The document discusses a case study about selecting a promotional strategy for Boots, a hair care brand. It analyzes three options: a "3 for 2" deal, gift with purchase, and a 50p coupon. The hypothesis is that the "3 for 2" deal would drive the highest sales and profits. However, the alternative perspective is that the 50p coupon carries no risk of loss which the other options may face depending on the product mix sold.

1. BOOTS: HAIR-CARE SALES
PROMOTION
HARVARD BUSINESS SCHOOL CASE

2. Contents
 Situation.
 Questions.
 Hypothesis.
 Proof and Action.
 Alternatives.
 Summary.

3. SITUATION(1/5)

4. What is the Situation?(2/5)
Boots is professional hair-care line retalier developed in
collaboration with United Kingdom’s top celebrity hairdressers.
Robinson has to select one of three promotional alternatives scheduled to run for
a month starting December 1st during the Christmas season .
His primary objective was to drive sales volumes and trade-up consumers from
lower-value brands, while retaining orbuilding brand equity.

5. Industry analysis(3/5)
 Personal care Industry – Retail Hair care market

6. Competitor analysis(4/5)
 Most major retailers carried a variety of professional and mass market hair-care
brands.
 The major competitors in the supermarket segment are Tesco, Sainsbury’s and
Morrisons.
 The major players in the at Drug Retailers segment are Boots and Superdrug.

7. Consumer analysis (5/5)
Research indiacted that U.K. consumers were not very brand loyal for following
reasons:
 General belief that changing shampoo brands produced better results than
continually using a single brand.
 Second, trends in buying behaviour led to changing preferences.
 Third, it was difficult for consumers to identify meaningful differences between the
various brands available in any given store.

8. QUESTIONS(1/4)

9. What are Decision Options?(2/4)
The three decision options available in this case are described below :
 1) “3 for 2” : This offer would enable consumers to buy two hair-care items at regular price
and receive one free as long as they are of same brand. Free item would be the one that was
the least expensive of the three items selected.
 GWP (Gift With Purchase) : In GWP, Consumers will be given a product sample for free along
with a regular purchase.
 On-pack Coupon (50p off) : This Conservative approach gave customers to redeem a
coupon for getting 50p off on any product purchased during their store visit.

10. What are possible criteria?(3/4)
The possible criteria would be a perfect trade-off between the following:
• 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.

11. What are the most important criteria among them?(4/4)
As the promotional season lasts only for a month, most important criteria would be:
Driving sales volume up
and
Increasing profits from the promotions.

12. HYPOTHESIS (1/5)

13. What is my Hypothesis? (2/5)
After careful analysis of the case and the exhibits at the end, I think
the “3 for 2” would be the best option for the promotional strategy selection.
 It is given in the case that, Average bottle size (shampoo/conditioner) was 250 millilitres
(ml) — with an average pre-promotional price of £3.99. Industry average retail margins on
premium brands averaged 40 per cent.
 Mass-market brands had an average retail price of £2, with retailer margins of 25 per cent
approximately.
 The manufacturer’s typical margin was between 8 per cent to 12 per cent on their cost for
both types of products.

14. Type of
product
(A)
Offer type
(B)
Average
pre-
promotiona
l price
(C)
Retailer
Margin in
per cent
(D)
Average
Cost
incurred per
product
(E) = (C) *
{1-(D/100)}
Average
cost
incurred to
boots for
the items in
offer. (F)
Price cons-
umer Paid
after the
promotion
(G)
Profit per
product
(H)=
{(G)-(F)}
Premium 3 for 2 3.99 40 2.39 7.17 (per
3)
7.98 (per
2)
+0.81
Mass
Market
3 for 2 2.00 25 1.50 4.50 (per
3)
4.00 (per
2)
- 0.5
Premium GWP 3.99 40 2.39 2.39+0.9+
0.03 =3.32
3.99 +0.67
Mass
market
GWP 2.00 25 1.50 1.5+0.9+
0.03 =2.43
2.00 -0.43
Premium 50p off 3.99 40 2.39 2.39 3.99-0.50 =
3.49
+1.10
Mass
Market
50p off 2.00 25 1.50 1.50 2.0-0.50=
1.50
+0.00
All monetary terms are in Pounds and
1pound= 100 pence(p) TABLE 1

15. Few important criterion to be considered are(4/5)
Offer type Estimated Percentage increase in sales per
day (when compared to pre-promotional
period).
Approximate Percentage of sales to
customers [who would not
otherwise have purchased a haircare
product from Boots during the
promotional period].
3 for 2 300 60
Gift With
Purchase
(GWP)
170 40
50p off per
product.
150 50
TABLE 2

16. It can be inferred from above table
that(5/5)
 For the 3 for 2 promotional strategy, If 100 units of hair care product were sold per day
before the promotion, 300 bottles would be sold per day during the promotion (including
the free bottles).
 Similiar interpretation can be applied to the other promotional strategies GWP and 50p
off too.
 It means the overall profit will also get increased in each case.

17. Proof and Action(1/6)

18. Evidence for supporting Hypothesis (2/6)
 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.

19. Evidence for supporting Hypothesis(3/6)
 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.

20. Evidence for supporting Hypothesis(4/6)
 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

21. Additional Evidence required(5/6)
 The additional evidence required is the estimation of the percentage of mass market
products that can be sold along with the premium products – to have a clear and concrete
estimate of the profit.
 It is given that the manufacturer’s typical margin was between 8 per cent to 12 per cent on
their cost for both types of products- premium and mass market. Since Boots manufacture
some brands of its reatailing products as private label we can not get a correct estimate of
profits due to lack of information regarding the same

22. Action plan (6/6)
 The action plan is a program in which actions are taken at certain point of time due to
reason. It is not a mere To-Do list.
 After calculating estimated profits and analyzing market share potential, The
preference order of the implementing the 3 stratagies would be:
1) 3 for 2 strategy.
2) 50p off coupon.
3) Gift with purchase.
With its technological expertise, Boots should implement the 3 for 2 strategy as
soon as possible and reap the early benefits and build its brand equity.This strategy also
helps in consumers to try the new products and trade up the market.

23. Alternatives (1/2)

24. What are the Alternatives? (2/2)
 The greatest weakness of my hypothesis is calculating estimated profits focusing
only premium brands, ignoring the losses induced by mass-market products.
 The strongest alternative is going with the 50p off coupon strategy because it
makes us sure that there will be no losses whatever may be the percentage mix
of premium and mass-market products sold.

25. Sources
 en.wikipedia.org
 m.boots.com
 leadlifter.com
 forthemommas.com
 disjointedthinking.jeffhughes.ca
 blogs.uab.cat
 healingcuisinebyelise.blogspot.com
 thecryptocrew.com

26. Summary
 Contents.
 Situation.
 Questions.
 Hypothesis.
 Proof and Action.
 Alternatives.

27.  Created by Fayaz Ahamad, NIT Jamshedpur under the
guidance of Marketing Professor Sameer Mathur, IIM
LUCKNOW
DISCLAIMER