Be on schedule.Score better.

EN

Description For the exclusive use of A. Alkharashi, 2024. S w 905A22 BOOTS: HAIR-CARE SALES PROMOTION Pankaj Shandilya prepared this case under

Description

For the exclusive use of A. Alkharashi, 2024.
S
w
905A22
BOOTS: HAIR-CARE SALES PROMOTION
Pankaj Shandilya prepared this case under the supervision of Professors Robert Fisher and Murray Bryant
solely to provide material for class discussion. The authors do not intend to illustrate either effective or
ineffective handling of a managerial situation. The authors may have disguised certain names and other
identifying information to protect confidentiality.
Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written
permission. This material is not covered under authorization from CanCopy or any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey
Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London,
Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail [email protected].
Copyright © 2005, Ivey Management Services
Version: (A) 2008-03-20
In early November 2004, on a cold winter afternoon in Nottingham, England,
Dave Robinson was planning his sales promotion strategy for a line of professional
hair-care products at Boots. The professional hair-care line consisted primarily of
shampoos, conditioners and styling products (gels, wax, mousse, etc.) developed in
collaboration with United Kingdom’s top celebrity hairdressers. Robinson’s
challenge was to select one of three promotional alternatives — get three for the
price of two (“3 for 2”), receive a gift with purchase (“GWP”), and an on-pack
coupon worth 50p1 — for the Christmas season. He 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. His primary objective was to drive sales
volumes and trade-up consumers from lower-value brands, while retaining or
building brand equity.
THE COMPANY
Boots, one of the best-known and respected retail names in the United Kingdom,
provided health and beauty products and advice that enhanced personal wellbeing.
The company owned global differentiated brands in the self-medication market
such as Nurofen, Strepsils and Clearasil. It employed around 75,000 people and
operated in some 130 countries worldwide in 2004. Besides retailing, Boots had
1
£1 = 100 pence (p). £1 = Cdn$2.35, December 2004.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 2
9B05A022
international sales and marketing operations and also developed and manufactured
its own products.
Early Days
John Boot, born in 1815, spent his early life as an agricultural laborer on local
farms, where herbal remedies were popular with the laboring poor. John Boot’s
mother used herbs for healing, and he was familiar with the remedies. In 1849,
Boot opened ‘The British and American Botanic Establishment’ in Nottingham,
hoping to provide physical comfort to the needy as well as a reasonable living for
his family. However, after years of hard work and ill health, John Boot died in
1860, and his wife, Mary, took over management of the shop, with the help of her
10-year-old son, Jesse.
Jesse took sole control of the shop in 1877, and, in 1883, established it as a private
company ‘Boot and Company Limited,’ with himself as chairman and managing
director. He was determined to cut prices and asked customers to pay cash rather
than offering them credit. Additionally, the company adopted its own logo (see
Exhibit 1).
The company began to expand with more stores in Nottingham. In 1884, Boots
opened its first store outside Nottingham in Sheffield. Jesse wanted the company
to be fully self-contained so that he could control not only prices but also quality.
He wanted to be the ‘Largest, Best and Cheapest’ and, by 1913, sales in the 560
Boots stores across the United Kingdom amounted to over £2.5 million a year.
Post-War Regeneration and New Development, 1945-1968
A program of factory development in Nottingham was begun following the war,
the major part being completed by 1953. This included a new power house,
printing works, and, in 1959, a new pharmaceutical research building. In 1949, a
factory for the manufacture of cosmetics was opened at Airdrie in Scotland. The
company adopted a new black and white logo (see Exhibit 2).
The Modern Era
Boots continued to develop product ranges, many of which became household
names. ‘17’ cosmetics, aimed at the teenage market, was launched in 1968. In
1969, the analgesic Ibuprofen was introduced and was launched as the OTC brand,
Nurofen, in 1983.
With time, Boots also introduced new services. Boots Opticians, formed in 1987,
became one of the United Kingdom’s leading chain of opticians. Insurance
