Silkhair is a global leader in the world of body care from head to toe. In 2006, the company entered a new business segment. Through substantial investment in formulations, product development and customer service, a new brand and a full range for hair stylists and upscale hair salons was developed.
The range, exclusively developed and manufactured in Germany, met the highest quality standards. In a first briefing, the management and Sanet agreed that the fashion-conscious markets in Southeast Asia, especially Thailand, should be open to such a range.
However, it was clear to everyone involved that global competitors with long-standing brand names were also trying to tie upscale hair salons in Asia to themselves with contracts. Finding a strong sales partner would be particularly challenging. Success appeared to be by no means guaranteed. Sanet and the management of Silkhair agreed that the consulting company would be involved in the risk: one third of the fee would be performance-related.
The project was initially divided into three sections in order to reduce the financial risk for everyone involved. In Phase 1, Sanet was initially commissioned to examine the market situation and market mechanisms and to assess the projects’ chances of success accordingly.
Initially a profile of the strengths and weaknesses of brands already active on the market was created through an in-depth survey of 40 leading hairstyling salons. It was found that upscale salons especially were very sceptical about the market leaders because they were afraid of being limited in their business and creative freedom due to the tight contractual policies. This was a first, good basis for a new market entrant, which would focus on the upscale segment. The professional hair care sector was also unhappy with competition policy, which was characterised by an increasing shift away from the salons to mass distribution through markets. Again, upscale salons feared losing market shares due to the policies of their own suppliers. The market also turned out to be far larger than originally thought. It had strong growth rates. It turned out that Thailand, following Japan and Korea, was the most interesting market for fashion and make-up in Asia. Everything pointed to a wise entry strategy being successful.
The company management and Sanet agreed to initiate the second phase, namely the search for a distribution partner in Thailand. Based on the findings, a profile for the right partner was created. He should have access to the upscale hairstyling salons. In particular, academies for training hair stylists came into consideration. In addition, he should distribute hairdressing equipment on a national level and supervise the salons regularly.
Finally, he should have sufficient capital to support the new brand through mass advertising and to finance a warehouse that could provide fast and flexible service to the salons. From a long-list of around 20 candidates, four candidates were left at the end who had great interest in the introduction of German brands and who all appeared to be suitable to the same extent.
Among the candidates, however, was also a company that, as a manufacturer of hair care products, initially seemed to be a competitor rather than a partner for the German company. It was represented throughout the country in almost every salon and was also the largest supplier to the supermarkets.
It is worth noting that Sanet’s qualification of the candidates was not based solely on facts and figures, but the Sanet management, together with local management, entered into intensive discussions with and evaluations of all the candidates. A key role in this case also was that Sanet placed high value on the motivation of a potential trading partner to enter into a contractual relationship with the German customer.
The result was surprising: the Thai producer was just about to expand his product range, which was in the mid-range qualitywise, “upwards” through adding a high-quality line. A product manager had already been lured away from the market leader and placed in charge of the development of the line. Alone, it turned out that the technical expertise for the development was only partially available within the Thai company and the time needed for developing an upscale line exceeded original expectations. An opportunity opened up for both sides. While Silkhair was looking for a strong sales partner, who had the financial means to achieve rapid market entry, the Thai partner was looking for a high-quality segment with whom he could defy the international market leaders. A collaboration with Silkhair solved his problem regarding expertise and the time and financial resources for the development of the desired line. The collaboration, which initially seemed impossible due to a competitive situation, turned out to be absolutely synergistical, i.e. to the benefit of both sides.
Following detailed discussions with all candidates, Silkhair decided upon a contractual collaboration with the largest Thai producer of hair care products. The collaboration is developing extremely well. At a high advertising cost, the launch was celebrated on the island of Phuket at a gala show in front of more than a thousand invited hairstylists. Subsequent sales exceeded all expectations. The project was successfully completed.
The Greatest Reward is Trust
For a consulting company, the greatest reward for its work is the continued trust of the customers. Subsequently, Sanet was also commissioned with the search for distribution partners for the hair styling range and for one of the company’s other labels for footcare. We were also able to find excellent, well-motivated partners for both brands.