Boots: Hair Care Sales Promotion : Case Study

BOOTSHAIR CARE

SALES PROMOTIONCase Study

Who is the

Protagonist?

Dave Robinson

Early Days ......

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..POST WAR

REGENERATION

Modern Era

UKHAIR

MARKET

BOOTS: BACKGROUND OF THE COMPANY

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Modern Era

POST WAR REGENERATION

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..

UKHAIR

MARKET

In 1877 , Jesse Boots took over his father’s shop and

established it as a private company in 1883 under the

name “Boot & Company Ltd.” Started in Nottingham the company opened its first

outside store in Sheffield in 1884

Early Days ......

Modern Era......

..

UKHAIR

MARKET

New Developments took place in the period of 1945-1968. A

program of Factory Development began following

the war , majority of which was completed by 1953. This included printing works, new

power house and pharmaceutical research

building

Early Days ...... POST WAR REGENERATION

......

..

UKHAIR

MARKET

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. Boots Opticians was formed in 1987. ‘Boots

for Men’ stores and ‘Internet Services’ were introduced in

1999

Early Days ......

Modern Era

POST WAR REGENERATION

......

..

In 2000, over 60 major brands of hair care products were available in

the U.K. market. None of these brands had more than a nine per cent market share. Boots saw an

opportunity to be the retail hair-care expert .Additionally, Boots desired

to build a new market by using celebrity endorsements to create

awareness

situation Analysis

Boots is already one of the best-known and respected

retail names in the UK providing health and beauty

products

situation Analysis

Boots is already one of the best-known and respected

retail names in the UK providing health and beauty

products Dave Robinson is planning his sales promotion strategy for hair care products at Boots

Primary Objective to drive sales volume and trade up consumers from lower-value brands

situation Analysis

Boots is already one of the best-known and respected

retail names in the UK providing health and beauty

products Dave Robinson is planning his sales promotion strategy for hair care products at Boots

Has to select one of the following promotion strategies

• Get 3 for the price of two

• Gift with every purchase

• On-pack coupon worth 50p

situation Analysis

Boots is already one of the best-known and respected

retail names in the UK providing health and beauty

products Dave Robinson is planning his sales promotion strategy for hair care products at Boots

Has to select one of the following promotion strategies

• Get 3 for the price of two

• Gift with every purchase

• On-pack coupon worth 50p

Primary Objective to drive sales volume and trade up consumers from lower-value brands

Who are its major

Competitors?

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Procter & Gamble’s Pantene Pro-v is the best selling hair

care brand in the world. Apart from Pantene

Procter & Gamble offered other complete ranges of hair-care brands including Clairol,

Head & Shoulders, Daily Defence, PERT plus, and Herbal

Essences.

.....

.....

Alberto Culver has grown into a multibillion-dollar company. The

company’s products are sold globally. Alberto-Culver’s

acquisition of Sally Beauty Company has grown to over

2,000 store locations today in United States, United Kingdom,

Canada, Germany and Japan

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L’OREAL started exporting its products as early as 1912 when

they could be found in Italy, Austria and Holland. A few years later, via agents and consignments, they were distributed in the United

States, South America, Russia and the Far East. Today the group is present worldwide through its subsidiaries and

agents.

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Most major retailers are the competitors which carry variety of professional hair-care brands.

The major competitors in the supermarket segment are Tesco,

Sainsbury’s .Tesco was the largest supermarket chain in the United Kingdom with more than 1,800 stores ,Sainbury’s was the second largest with 700 stores.

What is the Problem statement

in the Case?

Selecting the best Sales promotion

Strategy from the given 3 alternatives

Buy 3 for the price of 2

Coupons with every pack

Gift on very purchase

AnalysisSelling price of Each bottle = £ 3.99 ≈ £ 4

40%of 4 = £ 1.6Thus, cost to retailer= £(4-1.6)= £2.4

Cost to Manufacturer:

10% *x+x=2.4X= £2.18

Thus, cost of manufacturing each bottle (250)ml is £2.18

3 For 2

Sales increased to 300%Thus, if 100 bottles were sold now 300 will be sold and

200 bottles will be paid ones. Thus, total earning= 200* £4= £800

Total cost incurred in manufacturing= £2.18*300= £654

Thus, Profit on 300 bottles= £(800-654)= £146Since 60% consumers are new

Approximate Increase in profit due to promotion =60% of 146= £87.6

Thus, increase in profit per bottle= £87.6/300= £0.292

Gift with every packSales increased to 170%

Thus if 100 bottles were sold now 170 bottles will be sold

Additional cost for each pack : 93pThus total sale : £170*4= £680

Cost Incurred = £(170*(.93+2.18)= £528.7Thus, Profit= £(680-528.5)=151.3

Thus, profit per bottle= £151.3/170= £0.89Since 40% customers are new

Extra profit per bottle due to promotion = £0.89 *40%= £0.365

CouponSales increased to 150%

Thus if 100 bottles were sold now 150 bottles will be sold

Additional cost for each pack : 50pThus total sale : £150*4= £600

Cost Incurred = £(150*(.5+2.18)= £402Thus, Profit= £(600-402)=£198

Thus, profit per bottle= £198/150= £1.32Since 50% customers are new

Extra profit per bottle due to promotion = £1.32 *50%= £0.66

Best promotional Strategy?The Coupon sales activity generates maximum profit. However the primary objective as stated is to drive up volume sales and trade

up consumers from lower value Brands. There would be 60% new consumers in case the first strategy is chosen and it would result in 300% increase in sales. Since the

difference in profits is not vast the company can always make up profit by increasing its volume sale. Further, the advantages are

that competitors cannot imitate the strategy . Thus, as a long term strategy it should adopt the strategy of

“ 3 For 2”.

Summary

COMPANY BACKGROUND

SITUATION ANALYISIS

MAJOR COMPETITORS

ANALYSIS OF BEST

PROMOTIONAL ACTIVITY

DISCLAIMER

Created By Ananta Chhajer, Jadavpur University during a Marketing

Internship under Prof. Sameer Mathur, IIM Lucknow