This is a presentation on a Harvard Business School case- Boots: hair-care sales promotion

1. BOOTS: HAIR-CARE SALES PROMOTION
A Harvard Business School Case

2. BOOTS’ BRIEF
HISTORY

3. • John Boot, born in 1815, was the founder of Boots.
• In 1849, Boots opened the ‘The British and American
Botanic Establishment’ offering herbal remedies to
make a living.

4. BOOTS LOGO IN 1883

5. • A program of factory development in Nottingham was begun following
the war. In 1949, a factory for the manufacture of cosmetics was opened
at Airdrie in Scotland.
• Boots continued to develop product ranges. In 1969, the analgesic
Ibuprofen was introduced and was launched as the OTC brand, Nurofen,
in 1983.

6. BOOTS BLACK&WHITE LOGO IN 1949

7. Boots has transformed over the years,
now offering beauty products as well as
health care products.
Boots was the first to introduce
professional hair-care brands in the
retailer market.

8. WHO IS DAVE ROBINSON?

9. Dave Robinson is a sales manager at
Boots who is planning a sales
promotion strategy for a line of
professional hair-care products.

10. WHAT PROBLEM IS BOOTS
FACING?

11. Boots couldn’t link its name with the
celebrity brand names ever since the
first celebrity brand was introduced,
eventually failing to maximise profit.

12. WHY DO WE NEED TO SOLVE
THIS CASE?

13. To help the protagonist(Dave-
Robinson) to choose the best
alternative among the three
mentioned promotion strategies:
GWP, on-pack coupon(50p), “3 for 2”;
and to maximise Boots’ profitability.

14. HAIR-CARE MARKET OF
THE UK

15. Mass-market brands Professional hair-care brands

16. MAJOR MASS-MARKET BRANDS IN UK
• These brands held strong market shares in the UK hair-care market in the
mid ‘90s and early ‘00s and gave a huge competition to professional hair-
care brands.

17. In this case we will focus on
devising promotion strategies
for professional hair-care
products at Boots

18. CASE ANALYSIS

19. We will clearly analyse
and evaluate each
available alternative…

20. Alternative: 1
“3 for 2”

21. •Average price of a 250ml
bottle(Shampoo/conditioner) is £ 3.99
•Average retail margins―40%

22. • Profit on one product― 40% of £ 3.99 = £ 1.596
• Sales increase to 300% of pre-promotion during the
deal period.

23. • If 100 customers visit a Boots store in a day, 300 products will be sold.
• Profit(pre-promotion) per 100 customers― £ 1.596 *100= £ 159.6
• Profit(promotional period) per 100 customers:
Total items sold= 300
Manufacturer’s price= £ 2.394(Retail price-profit)
Profit from one customer― £ 3.99*2-£ 2.394*3= £ 0.798
So, per 100 customers the profit per day is £ 79.8

24. •Final inference from the first alternative:
Pre-promotional profit― £ 159.6
Profit during promotion― £ 79.8

25. Alternative: 2
“GWP”

26. •In GWP(Gift with purchase), customers will be given a
sample product along with a regular purchase.
•Additional cost per sample― £ 0.93
•Sales increase― 170% of pre-promotional sales.

27. • Profit(pre-promotion) per 100 customers/day― £ 1.596*100= £ 159.6
• Profit(During promotion) per 170 customers/day:
£ 1.596*170- £ 0.93*170= £ 113.22

28. Final inference from the second alternative:
Pre-promotional profit― £ 159.6
Profit during promotion― £ 113.22

29. ALTERNATIVE: 3
On-pack coupon(50p off)

30. •The 50p off option is the most conservative approach
to promoting the brands.
•Sales would increase to 150% of non-promotional
sales.

31. •Profit(pre-promotional) per 100 customers― £
1.596*100= £ 159.6
•Profit(During promotion) per 150 customers― £
1.596*150-£ 0.5*150= £ 164.4

32. Final inference from the last alternative:
Pre-promotion profit― £ 159.6
Profit during promotion― £ 164.4
More profit during promotion than pre-promotion.

33. So, from Dave’s perspective we can choose the
“On-pack coupon(50p off)” as the best alternative
for sales promotion of professional hair-care
products at Boots, as it produces more profit during
the promotional period(Profit maximisation).

35. •Introduction to Boots & it’s history
•Situations & decisions involved in the
case
•The UK hair-care market
•Detailed case analysis and evaluation