Boots: hair care sales promotion
case study
Pradnya Shah 140103123
Type Private limited company
Industry PharmaceuticalsHealthcareBeauty
Founded 1849, Nottingham, United Kingdom by John Boot
Sector Retail and Lifestyle
Headquarters Nottingham, United Kingdom
Area served United Kingdom, Republic of Ireland
Key people Simon Roberts, managing director, Boots UK and Ireland
Brands No. 7 and Seventeen – MakeupSoltan – Sun creamAlmus – Generic drugs
Target Group Upper middle class and middle class, focus on women.
What’s our AIM????
COMPETITIORS HAIR CARE SALES
BRAND EQUITY CUSTOMERS
DAVE ROBINSON
3 for 2ADVANTAGES DISADVANTAGES
Consumer would get 3 items for a regular price buy of 2.
Would be perceived as a Stock clearing strategy
Consumers could combine any 3 items as they like e.g. shampoo, conditioner and styling gel of same brand
Premium products would lose their brand equity and may sound as some cheap promotion
Most competitors did not have the technology at the point of sale to imitate this promotion
Product partners (Hair dressers) may oppose this strategy for the dilution of their brand equity
Estimation was that sales would increase to 300 %60% customers – promotional buyers
Receive a gift with purchase (GWP)
ADVANTAGES DISADVANTAGES
Product sample would be given free along with a regular purchase
Adding the sample would cost approx. 90p per unit for the product plus 3p per unit extra to secure the sample to the featured product
Estimated sales would increase by 170% of the pre-promotional sales
This is a very common strategy used by most of the retailers and can be easily imitated
40% of the customers would be just promotional buyers.
ON PACK COUPON WORTH 50 %
Advantages DisadvantagesCustomers would be able to redeem their coupons during their current store visit
This is a very common strategy used by most of the retailers and can be easily imitated
Estimated sales would increase by 150% of the pre-promotional sales
Form of discounting which can dilute the brand equity
50% of the customers would be just promotional buyers
More of a conservative approach
Coupons would enable multiple visits for a single customer
Less estimated sales growth as per the market research
Alternatives 3 For 2 GWP On Pack CouponAll calculations are done for 1 day
Cost per bottle (Pounds) 1.4 1.4 1.4Estimated Sales for 1 Day 300 Units 170 Units 150 UnitsPromoitonal Cost per Unit
Production cost
Production cost + Sample cost
Production cost + Discount cost
Promoitonal Cost per Unit (Pounds) 1.4 2.33 1.9Total Cost (Pounds) 420 396.1 285Total Revenue (Pounds) 600 340 300Net Profit (Pounds) 180 -56.1 15
A Bit Of Math…
A model is to increase sales by focusing on low brand hair care products which would increase sales of the company at the same time maintaining and enhancing the professional hair care brands.
QUESTIONS1. Which promotion strategy to incorporate keeping in
brand and cost in mind?
2. How to effectively differentiate the promotion strategy from other major brands?
SITUATION
HYPOTHESIS :
I believe the best promotion strategy would be “Get 3 for price of 2”.
REASONS & PROOFS :Reason 1: It fulfills Boots primary objective of increasing sales with lower value brands and to drive sales volume without compromising on brand equity.
Reason 2: With this strategy there will be no increase in cost, nothing from packaging to manufacturing new samples as gifts.
Reason 3: Not only is Boots making a good sales of 300%, but also capturing a steady market share. Also, 60 percent of these sales are to customers who would have not purchased them without the promotional deal.
Reason 4: Other strategies like GWP have huge over head costs. 93% of product price would be spent in offering sample product as gift along with the purchase. Thus a possibility of dilution.
Reason 5: The 50% off strategy , on the second product ,is good in a sense that it makes consumer buy two product instead of one. Thus, a customer buys 2 products at a cost 1.5 of 1 product. But it is very common in market so wouldn’t differentiate the strategy.
But every coin has two sides..Although the strategy involves increase in cost , its benefits are many. Above all of which there is no extra cost for packaging .Thus it increasing sales could compensate the cost per unit in the long run.
SO I GUESS
WINS THE RACE…
Sindhuja NanduriBITS Pilani, Hyderabad Campus
DISCLAMAIR
This online presentation (the “Presentation”) is provided on a strictly private and confidential basis for information purposes only. This Presentation does not constitute or form part of, and should not be construed as, an offer, invitation or inducement to purchase or subscribe for securities nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. This Presentation does not constitute either advice or a recommendation regarding any securities.
Top Related