Literature Review: Factors Influencing Business Demand and Profit

This literature review examines various factors influencing business demand, sales, and profit maximization. It explores themes such as general factors relating to demand, factors related to demand like location, design, advertising, and employee skills, and factors regarding profit and revenue maximization. The review analyzes how factors like price, consumer preferences, income, competition, advertising, and market contestability impact business outcomes. It also highlights the importance of salon design, employee behavior, brand loyalty, networking, and cost reduction in driving demand and profitability. The review incorporates insights from various journal articles and research papers, emphasizing the interconnectedness of demand and profit and the significance of both internal and external factors in achieving business success, particularly within the context of salon services.

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Literature review..............................................................................................................................3
REFERENCES................................................................................................................................8

Literature review
Theme 1: general factors relating to demand and profit & sales maximization
In view of Guchhait and et.al. (2017), it has been stated that the demand influences with
result of changes in the prices and the others factors remain as constant. There are several other
factors that influences or affects the demand of the services that includes price, perceived quality,
taste and preferences of the customers, income, advertising and confidence of the consumers.
Arias and et.al. (2018), viewed that changes in the taste and the preferences act as an
important or crucial factor that determines demand for services or the product. If the taste and
preferences for particular good or the services is high or greater, demand for such services or the
product is seen as high. However, if the particular product or the services are not preferred by the
customers due to changes in fashion then the demand for that specific product resulted as
decreasing or declining.
It has been analyzed by the Bashiri and Lawryshyn (2017); demand for the services
highly depends on income of people. Greater or higher the income of people, higher will be
demand for the goods and services. On the hand, lower the income results in lower demand for
the goods because it reduces the purchasing power of an individual or person.
Mata-López and Tobón (2019) identified that advertisement expenses made by company
in order to promote sales of its goods or the services is considered as a significant factor which
determines the demand for services. The main purpose or objective of advertisement is inducing
he consumers in buying the product or availing services of the company. When the
advertisement resulted as successful, it causes a rise in the demand of the product or the services.
However, in case an advertisement is not found as effective then it causes decrease in the
demand.
Moreover, Alizadeh and Sriramula (2018) represented that there are various factor that
affects or influences profits and sales of the business involves level of competition, market
contestability & competition, Economic state, fashion, substitutes, success of advertising, cost
etc. degree of the competition is an important factor that determines the profit and helps in
increasing the profits and revenue by rising the price of the product. On other state, government
regulations might prevent the monopolies in abusing their respective power. Further, in terms of
the competition in market, if in case the market is very much competitive then profit would be
low as consumer would be buying from cheapest organizations.
Similarly, Khan (2017) viewed that successful advertising leads to rising demand that in
turn maximize revenue of the company and also the profits with higher market share and
demand. In case there are many substitutes and price of substitute is high then there will be

higher demand for company’s product and services. This results to higher profitability and sales
for the corporation and this in turn indicates success of the firm.
Theme 2: Factors in relation to the demand
In the view point of Marchuk and Fabiianska (2017) there are several factors other than
price that impact or induce the consumer’s demand for a beauty salon service. The consumers
make store-choice decisions by evaluating different criteria established in their mind and then
comparing it with the store’s features. It helps them in differentiating stores and deciding
whether they are acceptable or not. It has also been stated, location is an important factor in
influencing the demand of salon service because it is a well-known fact that if the geographical
location of salon is far away from the customers, then there will be a reduction in demand as
compared to its customers. Hence, it is necessary for every business to perform adequate
research before selecting the location as it plays a huge role in ensuring the growth and success
of an organization. It is important to keep in mind the availability of labor, raw materials and
target customers before selecting the location.
However, Yusuf and et.al. (2019) states that salon design, its interior and overall
architecture also contributes towards the increasing demand because it is important to have an
atmosphere that makes customers feel comfortable and they get attracted to it. Adding music,
lighting and attractive colors in the salon can help the business in achieving an edge over other
players in the market. Salon design plays a psychological impact in the minds of the consumers
as if the atmosphere is calm and relaxing, the consumers will visit again but if the interior is
poorly decorated with loud atmosphere it can have adverse effects on the growth of the salon
store.
Darmawan, Wong and Thorstenson (2018) has explained the importance of advertising
and sales promotion in increasing the demand for the salon service because it helps in providing
information to the customers in relation to new store opening, displaying the attributes of the
service and also to build a certain image in the minds of consumers so that they get influenced by
the product or service. Sales promotion can also be done through offering various discounts,
exciting offers and providing rebates to customers. Brand loyalty is also an important aspect that
must be considered while increasing the demand for Salon Company. The business must win the
trust of its customers by offering good quality services and must satisfy their needs and wants as
it will not only help in retaining old customers but will also help in attracting new customers.
However, Geary (2017) argues that the employees of an organization play the most
important role when it comes to promoting and advertising the company. The employees have
the power to influence the store’s image by providing good quality services to its customers and
also by being friendly, respectful and helpful. If the employees are not well trained or well
mannered then the demand for the salon can fall abruptly. It is also stated that employee attitude
and behavior is the reason that 70% customers re visit the stores. Another crucial factor in the

