Dave Robinson is evaluating promotional strategies for Boots' line of professional haircare products. The options are a "3 for 2" deal where customers get 3 products for the price of 2, a buy-one-get-one-free deal, or a 50p on-pack coupon. While the "3 for 2" strategy has the lowest estimated profit increase, it has the benefit of being unique to Boots and harder for competitors to copy. Considering Boots' relationships with celebrity hairdressers and the importance of protecting its leadership in the haircare segment, Dave decides that a "3 for 2" promotion is the best choice.

1. HAIR SALES PROMOTION
CASE ANALYSIS

2. What’s in here?
1.Understanding the company and its employee Dave
Robinson
2.Company’s promotional strategy alternatives
3.Choosing the best option
4.Reasons backing the decision

3. WHAT’RE BOOTS?
Who’s DAVE ROBINSON?
One of the best known and respected retail names in the UK. It provides health and beauty products and
advices that enhanced the personal well-being.

4. BOOTS
 1849- John Boot opened ‘The British and American Botanic Establishment’ in
Nottingham to provide physical comfort to the needy as well as a reasonable living
for his family.
 1860 - John’s death. Mary (w/o John) took over the management.
 1877- Jesse (s/o John) took sole control of the shop.
 1883- Established it as a private company ‘Boot and Company Limited’
Jesse was the MD and Chairman- he’s determined to cut down the price and
prefer cash sales over credit.
 1st logo:
 Jesse wanted Boots to be the ‘Largest, Best and Cheapest’
 1913- 560 stores and Sales amounted to 2.5 million euros.

5. Change of logo to black and white one
(post war
change)
 1996- began to cultivate relationships with well-established hairdressers in the UK.
Celebrity endorsements to create awareness and emotional
attachment between customers and the brand

6. Relationship with celebrity hairdressers.
So what?
For hairdressers:
 Gave them access to large percentage of UK customers because of Boots’ wide
customer base and area coverage.
85% female adults in the UK visited a Boots’ store in a week.
1300 stores.
For Boots’:
 Helped them to pitch-in celebrity-endorsed products in retail stores, for the
first time.
 Opportunity to be the first retail hair-care expert
 Offer latest ranges

8. So what’s the effect of partnership with
celebrity hairdressers?
1. Boots’ developed and launched mass of professional hair-care brands.
2. Formulations functionally better than other brands were designed.
3. Boots’ paid per unit licensing fee for using the celebrity’s brand name. (under
agreement)
4. The retailer hasn’t been able to link its name with the premium
products developed by it. As a result:
a. Missed on profit maximization.
b. Celebrities used media contacts to manage public relation.
c. Boots’ managed all other activities in consultation with the celebrity hair
dressers.

9. BOOTS AND ITS COMPETITORS
COMPETITION STEMMING FROM
CONTEMPORARIES
(RETAILERS)
HAIR-CARE COMPETITOR
MASS-MARKET BRANDS

10. Customer Behavior Analysis
1. CUSTOMERS BELIEFS AND ATTITUDES
o They believed that changing shampoo brands produced better results. Hence no
brand loyalty.
2. TIME AND TREND
o As decades progressed, people wanted product to cater to different needs. Hence
changing preferences.
• 70s- gentle shampoo, 80s- detangling shampoo, 90s shiny hair
3. COMPETITIVE BRANDS
o It was difficult for the customers to identify meaningful
differencebetween various brands available.

11. Premium brands-
1. Customers who purchased them were highly fashion-conscious. 20-35 yo.
2. Purchased for special occasions only
3. Female head of the family, in some cases purchase only for them.
Basic/mass consumption products-
1. For kids and husbands
2. For daily use

12. Dave
Robinson
Category &
Operations Manager
of Boots.
(from 2004, November to 2006 August)
Director of
Personalization
(as of now)

13. WHAT’S THE
CURRENT
SITUATION?

14. Dave’s planning for promotional
strategy for a line of professional hair-
care products at Boots.
Primarily: shampoos,
conditioners and gels.

