Analyzing Buyer Behavior Simulation 1 Running head: ANALYZING BUYER BEHAVIOR

Analyzing Buyer Behavior Simulation Summary

Arnold Stonewall founder and owner of Stonewall Barbershop has been running his barbershop for more than 30 years. Fashion trends never instered him, but being the practic businessman he noticied changes in the grooming aspirations of his customers and realizes that his barbershop needs to change. Stonewalls Barbershop was established in 1972, Stonwalls Barbershop is situated in Brooklyn , New York, where ten chairs and six employees bring in a little over $250,000 per year. The clientel consists of men who live in the area and visited the same barbershop for years. I am a business manager hired by Arnold Stonewall to help boost revenues and increase profitablity. I realized I must analyze buyer behavior andassess fashion trends to appropriately position the barbershop. The mix of promotions services will determine how successful you are.

Analyzing Buyer Behavior Simulation 2 The male grooming industry is growing at a 25 percent per year, but Stonewalls business has come to a stand still. The older clinets need less of Stonewalls service and the younger clinets only come for the occasional shave while visiting salons for hair color and most of their other grooming needs. Stonewalls wealthier clients have begun spending their money on day spas, and only come to the barbershop for a haircut. Arnold Stonewall relizes that there is poential for growth, and that is why he has hired me as his business manager. Therefore I have analyzed consumer behavior, identified oppertunities within the market, and created a positioning strategy with a budget of $500,000 to implement my chosen strategy. As Stonewalls manager, I had to analyze male grooming trends to choose a positioning strategy and appropriate services for the barbershop. The positioning strategy I choose was the Barber Spa with the following services; Value Added Services Hairstyle Color Pedicure Manicure Luxury Services: Massage Concierge Services With a budget of $550,000 the total cost was $354,000 After analyzing data from the male grooming industry and interpreting customers disires to repoistion Stonewalls barbershop. Data from the surveys amoung men in the Brooklyn area and the information about male salon industry indicated that men want more services. A large number of men also stated that looking good is important and listed the services the would like to enjoy. They would perfer a few salon and spa-style treatments along with the basic services offered by a barbershop. Barber Spa fits this requirement perfectly. It is primarily a barbershop, but also offers a few salon and spa treatments that appeal to both young and old customers. The findings were based on Barbershop plus does not provide additional services even though data from the surveys amoung men in Brooklyn area and the information about the male salon industry indicated that men want more services. Similarly, Cutting edge inhibit the older customers and does not provide sufficient additional services. Sports Spa offers luxury services that cater to a very narrow market segment, and the initial capital investment would have been high. As Stonewall Barber Spa Manager for last last five years, I have watched the Barber Spa prosper and grow into six spas all over New York County. After discussing how well the business is doing well, Mr. Stonewall, the oppertunitity in expanding to other counties has raised possibilities. After looking over the Market movement reports, and knowing Mr. Stonewalls expierences with the young and old market segments Mr. Stonewall and I have realized that nearby counties such as Albany, Dutchess, Niagara, Orange, and Oneida offer the highest potential for male salons moreover, the competition is low in these counties. Therefore, Stonewall Barbershop brand can use the franchising route for expansion. This means that Arnold must spend on promotions and marketing. For this to be possable, he will spend; $50,000 per franchisee and expect a fee of about 15 percent from each salon.

