Boots Marketing Strategy

INTRODUCTION:

Boots (UK) Ltd is also known as boots, It is the leading health and beauty retailer with around 1400 branches alongside in United Kingdom and Ireland. It has also more than 300 branches of Boots optician. Boots is previously known as The Boots Company, it has most its outlets in high streets throughout the United Kingdom and Ireland. Boots is subsidiary company of Alliance Boots. After merger of Alliance Boots and Boots Group Plc., Boots launched. Boots are dealing with 8 million customer every week. Boots develops and sells own brand products, a number of which are leaders in their respective markets. The Boots brand is founded on the trust, expertise and heritage, which comes with its longevity in the market.

Boots Group operates three principal businesses: Boots The Chemists; Boots Opticians; and Boots Retail International. Pharmacy is a fundamentally important part of the brand; representing one quarter of sales, it is the foundation of Boots’ authority and credibility. Boots stores are mostly located on high streets; but, in line with modern shopping trends, its presence in edge of town retail parks is rapidly increasing. Over the last three years 48 such stores have opened, as well as a flagship London store on Oxford Street. Overseas, Boots is working closely with other major retailers in their local markets, to open Boots branded within their stores. There are currently 758 implants in 13 countries. Boots also has 96 standalone stores in Thailand. Boots has had an illustrious history. From its beginnings in 1849 as an herbalist shop, Boots has continually developed new product ranges, many of which are now household names in their own right. By the 1930s, Boots had more than 1,000 stores selling a wide range of products. Over the years Boots has successfully introduced brands such as 17 cosmetics, aimed at teenagers, which was introduced in 1968 and new business ventures such as Boots Opticians — now a major division of the business. In 1985 the Research Department received the Queen’s Award for Technological Achievement for the discovery and development of ibuprofen. The analgesic ibuprofen was introduced in 1969 as a prescription drug, but launched as the over the counter brand, Nurofen, in 1983. Boots’ internet business has become increasingly important in the new millennium and a successful part of the brand. Improvements have been made to the online customer experience making navigation easier, resulting in boots.com sales becoming bigger than those of the largest Boots store. Boots is best known for selling a wide range of products under the Boots brand name across health and beauty. The merger between Alliance UniChem plc. and Boots Group plc. was completed on July 1 2006, creating an international pharmacy-led health and beauty group operating in more than 15 countries across the world. The Alliance Boots network will include two retail formats, both under the Boots brand, ranging from approximately 1,500 smaller dispensing pharmacies to approximately 800 larger destination high street and edge of town health and beauty stores. In addition, Alliance Boots will also operate approximately 300 additional retail outlets, including freestanding Boots Opticians practices. Boots is also developing in-store “health zones” in its bigger stores, which will include extended waiting areas for customers collecting prescriptions. Consultation rooms for pharmacists are also being introduced, as part of a government initiative to alleviate the pressure on GPs’ surgeries.

Boots uses a wide range of media on an ongoing basis, including TV, press, and direct mailings to its Advantage Card members to highlight new products, offers and services. Jesse Boot, the son of John Boot, the brand’s eponymous founder, took control of the business in the 1870s. He had a business philosophy of buying in bulk and passing the benefit of reduced prices on to his customers. His policy of superior goods at competitive prices delivered with expert care meant that the Boots name became synonymous with quality, value and service. His earliest marketing was based around the concept of “Largest, Best and Cheapest – Branches Everywhere”. This philosophy is still an important part of Boots’ today. It aims to treat its customers fairly and to act with integrity in everything it does, which results in the brand regularly being rated as the UK’s most trusted brand. Boots also believes that it has an enormously valuable role to play in promoting the health of the nation. It achieves this by forming innovative, long term partnerships with charities, particularly focusing on women’s cancer. Boots has worked with Breast Cancer Care for 11 years, and this year linked with the Eve Appeal to highlight ovarian cancer. Boots also supports the health of the UK everyday through its 15,000 healthcare advisers working in store.

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MARKETING STRATEGY:

Marketing strategy is a process that can allow an Boots to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centred around the key concept that customer is the main goal. Developing a marketing strategy is vital for any business. Without one, your efforts to attract customers are likely to be haphazard and inefficient. The focus of your strategy should be to make sure that your products and services meet customer needs and that you develop long-term and profitable relationships with those customers. To achieve this, you will need to create a flexible strategy that can respond to changes in customer perceptions and demand. It may also help you identify whole new markets that you can successfully target. The purpose of your marketing strategy should be to identify and then communicate the benefits of what your business offers to your target market. Once you have created and implemented your strategy, you should monitor its effectiveness and make any adjustments required to maintain its success. This guide helps you identify which customers to focus on and your key objectives in reaching them. It explains what to include in your marketing strategy and how it can be used as the basis for effective action.

