ObservationExercise Details Assignment no. 2 By Rolando Alagde
This observation was made toprove that there are lots ofdetails that are left outwhich when noticed wouldotherwise prove to be a keyopportunity that can lead toa competitive advantage. Butthink what will happen if anew entry in the productcategory could offer greatervalue at a price parity thatis acceptable to theconsumer. This puts both thetypical price competitor andor the segment specialist atrisk of losing their market.
By way of demonstratingthis concept, let us havea concrete example. Justlast week I needed ahaircut, so I went to myfavorite salon and noticedthe long queue of peoplewaiting for service so Idecided to go to a nearbybarbershop. In my placeof abode, generally it ischeaper to get a haircutfrom salons than abarbershop.
By way of comparison in this case, price ofhaircut is 25 percent higher in thebarbershop, but I guess the waiting time that Iwould spend at the salon is costlier than theadditional price I have to pay for the haircut soI decided to have my hair done in the barbershop.Since it is not only hot but also humid, I decidedto have a hot oil treatment for my scalp and thecost of doing that in the barbershop is 70%higher.
However, since I am already havingmy hair trimmed there, I decided tohave my scalp treatment done at thesame time. To my pleasantsurprise, the barber did not onlygave me a hot oil in a verycomfortable position, that is in areclined barber’s chair, he gave mea very comforting scalp massage,covered my eyes with a towel and;an additional upper and lower bodymassage while my scalp was beingsteamed. In the end he washed myhair, gave me a hot towel for myface after a good shave and all ofthese are part of the additional70% cost that I have to pay for theservice. The haircut was apleasant experience that I wasobliged to give the barber anadditional 20% tip for the serviceshe had rendered.
The barbershop concept with heavy fixed barber chairs which attracts predominantly male clients.
Compare that with the previoushaircut which I always experienceat the salon, the hairdresser sitsme in a light salon stool afterwaiting for my turn in the longline of waiting costumers, cuts myhair and applies the hotoil on myscalp with a semblance ofmassaging function. Since he isin a hurry for his nextcustomer, he brings me to anotherstool, steams my scalp and givesme several old magazines to read.He now takes on a new customerwhile waiting for my steamer timerto sound. He comes back tome, again massages my scalp for aminute or so and brings me to thewashing area where he washes myscalp and have it towel dried. Hebrings me to the stool again anduse a hair dryer to finish theprocess.
A typical high-end salon layout with light movable chairs where clients are moved around depending on the type of services they will be given.
Given the two experiencesthat I got, now tell me whichone of those mentioned wouldyou prefer?
This is the concept of value dynamics, which is thetechnique of using consumer experiences as a leveragepoint to drive value higher from the customerperspective even if he has to pay a relatively higherprice. Consider the competitive landscape; most of usseniors were used to the idea of getting our haircutfrom barbers in the sixties. With the evolution of thesalon, what was previously a feminine domain became thechoice unisex haircutters of the eighties. Withincreasing customer volumes in the 90’s salons wereable to offer lower prices than the traditionalbarbershop but with the ever increasing volume ofbusiness they adopted processes used by fast foodoutlets to enable them to cope up with more customers.Since these saloons have to contend with a biggermarket most if not all use the standard platform forfast services provided to their consumers. The onlydifferentiation are the prices charged, the more knownbrands in the category presumably the better stylistcan demand prices higher than the less known names.
With my most recent haircut however, I am coming back tothis barbershop next time for the enhanced customerexperience I received including a short but restful napduring the whole process of getting my hair done.Analyzing what happened seems to indicate, that in theeffort of most saloons to compete against each other,the pursuit of cost or differentiation had createdefficient processes for the business but had left theneeds of the paying customer out of the whole businessmodel. In an environment where everybody is busy, ashort pampering time afforded for personal enhancementsuch as a haircut when used as a central focus of thebasic business model becomes a very powerful argumentfor customer loyalty. This is the essence ofcompetition which I would like to impart through thisreport. My end view is to help create the next businessmodel that would capture the imagination of consumers,customers and market segments alike. This is creativethinking for a budding businessman or intrapreneurialmodeling for a mature business that would like to re-invent itself to gain customer loyalty.