Boots : Hair-Care Sales Pomotion

1. BOOTS: HAIRCARE SALES
PROMOTION

2. WHAT IS BOOTS?
One of the best known and respected providers
of health and beauty products and advice that
enhanced personal wellbeing.
Besides retailing, it had international sales and
marketing operations and also developed and
manufactured it’s own products.

3. THE MODERN ERA TIMELINE
1883
Jesse(John Boot’s son) took control
and established ‘Boot and Company
Limited’

4. THE MODERN ERA TIMELINE
1968 1969 1983 1987 1991

5. THE UK HAIR-CARE MARKET

6. THE PROFESSIONAL HAIR CARE BRANDS
Brand Awareness
Medium
Brand Awareness
Low
Brand Awareness
Strong

7. THE PROFESSIONAL HAIR CARE BRANDS
Brand Awareness
Medium
Brand Awareness
Medium

8. THE PROFESSIONAL HAIR CARE BRANDS
Brand Awareness
Strong
Brand Awareness
Low

9. THE MASS MARKET HAIR CARE BRANDS
By 1995, Pantene became the
best-selling hair-care brand in the
world. It had 8.4% share in UK
market in 2001.
Other P&G brands include Clairol,
Head & Shoulders, Daily Defense,
PERT and Herbal Essences
Over 60 years, beginning in 1955,Alberto
Culver has grown into a multibillion dollar
company with over 2000 stores over the
world
Some of its top brands include:
St. Ives,VO5, Consort, FDS etc.
The group markets over 500
brands and more than 2000
products in all sectors of beauty
segment.
It held 5% share of UK hair-care
market in 2001.

10. HAIR CARE PRODUCT RETAILERS
Largest supermarket chain in
UK with more than 1800
stores and 45000 employees
Sainbury’s was the second largest
with 700 stores.
Morrisons had 400 stores and
prided itself on providing quality
products at the same low price
across all of its U.K stores.

11. HAIR CARE PRODUCT RETAILERS
One of the largest health and beauty
retailers, with almost 700 stores in UK.
It is a value retailer with a wide assortment
of around 10,000 products.
Boots had the largest market share in UK
health and beauty industry in 2004 with
over 1300 stores across UK.
It employed around 75,000 people and
operated in some 130 countries in 2004.

12. THE CONSUMER

13. WHO ARE THE MAJOR BUYERS?
Research indicated that over 85% of
female adults in the United Kingdom
visited a Boots store within the past
week.
Consumers who purchased professional
brands were largely fashion-conscious
women in the 20-35 age category.
Most Boots customers bought both
basic and premium brands

14. LOW BRAND LOYALTY!! WHY?
There was a general belief by UK
consumers that changing shampoo brands
produced better results than continually
using a single brand.
Trends in buying behaviour led
to changing preferences.
It was difficult for consumers to
identify meaningful differences
between the various brands.
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15. SITUATION ANALYSIS

16. THE PROTAGONIST
Dave
Robinson
He is planning his sales promotion
strategy for a line of professional hair-
care products at Boots.
His primary objective is to drive sales
volumes and trade-up consumers from
lower value brands, while retaining or
building brand equity.

17. THE DECISION
Current Boots consumers and existing purchasers of mass-market brands were the primary target for the promotion.
The following alternatives were being considered:
“3 for 2”
Consumers can buy two items
at regular price and receive
one free(cheapest one).
They can combine any 3 items
they liked but they had to be
the same brand.
GWP (Gift with Purchase)
Consumers were given a
product sample along with a
regular purchase.
An existing sample product
would be used to avoid the
need to design and produce
additional packaging.
On-Pack Coupon(50p off)
This option was a more
conservative approach to
promoting the brands.
All customers would be able to
redeem the coupon during
their current store visit.

18. THE AIM
Secure market
leadership in UK
in hair care
segment
Ensure that
promotions
were profitable
Maintaining and
enhancing the
professional hair-
care brands

19. HYPOTHESIS

20. PROOF AND ACTION

21. A LITTLE MATH NEVER HURTS
Professional Hair-Care Brands 3 for 2 GWP 50p off
Average pre-promotional price 3.99 3.99 3.99
Average industry retail margin 40% 40% 40%
Average manufacturer margin 10% 10% 10%
Cost to retailer 2.394 2.394 2.394
Cost to Boots 2.176 3.106 2.176
Sales 300 170 150
Net Cost 652.9 528 326.5
Selling Price 798 678.3 523.5
Profit 145 150 197

22. A LITTLE MATH NEVER HURTS
Mass-Market Hair Care Brands 3 for 2 GWP 50p off
Average pre-promotional price 2 2 2
Average industry retail margin 25% 25% 25%
Average manufacturer margin 10% 10% 10%
Cost to Boots 1.5 2.43 1.5
Sales 300 170 150
Net Cost 450 413.1 225
Selling Price 400 340 225
Profit -50 -73.1 0

23. “3 FOR 2” OR 50P OFF

24. WHY “3 FOR 2” ?
Our primary objective was to drive sales
volume and trade-up consumers from lower
brand value brands
This option ensures the maximum increase
in sales, 3 times the earlier sales.
This option brings more customers(60%) who
would not have purchased these products
otherwise than the other two alternatives.
This option also increases consumption per
household.Thus the brands get more
visibility and their brand awareness increases.
Other competitors do not have the point of
sales technology to bundle products of
different prices

25. THE DOWNSIDES
This option provides less profit than that by 50p off coupon.
Some customers might only want to buy a single product and after looking at
the promotion, they might feel that the single product is not worth it’s marked
price.Thus diluting brand equity
Mass-Market products are being sold at a loss.

26. ALTERNATIVES

27. GIFT WITH PURCHASE
• The strategy can be easily imitated.
• It is not the best in either increasing sales or
increasing profit.
• Dilutes brand equity
• Increase of sales by 170%
• Gives the consumer, the benefit of
choosing different brands for different
products

28. 50P OFF
• It produces the maximum profit
when compared to other two
options
• Gives the consumer, the benefit of
choosing different brands for
different products
• The strategy can easily be imitated
• Lowest sales growth when compared to
other options
• Dilutes brand equity

30. DISCLAIMER
Created by:
Vibhor Kumar
During an internship with:
Prof. Sameer Mathur, IIM Lucknow