Environmental Scan Project Julie Carswell and Marie Boucher Renee Staples MKT2315 Section 318 Introduction: The product or service that we have chosen to pursue after graduation is a spa. Our spa will be located in a family based community in Ottawa, and will differ from the rest in the industry by offering more than your average spa experience. Not only will it have the usual services, but it will also have a section dedicated to children. Our spa will be the perfect place for kid’s birthday parties and gatherings. It will be separated into two distinct parts, one for children and one for adults. The decor in the adults section will be classic and relaxing, and in the children’s area it will be bright and exciting. Adults will come to our spa for a relaxing get away, experiencing an array of different services. Most of the time the children will come in groups receiving funky manicures, vibrant pedicures, and many other exciting things. The adult section of our spa will offer a variety of services such as, aesthetics, hair design, registered therapists, make up, and cosmetic surgery. For aesthetics the services include different kinds of facials, hair removal, manicures, pedicures, body treatments, tinting, and microdermabrasion. For hair design the services include cuts and styles, technical services, and hair and scalp treatments. With our registered therapists you can receive a relaxing massage or stone therapy. For make up we offer application for special events, and lessons. Cosmetic surgery will be offered in our salon, but it will be limited to facial reconstruction surgeries only. Prices for aesthetics will range anywhere from $20 - $150, depending on whether it is a manicure or a microdermabrasion procedure. Hair design will range from $20 - $180. Depending on the time of your massage it can range from $35 - $110. Make up applications and lessons can range from $40 - $60, and for cosmetic surgery you will have to schedule a consultation with our surgeon, and then receive an estimate. The spa will also offer packages that include all day services, and bridal packages. The children’s services this spa will offer are haircuts and styles, which includes trim and buzz cuts, babies first hair cut, hair wraps, and special occasion. Make up services are also available, we offer application and lessons, along with manicures and pedicures. In the kids section we offer a special package where kids are able to come in with a parent, and receive a variety of treatments together. The purpose of conducting this environmental scan is to determine whether or not this service will be a viable business three years from now. By evaluating the competitive, social, technological, and regulatory forces along with the economic environment we will be able to have a more in depth understanding of what it will take to run this service successfully, and evaluate if it is worthwhile. Competitive Forces: The competitive forces of the spa industry will greatly affect our business, and there are two in particular: The Spa and Goobers. The Spa is a widely popular spa focusing on the young adult and adult demographic, and already has two locations in Ottawa. Goobers focuses on the needs of kids, offering a variety of services, as well as doing birthday parties and large gatherings. o The Spa is directed towards adults, both male and female. They offer a wide variety of services including aesthetics, hair design, make-up, registered therapists, and cosmetic surgery. (The Spa – Services. (2009). The Spa. Retrieved November 28, 2009, from http://www.thespaottawa.ca/html/cm3.cfm?id=7&lang=1) o Goobers is directed towards kids, offering a wide range of services along with spa parties. (Goobers Salon. (2009). Goobers. Retrieved November 28, 2009, from http://www.goobers- salon.ca/) o There are seven major trends in the spa industry right now: Better, cheaper, faster: providing the best service, at a cheap price and fast. Niche equals rich: defining the role of our spa within the market. Medical spa mania: a lot more spas are now offering services that previously could only be done by a physician. Corporate connection: providing corporate services and having corporate clients. The branded spa: large business that our known regionally, or even nationally. Rallyin’ ‘round retail: managing retail sales operations. Sayonara stereotypes: serving all types of customers. (7 Trends in the Spa Industry. (2009). SpaMassage News. Retrieved November 28, 2009, from http://www.massagemag.com/spa/news/107.php ) Based on the above competitive information, we can conclude that it is very important to be aware of our competitors, their objectives, their place in the market, and the latest trends in the industry. Social