16. The Promotion Strategy
1. Targets Boots’ consumers and existing
purchasers of mass-market brands.
2. Runs for a month (entire December)
3.No variation in product sizes (to avoid the added costs and
complexities involved)
4. No media advertisement budget allocated. Strategy
highlighted though flyers.
5. Dedicated place for stock display-signage to promote the offer.

17. Description Premium brands (euros) Mass-market brands (euros)
a. Average Pre-promotional price 3.99 2
b. Industry margins 40% 25%
c. Margin 1.596 0.5
d. Cost to retailers / Manufacturer’s
price
(a-c)
2.394 1.5
e. Manufacturer’s margin (on the
higher side)
12% 12%
f. Margin 0.28728 0.18
g. Cost to Manufacturer
(d-f)
2.1 (approx) 1.32
Note: Margin assumed to be on the price and not on cost.
And since the celebrity hair-care products are important component of their strategy, we’ll
consider the premium brands for the further calculations.

18. What’s the challenge?
Dave has to select one of three promotional activities.
1.3 for 2
2. GWP
3. On-pack coupon worth 50p
For the Christmas season

19. Pros:
1. Competitors lack in the
technology at point of sales to
imitate this promotion.
2. Sales per day estimated to increase
by 300%
3. Approx. 60% of sales will be to
people who will not purchase at
Boots’ during the promotional
season, otherwise.
Conditions:
1. Customers can avail this offer only
if they purchase 3 products from
the same brand.

20. Pre-promotional Margin of Retailer= 1.596/bottle.
No. of units sold on a regular day=100
(say each customer purchases one unit a day, implying 100 customers a day)
Margin per pre-promotional day= 1.596*100= 159.6
During promotion season, 300 units are expected to be sold, same 100 customers.
Therefore, Margin during promotional season = (Price of 2 – cost of 3)*100
= [(3.99*2)-(2.394*3)]*100
= 79.8
Therefore, net margin during
the promotion season, if
“3 for 2” is adopted is 79.8

21. Features:
1. Free sample along with regular
purchase.
2. Existing samples to be used.
3. Additional costs: 93p
4. Sales expected to raise by 170%
5. 40% of sales will be to shoppers
who wouldn’t have otherwise
purchased from Boots’ if not for the
promotional season.
Cons:
1. Most competitors use GWP as
a promotional method.

22. Pre-Promotional Margin per 100 units= 159.6
During the promotional season, net margin = (1.596-0.93)*170
= 113.22
Therefore, net margin during
the promotion season, if
“GWP” is adopted is 113.22

23. Features:
1. Conservative approach
2. Sales expected to raise by 150%
3. 50% of sales would be from shoppers
who wouldn’t have purchased from Boots
if not for the promotion season.
Cons:
1. Most competitors would
use price discounts

24. Pre-promotional margin per 100 units= 159.6
During the promotion season, net margin = (1.596-0.5)*150
= 164.4
Therefore, net margin during
the promotional season if “50p
on-pack coupon” is adopted is
164.4

25. Points to be considered
1. Leadership in hair-care segment in the UK to be secured.
2. Hair-care brands are important component of their
strategy.
3. Boots has contracts with some of the most prestigious
salon brands in the UK. This means competitors cannot
copy Boots’ strategy. So what ever strategy is adopted,
Boots will be on safer side.
4. Profitability is one aspect only, emphasis should be on
maintaining and enhancing the professional hair-care
brands.

26. Basis 3FOR2 GWP
On-pack coupon (50p
off)
Profitability Least Medium High
Evaluation of 3 projects
Considering the pros and cons of 3 alternatives, though the profitability of “3for2” is least, it has
got prospective benefits.
• It’s uniqueto Boots. Therefore less scope for imitation of strategy.
• It helps the customers try new products and helps Boots to
sell the less moving products of a celebrity hairdresser.
• Also, it maintains and enhances the importance of professional
hair-care products.

27. Decision
time

28. 3 for 2
is the best choice

29. Summary

30. DISCLAIMER
Created by Meghana M., BVC Hyderabad,
during Marketing Internship by Prof. Sameer
Mathur, IIM Lucknow.