Boots: hair care sales promotion

case study

Pradnya Shah 140103123

Type Private limited company

Industry PharmaceuticalsHealthcareBeauty

Founded 1849, Nottingham, United Kingdom by John Boot

Sector Retail and Lifestyle

Headquarters Nottingham, United Kingdom

Area served United Kingdom, Republic of Ireland

Key people Simon Roberts, managing director, Boots UK and Ireland

Brands No. 7 and Seventeen – MakeupSoltan – Sun creamAlmus – Generic drugs

Target Group Upper middle class and middle class, focus on women.

What’s our AIM????

COMPETITIORS HAIR CARE SALES

BRAND EQUITY CUSTOMERS

DAVE ROBINSON

3 for 2ADVANTAGES DISADVANTAGES

Consumer would get 3 items for a regular price buy of 2.

Would be perceived as a Stock clearing strategy

Consumers could combine any 3 items as they like e.g. shampoo, conditioner and styling gel of same brand

Premium products would lose their brand equity and may sound as some cheap promotion

Most competitors did not have the technology at the point of sale to imitate this promotion

Product partners (Hair dressers) may oppose this strategy for the dilution of their brand equity

Estimation was that sales would increase to 300 %60% customers – promotional buyers

Receive a gift with purchase (GWP)

ADVANTAGES DISADVANTAGES

Product sample would be given free along with a regular purchase

Adding the sample would cost approx. 90p per unit for the product plus 3p per unit extra to secure the sample to the featured product

Estimated sales would increase by 170% of the pre-promotional sales

This is a very common strategy used by most of the retailers and can be easily imitated

40% of the customers would be just promotional buyers.

ON PACK COUPON WORTH 50 %

Advantages DisadvantagesCustomers would be able to redeem their coupons during their current store visit

This is a very common strategy used by most of the retailers and can be easily imitated

Estimated sales would increase by 150% of the pre-promotional sales

Form of discounting which can dilute the brand equity

50% of the customers would be just promotional buyers

More of a conservative approach

Coupons would enable multiple visits for a single customer

Less estimated sales growth as per the market research

Alternatives 3 For 2 GWP On Pack CouponAll calculations are done for 1 day

Cost per bottle (Pounds) 1.4 1.4 1.4Estimated Sales for 1 Day 300 Units 170 Units 150 UnitsPromoitonal Cost per Unit

Production cost

Production cost + Sample cost

Production cost + Discount cost

Promoitonal Cost per Unit (Pounds) 1.4 2.33 1.9Total Cost (Pounds) 420 396.1 285Total Revenue (Pounds) 600 340 300Net Profit (Pounds) 180 -56.1 15

A Bit Of Math…

A model is to increase sales by focusing on low brand hair care products which would increase sales of the company at the same time maintaining and enhancing the professional hair care brands.

QUESTIONS1. Which promotion strategy to incorporate keeping in

brand and cost in mind?

2. How to effectively differentiate the promotion strategy from other major brands?

SITUATION

HYPOTHESIS :

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

REASONS & PROOFS :Reason 1: It fulfills Boots primary objective of increasing sales with lower value brands and to drive sales volume without compromising on brand equity.

Reason 2: With this strategy there will be no increase in cost, nothing from packaging to manufacturing new samples as gifts.

Reason 3: Not only is Boots making a good sales of 300%, but also capturing a steady market share. Also, 60 percent of these sales are to customers who would have not purchased them without the promotional deal.

Reason 4: Other strategies like GWP have huge over head costs. 93% of product price would be spent in offering sample product as gift along with the purchase. Thus a possibility of dilution.

Reason 5: The 50% off strategy , on the second product ,is good in a sense that it makes consumer buy two product instead of one. Thus, a customer buys 2 products at a cost 1.5 of 1 product. But it is very common in market so wouldn’t differentiate the strategy.

But every coin has two sides..Although the strategy involves increase in cost , its benefits are many. Above all of which there is no extra cost for packaging .Thus it increasing sales could compensate the cost per unit in the long run.

SO I GUESS

WINS THE RACE…

Sindhuja NanduriBITS Pilani, Hyderabad Campus

DISCLAMAIR

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