Strategic marketing management for Boots in the UK

Boots is a leading UK retailer, selling health and beauty products through its chain of Boots the Chemists stores. Around half the Boots brand products are developed and manufactured by the company. In this case the company is in control of the entire supply chain.

From its foundation in 1849 Boots has always believed in and practiced what is today known as Corporate Social Responsibility. The company is proud of this heritage and its “strong sense of social responsibility”. Today it is reflected in values and behaviours and made explicit in the company statement of business purpose.” We seek to respond to the legitimate concerns of our stakeholders – whether they be in the marketplace, the workplace, the communities in which we operate or the environment that affects us all.”

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 internationalising 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.

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.

Marketing strategies options:

Every marketing strategy is unique, but if we abstract from the individualizing details, each can be reduced into a generic marketing strategy. A brief description of the most common categorizing schemes is presented below, Strategies based on market dominance – In this scheme, firms are classified based on their market share or dominance of an industry. There are a number of ways of categorizing these generic strategies.

Typically there are four types of market dominance strategies:

Leader

Niche

Follower

Challenger

Porter generic strategies: – Michael Porter assessed strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the breadth of market penetration while strategic strength refers to the firm’s sustainable competitive advantage. He felt three types were important:

Market segmentation

Product differentiation

Cost leadership

Innovation strategies:- This deal with the firm’s rate of new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:

Close followers

Late followers

Pioneers

Growth strategies:- In this scheme we ask the question, how should the firm grow? There are a number of different ways of answering that question, but the most common gives four answers:

Diversification

Intensification

Vertical integration

Horizontal integration

Aggressiveness strategies: – This asks whether a firm should grow or not, and if so, how fast. One scheme divides strategies into:

Holding

Building

Harvesting

Warfare based strategies: – This scheme draws parallels between marketing strategies and military strategies. There are many types of marketing warfare strategies, but they can be grouped into:

Flanking marketing warfare

Defensive marketing warfare strategies

Offensive marketing warfare strategies

Keys to Success:

An analysis of successful partnerships has identified common features. These include: –

Project delivery focused on addressing local requirements over a sustained period of time. Likely to include issues as varied as access, car parking, addition to their local Business Rate, to pay for additional services. Where there is a majority vote in favour, all businesses are required to pay.

The genuine commitment of the Local Authority (both at senior officer and political level)

Adequate funding identified from a broad base of supporters/ sponsors and other sources

A Business Plan and a programme of projects endorsed and funded by the partners

A robust, inclusive partnership that represents a genuine cross-section of all the elements of town centre activity.

A management structure with clear accountabilities to deliver the Business Plan and to monitor and evaluate progress

A realistic, achievable vision for the centre that identifies the necessary steps required for its delivery

The precept is gathered by the Local Authority but passed to a business-led local partnership to manage and deliver the BID Business Plan.

Support available from Alliance Boots, Corporate Affairs:

1. Links and contacts to a broad range of external organisations that can assist with sourcing information and practical support.

2. An additional programme is facilitated by Boots UK for those sites currently without an effective local partnership, but wishing to establish one

3. The Company continues to support the core funding of 100 Town Centre Management initiatives. A twice-yearly Induction Programme is provided by Boots UK (at no charge to ATCM members), for newly appointed Partnership Managers. The programme focuses on the key issues that challenge partnerships and offers help to successfully resolve them

4. A series of short briefing papers have been prepared that store managers and town centre managers can receive upon request. These include;

• Developing a Retail Crime Partnership

• Participating in Working Groups and Steering Groups

• Business Improvement Districts – what are they

• Influencing Car Park Provision

• Developing Christmas

•Business Improvement Districts – lessons learnt

•Preparing a Business Plan

•Broadening the Base of Business Engagement – membership services

• Funding

• Marketing and Promotion. Launching an effective campaign to promote your centre

• Business Improvement Districts – key criteria necessary for Alliance Boots support

• Sunday/extended Trading hours

5. Advice and guidance to store managers and Town Centre Managers, via contact details on page one of this brief

Development of Boots Corporate Social Responsibility Strategy:

The launch in 2004 of a new CSR strategy has enabled Boots to develop a framework to integrate sustainable development holistically into all areas of operations covering the sectors of:

Workplace

Marketplace

Community

Environment

This strategy ensures that sustainable development is integrated effectively across the organisation and underlines Boots commitment to social responsibility as a business value. Progress is reviewed quarterly and reported to the Corporate Social Responsibility Action Group chaired by the Group Operations Director. In addition the Board Social Responsibilities Committee chaired by a non-executive Board Director reviews consistency against operational planning on a quarterly basis.

Within these sectors are a total of 21 focus areas. For each one a review was undertaken to benchmark against similar organisations, analyse strengths, weaknesses

and identify opportunities for improvements. From this our ambition and annual targets have been developed

Targets and progress made in meeting them is reported annually and made publicly available.

Porter’s 5 forces analysis:

Competitive rivalry

All the other retailers have different competitive advantages.

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

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

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

Barriers for entry

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

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

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

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

Threats of Substitutes

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

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.

Buyers power

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

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.

Developing Tools and Processes:

The company has formal processes for all new product development and introduction. To integrate sustainable development criteria consistently across our product range new and revised tools and processes were introduced.

Mckinsey growth pyramid

It is similar to that of market matrix. This model argues that business should develop their growth strategies based on:

Growth skills

Privileged assets

Operational skills

Privileged assets

The model outlines seven ways of achieving growth, which are:

New product and services

A combination of market matrix and diversification strategy-by developing and marketing new products. Some of these can be sold to the existing customers who trust the business but new customers would require more persuasion.

