boots hair-care sales promotion
TRANSCRIPT
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BOOTS HAIR-CARE SALES PROMOTIONHarvard Business School Case
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What is
?
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Boots Group, one of the best known and respected retail names in the United Kingdom, provides health and beauty products and advice that enhances personal well-being
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PROBLEM STATEMENT
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To drive sales volumes and trade-up consumers from lower value brands while retaining or building brand equity.
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History of Boots…
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Early Days• John Boot, born in 1815, spent his early life as an agricultural labourer on local farms,
where herbal remedies were popular with the labouring poor
• In 1849,Boot opened ‘The British and American Botanic Establishment’ in Nottingham, hoping to provide physical comfort to the needy as well as a reasonable living for his family
• His son Jesse took sole control of the shop in 1877, and, in 1883, established it as a private company ‘Boot and Company Limited,’ with himself as chairman and managing director
• He was determined to cut prices and asked customers to pay cash rather than offering them credit
• Also, the company adopted its own logo
• Jesse wanted the company to be fully self-contained so that he could control not only prices but also quality
• He wanted to be the ‘Largest, Best and Cheapest’ and, by 1913, sales in the 560 Boots stores across the United Kingdom amounted to over £2.5 million a year
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Post-War Regeneration and New Development, 1945-1968
• A program of factory development in Nottingham was begun following the war, the major part being completed by 1953.
• This included a new power-house, printing works, and, in 1959, a new pharmaceutical research building.
• In 1949, a factory for the manufacture of cosmetics was opened at Airdrie in Scotland.
• The company adopted a new black and white logo
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Present Situation
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The Modern Era• Boots continued to develop product ranges, many of which became
household names. ‘17’ cosmetics, aimed at the teenage market, was launched in 1968.
• In 1969, the analgesic Ibuprofen was introduced and was launched as the OTC brand, Nurofen, in 1983.
• Boots Opticians, formed in 1987, became one of the United Kingdom’s leading chain of opticians.
• Dentistry, chiropody, ‘Boots for Men’ stores and ‘Internet Services’ were introduced in 1999.
• International expansion in operations was conducted by Boots Healthcare International (formed in 1991), which exported healthcare products to more than 130 countries round the world.
• Boots Health and Beauty stores were established in Ireland, Thailand and Taiwan.
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THE
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A sales promotion strategy for aline of professional hair care products,developed in collaboration withUnited Kingdom's top celebrity hairdressers.
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Competitors/Retailers inHair-Care Products
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Tesco(1800 stores, 45000 employees)Sainsbury`s(700 stores)
Superdrug(700 stores)Morrisons(400 stores)
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•Consumers
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Shiny Hairshampoo
`90`s
Detanglingproperty
`80`s
Gentle shampoo
`70`s
Consumer Preference Trend
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Major Competitors for Boots
•P&G
•Alberto Culver
•L`oreal
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What type of sales promotion strategy should Boots apply
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The Alternatives
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3 for 2PROS• Customer would get 3 products for the price of 2.
• Estimated sales would increase to 300%
• Promotional buyers would rise to 60%
• Consumers could combine any three products of their choice, for e.g.
shampoo, conditioner, styling gel of the same brand.
• Most competitors did not have that kind of technology to imitate this
promotion
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• It would be thought of as a stock clearing strategy
• Premium products would end up losing their brand equity
• Cheap promotion strategy
• Product partners might go against this strategy as this would hurt
their brand equity
CONS
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On Pack Coupon worth 50p
PROS
• Customers can redeem their coupons during their store visit
• Estimated sales would increase to 150% of its pre-promotional sales
• 50% of the customers will be promotional buyers
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• A very common strategy and can be imitated
• It’s a form of discounting that will dilute the brand
equity
• Less estimated sales growth than expected
CONS
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GWP(Gift With Purchase)
PROS
• Product sample would be given free along with a regular
purchase
• Approximately 40% of the customers will be promotional buyers
• Estimated sales would increase to 170%
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• This is a very common strategy used by most of the retailers
and can be easily imitated.
• Adding the sample would cost approx. 90p per unit for the
product + 3p per unit extra to secure the sample to the featured
product
CONS
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After Effects
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Consequences
Short TermCost Sales
Long TermBrands
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AIM: To secure market leadership in the United Kingdom in the hair-caresegment.
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Contacts and connections withprestigious salon brands in U.K.
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3 FOR 2 On-pack coupon
GWP
Price of bottle $3 per bottle $3 per bottle $3 per bottle
Units Sold 300 150 170
Cost Areas Production Production+ Discount
Production+ Sample
Promotional Cost
$3 $4.07 $5.03
Total Cost $900 $610 $855
Total Revenue $600 $450 $510
Money Invested $300 $160 $345
QUALITATIVE ANALYSIS
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According to calculations,the best choice is the on-pack coupon promotion strategy as it seems the most cost effective
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