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 3
9B05A022
services and initiatives in dentistry, chiropody, ‘Boots for Men’ stores and
‘Internet Services’ were introduced in 1999. International expansion in operations
was conducted by Boots Healthcare International (formed in 1991), which
exported healthcare products to more than 130 countries round the world. Boots
Health and Beauty stores were established in Ireland, Thailand and Taiwan.
UNITED KINGDOM HAIR-CARE MARKET
In the mid-’90s, 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.
In 2000, over 60 major brands of hair care products were available in the U.K.
market. None of these brands had more than a nine per cent market share. The
overall market was expected to grow by between one per cent and three per cent
per year for the next five years. However, severe price competition meant that
volume would grow more quickly than value. In some instances, notably shampoo,
the use of price promotions to secure volume would see an overall decline in prices
of approximately one per cent. Significant price discounting through promotional
activity and competition from low-cost private label alternatives were expected to
continue into the foreseeable future.
Boots saw an opportunity to be the retail hair-care expert and to offer the latest
ranges. Additionally, 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. Boots began to cultivate relationships, beginning
1996, with well-established hairdressers in the United Kingdom. In particular, they
sought hairdressers located on High Street in London that had high consumer
awareness and a premium positioning.
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.
Research indicated that over 85 per cent of female adults in the United Kingdom
visited a Boots store within the past week.
Boots developed a critical mass of professional hair-care brands. Some ranges
were developed and launched in partnership whereas others (existing products)
were launched through a beneficial supplier and retailer partnership (e.g. John
Freida). Using its superior technological capabilities and significant production
capacity, Boots worked with the celebrities to design formulations that were
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 4
9B05A022
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. Boots and the brand owners
(hairdressers), between them, currently undertook the management of the licensed
brands. The brand owners, given their contacts with the media, specifically
managed the public relation activity. Boots managed all other activities in
consultation with the brand owners.
THE PROFESSIONAL HAIR-CARE BRANDS
Exhibit 3 gives details about associated celebrities and the brands. Exhibit 4 gives
a summary of the brand’s product ranges. Exhibit 5 shows their distribution and
introduction dates.
THE MAJOR COMPETITORS (MASS-MARKET BRANDS)
Procter & Gamble
Swiss drug company Hoffman-La Roche developed Pantene as a shampoo and
launched it in Europe in 1947. The name “Pantene” refers to the product’s origins,
from “Panthenol,” which is another name for pro-vitamin B-5. Richardson-Vicks
acquired Pantene in 1983, by which time Pantene had developed into a fragmented
business with more than 100 products, sold mainly in department stores and
salons.
Procter & Gamble acquired Richardson-Vicks in 1985, and in 1991, the product
was reformulated as the Pantene Pro-V (Pro-Vitamin) line and rolled out as a
global brand. By 1995, it became the best-selling hair-care brand in the world with
a lineup that included shampoos, conditioners and styling products for all different
hair types. The consumer awareness for Pantene was very high, and the brand was
widely available. It held a 8.4 per cent share of the U.K. hair care market in 2001.
Apart from Pantene, Procter & Gamble offered other complete ranges of hair-care
brands including Clairol, Head & Shoulders, Daily Defense, PERT plus, and
Herbal Essences.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 5
9B05A022
ALBERTO-CULVER (UNITED KINGDOM)2
Over 60 years, beginning in 1955, Alberto Culver grew into a multibillion-dollar
company. The company’s head-office was located in Illinois, but its products were
sold globally. Alberto-Culver’s acquisition of Sally Beauty Company in 1969 has
grown from a handful of franchised stores to over 2,000 store locations today in
United States, United Kingdom (150), Canada, Germany and Japan. The
company’s most famous claim to fame was when, in 1971, its founder, Leonard
Lavin, forced television networks to abandon their 60-second commercials with