Forces: The social forces involved in operating a spa have a great deal of importance. You need to know the type of clients you can expect, the strength of the industry as it stands now, and even some environmental factors that may affect the spa. o Based on six years of studies, the typical spa customer is “female, age 24-35, college educated, married with no children, visiting a spa once every month to every three months, concerned about the cost of Spa Services, spending about $100 per visit, and visits the spa alone.” (The Marketing Demographics of a day spa-Goer 2005. (2009). Spa Events in the News. Retrieved November 28, 2009, from http://www.discoverspas.com/news/newsevents68.shtml) o In 2009, the overall Spa Industry has grown continuously at a rate of 17.8 percent. Refer to Appendix B to view the revenues and expenditures of spas. (http://www.hospitalitynet.org/news/154000320/4042313.search?query=spa+industry) o More and more spas are becoming more “green”, they’re looking for ways to conserve energy and water, and to make the most of their building materials. As well as using all natural ingredients and recycling as much as possible. (Spa Knowledge: Blue Spas’ Top Industry Trends. (2009). Blue Spas’ Top Industry Trends. Retrieved November 28, 2009, from http://www.spatrade.com/knowledge/idx/0/200/article/) Based on the above social information, we can conclude that it is very important to be aware of the demographics of the typical customer, the strength of the industry as a whole and some environmental issues. Technological Forces: You may think that there isn’t much technology needed to run a spa as it is such a personal business, but there is a lot behind the scenes, that is unknown. o It is essential to use technology when running a spa, whether it’s for scheduling clients, dealing with the schedules and commissions of employees, or to keep track of the preferences of clients along with the treatments they’ve had before. (Adams, B. (2004). Technology helps spa operations run smoothly. Hotel & Motel Management, 219(1), 38-40. Retrieved from Hospitality & Tourism Complete database.) o It’s important to keep up to date with new and recent technologies involving spas; otherwise you may start to lose your customers. Spa’s can now offer a lot more to their clients than they ever could before. There are multiple treatments and procedures that a spa can now offer, whereas before it was only available through a physician. Such as: Anti-Aging Acne Dry Skin Laser Skin Patients Ethnic Skin Care Sensitive Skin Senior Skin Pre and Post Surgery Care The only system that can treat dry skin is The SilkPeel™Spa. Adding this to our services could greatly increase revenue, although, there is first the decision of whether to lease or to buy. Leasing it would cost approximately $375 per month, and scheduling two appointments a day, five days a week would have you making approximately $6000 a month, so the projected return on investment would be amazing. (Whitman, C. (2008). BECOME A SUPER SPA. Spa Management, 18(10), 20-28. Retrieved from Hospitality & Tourism Complete database.) o There is more and more technology available as time goes by. There are now a number of different options, including: Steamy Wonder™ A steam system that can fit on top of any massage table. The Mermaid Uplift A water bed that holds 30 gallons of water with the option of heating. (Advanced Hydrotherapy Equipment. (2009). Integrated Spa System. Retrieved November 28, 2009, from http://www.innovativespa.com/) Based on the above technological information, we can conclude that technology is a very vital aspect in running a spa. It can make all the difference in keeping up with the new technologies that are constantly being invented. Economic Environment: The economic environment surrounding the spa industry largely affects the purchasing power for this specific industry. The predicted economic cycle includes many aspects that could assist or hinder the outcome of a new spa. o During the first quarter of 2009, Ottawa’s household net worth declined 1.3% or 72 billion dollars. Though according to Statistics Canada the rate of decline has slowed a substantial amount, since the last 2 quarters of 2008. Profits of large financial corporation’s fell at the beginning of 2009, however smaller non financial businesses profits were mostly unchanged. (Canadian press. (2009). Household wealth dropped $72 billion in first quarter. EBSCO. Retrieved November 21, 2009, from http://web.ebscohost.com.rap.bibliocentre.ca/ehost/detail? vid=5&hid=5&sid=0424 d5cb-2117-4c13-83f5- b10ee9f09855%40sessionmgr4&bdata=JnNpd GU9ZWhvc3QtbGl2ZQ%3d%3d#db=rch&AN=MYO034186226909) o It is well known that Ottawa has one of the lowest unemployment rates