Analyzing Buyer Behavior Simulation 3 With a budget of $900,000 that has been raised through a loan, you have to pick the best combination of counties and number of salons per county. You have to avoid overcrowding the market with your own brand, and budgetary constraints will determine how many new salons you can have. You also have to decide what type of salon to open in each location-Lords or Masters Positioning Stonewalls Barbershop as a Barber Spa has been profitable exercise. The Barber Spa is mudrange in price and services. This is a barbershop with a salon-style and Spa-style treatments that appeal to young and old customers. By ensuring that both target segments are satisfied, the barber spa was an accurate and profitable analysis of buyer behavior. Currently, Stonewall uses Lords and Masters to discribe the two types of barber spas that run under the Stonewall brand name. The Lord salon is an up-market version of the Stonewall brand. Situated in more exclusive areas of the city, its clients are older and more afflluent than Stonewalls Masters. The Master salon has a more relaxed, casual atmosphere. Its clients are usually young professionals. There is a considerable price difference between the two types off salons (Lords are at least 20% more expensive than Masters), and different service packages exist in the two types of stores (Masters does not offer manicure and peticure, while Lords does not offer tattoos). (Ages 21 to 35) This customer segment categorizes young people from the service industry or the blue-collar workforce. They tend to be from a lower income group, but that does not stop them from being fashionable and living lifestyles that revolve around outdoor sports and cars. Most of them live in small apartments and are single or cohabiting, and some have very young children. (Over 36 years old)The customer segment categorizes college-educated professionals who earned enough to lead a wealthy lifestyle. They are sophisticated and well settled in their careers. With considerable savings and investments, they do not worry about spending on premium goods and holidays. They enjoy all the trappings of success and are health conscious. Their large apartments and country estates are venues for their social gatherings, and these empty-nesting couples do not have to worry about their grown-up children. Salon Preferences: Over 300 males from different age groups in each of the following counties were surveyed to find out what kind of services they prefer. Depending on their preferences, the services were categorized into Lords and Masters Salon types. I choose the most approate cities to expand to and formulate a very good mix of Lords and Masters for each county. The psychographics indicated that the grooming preferences of males in Albany and Oneida are basic, which implies that Albany and Oneida are not the most approate cities for expansion. In Dutches, the psychograpgics suggest that males perfer luxury services. The survey on salon type preferences confirms this, indictating that Dutches is approate for the Lords salons. the psychograpgics and the survey on salon types preferences also indicate that in Niagara they perfer Masters and in Orange they perfer Lords. Appropriate Cities & Mix Dutches Niagara Orange Masters 6 0 6 Lords 0 6 0

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As part of the expansion plans, you had to choose the counties to expand to and decide on the number of Lords and Masters for each county. You have done well and an excellent job. You choose the most approate cities to expand to and formulated a very good mix of Lords and Masters for each county. The psychographics indicated that the groomimg preferences of males in Albany and Oneida are basic, which implies that Albany and Oneida are not the most approate cities to expand to. In Dutchess, the psychographics suggest that males perfer luxury services. The survey on salon type preferences confirms this, indicating that Dutches is approate for Lords. It has been seven years since the Salon Revolution started. Now the macho men are fighting back by not shaving, sporting longer hair, and buying bigger cars. They are also planning to get a different kind of tattoo, and they call themselves Born Again Man or also known as BAM. BAMs need different kinds of services and your Lords and Masters salons currently do not offer them. Moreover, some of your younger customers are converting to BAM, and this is affecting your business. You have to analyze this fashion movement to decide how to change your services portfolio. Arnold Stonewall feels that $350,000 would be sufficient to promote the new marketing strategy. Grooming Preferences of BAMs; Initial industry reports have shown that BAMs also require salon services, but their preferences are quite different. While BAMs sport long hair and choose not to shave, it implies that they have to care for their hair. Their tattoos are bigger and more intricate, and their hairstyle is more radical. However, the report states that while BAMs are willing to pay a premium for skilled tattoo artist, they are reluctant to pay more for hair care or hair-styling services. My decision: I choose the following service options: Loyalty program Bonus Packages with Annual Plans Discount Coupons Educational Programs in Hair-Care and Skin-care Tattoo and Body Piercing Services Gift Membership by females for husbands or boyfriends totaling $318.530 You had to decide whether or not to respond to the fashion standards being set by the BMA. To do this, you had to choose between services that attracted BMAs and existing customers or catered exclusively to either segment. You choose the most appropriate services, you did a great job. Loyalty programs, bonus packages, educational programs, and gift memberships by females for husbands or boyfriends are relevant to existing customers. Retaining existing customers is more important when fashions begin to affect business. Assessing the fashion trends for longevity is more important than reacting impulsively. The short-term response is to offer services such as bonus packages and loyalty programs to retain existing customers. Targeting women with gift memberships for their significant other was a very good choice, because it means that you are promoting your business in a completely new customer segment. The average spend of BAMs across counties indicates that BAMs do not spend much on grooming. Their preferences are specific to body piercing and tattooing, which is not significant to your mix of services. Moreover, the Customer Profile Comparison shows that the average age of BAMs is 24 to 27 years, which affects only some of your Masters customers. Discount Coupons may be attractive, but a reduction in prices would affect revenues and profits. Renaming services, changing

