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FEEL GOOD
OBJECTIVE OF THE CASE
What is the case about?
SALES PROMOTION STRATEGY
Plan sales promotion strategy to - Increase Sales volume Trade-up consumers Maintain brand equity
WHAT IS BOOTS?
BUT………….
One of the best-known retail names in the U.K., providing HEALTH & BEAUTY PRODUCTS
BOOTS’ EARLY
DAYS
1849 - Founded by John Boot.
1883 - Established as private company
“Boot and Company Limited” - Company Adopted
its first logo
MODERN ERA
1987 - Boots Opticians1999 - Boots For Men Stores - Internet Services
Kept Introducing New Services
ASSOCIATED HAIR-CARE CELEBRITIES AND BRANDS
Synonymous with style, innovation and success.
John Frieda’s “House ofExperts” fuels the company’s newproduct initiatives with the inside track on hot, new celebrity hairtrends.
A popular hairstylist to the stars from the film, television, fashion, and music industries.
Creates sexy, contemporary catwalk looks
to recreate catwalk glamor at home.
Wearable, catwalk-led hairstyles for people who
want easy-care, trend-setting hairstyles.
Showman of all hairdressers.His Pioneering techniques and cuts —the Wedge, the Chop, and the Scrunch are now part of everyday salon parlance.
Known for hairstyle and hair care.
COMPETITORS
MAJOR
Holds 8.4 % shares of U.K. hair care market
- Offers a variety of products.- Has globally acquired diverse firms.
- Worldwide presence - Over 500 brands and 2000 products in beauty business
sector.
Largest supermarket chain in the U.K. with more than 1,800 stores
400 stores providing quality products at the same low price across all of its U.K. stores.
- One of the largest health and beauty retailers. - Almost 700 stores in the U.K. - Wide assortment of around 10,000 products.
Consumers......
NOT Brand Loyal......
…..…WHY?
1. Changing brands produce better results.
2. Trends in buying behaviour led to changing preferences.
3. Too Many Choices
DECISION
THREE PROMOTIONAL
ALTERNATIVES
1.
2. GIFT WITH
PURCHASE
3.
ON-PACK COUPONS
ADVANTAGES
300% increase in pre-promotional sales.
60% customers = Promotional
buyers.
Competitive Advantage
DISADVANTAGES
Offer can only be implemented when the prices for 3 same branded items are same.
ADVANTAGES
GWP
170% increase in pre-promotional sales.
40% customers = Promotional buyers.
DISADVANTAGES
GWP
Adding the sample would cost 93p/unit more to company.
Competitors may use this strategy.
150% increase in pre-promotional sales.
50% customers = Promotional
buyers.
ON-PACK COUPONS
Most competitors tend to use price discounts as their promotional method.
ON-PACK COUPONS
COSTS AND
EXPENSES
Average bottle size = 250 mlAverage pre-promotional price = £3.99Industry average retail margin on premium brands = 40%Manufacturer’s typical margin = 0.10 = 10% (taking average for 8 -12 %)
Manufacturing cost per bottle
Cost to retailer = 60 % of selling price = 0.6 * 3.99 = £ 2.39Cost to company manufacturing the product = 2.39 / (1 + 0.10) = £ 2.17
SOME STATS
For one day,
- Increase in sales = 300% - Cost of each bottle = £ 2.17 - Cost to company = 2.17 * 300
= £ 651
- Selling price = 3.99 * 200 = £ 798
Profit in one day = 798 – 651 = £ 147
Profit on each bottle in one day = 147/ 300 = £ 0.49
GWP
For one day, - Increase in sales = 170% - Cost of each bottle = 2.17 + 0.93 = £ 3.1 - Cost to company = 3.1 * 170 = £ 527
- Selling price = 3.99 * 170 = £ 678.3
GWP
Profit in one day = 678.3 - 527
= £ 151.3
Profit on each bottle in one day = 151.3/ 170 = £ 0.89
For one day,
- Increase in sales = 150% - Cost of each bottle = £ 2.17 - Cost to company = 2.17 * 150 = £ 325.5
- Selling price of each bottle = 3.99 – 0.5 = £ 3.49 - Selling price = 3.49 * 150 = £ 523.5OPC
Profit in one day = 523.5 – 325.5 = £ 198
Profit on each bottle in one day = 198/ 150 = £ 1.32
OPC
CATEGORY
CharlesWorthington
JohnFrieda
NickyClarke
UmbertoGiannini
Toni & Guy
TrevorSorbie
LeeStafford Pantene L'Oreal
Shampoo 1.95 1.95 1.6 1.6 1.75 2.0 1.6 0.5
Conditioner 2.5 2.1 1.8 1.8 2.0 2.0 1.6 0.5
Gel 3.30 2.43 3.33 1.86
Mousse 2.75 2.15 2.65 2.3 1.9 1.86 1.6
Hair-spray 2.7 3.9 5.15 3.0 2.75 2.5 1.51
Wax 10.0 7.5 10.0
Serum 10.1 13.5 12.0 20.3 16.85 7.0
Hair Brush 6.65 5.65 5.15
AVERAGE PRICE* COMPARISON TABLE (PER 100 ml OF PRODUCT)
*Prices are in £
From the table, it is evident that price range of 3 items of the same brand are NOT THE SAME – ranging from ~ £2 to ~ £10.
So, even though “3 for 2” offer will create a larger consumer base, it CAN NOT BE APPLIED for every brand.
Among the remaining 2 alternatives -
OPC will be MAXIMISING the profit but it WILL NOT be trading up the consumer’s much.
while
GWP is INCREASING the profit and also INCREASING the customer base APPRECIABLY.
SOLUTIONSo, the second alternative – GIFT WITH PURCHASE should be chosen as the promotional strategy.
SUMMARY
OBJECTIVE OF THE CASE
What is the case about?
DECISION
SOLUTION
THREE PROMOTIONAL ALTERNATIVES
So, the second alternative – GIFT WITH PURCHASE should be chosen as the promotional strategy.
DISCLAIMERCreated by Harshit Singh, IIT Madras, during a marketing management internship by Prof. Sameer Mathur, IIM Lucknow.
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