in Canada, and its rate is typically lower than the national and provincial averages. Unemployment rates are lowest in people older than 35 and highest in the younger age groups. It is assumed that Ottawa’s unemployment rate will minimize to 5.5% between the years of 2006 and 2011 (Refer to Appendix A). (Unemployment rates. (n.d.). City of Ottawa. Retrieved November 19, 2009, from http:// www.ottawa.ca/residents/statistics/new_growth/projections/employment/unemployment_en.html) o Canada’s Service industries have outsold Canada’s Goods industries in both growth and popularity for decades. In large population areas such as Ontario, services account for about 75% of Canada’s GDP. Due to the increasingly busy lives of Canadian’s, they tend to turn to the service industry more and more to take care of their regular household activities and some of their entertainment and leisure needs. Personal Service companies earned $9.1 Billion in 2005, and the personal care industry was responsible for $4.1 billion of the revenues. (Business, consumer, and property services. (2008). Statistics Canada. Retrieved November 18, 2009, from http://www41.statcan.gc.ca/2008/0163/ceb0163_000-eng.htm) Based on the above economic information, we can conclude that Canada’s economy has a huge impact on the success of a service company, such as a spa. When Ottawa’s household income declines, so does the level of disposable income. Also, high unemployment rates in younger age groups likely won’t harm our business because our target market includes them, but is not narrowly focused on them. The increase in prices of services will not be affecting the popularity of the service industry anytime soon, due to the growing workload of adults. Political, Regulatory and Legal Forces The political, regulatory and legal forces behind a service business such as a spa are vitally important to the well being of the business. Without set rules and regulations, a spa would not be strong enough to survive. o Federal laws are put in place to protect the consumers of various products and services, and impact the daily operations of the business. It is the responsibility of the salon to abide by mandatory regulations put in place by various levels of government. For example, the operator of an indoor tanning bed must be familiar and in compliance with the dangers and rules that go along with the machinery. The rules are distinctively written to the manufacturers of the product, but should be understood by owners and operators alike to effectively run their salon. (Thorlin, A. (2005). Shaping The Industry : Federal And State Regulations Guide Salons, Protect Consumers. LOOKING FIT magazine. Retrieved November 25, 2009, from http://www.lookingfit.com/articles/531cover.html) o The government’s involvement is constantly increasing in the spa industry. Especially in the Medical Spa’s, with licenses, regulations and practitioners, there are various issues likely to arise. Some of the most common legal issues in this industry concern employee wages, tracking tips and compensation. (Spa Knowledge. (2005). SpaTrade. Retrieved November 26, 2009, from http://www.spatrade.com/knowledge/idx/0/200/article/) o New spa equipment and products have been developed to help prevent the spread of bacteria in salons. This is mostly due to the rise of consumer awareness regarding the dangers connected with spa visits, especially with cross contamination between clients. An example of this bacteria prevention is pipe less pedicure chairs. The safety standards are getting so high that in the near future it might even be necessary for salon inspection ratings to be posted publically for everyone to see, similar to restaurants in many parts of the country. (Spa Knowledge. (2005). SpaTrade. Retrieved November 26, 2009, from http://www.spatrade.com/knowledge/idx/0/200/article/) Based on the above information, we can conclude that the political, regulatory and legal forces behind the spa industry have a huge impact on the survival of the business. Legal regulations and safety issues, along with the various governmental issues that can arise are all critically important to the current and future well being of an up and coming salon. Conclusion: After gathering and evaluating all of the above information, we are now more equipped with the knowledge we need to pursue our own business in the spa industry. There are two businesses that will be our main competitors, The Spa and Goobers. They offer a lot of the same services that we will, however they are two separate companies with two different locations. Our spa will be a one stop shop for children and adults alike, which consumers will find a lot more practical. In the past six years the spa industry has been