MARKETING MIX

Boots has a marketing strategy that tries to increase turnover. Look carefully at this strategy (page 6) and suggest ways in which the strategy could be improved. How can Boots improve the image of its brand products? How can Boots boost the male market for beauty products? Think about the target group and the 4 P’s.

Marketing is not just about selling, It involves:-

• Price:

This is the term used to describe what a customer pays for a product and service. It includes the actual selling price, any credit terms and profitability. Boots has to decide price of product as per local market conditions and customers.

• Place:

This part of the marketing mix is about many things. It is about Location – where it is located, how easy it is to get there. Access – when is it open, are their special access facilities for people with special needs. Distribution channels – how can you buy the product or service provided or buy tickets for the attraction. Boots has to open their outlets at opportunities market at initial stages.

• Promotion:

This is about how you let people know about what you have available. There are many different ways you can go about this: Advertising, Direct marketing, Public relations, Personal selling, Displays, Sponsorship, Demonstrations, Sales promotions. Boots have to promote their product locally by sponsoring local events and local advertisements.

• Product:

This is what the Boots provides for its customers. It is what they buy or what they experience. What they buy are tangible goods or products. They are things that can be taken away such as tennis rackets from a sports shop. Mostly what the customer buys is intangible. You cannot take them away but you can experience them like a ‘white-knuckle’ ride at a theme park. All of these are part of the ‘product’. When looking at the product, there are a number of things to think about to make sure it meets the needs of the customer: Product and service features, brand name, after sales service, product life cycle, Researching the market to find out what customers want. Developing and designing a product that customers desire/want. Producing the right amount of the right quality. Getting the price right so that the product is affordable and profitable. Making sure that the customer know about the product through promotion. Making sure the product is on sale in convenient places

These combination of factors adds up to the marketing mix or the 4 p’s.

This Could improve strategy by aiming to increase turnover during other periods other than Xmas. And also Aim to increase their business with the male market. Boost brand products could be improved through advertising – television, magazines etc. – target specific consumer groups. In order to boost the male market Boots needs to distance the male products from the women’s and target marketing and promotional campaigns at the male consumer group.

The Marketing Strategy for boots going to international market should be as follows. The below are the analysis, how boots can achieve success by going it internationally. By exploring key market drivers they can make huge success. Brand Tracking data showed that Boots continued to be rated much higher than competitors on the quality and choice of healthcare products and on customer knowledge and advice. However, only 19 per cent of dispensing customers identified Boots as their first choice pharmacy. The reason Boots isn’t first choice is because only 20 per cent of Boots stores are more conveniently located than their competitors – and convenience is the primary driver of pharmacy choice. The audience are the key factors which can make differences. The dispensing audience is critical to Boots. More importantly when you analyse the audience it becomes apparent that the pare to principle applies to Boots pharmacy. 60 per cent customers are on repeat medication, this 60 per cent generates 90 per cent of the Boots pharmacy revenue.  

In addition it is important to remember that our audience is heavily skewed towards those over the age of 60 (57per cent). This was important for us to keep in mind as we develop the strategy and Mother developed the creative work. We had to ensure that our positioning and messaging were relevant and motivating to a certain type of consumer. Brand positioning is important for boots as they are going internationally. 

Government legislation makes it illegal for any company to claim that their prescription Collection Service brand is better or different from competitors’. So in the absence of a distinct USP, PCS is effectively a parity service. As such, the positioning, creative and use of media became even more critical. Operational: store visits revealed that the staff don’t understand the PCS service and can’t explain its benefit. Competitive: every competitor has an equal service to us. Some are using television advertising to raise awareness. Communications: the previous agency had tried to use TV advertising to drive PCS sign-ups. While it may have driven awareness. Consumer: qualitative research revealed that customers didn’t understand the benefits of the service either. They needed a few minutes of someone explaining it, and then they really understood how it saved them having to stand in a queue. Upon deeper interrogation of the brief, it was apparent that the required campaign was not an awareness one. This was not a mass message or proposition – this was aimed specifically at people on repeat prescription. Therefore traditional ATL channels would prove to be an inefficient way of meeting our clients business objectives. There’s only one place where you’re really receptive about a message about not having to get tired of waiting in a queue. It’s when you’re standing in one. So we spent most of our media budget on huge signs hung above the queue. And then when customers got to the front of the queue, we got our staff to offer customers the chance to sign up to a service where you never have to queue again. So we were now communicating the right message at the right time. Remember the staff in-store didn’t understand the service. And we were now using them as the primary communications channel. We couldn’t just give them a T-shirt and a badge and expect them to sign customers up. So the final part of the strategy was to: train our staff on how to sell the service incentivise the staff by giving them longer coffee breaks if they reached their target number of sign-ups introduce a standard operating procedure so they knew how to enter.

