Franchising Opportunities and Market Analysis Report: Lotus Salon

This report provides a detailed analysis of franchising opportunities for Lotus Salon, a hair salon located in New York City. The report begins with an introduction that outlines the purpose of the analysis, which is to identify potential franchise opportunities based on the current market position and marketing strategies of Lotus Salon. It includes a market analysis that examines the hair care industry's overall revenue, growth trends, and market size, as well as the competitive landscape, including key players like L'Oreal and Henkel. The report identifies niche markets and target customers, such as fashion-conscious males and corporate females, to create a strategic approach to franchising. The analysis also explores the importance of understanding competitors and their strategies, such as Marie Robinson Salon and Sassoon Salon. The report concludes by emphasizing the importance of customer loyalty and the quality of services in expanding the business through franchising and maximizing market share, supported by relevant academic references.

Running head: FRANCHISING
FRANCHISING
Name of the student
Name of the university
Author note

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Organization- Walk in Trim – A Hair Salon for men and women
Introduction
This report provides the identification of franchise opportunities of small organization
called “Lotus Salon”, which is located in New York City of USA. The purpose of the report
is to derive the franchise opportunities for Lotus Salon from its current operation and
marketing position. Thus, to meet the purpose of the report, a detailed market analysis has
been conducted including some particular element such as current market position, market
share, and overall market share of the industry, competitors’ position and strategies. To
become specific about the franchise marketing, the target market for Lotus Salon has also
been identified in the report.
Overview of the business concepts
It is certain that hair care sector is rapidly developing because both men and women
are more concerned about the treatment of hair. Thus, the demand of an established salon or
hair care is rapidly growing. Thus, as the initiative of meeting the growing demand of the
services, Lotus Salon provides a broad range of service being small firm such as hair care,
cutting, color, trim, hair spa, and other related services. As the organization is located at the
New York City, the customer base of the firm is increasing gradually despite being a small
firm in size. Several small firms are trying to create a marketing position in the industry by
innovating their products and services. In this context, Korsak (2014) commented that future
growth of US Hair care is expected to be led by a surge in demand for both natural as well as
multi-cultural hair products. Rondan-Cataluña et al. (2012) also mentioned that industry
growth could be bolstered due to increase in the annul expenditure on the hair care products,
increasing disposable income as well as innovative advertisement campaign. On the other

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side, Terry and Di Lernia (2013) also mentioned that increasing fashion consciousness
towards the hair color is also a driving factor for the growth of hair care industry in USA.
Some large established organization such as L’Oreal, Henkel and Kao Corporation
have long been delivering excellent products and cater to the whole range hair care services
and products with the inclusion of Shampoo, hair color, conditioners. Such hair salon
companies tend to enhance products pertaining to both mass segment and luxury segment
products. Stefanović and Stanković (2014) conducted a research and found that the Shampoo
was the largest segment which is accounting for 34% of the market revenues in 2015. It is
also identified that broad scale adoption of shampoo as the hair care item in United State led
to the growth of the segment. The industry statistic and market size indicates that the overall
revenue of the sector is around $44 billion and the annual growth is around 1.8% with the
business above 1 million. When it comes to growth, the growing consumer sentiment as well
as per capita income have boosted the growth of the sector over the five years to 2017. This
further leads to increased demand for hair care services. According to Perrigot, Basset and
Meiseberg (2016), increasing consumer confidence and disposable income could foster the
growth of the sector.
Niche market
In order to create innovation in hair care products, the business should know about
and find niche markets. In this context, Dhingra and Parker (2015) a niche market for hair
care product is no different than a niche market in some other fields. As the hair care
organizations tend to share a similar categories of products and services, it is highly
necessary for the organizations in hair care sector to create niche market which would give
significant and separate return.

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The various manners in which the companies can identify the different niche market
are through the analysis of the preferences of the customers and the issues that are faced by
the same relating to the hair care options. As a first step, the entrepreneur who is willing to
make an expansion in the business must make use of the Mind mapping to identify the
different customers groups. Gauzente and Dumoulin (2012) stated that the identification of
the specific products based on the assessment of the issues faced by the customers. Lastly,
matching up the needs of the customers with the product deliverables as per the assessment of
the proposition (Brown et al., 2013). Thereby identifying the niche market of the organization
helps in identifying the customers segments to bring in changes in the systems and the
performance of the businesses. The identification of the niche market will be helping the
organization to bring in changes in the systems and regulate their production to fit in the
demands of the customers.
Similar aspects of the market place (competition)
The completion of the business is identified through the market shares that are held by
the other organizations while operating in the same niche market. The dynamics of the
change that is undertaken by the investors are based on the identification of the needs of the
customers and the value that is proposed for the same to bring in changes in the structure of
its performance in the markets. The different competitors of the business are Marie
Robinson salon and Sassoon salon, which have occupied a large share in the market of the
region. The different activities that are undertaken by the salons are dependent on the
identification of the trends and the demands of the customers. Cumberland (2012) stated that
the stable profit margins and the minimization of the barriers to enter the trade have helped in
the growth of the organizations in the industry. On the other hand, the declining rates of
unemployment have boosted the potency of the customers to avail for the services that are
amended by the salons.