opinion of Singh and Okoro (2017) is that it is the duty of every business to do proper research
and identify the latest trends in the industry; it can help them in increasing their demand and also
help the organization in achieving its desired goals and objectives effectively and efficiently.
Theme 3: Possible factors regarding profit and revenue maximization
It is mandatory for every business to earn profit, not only to survive but also for its
growth, according to author, there are various factors that can help in increasing the sales and
overall profitability of the salon store but the most important is networking. It is important for
salon store to increase their client network as they directly contribute towards the growth of the
business. It is the duty of employees to not only build new client business through
communication but also retain the existing base with the help of brand loyalty. In the view point
of author, the salon company must also focus on selling more products and services per customer
visit so that the business can earn maximum revenue from single individual and not have to
worry about constantly adding new customers to increase profits. It can be done through good
marketing skills; the employees must offer add on services and offer retail assortments by
adequately communicating with the customers.
However, according to McKay, Brown and Skalberg (2016) it is not always essential to
offer additional services to customers as it can sometimes hamper the image of the salon
therefore in order to increase the revenue, the business must also focus on reducing their
operational costs which can be done through continuously monitoring the expenses and making
sure to cut them if they are not creating any value for the organization. Also, the salon business
must ensure different ways to make profits like selling beauty and herbal products, providing
SPA services and also offering door to door beauty services. The salon can also shift their
services online and even start teaching different skills to the audience; it can be a good way to
increase their revenue. Also, it can sell their products on Amazon and other E-commerce
websites to increase profits.
In Chen and et.al. (2017) opinion, the salon must establish a brand name for itself by
providing good quality services at affordable rates to its customers. It can help them in increasing
their customer base and also mouth publicity will create a brand name for the salon company
thus after some time the brand can expand their services in different geographical locations
which will help them in increasing their profit margin. It is essential for the salon manager to
measure the key performance indicators of the business-like number of clients, frequency on
arrival, products and services sold during single visit, profit margin of salon and total product
sales. These factors must be tracked on a monthly basis and comparisons must be made
systematically. It is the duty of the employer to sharpen the skills of its employees by providing
them adequate training and making them learn new skills and equipment so that the salon can

