Wednesday, April 1, 2009

Category 2 - Implicit Space/Explicit Time



College Education
College education, or any education for that matter, is an industry often overlooked for its revenue management potential. Traditionally, it is located in Quadrant II. Time is explicit because classes are for a set amount of time. On a larger scale, the length of the semester and of the degree program is relatively fixed. Space, in the case of classes, would be rooms. Since room size is defined by the institution, space is implicit. However, as we will illustrate with the following examples, not all institutions are the same in their revenue maximization approaches.

Cornell University (http://www.cornell.edu)
Cornell is a traditional private university. It generates revenue through tuition dollars, which entitle students to take as many classes as they want. In this way, Cornell is selling a package. Because students do not pay for the individual classes, time is measured in terms of the length of the semester, which Cornell controls. Space is somewhat more difficult to discuss. While for an individual class the space is the classroom used, we have already determined that Cornell’s strategy applies to each student. Thus, space could be each student’s spot on campus in relation to the total enrollment capacity.

eCornell (http://www.ecornell.com/)
eCornell is a subsidiary of Cornell University that offers online courses. Having classes online completely transforms the “space” lever of revenue management. With eCornell, space is only whatever storage space each account takes on the company’s server. Time is also transformed, because courses are not in real-time, and can be taken at the leisure of the students. Under this model, eCornell loses control of time, thus making time more implicit, as it is controlled by the students’ own learning pace.

Tompkins/Cortland Community College (http://www.tc3.edu/enroll_svc/st_tuition.asp)
This community college, in addition to its normal academic programs, offers students the opportunity to pay per credit. In this model, time is a class period and space is a classroom. TC3 thus strives to maximize revenue per available classroom period. It controls both time and space. As such, it is able to use the most effective revenue management principles, such as shortening duration between periods and extending operating hours (i.e. offering night classes).

Cornell Executive MBA Program (http://www.johnson.cornell.edu/academic/emba/format.html)
Cornell EMBA is a graduate business program for professionals that combines traditional courses with distance learning. Program participants begin their education with a week on Cornell’s campus. After that, they engage in a series of self-paced online coursework and meet alternating weekends at a distance learning center. Although this structure is in the same category as Cornell’s traditional program, as both space and time are controlled by the institution, it does successfully reduce the time that students occupy Cornell’s limited classroom space.




Personal Care & Beauty Industry
In its November 2005 report on ‘The US Beauty & Personal Care Products’, Mintel identifies a multitude of products in the beauty and personal care categories. It further elaborates that in this dynamic retail environment the industry faces a number of powerful market drivers. Some of these include demographics, general economic conditions, product innovation, and the growing effort of some manufacturers to expand offerings into both the mass and prestige channels.
More details about this industry are available on the following link.
One of these prestige channels includes Beauty Salons. We identify this channel under Explicit Time – Implicit Space category for the following reasons –

1. How is time defined and who controls the time definition?
As a general rule it is observed that the Beauty Salons sell time by appointments based on the need of the customer. They have general guide lines for each beauty treatment which help them book the stylists accordingly, and hence control time. Traditionally, the basic services at the saloons were sold as an event, but in today’s competitive world we find more and more saloons trying to sell time explicitly even for basic services such as waxing, nail art, etc. In our examples we draw a comparison between some saloons that are still more traditional in nature vis a vis the new age saloons, which are trying to sell time more explicitly.

2. How is the space defined and how is it used to make money?
The space here is mostly shared and there is usually no distinction made in terms selling it explicitly. There may be some high-end saloons which may be an exception to it, but on the whole the space is not sold explicitly to generate money.

Strip (http://www.strip.com.sg/)
The idea was conceived by a group of friends, who have managed to create this fun brand which has the service promise of Hygiene, Speed and Quality with a guaranteed 15 minute Brazilian wax. Apart from the various Brazilian waxing options they also provide nail art at selected saloons. These are not sold by time, and hence are implicit in time & space.
This saloon was more traditional in its approach. Most treatments here were not pegged against time. Hence the salon is selling events that are implicit in terms of time and space. It may be noted here that the range of services at the saloon are limited to manicure, pedicure, nails and waxing. Traditionally, most of these services are more time-implicit in nature.

Dashing Diva (http://www.dashingdivamadison.com/)
It is an international chain of saloons that provides all the regular saloon services and more. They merge the concept of personal and beauty care with hospitality and provide for concepts such as ‘Girls Night Out’ which is like a week end special happy hours. Also, one can plan exclusive self indulgent parties there for events such as bride maid mixers and catching up with girl friends. Here, the menu of services entailed more emphasis on time and prices were available for extra 5 or 10 minute massages as services add-ons.


Nailz Story & Beauty Tale (http://www.nailzstory.com/)
As the name suggests the USP for this Saloon is Nail Art. They do provide other regular saloon services, some of which are provided as packages. Moreover, they provide special group packages too. In concurrence to the observation made earlier at Honeypot, similar limited services are provided which are time-implicit in nature.


In sum, traditionally the more basic services such as waxing, manicure, pedicure and nail art that were time & space implicit are now more increasingly being sold explicitly for time. An example to illustrate my point is as below –
All-Out-Diva Manicure
$40
Like a “facial” for your hands. Our special anti-aging Crystal Exfoliator helps restore hands’ youthful appearance. Includes super-hydrating paraffin treatment and a full 10-minute hand & arm massage. When only the “best” will do!
· Regular Polish Change for Hands $10
· French Manicure Supplement $5
· Extra 5-minute Hand Massage $5

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