the introduction of 30-second ones. In the recent past, the company, in order to
increase its product base, has globally acquired diverse firms.
Alberto-Culver offered a variety of products for hair-care, skin-care and homecare. Some of its top brands included: St. Ives, VO5, Consort hair care for men,
and FDS etc. Alberto-Culver’s hair-care range offered a broad assortment of
shampoos, conditioners and styling agents.
L’ORÉAL
L’Oréal began in 1907 when a young French Chemist, Eugene Schueller,
developed an innovative hair-color formula. He called his new perfectly safe hair
dye “Auréole.” In 1909, he registered the company, the “Société Française de
Teintures Inoffensives pour Cheveux,” the future L’Oréal. The company started
exporting its products as early as 1912 when they could be found in Italy, Austria
and Holland. A few years later, via agents and consignments, they were distributed
in the United States, South America, Russia and the Far East. Today the group is
present worldwide through its subsidiaries and agents.
L’Oréal’s nearly century-old history was marked with major successes, with
landmark products that offered women new ways and means to enhance beauty.
The group marketed over 500 brands and more than 2,000 products in all sectors
of the beauty business: hair color, permanents, styling aids, body and skincare,
cleansers, and fragrances. These products were found in all distribution channels,
from hair salons and perfumeries, to hyper-super markets, health/beauty outlets
and direct mail. Communications became the other key in the company’s history.
Back when advertising was still in its infancy, L’Oréal commissioned promotional
posters from graphic artists like Colin, Loupot, Savignac to publicize the
company’s products. The product range consisted of shampoos, conditioner and
styling products. It held a five per cent share of the U.K. hair care market in 2001.
2
accessed May 2005.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 6
9B05A022
Hair-care Product Retailers
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 Morrisons. Tesco was the largest supermarket chain in the United
Kingdom with more than 1,800 stores and 45,000 employees. 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. Morrisons had 400 stores and prided itself on
providing quality products at the same low price across all of its U.K. stores.
Morrisons had taken over Safeway in the United Kingdom in 2004. .
A second major hair-care competitor was Superdrug. Started in 1966, Superdrug
had grown to become one of the largest health and beauty retailers, with almost
700 stores in the United Kingdom. The company’s value offering was that of a
value retailer with a wide assortment of around 10,000 products, ranging from
essentials to premium products. Superdrug stores layout, lighting and color,
allowed customers to move at their own pace in an attractive setting, thus
providing a welcoming and relaxing environment.
Superdrug launched hundreds of private label products each year. Working with its
suppliers, Superdrug identified trends (including catwalk fashion) and transformed
them into an affordable reality. More than 25 per cent of the company’s stores
featured a pharmacy.
CONSUMERS
Research indicated that consumers were not very brand loyal for a variety of
reasons. First, there was a general belief by U.K. consumers that changing
shampoo brands produced better results than continually using a single brand.
Second, trends in buying behaviour led to changing preferences. Whereas in the
’70s consumers wanted shampoos that were gentle, the ’80s saw a greater
emphasis on detangling, and in the ’90s, shiny hair became more important. Third,
it was difficult for consumers to identify meaningful differences between the
various brands available in any given store. 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. These purchasers tended to be more affluent
than buyers of mass-market brands. However, most Boots consumers bought both
basic and premium brands. In some cases, the female head of household would
buy basic products for her kids and husband, and premium for herself. Other
customers bought basic products for everyday use and premium products for
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 7
9B05A022
special occasions such as weekends or social outings. These customers used
premium brands as a “treat” when consumers wanted to look and feel their best.
THE DECISION
Current Boots consumers and existing purchasers of mass-market brands were the
primary target for the promotion, which was to run for one month starting
December 1st. Due to efficiency considerations and ongoing management of stock,
