 2 2400 10% 240 2160
out of mats
*Hair dyeing 100 (av.) 1 3000 30% 900 2100
*Hair edging 30 3 2700 10% 270 2430
*Ears trimming 12 3 1080 5% 54 1026
*Paws trimming 12 3 1080 5% 54 1026
*Claws cut 15 5 2250 10% 225 2025
*Ears cleaning 15 5 2250 15% 340 1910
*Extirpation and 20 3 1800 20% 360 1440
prophylaxis of
fleas and mites
*Paraproctitis 20 5 3000 15% 450 2550
prophylaxis
*Removal of 100 (av.) 4 12000 25% 3000 9000
tooth stone
* SPA 50 (av.) 2 2500 30% 750 1750
procedures New!
* Mud pack for 60 1 1800 30% 540 1260
problem skin
New!
Ozone therapy 40 1 1200 20% 240 960
New!
Correction of 250 10 times a 2500 40% 1000 1500
bite (braces) month
New!
Sale of 6000 60% 3600 2400
accompanying
goods
(cosmetics,
accessories,
clothes, toys)
Total 70460 15443 55017

7
Multiplier for aggressiveness is 1.25, for complex preparation for show – 1.5.
8
Beauty shops are opened 7 days a week. The number of days in month taken for calculation is 30.

24
Appendix 3

Table 1. Schedule of Key Tasks

Action 2008 (trimesters) 2009 2010

II III IV I II III IV I II III IV
*Working out
qualification
standards
A. Premises search
for 1st saloon
(South-West)
B. Documents
execution
(certificates, etc),
repair and design
C. Recruitment
and staff training
D. Purchase and
installation of
equipment
E. Saloon opening
*Start of
advertising
campaign
* Analysis of
work results of 1st
saloon and
correction of
errors
A. (2nd saloon,
West)
B.
25
 Action 2008 2009 2010
II III IV I II III IV I II III IV
C.
D.
E.
A. (3rd saloon,
Center)
B.
C.
D.
E.
A. (4th saloon,
Center)
B.
C.
D.
E.
A. (5th VIP-
saloon,
Rublevka)
B.
C.
D.
E.

26
Appendix 4

Table 1. Marketing budget for year 20089

Action Costs (USD)

*Web-site development and promotion 2000
*Advertising in special magazines 3600
*Ads materials manufacturing (prospects, etc.) 5000
*Organization of special events 2500
*Gifts 1000
Total 14 100

Table 2. Work force budget

Qualification
Fixed Salary % Salary Number of Total
(USD) When plan is 100% plan employees Amount
realized over realization
50%10
*Manager 1900 3% from 2725 1 2725
profit
*Administrator 1000 x2 1% form total 1410 2 2820
turnover
*Groomer 1100 x4 30% from 2540 4 10160
own turnover
*Cosmetologist 1100 x2 30% from 1960 2 3920
own turnover
*Dentist 1300 20% from 2750 1 2750
own turnover
Total 11 800 22375

9
Marketing research is paid by Holding.
10
Appendix 2, Table1.

27
Appendix 5

Table 1. Indicators for Benchmarking

Indicators “TWINS” “Milord” “Charley”

(should be
considered in
dynamics)
*Market Share X X X
*Revenue X X X
*Costs X X X
*Gross Profit X X X
*EBITDA X X X
*Net profit X X X
*Gross Profit Margin X X X
*Net Profit Margin X X X
*Contribution Margin X X X
*Return on Capital X X X
Employed
*Return on X X X
Investment
*Current assets
turnover
*Fixed assets turnover X X X
*Revenue per one X X X
employee
*Marketing costs X X X

Table 2. Sales and Costs Forecast for Year 200811

The first saloon will be opened in September 2008, thus calculations for 4 month are made
assuming that first four month saloon will operate with 50% work load. Calculations are made
excluding investment costs.

Indicators Monthly (USD) Total (USD)

Sales 35 230 140 920
Costs: 30 467 121 868
Material Consumption 7722 30888
Salary 11800 47200
Advertising 3525 14100
Utility Services 420 1680
Rent 7000 28000
Gross Profit 4 763 19 052
Gross Profit Margin 13.5% 13.5%

11
Assumptions: all calculation are made ignoring inflation and possible price readjustment; utility costs were taken
as fixed costs; average cost of rent for one saloon is USD 7 000 per month.

28
Table 3. Sales and Costs Forecast for Year 2009

In Year 2009:
- first saloon works 12 month with 100% work load;
- second saloon will be opened in June (June – 50%, July, August – 75%, September-
December – 100%);
- third saloon will be opened in December (50%).

Indicators First Saloon Second Saloon Third Saloon Total (USD)

(USD) (USD) (USD)
Sales 845 520 422 760 35 230 1 305 510
Costs: 566 856 294 074 28 942 889 872
Material 185316 92659 7722
Consumption
Salary 268500 135475 11800
Advertising 24000 14000 2000
Utility Services 5040 2940 420
Rent 84000 49000 7000
Gross Profit 278 664 128 686 6 288 413 638
Gross Profit Margin 32.9% 30.4% 17.8% 31.7%

Table 4. Sales and Costs Forecast for Year 2010

In Year 2010:

- first and second saloon work 12 month with 100% work load;
- third saloon (January – 50%, February-March – 75%, April-December – 100%);
- forth saloon will be opened in June (June, July – 50%, August, September – 75%,
October-December – 100%);
- fifth saloon will be opened in December (50%).

Indicators First Second Third Forth Fifth Total

Saloon Saloon Saloon Saloon Saloon (USD)
(USD) (USD) (USD)
Sales 845 520 845 520 775 060 387 530 35 230 2 888 860
Costs: 566 856 566 856 530 264 275 778 28 942 1 968 696
Material 185316 185316 169874 84938 7722
Consumption
Salary 268500 268500 247350 124900 11800
Advertising 24000 24000 24000 14000 2000
Utility Services 5040 5040 5040 2940 420
Rent 84000 84000 84000 49000 7000
Gross Profit 278 664 278 664 244 796 111 752 6288 920 164
Gross Profit 32.9% 32.9% 31.5% 28.8% 17.8% 31.8%
Margin

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