Overview of Boots Pharmacy

Boots is the largest pharmacy chain in Europe with an with an excellent reputation for differentiated health and beauty products and customer care. Our strategy is to develop Boots into the world’s leading pharmacy-led health and beauty retail brand,focused on healping people look and feel their best. Alliance Healthcare is the backbone of Alliance Boots wholesale and distributions service with twice daily deliveries to around 5,700 pharmacy shops in the UK alone. Internationally,Alliance Boots distributes drugs and cosmetics to around 150,000 outlets and operates from 360 delivery depots.In addition to supplying Alliance pharmacies ,the Alliance Healthcare distribution subsidiaries also deliver to NHS central warehouses and hospitals in the UK,alone with private hospitals, GP surgeries,local health centres and private pharmacies throughout Europe,Asia and Australia.

Marketing Strategy Options

Boots is a member of Alliance Boots, an international pharmacy-led health and beauty group. Our purpose is to help our customers look and feel better than they ever thought possible.

Our customers are at the heart of our business. We’re committed to providing exceptional customer and patient care, be the first choice for pharmacy and healthcare, offer innovative products ‘only at Boots’, with great value our customers love.

Our people are our strength and they tell us that Boots is a great place to work. We are always be the employer of choice, attracting and retaining the most talented and passionate people.The strategy is to focus on its two core business activities of pharmacy led health and beauty retailing and pharmaceutical wholesaling and distribution,while increasingly developing and intenationalising our product brands to create a third dimension.growing the core businesses in existing markets,continuing to deliver productivity improvements and other cost savings,pursuing growth opportunities in selective new high growth markets and launching our product brands in new markets. This strategy is underpinned by our continue focus on patient or customer needs and services selective partnerships and our strong financial diciplines.we are commited to providing exceptional customer and patient care be the first choice for pharmacy and healthcare offer innovative products only at Boots,with great value our customer love.

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Pharmacy-led health and beauty strategy

Boots is the largest pharmacy chain in Europe with an excellent reputation for differentiated health and beauty products and customer care.Our strategy is to develop Boots into the world’s leading pharmacy-led health and beauty retail brand,focused on helping people look and feel their best.

The key steps we are taking in the uk to execute our strategy are:

• Making Boots more convenient and accessible for our customers.
• Developing our people to be at their very best for our customer
• Improving our customer in store shopping experience
• creating a compelling multi-channel health and wellbeing consumer offering
• Increasingly differentiating our product offering
• Continuing to provide customers with excellent value
• Opening new stores in markets where Boots is already well established
• Developing new store in markets where Boots is already well established
• Developing country specific Boots branded trading formats to meet local needs.

SWOT analysis

STRENGTHS

Boots as being one of the bigest UK pharmacy-led health and beauty group market, its brand has been well-known and already built up its reputations over Healthy and Beauty Product retailing.

Under the leadership team with Alex Gourlay, the chief executive of Health & Beauty Division it is showing tremendous increase in its profit.

It also keeps into account the green and environmental issues. As a result it has a positive impact on consumer brand especially the green activists consumers.

Strengths

Weaknesses

• Strong Brand Equity
• Low profitability
• Store Network
• Lack of International Presence

Opportunities

Threats

• Store expansions in UK
• Intense price competition
• Expanding product offerings
• High regulatory oversight

Reference: Data monitor, 2006

WEAKNESSES

Boots is only presented in UK. Therefore there can be an issue if the company wants to have growth in the retailing Health & Beauty Division sector.

Declining Reputation

OPPORTUNITY

Boots alternative business, investing in properties can have major growth in the future.

Staff which works at Boots are essential – buyers, administrators, systems designers, finance workers and so on all are part of the whole team that must work together to make things operate smoothly and efficiently

Online sales are a great opportunity for future growth.

THREATS

Boots operations have become a topic on various issues like environmental, planning and other factors.

As a result there needs to be investment related to environmental and green issues.

