Prepared as part of marketing Internship. Based on Harvard Business Review Case.

1. 5
Hair Care Sales Promotion

2. MARKET LEADER IN
HAIR CARE SEGMENT
Pharmacy-led health
and beauty group
Helps customers
look and feel better
Close to 2,500 stores
Fantastic products and
services cared for by
expert, friendly people

4. POST WAR REGENERATION AND
NEWDEVELOPMENT (1968)
•Program of factory development in Nottingham including a new
power house, printing works, and a new pharmaceutical research
building.
•A Cosmetic manufacture factory was also opened.
EARLY DAYS (1913)
•Initially established as providing herbal remedies to the needy as
well as poor by JOHN BOOTS in 1849.
•But as his Son JESSE BOOTS took over he established
‘THE BOOTS AND COMPANY LIMITED’ and wanted to become
the LARGEST, BEST and CHEAPEST’

5. Developed a range of products and became a household name.
Main Products:
•Cosmetics aimed at teenage market
•Analgesic Ibuprofen and Nurofren introduced.
New Services:
•Boots Opticians : Became leading optician in UK
•Insurance Services and initiatives in Dentistry,Chiropody,
and Internet Services also in 1999.

6. •In UK with more than 2500 Stores
•It started exporting its health care products to more than 130 countries.
•Boots health and Beauty stores were established in Ireland, Taiwan and Thailand.

8. In 2000 over 60 major brands of hair care
products were there in UK market.
None of the brands had more than 9%
market share.
The overall market was expected to grow
by
BETWEEN 1% and 3% per year for the
NEXT 5 YEARS.
.

9. SEVERE PRICE COMPETITION
MEANS THAT VOLUME WOULD
GROW MORE QUICKLY THAN
VALUE
•The use of PRICE PROMOTIONS to secure
volume would see an overall decline in prices of
approximately one percent.
•Significant PRICE DISCOUNTING through
promotional activity and COMPETITION FROM
LOW COST private label alternatives were
expected to continue into foreseeable future.

10. In the times of severe competition BOOTS
Primary Objectives were:
1.Drive Sales volume UP.
2.Trade up Consumers from Low value Brands
3.Retaining and Building Brand Equity.

12. In SEVERE COMPETITION
times
Every company needs to
CRAFT ITS POSITIONING IN
THE MARKET WELL.
BOOTS took a step which was
UNIQUE and carved its own
NICHE.

13. •Boots began to cultivate relationships , beginning 1996 with
well established hair dressers in UK.
•They desired to build a new market by using celebrity
endorsements to create AWARNESS and create an
EMOTIONAL ATTACHMENT between consumers and brand.
This ensured:
HIGH CONSUMER AWARENESS
PREMIUM POSITIONING OF BRAND.

14. PARTENERED BRAND DESCRIPTION

16. •The relationship with BOOTS was
lucrative for the hairdressers because
it gave them access to a large
percentage of U.K consumers through
1300 Boot’s stores.
•Research indicated that over 85% of
female adults in the United Kingdom
visited a Boots store within past week.

18. 3Ways in which Boots
Can change its course
 MARKET MODIFICATION
 PRODUCT MODIFICATION
 MARKET PROGRAM MODIFICATION

19. A company might try to expand its mature
brand by working
With 2 Factors:
VOLUME=
(NUMBER OF BRAND USERS)*
(USAGE RATE PER USER)

20. INCREASE THE
USAGE RATES
AMONG USERS
CONVERT NON USERS HAVE CUSTOMERS USE THE
PRODUCT ON MORE OCCASION
ENTER NEW MARKET SEGMENTS HAVE CONSUMERS USE MORE
OF THE PRODUCT ON EACH
OCCASION
ATTRACT COMPETITORS
CUSTOMERS
HAVE CONSUMERS USE THE
PRODUCT IN NEW WAYS

21. Managers also try to stimulate sales by improving
Quality
Features
Style
Quality improvement :
Increases functional performance by launching a new and improved
product.
:Feature Improvement
Adds size, weight,material,supplements and accessories that expands
products performance ,versatality,safety or convenience.
Style Improvement:
Increases the products aesthetic appeal. Any of these can attract
consumer attention.

25. Finally brand managers might also try to stimulate sales by
modifying non product elements—
PRICE
DISTRIBUTION
COMMUNICATION
They should also assess the likely success of any changes in
terms of effects on new and existing customers.

29. Due to efficiency considerations and ongoing
management of stock, boots was not considering any
variation in product-sizes because of the added cost and
complexity involved.
 No media advertising budget was allocated for this
promotion, although it would be highlighted in flyers
distributed by the store

32. CURRENT BOOTS CONSUMERS AND EXISTING
PURCHASERS OF MASS-MARKET BRANDS ARE THE
PRIMARY TARGET FOR THE PROMOTION.
DURATION 1 MONTH
AVERAGE BOTTLE SIZE 250 ML
PRICE £4 AND £2 FOR MASS MARKET
PRODUCT
MANUFACTURER’S MARGIN : 8-12%
RETAIL MARGIN 40% AND 25 % FOR MASS MARKET
PRODUCT

33. It has been observed that same customer buys both
premium and basic products and to take advantage of
promotion customer will try to buy premium product
,also Christmas and new year is approaching so
customer are more likely to but premium product
increasing its sale
Hence it is assumed for the next month premium and
basic product sale will be at par, so an average can be
assumed for all quantities

