Description
UK retail giant Boots and the sales promotion strategies for its product Hair care for increase in sales, attract customers by having sales strategies.
Boots: Hair-care sales Promotion
Situation Analysis:
Boots is one of the best known and respected retail names in the UK, provided health and beauty products and advice that enhanced personal wellbeing. It also had ventures in other fields such as Boots Opticians, dentistry, chiropody, ‘Boots for Men stores’ and ‘Internet Services’. For hair care market in UK the sales for popular consumer brands like P&G, L’Oreal, Alberto-Culver were directly proportional to the advertizing expenditure. The market share for hair care products was highly fragmented among the products of these brands and Boots saw an opportunity to be the retail hair care expert and to offer the latest ranges. Hence they built up on celebrity endorsements and hairdresser relationships. They developed these products some in partnership while others through a supplier and retailer partnership. Research indicated that the consumers were not very brand loyal for variety of reasons. They mainly chose between packaging, advertizing, price, ingredients, consistency, fragrance and so forth. Most Boots consumers bought both basic and premium brands. Now looking at the festive seasons Robinson was planning for a sales promotion of its hair care products. Due to the 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 advertizing budget was allocated although sufficient visibility in the stores was maintained. Boots aim was to secure market leadership in the UK in the hair care segment. Competitors could not easily copy their strategy because they had contracts with some of the most prestigious salon brands in the UK. 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.
Problem Statement:
The main problem Robinson was facing is to select one of the three promotional alternatives – get three for the price of two, receive a gift with purchase (GWP), and an on-pack coupon worth 50p while keeping in mind his primary objective to drive sales volumes and trade up consumers from lower value brands while retaining or building brand equity.
Decision criteria for the alternatives:
? ? ? ? Sales volumes should increase for its hair care products. Attract consumers from the lower value brands. Build and retain the brand equity. Considering the competitors both in hair care products and retail stores.
Alternatives:
1) Get the three for the price of two (“3 for 2”) 2) Receive a gift with purchase (GWP)
3) On-pack coupon worth 50p
Evaluation of alternatives:
1)Get the three for the price of two (“3 for 2”) Advantages : ? Consumer would get 3 items for a regular price buy of two.
? ? ?
Consumers could combine any three items as they like e.g. shampoo, conditioner and styling gel of same brand and product with least price would be offered free. Most competitors did not have the technology at the point of sale to imitate this promotion. Estimation was that sales would increase to 300 % of pre-promotion sales
? 60 % of the customers would be just promotional buyers.
Disadvantages : ? ? ? This will have clear cut indication of the stock clearing strategy which could impact potential customers from buying the products. Premium products would lose their brand equity and may sound as some cheap promotion. Product partners (Hair dressers) may oppose this strategy for the dilution of their brand equity.
2) Receive a gift with purchase (GWP) Advantages : ? ? ? Product sample would be given free along with a regular purchase. Additional packing would be used to pack the free sample along with the existing one. Estimated sales would increase by 170% of the pre-promotional sales.
? 40 % of the customers would be just promotional buyers.
Disadvantages : ? ? Adding the sample would cost apprx. 90p per unit for the product plus 3p per unit extra to secure the sample to the featured product. This is a very common strategy used by most of the retailers and can be easily imitated.
3) On-pack coupon worth 50p Advantages : ? ? ? Customers would be able to redeem their coupons during their current store visit. Sales are estimated to increase by 150% of the pre-promotional sales. 50 % of the customers would be just promotional buyers.
? Coupons would enable multiple visits for a single customer.
Disadvantages : ? ? ? ? This is a very common strategy used by most of the retailers and can be easily imitated. Again this is one of the form of discounting which can dilute the brand equity. This is more of a conservative approach. This option has less estimated sales growth as per market research.
Recommending a solution:
considering the advantages and disadvantages, It would be better for the Boots company to adopt the first strategy i.e. ‘3 for 2’ for the reasons that it can not be easily imitated by the competitors, it has more estimation of the increase in sales as per the market research and more customers would buy the product had it not been for the promotional offer. This will also help the Boots to push its non selling brands in this strategy, as general tendency of the consumers is to buy different brands for different products but this offer would attract many consumers to buy the 2nd or the 3rd product in the offer of their brand which they otherwise would not have purchased. This offer would thus boost their sales volumes and increase their brand consumption.
doc_498877526.docx
UK retail giant Boots and the sales promotion strategies for its product Hair care for increase in sales, attract customers by having sales strategies.