MARKETING ENVIRONMENT:

The marketing environment surrounds and impacts upon the Boots. There are three key perspectives on the marketing environment, namely the ‘macro-environment,’ the ‘micro-environment’ and the ‘internal environment’.

• The micro-environment

This environment influences the Boots directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

• The macro-environment

This includes all factors that can influence and Boots, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade Boots). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

The internal environment.

All factors that are internal to the Boots are known as the ‘internal environment’. They are generally audited by applying the ‘Five Ms’ which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change ‘internal. Essentially we use marketing approaches to aid communication and change management.

The external environment can be audited in more detail using other approaches such as PESTLE Analysis, Michael Porter’s Five Forces Analysis or SWOT Analysis.

Pestle analysis:

There are many factors in the macro-environment that will affect the decisions of the managers of any Boots. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To help analyse these factors managers can categorise them using the PESTEL model. This classification distinguishes between:

• Political Factors

Political factor includes government policy, wars and conflicts, legal issues, some employment laws, revenue policy, environmental laws, trade policy, current legislation, future legislation, international legislation, government’s stability, international trading policy, are the political factors that affect Boots.

• Economic Factors

Economic factors includes economic crisis in country, employment problems, exchange rate, condition of stock market, change in international trade policy, fluctuation in tax, inflation rate, growth in economic are the economic factors that affect the Boots.

• Social Factors

Social factors includes literacy rate, minimum wages, change in lifestyle, living condition and standards, demographic changes, population changes, occupation of people, earning capacity, consumer’s attitude, ethical problems, marketing and publicity pattern, religion issues are the social factors that affects the Boots. Generation gap between young employees and old age employees to fulfill both requirement and satisfied both according to their thinking strategy are work as a medicine. Dominant religion – if they are religious, they will not work on the day they are worshipping like the Sabbath for Christians. Some religions favours certain animals such as in Hinduism, the cow is sacred; if cows were used in testing the chemicals or Boots sell anything that has beef in it, Hindus will probably not work there. Attitudes towards foreign products and services – they don’t like stuff for foreign companies; they are not likely to attract people who don’t like foreign products. If people think foreign stuff are cheap and it compromises the quality of the product, their self-image may be an issue. Green issues – If Boots were to do all sort of environmental harm, environmentalists will not work for them. Likewise, if environmentalists found out that Boots does recycling and is dedicated to planting a hectare of trees each month out of its own pockets, it will attract more environmentalists to work for them. Animal testing – if Boots’ products were animal tested, protesters will not work for them, let alone any animal lover. Roles of men and women – if there is any sexism in the company, women are likely to leave. If there are only a selected set of roles that each sex can apply for (e.g. facial cream sales rep, beauty treatment), then that would restrict the number of applicants and workers Boots will get. Health consciousness – if people are health conscious, they can use their knowledge to promote products Boots has. On the other hand, if the applicant wasn’t health conscious, he/she will not really guarantee a job as a sales assistant in any section to do with health products. If people have a choice of jobs with equal pay anywhere and they were not all that health conscious, then they are not likely to be applying for jobs at Boots.

• Technological Factors

Technological factors includes arrival of new technology, quick acceptance of new technology, competing technology development, Information technology, intellectual technology issue, communication, replacement of technology, maintenance of machines, outsourcing of technology, Research and development activity, Customer relationship management are the technological factors that affects the Boots.

• Environmental Factors

Boots has to take care of Staff, they have to increase morale of staff periodically by giving satisfying them. This could be satisfy by hierarchies needs. Boots has to concerns about staff engagement. Enjoyment between staff is necessary to increased productivity and quality of product. Boots has to conduct workshops for employees to increase product awareness, customers service lessons, and all other aspects which can help Boots. Boots culture is most importing aspects which can helps them to be a success in international market. Boots has also take care of pollution which may be created from Boots products or services or both. They has to more concern about recycling of products which can help to boost international image. They has to help government and consumers towards environment by giving service in environmental activities.

• Legal Factors

Legal factors are important for a company who is going to internationally. Boots has to take in mind that what is happening in our sector that will impact what we do, they also have take care of minimum wages, working conditions as per local government rules. Governments is most important in legal factors. Boots have to take care of food items, Industrial training and take care of local child labour laws. The below legal factors affects boots and which will be Legislation in areas such as employment, competition and health & safety, future legislation changes, changes in government law, trading policies and Regulatory bodies

Pest analysis gives brief knowledge about key factors which is affect the Boots and Stakeholder to fulfil their needs .PEST analysis looks at the external business environment and is an appropriate strategic tool for understanding the “big picture” of the environment in which business operates, enabling the company to take advantage of the opportunities and minimize the threats faced by their business activities. When strategic planning is done correctly, it provides a solid plan for a company to grow into the future. With a PEST analysis, the company can see a longer horizon of time, and be able to clarify strategic opportunities and threats that the Boots faces. By looking to the outside environment to see the potential forces of change looming on the horizon, firms can take the strategic planning process out of the arena of today and into the horizon of tomorrow.

