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The sticky Sales Promotion Strategy
By Akhil SuleBITS Pilani Goa
What is Boots ?
Best known and respected brand in UK for making beauty and health
products
These are the products that Boots makes
Started by John Boot in 1849 in Nottingham
Jesse Boot, son of John Boot established it as “Boot and Company Limited” in 1883
The Expansion
New store in Sheffiel
d in 1884
Cosmetic manufact
uring factory
opened in Scotland in 1949
New powerhouse and printing
works in 1953
New pharmace
utical research
building in 1959
These are the globally differentiated brands that Boots owned
They have also expanded in areas like
Boots for men
Boots internet services
Now in Boots we have somewhat of a
This guy is Dave Robinson. He is the one who decides what sales promotion strategies to implement
He has options
Of which he has to chose
With the aim of securing the position of
And
And
Lets take a look at the hair care market in UK.
UK market was dominated by brands like
In 2000 there were more than 60 brands with none more than 9 percent market share
But Boots saw the opportunity to be retail hair care expert and entered the market with celebrity hairdresser endorsed products
Hairdressers got access to customers through 1300 Boots stores
Yet Boots had a lot of
Procter and Gamble
100+ products 8.4 percent market share
Alberto Culver
2000+ store locations
Hair care, skin care, home care
L'Oréal
500+ brands 2000+ products
Superdrug
700 stores 10,000 products
The major retailors in market are
1800+ stores
700 stores
400 stores
Consumers
• Mostly women aged 20 -35
• Not very brand loyal
• Choice depends upon brand name, but also
packaging, advertising, price,
ingredients, consistency and
fragrance
Now for the situation we have, there arise two questions
Which strategy is best to increase volume of sales ?How will the brand equity be maintained or increased?
Evaluating the options
3 for 2
• Advantages1. Customers can buy any 3 items with the least expensive
item free2. Most competitors didn’t have technology to imitate this offer3. Sales estimation during the promotional period was 300
percent.4. 60 percent of the sales would come from new customers
3 for 2• Disadvantages
1. This strategy totally looks like a stock clearing strategy which might repel some customers.
2. The company will have to bear the cost of the free product3. Premium products may lose their brand value
Gift with purchase• Advantages
1. Customers will get a product sample with a purchase2. Estimated sales during promotion will be 170 percent of the
pre promotion sales3. 40 percent of the sales would come from new customers
Gift with purchase• Disadvantages
1. The additional cost of the gift will be bared by the company2. Competitors can imitate the strategy
50p coupon• Advantages
1. Customers would be able to redeem the coupon during their current store visit
2. Robinson estimated that sales would increase to 150 per cent of non-promotion sales
3. 50 percent of sales would come from new customers
50p coupon• Disadvantages
1. This is a very common strategy2. It might result in decrease in brand equity3. Least sales from this option4. Very conservative approach
Lets look at it quantitatively • For “3 for 2”:• Lets consider average promotional price of 3.99 pounds• Without promotion revenue per day is 399 pounds• Estimated sale for a day is 300 bottles which gives revenue of 1197
pounds minus cost of 100 free bottles which gives actual revenue 798pounds• Profit is 399 pounds
For gift with purchase• Without promotion revenue per day is 399 pounds• With this offer extra cost of 0.93 pound is incurred but 170 bottles are
sold• Therefore with new cost of 3.06 total revenue is 520.2• Profit is 121.2 pounds
For 50p coupon• Revenue of 100 bottles without promotion is 399 pounds• New cost of bottle becomes 3.49 and sales become 150• Therefore net revenue is 523.5 pounds• Profit is 124
Hence best strategy would be to chose the option “3 for 2”