the right choice at the right time || boots: hair care sales promotion

BOOTS: HAIR CARE SALES PROMOTION

The right choice at

the right time

Objectives of this

case study

How to choose the right strategy?What is the math/calculation

involved?Is the profit shown by math, the only

factor to select the right strategy?

THE PLAYER Dave RobinsonCategory & Operations Manager

John Boot & Jesse Boot Founders

Hair Care Sales Promotion

• Get 3 for price of 2• GWP – Gift with purchase• Include a coupon worth 50p

Alternatives available:

1

Challenge/Problem

What are the pros and cons of each of the alternatives available?

Which alternative should I choose?Why should I select that alternative?

2

Dave Robinson’s target

To select a sales promotion strategy, which will:• Drive sales volumes • Trade up consumers from lower-value brands

while retaining or building brand equity.

This strategy selected will have immediate effect on cost, sales and long term implications for brands involved.

3

ABOUT BOOTS4

Boots company

• Jesse Boot established Boots in 1883 • Provides health and beauty products and

services. • Aim: To be the LARGEST, BEST and CHEAPEST

Boots Services

• Boots opticians• Boots for Men• Insurance services and initiatives in

Dentistry, Chiropody. • Beauty and Healthcare productsProducts are exported to more than 130 countries. Boots stores are established in Ireland, Thailand and Taiwan

Boots Marketing Strategy

To create brand awareness and an emotional attachment between consumer and the brand.

Use Celebrity endorsements:

Price per unit licensing fee for the use of celebrity‘s brand name.

Boots relation with Hairdressers

• The relationship with boots was lucrative for hairdressers.

• It gave them access to a large percentage of UK consumers through Boots 1300 stores.

Boots Products or Brands

Boots worked with celebrities to design formulations that were functionally better than existing brands.

• Charles Worthington Market awareness : Medium

Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Glosser, Serum, Gel, Putty, Wax,

Makeover kit Hair brush, Face wash, Face scrub Men’s Range: Shave foam, Shave Gel, After shave, Deodorant.

• John FriedaMarket awareness: Strong

Products: Styling Products: Shampoo, Conditioner, Spray, Mousse, Glosser, Hair cream,

Serum, Gel, Styling foam, Hair lotion

• Nicky ClarkeMarket awareness: Medium

Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse Hair dryer

• Umberto GianniniMarket awareness: Low

Products: Styling Products: Shampoo, Conditioner, Spray, Mousse, Jelly, Glosser, Hair cream,

Serum, Wax Hair powder, Hair color

• Toni & GuyMarket awareness: Strong

Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Hair cream, Serum,

Putty Hair brush, Hair comb, Hair rollers

• Trevor SorbieMarket awareness: Medium

Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Glosser, hair cream,

Serum, Gel Hair dryer, Hair brush, Hair comb, Barber’s clipper, Straightening iron, Heat rollers,

Face wash Men’s Range: Beard softener, Shave oil, Shave Gel, After shave, Shower Gel,

Deodorant, Eau de toilette, Hair wipe, Lip balm.

• Lee Stafford Market awareness: Low

Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Shaper, Mousse

Current Situation5

UK MarketCompetitorsBrand LoyaltyConsumer BehaviorBoots at present

UK Market

Sales of the brand was directly proportional to amount of advertising expenditure.

UK Market

60 major hair care products brands with none of them having more than 9% market share.

UK Market

Severe price competition => Volume would grow more quickly than value!

Competitors

• Procter & Gamble

Competitors

• Alberto-Culver

Competitors

• L’OREAL

Competitors in super market segment

Competitors in super market segment

Competitors in super market segment

Competitors in super market segment

Brand Loyalty

Consumers were not very brand loyal because of 3 reasons

• Belief that changing shampoo brands produced better results than continually using the same brand

• Changing preferences• It was difficult for customers to identify meaningful difference between

the various brands

Consumer Behavior

• Consumers who purchased professional brands were largely fashion conscious i.e. women belonging to 20 to 35 age

Consumer Behavior

• Other consumers bought basic products for daily use and premium products for special occasions.

Boots… at present

• Missed on maximizing profits because it had not been able to sufficiently link its name with its products

Boots… at present

• Target market: Current Boots consumers and existing purchasers of mass market brands.

Boots… at present

Marketing: • No media advertising budget • Highlighted in flyers

distributed by the store• Signage within the store to

promote offer

Selecting the offer

Decision making6

Selling price of the product is ₤4Average retail margin = 40%Retail Price = 2.4₤

Cost to manufacturer assuming 10% margin = 2.18₤

3 for 2

This would enable buyers to buy 3 products at the price of 2 products.

Estimated Sales increase: 300%

Manufacturing cost for 300 products = 300 x ₤ 2.81 = ₤ 654.54

Income for 300 products = income of 200 products because of this offer = 200 x ₤ 4 = ₤ 800

Total Profit = ₤ 154.46 Profit per bottle = ₤ 0.485

GWP (Gift with purchase)

A product sample will be given along with a regular purchase

Estimated sales increase = 170%

Manufacturing cost for 170 products = 170 x ₤ 2.81 = ₤ 370.6Overall cost for 170 products including packing cost of 93p per unit = ₤ 528.7

Income for 170 products = 170 x ₤ 4 = ₤ 680

Total Profit = ₤ 151.3 Profit per bottle = ₤ 0.89

On pack coupon (50p Off)

50p Off option for customers. They would be able to redeem during current store visit.

Estimated sales increase = 150%

Manufacturing cost for 150 products = 150 x ₤ 2.81 = ₤ 327

Income for 150 products = 150 x ₤ 4 = ₤ 600

Total Profit = ₤ 273 Profit per bottle = ₤ 1.82

Selection strategy

• Maximum sales is from 3 for 2 strategy

• Maximum profits are from 50p off strategy

To select a sales promotion strategy, which will:• Drive sales volumes • Trade up consumers from lower-value brands

while retaining or building brand equity.

Recall Dave Robinson’s target? To increase sales and customer base

So profit is not the criteria to select the right strategy..!

X

3 for 2 is the right strategy

SummarySUMMARY