Boots UK Marketing Strategy Options
Boots UK is a member of Alliance Boots, an international pharmacy-led health and beauty group. Boots purpose is to help customers look and feel better than they ever thought possible.Â Boots have close to 2,500 stores from local community pharmacies to large destination health and beauty stores.Â Boots offer fantastic products and services and you'll be cared for by expert, friendly people. Boots is a member of Alliance Boots, an international pharmacy-led health and beauty group. Purpose is to help customers look and feel better than they ever thought possible. The customers are at the heart of the 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. People are the strength and they tell us that Boots is a great place to work. We aim to always be the employer of choice, attracting and retaining the most talented and passionate people.
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Boots UK is a major product developer, manufacturer and retailer with a large and varied portfolio of products. The approaches we have taken enables the company to keep abreast of changes driven by the challenge of sustainable development and harness these to drive innovation in consumer products within a complex business.
The principles and methods used to embed sustainable development into product development described here can apply to any manufacturing or retail organization large or small.
Sustainable Products and Services:
The way society has addressed environmental, social and ethical issues has evolved considerably over the last twenty years. From an early focus on the mitigation of "end of pipe" impacts, thinking has now moved on to a more holistic and sustainable approach closely linked to the concept of social responsibility. It has to be embraced and understood by multi-disciplinary teams working on product development. For product developers, manufacturers and retailers this evolution has been mirrored by a move from management of single issues such as the environmental impact of packaging waste or product safety into the arena of whole product impact and sustainable product development. Entire product lifespans are now considered using cradle-to-cradle thinking.
However adopting a sustainable development strategy for products in a major manufacturer and retailer presents several challenges, The approach has to be applicable across a wide range of different product types.
Boots UK have approximately 30,000 product lines and up to 10% are changed annually
It has to be flexible to cope with the rapid turnover of products. It has to cope with the three routes by which products are introduced at Boots UK(own manufacture, third party supply of Boots brands, proprietary brand), Understanding the complex systems that determine our effect on the social and natural environment is now seen as critical in meeting the challenges facing society.It has to raise awareness of complex sustainable development issues whilst recognising that not everyone in the process is a sustainability expert. It has to provide guidance on where and how improvements can be made It must act as a stimulus for sustainable innovation. It must be commercially successful.
Boots UK's solution has been to develop an integrated approach as a key element of our Corporate Social Responsibility Strategy. Our approach was grounded on existing systems yet introduced new tools and processes to raise awareness, facilitate improvements and drive innovation in an incremental way. The methods and tools developed continue to be refined as we move further along the path towards sustainability.
Boots aims to be the consumer's first choice for pharmacy-led health and beauty, delivering products of outstanding quality and great service at a competitive cost through working 'faster, simpler and together'. The company is committed to achieving industry-leading margins within a dynamic, competitive market and to delivering strong double digit underlying profit growth in each year of its business programme. Boots is looking for profit growth through a balance of strong sales growth, further reductions in the cost base, and continuing margin improvements There are many techniques for achieve competitive advantages and long term growth.
Ansoff's product/ market matrix:
This well-known marketing tool was first published in the Harvard Business Review (1957) in an article called 'Strategies for Diversification'. Ansoff's matrix offers strategic choices to achieve the objectives. It is used by marketers who have objectives for growth. There are four main categories for selection
Market penetration means old products introduced in the new products. Boots need to promoting the product with the new features and providing the product with good quality .Boots need to focus on the competitors and on customer needs. For this research Boots requires much investment in new market research. Boots try to reduced cost of the distribution channel and sale a product with the cheaper than his competitors.
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. Boots develops new products to aim within their existing market, in hope that they will gain more customers and market share. This strategy may require the development of new competencies and requires the business to develop modified products, which can appeal to existing markets.
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Market development means expansion of the products in the different markets or countries. Boots establish different pricing policies to attract different customers or create new market segmentation. For this Boots need to create new distribution channel for the market development. For this Boots need to expand his business with the increase in the services like banking, holidays, insurance, credit cards and many other services to the customers.
Diversification means new product in the new market. When a business adopt a diversification strategy company must have a clear idea about what it experts to gain from the strategy and an honest assessment of the risks. In this stage more risk because the business is moving into market, which it has little or no experience.
Porters generatic strategy:
Porter has described a category scheme consisting of three general types of strategies that are commonly used by businesses to achieve and maintain competitive advantage. Focus is narrow in scope while both cost leadership and differentiation are relatively broad in market scope. Porter simplifies the scheme by reducing it down to the three best strategies. They are cost leadership, differentiation, and focus.
Cost leadership simply means producing high volume of standardized product with lowest cost. For the successful strategy to achieve cost leadership Boots need to produce a product with the law cost and sell cheaper than their competitors. Boots need to control on the cost of the raw material, components, labour, or some other input. Successful implementation of this strategy by increase in process engineering skills, control on the cost of the production, mass production to reduce labour cost.