Boots was not considering any variation in product-sizes because of the added cost
and complexity involved. No media advertising budget was allocated for this
promotion, although it would be highlighted in flyers distributed by the store.
Stock would be placed in a dedicated end of aisle or mid-aisle display during the
promotional period. There would also 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 millilitres (ml) — with an
average pre-promotional price of £3.99. Industry 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.
The following alternatives were being considered.
“3 for 2”
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. An interesting aspect of this promotion is that most
competitors did not yet have the technology at point of sale to imitate this
promotion. They could implement only a 3-for-2 offer when the prices for the
three items were the same.
Robinson estimated that sales per day would increase to 300 per cent of prepromotion sales during the deal period. In other words, if 100 units of hair care
product were sold per day before the promotion, 300 bottles would be sold per day
during the promotion (including the free bottles). Approximately 60 per cent of
these sales would be to customers who would not otherwise have purchased a haircare product from Boots during the promotional period.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 8
9B05A022
GWP (Gift With Purchase)
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. Adding the sample
would cost approximately 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 that would have occurred
without the promotion. He 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.
Robinson estimated that sales would increase to 150 per cent of non-promotion
sales because December would be a heavy promotional period for mass market
brands. Also, most competitors tended to use price discounts or GWP’s as their
promotional method. Fifty per cent of sales would come from Boots customers
who would not have otherwise purchased a hair-care product within the
promotional period.
Under all three promotional tactics, the vast majority of sales would be for
shampoo, conditioners and gels. Based on market research, Robinson expected
low levels of stockpiling because of the promotions.
CONCLUSION
Boots’ aim was to secure market leadership in the United Kingdom in the hair-care
segment. The celebrity hair-care brands were clearly an important component of
their strategy. Competitors could not easily copy their strategy because Boots had
contracts with some of the most prestigious salon brands in the United Kingdom.
He wanted to ensure that the promotions were profitable, but the importance of
maintaining and enhancing the professional hair-care brands could not be
understated.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 9
9B05A022
Exhibit 1
FIRST LOGO ADAPTED IN 1883
Source: Company files.
Exhibit 2
NEW BLACK AND WHITE LOGO ADAPTED IN 1949
Source: Company files.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 10
9B05A022
Exhibit 3
BRAND DESCRIPTIONS
Name
Description
Charles Worthington1
One of the most influential and
creative hairdressers. His name is
synonymous with style, innovation
and success.
John Frieda3
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.
A popular hairstylist to the stars from
the film, television, fashion, and
music industries.
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 glamor
at home.
“At Toni & Guy we create wearable,
catwalk-led hairstyles for people who
want easy-care, trend-setting
hairstyles. Be an individual; be ahead
in the style stakes with Toni and
Guy.”
Trevor Sorbie, is considered as the
showman of all hairdressers. His
pioneering techniques and cuts —
the Wedge, the Chop, and the
Scrunch are now part of everyday
salon parlance.
He is known for hairstyle and hair
care.
Nicky Clarke
Umberto Giannini4
Toni & Guy5
Trevor Sorbie6
Lee Stafford7
Specifics
– Five prestigious London2
salons tending to more
than 2,000 clients a week
– Celebrity following on
both sides of the Atlantic
– Three salons in London,
two in New York and one
in Los Angeles.
– The product range is
targeted for specific hair
types.
Market
Awareness
Medium
Strong
– Salons in London and
Manchester
Medium
– Eight salons in the United
Kingdom
Low
– 250 salons in the United
Kingdom
Strong
– Two salons in the United
Kingdom
Medium
– Three salons in the
United Kingdom
Low
1
Charles Worthington home-page
All references to London in United Kingdom
3
John Frieda home-page
4
Umberto Giannini home-page
5
Toni & Guy home-page
6
Trevor Sorbie home-page
