The Boots hair care product sales promotion strategy

1. The sticky Sales Promotion Strategy
By Akhil Sule
BITS Pilani Goa

2. What is Boots ?

3. Best known and respected brand in UK
for making beauty and health products

4. These are the products that Boots makes

5. Started by John Boot in 1849 in
Nottingham

6. Jesse Boot, son of
John Boot
established it as
“Boot and Company
Limited” in 1883

7. The Expansion
New
store in
Sheffield
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

8. These are the globally
differentiated brands that Boots
owned

9. They have also expanded in
areas like

11. Boots for men

12. Boots internet services

13. Now in Boots we have somewhat of a

14. This guy is Dave
Robinson. He is the one
who decides what sales
promotion strategies to
implement

15. He has options

16. Of which he has to chose

20. With the aim of securing
the position of

22. And

23. And

24. Lets take a look at the
hair care market in
UK.

25. UK market was dominated by brands like

26. In 2000 there were more than 60 brands
with none more than 9 percent market share

27. But Boots saw the
opportunity to be
retail hair care expert
and entered the
market with celebrity
hairdresser endorsed
products

28. Hairdressers got
access to customers
through 1300 Boots
stores

29. Yet Boots had a lot of

30. Procter and Gamble
100+ products 8.4 percent market share

31. Alberto Culver
2000+ store
locations
Hair care, skin
care, home care

32. L'Oréal
500+ brands 2000+ products

33. Superdrug
700 stores 10,000 products

34. The major retailors in market are

35. 1800+ stores

36. 700 stores

37. 400 stores

38. Consumers
• Mostly women
aged 20 -35
• Not very brand loyal
• Choice depends upon
brand name, but also
packaging, advertising,
price,
ingredients, consistency
and fragrance

39. Now for the situation we have, there arise
two questions

40. Which strategy is
best to increase
volume of sales ?
How will the
brand equity be
maintained or
increased?

41. Evaluating the options

42. 3 for 2
• Advantages
1. Customers can buy any 3 items with the least expensive item free
2. Most competitors didn’t have technology to imitate this offer
3. Sales estimation during the promotional period was 300 percent.
4. 60 percent of the sales would come from new customers

43. 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 product
3. Premium products may lose their brand value

44. Gift with purchase
• Advantages
1. Customers will get a product sample with a purchase
2. Estimated sales during promotion will be 170 percent of the pre
promotion sales
3. 40 percent of the sales would come from new customers

45. Gift with purchase
• Disadvantages
1. The additional cost of the gift will be bared by the company
2. Competitors can imitate the strategy

46. 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

47. 50p coupon
• Disadvantages
1. This is a very common strategy
2. It might result in decrease in brand equity
3. Least sales from this option
4. Very conservative approach

48. 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

49. 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

50. 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

51. Hence best strategy would be to chose
the option “3 for 2”