HISTORYBoots UK Limited (formerly Boots the Chemists Limited), trading as Boots, is a pharmacy chain in the United Kingdom and Ireland.

Was Founded By John Boot in 1849 as “The British and American Botanic Establishment” in Nottingham.

In 1883, established as a private company “Boot and Company Limited” by Jesse Boot.

CHANGE IN COMPANIES LOGO

First Logo Adapted in 1883 NEW Black Logo Adapted in 1949

Competitor Brands Retailers Of Same CategoryConsumer Behaviour

SITUATION 1MAJOR COMPETITOR BRANDS

PROCTER & GAMBLE

• Procter & Gamble Co., also known as P&G, is an American multinational consumer goods company

headquartered in downtown Cincinnati, Ohio, United States, founded by William Procter and James Gamble, both from

the United Kingdom.

• Procter & Gamble acquired Richardson-Vicks in 1985, and in 1991, and then the product was reformulated as the

Pantene Pro-V (Pro-Vitamin) line and rolled out to be as a global brand.

• By 1995 P&G became the best-selling hair-care brand in the

• world with a product lineup that included shampoos, conditioners and styling products for all different hair types

• It held a 8.4 per cent share of the U.K. hair care market in 2001.

ALBERTO-CULVER (UNITED KINGDOM)

•Alberto-Culver was an American corporation with international sales whose principal business is manufacturing hair and skin beauty care products under such brands as Alberto VO5, Andrew Collinge, St. Ives (skin care products), TRESemmé, FDS, Consort, and Nexxus.

•The company’s head-office was located in Illinois, but its products were sold globally.

•Over 60 years, beginning in 1955, Alberto Culver grew into a multibillion-dollar company. .

• L’ORÉAL

• L'Oreal is a French cosmetics company headquartered in Clichy, Hauts-de-Seine with a registered office in Paris It

is the world's largest cosmetics company and in 2001 it held five percent of the U.K’ s market share.

• It has developed activities in the field of cosmetics, concentrating on hair colour, skin care, sun

protection, make-up, perfumes and hair care, the company is active in the dermatology, toxicology, tissue

engineering, and biopharmaceutical research fields and is the top nanotechnology patent-holder in the United

States.

• L'Oreal's 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.

•As we talk about the hair-care market in UK, the sales for popular consumer brands like P&G, L’Oreal, Alberto-Culver were directly proportional to the advertising expenditure.

•Therefore the market share of hair-care products was highly fragmented and 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.

•Research also indicated that the consumers were not very brand loyal for variety of reasons. BOOT’s mainly chose between packaging, advertising, price, ingredients, consistency, fragrance and so forth.

Some facts about associated celebrities and the brands…

Name Description Specifics Market Awarene

ss1. Charles

Worthington

One of the most influential andcreative hairdressers. His name issynonymous with style, innovationand success.

• Five prestigious London salons tending to more than 2,000 clients a week.

• Celebrity following on both sides of the Atlantic

Medium

2. John Frieda

Entrepreneurial in spirit, global inimpact, John Frieda’s team ofcelebrity stylists (the “House ofExperts”) fuels the company’s newproduct initiatives with the insidetrack on hot, new celebrity hairtrends.

• Three salons in London, two in New York and one in Los Angeles.

• The product range is targeted for specific hair types.

Strong

3. Nicky Clarke

A popular hairstylist to the stars fromthe film, television, fashion, andmusic industries.

• Salons in London and Manchester

Medium

Name Description Specifics Market Awarene

ss4.

Umberto Giannini

One of the most esteemed and influential names in British air dressing. 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.

• Eight salons in the United Kingdom

Low

5. Toni & Guy

“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.”

• 250 salons in the United Kingdom

Strong

6. Trevor Sorbie

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.

• Two salons in the United Kingdom

Medium

7. Lee Stafford

He is known for hairstyle and hair care.

• Three salons in the United Kingdom

Low

Distribution and Introduction dates

Brand Introduced Distribution

Charles Worthington 1996 Only Boots

John Frieda 1996 Widely Available

Nicky Clarke 1998 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

SITUATION 2RETAILERS OF SAME

CATEGORY

The major competitors in the supermarket brand segment were Tesco, Sainsbury’s and

Morrison's.

•Tesco is a British multinational grocery and general merchandise retailer headquartered in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third largest retailer in the world measured by profits and second-largest retailer in the world measured by revenues.

•It has stores in 12 countries across Asia and Europe and is the grocery market leader in the UK (where it has a market share of around 28.4%), Ireland, Hungary, Malaysia, and Thailand.

•Tesco was the largest supermarket chain in the United Kingdom with more than 1,800 stores and 45,000 employees.

•Sainsbury's was the second largest with 700 stores.

