Boots : Hair care sales promotion

ABOUT USType Private limited company

Industry PharmaceuticalsHealthcare

BeautyPhotography

Founded 1849; 167 years ago,Nottingham, United Kingdom

Founder John BootHeadquarters Nottingham, United KingdomArea served United Kingdom, Republic of IrelandKey people Simon Roberts, managing director,

Boots UK and IrelandBrands No. 7 and Seventeen – Makeup

Soltan – Sun creamAlmus – Generic drugs

Number of employees 70,000 (UK)1,900 (Ireland)

How we evolved ??

Early days

Post-War Regeneration and New Development, 1945-

1968

The Modern

Era

PRESENT SITUATION

In order to secure market leadership in face of severe competition, it needsto adopt promotional strategy.

The Major Competitors

BRANDS

• Pantene, Clairol, Head and Shoulder, PER plus, Daily Defense.

STRENGTHS

• Best selling hair care brand around the world as per 1995 census.

• Share 8.4% percent of UK’s hair market

WEAKNESS

• Significant presence in mass market products/basic products but have less or no professional hair care products.

BRANDS• St. Ives, VO5, Consort Hair Care

for Men, and FDS.

STRENGTHS

• Offer Broad Assortment of Hair Care Products.

WEAKNESS

• Have less or no professional hair care products.

• Lesser number of stores

BRANDS

• Lancôme, Giorgio Armani, Biotherm, Ralph Lauren.

STRENGTHS

• Global Presence.• Share 5% percent of UK’s hair

market

WEAKNESS

• Significant presence in mass market products/basic products but have less or no professional hair care products.

Retailers of similar category

TESCO : largest super market chain in U.K

SAINSBURY’S : 2nd largest in U.K

MORRISON’S : provides high quality at low prices

CONCLUSION FROM ABOVE MARKET STUDY1. Increase awareness

about its professional hair care products.

2. Differentiate its products with others through packaging or sales strategy.

WHAT’S THE AIM

To make sales promotion strategy for Company’s Hair-care Products UK Stores

OBJECTIVES

Sales volumes should

increase

Build and retain the

brand equity

Consider competitors from both, hair care

products and retail stores

Attract consumers from lower

value brands

WHAT’S THE SITUATION ??

ToFinalize

APromotionStrategy

Among TheseThree

Promotional Alternatives

3 for 2GWP (Gift With Purchase)On-pack Coupon (50p off)

So, Let’s Place Our Self In Place of Dave Robinson and Remember the words of Philip Kotler for How to Analyze a Market?

Analyze Customer needs and Behavior

See competitors in

the market

Propose a solution and target your segmented customers

1.

Advantage Disadvantage

Cheap promotion

Stock clearing strategy

Receive one free

Promotional buyers 60%

Increase in sales 300%

2.

Advantage Disadvantage

Additional packing

Common strategy

Free product sample

Promotional buyers

40%

Increase in sales 170%

3.

Advantage Disadvantage

Less estimated sales

Dilute brand equity

Conservative approach

Promotional buyers

Multiple visits

FOLLOW THE CASE ANALYSIS PROCESS TO DEDUCE THE FITTING SOLUTION

SITUATION

QUESTIONS

HYPOTHESIS

PROOF AND ACTION

ALTERNATIVES

Select a model to increase sale for lower brand hair care products that would be most profitable to the company at the same time maintaining and enhancing the professional hair care brands.

1. Which promotion strategy to incorporate keeping in mind the cost to the company and its brand equity.2. Since consumers are not brand loyal, so how to effectively differentiate the promotion strategy from other major brands so as to get at least the estimated sales as predicted.

BOOTS TARGET MARKET

Current Boots customers and purchasers of mass market brands.

Since Boots primary objective is to trade up consumers from lower value brands and to drive sales volume, while retaining or building brand equity.

So, I believe the best promotion strategy would be “Get 3 for price of 2”.

The reason behind choosing the above strategy is….

REASON 1:-

Since it involves maximum increase in the total sale viz. 300%, which is our primary aim.

REASON 2:-Since the technology to implement this strategy is with few or no other company, hence it would be unique as customer will be able to differentiate it from other competitors.

REASON 3:-Second aim was to maintain or enhance the brand equity, this will enhance using the above strategy since we are using sales promotion for all value brands and with this the customer inflow is increasing and hence automatically the incoming new customers(apart from regular boots customers) will try its premium products and since the products are better than any other product in market due to its professionalized manufacturing process thus will lead to a satisfy or even a happy customer and people have value for their money and hence will increase brand equity and its professional hair care products will penetrate into the lower income market too.

REASON 4:-

Cost : With this strategy there will be no increase in cost, nothing from packaging to manufacturing new samples as gifts.

ANALYZING ALTERNATIVES

=> Although 170% increase in sale, but 93% of product price would be spent in offering sample product as gift along with the purchase.

=> Since above strategy incur more costs with lesser sales and above that offering competitors equal opportunity to adopt the model thus diluting the differentiating itself strategy. So, this strategy is less likely to be adopted.

=> This strategy is comparatively good since it ensures customer to buy more than one product hence increase sale. => But, since it offers a 50p off on the same product, so in that way no customer would be inclined to buy two bottles of the same product at a price of 1.5 of original cost of 1 bottle or 3 bottles at a cost of 2 bottles, which is equivalent to the first strategy but more sales and offering variation in products thus more alluring to the customers.=> Above all this model is mostly used by other competitors too, thus is less likely to be adopted.

AnalysisAlternatives 3 for 2 GWP One pack

couponCost/bottle [£] 1.4 1.4 1.4Estimated sales/day

300 170 150

Promotional cost/unit

Production cost Production cost + sample cost

Production cost + discount cost

Promotional cost/unit [£]

1.4 2.33 1.9

Total cost [£] 420 396.1 285Total revenue [£] 600 340 300

Net profit [£] 180 -56.1 15 all calculations for one day

3 FOR 2 GWP 50P OFF0

50

100

150

200

250

300

350Better Visual Analysis

sales during thepromotional period = % of sales that would have occurredwithout the promotion.

CONCLUSION

FROM THE CASE ANALYSIS I WOULD SAY THAT THE “3 FOR 2” WAS A BETTER STRATEGIC PLAN BY BOOTS FOR THE PRODUCT GROWTH & DEVELOPMENT.

Thank you

DISCLAIMER

Created By Tanmay Garg, NIT Surat, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow