Boots hair care products_case analysis

8/10/2019 Boots hair care products_case analysis

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BOOTS- hair care products

Prepared by

Rahul Batra

140101120

IMT Ghaziabad


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UK- Hair market (existing)

BrandsPantene Pro V andHead and shoulder

by Proctor andGamble

Alberto VO5 byAlberto

Elvive by LOreal

StoresTesco, Sainsburry

and Morrisons

Drug retailer- Boots,Drug store

MarketNo brand with morethan 9% of market

share

Market expected togrow at 1-3% peryear for the next 5

years

Volume expected togrow faster than

value

Price promotion forshampoo causing

overall decline inprices


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UK- Hair market (opportunity)

The celebrity products were not known to the common public, so theyneeded some exposure

Create an emotional attachment

Celebrity Endorsement

These products were basically available in their own stores, so salescould be generated by making them available in the BOOTS stores.

Availability of Celebrity owned products

New range of products were launched in partnership

Existing products only with beneficial supplier and retailer partnership

BOOTS manufactured the products and pay licensing fee

Products

Brand owners- Celebrity hairdressers managed the public relationactivity

BOOTS managed all this in consultation with the brand owners

media


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Competitors

P&G

8.4% Market Share

Leading Brand: Pantene

High ConsumerAwareness

Alberto-Culver

Revolutionized Ad-slots

Increased product baseby Global acquisitions

Wide product-range

LOreal

5% Market SharePortfolio of over 500

brands and 2000 prod.

Pioneer in promotions

Product Retailers

Tesco, Sainsburys,MorrisonsTraditional

Supermarket

SuperdrugValue Retail


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Consumer

Gentleshampoos

70s

Detanglingshampoos

80s Shiny hair

90s

Changing shampoo brands continuously have better results on hair

Belief

The requirement of consumers have changed since 70s

Changing trends of requirement

No identification of meaningful difference between shampoo brands

Large number of choices varying not just on brand name, but also onpackaging, advertising, price, ingredients, consistency, fragrance etc

Difference in choices


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Targetconsumer

Age 25-30 years

Premiumproducts as treat

either forthemselves

specially or forsome special

occasion

Both basic andpremiumproducts

More affluentthan mass

market buyers


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Promotional program

Drive sales volume and trade-up customers from lower value brands Retain the building brand equity

Objective

Boots customers

Purchasers of mass market brands

Size

One month starting from December 1st, Christmas season

Duration

400 BOOTS stores

Flyers distributed to the visitors No separate advertisement

Signage within the store to promote the offer

Distribution Vehicle

Christmas season, when consumers spend more than usual

Market is flooded with discounts, keep up with the volume sales

Timing


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0.00 1.00 2.00 3.00 4.00 5.00

Premium brands (inpounds)

Mass-market brands (inpounds)

Premium brands (in

pounds)

Mass-market brands (in

pounds)manufacturing cost 2.59 1.45

manufacturer's margin(average 10%)

0.26 0.15

retailer's margin 1.14 0.40

Average industry Pricing of 250ml shampoobottle


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Promotional alternative- 3 for 2

Consumers could combineany items of their choice

Boots had the Point-of-Sales technology toimplement it

Estimated Sales increaseis 300% of Pre-promotions

Incentive for Bulk-buyingcustomers

ProsChoice of free item limitedto the same brand and notthe Brand House

Skeptical customers wouldthink that Boots is trying topush its stocks

Price Sensitive consumerswould prefer a pricediscount instead of in kind

Cons

Cheapest item would be given for free

Competitors didnt have POS tech


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Promotional alternative- GWPAn existing sample would be bundled with the regular purchase

No additional designing,packaging cost

Estimated 40% sales toBoots shoppers who wouldnot have otherwisepurchased a hair-careproduct

Creates excitement amongcustomers regarding thegift

Incentive for Bulk-buyingcustomers

Pros

No actual monetarysavings

Discerning buyers would notbe able to choose their gifts

Skeptical customers wouldthink that Boots is trying topush its stocks

Cons


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Promotional alternative- On pack

coupon (50p off)Advantage of immediate usage by the consumer

Actual savings inmonetary terms for theprice sensitive consumer

Estimated high usage ofcoupons as customerswould indulge in holiday

season shopping anyway

Time-tested and easy toimplementno hi-techimplementation reqd.

Pros

No differentiation with

competitors

Consumers need toremember to carry thecoupons with them for

purchase

Cons


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Comparison- premium brands3 for 2 GWP 50p discount

Cost of an average item 3.99 3.99 3.99

pre-promotional unit sales/day 100 100 100

percentage increase in unit sales/day 300% 170% 150%

promotional unit sales/day 300 170 150

Number of sets sold 150 170 150

Total Revenue (pre-promotional) 399 399 399

total revenue 1197 678.3 598.5%age change in revenue 200.00% 70.00% 50.00%

Margin earned (pre-promotional) 114 114 114

margin earned 342 193.8 171

%age change in Margin 200.00% 70.00% 50.00%

promotional cost per unit 2 0.93 0.5

total promotional cost per day 300 158.1 75

Profit 42 35.7 96

Accusition of new customers 60% 40% 50%

Effect on building brand equity negative neutral negative

C i k


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Comparison- mass-market

brands3 for 2 GWP 50p discount

Cost of an average item 2 2 2

pre-promotional unit sales/day 100 100 100

percentage increase in unit sales/day 300% 170% 150%

promotional unit sales/day 300 170 150

Number of sets sold 150 170 150

Total Revenue (pre-promotional) 200 200 200

total revenue 600 340 300%age change in revenue 200.00% 70.00% 50.00%

Margin earned (pre-promotional) 57.14 57.14 57.14

margin earned 171.43 97.14 85.71

%age change in Margin 200.00% 70.00% 50.00%

promotional cost per unit 1 0.93 0.5

total promotional cost per day 150 158.1 75

Profit 21.43 -60.96 10.71

Accusition of new customers 60% 40% 50%

Effect on building brand equity positive neutral neutral


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Indian market- promotional program for Lenovo Laptops

Maitain its number one position in laptop selling Drive ismart phones and laptops in the market

Objective

People who are looking to purchase both smart phone and a laptop

Recent managers, promoted,and

Size

For a period of 2 months

Duration

Online through its own website and lenovo stores

Exclusive channels such as amazon online Exclusive stores such as mobile store

Distribution Vehicle

June- july, when recently promoted people wil prefer to spend higher disposableincome

Promotional at business parks in order to give them offers then and there

Timing


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Indian market- promotional program for Lenovo Laptops

(contd)

Smart phone free with a laptop withthe price range of more thanRs40,000

Exchange bonus when an old laptopis exchanged or a net discount of3000 (which ever is higher) for thelaptops of price range of 32000 to

40000 OS and basic softwares installed with

the laptop for the price range of25000- 32000

Offers


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>40000

32000-

40000 25000-32000

cost of one laptop 27000 19000 14500

cost of promotion 5500 3500 2200

total cost 32500 22500 16700

average selling cost 44000 35000 28500

profit per unit pre-promotional 17000 16000 14000

profit per unit after promotional offer 11500 12500 11800

unit sales per day 75 50 100

expected increase in unit sales 75.00% 100.00% 150.00%

final unit sales 131.25 100 250

pre-promotional profits 1275000 800000 1400000

post-promotioanl profits 1509375 1250000 2950000

change in profits 18.38% 56.25% 110.71%


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THANK YOU

Boots hair care products_case analysis

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