7
Lee Stafford home-page
2
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 11
9B05A022
Exhibit 4
PRODUCT CATEGORIES
Men’s
Range
Product Categories
Styling Products
Charles
Worthington
Shampoo
Conditioner
Spray
Balm
Shaper
Mousse
Jelly
Glosser
Hair cream
Serum
Gel
Styling Foam
Hair lotion
Putty
Wax
Makeover kit
Hair powder
Hair colour
Hair dryer
Hair brush
Hair comb
Barber’s clipper
Straightning iron
Heat rollers
Hair band
Face wash
Face scrub
Beard softner
Shave oil
Shave foam
Shave gel
After shave
Shower gel
Deodorant
Eau de toilette
Hair wipe
Lip balm
BRANDS
John Nicky Umberto Toni Trevor
Lee
Frieda Clarke Giannini & Guy Sorbie Stafford
1996
X
X
X
X
1996
X
X
X
1998
X
X
X
X
1999
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Jan-01 Sep-01
X
X
X
X
X
X
X
X
Sep-01
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Source: Company files.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 12
9B05A022
Exhibit 5
DISTRIBUTION AND INTRODUCTION DATES
Brand
Introduced
Distribution
Charles Worthington
1996
Only Boots
John Frieda
1996
Nicky Clarke
1998
Widely Available
Widely Available
Umberto Giannini
1999
Widely Available
Toni & Guy
January 2001
Only Boots
Trevor Sorbie
September 2001
Only Boots
Lee Stafford
September 2001
Only Boots
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
For the exclusive use of A. Alkharashi, 2024.
Page 13
9B05A022
Exhibit 6
PRICE COMPARISON CHART
CATEGORY*
Shampoo
Conditioner
Gel
Mousse
Hair-spray
Wax
Serum
Hair Brush
PRICE**
Charles
John
Worthington
Frieda
1.7 – 2.2
1.4 – 2.5
1.7 – 3.3
1.7 – 2.5
3.30
2.43
2.0 – 3.5
1.8 – 2.5
1.9 – 3.5
1.3 – 6.5
9.0 – 11.0
9.2 – 11.0
11.4 – 15.6
4.8 – 8.5
Nicky
Clarke
1.6
1.8
Umberto
Giannini
1.6
1.8
2.3 – 3.0
2.7 – 7.6
5.0 – 10.0
12.0
Toni & Guy
1.5 – 2.0
2.0
Trevor
Sorbie
2.0
2.0
3.33
1.8 – 2.0
1.5 – 4.0
2.2 – 2.4
2.0 – 4.0
10.0
14.0 – 26.7 12.0 – 21.7
2.8 – 8.5
2.3 – 8.0
Lee
Stafford
1.6
1.6
2.5
Pantene
1.86
1.86
1.12 – 1.90
L’Oreal
0.5
0.5
1.4 – 1.8
7.0
* 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.
This document is authorized for use only by Amal Alkharashi in health Marketing taught by abdullah alhidari, King Saud University from Jan 2024 to Jul 2024.
“Making the Right Move:
Evaluating Boots Hair Care
Seals Promotion Strategy”
Amal Alkharashi
445920239
Ebtesam Alsleeman
445920261
Manar Almehaijeen
445920260
The story behind
ROBINSON
• In Early November 2004, In Nottingham,
England, Dave Robinson Was Planning His
Sales Promotion Strategy For A Line Of
Professional Hair-care Products At Boots.
• The Professional Hair-care Line Consisted
Primarily Of Shampoos, Conditioners And
Styling Products (Gels, Wax, Mousse, Etc.)
Developed In Collaboration With United
Kingdom’s Top Celebrity Hairdressers.
The challenge
Robinson’s Challenge Was To Select One Of Three
Promotional Alternatives:
• Get Three For The Price Of Two (“3 For 2”)
• Receive A Gift With Purchase (“GWP”)
• On-pack Coupon Worth 50p
Primary objective
Increase sales
volumes of Boots
hair products
Trade-up consumers
from lower-value
brands
Build and retain
brand equity
Boots, a leading
&
respected
retail brand in
U.K.
Overview of
Boots
Company
Ownership
of
renowned
brands in the
self-medication
market: Nurofen,
Strepsils,
Clearasil.
Products &
Services
Company
Profile
Workforce
Global Brands
Provider
of
health & beauty
products
&
personalized
wellbeing
advice.
Operations
spanned across
130
countries
worldwide
in
2004.
Business
Operations
Global
Presence
Employed
approximately
75,000
individuals.
Retailing,
international
sales
&
marketing,
product
development,
manufacturing
Overview of Boots Company
Established as a private
company
‘Boot
and
Company Limited’.
John Boot, born 1815,
began
as
an
agricultural
labourer,
exposed
to
herbal
remedies
popular
among the labouring
poor.
John’s death. Mary
(without John) took
over the management.
1849
1815
Jesse as the MD and
Chairman
was
determined to cut down
the price & prefer cash
sales over credit.
Company
own logo
adopted
1877
1860
Opened ‘The British &
American
Botanic
Establishment’
in
Nottingham to provide
physical comfort to the
needy as well as a
reasonable living for his
family.
its
560 stores and Sales
amounted to 2.5 million
euros.
1884
1883
Jesse (s/o John) took
sole control of the shop.
New
power
house,
printing
works,
and
pharmaceutical
research building.
1953
1913
Boots opened its first
store
outside
Nottingham in Sheffield.
1949
1959
A program of factory
development
in
Nottingham was begun
following
the
war,
completed majorly by
1953.
Cosmetics
Scotland.
factory
in
Adoption of a new
black and white logo.
6
The Modern Era
❑ PRODUCT DEVELOPMENT:

