HBR case study on Boots Hair Care Promotion Sales. Prepared during a marketing internship under Prof Sameer Mathur, IIM Lucknow

1. Boots Hair Care Sales
Promotion:
HBR Case Study

2. Objective
To drive up sales volume and trade
up consumers from lower brands ,
while retaining or building brand
equity for a line of professional
hair-care products at BOOTS.

3. CaseBackground
• One of the largest retail names in United
Kingdom.
• Employed 75000 people in 130 countries
in 2004.
• Apart from health and beauty products,
deals in optician, insurance services etc.

5. Competition
• These brands were widely
available in supermarkets
and at drug retailers
including Boots and
Superdrug.
• The sales of these brands
were directly proportional
to the amount of
advertising expenditure.

6. Marketshare
• Over 60 major brands in
hair-product market in
2000.
• No brand enjoyed more
than 9% market share.
• Severe price competition.

7. Consumer Analysis

8. Understanding ConsumerBehaviour
• Lack of Brand Loyalty
• Dynamic consumer
behaviour
• Consumers found it
difficult to identify
product differentiation.

9. Demographics
• Consumers who purchased
professional brands were
largely fashion-conscious
women in the 20-35 age
category.
• Most Boots consumers
bought both basic and
premium brands.
• Other customers bought
basic products for everyday
use and premium products
for special occasions such as
weekends or social outings.

10. The Problem
• Dave Robinson, the
sales manager at Boots
needs to come up with a
strategy to promote
sales in UK in December
2004.
• He has 3 different
promotional strategies at
his disposal, and needs
to choose the most
effective one.

11. The Decision
• Average bottle size is 250 ml
(shampoo/conditioner).
• Average pre-promotional
price is 3.99 pounds.
• Industry average retail
margins :- 40%.
• Mass-market brands had an
average retail price of 2
pounds with retailer
margins of 25%.
• Manufacturer’s margin :- 8-
12%.

12. PromotionalStrategies
1. Buy two hair-care
items at regular price
and receive one free.

13. Analysis
• Loss of
Brand
Loyalty.
• Not a long
term solution
• Competitors
cannot
replicate the
strategy.
• Sales would
increase by
300%
• 60% new
customers.

14. Analysis
• We do not know whether all consumers
will buy 3 products every time, hence
calculating the exact profitability is not
possible.
• Assuming they do, and consumers buy
only from mass-market brands ( more
likely in such a scenario), pre-promotional
profit per unit is 1.3. For 100 units, it is
130 pounds.

15. Analysis
• After promotional strategy, effective price
becomes 1.33 pounds. Profit margin is
65% ( minus manufacturer and retailer).
Hence profit per unit is 0.86. For 300
units, it is 258 pounds. Profit increases by
almost 200%.
• Also, there is more consumer reach (60%)
and competitive advantage.

16. PromotionalStrategies
1. Customers to be given a
product sample along
with their purchase.

17. Analysis
• Average cost
of 93p per
unit.
• Competitors
can easily
replicate the
strategy.
• Sales would
increase by
170%
• 40% new
customers.

18. Analysis
• This strategy will cost 93p per unit of bottle.
• Pre-promotional profit was 0.65*2*100 = 130
pounds.
• After promotional strategy, (1.3-0.93)*170 =
68 pounds.
• Profit is decreasing by almost 48%.

19. PromotionalStrategies
1. Customers would be
able to redeem the 50p
off coupon during their
current store visit.

20. Analysis
• Affects brand
equity and
long term
sales.
• Sales would
increase by
150%
• 50% new
customers.

21. Analysis
• This strategy would cost 50p per unit.
• Pre promotional profit was 0.65*2*100 =
130 for 100 units.
• After promotion, profit is (1.3-0.5)*150 =
120 pounds.
• Profit is decreasing by approximately 7.7%.

22. “3-for-2” seems to be
the best possible
strategy since it
increases profit as well
as consumer reach.

23. • Objective
• Case Background
• Market Analysis
• Consumer Analysis
• Problem and Analysis
• Conclusion

25. PreparedByAnchitAhuja, duringan internship underProfSameer Mathur,
IIMLucknow.