Based on Harvard case study

1. BOOTS:
HAIR-CARE SALES PROMOTION

2. Situation
 Boots, A best known and respected retailer and
provider of health and beauty product in UK
 primary objective was to drive sales volumes and
trade-up consumers from lower-value brands,
while retaining or building brand equity

3. Competitors
Mass market brands-P&G, ALBERTO-CULVER
(UNITED KINGDOM), L’ORÉAL
 Hair care product retailer- Tesco, Sainsbury’s and
Morrison’s
 Major hair care competitor- Superdrug

4. Consumers
 Not very brand loyal
• Brands produced better results than continually using a single
brand
• Trends in buying behaviour led to changing preferences
• It was difficult for consumers to identify meaningful differences
between the various brands available in any given store

5. Questions

6. Decision Options

7. To redeem a coupon for getting 50p off on any product purchased
consumers to buy two hair-care items
at regular price and receive one free
will be given a product sample for
free along with a regular purchase.

8. Possible Criteria
• Driving Sales volumes in the current season
• Trade up Current consumers from low-value brands
• Maintaining Profits from the current promotions
• Secure market leadership in Hair care Retail segment
ultimately.

9. Hypothesis
3 for 2 would be the best option for the promotional
strategy selection
Offer
type
Estimated Percentage
increase in sales per day
Approximate
Percentage of sales
to customers
3 for 2 300 60
Gift With
Purchase
(GWP)
170 40
50p off
per
product.
150 50

10. pe of
oduct
)
Offer
type
(B)
Average
pre-
promoti
onal
price
(C)
Retailer
Margin
in per
cent
(D)
Average
Cost
incurre
d per
product
(E)
Average
cost
incurre
d to
boots
for the
items in
offer.
(F)
Price
Paid
after
the
promoti
on
Profit per
product
(H)=
{(G)-(F)}
mium 3 for 2 3.99 40 2.39 7.17
(per 3)
7.98
(per 2)
+0.81
ss
rket
3 for 2 2.00 25 1.50 4.50
(per 3)
4.00
(per 2)
- 0.5
mium GWP 3.99 40 2.39 2.39+0.9
+ 0.03
=3.32
3.99 +0.67
ss
rket
GWP 2.00 25 1.50 1.5+0.9+
0.03
=2.43
2.00 -0.43
mium 50p off 3.99 40 2.39 2.39 3.99-0.50
= 3.49
+1.10
ss 50p off 2.00 25 1.50 1.50 2.0- +0.00

11. Proof & Actions
 The profit per product is 0.81£ in 3 for 2 promotion strategy.
 Per day profit= 300*0.81£ =243£
 For total December= 243*31days =7533£ (considering
consumers will go for only premium products due to offer
season.)
 Even if we consider there would be atleast one mass market
product out of 3, the 300% percent increase in sales and
60% new consumer attraction would offset this.
 Moreover, the firm has an advantage of pioneering technology
which keeps the competitors from copying the strategy and this
proves to be a huge advantage for Boots.

12. • The profit per product is 1.10 £ in 50p coupon off promotion
strategy.
•Per day profit= 150*1.1£ =165£
•For total December= 165*31days =5115£ (considering consumers will
go for only premium products due to offer season.)
•In this case even if more number the consumers go for mass market
products(0p loss per product), there is no chance of the retailer going
into loss but it may result in decrease of profit.
•Although it may bring in 50% new customers, This strategy can be
easily copied by competitors

13. • The profit per product is 0.67£ in Gift with purchase promotion
strategy
•Per day profit= 170*0.67£ =113.9£
•For total December= 113.9*31days =3531£ (considering consumers
will go for only premium products due to offer season.)
•In this case if more number the consumers go for mass market
products(43p loss per product), it can push the firm into losses as
there is no rule regarding least expensive product as in case of 3 for
2 option.
•Although it may bring in 40% new customers, This strategy can be
easily copied by competitors.

14. Action Plan
After calculating estimated profits and analyzing market share
potential, The preference order of the implementing the 3 strategies
would be:
1) 3 for 2
2) 50p off coupon
3) Gift with purchase

15. Summary
 Situation
 Questions
 Possible criteria
 Hypothesis
 Proofs & Action

16. Disclaimer
This presentation is prepared by Arvind Patel, student
of IIT Bombay, under the guidance of Professor
Sameer Mathur, IIM Lucknow.