BOOTS: HAIR-CARE SALES PROMOTION

2. HISTORY OF BOOTS

3. • Founded in 1849 as ‘The British and American Botanic Establishment’ in
Nottingham, hoping to provide physical comfort to the needy as well as a
reasonable living for his family.
• In 1883, established as a private company ‘Boot and Company Limited,’ with
Jesse Boot as chairman and managing director.
• Company also adopted its own logo.

4. POST-WAR REGENERATION AND NEW DEVELOPMENT, 1945-1968
• A program of factory development in Nottingham was begun following the war, the major part
being completed by 1953. This included a new power house, printing works, and, in 1959, a new
pharmaceutical research building.
• The company adopted a new black and white logo .

5. THE MODERN ERA
• Boots continued to develop product ranges, many of which became household names. ‘17’
cosmetics, aimed at the teenage market, was launched in 1968.
• Boots opticians was formed in 1987,became one of the united kingdom’s leading chain of
opticians.
• International expansion in operations was conducted by boots healthcare international (formed
in 1991), which exported healthcare products to more than 130 countries round the world

6. SITUATIONAL ANALYSIS
Competitor Brands
Same category retailers
Market situation

7. MAJOR BRAND COMPETITORS

8. PROCTER & GAMBLE
• Procter & gamble acquired Richardson Vicks in 1985, and in 1991, Pantene was reformulated as
the Pantene pro-v (pro-vitamin) line and rolled out as a global brand.
• The consumer awareness for Pantene was very high, and the brand is widely available.
• It held a 8.4 per cent share of the U.K. Hair care market in 2001.
• Apart from Pantene, Procter & gamble offered other complete ranges of hair-care brands
including Clairol, head & shoulders, daily defence, pert plus, and herbal essences.

9. • Beginning in 1955, alberto culver grew into a multibillion-dollar company. The company’s head-
office may be located in Illinois, but its products are sold globally.
• Alberto-Culver offered a variety of products for hair-care, skin-care and homecare.
• Some of its top brands included: St. Ives, VO5, consort hair care for men, and FDS etc.
• Alberto-Culver's hair-care range offered a broad assortment of shampoos, conditioners and
styling agents.

10. • L’ORÉAL’S NEARLY CENTURY-OLD HISTORY HAS BEEN MARKED WITH MAJOR SUCCESSES, WITH
LANDMARK PRODUCTS THAT OFFER WOMEN NEW WAYS AND MEANS TO ENHANCEBEAUTY.
• THE GROUP HAS MARKETED OVER 500 BRANDS AND MORE THAN 2,000 PRODUCTS IN ALL SECTORS OF
THE BEAUTY BUSINESS: HAIR COLOUR, PERMANENTS, STYLING AIDS, BODYAND SKINCARE, CLEANSERS,
AND FRAGRANCES.
• THE PRODUCT RANGE CONSISTED OF SHAMPOOS, CONDITIONER AND STYLINGPRODUCTS.
• IT HELD A FIVE PER CENT SHARE OF THE U.K. HAIR CARE MARKET IN 2001.

11. MAJOR HAIR-CARE PRODUCT RETAILERS

12. •Tesco is the largest supermarket chain in the united kingdom with
more than 1,800 stores and 45,000 employees.
•Sainsbury's is second largest with 700 stores
•Morrison's has 400 stores and prided itself on providing quality
products at the same low price across all of its U.K. Stores.

13. •A second major hair-care competitor is Superdrug.
•Superdrug has grown to become one of the largest health and beauty retailers,
with almost 700 stores in the united kingdom.
•Superdrug launches hundreds of private label products each year. Working with
its suppliers, Superdrug identifies trends and transforming them into an
affordable reality.
•More than 25 per cent of the company’s stores features pharmacy.

14. CONSUMER BEHAVIOUR
TWO MAIN THINGS WORTH NOTING ARE THAT CONSUMERS WEREN’T BRAND
LOYAL FOR A VARIETY OF REASONS AND A SINGLE CONSUMER WAS
CONSUMING BOTH BASIC AND PREMIUM PRODUCTS CLOUDING
DISTINCTION BETWEEN TWO TARGET SEGMENT.