Porter’s 5 forces analysis

Competitive rivalry

The retail market is filled up with high competitors as more and more companies are trying to step into the Health & Beauty industry

All the other retailers have different competitive advantages.

Boots reach in different stores allows it to reach large number of customers.

The other factors which compete with the Boots bank is different banks and building societies

Barriers for entry

Barriers to entry is high due to a number of factors:

Firstly, company looking to set up its business in UK requires lots of investment, brand development, which takes years to establish.

Secondly, company in retail sectors are increasing, which itself means there is very less chance for any new entrances.

Local knowledge is required for a new business in order to establish, which is highly difficult for new firms to replicate.

Threats of Substitutes

The threats for newcomers or substitutes is less, as the consumers views that as a necessity, especially in the developed world.

The retail market is always trying to look around for new innovations with respect to Health & Beauty products, alternative businesses. As a result of which it is difficult for substitution.

The only major threat of substitute is an internal industry threat, wherein one supermarket can lap up the business of other supermarkets.

Buyers power

Because of the presence of too many competitors in the retail Health & Beauty sector selling the same product, buyer power is high in the industry.

During the time of recession consumer’s wants are taken into more demand, thereby increasing their power.

Supplier power

Suppliers in itself is huge company providing products to the supermarkets.

If the products are not sold, consumer will shift loyalties, making suppliers more powerful. And also when the products do not reach the supermarket, sales do get affected hugely.

Competitive strategy by Michael Porter

MARKETING STRATEGY TO ACHIEVE COMPETITIVE ADVANTAGES

The main aim of Boots is to provide Health & Beauty Product to the consumers, delivering the products of outstanding quality and great service. It always looks for profit growth through a balance of strong sales growth, reduction in cost and continuing margin improvements.

There are many techniques in order to achieve its aims and goals

PORTERS GENERIC STRATEGY

MARKET MATRIX

PORTERS GENERIC STRATEGY

Michael Porter had argued that a company’s strength depends on two headings: cost advantage and differentiation. By applying these strengths three generic strategies result:

Cost leadership

Differentiation

Focus

Target scope

Low cost

Product uniqueness

Broad (industry wide)

Cost leadership

Strategy

Differentiation

Strategy

Narrow (market segment)

Focus

Strategy (low cost)

Focus

Strategy( differentiation)

Cost leadership strategy

Cost leadership is a strategy built on offering a customer a lower pirce than competitors and maintaining an advantage by ensuring the cost are lower than those of competitors.

Factories are built; labor is recruited and trained in all sorts of knowledge for the lowest cost of production. In the process cost advantage is the focus.

However low cost not always allows low price. Producers could price at competitive parity, other than the competitors. For example, such as Toyota, are good in producing autos at a low price, but have the brand and marketing skills.

Differentiation strategy

It is a strategy that involves offering a product which is different to, is differential from, those of competitors. The advantage of the product will appeal to the whole market and not in a narrow segment.

The company that succeeds in differentiation strategy often follows the internal strengths

Access to scientific research

Highly skilled and creative development team.

Strongly sales team with the ability to successfully communicate the perceived strengths of the products.

Corporate reputation for quality and innovation.

Focus

The focus strategy strives on a narrow segment and within that segment tries to achieve either a cost advantage or differentiation. A company following the focus strategy often enjoys a high degree of customer loyalty, and this in turn leads to more customer lifetime value.

The focus strategy has two variants.

In cost focus a firm seeks a cost advantage in its target segment, while in

Differentiation focus a firm seeks differentiation in its target segment.

Cost focus exploits differences in cost behavior in some segments, while differentiation focus exploits the special needs of buyers in certain segments

A company following narrow market focus and pursuing a focus strategy, have lower volumes of bargaining power with their suppliers.

A company following differentiation focused strategy may be able to pass higher costs on to customers since close substitute products would not exist.