•Sainsbury's is the second largest chain of supermarkets in the United Kingdom, with a 16.9% share of the UK supermarket sector. 

•It was Founded in 1869, by John James Sainsbury with a shop in Drury Lane, London, the company became the largest grocery retailer in 1922, was an early adopter of self-service retailing in the UK, and had its heyday during the 1980s

•Tesco and Sainsbury’s both ,offered a worldwide product assortment that included all traditional supermarket items and online shopping, as well as CD’s, books, DVDs, wine, flower ,gifts, kitchen appliances, banking services, and mobile phones.

•Morrison's had 400 stores It had taken over Safeway in the United Kingdom in 2004. •Morrison's is the fourth largest chain of supermarkets in the United Kingdom, headquartered in Bradford, West Yorkshire, England. The company's legal name is Wm Morrison Supermarkets plc.

•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 UK.

•Superdrug stores layout, lighting and colour, allowed customers to move at their own pace in an attractive setting, thus providing a welcoming and relaxing environment.

SITUATION 3CONSUMER BEHAVIOUR

Research indicated that consumers were not very brand loyal for a variety of reasons:

First, that there was a general belief by U.K. consumers that changing shampoo brands produced better results than continuously using a single brand.

Second, was that 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.

The main problem that company was facing in this case is to select one of the three promotional alternatives:

• 3 for 2

• GWP (Gift With Purchase)

• On-pack Coupon (50p off)

while keeping all this in mind that there primary objective was to drive sales volumes and trade up consumers from all the lower value brands while retaining or building brand equity.

PROBLEM

Get 3 for the price of 2

PROS:•Consumer can get the 3 items for a regular price of the buy of two.

•Consumers could also 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.

•Estimation was that the sales would increase to 300% of pre-promotion sales, and 60% of the customers would be just promotional

CONS:•This will have clear cut indication of the stock clearing strategy that could impact the potential customers from buying the products.

•Premium products could also 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.

Receive a gift with purchase

PROS:•A 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

CONS:•Adding the sample would also cost approximately 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 which is used by most of the retailers and can be easily imitated.

On-pack coupon worth 50pPROS:•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 that would lead to increase the number of sales.

CONS:•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 o f a conservative approach but ,this option has less estimated sales growth as per market research.

FINANCIAL ANALYSIS

3 for 2 GWP50p discount

Cost of an average item 3.99 3.99 3.99 pre-promotional unit sales/day 100 100 100 percentage increase in unit sales/day 300% 170% 150% promotional unit sales/day 300 170 150 Number of sets sold 150 170 150 Total Revenue (pre-promotional) 399 399 399 total revenue 1197 678.3 59 8.5 %age change in revenue 200.00% 70.00% 50.00% Margin earned (pre-promotional) 114 114 114 margin earned 342 193.8 171 %age change in Margin 200.00% 70.00% 50.00% promotional cost per unit 2 0.93 0.5 total promotional cost per day 300 158.1 75

Profit 42 35.7 96

Accusition of new customers 60% 40% 50%

COMPARING PREMIUM BRANDS

3 for 2 GWP50p discount

Cost of an average item 3.99 3.99 3.99 pre-promotional unit sales/day 100 100 100 percentage increase in unit sales/day 300% 170% 150% promotional unit sales/day 300 170 150 Number of sets sold 150 170 150 Total Revenue (pre-promotional) 399 399 399 total revenue 1197 678.3 59 8.5 %age change in revenue 200.00% 70.00% 50.00% Margin earned (pre-promotional) 114 114 114 margin earned 342 193.8 171 %age change in Margin 200.00% 70.00% 50.00% promotional cost per unit 2 0.93 0.5 total promotional cost per day 300 158.1 75

Profit 42 35.7 96

Accusition of new customers 60% 40% 50%

COMPARING MASS MARKET BRANDS

PRICE COMPARISION CHART

SOLUTION

Although Maximum Profit lies with the 3rd strategy, from Robinson’s estimates but,the first promotional strategy should be chosen,because by considering the advantages and disadvantages.It would be better for the Boots company to adopt the first strategy i.e. “3 for 2”.

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.

BOOT’s wanted to ensure that the promotions were profitable, but the importance of maintaining and enhancing the professional hair-care brands could not be understated.

•It has more estimation of the increase in sales as per the market research.

•More customers would buy the product.

•This will also help the Boots to push its non-selling brands in this strategy, as general tendency of the customers is to buy different brands for different products but this offer would attract many customers to buy the 2nd or the 3rd product in the offer of their brand which they otherwise would not have purchased.

•History

•Situation Analysis

•Problem

•Financial Analysis

•Solution

This Presentation is prepared by Rahul Ladiya Student of Maulana Azad National Institute Of Technology (NIT) BHOPAL under the guidance of Prof. Sameer Mathur of IIM Lucknow.