16. 1. THERE WAS A GENERAL BELIEF BY U.K. CONSUMERS THAT CHANGING SHAMPOO
BRANDS PRODUCED BETTER RESULTS THAN CONTINUALLY USING A SINGLE BRAND.
2. TRENDS IN BUYING BEHAVIOUR LED TO CHANGING PREFERENCES. WHEREAS IN THE
70S CONSUMERS WANTED SHAMPOOS THAT WERE GENTLE, THE ’80S SAW A GREATER
EMPHASIS ON DETANGLING, AND IN THE ’90S, SHINY HAIR BECAME MORE
IMPORTANT.
3. IT WAS DIFFICULT FOR CONSUMERS TO IDENTIFY MEANINGFUL DIFFERENCES
BETWEEN THE VARIOUS BRANDS AVAILABLE IN ANY GIVEN STORE. CONSUMERS HAD
A LARGE NUMBER OF CHOICES THAT VARIED NOT ONLY ON BRAND NAME, BUT ALSO
PACKAGING, ADVERTISING, PRICE, INGREDIENTS, CONSISTENCY, FRAGRANCE AND SO
FORTH.

18. Consumers who purchased professional brands were largely fashion-conscious
women in the 20-35 age category. these purchasers tended to be more affluent
than buyers of mass-market brands. however, most boots consumers bought both
basic and premium brands. in some cases, the female head of household would
buy basic products for her kids and husband, and premium for herself. other
customers bought basic products for everyday use and premium products for
special occasions such as weekends or social outings. these customers used
premium brands as a “treat” when consumers wanted to look and feel their best.

19. UK’S HAIR CARE MARKET
•OVER 60 MAJOR BRANDS OF HAIR CARE PRODUCTS WERE AVAILABLE IN THE U.K.
MARKET.
•THE SALES OF THESE BRANDS WERE DIRECTLY PROPORTIONAL TO THE AMOUNT OF
ADVERTISING EXPENDITURE.
•NONE OF THESE BRANDS HAD MORE THAN A NINE PER CENT MARKET SHARE.
•SIGNIFICANT PRICE DISCOUNTING THROUGH PROMOTIONAL ACTIVITY AND
COMPETITION FROM LOW-COST PRIVATE LABEL ALTERNATIVES WERE EXPECTED TO
CONTINUE INTO THE FORESEEABLE FUTURE.

20. BOOTS STRATEGY& POSITION SO FAR..
• BOOTS SAW AN OPPORTUNITY TO BE THE RETAIL HAIR-CARE EXPERT AND TO OFFER THE LATEST RANGES.
• ADDITIONALLY, BOOTS DESIRED TO BUILD A NEW MARKET BY USING CELEBRITY ENDORSEMENTS TO
CREATE AWARENESS AND CREATE AN EMOTIONAL ATTACHMENT BETWEEN CONSUMERS AND THE BRAND
• BOOTS DEVELOPED A CRITICAL MASS OF PROFESSIONAL HAIR-CARE BRANDS. SOME RANGES WERE
DEVELOPED AND LAUNCHED IN PARTNERSHIP WHEREAS OTHERS (EXISTING PRODUCTS) WERE
LAUNCHED THROUGH A BENEFICIAL SUPPLIER AND RETAILER PARTNERSHIP (E.G. JOHN FRIEDA)..

21. • THE RELATIONSHIP WITH BOOTS WAS LUCRATIVE FOR THE HAIRDRESSERS BECAUSE IT GAVE THEM
ACCESS TO A LARGE PERCENTAGE OF U.K. CONSUMERS THROUGH BOOTS’ 1,300 STORES. RESEARCH
INDICATED THAT OVER 85 PER CENT OF FEMALE ADULTS IN THE UNITED KINGDOM VISITED A BOOTS
STORE WITHIN THE PAST WEEK.
• USING ITS SUPERIOR TECHNOLOGICAL CAPABILITIES AND SIGNIFICANT PRODUCTION CAPACITY, BOOTS
WORKED WITH THE CELEBRITIES TO DESIGN FORMULATIONS THAT WERE FUNCTIONALLY BETTER THAN
EXISTING BRANDS.
• IN THE MORE THAN FIVE YEARS SINCE THE FIRST CELEBRITY BRAND WAS INTRODUCED, BOOTS FELT THAT
IT HAD NOT BEEN ABLE TO SUFFICIENTLY LINK ITS NAME WITH THESE PRODUCTS AND HENCE MISSED ON
MAXIMIZING PROFITABILITY.

