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Identify and discuss the impact of the business risks of entering into the downmarket end.

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Identify and discuss the impact of the business risks of entering into the downmarket end.

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Lower prices leading to lower profit margins

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Lower prices leading to lower profit margins

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Due to now seeing brand as down market

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Brand based on cutting edge hair technology and quality customer service.

Not something that could be replicated and still be profitable in the down market

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Downmarket salons may change customer perception and affect demand in mid/upper market salons

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Lower costs of setting up in downmarket will mean Trimayr will have more competitors

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Impact to reputation of upmarket/mid-market salons

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Impact to reputation of upmarket/mid-market salons

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We need to take into account how this venture may affect our reputation with outstanding customers at our higher-level market salons.

In this sense, we would have to strongly diversify and this may come at a cost.

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Costs structure might be not fit for the downmarket. Income might be projected too optimistically. Marketing strategy might not be suitable for downmarket

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but can use another branding name

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If downmarket salons are in rougher areas, might increase associated property maintenance costs

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as Market is saturated would be difficult to gain market share

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Trimayr is identified as a quality brand leading in tech, a move to downmarket will diminish this

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customer uncertainty - will people get their hair cut with us? or are we too boujee?

High number of competitors - will we be able to fend off the rest?

Impact on brand perception - how will this impact how we are viewed by our current, loyal, upmarket customers? will they start going elsewhere?

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potential higher insurance costs due to non desirable locations

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Staff will want to work at higher end salons and might use downmarket as a stepping stone to move up salon chain. High turnover = high training/hiring costs

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Due to wanting to work in higher end salons we have

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Brand reputation, if entering the downmarket end then it may be advisable to not associate the current Trimayr brand with these salons. Currently do not have any expertise in the downmarket area. Competition is far greater in this sector compared to mid/high market. In order to maximise profits we need to have large numbers of salons with high turnover of customers. Obtaining the number of staff to work at this level.

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Brand reputation, if entering the downmarket end then it may be advisable to not associate the current Trimayr brand with these salons. Currently do not have any expertise in the downmarket area. Competition is far greater in this sector compared to mid/high market. In order to maximise profits we need to have large numbers of salons with high turnover of customers. Obtaining the number of staff to work at this level.

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Impact on every aspect of business model

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Impact on every aspect of business model

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Quality customer service and cutting edge hair fashion is how we define, create and deliver value for our customers. Down market customers will want something different e.g. low cost, speed, value for money.

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Trimayr may opt to stock lower quality, cheaper products at the downmarket salon for sale, which do not have the advertised effects on hair, e.g., increased volume/shine for hair, which will deter people from purchasing products from the downmarket Trimayr salon which may be problematic for working capital and relationships with hair product suppliers/manufacturers.

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Mid market and upmarket salons have products that we sell. It might not be the same case for downmarket. They can use marketing techniques to solve this

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Difficult to get loyal customers and can create a race to the bottom with pricing and existing downmarket salons

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Difficult to get loyal customers and can create a race to the bottom with pricing and existing downmarket salons

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The overall competitive advantage the business may have in the market may change as a result of taking a new strategic direction and entering the downmarket, e.g., brand/reputational risk, finance risk, staff turnover, change in customer pool

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Product reputation risk / Operational risk

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Product reputation risk / Operational risk

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If downmarket is a seen on arrival system, this may lead to both Operational and Product Reputation risk. Since we currently schedule all appointments and therefore operate in a more orderly fashion, staff may struggle to keep up with a revolving door of customers, possibly leading to our service quality slipping. Since our brand is polished, and our approach is organised, it may be difficult to find success in the downmarket that satisfies demand AND maintains our brand reputation

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We are yet to venture into this sector of the market - therefore we may need to take into consideration how we gain that understanding of how salons operate in this area of the market. We may see some teething problems to begin with which we must learn to tackle.

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Unlikely to sell our hairdressing products which provide decent profit - factoring this might diminish overall profitability vs mid/upper market 

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Unlikely to sell our hairdressing products which provide decent profit - factoring this might diminish overall profitability vs mid/upper market 

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May lead to a change of business model and will not align to how Trimayr creates value and brand reputation

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May lead to a change of business model and will not align to how Trimayr creates value and brand reputation

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Crime - dowmarket areas will have more crime and risk of non-payment

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Crime - dowmarket areas will have more crime and risk of non-payment

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There may be an impact on the supply chain - changing to different suppliers for cheaper and possibly lower quality products. Might also not have the relationship with new suppliers

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May see that some our of our current customers move from mid-market to downmarket as they believe they can get the same quality at a lower price as our fundamental aspects (e.g. training of our principles/hairdressers) are still part of our core business