Introduction Of 17 cosmetics In 1968, targeting the teenage
market.

Launch Of Ibuprofen In 1969, later branded bs Nurofen in
1983.
❑ EXPANSION OF SERVICES:

Establishment of ‘Boots Opticians’ in 1987, evolving into a
leading chain in the U.K.

Introduction of insurance services, dental and chiropody
services, ‘Boots For Men’ stores, and ‘Internet Services’ In
1999.
❑ INTERNATIONAL EXPANSION:

Formation of Boots Healthcare International in 1991.

Expansion of Boots health and beauty stores to Ireland,
Thailand, and Taiwan.
Boots’ Hair-Care Market Strategy
Boots Strategy:
•Aiming to become the expert in retail hair-care.
•Utilizing celebrity endorsements to create brand awareness and emotional attachment.
•Cultivating relationships with renowned hairdressers since 1996 for premium positioning.
Partnerships and Product Development:
•Developed professional hair-care brands, some in partnership, others through supplier
agreements.
•Leveraged technological capabilities to create superior formulations in collaboration
with celebrities.
Challenges and Management:
•Struggled to associate its name with celebrity-endorsed products, impacting profitability.
•Boots and brand owners jointly managing licensed brands, with brand owners handling
PR.
Conclusion:
•Boots seeks to maximize profitability through strategic partnerships and effective brand
association.
Competitors
The United Kingdom
Hair-care Market

In the mid-’90s, the consumer market for hair-care
comprised of brands such as Pantene Pro-V and Head and
Shoulders by Procter and Gamble, Alberto VO5 by AlbertoCulver, 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.
In 2000, over 60 major brands of hair care products were
available in the U.K. market. None of these brands had more
than a nine per cent market share.
Major competitors
Procter &
Gamble
Alberto-Culver
Loreal
Hair care
product retailers
Procter & Gamble
P&G has a very diverse portfolio of health
products including some of the most
famous hair-care brands including:
❖ Pantene
❖ Clairol
❖ Head & Shoulders
❖ Daily Defense
❖ PERT Plus
❖ Herbal Essences
The story of Pantene and Procter &
Gamble
1947
1985
1995
A
new
shampoo
was
developed
by
Hoffman-La
Roche and launched in Europe,
named Pantene.
Procter & Gamble acquired
Richardson-Vicks.
Pantene became the bestselling hair-care brand in the
world.
Richardson-Vicks
Pantene.
It developed into a huge line
including
shampoos,
conditioners, styling products for
all different hair styles.
acquired
By then, Pantene developed into
a fragmented business with more
than 100 products (Department
store and Salons).
The product was reformulated as
the Pantene Pro-V and rolled out
as a global brand.
Pantene held 8.4% share of the
U.K. Hair care market.
1983
1991
2001
Alberto-Culver (U.K.)
About:
Products:
• Multibillion-dollar company.
Offering variety of hair-care, skin-care and
home-care products, including:
• Head office in Illinois with global
presence.
• The company’s acquisition of Sally
beauty company in 1969 grew into more
than 2000 stores located in the U.S., U.K.,
Canada, Germany and Japan
• St. Ives
• VO5
• Consort hair care (men)
• FDS
The story of L’OREAL
The company started exporting its
products to Italy, Austria and
Holland. After few years, the were
distributing to the U.S., Russia, South
America and the far east.
A French chemist named Eugene
Schueller developed “Aureole” an
innovative hair-color formula known
to be perfectly safe.
1907
1909
The company was registered by the
name of “Societe Francaise de
Teintures Inoffensives pour Cheveux”
which became the future Loreal.
1912
2001
It held 5% share of the U.K. hair care
market.
L’OREAL
About:
Products:
Distribution
channels:
• Nearly century-old
history.
• Shampoos;
Distributed globally through:
• Conditioners;
• Hair salons;
• Hair color;
• Supermarkets
• Styling aid;
• Perfumeries;
• The group marketed
over 500 brands and
2000 products.
• Communication and
advertising from early
times.
• Promotional posters
from graphic designers.
• Body and skincare;
• Cleansers;
• Fragrances
• Health and beauty outlets
• Direct mails
Hair-care
product
retailers
1. Tesco
2. Sainsbury’s
3. Morrisons
4. Superdrug
Consumers
Consumer Insights
Consumers are not highly brand loyal due to various factors:

Changing shampoo brands perceived as yielding better
results.

