A Case Study on

Hair-Care Sales &

Promotion of

By- Sriram A R

Self-Medication

Industry

Pharmaceuticals Industry

Beauty

Fragrance

Mother & Baby

ToiletriesMen

Photography

Electricals

Opticians

Toys & Gifts

The Hair-Care Industry

Number of Competitors in the market

Maximum share in % per member

The market was thus, crowded with fierce competition.

Major Competitors1. Procter & Gamble

Other

s Others

8.4% market share

Major Products

Major Competitors2. Alberto Culver

2000+ Stores150+ stores in UK

Revolutionized advertising with 30-second ads.

Major Competitors3.L’OREAL

500+ Brands2000+

Products5% market

share

Pantene Pro V 8.4%Alberto Culver L’OREAL 5%Other Products of P&G (Head & Shoulders, etc)Others

Scenario with the Competition

The Retail Market

Mass Retailing

1800+ stores 700+ stores

400+ stores

Speciality Retailing700+ stores, 10000+ products25% of stores also contained a pharmacy

Pioneer in marketing; started trends such as the “Catwalk”

In this situation, Boots decided to make an entry into the hair care industry….

Given the cut-throat competition in the market it had to tick all boxes of marketing.

Product Concept

Selling Concept

Marketing Concept

Product Concept

Celebrity Endorsements1. Associations with celebrity hair-dressers.2. Mass Production of Celebrity Endorsed Products.3. In some cases, only retailing of such products.

Selling Concept1. Sale of the Products across the 1300+ Boots stores.3. During Promotional Period, it was extended to other retailers, with a separate strategically located space at the stores for its products.

Marketing Concept

Segmentation

Brand Equity

Brand Positioning

Pricing

Segmentation

Brand Equity

Brand Positioning

Pricing

Different products for different target markets such as men, women, childcare, etc. ; and also various sub-divisions within a given demography.Associations with celebrity hair-dressers.Celebrity Endorsed Prooducts.First of a kind, completely new ideaIdentifying as a brand that

gives unique expert hair care solutions at affordable prices.Unique, one of a kind expert advice

Separate Basic and Premium Products.Basic Products affordable for everyday usage and Premium for Special usage.

Marketing Concept

Results• Boots became an important member in the hair-care

market.• Sales soared.• Estimated that 85% of the women of the United

Kingdom visited Boots store in a week.• Mutually beneficial for both the celebrities as well as

Boots. WIN-WIN

Challenges• Though its products gained popularity, Boots as a

brand didn’t.• Constantly Changing Consumer Needs.• Very few notable differences between products of

different brands.• Cut-throat Competition.

The Decision

To choose between the 3 alternatives to devise a promotion strategy for a month starting December 1st.

Alternatives

“3 for 2” GWP On-Pack Coupon

Decision CriteriaFinancial:From the point of view of a marketer, the minimum criteria for a promotion strategy is to break even. That is, the variable costs should atleast be covered by the increase in sales.

Qualitative:The strategy should be such that it has the maximum positive influence on the Brand Equity and Brand Image.

Financial:Let us assume existing sales as X.

3 for 2 GWP On-Pack Increase in sales to 300% 170% 150%

Costs incurred {(7/8)*£2 + (1/8)*£4}*x# £0.93*1.7x £0.50*1.5*x 2.25x 1.581x 0.75x Actual Costs 1.35x 0.9486x 0.45x

(Avoiding the 40% margin given to retailers which in this case doesn’t apply since it is not a sale of a product but a free product)

#The probability that the lowest cost of the three is that of the price of a premium product is 1/8. Hence, the calculation of costs involved is done by estimating 1/8 of the probability of the free product being a premium product and otherwise a basic product in case of “3 for 2”.

Revenue :

“3 for 2”

*Note that the price of a product is considered as the avg. price of a product in that product category.

#Revenue = x* (1/4*£8 + 1/2*£7 + 1/8*£9 + 1/8*£6) = x* (£2 + £3.5 + £1.125 + £0.75) = £7.375xRevenue without promotion (approx.) = Revenue with promotion

= 3xNet Increase in Revenue= £4.375x Net Increase in Profit = 10% of Revenue =£ 0.4375x

Net Profit= £0.4375x – £1.35x = -0.9125x (No break even)

#The revenue during the promotional period is calculated by assuming that the products are bought in the probability of the outcome of the cases that arise when choosing 3 products of 2 types. For non-promotional period, revenue is calculated with equal probability of a consumer purchasing a premium and a basic product. Another assumption made is that all consumers buy 3 products. This has been assumed due to lack of information on the goods sold.

Revenue :

“GWP”

*Note that the price of a product is considered as the avg. price of a product in that product category.

Revenue = 1.7x* £3x = £5.1xRevenue without promotion (approx.) =Assumed to be same as previous case = £3x

Net Increase in Revenue= £2.1x Net Increase in Profit = 10% of Revenue = £0.21x

Net Profit= £0.21x – £0.9486x = -0.7386 (no break even)

Revenue :

“On-Pack Coupon”

*Note that the price of a product is considered as the avg. price of a product in that product category.

