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Aruna Beauty Salons: Identifying Loyal Customers through Discriminant Analysis

CASELET, MARKETING RESEARCH
ET Cases, 5 Pages

Case Preview

Aruna Beauty Salons: Identifying Loyal Customers through Discriminant Analysis

Established in 2010, Chennai-based Aruna Beauty Salons (ABS) offered head to toe beauty care services. Over the few years, its prestigious clientele included local celebrities – from TV industry, films, sports and public life. Quite a few suggestions offered by regular clients were implemented gaining their trust. ABS’ Founder-Owner,  Aruna Kumari (Aruna) always ensured that the customers were provided with quality service and products at affordable price. Since inception, Aruna kept on adding  services and product varieties, improvising the ambience every now and then based on the suggestions and feedback from her customers.

Aruna married Manoj Kumar (Manoj), who was working as Regional Marketing Manager with an Agrochemical company in Chennai. As Manoj’s job demanded excessive travelling Aruna was left alone at home. To keep herself busy she started providing beauty services from home. Initially, she started with only few services but with  word-of-mouth publicity, she quickly gained popularity in her area in Velachery, one of the busiest locations in the city. Aruna opened a full-fledged beauty salon and  named it as Aruna Beauty Salons (ABS), which grew leaps and bounds with its quality services and products.

In 2012, Aruna decided to expand the salon. She recruited three more girls who were certified in beauty course from National Skill Development Corporation (NSDC), a  Government of India’s wing, which helps youth to increase employability skills. Over the years, Aruna added many more services to her salon. However, Aruna was not  able to grow her store beyond a point as the city has many private beauty salons, national and international brands like Mythili’s, Anoo’s, Naturals, Vasundhra’s, VLCC,  Shahnaz Hussain, etc.............

Teaching Note Preview

Aruna Beauty Salons: Identifying Loyal Customers through Discriminant Analysis


Synopsis

This caselet is meant for learners pursuing a course in Marketing Research and enables to understand the Discriminant Analysis concept through the dilemma  faced by Aruna Kumari (Aruna), the Founder of Aruna Beauty Salons (ABS), a beauty care salon. To promote her company further, Aruna had decided to introduce a  loyalty program by distributing privilege cards to her loyal customers. Based on her experience, she classified sample of customers into loyal and disloyal based  on the average money value spent at the salon and frequency of purchase/services availed at the salon. However, she was deliberating whether her classification  was correct. When requested for an analysis to rule out any skepticisms, Ram Kumar (Ram) a family friend, Research Manager and Freelance Consultant, agreed  to perform the required analysis and provide the report. Ram, assigned the responsibility to his subordinate Varun Kumar to do the analysis in the minimal possible time. Varun was in a dilemma as to which technique/tool would give him the best possible analysis in the shortest time.

Prerequisite Conceptual Understanding

The students/participants should be encouraged to read the following before they come to the classroom:

  • -Naresh K. Malhotra and Satyabhushan Dash, “Discriminant and Logit Analysis”, Marketing Research an Applied Orientation, 6th Edition, Pearson Education, 2010 - To  understand the concepts of discriminant analysis and logit analysis and relationship between both of them


Case Positioning and Setting

This caselet can be used in MBA Program/MDPs/EDPs in Marketing Research Course – To introduce the participants/students to the concept of Discriminant Analysis and Logit Analysis

Assignment Questions

  • I. What is discriminant analysis? What are the procedures for conducting discriminant analysis? How do you think discriminant analysis can help ABS’ marketing research problem?
  • II. Explain multiple discriminant analysis. How do you conduct multiple discriminant analysis in the context of ABS’ marketing research problem?
  • III. What is logit analysis? Compare and contrast logit analysis with discriminant analysis. Apply logit analysis for ABS’ marketing research problem and interpret the results.


Preamble to this Case Analysis

This caselet is meant to introduce the students/participants to the nuances of discriminant analysis in marketing research context. This caselet provides scope to discuss how to classify group based on certain variables. This caselet was also used to provide the right perspectives on logit analysis and its  advantages over discriminant analysis. Accordingly, this caselet was orchestrated in the following way........


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Abstract

This caselet is meant for learners pursuing a course in Marketing Research and enables to understand the Discriminant Analysis concept through the dilemma faced by Aruna Kumari (Aruna), the Founder of Aruna Beauty Salons (ABS), a beauty care salon. To promote her company further, Aruna had decided to introduce a loyalty program by distributing privilege cards to her loyal customers. Based on her experience, she classified sample of customers into loyal and disloyal based on the amount of  purchase and frequency of purchase at the salon. However, she was deliberating whether her classification was correct. When requested for an analysis to rule out any skepticisms, Ram Kumar (Ram) a family friend, Research Manager and Freelance Consultant, agreed to perform the required analysis and provide the report. Ram, assigned the responsibility to his subordinate Varun Kumar (Varun) to do the analysis in the minimal possible time. Varun was in a dilemma as to which technique/tool  would give him the best possible analysis in the shortest time.



Pedagogical Objectives

  • To understand discriminant analysis and its objectives
  • To discuss the procedures for conducting discriminant analysis and applying the procedures for ABS’ marketing research problem
  • To discuss multiple discriminant analysis and applying the procedures for ABS’ marketing research problem
  • To discuss and understand binary logit model and its relationship with discriminant analysis

Case Positioning and Setting

This caselet can be used in MBA Program/MDPs/EDPs in Marketing Research Course – To introduce the participants/students to the concept of Discriminant Analysis and Logit Analysis



This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
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