On the Role of Skill, Quality, and Environmental Factors on Customer Behavior of the Beauty Industry

Author Name KONISHI Yoko (Senior Fellow, RIETI)
Creation Date/NO. March 2017 17-E-035
Research Project Decomposition of Economic Fluctuations for Supply and Demand Shocks: Service industries
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What do hair salons and hairdressers provide for their customers? One answer is services and creation of customer satisfaction. Customer satisfaction could depend on factors such as location, price, the skill of the hairdressers, and the overall experience at the hair salon. It is difficult to observe customer satisfaction directly for hair salon owners and researchers, because satisfaction is subjective. However, if the customers like the hair salon or hairdressers and are satisfied with their services, customers would return at a higher frequency and become big spenders. This suggests that we can measure customer satisfaction by investigating what causes them to return. In this study, we apply count process and double hurdle analysis to specify a model of customers' return and purchase behavior. We collected daily records from a hair salon in Japan between 2003 to 2010 (2,046 working days). The hair salon has about 15,000 customers and the daily records contain payments and the hairdresser's names for each customer visit. Using the information, we introduced customer behavioral variables, the hairdresser's skill and how crowded the salon is in addition to demographic variables into our model.