Differentiation means making a product different from the competitors. In product, differentiation allowed Boots has to charge a premium price for it. To achieve product differentiation Boots need to access to leading scientific research, highly skilled and creative product development team, strong sales team with the ability to successfully communicate the perceived strengths of the products, corporate reputation for quality and innovation. Boots hopes that the higher price will more than cover the extras cost incurred in offering the unique product. Because of the product, high price if suppliers increases their prices the firm may be able to pass along the costs to its customers who cannot find substitute product easily.
In this strategy, the firm concentrates on a select a few target markets. It is also called focus strategy or niche strategy. Boots needs to open local stores in uk busy places where more and more customers are attract. In a focus strategy Boots needs to focus to open local Boots stores to target more and more people from the market.
Situational Analysis of Boots:
According to professor Malcom Mcdonalds situational analysis has been a primary function of marketing planning process of the company. It involves the environmental and SWOT analysis as well as the existing marketing plan and any other information that can be gathered about the company and its brands. A review of the company's objectives matched with the strategic and performance metrics completes the analysis.
Situational analysis includes:
Porter's 5 factors
Boots is perhaps the oldest pharmacy-led health and beauty that started business in retailing in UK and made its name throughout years through excellent satisfaction and reliable products to all types of customers. Swot analyisis of Boots are as under:
Unique relationship with long-standing, frequently visiting, customers.
Historical reputation for quality.
Customer intelligence is gathered via analysis of Nectar Card
New management should provide fresh ideas and a strengthened strategy.
locations of stores without high rent in all major towns and cities in the UK,
It has had a difficult time in meeting the competition from Tesco.
The Retail business is highly competitive; those that do not adapt get left behind quickly as Tesco has found out.
Struggling to cope with the increased competition in the market and has now slipped to third, in the pharmacy list.
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Changing management team
Increase in the online shopping and other important services like insurance, bank etc.
Increase staff moral through possible incentives, provide training to the staff for better customer service.
To getting the right combination of price, product, promotion and place to achieve the firm's aims of long-term growth.
Opens Boots local store that focus on the main area of the UK
Increases in interest rates might seem to lead to a slowdown in consumer spending.
Threats from his main competitors like Tesco. More expensive than its major rivals tesco.
Tesco manage to seemingly continue to push sales and profits ever higher, year upon year gaining market share.
Porterts 5 forces:
The five forces model of porters is an outside in business in unit strategy tool that is used to make an analysis of the attractiveness of an industry structure. The competitiveness forces analysis is made by the identification of 5 fundamental competitive forces:
1. Entry of competitors:
How easy or difficult is it for new entrance to start competing which barriers do exists.
2. Threats of substitutes:
How easy can a product or service be substituted especially made cheaper?
3. Bargaining power of buyers:
How strong is the position of buyers? Can they work together in ordering large volumes?
4. Bargaining power of suppliers:
How strong position of the seller. Do many potential; suppliers exist or only few potential suppliers monopoly.
5. Rivalry among the existing players:
Does a strong competition between the existing players exist? Is one player very dominant or are equal in strength and size.
Porters 5 factors are useful for the Boots situational analysis. Boots has also power of the bargaining with the suppliers. Tesco is now purchasing medicine from different countries like Russia and Taiwan with cheaper rate. Boots also threat from the substitutes because when new products are in the market after sometime another substitute product enter in the market with cheaper price. Increase in the competitions so there is also increase in the bargaining power of buyers because many substitute products are available with the cheaper rate. In the market Boots has tough competition with the another competitor so there is increase in the cut through competition. Boots has threat from his competitor's Tesco. New products are entering in market with competition
The marketing audit considers both internal and external influences on marketing planning as well as a review of the plan it self. The marketing audit is a fundamental part of the marketing planning process. It is conduct not only at the beginning of the process, but also a series of points during the implementation of the plan. In many ways, the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.
The six 'm':
Marketing audits, 6M includes Men, Material, Money, Market, Mack-up, and Machinery. Important for the Boots are as under:
Money: finance is not a problem for Boots. Boots is financially strong to face the market situation.
Machinery: Boots recently started the self check put machine for the better customer service and also reduce the cost of the manpower.
Man: Boots has fully trained and skilled workers to provide better customer satisfaction. Boots workers are work with the fully dress code and with good cultural environment
Mack-up: Mack-up means management structure of the company. In Boots management meeting lower level manager are also involve to take decision about the structure of the company.
Mckinsey's sevan 'P':
Seven P Formula use to continually evaluate and reevaluated business activities. These seven 'P' are Product, Price, Promotion, Place, Packaging, Positioning and People. As products, markets, customers and needs to change rapidly, Boots need continually revisit these seven p s to make sure company on track and archiving the maximum results possible for you in today's market place.
Product: Boots are selling more than the 30000 products and many products are his own brands. Boots need to evaluate the market condition for the product and availability of the competitors and substitute products in the market.
