Critical issues:
1. There is no differentiation strategy of Princessa to stand out from the highly competitive environment.
2. Richards, the owner, lacks of experience and knowledge on running a retail beauty store, in a way, failed to capture customers’ purchase criteria
3. Princessa does not have an effective marketing strategy to differentiate and promote their products.

Situational analysis:

Princessa Beauty is experiencing a decreasing in sales as a result of slowing economy and increasing competition, this has caught Richards’ attention that different operational direction is needed for recover and achieve a minimum 5% yearly sales growth. Princessa failed to differentiate themselves among the market due to competitors providing similar products with small variances this results a 30% of Princessa’s customers do not have customer loyalty. Moreover, although current product mix is similar to all competitors, 88% of Princessa’s total sale come from hair, hair care and skin care. This reveals that failure to differentiate in a highly competitive environment will cause Princessa a dramatic decrease in sale.

An internal weakness of Princessa comes from the management. Richards, the owner of Princessa, is unable to communicate with French-speaking customers and capture target customers’ purchase criteria with his inadequate experience and knowledge on beauty products.Although, Princessa has better layouts, appearances and organization compare to its competitors, these are not the factors that customers value. Customers are identified as price sensitive, not willing to travel long distance and value on-site beauty consultants. For Princessa to correctly capture customers’ purchase criteria, it needs focus on what customers value the most.

Another reason that caused lack of differentiation is that there is no aggressive promotional activities among