Boots is a major UK retailer that sells health and beauty products. It wants to increase market share in the hair care segment. Three promotional strategies are considered: buy 3 products for the price of 2 ("3 for 2"), receive a gift with purchase (GWP), or receive a 50p coupon. Quantitative analysis shows "3 for 2" generates the highest net profit of £478.80 for premium brands and £150 for mass market brands, making it the best strategy.

1. BOOTS HAIR CARE SALES
PROMOTION
Richard Ivey School Of Business Case

2. Products and services offered by BOOTS
Boots, one of the best-known and respected retail names in the United Kingdom,
provided health and beauty products.
Boots had international sales and marketing operations and also developed and
Manufactured its own products.
Insurance services and initiatives in dentistry, chiropody, ‘Boots for Men’ stores and
‘Internet Services’ were introduced in 1999.

3. Competition
Retail
Competitors
Tesco Sainsbury
Mass Market
Competitors
ALBERTO-
CULVER
Haircare
competitors
Morrison Superdrug
Procter &
Gamble
L’ORÉAL

4. AIM
To secure market Leadership in U.K in hair-care segment

5. Objective
Drive sales Volumes and trade-up consumers from lower value brands,
while retaining or building brand equity

6. Target
Current Boot consumers and existing purchasers of Mass-market brands.

7. Alternatives for the Promotion strategy
1) Get three for the price of two(3 for 2)
2) Receive a Gift with Purchase(GWP)
3) On pack coupon worth 50p

8. 1) Customers get 3 products
for the price of 2.
2) Revenue is estimated to
increase to 300%.
3)Increase in customer base
as 60% of the revenues were
expected from customers who
wouldn’t have bought without
the offer.
4)Most competitors did not
have the technology at point
of sale to imitate this
promotion.
1)Premium products would lose
their brand equity and may
sound as some cheap
promotion.
2)Would be perceived as a Stock
clearing strategy
3)Product partners (Hair
dressers) may oppose this
strategy for the dilution of their
brand equity
Advantages
Disadvantages
3 for 2

9. 1)customers were given a
product sample along with a
regular purchase.
2)Revenues were expected
to grow to 170% of Pre-
promotional sales.
3)40% of sales would be to
Boots shoppers that would
not have otherwise
purchased without the offer.
1)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.
2)This is a very common
strategy used by most of the
retailers and can be easily
imitated.
Advantages
Disadvantages
Receive a Gift with Purchase(GWP)

10. 1)customers would be able to
redeem the coupon during their
current store visit.
2)Estimated that the sales would
increase to 150% of non-
promotion sales.
3)50% of sales would come from
Boots customers who would not
have otherwise purchased
without offer.
4)Coupons would enable
multiple visits for a single
customer.
1)This is a very common
strategy used by most of the
retailers and can be easily
imitated.
2)It decreases the brand image
in customers mind.
3)More of a conservative
approach.
Advantages
Disadvantages
On pack coupon worth 50p

11. Quantitative Analysis

12. Data used for the Analysis
1) Average Price of the Premium brands is 3.99£.
2)Premium brands margin is 40%
3)Average price of the Mass-Market is 2£.
4)Margin on Mass-Market Margin is 25%.
Therefore, Cost of Premium brands are 3.99*0.6=2.394 pounds and cost of Mass-market
brands are 2*0.75=1.5 pounds.
Cost of GWP Promotion is 90p per unit for the product plus 3p per unit extra to secure
the sample =93p=0.93 pounds and Cost of On pack promotion is 50p =0.5£
1£=100p

13. Alternatives 3 for 2 GWP On pack coupon
All calculations are done for single day
Revenue per unit 3.99 3.99 3.99
Production cost per unit 2.394 2.394 2.394
Promotional cost per unit 0 Sample cost Discount cost
Promotional cost per unit
(in Pounds)
0 0.93 0.5
Total cost per unit 2.394 3.324 2.894
No.of units sold 300 170 150
Total revenue 1197 678.3 598.5
Total cost 718.2 565.08 434.1
Net Profit 478.8 113.22 164.4
Analysis for Premium brands

14. Alternatives 3 for 2 GWP On pack coupon
All calculations are done for single day
Revenue per unit 2 2 2
Production cost per unit 1.5 1.5 1.5
Promotional cost per unit 0 Sample cost Discount cost
Promotional cost per unit
(in Pounds)
0 0.93 0.5
Total cost per unit 1.5 2.43 2
No.of units sold 300 170 150
Total revenue 600 340 300
Total cost 450 413.1 300
Net Profit 150 -73.1 0
Analysis for Mass Market Goods

15. Conclusion
From the above Calculations ,it is clear that ‘3 for 2’
is the best strategy to proceed with.