the right choice at the right time || boots: hair care sales promotion
TRANSCRIPT
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BOOTS: HAIR CARE SALES PROMOTION
The right choice at
the right time
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Objectives of this
case study
How to choose the right strategy?What is the math/calculation
involved?Is the profit shown by math, the only
factor to select the right strategy?
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THE PLAYER Dave RobinsonCategory & Operations Manager
John Boot & Jesse Boot Founders
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Hair Care Sales Promotion
• Get 3 for price of 2• GWP – Gift with purchase• Include a coupon worth 50p
Alternatives available:
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Challenge/Problem
What are the pros and cons of each of the alternatives available?
Which alternative should I choose?Why should I select that alternative?
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Dave Robinson’s target
To select a sales promotion strategy, which will:• Drive sales volumes • Trade up consumers from lower-value brands
while retaining or building brand equity.
This strategy selected will have immediate effect on cost, sales and long term implications for brands involved.
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ABOUT BOOTS4
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Boots company
• Jesse Boot established Boots in 1883 • Provides health and beauty products and
services. • Aim: To be the LARGEST, BEST and CHEAPEST
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Boots Services
• Boots opticians• Boots for Men• Insurance services and initiatives in
Dentistry, Chiropody. • Beauty and Healthcare productsProducts are exported to more than 130 countries. Boots stores are established in Ireland, Thailand and Taiwan
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Boots Marketing Strategy
To create brand awareness and an emotional attachment between consumer and the brand.
Use Celebrity endorsements:
Price per unit licensing fee for the use of celebrity‘s brand name.
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Boots relation with Hairdressers
• The relationship with boots was lucrative for hairdressers.
• It gave them access to a large percentage of UK consumers through Boots 1300 stores.
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Boots Products or Brands
Boots worked with celebrities to design formulations that were functionally better than existing brands.
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• Charles Worthington Market awareness : Medium
Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Glosser, Serum, Gel, Putty, Wax,
Makeover kit Hair brush, Face wash, Face scrub Men’s Range: Shave foam, Shave Gel, After shave, Deodorant.
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• John FriedaMarket awareness: Strong
Products: Styling Products: Shampoo, Conditioner, Spray, Mousse, Glosser, Hair cream,
Serum, Gel, Styling foam, Hair lotion
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• Nicky ClarkeMarket awareness: Medium
Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse Hair dryer
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• Umberto GianniniMarket awareness: Low
Products: Styling Products: Shampoo, Conditioner, Spray, Mousse, Jelly, Glosser, Hair cream,
Serum, Wax Hair powder, Hair color
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• Toni & GuyMarket awareness: Strong
Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Hair cream, Serum,
Putty Hair brush, Hair comb, Hair rollers
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• Trevor SorbieMarket awareness: Medium
Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Mousse, Glosser, hair cream,
Serum, Gel Hair dryer, Hair brush, Hair comb, Barber’s clipper, Straightening iron, Heat rollers,
Face wash Men’s Range: Beard softener, Shave oil, Shave Gel, After shave, Shower Gel,
Deodorant, Eau de toilette, Hair wipe, Lip balm.
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• Lee Stafford Market awareness: Low
Products: Styling Products: Shampoo, Conditioner, Spray, Balm, Shaper, Mousse
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Current Situation5
UK MarketCompetitorsBrand LoyaltyConsumer BehaviorBoots at present
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UK Market
Sales of the brand was directly proportional to amount of advertising expenditure.
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UK Market
60 major hair care products brands with none of them having more than 9% market share.
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UK Market
Severe price competition => Volume would grow more quickly than value!
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Competitors
• Procter & Gamble
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Competitors
• Alberto-Culver
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Competitors
• L’OREAL
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Competitors in super market segment
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Competitors in super market segment
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Competitors in super market segment
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Competitors in super market segment
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Brand Loyalty
Consumers were not very brand loyal because of 3 reasons
• Belief that changing shampoo brands produced better results than continually using the same brand
• Changing preferences• It was difficult for customers to identify meaningful difference between
the various brands
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Consumer Behavior
• Consumers who purchased professional brands were largely fashion conscious i.e. women belonging to 20 to 35 age
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Consumer Behavior
• Other consumers bought basic products for daily use and premium products for special occasions.
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Boots… at present
• Missed on maximizing profits because it had not been able to sufficiently link its name with its products
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Boots… at present
• Target market: Current Boots consumers and existing purchasers of mass market brands.
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Boots… at present
Marketing: • No media advertising budget • Highlighted in flyers
distributed by the store• Signage within the store to
promote offer
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Selecting the offer
Decision making6
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Selling price of the product is ₤4Average retail margin = 40%Retail Price = 2.4₤
Cost to manufacturer assuming 10% margin = 2.18₤
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3 for 2
This would enable buyers to buy 3 products at the price of 2 products.
Estimated Sales increase: 300%
Manufacturing cost for 300 products = 300 x ₤ 2.81 = ₤ 654.54
Income for 300 products = income of 200 products because of this offer = 200 x ₤ 4 = ₤ 800
Total Profit = ₤ 154.46 Profit per bottle = ₤ 0.485
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GWP (Gift with purchase)
A product sample will be given along with a regular purchase
Estimated sales increase = 170%
Manufacturing cost for 170 products = 170 x ₤ 2.81 = ₤ 370.6Overall cost for 170 products including packing cost of 93p per unit = ₤ 528.7
Income for 170 products = 170 x ₤ 4 = ₤ 680
Total Profit = ₤ 151.3 Profit per bottle = ₤ 0.89
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On pack coupon (50p Off)
50p Off option for customers. They would be able to redeem during current store visit.
Estimated sales increase = 150%
Manufacturing cost for 150 products = 150 x ₤ 2.81 = ₤ 327
Income for 150 products = 150 x ₤ 4 = ₤ 600
Total Profit = ₤ 273 Profit per bottle = ₤ 1.82
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Selection strategy
• Maximum sales is from 3 for 2 strategy
• Maximum profits are from 50p off strategy
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To select a sales promotion strategy, which will:• Drive sales volumes • Trade up consumers from lower-value brands
while retaining or building brand equity.
Recall Dave Robinson’s target? To increase sales and customer base
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So profit is not the criteria to select the right strategy..!
X
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3 for 2 is the right strategy
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SummarySUMMARY
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