Group 2:

Cherry Srivastava
Katie Vu
Gurwinder Dhillon
Calvin Fox
Eric Tran

Focus: How to help a company increase its sales in a small market on

a product that has declining for the past few years.

Table of Contents:
I.

Executive Summary3

II.

SWOT Analysis4

III. Market STP Analysis..6

IV. Pricing..7
V.

Product Strategy.9

VI. Market Channels and Promotion..10

VII. Conclusion..12
VIII. References...13

I. Executive Summary
Pro Spa, Inc located in Garland, Texas was launched in June 2003 as a manufactures
specializing in building only pipe less pedicure spas. The company has grown for almost 11
years in the business and has three major locations around the U.S (California, Texas, and
Missouri) and hopes to start another branch in Florida soon. Although we only have four
locations, they ship to anywhere in the United States and even offer special deals accordingly to
the purchase. The company sells a variety of spa equipment such as products for beauty, health,
relaxation, and is the master distributer of CND and OPI products in North Texas. The spa chairs
are complete with built in massages, jets in the feet tub, arm rests, are comfortable, and have
unique design.
The goal of our company is to manufacture and distribute the best quality spa chairs to
spa owners across the United States. Company offers large variety of great quality chairs for spa
owners to select from to ensure their customers have a great spa experience.
In the past two years since the economy has slowed down, the spa chair half of the
business is doing poorly. Although Pro Spa spent much money to run advertising, it cannot sell in
the current market since it has the same products from other manufactures with same function in
the market.
Although the pricing has not changed, it is selling the product is an issue. The revenue
from selling pedicure spas is going down. Our competition typically sells the product for a lower
price; we know that the competition is not providing the same quality or variety of spa chairs.
Many customers choose chose price over quality though.

II. SWOT Analysis

Strengths: ProSpa Inc., with its distributors located in Missouri, Texas, and California, is
exposed to a large and expanding market and are known for their production and supply of high
quality chairs for the consumer market. Along with urban locations located in Kansas City,
Sacramento, and Garland, ProSpa also offers nationwide service and an ability to sell, produce,
and deliver spa chairs and equipment to anywhere in the country (ProSpa, 2007).
Weaknesses: However, customer knowledge about ProSpa is limited, particularly due to poor
advertising methods and lack of information on brochures and advertisements. Despite the
magnitude of advertisement, customers lack information on what ProSpa Inc., offers in terms of
quality and service. Location of the distributors is also a problem. These locations are difficult to
discover and as a result may limit customers' ability to access the locations. Delivery is also
inconvenient, with high delivery costs if delivered nationwide and the outlying locations are
difficult for customers to locate. ProSpa's chairs are also un-customizable. Although the chairs
are high quality and built-to-last, they are unable to be customized to suit a consumer's interests,
which may impact the demand for the product.

Opportunities: With all-year interest in health and beauty, as well as peaking interest during the
summer seasons, demand for spa chairs should stay constant and peak during the summer.
Customers may want to purchase their own spa chairs for household use during the hot summer
seasons or spas will require more spa chairs for a greater surge of customers. This is also a prime
time for health and beauty suppliers, as the trend of health and fitness has become to take
presence in the United States. Citizens of all ages are beginning to become health-conscious, and
therefore take more care into beauty, appearance, and fitness. This may cause more spas to be
opened, increasing the demand for spa chairs. However, not only spas require spa chairs. Hotels,
resorts, and the like also are taking note of the pro-fit movement and are supplying their
customers with gymnasiums, spas, and treatment such as massage therapy. (SpaFinder Wellness,
2013) With hotel corporations interest in spa chairs, this may also support the demand for spa
chairs and equipment. Most interestingly enough, the U.S. economy is doing well in the second
quarter, with consumer spending climbing by 0.9%, the highest in the past five years (Stilwell,
2014). With a rise of consumer spending, demand for spa chairs may increase due to a rise in
disposable income and in combination with the pro-fit movement, customers may spend this
income on spas and gymnasiums, increasing the need for spa chairs.
Threats: With the rise of the pro-fit movement, other companies have also taken note on increased
customer interest in fitness, health, and beauty. The number of suppliers and competitors in the
health and beauty market has increased. This may inhibit ProSpa's growth, but with innovation and
good customer service, ProSpa can put themselves ahead of the other market competitors.