Analyzing Buyer Behavior Simulation 5 facilities, new dress standards for employees, events for BAMs, and tattoo and body-piercing services risk attracting BAMs at the expense of existing customers. Targeting a community that is fundamentally opposed to grooming is not an appropriate choice. Health and wealth for men is turning into health and wealth for those in the male grooming industry. With men realizing that their grooming is more than a fashion statement, the industry growth can only look good. In this simulation, you recognized the growth potential of the male grooming industry and repositioned an old-fashioned barbershop. You analyzed consumer profiles and demographics across cities and formulated an expansion plan. Finally, you responded to a transient grooming trend and changed your services mix accordingly. The maturing of an industry increase the complexity of buyer behavior. Faced with options, consumers may change their lifestyles and buying patterns. Changing levels of income also affect the profile of the consumer. The transient nature of a consumers spending habits makes the measurements and analysis of buyer behavior all the more essential. This analysis offers the marketing manager quantifiable information on which investment decisions can be based. When behavior has been quantified, it can only mean increased profitabilityand no bad hair days.

Conclusion Salons are springing up to cater to the grooming needs of all males. Professionals, lawyers, doctors, top executivies, bankers, businessmen, and blue coller workers are realizing that a well groomed appearance gives the impression of power, youth, energy, and efficiency. They are also finding out how enjoyable and relaxing a manicure or massage can be. However, while men might like the well groomed look (clean, manicured nails, sculpted eyebrows, and blackhead free nose), they are uncomfortable around women in the unisex salon. This sets the stage for a booming retail market in off-the-shelf beauty products for men, and a rapidly developing male salon industry. For every man who steps into a salon, there are several factors that innfluence his decision to spend money on his appearance. These factors, which are influenced by various internal, and situational forces, constitute buyer behavior. An analysis of these factor and forces is necessary to identify new markets, opportunties, and threats while formulating a market mix. This simulation takes you through anyalyses of buyer behavior in the male grooming industry.

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Reference University of Phoenix. (2011). Analyzing Buyer Behavior. Retrieved January 29, 2011, from University of Phoenix, rEsource, Simulation, MKT/435Consumer Behavior Web site. Michael R. Solomon, (2004). Consumer Behavior: Buying, Having, and Being (6th ed.). Upper Saddle River, NJ: Prentice Hall.

1. What additional external factors or macro factors should be considered in your analysis of the simulation? 2. What additional social and cultural factors would you consider in this scenario? 3. How do you account for variations in different geographic regionswhat do you really look for? Why is there a difference? 4. Considering the importance of keeping existing customers, what methods can be used to encourage loyalty among existing customers in a service business?

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Reference Page Entry Michael R. Solomon, (2004). Consumer Behavior: Buying, Having, and Being (6th ed.). Upper Saddle River, NJ: Prentice Hall. In-Text Citation 1. [Insert the paraphrased material] (Michael R. Solomon, 2004). 2. [Insert the paraphrased material] by Michael R. Solomon (2004). 3. [Insert the quotation] (Michael R. Solomon, 2004, p. 3).
Scott Gallagher 2006

External Analysishttp://educ.jmu.edu/~gallagsr/WDFPD-External.pdf
Updated: 2 Sept. 2009

External Analysis

Economics predicts that all firms should obtain similar results after adjusting for their costs of capital. Yet clearly firm performance varies tremendously. Why? Naturally, firms do not exist in isolation and their performance can vary because of their external environment. For analysis purposes we'll break the external environment up into the broad macro environment and a more narrow industry environment. As their names suggest, both of these environments are outside the firm and generally beyond the firms control, at least in the near term. The Macro-environment The macro environment consists of the broad trends and patterns in the nation and world beyond the firm. These patterns and trends highly influence customer needs and firm options. For purpose of analysis, the use of five aspects of the environment will provide reasonable coverage.1 The five-macro environments are economic, political/legal, technological, socio-cultural, and demographic. Each environments impact on a firm can range from favorable to unfavorable. Generally, these environments are analyzed at the level of the nation; however, it may be advisable to look at them more broadly or