PEST is not a set of rigid compartments into which ideas need to be sorted. It is better thought of as a set of hooks that can be used to fish for important facts. Once the factors have been “fished out”, it does not matter which hook they were attached to. When it comes to writing up the analysis, there is no need to mention the PEST labels at all.

Porter’s Five Forces for Competitive Position

Porter’s five forces is strategy for competitors, deals with issue regarding the suppliers, Rivalry, threat about their competitors, substitutes, and threats of new market entrants are the porter’s five forces.

• Power of Suppliers:

It includes concentration of supplier on business, importance of volume to supplier, separation of inputs, and impact of inputs on cost, Threat of future assimilation, cost relative to total purchase in industry, switched cost of Boots.

• Power of Buyer:

It includes bargaining leverages, volume of buyers, detail information of buyer, identity of buyer, and sensitivity of price, incentives of buyer, threat related to past integration, differentiation of products.

Entry barriers: Both new and existing competitor’s feels threat. It includes absolute cost advantages, access of inputs, Economic scale, capital requirement, and identity of brands, governments’ binding policy, and access of distribution channel.

Threat regarding substitutes: Buyer’s tendency to substitutes, price performance of substitutes, switching cost of buyers, buyer’s opinion regarding the product and its separation and amount of substitute’s product available in market.

Rivalry: It defines when some organization competes with each other in same business for same thing. It is important to make strategy to deals with competition in same business environment. It determines attractiveness of Boots.

Swot Analysis:

Environmental scanning includes internal analysis of the Boots and external macro environment and task environment. Internal analysis and external analysis of Boots is known as a SWOT analysis. This analysis gives brief knowledge about auditing of Boots and details of products. SWOT Analysis is the base of making strategy and to manage risks regarding to the products. It is very important to understand general techniques and functions of managements. .SWOT analysis makes suitable environment for identifying and analysing strengths, weaknesses, opportunities, and threat. It also gives clear vision regarding situation and making suitable strategies and business formulas.

There are following stages of SWOT analysis.

• Strengths

Appropriate Environment, strong brand name, Strong background, good reputation, strong distribution channels, good quality natural resources, exclusive rights of products are the strengths of business Boots. Boots turnover and current sales are marginal to enters global market. Boots have clear objectives which can help to understand the global market easily. Boots is successful manufacturer of health and safety products. There customers are loyal to the brand which can helps to enter global market.

• Weakness

Boots failed to attempts to diversified in Halfords. Saturated global market is also important factor for boots in this segment. Boots is also failed to expand their business in European market. Weak background, inappropriate environment, inferiority raw material, lack of natural resources, lack of manpower, unreliable product and services ,lack of finance, weak brand name, poor reputation, lack of distribution network are the weaknesses of business Boots. At present situation of credit crunch, their operating profit is falling. Boots’ market strategy failed to target socio-economic groups .

• Opportunity

Boots has opportunity by some success with implant in south east Asia. There is a possibility of £100 million savings if they merger with Alliance Unichem. Women are the key customers of this kind business and at present that 11 million people have an advantage card, but only 9% being male. Now a days internet selling is important and Internet sales becoming popular. They have an opportunity to expand their business in ethical market. Male healthcare and beauty products are also opportunity for boots. Increasing production when low revenue cost, increasing production when inflation rate is low, quick acceptance of latest technologies, take benefits of international trade policy, investments which is favourable for Boots are the opportunities of Boots.

• Threat

Tesco and other supermarkets are threats after deregulation of Boots. Competitors’ sales of product through the internet is remarkably high as compared to Boots. Competitors, less interest of customers in product, fluctuations of price between competitors, changes in government policy like tax, revenue and inflation rate, Demographic changes in target market, changes in population age are the threats of Boots.

CONCLUSIONS AND RECOMMENDATIONS:

Boots could expand their business overseas. Because it has had failures but can benefit from this experience. Boots could look for further mergers to give it access to more markets either in the UK or abroad. Unichem does have pharmacies and hospitals abroad. Boots could continue with the idea of implants. Boots could continue with its core activity of developing new products in healthcare. It has a great deal of expertise in research and development and an understanding of the market. The male market is under-developed and needs to be expanded. The Advantage Card is not used by male customers. I would recommend that Boots concentrate on its core business for a number of reasons which are Boots should not diversify because it has failed in markets, Boots has only recently merged with UniChem. If this proves to be successful it should merge with other companies as this increases market share and lowers cost, The UK market is saturated, Boots should expand its internet sales worldwide. Boots should re-design it marketing strategy toward young male customers. This would expand its core business. The Advantage Card needs to be launched to male customers to improve the core business.