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.