Boots: Hair Care Sales Presentation

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Information about Boots: Hair Care Sales Presentation

Published on July 7, 2016

Author: RishabDevBhaskar

Source: slideshare.net

1. HAIR CARE SALES PROMOTION A CASE STUDY

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3. • Founded in 1849 by Mr. John Boot • In Nottingham • Mary Boot -> 1860 to 1877 • Jesse Boot -> 1877 • Established in 1883

4. • Good brand image • “Largest Best Cheapest” • Sales > 2.5 Million (By 1913) • 75,000+ Employees (By 2004) • 130 Countries (By 2004) • Large variety of products • Popular brands like Strepsils, Nurofen, Clearsil etc

5. “TO SELECT A PROMOTION SCHEME FOR BOOSTING CHRISTMAS SALES”

6. THREE SCHEMES : • Get “3 for 2” • Gift With Purchase (GWP) • On Pack Coupon

7. LET’S NOT FORGET!

8. MARKET RESEARCH!!!

9. Goods Competitors: • Pantene (Proctor & Gamble) • L’oreal • Alberto Culver

10. Retail Competitors: • TESCO • Sainsbury • Morrisons • Superdrug

11. COMPARING COMPETITOR PRICING (Source: Harvard Case Study: BOOTS HAIR CARE SALES PROMOTION)

12. WHAT NEXT?

13. ANALYZING PROMOTION OPTIONS

14. 3 FOR 2: • Select 3 items, get the cheapest one free • Increase in sales: 300% of Pre promotion • 60% purchase from customers who would not purchase regularly. • Disadvantage: Could make the brand look cheap, and could dilute brand equity

15. GIFT WITH PURCHASE: • Attaching sample size of other product from same brand • Increase in sales: 170% of Pre promotion • 40% purchase from customers who would not purchase regularly. • Disadvantage: Additional cost for sample

16. ON PACK COUPON: • Giving a small coupon worth 50p redeemable during their current store visit • Increase in sales: 150% of Pre promotion • 50% purchase from customers who would not purchase regularly. • Disadvantage: Conservative approach, and brands would be using this or GWP as their major purchase.

17. COST vs PROFIT (For Each of the Schemes)

18. BASIC ANALYSIS: • Pre Promotional Price (PPP): £ 3.99 (Assume £4) • Retail Margin: 40% • Actual cost to Manufacturer: 60% of PPP : £ 2.4 • Manufacturer’s Margin: 8%-12% (Assume 10%) • Actual Production Cost (x) • Equation from Data: (10% of x)+ x=£ 2.4 • Production cost (x): £ 2.1818

19. Analysing “3 for2”: • Boost in sales: 300% (Including free Item) • Cost Price of all Items: 300x 2.18 (No. X Manufacturing Cost) £ 654 • Selling Price of all Items: 200x4 (£ 800) • Profit Generated: Selling Price (SP) – Cost Price (CP) :£ 800 - £ 654 : £ 146 • Profit Per Bottle: Profit/No Of Bottles : £146/300 : £ 0.48666

20. Analysing “Gift With Purchase”: • Boost in sales: 170% (Including free Item) • Cost Price of all Items: 170x (2.18 + 0.90 + 0.03) £ 528.7 (Cost of manufacturing and cost of attaching sample) • Selling Price of all Items: 170x4 (£ 680) • Profit Generated: Selling Price (SP) – Cost Price (CP) :£ 680 - £ 528.7 : £ 151.3 • Profit Per Bottle: Profit/No Of Bottles : £ 151.3/170

21. Analysing “On Pack Coupon”: • Boost in sales: 150% (Including free Item) • Cost Price of all Items: 150x (2.18) £ 327 • Selling Price of all Items: 150x(4 - 0.5) (£ 525) (0.5 reduction on Selling price for coupon compensation) • Profit Generated: Selling Price (SP) – Cost Price (CP) :£ 525 - £ 327 : £ 198 • Profit Per Bottle: Profit/No Of Bottles : £ 198/150

22. Inferences: • Maximum Profit/Bottle : “On Pack Coupon” (£ 1.32) • Maximum No of Bottles Sold : “3 for 2” (300 (200 sold)) • Maximum No of New Customers : “3 for 2” (60%)

23. Before We Draw a

24. What WAS our ACTUAL GOAL?

25. 1. Secure Market Leadership 2. Ensure Promotions are PROFITABLE 3. Maintain Professional Hair Care Brand Value

26. Also, DON’T FORGET

27. KEY PARAMETER: (Low Levels of Stockpiling)

28. SO, WINDING UP Our Presentation,

29. BEST SOLUTION: “3 for 2” • Since the company’s main goal was to drive sales and gain market leadership • It maximized the amount of non regular customers purchase (By 60%) • Stocks would get over soon as well, as each customer would buy 3 products, where he/she would usually buy one. • The fact that the whole system of lowest item free could not be imitated by other customers was a huge bonus • This solution maximizes brand equity as well, as it is driving more sales as well.

30. BUT REMEMBER: THERE IS NOTHING ABSOLUTELY RIGHT IN MARKETING

31. ALTERNATIVE SOLUTION: “On Pack Coupon” • On pack coupon has a perfect mix of the two goals we want • It maximizes profit (Actually, The best option of the three) • Increases the percentage of non regular customers (By 50%) (Which is basically the second best option) • Does not dilute Brand Image, as the same promotion is most likely being offered by other brands as well • In case of BOOTS products being offered in other shops, the scheme could also be applied there (Unlike the “3 for 2” option) • Comparing this to the “3 for 2” offer, this is a conservative approach.

32. These slides were created by Rishab Dev Bhaskar, under the guidance of Prof. Sameer Mathur, IIM Lucknow as a part of an internship.

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