PowerPoint Presentation

BOOTS: HAIR-CARE SALES PROMOTION

ABOUT THE COMPANY

BOOTSBest-known and respected retail names in the United KingdomProvides health and beauty productsIt employed around 75,000 people and operated in some 130 countries worldwide in 2004.

The protagonist:Dave Robinson

Marketing & sales headboots

Early daysStarted in 1849 by John Boot as the The British and American Botanic Establishment.Started to provide physical comfort to the needyDeveloped into a private company Boot and Company LimitedThe company began to expand with more stores.The marketing strategy involved around being Largest, Best and Cheapest.

The company launched its first logo in late 1883.It was focused that customers should to pay cash as prices were cut a large extent in product range.Later in 1960s mostly after the war regeneration the company adopted a new black and white logo.

In post war regeneration and development, the company included a new power house, printing works and a new pharmaceutical building.

The company has expanded its major sector in pharmacy and owned global differentiated brands in medication market.

Boots continued to develop product range. About 17 cosmetics were launched to target the teenage market.

The international expansion operations were performed, which exported healthcare products to more than 130 countries.

United kingdomHair-care market

The consumer market comprised of brands such as Pantene Pro-v , Head & shoulders, Alberto V5 and Elvive.These national brands were widely available in supermarkets such as Tesco, Sainsbury and Morrison's.The sales of the brands were directly proportional to the amount of advertising expenditure.

About 60 major brands of hair care products were available in the U.K. market.

None of the brand had more than a nine percent market share.

The overall market was expected to grow by between one to three percent per year.

Severe competition proved how volume grew more quickly In market than value.

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

No celebrity-endorsed products were available in retail stores. Boots began to cultivate relationships, beginning 1996, with well-established hairdressers in the United Kingdom.

Market analysis..

Boots developed a critical mass of professional hair-care brands.

Hairdressers got 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 celebritys 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.

Associated Hair-CareCelebrities & Brands

One of the most influential and creative hairdressers. His name is synonymous with style, innovationand success.

Entrepreneurial in spirit, global in impact, John Friedas team of celebrity stylists (the House of Experts) fuels the companys new product initiatives with the inside track on hot, new celebrity hair trends.

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

BrandIntroducedDistributionSpecifies( No. of salons in U.K. )MarketAwarenessCharles Worthington1996Only Boots5MediumJohn Frieda1996Widely Available3StrongNicky Clarke1998Widely Available2MediumUmberto Gianni1999Widely Available8LowToni & GuyJan 2001Only Boots250StrongTrevor SorbieSept 2001Only Boots2MediumLee StaffordSept 2001Only Boots3Low

Analysis

Price Comparison Chart

Major competitors

>> Holds a 8.4% market share in hair-care market. And products include Pantene, Head & Shoulders.

Product range consists of shampoos, conditioners and styling products.

It holds a 5% share of the UK hair-care market.Typically a French origin company.

Owns over 2000 products in all sectors of beauty business.

Offers a variety of hair-care, skin-care and home-care products.Owns upto 6-7% of market share.It has about 2000 stores located worldwide.

Most major retailers carried a variety of professional and mass market hair-care brands. The major competitors in the supermarket segment were Tesco, Sainsburys and Morrison's.

The second major hair-care competitor was Superdrug. It owned about 700 stores in United Kingdom itself.Superdrug stores layout, lighting and colour allowed customers to move at their own pace in an attractive setting. The companys value offering was that of a value retailer with a wide assortment of around 10,000 products

Consumers endReasons as to why customers are not brand loyal !Why no brand has more than 9% market share ?

There is a general belief among consumers that changing shampoo brands provide better results than using a single brand.

Trends in buying behavior led to changing preferences-

70s market wanted gentle shampoos80s saw a emphasis on detangling90s market had value for shiny hair-care products.

Points to ponder:No variation in product-sizes because of the added cost and complexity involved.No media advertising budget was allocated for this promotion.There would only be signage within the store to promote the offer.

Average bottle size (shampoo/conditioner) was 250 millilitres (ml) with an average pre-promotional price of 3.99. Industry average retail margins onpremium brands averaged 40 %. Mass-market brands had an average retail price of 2, with retailer margins of approximately 25 %. The manufacturers typical margin was between eight per cent to 12 per cent on their cost for both types of products.Some stats

Which is the BEST alternative ?

3 for 2 offer

The 50p off option was a more conservative approach to promoting the brands. All customers would be able to redeem the coupon during their current store visit. Also, most competitors tended to use price discounts or GWPs as their promotional method.

Sales per day would increase to 300 per cent of pre promotion sales during the deal period with this offer. And approximately 60 per cent of these sales would be to customers who would not otherwise have purchased a hair-care product from Boots during the promotional period.

Gift with purchase offer

A GWP was an offer in which customers were given a product sample along with a regular purchase. For example, a sample size of conditioner would be packaged with a regular bottle of shampoo. An existing sample product would be used toavoid the need to design and produce additional packaging.

Adding the samplewould cost 90p per unit for the product plus 3p per unit to secure the sample to the featured product. Robinson expected that sales during the promotional period would be 170 per cent of sales . It is estimated that 40 per cent of sales would be to Boots shoppers that would not have otherwise purchased a hair care product from Boots during the promotional period.

On-pack coupon 50P OFF

The 50p off option was a more conservative approach to promoting the brands. All customers would be able to redeem the coupon during their current store visit. Also, most competitors tended to use price discounts or GWPs as their promotional method.

Robinson estimated that sales would increase to 150 % of non-promotion sales because December would be a heavy promotional period for mass market brands. 50 % of sales would come from Boots customers who would not have otherwise purchased a hair-care product within the promotional period.

Boots is U.K. based company. To promote the sales Dave has to consider a promotional alternative. The competition in hair-care is severe and many big brands fight for the battle. Most of the hair-care brands are associated with professional hair- stylers and celebrities. Research shows that consumers are not vey brand loyal. Current boots consumers and existing purchases were the primary target of promotion. 3 for 2 seems more profitable as it not only lead to 300% increment in promotion sales but attracts 60% customers who would not have otherwise purchased.

Conclusion:

DISCLAIMERCreated by Sunil Swaroop, CET Bhubaneswar, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow.

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