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Franchising activities that are undertaken by the organizations has helped in
influencing the growth of the organizations through the identification of the needs of the
customers. The rise in the per capita disposable income of the people in the nation has
resulted to the growth of the organizations by 1.8%. It has helped in identifying the different
causes of the growth of the organizations in the national and the international markets. The
hair care and the salons have grown based on their franchising activities, which facilitated
them to expand their business to the international markets. On the other hand, Chen, Wang
and Yang (2015) stated that identification of the needs of the customers and amending them
with the same has helped in enhancing the market competition in the different regions.
The loyalty of the customers towards the business has helped in undertaking the
growth and expansion of the business in the international markets. On the other hand, the
quality of the services and the customer behaviour that is maintained by the business
contributes to the smooth functioning and the expansion of the businesses in the market.
Badrinarayanan, Suh and Kim (2016) stated that the identification of the niche markets of
the organization has helped in expanding the business through franchising activities. It will be
helping in maximizing the market share for the organization.
The enumeration of competition in the market has helped in identifying the different
aspects of the change that will be helping the organization to sustain in the markets.
Sustenance of the organizations is backed by their reliability on the identification of the needs
of the customers. Therefore, Lee et al., (2015) stated that identification of the needs and the
preferences of the customers in the niche markets helps in the maintaining the performance of
the businesses in the different market structures.
Target market for the business

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The target market for the company is based on the identification of the individual
needs of the customers and assessing the same to bring in changes in the product range or the
services that are provided by the organization. This section of the report focuses on the target
customer of the business in the competitive markets.
Target customers Rationale
Fashion freak Male customers The fashion freak male customers are growing in
numbers. Therefore, the concerned company
must tak4e steps to target these customers to
maximize their growth ratings while operating in
the markets. On the other hand, the identification
of the male fashion freak group will be helping
the organization to bring in changes in the
systems and the performance of the business in
the market.
Corporate Females The growing number of female corporate
employees has enhanced the scope of their
indulgence in the style conscious segments of the
organization. Therefore, the organization must
target the female customers who work in the
corporate fields to maximize their functioning in
the markets.

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Reference
Badrinarayanan, V., Suh, T., & Kim, K. M. (2016). Brand resonance in franchising
relationships: A franchisee-based perspective. Journal of business research, 69(10),
3943-3950.
Brown, H., Dady, J. M., Gardner, R. K., & Haff, J. S. (2013). Franchising: Realities and
Remedies, Forms Volume. Law Journal Press.
Chen, S., Wang, S., & Yang, H. (2015). Spatial competition and interdependence in strategic
decisions: empirical evidence from franchising. Economic Geography, 91(2), 165-
204.
Cumberland, D. M. (2012). Exploring franchise boards: A stakeholder perspective.
University of Louisville.
Dhingra, P., & Parker, J. (2015). Franchising ethnic entrepreneurship: Immigrant business
owners and an alternative economic model. In Immigration and Work (pp. 231-252).
Emerald Group Publishing Limited.
Gauzente, C., & Dumoulin, R. (2012). Franchising choice in retail networks: a multi-level
institutional framework. The International Review of Retail, Distribution and
Consumer Research, 22(4), 385-396.
Korsak, V. I. (2014). Franchising as a tool for sustainable regional development. Review of
Applied Socio-Economic Research, 8(2), 94-99.
Lee, I., Lee, C. K., Yoo, S., & Choi, M. J. (2015). A Decision-Making Model of Social
Shopping in Franchising: Assessing Collaboration Strategies. International Journal of
Information Technology & Decision Making, 14(02), 395-420.

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Perrigot, R., Basset, G., & Meiseberg, B. (2016). Resale prices in franchising: insights from
franchisee perspectives. Journal of Product & Brand Management, 25(7), 663-675.
Rondan-Cataluña, F. J., Navarro-Garcia, A., Diez-De Castro, E. C., & Rodriguez-Rad, C. J.
(2012). Reasons for the expansion in franchising: is it all said?. The Service Industries
Journal, 32(6), 861-882.
Stefanović, S., & Stanković, M. (2014). Enterpreneurial model of franchising.
In International symposium SymOrg, Faculty of Organizational Sciences.
Proceedings (pp. 560-567).
Terry, A., & Di Lernia, C. (2013). Quasi-franchising: a new model for strategic business
cooperation. In Network Governance (pp. 269-286). Physica, Berlin, Heidelberg.