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New Salon Concept Breaks Mold

NEW YORK — A new business model, being offered up by Profound Beauty Inc., looks to provide solutions to many of the issues plaguing the salon industry. And it addresses a full menu of them.

Diversion? Check. Salon branding? Check....

NEW YORK — A new business model, being offered up by Profound Beauty Inc., looks to provide solutions to many of the issues plaguing the salon industry. And it addresses a full menu of them.

Diversion? Check. Salon branding? Check.

Quality product, competitive price points and an incentive plan for salon owners?

Check, check and check.

All Profound founders have to do now is sell the model to thousands of U.S. independent salon owners who, until now, haven’t had much of an opportunity to advertise or market their salon name to their clients in conjunction with a product.

Profound, a Long Island City, N.Y.-based company founded by beauty industry veterans Nikos Mouyiaris and Bob Salem, aims to offer independent salons a concept designed to embrace the authority stylists have recommending products to clients, and move away from consumer self-selection. In other words, products can only be bought if a stylist recommends them for a salon client.

“We wouldn’t have created a product line where we say to the salon owner ‘Let’s put this on your shelf and see what happens,’” said Mary Wilson, Profound’s executive vice president charged with marketing, salon development and education responsibilities. Wilson most recently served as vice president, education, for Matrix.

Profound, in turn, offers hair care products, including shampoo, conditioners and styling products, bearing the Profound brand name, but also the address, phone number and name of the salon that sells Profound.

There are 22 products in all, none of which could be featured at press time, due to the stage of intellectual property protection the company is in. Profound products will retail from $14.50 for shampoo and conditioners to $20 for styling products.

Profound’s business model also makes suggestive selling for salon professionals lucrative: On Dec. 31, Profound filed a Regulation A offering statement with the Securities and Exchange Commission for the Profound Incentive Equity plan that, subject to SEC approval, would grant at Profound’s sole discretion stock options to salon owners, something the likes of L’Oréal, Bumble and bumble and Aveda don’t do.

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In addition to Salem, who has led the U.S. marketing and creative teams for L’Oréal and Aveda, and Mouyiaris, who is Profound’s leading investor and also owner of Mana Products Inc., Profound has tapped Howard Friedensohn, founding chief financial officer of Bath & Body Works and Victoria’s Secret, as chief operating officer. Stefany Reed, who launched and served as general manager of Aveda’s direct distribution, has joined Profound as vice president of salon development. Maria Laguardia has been tapped to be in charge of product development, and Shari Schneider, who has worked for Aveda and Bumble and bumble, directs Profound’s education programs.

In addition to embracing the creativity of professionals and branding independent salons, Profound aims to eliminate diversion with its strict recommendation-only policy. Furthermore, bottles do not contain copy describing content functions, only instructions on how to use the product.

“The branding, therefore, is an extension of the session where the professional can recommend what products work perfectly within that session. That is the contribution [stylists] make to the development of the company,” said Salem. “We have developed the first mutual brand that includes the salon, their address and location on every bottle in every salon. This effectively eliminates diversion before it ever begins, and diversion is the number one problem facing salons in their effort to protect the integrity of the professional recommendation,” Salem said.

And while Profound is in fact a new brand, not just a new business model, the product is only as good as the salon and stylist who recommend it. “In our minds if their name is on the bottle, that’s what makes the product credible,” Salem said.

Which reveals a challenge in the model: pilot programs, which began in seven salons across the country in September, have shown that Profound is only successful when a stylist recommends products that meet a client’s hair needs. Overselling, therefore, as well as hair type misdiagnosis, could damage trust.

“Products have to perform. Clients cannot be misdiagnosed, or the integrity of the salon and the brand suffer,” Salem said.

Profound will roll out nationally in April and will target salons that meet certain criteria. Eligible salons will offer no more than three hair care brands, such as Kerastase, Aveda and Bumble and bumble, and will also be considered an upper- tier salon. Salons will also need to generate revenue of at least $300,000 a year. Salem expects to sell Profound in 200 to 500 salons by April 2005.

Salem and the Profound executive team is heading to Orlando, Fla. this weekend to unveil their new business model at the Salon Association’s annual symposium. Members from the country’s 2,000 leading independent salons are expected to attend.