III. Market STP Analysis

The target customer for this company is the owner or buyer of spas that people go to in
order to get their nails done, get facials, and relax. Our spa chairs specifically are designed to
give any person that sits on them the best comfort possible. If the customer is pleased with their
spa chair experience, then the owner of the spa will be pleased with our company. That is why
we provide the best quality chairs at a reasonable price.
The way that we segment our buyers is by the budget of the spas they own. First we have
the higher end budget spas, which are the most luxurious and would have the highest paying
customers. Therefore, they would need to buy the best quality chairs as well as the most chairs.
Next we have the middle budget spas, which are the average spas and will buy chairs according
to their ability to accommodate with prices and special deals. Therefore, they will still be
profitable, but just not as profitable as the higher end spas. Lastly, we have the low budget spas
which will be the least profitable yet still a target consumer because we offer refurbished chairs
at lower prices specifically for this range. For the purpose of gaining the most profit, we will
choose the higher budget spas as our target in this analysis. When we further the segmentation,
we are going to look specifically at the markets of our four locations: California, Texas,
Missouri, and Florida.
As far as our positioning goes, we are using the head-to-head positioning, which involves
the company going into the market with the competing companies as well. Although the market
for spa chairs is not as big as other markets, the competition is still very prominent. The most
important part of our product is that it is of the highest quality (as told by our customers and
through our personal guarantee) and there is large variety that we provide. We are better than our
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competition due to our points of differences. Specifically, we provide special kiddie chairs that
are made for children to have a similar experience as thy accompany adults at the spa. We also
have the most high-technology chairs, most spa chairs come with massage chair installed and
Spa chairs come with pedicurist stool (its free), base or tub made with fiberglass. Pro Spa has
more specialization with power adjustable seat reclining & sliding. Leather back or seat covers
can be replaced if it has any damage and we provide necessary parts as well as cleaning products.
Therefore, our positioning statement puts us on a better end with our higher budget spas because
we provide more superior spa chairs than our competitors.

IV. Pricing
Pro Spa has many models and different options with different price ranges to help
accommodate our customers. Our top of the line models we offer are the Oscar and the Sophia,
they both are priced at $2,500 and they come with our premium leather, ergonomic seat foam,
and special water jets that massages, prepare, and disinfect your feet for your pedicure. We have
a model just below the top of the line and it is our Paris Model, This also comes with our
premium leather and ergonomic seat foam but does not come with the water jets. The models
below that are the Wynn and Venice and they are both priced at $1,900 and they come with
durable vinyl fabric and ergonomic seat foam, unfortunately these models do not have the foot
water prep station. On our low-end side we offer the Pro 1000 and the Napoleon and they are
priced at $1800 these will come with our durable vinyl and our quality foam seating. We also
offer lower cost refurbished models for the consumers that are looking for more value, these will
be inspected repaired and quality tested by our trained staff and we offer these at 30% off the
original cost.

All these models come with a year warranty on our motors and we also offer repair parts
on every model. We have four locations and our fourth location we just started is in Florida.
Since we have competition, trying to get our name out is pretty hard, so for our Florida location
we are using Penetration Pricing to get a foothold in the Florida market. One company that we
are competing against is a company called Salon Equipment located in Beverly Hills, Florida.
Salon Equipments price range for their high budget chairs are around $2400-2900, which they
offer similar styles and options as we do. The way we can penetrate the market in Florida is to
discount 15% on all our chairs we sell, this way we can build up our clientele and get our name
out in the market.
Since our product comes with many features and competitors, we are mainly dealing with
a monopolistic competition. We offer tiered pricing for our chairs so that our customers know
which chairs is the higher end, which specifically speaks to our higher end spas. Therefore with
our price and product we will need to advertise as much as possible in order to differentiate from
the competitors. Furthermore, due to the fact that we are specifically targeting the higher end
spas, we will be able to project for higher demand for our chairs and the highest revenue because
the higher end spas will want only our best chairs for their salons. Since we are the manufactures
as well as the retailers, we are able to keep our price as low as possible to accommodate our
quality. Although our current three locations use cost orientated price (the cost of the
manufacturing as the price of the chair) in order to distinguish our greater quality, we are going
to use penetration pricing (lower our price) at first specifically in our Florida location since we
are new to the area and would like to appeal to the new customers. We also use bundle pricing to
create a greater incentive for our customers to buy more chairs and ship more out to their
locations.