Analyzing Buyer Behavior Simulation 8 more narrowly depending on the scope of the firm's business. For example if you are examining a single restaurant then the local conditions are probably far more important than what's going on in the nation as a whole. The economic environment refers to the broad economic conditions inside a country. Items such as changes in per capita income, interest rates, foreign exchange and inflation are all common measures of the economic environment. For most (but not all) firms a growing economy is favorable for business. The political/legal environment refers to a societys formal rules (i.e. enforced by state sanction) for determining who gets and does what. This can include the political system, economic system, as well as wide range of laws concerning behavior, e.g. speed limits. In the simplest of terms political systems are the ways the members of a group determine who gets what. We most often think in terms of countries but political systems operate in smaller groups such as organizations and families. Economic systems determine how scarce resources are allocated. Capitalism is an economic system predicated on freedom , and ironically, mutual exploitation, that has been shown to be incredibly effective in allocating resources. The technological environment refers to how work is done. Technology influences the transformation of inputs into outputs. For example, how information is encoded on a page by an ink pen, a typewriter, or a computer is an issue of technology. However, the work itself, encoding information, is independent of the technology.
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The socio-cultural environment refers to the shared norms and values of a group that generally lead to tacit expectations of behavior. While usually thought of as a national culture, it can also be important within ethnic groups, industries, and organizations as well as nation states. What is favorable in one culture may not be favorable in another.

Analyzing Buyer Behavior Simulation 9 This frequently shows up in marketing - a slogan that connotes one thing in one culture may not convey the same meaning in another. The socio-cultural environment occupies a preeminent position (though legal and economic are also very important) when discussing the challenges of international business. Finally, the demographic environment refers to the size and composition of the nation's population. This can often reveal important population segments for commercial attention such as the baby boom generation in the United States. Industry Analysis2 In addition to the broad macro environment, another reason why firm performance varies so much is easily attributable to what industry they are in. An industry can be defined as a group of producers of close substitutes. Substitutes are products or services that serve the same function or purpose for consumers. A watch is a product that keeps track of time, but all watchmakers may not be in the same industry, for example a Rolex serves a purpose going beyond just the function of timekeeping. The idea of industry analysis was develop from early industrial economics models.3 Popularized by Michael Porter in 1980 the present application of this system is called the five forces model. The five forces model is a way to characterize industry structure in order to arrive at INDUSTRY performance. The five forces model does not directly address firm performance. Rather it helps firms identify opportunities and threats as well as Key Success Factors (KSF) in their industry. Key success factors are derived from industry analysis and are simply what are the critical things firms must do in order to compete in a market. Having high economies of scale, or good
This entire section and school of analysis was well laid out in Porter, M.E. (1980). Competitive Strategy. New York: The Free Press.
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While trying to explain the cause of the great depression, Bain and Mason developed models labeled Structure Conduct Performance (SCP) that argued the firm's conduct was determined by industry structure and therefore industry structure directly determined firm performance.
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Standard Industrial Classification Codes A Formal Designation of Industries Most nations keep detailed statistics on their industries. For many years the United States used Standard Industrial Classification (SIC) codes to designate industries. An SIC code had up to 7 digits to specify an industry and its group. The first two digits corresponded to a firms major group with the additional digits progressively refining the classification with a four digit code indicating a firms industry. In 2000 the U.S. replaced the SIC code system with the North American Industrial Classification System (NAICS). The NAICS embodies the exact same ideas as the SIC system but is designed to facilitate compatibility with other nations systems.
This entire section and school of analysis was well laid out in Porter, M.E. (1980). Competitive Strategy. New York: The Free Press. 3 While trying to explain the cause of the great depression, Bain and Mason developed models labeled Structure Conduct Performance (SCP) that argued the firm's conduct was determined by industry structure and therefore industry structure directly determined firm performance.
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distribution networks are examples of KSFs. Usually, the most difficult task in performing a five forces analysis is pin pointing the firm's industry. This must be done carefully. Failing to define the industry is the number one mistake people make in trying to apply industry analysis. In thinking about the industry, consider the idea of what are the alternatives for the good or service you are analyzing. Generally, as long as you clearly delineate your industry your analysis will be okay, it will make it easy to separate rivals from substitutes. Also, please keep in mind

Analyzing Buyer Behavior Simulation 11 that if a firm is active in multiple industries, MULTIPLE industry analyses must be conducted. Threat of Supplier Power Relative size of suppliers to firms in industry * Substitutes for suppliers Threat of Buyer Power Switching costs Relative size of buyer to industry members Rivalry Relative size of firms in the industry more firms of equal size = more rivalry Threat of Substitutes Range of alternatives to the industrys Threat of Entry Economies of scale In no particular order the five forces are: Suppliers are those who provide inputs for the industry. Labor is almost always a supplier to an industry. Generally the larger the suppliers are relative to the industry and the fewer the substitutes for the inputs they provide, the more powerful they will become. For example, Microsoft is an incredibly powerful supplier to the personal computer industry. Higher supplier power leads to lower industry performance and vice versa. Pg. 3