Evolving trends in buying behavior influence preferences
over time.

Difficulty to identify meaningful differences among available
brands available in any given store.
Professional brand consumers primarily fashion-conscious
women aged 20-35:

Generally, more affluent compared to mass-market brand
buyers.

Many Boots consumers purchase both basic and premium
brands:
➢ Basic products for daily use, premium for special occasions.
➢ Premium brands seen as a “treat” for optimal appearance
and confidence.
The Decision
Promotional Strategy
Target Audience
Primary Focus: Current Boots consumers and existing purchasers of
mass-market brands.
Promotion Duration: One month, commencing December 1st.
Product Considerations
Standardized Product Sizes: No variation planned due to cost and
logistical complexities. ( Average bottle size: 250 milliliters (ml) with
Pre-promotional price: £3.99.)
Promotion Implementation
Advertising Strategy:
– No allocated media advertising budget.
– Promotion highlighted in store flyers.
In-Store Promotion:
– Dedicated end or mid-aisle display for promoted stock.
– In-store signage to promote the offer.
– Approximately 400 Boots stores to feature exterior signage.
Three alternatives :
“3 for 2”
GWP (Gift with purchase)
On-Pack Coupon (50 p off )
“3 for 2”
• Buy two hair-care items at regular price, get one free.
• Items must be of the same brand.
• Free item is the least expensive of the three selected.
Potential Impact:
• Sales / day estimated to increase to 300% of prepromotion sales.
• 60% of increased sales from customers who wouldn’t
have purchased otherwise.
Competitive Advantage:
• Competitors lack technology to replicate this offer.
GWP (Gift with purchase)
• Customers receive a product sample with a regular
purchase.
• Sample packaged with existing product to minimize
additional costs.
Cost and Impact:
• Addition of sample costs approximately 93 p per unit.
• Expected sales during promotion: 170% of nonpromotion sales.
• 40% of increased sales from new Boots customers.
On-Pack Coupon (50 p off)
Customers receive a 50p off coupon redeemable
during the purchase.
Expected Impact:
• Sales estimated to increase to 150% of nonpromotion sales.
• 50% of
customers.
increased
sales
from
existing
Boots
Market Dynamics:
• December heavy promotional period for massmarket brands.
• Competitors predominantly use price discounts or
GWPs.
Analysis (Cost vs Profit)
pre-promotional price of £3.99 ( let’s say 4 )
Production cost (250 ml bottle) : £ 2
production cost for the free sample : £ 0.93
“3 for 2”
GWP
On-Pack Coupon (50
p off)
Max. No of New
Customers
60%
40%
50%
Boost in sales
300%
170%
150%
Cost Price
300 x 2
=600
Selling Price
170 x(2+0.93)
=498.1
(Cost of manufacturing and cost of
attaching sample)
150×2
=300
150x(4-0.5)
=525
200 x 4
=800
170 x4
=680
Profit Generated
Selling Price – Cost Price
800-600
=200
680-498.1
=181.9
525-300
=225
Profit Per Bottle
Profit/no. of bottle
200/300
=0.667
181.9/170
=1.07
225/150
=1.5
(0.5 reduction on Selling price for
coupon compensation)
profit/ bottle
Findings
2
1
0
3 for 2
GWP
On pack coupon
no. of sold bottles
350
300
250
200
150
100
50
0
3 for 2
GWP
On pack coupon
no. of new costumer
70%
60%
50%
40%
30%
20%
10%
0%
3 for 2
GWP
On pack coupon
Recall Dave Robinson’s target
To select a sales promotion strategy,
which will:
• Drive sales volumes
• Trade up consumers from lowervalue brands
• Retain or build brand equity.
“Marketing is a unique
blend of science and art
where there are no right or
wrong decisions. It’s about
understanding
the
dynamics
of
human
behavior
to
create
meaningful connections.”
Thank you for
listening!
Amal Alkharashi
Ebtesam Alsleeman
Manar Almehaijeen

Purchase answer to see full
attachment

Table of Contents

[display_short_calculator]

Latest Reviews

Impressed with the sample above? Wait there is more

Related Questions

New questions

Don't Let Questions or Concerns Hold You Back - Make a Free Inquiry Now!