A 40-outlet salon chain runs at 47% chair utilisation. Weekends are at 89%, weekdays at 31%. Average bill is Rs 900. Staff are salaried, so weekday idle time is a fixed cost. Discount coupons distributed through a deals app brought volume but average bill on those visits is Rs 520 and repeat is 8%. Membership packages exist but are sold by staff at the counter and are 4% of revenue. A competitor opened 6 outlets in the same catchments at 20% lower prices.
Diagnose which element of the mix is at fault, recommend specific changes, and check them against the economics.
100 points, 60% to pass.
This is a capacity problem being treated as a demand problem. Salaried staff mean a weekday chair costs the same empty or full, so the marginal revenue on a weekday visit is nearly all contribution — which makes weekday-only pricing rational and blanket discounting destructive. The coupon channel is the clearest error: it discounts weekend customers who would have paid full price, and brings buyers who do not return. Strong answers restrict any discount to the idle window, move membership from a counter upsell to a designed proposition since it pre-commits future visits, and decline to match the competitor's 20% across the board because the utilisation split says price is not the binding constraint on weekends.