Comprehensive analysis for opening a

Salon in IIM Kozhikode Campus

Submitted By

GROUP 7
SECTION -E
PGP 20
Gaurav Madanpuri (265)
Saurabh Patle (292)
Sonam Verma (295)

The survey part was done by Saurabh Patle

The analysis and conclusion part was done by Gaurav Madanpuri and Sonam Verma together

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Contents

Acknowledgement............................................................................................................................. 2
Background & Summary .................................................................................................. 3
Descriptive Statistics ....................................................................................................... 4
Pie chat and Bar chart Analysis ......................................................................................... 5
Regression Analysis ........................................................................................................ 6
Conclusion................................................................................................................... …8

Motivation for the project

Since, we have joined the IIM Kozhikode campus, we have to go outside for haircuts, massage,
nail polish, and eyebrow hair removal (for females), thus killing lot of our productive place.
Since we were new to this place, we also didn’t know where to go and which shops to target.
So, we thought to study the feasibility of establishing a salon in campus statistically by using
different data collected from primary survey.
Thus, if any enthusiastic group of student or some outside vendor wish to open a salon in
campus, we believe that this report would be handy for them

Acknowledgement
We thank our esteemed IIMK institute and Professor Shovan Chowdhury for giving this project which
provides a very good statistical analysis of prospects of opening a salon in IIM Kozhikode and its
initial revenue, customer arrival pattern etc.

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Background & Summary
Title:

Preparing the broad outline for establishing a salon in IIM Kozhikode campus for boys and girls
separately, using data collected by primary surveying.

Objectives-

1. To find the frequency of salon visits and average time spent on every visit by each gender in a
month. We can estimate the average footfall on each day and accordingly salon timings will be
decided for whole week.
2. To analyse how much each gender spends on every visit and which type of salon they prefer, AC
or non AC? Based on data, we can decide whether salon should operate in ordinary segment or
premium segment and accordingly, decide pricing.
3. To determine what extra services in the salon can be provided apart from hair cut based on
their spending pattern?
4. To compare and correlate the spending pattern of men and women in the salon.

Survey Points

We will conduct a primary survey in the campus and collect the data on following parameters.

1. Average no of times, you visit salon in a month?

2. How much on an average, you spend on every visit?
3. How much time do you spend on an average in a salon?
4. You prefer AC on Non AC salon?
5. You prefer weekends or weekdays for visiting salon?

Assumptions-

 On a typical month, approximately 1200 people are residing on the campus and 600 people
residing in campus will use campus salon after establishment.
 Population Size=600, Sample size=200
 Any parameter regarding population is unknown, as for this, survey has to be conducted in
the whole campus.

Data Collection
Data is collected from IIM K junta by rolling out forms both online and offline. The responses from
other teaching staff, chetas and chechis were taken verbally and noted down.

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 Descriptive Statistics
Assuming average spending follows a normal distribution for Population.
Each person was given a choice to choose from 50 to 400 in multiples of 50

Total Spending in a month by Female

Total Spending in a month by Male
Mean 368.4210526 Mean 241.0569106
Standard Error 27.55922021 Standard Error 12.97215721
Median 300 Median 250
Mode 300 Mode 250
Standard Deviation 240.2557117 Standard Deviation 143.8681831
Sample Variance 57722.80702 Sample Variance 20698.05411
Kurtosis 1.100848284 Kurtosis 1.132826906
Skewness 1.219732327 Skewness 1.017356289
Range 1100 Range 750
Minimum 100 Minimum 0
Maximum 1200 Maximum 750
Sum 28000 Sum 29650
Count 76 Count 123
Largest(1) 1200 Largest(1) 750
Smallest(1) 100 Smallest(1) 0
Confidence Level(95.0%) 54.90078195 Confidence Level(95.0%) 25.67968084

RFERENCES FROM ABOVE

 We can see from the above analysis that average spending in a month by female is Rs. 368 which is significantly
higher than men.

 The high average for both men and women can be attributed from the fact that today youth emphasize a lot of
importance in their looks and since many have prior work experience, they don’t rely on pocket money for
availing services in premium salon.

 The range is also higher in Female as compared to Men

 The median spending is Rs. 300 for Men and Rs. 250 for Female

 The standard deviation is higher in both the cases which can be accounted from the fact that students here
come from all parts of the country with different cultural and economic backgrounds. Also, the survey included
people chechis and chetas which do not have very good economic background thus the difference

 Sample size for Men is 123 whereas for sample size for Female is 76. This difference in size is basically due to
the low gender ratio in the campus.

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Some other results and inferences from the survey are posted below

No of customer prefering weekend 170

No of customer prefering weekdays 29

No of persons preferring AC salon 191

No of persons not preferring AC salon 8

200 Since the average consumer spending is higher than the normal average, we can deduce
that salon should operate in the premium segment.
Also, the salon should be installed
No of customer with air conditioners as majority of people are opting
150 AC salon prefering weekend

100
No of customer
prefering
50
weekdays

200

No of customer
150
prefering weekend

100
No of customer
prefering
50
weekdays

200

No of customer
150
prefering weekend

100
No of customer
prefering
50
weekdays

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Length of visit at Hair Salon

We can conclude from the bar chart given below that, on an average female spend more time in
salon than the male.
Thus, there is a strong correlation between the spending pattern of genders and their average
time spent in the salon.
Due to descriptive nature of the variables, we can’t show it graphically but it is evident from the
fact female spend much more on a salon compared to men in a month.