V. Product Strategy
Pro Spa is in its maturity stage in its product life cycle, which basically means that our profits
shift due to lack of buyers and increase or decrease of competition. Spa chair sales have slowed
down because there are very few buyers, most spas already have chairs or they are buying from
our cheaper competitors. Furthermore, the product life cycle will be lengthy because the product
is not going away anytime soon due to how many spas use these spa chairs. Also, since its a
high learning product (requiring significant consumer education) the products profits over time
will decline slightly during the maturity stage. Therefore, it is important for product manages to
modify the spa chairs market.
We will hire a product manager to manage and track the sales and help boost them whenever
their slowing down. One way to bring sales up is product modification; we will modify the spa
chairs and add more features to bring in more buyers. We will reposition the product by reaching
out to a new market (Florida), which will increase sales opportunities. We can also change the
value offered and trade up by adding value through additional features and higher quality
materials in order to create an elite, new product in the market. Furthermore, we can use the
already established name Pro Spa and emphasize branding for the company. The benefits of this
would include communication benefits such as conveying directions and the materials and a firm
perception of the product in the consumers mind. Packages and labels must be continually
updated to connect with customers. We offer a Product Warranty for one year- product and parts.
In conclusion, we are able to modify and reposition the product through these strategies and
hopefully it will mean our sales pick up.

VI. Marketing Channels and Promotions

Pro Spa is an exclusive manufacturer of high end spa chairs. The product currently is
distributed two ways- by direct and indirect marketing channels. The Factory outlet in Garland
serves as direct sales point for the local business owners. Potential customers visit the factory
store and may purchase the chair right then and there. This channel has proved to be the only
efficient distribution to keep the costs low. In addition to the factory store, Pro Spa has online
store which offers a select variety of the products available nationwide.
Pro Spa works with other distributors as the indirect marketing channel, selling their
product in Kansas City, MO, Houston, TX and Sacramento, CA. These distributors specialize in
spa chair and beauty product sales, but the sales numbers are still very low. Other beauty retailers
carry the product catalog but there is low response to that.
In recent years, Pro Spa has been struggling to work their marketing channels to their
advantage. We propose to increase direct marketing by adding a District Sales Manager (DSM)
in each territory MO, FL, CA and TX. This will increase the coverage in the area with B2B
sales of direct promotion. Having a sales person visit the local businesses carrying the catalog
with the variety of product will increase the chance for growing sales of this high end product.
Showing the value of the product and explaining the benefits, for this type of product, will
increase the likelihood of business owners understanding why they would want to pay possibly a
higher price for the product they use in for their business. For the lower end or recycled products,
we recommend direct sales but with less coverage.
In the recent years Pro Spa has attempted to market the product through various
magazines, radio ads and has attended multiple trade shows. All ads and trade shows have been

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industry specific, yet are not generating the desired return of investment (ROI). ProSpa currently
has 4 distributors from which only 1 is distributing their product exclusively.
Current marketing channels:

Magazines
Vietbeauty Magazine
Nail Magazine
DEP weekly Magazine
Viet Salon
Bobit publishing
Average ad cost is $700/ month each.
Radio Ads
o Average cost $1200 for a weeks worth of ads in the VietRadio
Trade Shows
Long Beach, CA ( $10000 per event)
Orlando, FL ( $12300 per event)
Chicago/ Midwest ( $12100 per event)
Distributors
Pediworld, Kansas City, MO
Spa Mal, Houston, TX
Sinshire Beauty Supply, Sacramento, CA
Nail Warehouse, Garland, TX ( exclusive ownership)

Marketing Channels to improve the business

Regional Sales Representative ( 1 employee base salary + commission)

Daily meetings with local business owners
Personal advertisements on social media about the product
Monthly sales quota to generate revenue

Social Media
Have a Facebook Page ( have potential users like the design )
Utilize Twitter to follow other businesses to see the latest trends in the business
LinkedIn page for the professionals in the industry
Email Blasts to current customers with Specials content

Direct Interaction with the potential clients

Monthly private demonstrations of the latest products
Client of the month drawings to have % discounted from the product
Product of the month advertisement to the client

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o Fall Special 5% off kiddie chairs

o Winter Sale- 9% off all pink chairs
o Spring- All Fall designs are 15%
Offer the test drives of the product in their salon

VII. Conclusion
As established, the biggest problem for our company, Pro Spa, is that our sales have
significantly declined due to competition and lack of promotion. One we have decided to fix this
is to have a more direct sales approach including new sales representatives in all of locations
who know the market well and are able to communicate very personally to our consumers. We
are also going to improve our social media so that customers can connect with us at their
convenience. Lastly, we are going to create more customizable, better quality and more high
technology features so that customers are drawn to us. These strategies will specifically help to
achieve the goal of higher revenue with the high budget spas because they will be drawn in by
our sales representatives, stay connected through our social media, and remain loyal to us due to
our elite, good quality products.

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