Boots: Hair Care Sales Promotion : Case Study
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Transcript of Boots: Hair Care Sales Promotion : Case Study
BOOTSHAIR CARE
SALES PROMOTIONCase Study
Who is the
Protagonist?
Dave Robinson
Early Days ......
......
..POST WAR
REGENERATION
Modern Era
UKHAIR
MARKET
BOOTS: BACKGROUND OF THE COMPANY
......
Modern Era
POST WAR REGENERATION
......
..
UKHAIR
MARKET
In 1877 , Jesse Boots took over his father’s shop and
established it as a private company in 1883 under the
name “Boot & Company Ltd.” Started in Nottingham the company opened its first
outside store in Sheffield in 1884
Early Days ......
Modern Era......
..
UKHAIR
MARKET
New Developments took place in the period of 1945-1968. A
program of Factory Development began following
the war , majority of which was completed by 1953. This included printing works, new
power house and pharmaceutical research
building
Early Days ...... POST WAR REGENERATION
......
..
UKHAIR
MARKET
Boots continued to develop product ranges, many of
which became household names. ‘17’ cosmetics, aimed
at the teenage market, was launched in 1968. In 1969, the
analgesic Ibuprofen was introduced. Boots Opticians was formed in 1987. ‘Boots
for Men’ stores and ‘Internet Services’ were introduced in
1999
Early Days ......
Modern Era
POST WAR REGENERATION
......
..
In 2000, over 60 major brands of hair care products were available in
the U.K. market. None of these brands had more than a nine per cent market share. Boots saw an
opportunity to be the retail hair-care expert .Additionally, Boots desired
to build a new market by using celebrity endorsements to create
awareness
situation Analysis
Boots is already one of the best-known and respected
retail names in the UK providing health and beauty
products
situation Analysis
Boots is already one of the best-known and respected
retail names in the UK providing health and beauty
products Dave Robinson is planning his sales promotion strategy for hair care products at Boots
Primary Objective to drive sales volume and trade up consumers from lower-value brands
situation Analysis
Boots is already one of the best-known and respected
retail names in the UK providing health and beauty
products Dave Robinson is planning his sales promotion strategy for hair care products at Boots
Has to select one of the following promotion strategies
• Get 3 for the price of two
• Gift with every purchase
• On-pack coupon worth 50p
situation Analysis
Boots is already one of the best-known and respected
retail names in the UK providing health and beauty
products Dave Robinson is planning his sales promotion strategy for hair care products at Boots
Has to select one of the following promotion strategies
• Get 3 for the price of two
• Gift with every purchase
• On-pack coupon worth 50p
Primary Objective to drive sales volume and trade up consumers from lower-value brands
Who are its major
Competitors?
.....
.....
.....
.....
Procter & Gamble’s Pantene Pro-v is the best selling hair
care brand in the world. Apart from Pantene
Procter & Gamble offered other complete ranges of hair-care brands including Clairol,
Head & Shoulders, Daily Defence, PERT plus, and Herbal
Essences.
.....
.....
Alberto Culver has grown into a multibillion-dollar company. The
company’s products are sold globally. Alberto-Culver’s
acquisition of Sally Beauty Company has grown to over
2,000 store locations today in United States, United Kingdom,
Canada, Germany and Japan
.....
.....
L’OREAL started exporting its products as early as 1912 when
they could be found in Italy, Austria and Holland. A few years later, via agents and consignments, they were distributed in the United
States, South America, Russia and the Far East. Today the group is present worldwide through its subsidiaries and
agents.
.....
.....
Most major retailers are the competitors which carry variety of professional hair-care brands.
The major competitors in the supermarket segment are Tesco,
Sainsbury’s .Tesco was the largest supermarket chain in the United Kingdom with more than 1,800 stores ,Sainbury’s was the second largest with 700 stores.
What is the Problem statement
in the Case?
Selecting the best Sales promotion
Strategy from the given 3 alternatives
Buy 3 for the price of 2
Coupons with every pack
Gift on very purchase
AnalysisSelling price of Each bottle = £ 3.99 ≈ £ 4
40%of 4 = £ 1.6Thus, cost to retailer= £(4-1.6)= £2.4
Cost to Manufacturer:
10% *x+x=2.4X= £2.18
Thus, cost of manufacturing each bottle (250)ml is £2.18
3 For 2
Sales increased to 300%Thus, if 100 bottles were sold now 300 will be sold and
200 bottles will be paid ones. Thus, total earning= 200* £4= £800
Total cost incurred in manufacturing= £2.18*300= £654
Thus, Profit on 300 bottles= £(800-654)= £146Since 60% consumers are new
Approximate Increase in profit due to promotion =60% of 146= £87.6
Thus, increase in profit per bottle= £87.6/300= £0.292
Gift with every packSales increased to 170%
Thus if 100 bottles were sold now 170 bottles will be sold
Additional cost for each pack : 93pThus total sale : £170*4= £680
Cost Incurred = £(170*(.93+2.18)= £528.7Thus, Profit= £(680-528.5)=151.3
Thus, profit per bottle= £151.3/170= £0.89Since 40% customers are new
Extra profit per bottle due to promotion = £0.89 *40%= £0.365
CouponSales increased to 150%
Thus if 100 bottles were sold now 150 bottles will be sold
Additional cost for each pack : 50pThus total sale : £150*4= £600
Cost Incurred = £(150*(.5+2.18)= £402Thus, Profit= £(600-402)=£198
Thus, profit per bottle= £198/150= £1.32Since 50% customers are new
Extra profit per bottle due to promotion = £1.32 *50%= £0.66
Best promotional Strategy?The Coupon sales activity generates maximum profit. However the primary objective as stated is to drive up volume sales and trade
up consumers from lower value Brands. There would be 60% new consumers in case the first strategy is chosen and it would result in 300% increase in sales. Since the
difference in profits is not vast the company can always make up profit by increasing its volume sale. Further, the advantages are
that competitors cannot imitate the strategy . Thus, as a long term strategy it should adopt the strategy of
“ 3 For 2”.
Summary
COMPANY BACKGROUND
SITUATION ANALYISIS
MAJOR COMPETITORS
ANALYSIS OF BEST
PROMOTIONAL ACTIVITY
DISCLAIMER
Created By Ananta Chhajer, Jadavpur University during a Marketing
Internship under Prof. Sameer Mathur, IIM Lucknow