BOOTS : HAIR-CARE SALES PROMOTION

CASE ANALYSIS

RICHARD IVEY SCHOOL OF BUSINESS

Type Private limited company

Industry PharmaceuticalsHealthcareBeautyPhotography

Founded 1849; 167 years ago,Nottingham, United Kingdom

Founder John Boot

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

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

BOOTS POPULAR BRANDS

It’s UK’s Holiday Month - December

What’s the aim?

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

Dave Robinson

What’s the situation

ToFinalizeAPromotionStrategyAmong TheseThree…

“3 for 2” Gift With Purchase

50% 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

FIRST STEP

AnalyzingConsumer Behavior

Consumer – Not Brand Loyal

Due to 3 reasons but the one that matters is..

NO PROMINENT BRAND DIFFERENTIATION

BOOTS CUSTOMER BASE : BRAND WISE

Basic Brands - All

Premium Brands - Female(20-35)

DEDUCTION FROM CONSUMER BEHAVIOR

Prominent Differentiation with Other Brands Required

BOOTS PROGRESS ON THIS..

Offers professional hair care products endorsed from celebrity salons around UK. – Unique to Boots

Now, Let’s move on to Analyze..

.. Competitors in the Market

Major Competitors And TheirStrengthsAndWeakness

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.

CONCLUSION FROM ABOVE MARKET STUDY

1. Increase awareness about its professional hair care products

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

NOW AFTER ANALYZING THE CONSUMER BEHAVIOR

LET’S FACE THE SITUATION..

3 SALES PROMOTION STRATEGY : TO CHOOSE THE BEST ONE

Let’s Enlighten Us With These Strategy

• Buy 2 products of a brand and get 3rd product for free of the same brand. Purchasing cost will include summation of max of two among three selected.

Scheme

• 300% of pre promotion sale.Estimated

Sale

• Less competitor has the technology to imitate the model because of dearth of required technology.

Competitive Advantage

• A product sample is given along with a regular purchase. Since sample size of product is packed with the regular sample so no extra cost of manufacturing addition samples.

Scheme

• 170% of pre promotion sales.Estimated Sale

• Competitor can easily imitate this model so no advantage as such.

Competitive Advantage

• Get a 50p off coupon and redeem it during your first store visit.

Scheme

• 150% of pre promotion sales.Estimated Sale

• No advantage, competitor can easily imitate this model.

Competitive Advantage

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.

A good strategist tell both upsides and downsides of its proposed strategy. So let’s see the downsides.

DOWNSIDE OF ABOVE STRATEGY:-

Since the strategy involves offering one bottle for free on purchase of 2, so it could cost company a little more but, and this is a big BUT, its benefits are multiple : from increasing sales to brand awareness to brand equity and above all since there is no extra cost and company has well planned manufacturing unit so it can further decrease its cost thus will be profitable overall for both present and future time.

Now after proving that “3 for 2” strategy is best,

to finish of the case analysis before getting through the final step.

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.

SO,

“3 for 2” strategy is best suited for Boots hair-care product line in order to effectively target UKs customers.

DISCLAIMER

Created By Vishal Nagarkoti, IIT Patna, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow