The document outlines Boots' promotional strategy for a new hair-care product line, focusing on driving sales and increasing customer base through strategies like celebrity collaboration and sales promotions. It evaluates three promotional options—'3 for 2', gift with purchase, and a discount coupon—based on their potential impact on sales. The analysis suggests that while the coupon offers maximum profit, the '3 for 2' strategy could more effectively attract new customers and enhance overall sales.

1. Boots: Planning the promotional strategy for
the
Hair-care product line.

2. What is Boots???

3. Opened In 1849 by John Boot as ‘The British and American Botanic
Establishment’ in Nottingham, to provide physical comfort to the needy.
Established as a private company “Boots and Company Limited” by son
Jesse Boot in 1883. Diversified into research & manufacturing of drugs.
Boots continued to develop product ranges, many of which became
household names. Ex: ‘17’ cosmetics, aimed at the teenage market.
With time, new services introduced like Boots Opticians, insurance
services etc. Boots Healthcare International exported healthcare
products to 130 countries.
In 2004 the company employed around 75,000 people & operated in 130
countries worldwide.

4. What is the current
situation ???

5. Situation Analysis
Plan a sales promotional strategy for a new line of
professional hair-care products at Boots.
Drive sales volumes and trade-up consumer from
lower-value brands, while retaining or building brand
equity.
Collaboration with UK’s top celebrity hairdressers
→ an important component of their strategy

6. Select : one of three promotional alternatives —
— For the Christmas season
Get three for the price of two (“3 for 2”)
Receive a gift with purchase (“GWP”)
An on-pack coupon worth 50p

7. What are the
objectives of the
case ???

8. Understand the relationship between
promotional strategies and their impact on
product sales
To define the criteria to select the
appropriate strategy to boost up sales and
increase customer base..

9. United Kingdom
Hair-care Market…

10. • In 2000, over 60 major brands of hair-care products in
U.K.
• None had a market share greater than 9%.
• Brand sales directly proportional to the amount of
advertising expenditure.
• Severe price competition → use of price promotions
to secure volume → overall decline in prices by
approximately 1 %

11. Offer the latest ranges by working with
the celebrities to design formulations →
functionally better than existing brands
Use celebrity endorsements to create
awareness and emotional attachment
Had superior technological capabilities
and significant production capacity.
Opportunity for Boots :

12. Consumer
Behavior Analysis

13. Consumers in UK not very brand loyal due to:
• A general belief → changing shampoo
brands produced better results
• Trends in buying behavior led to changing
preferences.
• difficulty for consumers to identify
meaningful differences between various
brands

14. Boots consumers →
Professional
brands
• largely fashion-conscious women
• in the 20-35 age
• more affluent than buyers of mass-
market brands
•brands

15. Boots consumers →
Basic
brands
• Other consumers
• used premium brands as a “treat” when
they wanted to look and feel their best for
special occasions.
• In some cases, female would buy basic
products for family and premium for
herself.
•brands

16. Choosing from the
3 alternatives….

17. “3 For 2”
Offer
• buy two hair-care items at regular price
and receive one free
• three items had to be the same brand.
• least expensive of the three items
would be free

18. GWP
(Gift with
Purchase)
• a product sample along with a regular
purchase
• existing sample product would be used
to avoid the need to design and
produce additional packaging

19. On Pack
Coupon
(50p off)
• Consumers will get 50p off on their
purchase.
• All customers would be able to redeem
the coupon during their current store
visit.

20. Robinson’s
Estimates….

21. Offer
• Increase
in sales
per day
• New
customers
added
“3 For 2” GWP
• 170%
• 40%
On Pack
Coupon
• 150%
• 50%
300%
60%
170%
40%
150%
50%

22. The Decision :
• Primary target → Current Boots consumers &
existing purchasers of mass-market brands
• Promotion for 1 month starting December 1st.
• No media advertising budget allocated.
Promotion highlighted in flyers distributed.
• Signage to promote the offer.
• No variation in product-sizes because of the
added cost and complexity involved.

