Boots hair care products_case analysis
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Transcript of Boots hair care products_case analysis
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BOOTS- hair care products
Prepared by
Rahul Batra
140101120
IMT Ghaziabad
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UK- Hair market (existing)
BrandsPantene Pro V andHead and shoulder
by Proctor andGamble
Alberto VO5 byAlberto
Elvive by LOreal
StoresTesco, Sainsburry
and Morrisons
Drug retailer- Boots,Drug store
MarketNo brand with morethan 9% of market
share
Market expected togrow at 1-3% peryear for the next 5
years
Volume expected togrow faster than
value
Price promotion forshampoo causing
overall decline inprices
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UK- Hair market (opportunity)
The celebrity products were not known to the common public, so theyneeded some exposure
Create an emotional attachment
Celebrity Endorsement
These products were basically available in their own stores, so salescould be generated by making them available in the BOOTS stores.
Availability of Celebrity owned products
New range of products were launched in partnership
Existing products only with beneficial supplier and retailer partnership
BOOTS manufactured the products and pay licensing fee
Products
Brand owners- Celebrity hairdressers managed the public relationactivity
BOOTS managed all this in consultation with the brand owners
media
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Competitors
P&G
8.4% Market Share
Leading Brand: Pantene
High ConsumerAwareness
Alberto-Culver
Revolutionized Ad-slots
Increased product baseby Global acquisitions
Wide product-range
LOreal
5% Market SharePortfolio of over 500
brands and 2000 prod.
Pioneer in promotions
Product Retailers
Tesco, Sainsburys,MorrisonsTraditional
Supermarket
SuperdrugValue Retail
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Consumer
Gentleshampoos
70s
Detanglingshampoos
80s Shiny hair
90s
Changing shampoo brands continuously have better results on hair
Belief
The requirement of consumers have changed since 70s
Changing trends of requirement
No identification of meaningful difference between shampoo brands
Large number of choices varying not just on brand name, but also onpackaging, advertising, price, ingredients, consistency, fragrance etc
Difference in choices
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Targetconsumer
Age 25-30 years
Premiumproducts as treat
either forthemselves
specially or forsome special
occasion
Both basic andpremiumproducts
More affluentthan mass
market buyers
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Promotional program
Drive sales volume and trade-up customers from lower value brands Retain the building brand equity
Objective
Boots customers
Purchasers of mass market brands
Size
One month starting from December 1st, Christmas season
Duration
400 BOOTS stores
Flyers distributed to the visitors No separate advertisement
Signage within the store to promote the offer
Distribution Vehicle
Christmas season, when consumers spend more than usual
Market is flooded with discounts, keep up with the volume sales
Timing
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0.00 1.00 2.00 3.00 4.00 5.00
Premium brands (inpounds)
Mass-market brands (inpounds)
Premium brands (in
pounds)
Mass-market brands (in
pounds)manufacturing cost 2.59 1.45
manufacturer's margin(average 10%)
0.26 0.15
retailer's margin 1.14 0.40
Average industry Pricing of 250ml shampoobottle
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Promotional alternative- 3 for 2
Consumers could combineany items of their choice
Boots had the Point-of-Sales technology toimplement it
Estimated Sales increaseis 300% of Pre-promotions
Incentive for Bulk-buyingcustomers
ProsChoice of free item limitedto the same brand and notthe Brand House
Skeptical customers wouldthink that Boots is trying topush its stocks
Price Sensitive consumerswould prefer a pricediscount instead of in kind
Cons
Cheapest item would be given for free
Competitors didnt have POS tech
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Promotional alternative- GWPAn existing sample would be bundled with the regular purchase
No additional designing,packaging cost
Estimated 40% sales toBoots shoppers who wouldnot have otherwisepurchased a hair-careproduct
Creates excitement amongcustomers regarding thegift
Incentive for Bulk-buyingcustomers
Pros
No actual monetarysavings
Discerning buyers would notbe able to choose their gifts
Skeptical customers wouldthink that Boots is trying topush its stocks
Cons
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Promotional alternative- On pack
coupon (50p off)Advantage of immediate usage by the consumer
Actual savings inmonetary terms for theprice sensitive consumer
Estimated high usage ofcoupons as customerswould indulge in holiday
season shopping anyway
Time-tested and easy toimplementno hi-techimplementation reqd.
Pros
No differentiation with
competitors
Consumers need toremember to carry thecoupons with them for
purchase
Cons
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Comparison- premium brands3 for 2 GWP 50p discount
Cost of an average item 3.99 3.99 3.99
pre-promotional unit sales/day 100 100 100
percentage increase in unit sales/day 300% 170% 150%
promotional unit sales/day 300 170 150
Number of sets sold 150 170 150
Total Revenue (pre-promotional) 399 399 399
total revenue 1197 678.3 598.5%age change in revenue 200.00% 70.00% 50.00%
Margin earned (pre-promotional) 114 114 114
margin earned 342 193.8 171
%age change in Margin 200.00% 70.00% 50.00%
promotional cost per unit 2 0.93 0.5
total promotional cost per day 300 158.1 75
Profit 42 35.7 96
Accusition of new customers 60% 40% 50%
Effect on building brand equity negative neutral negative
C i k
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Comparison- mass-market
brands3 for 2 GWP 50p discount
Cost of an average item 2 2 2
pre-promotional unit sales/day 100 100 100
percentage increase in unit sales/day 300% 170% 150%
promotional unit sales/day 300 170 150
Number of sets sold 150 170 150
Total Revenue (pre-promotional) 200 200 200
total revenue 600 340 300%age change in revenue 200.00% 70.00% 50.00%
Margin earned (pre-promotional) 57.14 57.14 57.14
margin earned 171.43 97.14 85.71
%age change in Margin 200.00% 70.00% 50.00%
promotional cost per unit 1 0.93 0.5
total promotional cost per day 150 158.1 75
Profit 21.43 -60.96 10.71
Accusition of new customers 60% 40% 50%
Effect on building brand equity positive neutral neutral
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Indian market- promotional program for Lenovo Laptops
Maitain its number one position in laptop selling Drive ismart phones and laptops in the market
Objective
People who are looking to purchase both smart phone and a laptop
Recent managers, promoted,and
Size
For a period of 2 months
Duration
Online through its own website and lenovo stores
Exclusive channels such as amazon online Exclusive stores such as mobile store
Distribution Vehicle
June- july, when recently promoted people wil prefer to spend higher disposableincome
Promotional at business parks in order to give them offers then and there
Timing
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Indian market- promotional program for Lenovo Laptops
(contd)
Smart phone free with a laptop withthe price range of more thanRs40,000
Exchange bonus when an old laptopis exchanged or a net discount of3000 (which ever is higher) for thelaptops of price range of 32000 to
40000 OS and basic softwares installed with
the laptop for the price range of25000- 32000
Offers
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>40000
32000-
40000 25000-32000
cost of one laptop 27000 19000 14500
cost of promotion 5500 3500 2200
total cost 32500 22500 16700
average selling cost 44000 35000 28500
profit per unit pre-promotional 17000 16000 14000
profit per unit after promotional offer 11500 12500 11800
unit sales per day 75 50 100
expected increase in unit sales 75.00% 100.00% 150.00%
final unit sales 131.25 100 250
pre-promotional profits 1275000 800000 1400000
post-promotioanl profits 1509375 1250000 2950000
change in profits 18.38% 56.25% 110.71%
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THANK YOU