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IVEY Business School Case Study- Boots:Hair-care Sales promotion

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Information about IVEY Business School Case Study- Boots:Hair-care Sales promotion

Published on June 8, 2016

Author: ShohamTeberiwal

Source: slideshare.net

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1. >> Best known and respected retail names in United Kingdom. >> Provides health and beauty products. >> Operates in around 130 countries with a total of 75,000 employees.

2. Plan sales promotion strategy for a line of professional hair care products at Boots. To drive sales volume and trade-up consumers from lower brand values, while retaining or building brand equity.

3. Challenge is to choose one of the promotional alternatives-

4. What to choose ?

5. 3 for 2 GWP 50p Coupon

6. •Started in 1849 by John Boot as the ‘The British and American Botanic Establishment.’ •Started to provide physical comfort to the needy •Developed into a private company ‘Boot and Company Limited’ •The company began to expand with more stores. •The marketing strategy involved around being – ‘Largest, Best and Cheapest.’

7. 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 1960’s mostly after the war regeneration the company adopted a new black and white logo.

8. 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.

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

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

11. •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.

12. •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.

13. • 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.

14. • 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 celebrity’s brand name.

15. 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.

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

17. Entrepreneurial in spirit, global in impact, John Frieda’s team of celebrity stylists (the “House of Experts”) fuels the company’s new product initiatives with the inside track on hot, new celebrity hair trends.

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

19. One of the most esteemed and influential names in British hairdressing. His company’s philosophy is simple — creating sexy, contemporary catwalk looks within its salons alongside a salon performance range of hair-care products to recreate catwalk glamour at home.

20. The showman of all hairdressers. Has pioneering techniques and cuts. Styles include- The Wedge, The Chop, and The Scrunch.

21. -Known worldwide for hair style and hair care.

22. Brand Introduced Distribution Specifies ( No. of salons in U.K. ) Market Awareness Charles Worthington 1996 Only Boots 5 Medium John Frieda 1996 Widely Available 3 Strong Nicky Clarke 1998 Widely Available 2 Medium Umberto Gianni 1999 Widely Available 8 Low Toni & Guy Jan 2001 Only Boots 250 Strong Trevor Sorbie Sept 2001 Only Boots 2 Medium Lee Stafford Sept 2001 Only Boots 3 Low

23. * 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

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

25. •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.

26. •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.

27. Most major retailers carried a variety of professional and mass market hair-care brands. The major competitors in the supermarket segment were Tesco, Sainsbury’s and Morrison's. TESCO SAINSBURY’S MORRISON’S • Largest supermarket chain in U.K. • 1.800 stores and 45K employees. • Second largest in U.K. • About 700 stores • Provides high quality + low prices • Owns around 400 stores.

28. •Reasons as to why customers are not brand loyal ! •Why no brand has more than 9% market share ?

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

30. Trends in buying behavior led to changing preferences- •70’s market wanted gentle shampoos •80’s saw a emphasis on detangling •90’s market had value for shiny hair-care products.

31. 1. No variation in product-sizes because of the added cost and complexity involved. 2. No media advertising budget was allocated for this promotion. 3. There would only be signage within the store to promote the offer.

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

33. Which is the BEST alternative ?

34. This offer would enable consumers to buy two hair-care items at regular price and receive one free. Customers could combine any three items they liked (e.g., shampoo, conditioner, and styling gel, etc.), but the three items had to be the same brand. The free item would be the one that was the least expensive of the three items selected by the shopper.

35. 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.

36. 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 to avoid the need to design and produce additional packaging.

37. • Adding the sample would 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.

38. 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 GWP’s as their promotional method.

39. • 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.

40. 0 50 100 150 200 250 300 3 for 2 GWP On pack Coupon Market Analysis % Sales Increase % Increase in consumers (who prefer other brands usually)

41. • 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.

42. •The business case was downloaded from the Harvard site www.hbs.org •The Richard Ivey School of Business website •Boots website www.boots-uk.in •Various images in the background were downloaded from www.google.com/images •Charles Worthington home-page http://www.cwlondon.com •John Frieda home-page http://www.johnfrieda.com •Umberto Giannini home-page http://www.umbertogiannini.com/ •Toni & Guy home-page http://www.toniandguy.co.uk/start.html •Trevor Sortie home-page http://www.trevorsorbie.com/index.htm •Lee Stafford home-page http://www.leestafford.com/

43. Marketing Professor 2013-Present Marketing Professor 2009-2013 Ph.D. and M.S. (Marketing) 2003 - 2009 Undergraduate student at IIT Bombay Summer Intern under Prof. Sameer Mathur

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