Boots: Hair-care sales Promotion
Situation Analysis:
Boots is one of the best known and respected retail names in the UK, provided health and beauty products and advice that enhanced personal wellbeing. It also had ventures in other fields such as Boots Opticians, dentistry, chiropody, ‘Boots for Men stores’ and ‘Internet Services’. For hair care market in UK the sales for popular consumer brands like P&G, L’Oreal, Alberto-Culver were directly proportional to the advertizing expenditure. The market share for hair care products was highly fragmented among the products of these brands and Boots saw an opportunity to be the retail hair care expert and to offer the latest ranges. Hence they built up on celebrity endorsements and hairdresser relationships. They developed these products some in partnership while others through a supplier and retailer partnership. Research indicated that the consumers were not very brand loyal for variety of reasons. They mainly chose between packaging, advertizing, price, ingredients, consistency, fragrance and so forth. Most Boots consumers bought both basic and premium brands. Now looking at the festive seasons Robinson was planning for a sales promotion of its hair care products. Due to the 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 advertizing budget was allocated although sufficient visibility in the stores was maintained. Boots aim was to secure market leadership in the UK in the hair care segment. Competitors could not easily copy their strategy because they had contracts with some of the most prestigious salon brands in the UK. 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.
Problem Statement:
The main problem Robinson was facing is to select one of the three promotional alternatives – get three for the price of two, receive a gift with purchase (GWP), and an on-pack coupon worth 50p while keeping in mind his primary objective to drive sales volumes and trade up consumers from lower value brands while retaining or building brand equity.
Decision criteria for the alternatives:
? ? ? ? Sales volumes should increase for its hair care products. Attract consumers from the lower value brands. Build and retain the brand equity. Considering the competitors both in hair care products and retail stores.
Alternatives:
1) Get the three for the price of two (“3 for 2”) 2) Receive a gift with purchase (GWP)
3) On-pack coupon worth 50p
Evaluation of alternatives:
1)Get the three for the price of two (“3 for 2”) Advantages : ? Consumer would get 3 items for a regular price buy of two.
? ? ?
Consumers could combine any three items as they like e.g. shampoo, conditioner and styling gel of same brand and product with least price would be offered free. Most competitors did not have the technology at the point of sale to imitate this promotion. Estimation was that sales would increase to 300 % of pre-promotion sales
? 60 % of the customers would be just promotional buyers.
Disadvantages : ? ? ? This will have clear cut indication of the stock clearing strategy which could impact potential customers from buying the products. Premium products would lose their brand equity and may sound as some cheap promotion. Product partners (Hair dressers) may oppose this strategy for the dilution of their brand equity.
2) Receive a gift with purchase (GWP) Advantages : ? ? ? Product sample would be given free along with a regular purchase. Additional packing would be used to pack the free sample along with the existing one. Estimated sales would increase by 170% of the pre-promotional sales.
? 40 % of the customers would be just promotional buyers.
Disadvantages : ? ? Adding the sample would cost apprx. 90p per unit for the product plus 3p per unit extra to secure the sample to the featured product. This is a very common strategy used by most of the retailers and can be easily imitated.
3) On-pack coupon worth 50p Advantages : ? ? ? Customers would be able to redeem their coupons during their current store visit. Sales are estimated to increase by 150% of the pre-promotional sales. 50 % of the customers would be just promotional buyers.
? Coupons would enable multiple visits for a single customer.
Disadvantages : ? ? ? ? This is a very common strategy used by most of the retailers and can be easily imitated. Again this is one of the form of discounting which can dilute the brand equity. This is more of a conservative approach. This option has less estimated sales growth as per market research.
Recommending a solution:
considering the advantages and disadvantages, It would be better for the Boots company to adopt the first strategy i.e. ‘3 for 2’ for the reasons that it can not be easily imitated by the competitors, it has more estimation of the increase in sales as per the market research and more customers would buy the product had it not been for the promotional offer. This will also help the Boots to push its non selling brands in this strategy, as general tendency of the consumers is to buy different brands for different products but this offer would attract many consumers to buy the 2nd or the 3rd product in the offer of their brand which they otherwise would not have purchased. This offer would thus boost their sales volumes and increase their brand consumption.
doc_498877526.docx