attract wider audience and increase its sales margin. Moreover, all the employees must
coordinate and cooperate with each other to ensure smooth working of the salon because team
work reduces confusions and conflicts in the workplace which ensures greater productivity and
thus increased sales. It is also the duty of salon owner to make sure that the employees are
adequately paid and they must be motivated timely to ensure good working environment within
the workplace.
Theme 4: Review of journal and article towards demand, sales & profit maximization
Dey and et.al. (2019) has concluded that the major factors that contribute towards
increase in demand are location, design of the store, advertising and sales promotion and
employee skills. With the increase in price of goods and services its demand will reduce and with
decrease in prices, the demand will increase. It is known as law of demand and it is very
important for a business to know because if the salon company wishes to attract a large number
of customers, then it must reduce its prices but at the same time if the salon wishes to maintain a
certain standard and attract a certain customer base then it must not reduce its prices. However,
another factor that plays a major role in increasing the demand of salon service is the profile of
customers. It has been known that the attitude of customers, their taste and preference also play
an important role in influencing the demand for the company’s products and services. It is
imperative for Salon Company to not only identify the taste and preference of its target
customers but also to perform market surveys so that the organization can identify latest trends
and therefore adopt them systematically. Another important factor is to build a brand name for
the salon company so that the demand for the goods and services increases constantly.
In the view point of Bouche and Crotty (2018), both demand and profit maximization are
positively related to each other because an increase in demand would lead to increase in sales
which will further increase the profits of the company. As mentioned, reduced operational costs
is an important way to increase profits and it can further help company to utilize those funds in a
more effective manner so that it creates value for the organization. The salon must offer
discounts, rebates and other exciting offers to its new customers so that they can be retained by
the company. Some other ways to maximize profits are by increasing the number of physical
stores or expanding business online so that it can attract a new customer base. Moreover, the
importance of retaining old customers should not be under estimated and the salon company
must provide them good services. New products and services can also be launched to increase
the revenue of the firm effectively. It can be stated that both demand and profit are positively
related to each other which means that if the demand increases, profit will also increase. A salon
company must perform market research to identify its target customers and it should identify
their needs and wants and provide services accordingly. It will ensure maximum consumer
satisfaction which is beneficial for both profit maximization and image building of the company.

REFERENCES
Books and journal
Alizadeh, S. and Sriramula, S., 2018. Impact of common cause failure on reliability performance
of redundant safety related systems subject to process demand. Reliability Engineering & System
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Arias, M. and et.al., 2018. Human resource allocation or recommendation based on multi-factor
criteria in on-demand and batch scenarios. European Journal of Industrial Engineering. 12(3).
pp.364-404.
Bashiri, A. and Lawryshyn, Y., 2017, June. A stochastic supply/demand model for storable
commodity prices. In Boston (21st Annual International Conference on Real Options). Available
online at http://realoptions. org/openconf2017/data/papers/36. pdf, checked on (Vol. 11, No. 9,
p. 2018).
Bouche, V. and Crotty, S. M., 2018. Estimating demand for illicit massage businesses in
Houston, Texas. Journal of human trafficking. 4(4). pp.279-297.
Chen, L. and et.al., 2017. Pricing and effort decisions for a supply chain with uncertain
information. International Journal of Production Research. 55(1). pp.264-284.
Darmawan, A., Wong, H. and Thorstenson, A., 2018. Integration of promotion and production
decisions in sales and operations planning. International Journal of Production
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Dey, B. K. and et.al., 2019. An integrated inventory model involving discrete setup cost
reduction, variable safety factor, selling price dependent demand, and investment. RAIRO-
Operations Research. 53(1). pp.39-57.
Geary, M., 2017. Critical performance indicators: how to use them to double your sales and
profit. Journal of Aesthetic Nursing. 6(10). pp.564-566.
Guchhait, R. and et.al., 2017. Single-vendor multi-buyer game theoretic model under multi-
factor dependent demand. International Journal of Inventory Research. 4(4). pp.303-332.
Khan, Z. A., 2017. " Profit Maximisation as an objective of a firm-A Robust Perspective".
Marchuk, U. and Fabiianska, V., 2017. Product quality as a condition for maximisation of profit:
accounting and control aspects. Economic annals-XXI. (163). pp.85-90.
Mata-López, W. A. and Tobón, S., 2019. Analysis of Factors Associated to the Enrollment and
Demand of Computing-Related Careers. Social Sciences. 8(1). p.1.

McKay, A., Brown, G. and Skalberg, N., 2016. Brand Activation: Implementing the Real Drivers
of Sales and Profit. Fontaine Press Pty Ltd.
Singh, G. and Okoro, O., 2017. Matching demand and supply to maximise profit.
Yusuf, Y. and et.al., 2019. Agile capabilities as necessary conditions for maximising sustainable
supply chain performance: An empirical investigation. International Journal of Production
Economics. p.107501.