continuously growing, opening up a lot of opportunity for new spa’s to surface, and to have a viable chance of survival within the industry. We know who our typical customer will be, and what they want out of our business. In recent years there has been a lot of new technology available, which means that there are a lot more services and treatments that can be performed in a spa. Certain services and treatments use to be only available through a physician, but now we can provide a lot more of those services at our spa. We will need to keep up-to-date with all of the upcoming new technology. Canada’s economy has a colossal impact on the stability of a service type business, such as a spa. Unemployment trends, level of disposable income and demand shifts for services all have different effects on a company. We realized that our spa will be a relatively stable business, and will be able to withstand all economic obstacles that may come our way. Political regulatory and legal forces will ultimately decide whether or not a spa will survive. Government, Legal and Safety issues are all things that can end up helping or destroying a business. After assessing all possible issues that could arise, we now have the skills we need to avoid them. Based on all of the research data from competitive, social, technological, economic, and regulatory forces, we can conclude that opening a spa will be greatly profitable and rewarding business to pursue in the future. Appendices Appendix A (Historical and projected unemployment rate, Ottawa.(2009). City of Ottawa. Retrieved November 19, 2009, fromhttp://www.ottawa.ca/residents/statistics/new_growth/projections/employment/unemploy ment_en.html) Appendix B (CPP- Revenues and Expenditures Trend. (2009). Treasury Board of Canada. Retrieved November 20, 2009, from http://www.tbs-sct.gc.ca/est-pre/20042005/SDC-DSC/SDC-DSCr4501_e.asp) Bibliography: 7 Trends in the Spa Industry. (2009). SpaMassage News. Retrieved November 28, 2009, from http://www.massagemag.com/spa/news/107.php Adams, B. (2004). Technology helps spa operations run smoothly. Hotel & Motel Management, 219(1), 38-40. Retrieved from Hospitality & Tourism Complete database. Advanced Hydrotherapy Equipment. (2009). Integrated Spa System. Retrieved November 28, 2009, from http://www.innovativespa.com/ Business, consumer, and property services. (2008). Statistics Canada. Retrieved November 18, 2009, from http://www41.statcan.gc.ca/2008/0163/ceb0163_000-eng.htm Canadian press. (2009). Household wealth dropped $72 billion in first quarter. EBSCO. Retrieved November 21, 2009, from http://web.ebscohost.com.rap.bibliocentre.ca/ehost/detail ?vid=5&hid=5&sid=0424d5cb-2117-4c13-83f5- b10ee9f09855%40sessionmgr4&bdata=JnNpdG U9ZWhvc3QtbGl2ZQ%3d%3d#db=rch&AN=MYO034186226909 CPP- Revenues and Expenditures Trend. (2009). Treasury Board of Canada. Retrieved November 20, 2009, from http://www.tbs-sct.gc.ca/est-pre/20042005/SDC-DSC/SDC-DSCr4501_e.asp Create a spa at home. (2009). Living Healthy Chicago. Retrieved November 20, 2009, from http://weblogs.cltv.com/features/health/livinghealthy/2009/08/ Goobers Salon. (2009). Goobers. Retrieved November 28, 2009, from http://www.goobers-salon.ca/ Historical and projected unemployment rate, Ottawa. (2009). City of Ottawa. Retrieved November 19, 2009, fromhttp://www.ottawa.ca/residents/statistics/new_growth/projections/employment/ unemployment_en.html ISPA Releases 2009 U.S. Spa Industry Statistics. (2009). Hospitality Net. Retrieved November 20, 2009, from http://www.hospitalitynet.org/news/154000320/4042313.search?query=spa+industry Spa Knowledge. (2005). SpaTrade. Retrieved November 26, 2009, from http://www.spatrade.com/knowledge/idx/0/200/article/ Spa Knowledge: Blue Spas’ Top Industry Trends. (2009). Blue Spas’ Top Industry Trends. Retrieved November 28, 2009, from http://www.spatrade.com/knowledge/idx/0/200/article/ The Marketing Demographics of a day spa-Goer 2005. (2009). Spa Events in the News. Retrieved November 28, 2009, from http://www.discoverspas.com/news/newsevents68.shtml Thorlin, A. (2005). Shaping The Industry : Federal And State Regulations Guide Salons, Protect Consumers. LOOKING FIT magazine. Retrieved November 25, 2009, from http://www.lookingfit.com/articles/531cover.html The Spa – Services. (2009). The Spa. Retrieved November 28, 2009, from http://www.thespaottawa.ca/html/cm3.cfm?id=7&lang=1 Unemployment rates. (n.d.). City of Ottawa. Retrieved November 19, 2009, from http://www.ottawa.ca/ residents/statistics/new_growth/projections/employment/unemployment_en.html Whitman, C. (2008). BECOME A SUPER SPA. Spa Management, 18(10), 20-28. Retrieved from Hospitality & Tourism Complete database.
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