This case is an analysis of the promotional that Boots should adopt to increase its sales as well as its customer base

1. HAIR-CARE PROMOTION
STRATEGY
BY URMI ARORA

2. What is Boots??

3. One of the best-known
and respected retail names
in the United Kingdom
Provides health and
beauty products and advice
Owns global differentiated
brands in self-medication
market
Develops and
manufactures its own
products too
Operates in around 130
countries with 75,000
employees

4. What is the
current
situation?

5. SITUATION ANALYSIS
Boots has to plan its sales
promotion strategy for a line of
promotional hair-care products
The professional hair-care line is
developed in collaboration with
United Kingdom’s top celebrity
hairdressers.
Primary objective is to drive sales
volumes and trade-up consumers
from lower-value brands.

6. 3 for 2
• Buy 3 products
for the price of 2
Gift With
Purchase
• Get a product
sample free with a
regular purchase
On pack
coupon
• Redeem the
coupon and get
50p off
THREE PROMOTIONAL ALTERNATIVES

7. Why study
this case?

8. Understanding the
relationship between
promotional
strategies and its
impact on consumer
base & sales.
OBJECTIVES OF THE
CASE

9. To use quantitative
analysis to develop
and choose an
appropriate
promotional
strategy.
OBJECTIVES OF THE
CASE

10. Boot’s
positioning in
the United
Kingdom hair-
care market

11. Boots saw an
opportunity to be
the retail hair-care
expert and to offer
the latest
ranges.

12. It built a new market
by using celebrity
endorsements to
create awareness
and an emotional
attachment between
consumers and the
brand.

13. Using its superior
technological capabilities
and significant
production capacity,
Boots worked to design
formulations that were
functionally better than
the existing brands.

14. MAJOR COMPETITORS AND MASS MARKET BRANDS
PROCTOR & GAMBLE
L’OREAL

15. Understanding
Consumer
Behavior

16. Consumers are not
brand loyal because….

17. There is a general belief by U.K.
consumers that changing
shampoo brands produced better
results than continually using a
single brand.

18. Trends in buying
behavior lead to
changing preferences.

19. It is difficult for
consumers to
identify
meaningful
differences
between the
various brands
available in any
given store.

20. BOOTS’ CONSUMERS
Fashion conscious
women in the 20-35 age
category
More affluent than the
buyers of mass markets
Consumers bought
both basic and premium
brands

21. PROMOTIONAL DECISIONS
Promotion was to run for 1
month starting December 1st
No variation in product-
sizes because of the added
cost
and complexity involved
No media advertising
budget was allocated for this
promotion
There would also be
signage within the store to
promote the
offer

22. Let’s analyze
the three
alternatives

23.  Buy two hair-care items at
regular price and receive one
free
Combine any three items
but the three items have to
be of the same brand
The free item would be
the one that was the least
expensive of the three
items
3 FOR 2

24. GIFT WITH PURCHASE
A product sample given
free with a regular
purchase
Existing sample product
would be used to
avoid the need to design
and produce additional
packaging

25. ON-PACK COUPON
Consumers will get 50p
on their purchase
Everyone would be able
to redeem coupon
during the visit

26. SALES AND CUSTOMER
ESTIMATES

27. 0
50
100
150
200
250
300
350
3 FOR 2 GWP ON-PACK
COUPON
SALES
CUSTOMERS
Increase in Sales and Consumers
% Increase
Various Schemes

28. QUANTITATIVE ANALYSIS
OF PROFITS IN EACH
CATEGORY…

29. Average bottle size = 250ml
Average pre promotional price = £3.99 ~ £4
Industry average retail margins on premium brands= 40%
Manufacturer’s typical margin on cost= 8% to 12% ~ 10%

31. Basic
Calculations
•Selling price of each bottle = £4
•Profit margin to retailer = 40%
•Cost to retailer = 0.6x4 = £2.4
•Profit margin of manufacturer =
10%
•Cost to manufacturer = 2.4/1.1 =
£2.18

32.  According to estimates , sales will increase by
300%
If 100 bottles were sold in a day before
promotions, now 300 bottles will be sold out of
which 100 will be free
Total sales in the month of December =
31x300=9300
Cost incurred to the manufacture = 9300x2.18 =
£20,274
Revenue incurred = 6200x4=£24800
Profit gained = £4,526

33. According to estimates , sales will increase by 170%
If 100 bottles were sold in a day before promotions, now
170 bottles will be sold
Total sales in the month of December = 31x170=5,270
Cost incurred to the manufacture = 5,270x(2.18+0.93) =
£16,389.7
Revenue incurred = 5,270x4=£21,080
Profit gained = £4690.3

34. According to estimates , sales will increase by 150%
If 100 bottles were sold in a day before promotions,
now 150 bottles will be sold out of which 100 will be
free
Total sales in the month of December = 31x150=4650
Cost incurred to the manufacture = 4650x2.18 =
£10,137
Revenue incurred = 4650x(4-0.5)=£16,275
Profit gained = £6,138

35. FINAL DECISION
‘3 for 2 is the
correct choice’
Though it is a little less
profitable than other schemes
but it is still profitable and leads
to a profit of £0.486 per bottle
It increases the customer base
by 60% , which is one of the
primary objectives of launching
this promotional strategy

36. Also, this scheme cannot be
imitated by competitors as
they so not have the required
technology and this gives an
edge to Boots which will help
it in the long run
It targets existing Boots
customers as well as new
customers

37. Created by Urmi Arora,
NSIT, during a marketing
internship under Prof.
Sameer Mathur, IIM
Lucknow