222.3 - Problem Boots Hair-Care must utilize a sales...

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Problem: Boots Hair-Care must utilize a sales promotion in attempt to increase profit for the company. Boots Hair-Care must make a promotion choice that takes into account the cost of the promotion, its affect on the diverse brands and their competitive position, and how much profit Boots will make in the long run due to new customers. Alternative 1: “3 for 2”- In this alternative Boots would let the customer combine any three items of the same brand at the price for two. This option has many advantages. First, this offer has the most sales to new customers out of any of the alternatives. This is important as the more new customers who try the product, the more potential Boots has of accumulating new customers for after promotion period which results in an increased normal profit. By letting a new customer pick any of items they liked, they are bound to find a shampoo that suits their needs. Additionally, this option retrieves the most profit throughout the promotional month compared to any other alternative. Assuming in a normal day the company sells 100 units, this promotion (see the first calculation in Appendix A) would retrieve almost 240 dollars per day than normal. Yet, this promotion does have disadvantages. This promotion gives the best deal to the customer. The customer only has to pay 66 percent of the normal price per bottle, or approximately 2 dollars 66 cents per bottle. This lets people pay a price much cheaper than normal premium brands and almost the same amount as a regular quality brand. Thus, many people who will take advantage of this deal might be buying the Boots product just because it’s
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222.3 - Problem Boots Hair-Care must utilize a sales...

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