34. PRICE £3.99
RETAIL MARGIN 40%
MANUFACTURERS MARGIN 8%-12%
RETAILER’S COST=
SELLING PRICE*(100-MARGIN%)
=3.99*0.6=2.394 POUNDS.
ACTUAL COST PER BOTTLE= 2.176

36. CONDITION:
CONSUMERS WOULD GET 3 AT PRICE OF 2
 CUSTOMERS COULD COMBINE ANY THREE ITEMS THEY LIKED (E.G.,
SHAMPOO, CONDITIONER, AND STYLING GEL, ETC. ] AND THE LEAST
EXPENSIVE ITEM WOULD BE FREE.
THEY COULD IMPLEMENT ONLY A 3-FOR-2 OFFER WHEN THE PRICES
FOR THE THREE ITEMS WERE THE SAME.
 SALES WILL INCREASE TO 300%.
THE PROBLEM:
 60% OF CONSUMERS WILL BE JUST PROMOTIONAL BUYERS.
 THIS WILL DILUTE BRAND EQUITY OF PREMIUM PRODUCTS
 CELEBRITY HAIRDRESSERS WHO ARE PRODUCT PARTNERS MAY NOT
LIKE ITAND IT MAY WEAKEN RELATIONSHIP BETWEEN THEM AND
COMPANY.

37. Selling Price of 3 items=3.99*2=7.98 pounds
Actual Cost of 3 items=2.176*3=6.528
Thus, profits= 0.484 Pound/unit
Now we know
The sales was 3 times more in promotional period.
Thus, Profit during promotional period
=3*0.484
=1.452 Pounds/unit

39.  A GWP WAS AN OFFER IN WHICH CUSTOMERS WERE GIVEN A PRODUCT
SAMPLE ALONG WITH REGULAR PURCHASE.
 AN EXISTING SAMPLE PRODUCT WOULD BE USED TO AVOID THE NEED TO
DESIGN AND PRODUCE ADDITIONAL PACKAGING.
 SALES WILL INCREASE TO 170%
PROBLEM:
40% WILL BE JUST PROMOTIONAL BUYERS
 A COMMON STRATEGY AND CAN BE EASILY IMITATED
 ADDITIONAL COSTS

40. Selling Price =3.99 Pounds
Cost /item =(2.176+0.93)=3.106 Pounds
Hence
Profit/item= 0.884 Pounds
During the promotional period the sales were
1.7 times more
Profit during promotional period= 1.7*0.884
=1.502 Pounds/item

42. CONDITION:
ON-PACK COUPON (50P OFF)
 CUSTOMERS WOULD BE ABLE TO REDEEM THE COUPON DURING
THEIR CURRENT STORE VISIT.
 ESTIMATED THAT SALES WOULD INCREASE TO 150 %
CUSTOMERS WILL VISIT STORE MULTIPLE TIMES
PROBLEMS:
 A CONSERVATIVE APPROACH
QUITE COMMON AND CAN BE EASILY IMITATED
 INCREASE IN SALES IS NOT TOO MUCH
 IN CASE IF CUSTOMER FAILS TO REDEEM COUPON BY HUMAN
TENDENCY HE IS MOST LIKELY TO BLAME BRAND AFFECTING BRAND
LOYALTY

43. Selling Price of an item= 3.99 pounds
Cost per item= (2.176+0.5)=2.676
Hence
Profit=1.314 Pounds/unit
We know
Sale was 1.5 times more in the Promotional
Period.
Hence
Profit during promotional period= 1.5*1.314
=1.971 Pounds/unit

45. PROMOTIONAL
SCHEME
SALES
REPORT
PROFIT
PER
UNIT
REMARKS
3 FOR 2 300% 1.452 COMPANY’S INCREASED SALES
VOLUME CAN BE BEST ACHIEVED BY
THIS.
ITS REACHING OUT TO MORE NEW
CUSTOMERS.
AND THIS POLICY MOREOVER CANNOT
BE IMMITATED BY COMPETITORS.
FREE GIFT
WITH
PURCHASE
170% 1.502 ALONG WITH REACHING OUT TO NEW
CUSTOMERS IT ALSO GIVES A
REASONABLE PROFIT PERCENTAGE.
IT GIVES THE USERS TO USE THE
PRODUCT IN MORE NUMBER OF WAYS.
THUS CREATING MORE AWARNESS.
GIFT COUPON
FREE WORTH
50P
150% 1.971 IT FAIRLY REACHES OUT TO NEW
CUSTOMERS BUT HELPS TO ENSURE
THAT THEY COME AGAIN.
THE HIGHEST PROFIT PERCENTAGE AS
NO ADDITIONAL COST IS INVOLVED.

46. Keeping in mind the primary objective of the company
The company should go for:
“Free Gift Coupon” Promotional scheme.
Because The Company remains in profit with a much
greater margin than the other two.
Also It ensures customers come again and again to its
stores and use its products more and in a variety of
ways. Thus increasing the sales volume.
It attracts the customers of the low value brands not
just within the promotional period but can help build a
loyal customer base.
This scheme helps to maintain its Brand Equity.
It also doesn’t involve any additional expenses.

47. Created by Shivani Mishra, CET-Bhubaneshwar
under a marketing internship by Proff Sameer
Mathur,IIM Lucknow.