23. Profits in each
Strategy….

24. CATEGORY* PRICE**
Charles
Worthington
John Frieda Nicky
Clark
e
Umberto
Giannini
Toni & Guy
Trevor
Sorbie
Lee
Stafford
Pantene L'Oreal
Shampoo 1.7 - 2.2 1.4 - 2.5 1.6 1.6 1.5 - 2.0 2.0 1.6 0.5
Conditioner 1.7 - 3.3 1.7 - 2.5 1.8 1.8 2.0 2.0 1.6 0.5
Gel 3.30 2.43 3.33 1.86
Mousse 2.0 - 3.5 1.8 - 2.5 2.3 - 3.0 2.2 - 2.4 1.8 - 2.0 1.86 1.4 - 1.8
Hair-spray 1.9 - 3.5 1.3 - 6.5 2.7 - 7.6 2.0 - 4.0 1.5 - 4.0 2.5 1.12 - 1.90
Wax 9.0 - 11.0 5.0 - 10.0 10.0
Serum 9.2 - 11.0 11.4 - 15.6 12.0 14.0 - 26.7 12.0 - 21.7 7.0
Hair Brush 4.8 - 8.5 2.8 - 8.5 2.3 - 8.0
Average
Price
1.62
1.73
2.73
2.03
3.73
9.2
13.3
5.82
PRICE COMPARISON CHART
Exhibit 6
* All products are normally available in 250 ml sizes. Their smaller Take-Away versions are normally 75 ml.
** All prices are in British pounds and per 100 ml unless otherwise stated. These prices are only applicable at Boots stores. Within a product
category the prices vary because of their formulations.

25. Average Price
Per 100 ml
1.62
1.73
2.73
2.03
3.73
9.2
13.3
5.82
Average Price
per 250 ml.
4.05
4.325
6.825
5.075
9..325
23
33.25
14.55
CATEGORY*
Shampoo
Conditioner
Gel
Mousse
Hair-spray
Wax
Serum
Hair Brush
Average Price per 250 ml

26. • Average bottle size (shampoo/conditioner) → 250 ml
• Average pre-promotional price → £3.99. Lets assume it to be £4.
• Industry average retail margins on premium brands → 40 %
• Manufacturer’s typical margin → 8 - 12 %. Lets assume it to be 10 %.

27. Manufacturing cost per bottle
Cost to retailer = 60% of selling price
= 0.6 * 4
= £ 2.4
Let Cost to manufacturer = x
10% of x + x = 2.4
x = £ 2.1818

28. “3 For 2” Offer
• Increase in sales = 300%
• i.e 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 = 100).
• Cost = 2.1818 * 300
= £ 654.54
• Selling Price = 200 * 4 = £800

29. “3 For 2” Offer
Profit £800 - £654.54
= £145.46
Profit/
Bottle
£145.46 / 300
= £0.485

30. GWP
(Gift with Purchase)
• Increase in sales = 170%
• i.e if 100 units of hair care product were sold per day before the
promotion, 170 bottles would be sold per day during the
promotion (plus the free bottles = 170 (75ml each)).
• Cost per 250 ml bottle = £ 2.1818
• Additional cost due to free sample = 93p
(90p per unit for the product plus 3p per unit to secure the sample
to the featured product)
• Thus, Cost per product = 2.1818 + 0.93 = £ 3.1118

31. GWP
(Gift with Purchase)
• Cost = 3.118* 170
= £ 529.006
• Selling Price = 170* 4
= £680

32. GWP
(Gift with Purchase)
Profit £680 - £529.006
= £150.994
Profit/
Bottle
£150.994 / 170
= £0.882

33. On Pack Coupon
(50p off)
• Increase in sales = 150%
• i.e if 100 units of hair care product were sold per day before
the promotion, 150 bottles would be sold per day during the
promotion.
• Cost = 2.1818 * 150
= £ 327.27
• Selling Price/ bottle = £4 – 0.5 = £3.5
• Selling Price = 150* 3.5 = £525

34. On Pack Coupon
(50p off)
Profit £525 - £327.27
= £197.73
Profit/
Bottle
£197.73 / 150
= £1.318

35. Selecting
Promotional
Strategy….

36. Max Profit → On Pack
Coupon

37. Primary Objective →
Drive sales volumes
Trade-up consumers from lower-value brands

38. Choosing Promotional Strategy
Although Max profit lies with the 3rd strategy, from
Robinson’s estimates, the first promotional strategy
should be chosen as it serves the dual purpose of
increasing sales as well as capturing new customers
more efficiently than the other two.
“3 For 2”
300%
Increase in sales
60%
New Customers
added!!!

39. Created by –
Vertika Bansal, IIT Roorkee
During an Internship with
Prof. Sameer Mathur , IIM Lucknow