Price: price of the product play an important role in the market to face the competition from the market. So Boots need to take right decision for product pricing as per the market current position. Substitute products are available so customers have option to purchase another products with the lowest price.
Promotion: product promotion is important because small changes in the promote and sale of the product can lead to change in the result. Boots promote his products with the advertising posters and many other ways so its increase in the selling of the products.
Packaging: packaging of the product creates an effect on the mind of the customers about the quality and use. Boots most of the products with attractive packaging to attract the customers to saw or buy those products. Packaging of the product create first impression in the eyes of the customers and attract to see that products.
Using of PESTEL analysis, marketing mix elements can be produced to contribute the goals and values of Boots, after analyzing the current marketing environment.
Increasing globalization presents a challenge as well as an opportunity to Boots. Boots can enter the markets of emerging companies through joint ventures or partnership to explore these new markets. Although it does not have any plans on the horizon to do so.
The challenge will be to compete against unknown forces and to source the best quality/ financially viable products from world over.
The rapidly increasing global healthy product crisis has increased healthy product prices all over the world, which will result in rising purchasing cost for Boots. Furthermore rising fuel costs will have implications right throughout the supply chain of the Boots leading to an overall situation of increasing prices This will have an impact on the margins of the organization and might lead to passing over the cost to consumers by increasing prices of its products. The credit crunch might decrease the purchasing power of consumers and through they will still buy the essentials they may be more cautious.The credit crunch can have an impact on Boots.
Nowadays there seems to be more emphasis on fresh, easy style cooking. This serves an opportunity for Boots to encourage new flavors and eating. This presents an opportunity to Boots produce more healthy products at a cheaper price than other manufacturers. This is to benefit from the new trend. This has lead to many consumers to shift towards healthier healthy product. There has been a huge emphasis by the government to promote healthy eating (eatwell.gov.uk 2008 [online]). Primarily due to the increasing level of obesity within the UK (Department of health 2008 [online]).
The internet phenomenon seems to be ever growing within western countries. It is predicted that by 2011, online retail sales in Europe will have reached Eur263bn, with British shoppers accounting for more than a third of all revenue. Competitors use their own online delivery model successfully. However, specialist delivery companies provide an alternative for the outsourcing of non-core work. The internet account for 8% of global advertising spends and is growing rapidly (The Economist, 2007). It is consists of new inventions, technological obsolescence, energy, research and evaluation, information technology and mobile technology as well.If used cleverly, Boots can leverage the internet to its advantage. This factor plays the most important role in the business environment. The growth of the organization also depends on the technology. It plays a main role in the success of the organization.
Impact of technological change on Boots
In case of Boots, it is world's leading crisps manufacturing plant. With the help of the technology it will become capable to meet its customers' demands. It produces crisps with different flavors and many other different products at a time. It produces crisps as mass production on daily basis. So with this factor Boots is always a step ahead among all other crisps manufacturing companies.
So, a change in the technology will give more quality of product to the customers and efficiency to the Boots. It will give changes in manufacture procedure as well as in the supply of the products also.It will help to reduce the cost and increase the productivity of the Boots. It means input with less costs and output with more profit.
A lot of emphasis western companies have been on the role of big companies in reducing carbon footprint and increasing energy efficiency (Bream 2008). This means Boots will have to invest more on green issue. This is just not a backburner issue anymore and every firm will have to prove they are reducing their impact on the environment.
The growing importance of such issues means that they will have to cater to those consumers as well as to consumers governed by price. Other important ethical issues, like sale of organic healthy product and the ethical treatment of animals, clearly affect Boots on various levels.
Due to its interest in financial services, there is ever more legal scrutiny in the operations of Boots. This means there is more responsibilities regarding legal compliance and other risk measures. With ever changing laws on healthy product and drinks, Boots will have to follow more and more packaging and labelling policies to deal these, which will be an additional financial burden on the company.
By expanding the general merchandise ranges and by creating sales that have higher growth potential and profitability we create the opportunity to reinvest some of that benefit back into our core healthy product offer. Customers will obviously spin off additional sales and general merchandise, which creates more profitable sales and profit opportunity to invest in our core healthy product offer. Hence that creates a positive circle of reinforcement between a strong general merchandise offer which makes the stores attractive to customers, and generates a profit which enables us to stay competitive and powerful in our healthy product offers, which is the heartland of our business. Thus we ensure that we stay compelling and that continues to drive customers.
These are the clear future direction for the business and strategy:
Market further acquisitions and mergers of healthier brands- to complement our Quaker, crisps etc.
Fund community programs that tackle real public health challenges- for example, tackling child hunger, influence health policy positively
Deliver a new wave of reformulation and innovation- move to next- generation technology.
Redirect our marketing expertise and power behind healthier products- help shift the market, not just respond to it.
Use feedback from stakeholders, including the scientific community, and consumer input- to drive our strategy and decision-making
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