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Discount sales, the Boots way

Working in a retail environment not only helps to gain knowledge of different products but also help frame some understanding behind the pricing strategies of retailers. However, there are some that bewilders me.
For example, Boots, the leading highstreet retailer, has a deal running till November 30 wherein customers can get a free vitamic C tablets costing £2.09 per bottle for purchase of a cough and cold product. Many of the popular over the couter products for cold and cough are sold at £0.99. In addition, Boots Vitamin C tablets are part of 3 for 2 offer. So, a customer buying two cough and cold products will pay only £ 1.98 and get £ 6.27 worth of free products!!!
Another example is Boots own brand of condoms. It comes in a pack of 4 and 12. The selling price for 12 pack condoms is £ 5.99, whereas the pack of 4 condoms are being sold for £ 0.99. The products mostly are displayed side by side. An intelligent customer would buy three pack of four condoms for £ 2.97 instead of paying £ 5.99. I always thought higher the quantity of anything, then it is usually cheap compared to many small packs aggregating to the higher quantity. (Also, is there any business logic in selling condoms being sold in a pack of 4- the minimum size- instead of lower quantity!!)
Thinking of reasons, I feel the push of major retailers like ASDA, owned by Walmart and Tesco, UK's largest retailer with a market share of 30%, into healthcare products have made Boots, a major player in retail pharmacy market with a share in excess of 50% in healtcare products, to resort to this strategy. Probably, in terms of actual cost (since the free vitamic C product is Boots own brand), it might not be a loss.

Comments

leena said…
Hi!! John that made interesting reading on pricing strategies of giant retailers of UK, the Vitamin C just reminded me on a article I read in Guardian newspaper a few weeks ago. It was earlier thought vitamin C tablets controlled coughs & cold as proposed by a nobel laureate (forgot his name) in the early 1970's but anyway after much research now they have found intake of Vitamin C pills does not have any positive influence in controlling Cold & Cough etc. The article pointed out that it was advisable to eat ample amounts of different fruits & vegetables rather than just pop a pill due to convenience.- Leena

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