BOOTS: HAIRCARE SALES PROMOTION

WHAT IS BOOTS?

One of the best known and respected providers

of health and beauty products and advice that

enhanced personal wellbeing.

Besides retailing, it had international sales and

marketing operations and also developed and

manufactured it’s own products.

THE MODERN ERA TIMELINE

1883

Jesse(John Boot’s son) took control

and established ‘Boot and Company

Limited’

THE MODERN ERA TIMELINE

1968 1969 1983 1987 1991

THE UK HAIR-CARE MARKET

THE PROFESSIONAL HAIR CARE BRANDS

Brand Awareness

Medium

Brand Awareness

LowBrand Awareness

Strong

THE PROFESSIONAL HAIR CARE BRANDS

Brand Awareness

Medium

Brand Awareness

Medium

THE PROFESSIONAL HAIR CARE BRANDS

Brand Awareness

Strong

Brand Awareness

Low

THE MASS MARKET HAIR CARE BRANDS

By 1995, Pantene became the

best-selling hair-care brand in the

world. It had 8.4% share in UK

market in 2001.

Other P&G brands include Clairol,

Head & Shoulders, Daily Defense,

PERT and Herbal Essences

Over 60 years, beginning in 1955, Alberto

Culver has grown into a multibillion dollar

company with over 2000 stores over the

world

Some of its top brands include:

St. Ives, VO5, Consort, FDS etc.

The group markets over 500

brands and more than 2000

products in all sectors of beauty

segment.

It held 5% share of UK hair-care

market in 2001.

HAIR CARE PRODUCT RETAILERS

Largest supermarket chain in

UK with more than 1800

stores and 45000 employees

Sainbury’s was the second largest

with 700 stores.

Morrisons had 400 stores and

prided itself on providing quality

products at the same low price

across all of its U.K stores.

HAIR CARE PRODUCT RETAILERS

One of the largest health and beauty

retailers, with almost 700 stores in UK.

It is a value retailer with a wide assortment

of around 10,000 products.

Boots had the largest market share in UK

health and beauty industry in 2004 with

over 1300 stores across UK.

It employed around 75,000 people and

operated in some 130 countries in 2004.

THE CONSUMER

WHO ARE THE MAJOR BUYERS?

Research indicated that over 85% of

female adults in the United Kingdom

visited a Boots store within the past

week.

Consumers who purchased professional

brands were largely fashion-conscious

women in the 20-35 age category.

Most Boots customers bought both

basic and premium brands

LOW BRAND LOYALTY!! WHY?

There was a general belief by UK

consumers that changing shampoo brands

produced better results than continually

using a single brand.

Trends in buying behaviour led

to changing preferences.

It was difficult for consumers to

identify meaningful differences

between the various brands.

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SITUATION ANALYSIS

THE PROTAGONIST

Dave Robinson

He is planning his sales promotion

strategy for a line of professional hair-

care products at Boots.

His primary objective is to drive sales

volumes and trade-up consumers from

lower value brands, while retaining or

building brand equity.

THE DECISION

Current Boots consumers and existing purchasers of mass-market brands were the primary target for the promotion.

The following alternatives were being considered:

“3 for 2”

Consumers can buy two items

at regular price and receive

one free(cheapest one).

They can combine any 3 items

they liked but they had to be

the same brand.

GWP (Gift with Purchase)

Consumers were given a

product sample along with a

regular purchase.

An existing sample product

would be used to avoid the

need to design and produce

additional packaging.

On-Pack Coupon(50p off)

This option was a more

conservative approach to

promoting the brands.

All customers would be able to

redeem the coupon during

their current store visit.

THE AIM

Secure market

leadership in UK

in hair care

segment

Ensure that

promotions

were profitableMaintaining and

enhancing the

professional hair-

care brands

HYPOTHESIS

PROOF AND ACTION

A LITTLE MATH NEVER HURTS

Professional Hair-Care Brands 3 for 2 GWP 50p off

Average pre-promotional price 3.99 3.99 3.99

Average industry retail margin 40% 40% 40%

Average manufacturer margin 10% 10% 10%

Cost to retailer 2.394 2.394 2.394

Cost to Boots 2.176 3.106 2.176

Sales 300 170 150

Net Cost 652.9 528 326.5

Selling Price 798 678.3 523.5

Profit 145 150 197

A LITTLE MATH NEVER HURTS

Mass-Market Hair Care Brands 3 for 2 GWP 50p off

Average pre-promotional price 2 2 2

Average industry retail margin 25% 25% 25%

Average manufacturer margin 10% 10% 10%

Cost to Boots 1.5 2.43 1.5

Sales 300 170 150

Net Cost 450 413.1 225

Selling Price 400 340 225

Profit -50 -73.1 0

“3 FOR 2” OR 50P OFF

WHY “3 FOR 2” ?

Our primary objective was to drive sales

volume and trade-up consumers from lower

brand value brands

This option ensures the maximum increase

in sales, 3 times the earlier sales.

This option brings more customers(60%) who

would not have purchased these products

otherwise than the other two alternatives.

This option also increases consumption per

household. Thus the brands get more

visibility and their brand awareness increases.

Other competitors do not have the point of

sales technology to bundle products of

different prices

THE DOWNSIDES

This option provides less profit than that by 50p off coupon.

Some customers might only want to buy a single product and after looking at

the promotion, they might feel that the single product is not worth it’s marked

price. Thus diluting brand equity

Mass-Market products are being sold at a loss.

ALTERNATIVES

GIFT WITH PURCHASE

• The strategy can be easily imitated.

• It is not the best in either increasing sales or

increasing profit.

• Dilutes brand equity

• Increase of sales by 170%

• Gives the consumer, the benefit of

choosing different brands for different

products

50P OFF

• It produces the maximum profit

when compared to other two

options

• Gives the consumer, the benefit of

choosing different brands for

different products

• The strategy can easily be imitated

• Lowest sales growth when compared to

other options

• Dilutes brand equity

DISCLAIMER

Created by:

Vibhor Kumar

During an internship with:

Prof. Sameer Mathur, IIM Lucknow