22. SOME DATA ASSOCIATED WITH BOOTS
STRATEGY

24. CONTD…

28. The

29. TO SELECT ONE OF THREE
PROMOTIONAL ALTERNATIVES

30. ALTERNATIVES AVAILABLE

31. •GET THREE FOR THE PRICE OF TWO (“3 FOR 2”)
•RECEIVE A GIFT WITH PURCHASE (“GWP”)
•AND AN ON-PACK COUPON WORTH 50P

32. LIMITATIONS
• 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.

33. DATA AVAILABLE
• 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

34. ASSUMPTIONS UNDERTAKEN
• 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

35. ASSUMED DATA
•PRICE : £3
•RETAIL MARGIN: 33%(APP)
•MANUFACTURERS MARGIN : 10%
•COST PRICE TO COMPANY : PRICE – TOTAL MARGIN =57% OF PRODUCT
=£1.7

36. ANALYSIS OF ALTERNATIVES

38. PROS
• 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.
• MOST COMPETITORS DID NOT YET HAVE THE TECHNOLOGY AT POINT OF SALE TO IMITATE THIS
PROMOTION. THEY COULD IMPLEMENT ONLY A 3-FOR-2 OFFER WHEN THE PRICES FOR THE THREE ITEMS
WERE THE SAME.
• SALES WILL INCREASE TO 300%.

39. CONS
• 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.

40. LOSS
• ASSUMING 100 BOTTLES SALES TO PLACE IN A MONTH WITHOUT PROMOTIONSO SALES IN THIS MONTH
WILL BE 300 OUT OF WHICH 100 WILL BE GIVEN FREE
• HENCE EXTRA COST THAT COMPANY WILL BEAR IS 1.7X 100=170
• PROFIT MADE ON 200 BOTTLE IS 200X3X0.1=60
• LOSS = 90

41. EXISTING CUSTOMERS TARGETED
• THE THING HERE WORTH NOTING IS THAT ACH CUSTOMER BUYS 3 PRODUCTSAND 300 BOTTLES WERE
SOLD SO ONLY 100 CUSTOMERS WERE BOUGHT PRODUCTS AND OUT OF WHICH60% WERE JUST
PROMOTIONAL CONSUMERS HENCE ONLY 40% WERE EXISTING CUSTOMERS
• HENCE EXISTING CUSTOMERS = 40

42. GIFT WITH PURCHASE

43. PROS
• 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%

44. CONS
• 40% WILL BE JUST PROMOTIONAL BUYERS
• A COMMON STRATEGY AND CAN BE EASILY IMITATED
• ADDITIONAL COSTS

45. LOSS
• NO OF UNIT SOLD WILL BE 170 AS ASSUMING 100 WERE SOLD WITHOUT PROMOTION
• EXTRA COST COMPANY WILL BEAR =0.93PER BOTTLE
• TOTAL EXTRA COST = 0.93 X 170= 158.1
• PROFIT MADE = 170X3X0.1= 51
• LOSS =107.1

46. EXISTING CUSTOMERS TARGETED
• TOTAL NO OF CUSTOMERS TARGETED 170
• 60 % WILL BE EXISTING BUYERS
• NO OF CUSTOMERS TARGETED = 0.6 X 170= 102

47. ON-PACK COUPON (50P OFF)

48. PROS
• 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

49. CONS
• 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 HEIS MOST LIKELY TO BLAME
BRAND AFFECTING BRAND LOYALTY

50. LOSS
• NO OF UNIT SOLD WILL BE 150 AS ASSUMING 100 WERE SOLD WITHOUT PROMOTION
• PROFIT MADE = 150X3X0.1= 45
• EXTRA COST = 0.5 X 150 = 75
• LOSS= 30

51. EXISTING CUSTOMERS TARGETED
• TOTAL NO OF CUSTOMERS TARGETED 150
• 50 % WILL BE EXISTING BUYERS
• NO OF CUSTOMERS TARGETED = 0.5 X 150=75

52. COMPARISON BETWEEN ALTERNATIVES
0
20
40
60
80
100
120
3for2 GwP 50p coupon
loss costumer targeted

53. DECISION
• IT WILL BE ADVISABLE TO GO WITH 50P COUPON PROMOTION STRATEGY EVEN THOUGH IT MAY APPEAR
TO BE CONSERVATIVE

54. JUSTIFICATION
• THE FIRST STRATEGY IS CLEARLY DISMISSED AS IT REACHES TO VERY FEW EXISTING CUSTOMERS AND
LOSS FOR IT IS ALSO QUITE HIGH.
• THE SECOND STRATEGY REACHES MAXIMUM CUSTOMERS BUT ALSO RESULTS IN MAXIMUM LOSS WHICH
IS MORE THAN 3 TIMES LOSS INCURRED IN 3RD STRATEGY
• THE 3RD STRATEGY IS SELECTED AS LOSSES ARE MINIMUM AND A SIGNIFICANT AMOUNT OF CUSTOMERS
ARE REACHED

55. SUMMARY
• HISTORY OF BOOTS
• SITUATIONAL ANALYSIS
• PROBLEM AND ALTERNATIVE ANALYSIS
• DECISION

56. DISCLAIMER