Average no of visits by both Genders

Again, as women spend higher than men on salon monthly, their frequency of salon visits are
higher than men as evident from the bar chart given below.

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Regression Analysis

We will conduct regression analysis assuming that average spending of a customer in a

single visit to salon depends on these very factors primarily

 If the distance to salon from residence is lower, do you prefer visit it?
 If there is combo pack for other services such as massage, You will prefer visiting salon
 If you are provided options for cashless payments, will you prefer that salon?
 If you see other member is a group following some trending style, will you visit salon?
 If others spend money on some facial treatments, will you also visit the salon for same?

Since all the above five points are qualitative variables, we will measure them out of 5 to
convert into a quantitative variable and start the analysis

Assumptions:
We are assuming a linear relationship among all the 5 variables posted above. Although
average ticket size for salon depends on lot many factors, these were the factors which we
suppose play a major role in deciding the ticket size for salon, although these are not
exhaustive.
Also, for regression analysis, we are assuming that the average spending of consumer
follows a normal distribution.

Limitations:

1. Since the average spending by a customer on a salon visit depends on lot of factors like
spending power, his dedication towards his look, whether some premium services are
available are not, advertisements etc., so this regression analysis may not give a true picture
of the problem. There can be 20-25 such factors.
2. We are taking a confidence interval of 50% for this regression analysis as choices of people
vary a lot even if they belong to the same social or economic group

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 Regression analysis output is given below. For input data, refer to the ratings sheet of
excel file
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.32105
R Square 0.103073
Adjusted R Square 0.054851
Standard Error 81.86494
Observations 99

ANOVA
Significance
df SS MS F F
Regression 5 71625.18 14325.04 2.137469 0.067749
Residual 93 623273.8 6701.869
Total 98 694899

Standard Upper
Coefficients Error t Stat P-value Lower 95% 95%
Intercept 113.2649 30.91376 3.663899 0.000413 51.8763 174.6535
If the distance to salon from residence is lower, do
you prefer visit it? 11.78603 10.84352 1.086919 0.279882 -9.74706 33.31912
If you see other member is a group following some
trending style, will you follow same? 2.73333 11.15647 0.245 0.806996 -19.4212 24.88786
If you are provided options for cashless payments,
will you spend more? 5.586681 6.810887 0.820258 0.414167 -7.93839 19.11175
If there is combo pack for other services such as
massage, You will prefer visiting salon? 16.41954 8.899728 1.844949 0.068228 -1.25355 34.09264
If group members spend money on some facial
treatments, will you also visit the salon for same? -6.0175 9.384066 -0.64125 0.52294 -24.6524 12.61739

REFERENCES

 At 94% confident level, we can say average ticket size for the salon will very much
depends on the offers rolled out by the salon from time to time such as combo pack for
the boys in the form of massage and shaving, for girls in the form of hair strengthening
and eyebrow hair removal.
 At confidence level about 70% we can say that average spending by the consumer
depends primarily on distance between residence and salon. If the salon is nearby,
consumer will naturally spend more as they can spent more time there.
 At confidence level about 50% we can say that consumer will spend more if they are
provided with cashless payment options
 Since confidence level for other tow parameters is very low, (20 % to 30 %), we will
reject that marked in red above. We can say that present generation is very smart and
they know what suits in them. They don’t follow others style.

Thus, the options which are marked in green can be worked upon for salon to be started and run
successfully.
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Conclusion

 The average spending for the whole sample is 289.71, means a typical customer would be
spending this amount per month.

 The salon will have facility for both men and women but in separate compartments.

 The salon will be an AC one and will operate in premium segment based on sample poll

 The pricing will be decided keeping in average ticket size and rates prevailing in Kerala.

 For both boys and girls, some extra services has to be there such as hair strengthening,
eyebrow hair removal, nail polish, massage for girls & face wash, massage, hair colouring for
boys.

 Average visit by each person= 1.37 days, taking whole sample average

 If we take into account the total no of persons using the salon to be 600, revenue for whole
month = (30*1.37*289.71*600) = Rs. 71,44,248 /month, assuming sample is free from any bias

 Average time spend by a customer in the salon is 50.8 minutes, that is approximately one hour.

 The total footfall per day will be (1.37*600/30) will be 27 persons and since average consumer
takes one hour, both unisex salon have to take a load of 12 persons per day on an average.

 Since the load will be more on weekend as compared to weekend as evident from the survey,
the salon should operate 8 hours on weekend and 12 hours on weekdays as each unisex salon
will have a load of approx. 12 persons per day which can fluctuates as per the environment.