j salon ltd
TRANSCRIPT
J Salon Ltdthe team:Ng Jia Ying, Mustaqim, Yong Kun JieLew Si Ying & Nicole GohDAC 01
Agenda
About J Salon Ltd
J Shampoo
J Bundles
Factors affecting pricing
Pricing approach
Summary
About J Salon Ltd
• Established on 1 January 2012• J Salon Ltd owns both J Salon (313@Somerset) and J
Manufacturing (Tanah Merah Industrial Park)• J Manufacturing produces the best selling, J
Shampoo• J Salon provides high-end yet affordable hair service
bundles, rendered by trained professionals from U.K.• Plans to venture the business network overseas by 2017
J Shampoo
• J Shampoo, one of the top selling products in the company
• Formulated by a team of well-known local researchers• Mixture of aloe vera and honey extract that strengthens
hair roots while providing a glossy finish• Able to cater to common hair problems such as damaged
and greasy hair as well as eliminates dandruff
J Bundle
J Bundle ServicesBundle Cut + Wash + Treatment
• Consumers like to do treatments to pamper their hair• A popular and profitable bundle
Factors affecting pricing (product)
Competitors ConsumersProduct
Differentiation
Cost
Cost Data
Item Total for the year ($)Direct Materials Spring Water 2,870
Ammonium Lauryl Sulphate 4,438.80Citric Acid 84.60Sodium Benzoate 231.20Aloe Vera and Honey Extract 9,112Container 3,931.20
Direct Labour Workers’ Wages 40,320Mfg Overhead Maintenance and Repairs 1,940
Utilities 6,435Indirect Materials 610Property Taxes 3,000Depreciation - Factory Building 20,000Depreciation - Equipment 12,000Depreciation - Delivery Van 2,500Insurance 9,000Indirect Labour - Supervisory 21,120
TOTAL 137,592.80
Pricing Approach
Why Psychological Approach?
• Uses the perception of consumers to price products “cheaper”
• Conveys better value • Influenced mind-set of consumers allows price to be
marked at the lowest possible price but is still value for money
Pricing of product after
pricing approach
$ 49.90
Why not cost-plus approach?
High cost production
Ignores demand
Missed Profit Opportunities
Why not competitor-based approach?
Priced unfavourably
Ignore production costs
Eliminates competitive disadvantage
Price easily mimicked
Factors affecting pricing (service)
Competitors
Consumers
Cost
Cost Data
Item Total for the year ($)Direct Material J Shampoo 16,212
Treatment Lotion 229,632Direct Labour Worker’s Wages + Commission 83,804.30Mfg Overhead Indirect Materials 1,095
Utilities 6,609Maintenance and Repairs 2,743Indirect Labour – Supervisory Salary 33,600Hair Steamers 1,600Backwash Shampoo Units 1,000Furniture and Fittings 1,000Professional Equipment 1,100Rental 180,000Insurance 40,000Staff benefits 2,500
TOTAL 600,895.30
Pricing Approach
Service
Competitor-based
Cost-plus
Market-oriented
Why Cost-PlusApproach?
• Simplicity in calculations• Requires little information and revenues• Sets a higher price for our hair treatment services,
assuring profits• Majority prefers quality yet value for money hair
treatment services
Pricing of service (bundle)
after pricing approach
$ 188
Why not competitor-based approach?
• Not suitable for our higher-end hair treatment services provided
• Risky on long-term basis
Why not market-oriented pricing
• Hugely dependable on fluctuating market rate; very risky
• Have to consistently be updated on market rate and adjust to meet the needs
Pricing approach
Psychological approachCompetitor-based approachCost-plus approachMarket-oriented approach
Final pricing $ 49.90 $ 188 (bundle)
In summary…
Factors affecting pricingProduct Service
CompetitorsConsumersProduct DifferentiationCost
First pricing $ 50 $ 78 (bundle)
Thank You