Boots: Hair Care Sales Presentation

HAIR CARE SALES PROMOTION

ACASESTUDY

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• Founded in 1849 by Mr. JohnBoot

• In Nottingham• Mary Boot -> 1860 to 1877

• Jesse Boot -> 1877

• Established in 1883

• Goodbrandimage• “LargestBestCheapest”• Sales>2.5Million(By1913)• 75,000+Employees(By

2004)• 130Countries(By2004)• Largevarietyofproducts• PopularbrandslikeStrepsils,

Nurofen,Clearsil etc

“TOSELECTAPROMOTIONSCHEMEFORBOOSTINGCHRISTMASSALES”

THREESCHEMES:

• Get“3for2”

• GiftWithPurchase(GWP)

• OnPackCoupon

LET’SNOTFORGET!

MARKETRESEARCH!!!

GoodsCompetitors:• Pantene(Proctor&Gamble)• L’oreal• AlbertoCulver

RetailCompetitors:• TESCO• Sainsbury• Morrisons• Superdrug

COMPARINGCOMPETITORPRICING

(Source:HarvardCaseStudy:BOOTSHAIRCARESALESPROMOTION)

WHATNEXT?

ANALYZINGPROMOTIONOPTIONS

3FOR2:• Select3items,getthecheapestone

free• Increaseinsales:300%ofPre

promotion• 60%purchasefromcustomerswho

wouldnotpurchaseregularly.

• Disadvantage:Couldmakethebrandlookcheap,andcoulddilutebrandequity

GIFTWITHPURCHASE:• Attachingsamplesizeofotherproduct

fromsamebrand• Increaseinsales:170%ofPre

promotion• 40%purchasefromcustomerswho

wouldnotpurchaseregularly.

• Disadvantage:Additionalcostforsample

ONPACKCOUPON:• Givingasmallcouponworth50p

redeemableduringtheircurrentstorevisit

• Increaseinsales:150%ofPrepromotion

• 50%purchasefromcustomerswhowouldnotpurchaseregularly.

• Disadvantage:Conservativeapproach,andbrandswouldbeusingthisorGWPastheirmajorpurchase.

COSTvsPROFIT(ForEachoftheSchemes)

BASICANALYSIS:• PrePromotionalPrice(PPP):£3.99(Assume£4)• RetailMargin:40%

• ActualcosttoManufacturer:60%ofPPP:£2.4

• Manufacturer’sMargin:8%-12%(Assume10%)

• ActualProductionCost(x)• EquationfromData:(10%ofx)+x=£2.4

• Productioncost(x):£2.1818

Analysing“3for2”:• Boostinsales:300%(IncludingfreeItem)• CostPriceofallItems:300x2.18(No.XManufacturingCost)

£654• SellingPriceofallItems:200x4(£800)• ProfitGenerated:SellingPrice(SP)– CostPrice(CP)

:£800- £654:£146

• ProfitPerBottle:Profit/NoOfBottles:£146/300:£0.48666

Analysing“GiftWithPurchase”:• Boostinsales:170%(IncludingfreeItem)• CostPriceofallItems:170x(2.18+0.90+0.03)

£528.7(Costofmanufacturingandcostofattachingsample)

• SellingPriceofallItems:170x4(£680)• ProfitGenerated:SellingPrice(SP)– CostPrice(CP)

:£680- £528.7:£151.3

• ProfitPerBottle:Profit/NoOfBottles:£151.3/170:£0.89

Analysing“OnPackCoupon”:• Boostinsales:150%(IncludingfreeItem)• CostPriceofallItems:150x(2.18)

£327• SellingPriceofallItems:150x(4- 0.5)(£525)

(0.5reductiononSellingpriceforcouponcompensation)

• ProfitGenerated:SellingPrice(SP)– CostPrice(CP):£525- £327:£198

• ProfitPerBottle:Profit/NoOfBottles:£198/150:£1.32

Inferences:

• MaximumProfit/Bottle:“OnPackCoupon”(£1.32)

• MaximumNoofBottlesSold:“3for2”(300(200sold))

• MaximumNoofNewCustomers:“3for2”(60%)

BeforeWeDrawa

What

WASour

ACTUALGOAL?

MAJORGOALS:

1. SecureMarketLeadership

2. EnsurePromotionsarePROFITABLE

3. MaintainProfessionalHairCareBrandValue

Also,

DON’TFORGET

KEYPARAMETER:

(LowLevelsofStockpiling)

SO,

WINDINGUPOurPresentation,

BESTSOLUTION:“3for2”• Sincethecompany’smaingoalwastodrivesalesandgain

marketleadership• Itmaximizedtheamountofnonregularcustomerspurchase

(By60%)• Stockswouldgetoversoonaswell,aseachcustomerwould

buy3products,wherehe/shewouldusuallybuyone.• Thefactthatthewholesystemoflowestitemfreecouldnot

beimitatedbyothercustomerswasahugebonus• Thissolutionmaximizesbrandequityaswell,asitisdriving

moresalesaswell.

BUTREMEMBER:THEREISNOTHINGABSOLUTELYRIGHTINMARKETING

ALTERNATIVESOLUTION:“OnPackCoupon”• Onpackcouponhasaperfectmixofthetwogoalswewant• Itmaximizesprofit(Actually,Thebestoptionofthethree)• Increasesthepercentageofnonregularcustomers(By50%)

(Whichisbasicallythesecondbestoption)• DoesnotdiluteBrandImage,asthesamepromotionismost

likelybeingofferedbyotherbrandsaswell• IncaseofBOOTSproductsbeingofferedinothershops,the

schemecouldalsobeappliedthere(Unlikethe“3for2”option)

• Comparingthistothe“3for2”offer,thisisaconservativeapproach.

TheseslideswerecreatedbyRishab DevBhaskar,undertheguidanceofProf.SameerMathur,IIMLucknowasapartofaninternship.