Revenue = 1.5x* £3x = £ 4.5xRevenue without promotion (approx.) =Assumed to be same as previous case = £3x

Net Increase in Revenue= £1.5x Net Increase in Profit = 10% of Revenue = £0.15x

Net Profit= £0.15x – £0.45x = -0.30x (no break even)

From the above observations, we can clearly see that all cases result in a small loss. Hence, this might not be the decisive criteria to decide.

However, let us look at the cost spent per new customer as an index to find out the best strategy.

“3 for 2”

Let no. of customers during non-promotional period be y= 40% current no. of customers. (Since 60% are new)=> No. of new customers = 1.5y

Expenditure/new customer = (0.9125/1.5)*x/y= 0.6083

GWP

No. of new customers= 0.67 yExpenditure/new customer= (0.7386/0.67)*x/y = 1.102

On-Pack Coupon

No. of new customers= yExpenditure/new customer= (0.3/1)*x/y = 0.3

Clearly, On-Pack Coupon is quantitatively the best strategy

financially, both in terms of the least losses as well as least

expenditure/new customer.

QualitativeIn terms of reaching out to the major chunk of shoppers, women of the age group 20-35 it has been observed that they do most of the shopping for the family, including their husband and kids.

This habit of women of the aforementioned age group is well served by the “3 for 2” offer since they cater to a maximum of three people, the typical size of a nuclear family.

This way the “3 for 2” strategy demographically reaches the target market most effectively.

Also, this happens to be a unique offer that is exclusively offered by Boots and where other brands have failed.

Hence, the “3 for 2” offer with its exclusivity promises to create a better brand image by creating an instant connect with the customers.

Final DecisionThe On-Pack Coupon certainly is the more economical option but it doesn’t really help the brand image or the brand equity by a great deal.

The “3 for 2” option is second to the On-pack Coupon strategy in terms of economical constraints. However, its uniqueness and exclusivity and ability to create a brand image and brand equity compensate for the excess expenditure.

ConclusionIf the company can afford the costs of a “3 for 2” sale I would suggest the “3 for 2” strategy as the better option because of its impact while still going gentle on the pockets.

However, if the company is not ready to spend more, the On-Pack Coupon Strategy is better-off

FYI

Boots, as a matter of fact had actually gone for the “3 for 2” strategy as illustrated by the advertisement given below, thereby suggesting that their thought process was similar to the one adopted in this presentation.

Boots- the company and the hair-care industry. • The Competitors• The Retail Market

The Situation• Product Concept• Selling Concept• Marketing Concept

The Decision• Financial• Qualitative

Summary

References• BOOTS: HAIR-CARE SALES PROMOTION Version: (A) 2008-03-20 • https://www.google.co.in/search?

hl=en&authuser=0&site=imghp&tbm=isch&source=hp&biw=1366&bih=667&q=boots.com&oq=boots.com&gs_l=img.3..0l2j0i30l8.1266.3333.0.3557.9.9.0.0.0.0.136.908.7j2.9.0....0...1ac.1.64.img..0.9.899.MsHfjuNFwcU#hl=en&authuser=0&tbm=isch&q=VS&imgrc=yMfBZG12q_bOIM%3A

• https://www.google.co.in/search?hl=en&authuser=0&site=imghp&tbm=isch&source=hp&biw=1366&bih=667&q=boots.com&oq=boots.com&gs_l=img.3..0l2j0i30l8.1266.3333.0.3557.9.9.0.0.0.0.136.908.7j2.9.0....0...1ac.1.64.img..0.9.899.MsHfjuNFwcU#hl=en&authuser=0&tbm=isch&q=3+for+2

• https://www.google.co.in/search?hl=en&authuser=0&site=imghp&tbm=isch&source=hp&biw=1366&bih=667&q=boots.com&oq=boots.com&gs_l=img.3..0l2j0i30l8.1266.3333.0.3557.9.9.0.0.0.0.136.908.7j2.9.0....0...1ac.1.64.img..0.9.899.MsHfjuNFwcU#imgrc=_

• https://www.google.co.in/search?hl=en&authuser=0&site=imghp&tbm=isch&source=hp&biw=1366&bih=667&q=boots.com&oq=boots.com&gs_l=img.3..0l2j0i30l8.1266.3333.0.3557.9.9.0.0.0.0.136.908.7j2.9.0....0...1ac.1.64.img..0.9.899.MsHfjuNFwcU#hl=en&authuser=0&tbm=isch&q=on-pack+promotions&imgrc=bMCvsZJ3tP_k-M%3A

Thank You

Disclaimer: This presentation was created by Sriram A

R, IITM during a marketing internship under the guidance of Prof. Sameer Mathur, IIM Lucknow (www.IIMinternship.com)

Sriram A R

Prof. Sameer Mathur