The Main Player

DAVE ROBINSONCategory & Operations

Manager, Boots

Dave Robinson is planning his sales promotion strategy for a line of professional hair-care products at Boots

His primary objective was to drive sales volumes and trade-up consumers from lower-value brands, while retaining or building brand equity.

Robinson’s challenge is to select one of three promotional alternatives

Robinson realized that the alternative he selected would have immediate effects on both costs and sales as well as long-term implications for the brands involved.

One of the best known retail names in UK.

Provided health and beauty products.

Owned global differentiated brands in the self-medication market.

Employed around 75,000 people and operated in some 130 countries worldwide in 2004.

In 1849 John Boot, an agricultural laborer opened ‘The British and American Botanic Establishment’ to provide physical comfort to the needy.

Jesse, his son, took sole control of the shop in 1877, and, in 1883, established it as a private company ‘Boot and Company Limited’.

Boots introduced new servicesBoots OpticiansInsurance services‘Boots for Men’ storesBoots Health and Beauty stores

The consumer market for

hair-care comprised brands

such as Pantene Pro-V and

Head and Shoulders by

Procter and Gamble,

Alberto VO5 by Alberto-

Culver, and Elvive by

L’Oreal.

These national brands were widely

available in supermarkets such as

Tesco, Sainsbury’s and Morrisons, and

at drug retailers including Boots and

Superdrug.

The sales of these brands were

directly proportional to the amount of

advertising expenditure.

None had more than a nine per cent market share.

In 2000, over 60 major brands were available in the U.K.

The overall market was expected to grow by between one per cent and three per cent per year for the next five years.

Severe price competition meant thatvolume would grow more quickly than value

Boots desired to build a new market by using celebrity endorsements to create awareness and create an emotional attachment between consumers and the brand.

Celebrity hairdressers had their own branded products, but distribution was limited to their own salons.No celebrity-endorsed products were available in

retail stores.

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.

Boots worked with the celebrities

to design formulations that were

functionally better than existing

brands. Under the agreement,

Boots manufactured the products

and paid a per-unit licensing fee

for use of the celebrity’s brand

name.

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.

The professional

Hair-care brands

One of the most influential and creative hairdressers.

Five prestigious London salons tending to more than 2,000 clients a weekFive prestigious London salons tending to more than 2,000 clients a week

Market Awareness- Medium

Entrepreneurial in spirit, global in impact

Three salons in London, two in New York and one in Los Angeles.

The product range is targeted for specific hair types.

Market Awareness- Strong

A popular hairstylist to the stars from the film, television, fashion, and music industries.

Salons in London and Manchester

Market Awareness- Medium

The company’sphilosophy is simple — creatingsexy, contemporary catwalk looks

Eight salons in the UnitedKingdom

Market Awareness- Low

Create wearable, catwalk-led hairstyles for people who want easy-care, trend-setting hairstyles.

250 salons in the United Kingdom

Market Awareness- Strong

Showman of all hairdressers

Two salons in the United Kingdom

Market Awareness- Medium

He is known for hairstyle and hair care.

Three salons in the United Kingdom

Market Awareness- Low

MASS MARKET BRAND

Hoffman-La Roche developed Pantene in 1947

Richardson-Vicks acquired Pantene in 1983

Procter & Gamble acquired Richardson-Vicks in 1985, and in 1991, the product was reformulated as the Pantene Pro-V

By 1995, it became the Best-selling hair-care brandIt held a 8.4 per cent share of the U.K. hair care

market in 2001.

In 1955, Leonard Lavin found Alberto Culver in Illinois

Globally acquired diverse firms.

Forced television networks to abandon their 60-second commercials with the introduction of 30-second ones.

French Chemist, Eugene Schueller, developed an innovative hair-color formula “Auréole.”The company

started exporting its products as early as 1912

The group marketed over 500 brands and more than 2,000 products in all sectors of the beauty business.

It held a five per cent share of the U.K. hair care market in 2001.

Hair-care Product

Retailers

The major competitors in the supermarket segment were Tesco, Sainsbury’s and Morrisons

Tesco was the largest supermarket chain in the United Kingdom with more than 1,800 stores and 45,000 employees.

Morrisons had 400 stores and prided itself on providing quality products at the same low price across all of its U.K. stores.

Sainbury’s was the second largest with 700 stores.

Both Tesco and Sainsbury’s offered a wide product assortment that included traditional supermarket items and online shopping, as well as CDs, books, DVDs, wine, flowers and gifts, kitchen appliances, banking services, and mobile phones.

Consumers were not Brand Loyal

There was a general belief by U.K. consumers that changing shampoo brands produced better results than continually using a single brand.

Trends in buying behavior led to changing preferences.

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.

Consumers who purchased

professional brands were

largely fashion-conscious

women in the 20-35 age

category.Most Boots consumers bought bothbasic and premium brands.

Customers used premium brands as a “treat” when consumers wanted to look and feel their best.

No variation in product-

sizes because of the

added cost and

complexity involved.No media advertising budget was allocated for this promotion

There would be signage

within the store to promote

the offer, and approximately

400 Boots stores would

include signage visible on the

exterior of the store.

Average bottle size (shampoo/conditioner) was 250 milliliters

The average pre-promotional price

was £3.99 with average retail

margins on premium brands

averaged 40 per cent.Mass-market brands had an average retail price of £2, with retailer margins of approximately 25 per cent.

The manufacturer’s typical

margin was between eight per

cent to 12 per cent on their

cost for both types of products.

ALTERNATIVE

Best Alternative is “3 for 2” offerSales per day and number of customers is increased more than the other two alternatives

3 for 2 FWP 50P off

Increase in sales per day 300% 170% 150%

Increase in number of customers

60% 40% 50%

Boots’ aim was to secure market leadership in the United Kingdom in the hair-care segment.Boots’ aim was to secure market leadership in the United Kingdom in the hair-care segment.

Boots’ aim was to secure market leadership in the United Kingdom in the hair-care segment.

DISCLAIMERCreated by Bhupendra Vishwakarma, UIT-RGPV during a marketing internship by prof. Sameer Mathur, IIM Lucknow.