Existing products to new customers

Taking the current customers as a base, the objective is to find entirely new products that these customers may buy, or else start to provide the products the existing customer is buying from the competitors.

Existing products to existing customers

The lowest-risk option; try to increase sales to the existing customers; which can be done by increasing the frequency of purchase and maintaining customer loyalty.

New competitive arenas

This option requires a business to think about opportunities to integrate vertically or consider whether the skills could be used in other industries.

New geographies

In this businesses are encouraged to consider new geographical areas into which to sell their products. Geographical expansions is one of the most powerful option for growth-but also one of the difficult ones.

New delivery approaches

This focuses on the use of distribution channels as a possible means of growth.

Are there any ways in which the products can be sold using the current or new emerging channels which may boost sales?

New industry structure

It considers the possibility of acquiring troubled competitors which can be done through a general acquisition program.

TASK2

MARKETING ENVIRONMENT

Using of PESTEL analysis, marketing mix elements can be produced to contribute the goals and values of Boots, after analyzing the current marketing environment.

PESTEL analysis:

PESTEL ANALYSIS (Political, Economical, Social, Technological, Environmental, Legal)The PESTEL analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business.. The PESTEL analysis headings are a framework for reviewing a situation, and can also, like SWOT analysis, and Porter’s Five Forces model, be used to review a strategy or position, direction of a company, a marketing proposition, or idea. Its an external factor. PESTEL is used to assess the market for a business or organizational unit. A PESTEL analysis is a business measurement tool.

A PESTEL analysis measures a market; a SWOT analysis measures a business unit, a

proposition or idea.

Considering each factor individually :-

Political

European/international legislation

international regulations

government term and change

regulatory bodies and processes

current legislation home market

government trading policies

funding, grants and initiatives

Economic

The UK has been in recession since August 2009 with two successive quarters of decline , affecting the economical factors nationally and globally.

general/ product specific taxation issues

customer/end-user drivers

overseas economies and trends

home economy situation/ trends

specific industry factors

market routes and distribution trends

Social

Factors including the demographic changes, the way people live, work and think and cultural aspect of the place, affecting customer needs and the potential markets

demographics

consumer attitudes and opinions

lifestyle trends

advertising and publicit

.media views

consumer buying patterns

brand, company, technology image

ethnic/religious factors

Technological

It includes R&D, computerization, technology incentives and rate at which technology changes. These changes affect the cost and quality of the product motivating for improvement.

competing technology development

research funding

intellectual property issues

consumer buying mechanisms/technology

maturity of technology

associated/dependent technologies

manufacturing maturity and capacity

technology access, licensing, patents

replacement technology/solutions

information and communications

innovation potential

technology access, licensing, patents

technology legislation

Environmental

Boots uses the carbon foot printing tool in their farms which says about the total amount of greenhouse gases caused directly and indirectly in the making and transportation of that product

climate

Weather

climate change

..

Legal

The cost of production and operation and effect on employees working in Boots was affected when government increased the labour wages by 15%. It also follows legal factors like no child labour, special consideration for disables ,etc.

health and safety law

employment law

antitrust law

discrimination law

consumer law

Globalisation:-

After considering all the above factors Boots should put plan and put down proper strategies before entering the global market and also reviewing the progress on regular basis , so as to make the necessary changes.

Following are the areas which should be consider by the organisation:

Well planned Strategies to develop the profit and to attain long term goal

Know clearly the goals , objectives and targets with a regular follow up.

Organisation should identify and assess their product in the market

need to plan strategically as well as operationally

market growth using the PESTEL analysis.

logic, self-discipline and to operate systematically

SWOT analysis

STRENGTHS

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

WEAKNESSES

Declining Reputation

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.

OPPORTUNITY

Online sales are a great opportunity for future growth.

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

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

THREATS

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

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

Conclusion

It is important to recognize that sustainable development is a journey of continual improvement. The processes and tools we have developed are under continual review and refinement. Some of our priorities for the immediate future include:

Extending and adapting the risk assessment model for use in other business functions.

Developing product sustainability benchmarking

Building sustainable development criteria into brand and departmental key performance indicators.

Understanding the climate change impacts of products.

Developing strategies for consumer information on sustainable development issues.

In short Boots UK’s views sustainable development as a Holy Grail – given the scale of the challenge, the complexity of our business and the pace of change. But we know that it is a key differential for Boots UK, that we are leading the way on many of the issues, and it is no less than what is expected of us by our customers and wider society.

Journals/Magazines

European Journal of Marketing (Emerald Group Publishing)

Campaign ( Haymarket Publishing)

Admap ( World Advertising Research Centre)

Revolution ( Haynet)

Journal of Consumer Behaviour ( Academy of Marketing Science)

Marketing Intelligence and Planning (Emerald Group Publishing)

Marketing Business (The Chartered Institute of Marketing Magazine)

Journal of the Academy of Marketing Science ( Academy of Marketing Science)

Marketing Week (Centure Communications Ltd)

Websites

http://www.boots-UK/Media/PDFs/CSR/2BCE_AWARDS_Paper_v3_general_release.pdf

http://www.boots.com/en/Help/About-Boots.com/

http://media.wiley.com/product_data/excerpt.PDF

http://en.wikipedia.org/wiki/PEST_analysis

http://www.businesspme.com/uk/articles/marketing/6/Types-of-marketing-strategies.html

http://www.chicagoexec.net/chicago.nsf

http://www.boots-uk.com/Our_Group/Alliance_Boots_Board.aspx

http://strategy-guide.blogspot.com/2006/03/mckinsey-growth-pyramid

The Strategic Marketing Process