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