Firms that succeed in a focus strategy are able to lead a broad range of product development strengths to a relatively narrow market segment

Finally, other focusers may be able to carve out sub-segments that they can serve even better.

Industry Force

Cost Leadership

Differentiation

Focus

Entry

Barriers

Ability to cut price in retaliation deters potential entrants

Customer loyalty can discourage potential entrants

It develops core competencies that can act as an entry barrier

Buyer

Power

Ability to offer lower price to powerful barriers

Large buyers have less power to negotiate.

Large buyers have less power to negotiate

Supplier

Power

Better insulated from powerful suppliers

Better able to pass on supplier price increases to customers

Suppliers have power because of low volumes

Threat of

Substitutes

Can use low price to defend against substitutes

Customer’s become attached to differentiating attributes, reducing threat of substitute

Specialized products and core competency protect against substitutes

Rivalry

Better able to compete on price

Brand loyalty to keep customers from rivals

Rivals cannot meet differentiation-focused customer needs

PESTEL analysis

Political factors

Increasing globalization, gives challenges and opportunities to Boots. Using this company can enter into new markets through partnerships.

The ongoing investigation of price fixing among the UK retailers which can have a negative impact to the industry which can make the consumer feel cheated and my lead to a negative impact on the reputation of the company.

Economic factors

Because of the food crisis all over the world, can result in the purchasing cost of the company, which in turn can increase the Health & Beauty Product prices which affects the purchasing power of the consumers.

Because of credit crunch, the consumers purchase power would decrease, but they would still consider that as its basic necessity.

Lot of incentives is given to the consumers. This affects Boots as prices have to be reduced most of the times.

Social factors

There seems to be more attention on fresh and easy style cooking. This gives Boots an opportunity to encourage new Health & Beauty Product.

Recently government has given more emphasis to promote healthy eating because of the increasing obesity. As a result the consumer would move on to healthy eating which in turn will be an opportunity to Boots to stock in more of healthy Health & Beauty Product and as a result of which there would be an increase in consumer’s number.

Technological factors

The internet phenomenon seems to be growing more rapidly. Boots can use internet for its advantage.

Standing in the queue system for few items in the shopping market is time consuming. By installing the self checkout machines it can reduce the queue system for which the customer would not have to wait for few items which in turn will increase the sales for Boots.

Environmental factors

It should be mandatory to reduce carbon footprint and increasing energy efficiency.

One of the important and ethical issues is, like sales of organic food and ethical treatment of animals, this can clearly affect Boots on various levels. This is a sensitive issue. This can be done by maintaining on the public stand and environment.

Legal factors

The current UK grocery market is highly regulated in many aspects, which is commonly in the developed countries.

The recent inquiry by OFT could act as one example, which would potentially reduce the profitability of the supermarkets. Moreover, Trade Union would also protect employees to receive lack benefits, and this would make the grocers difficult to lay off employees.

Marketing audit

Mckinsey’s 7-S framework can be used to design an internal appraisal of an organization. The 7-S framework of Mckinsey is a management model that describes 7 factors to organise a company in a holistic and effective way. They are:

• Strategy – Plans for the allocation of firms scare resources, overtime, to reach identified goals.
• Structure – The way in which organisation’s unit relate to each other centralised, de-centralised and matrix.
• Systems – The procedures, processes and routines that characterise how the work is to be done like financial systems, recruiting and performance appraisal systems.
• Staff – Number and types of personnel within the organisation.
• Style – The style of organisation and how key managers behave in achieving the organisations goals.
• Skills – Distinctive capabilities of personnel or of the organisation as a whole.
• Shared values – What does the organisation stand for and its central beliefs and attitudes.

Conclusion

To survive in such a competitive market place, Boots must continue to build a strong brand in order to create a strong differentiation in the market, attract customers with a credible value proposition and to constantly engage customers in ways that would endear them to the brand and to the company. This can help improve their market share especially during periods of recession when lower priced private brands are sought by consumers. And thereby achieve competitive advantages and long-term growth.