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Pharmasim Presentation

Group 2

Mission Statement
Allright is a leading Pharmaceutical company founded in
providing a quality product at a competitive value. Our
success is attributed to an ongoing commitment from our
management team and support from our stockholders.
Providing over ten years of relief to our customers has
been our highest priority. Our market shares have
increased annually and research has yielded a new
product to introduce every 4 years. Allright continues to
provide promotional items for its retailers and clientele
alike to help reduce costs and bring in new customers.
Looking toward the future, Allright will continue its
success with a well balanced marketing plan and remain
an industry benchmark for years to come.

Marketing Objectives

Increase Brand Trials for Allround


to 85%
The company should focus on reaching that goal
within three years
Brand Trials for Allround is at 59.7%, and our
most frequently purchased is at 21.8%
If the Brand Trials are increased to 85% then in ratio
to how many people most frequently purchase
Allround now, we can expect it to be around 31.04%
However the retention ratio is still the same in this
case so you should focus on having the most
frequently purchased to be at 35%, which makes the
resulting retention ratio 41.2%.

Reach a stock price of $150.00


Try and accomplish this in three years
There has been a steady increase in our
stock price over the last six years
Allstars stock price went from $30.94 to
$110.00 in that time

Allrights Brand Awareness to be at


75%, and the Brand Trials to be at
least 40%
Since Allright is a product that is in a fairly new
category of the market, and we have the same
symptom relief as Defogg, we should get the
Brand Awareness and Brand Trials for Allright to
both be increased
This should be expected to occur over the next five
years

If Allstar can reach these numbers, then the most


frequently purchased for Allright should hopefully
increase to around 20%

This would help in getting Allstar to be a leader in the 4


hr Allergy Capsule segment of the market, especially
since this is a new area

Put competition out of business


Our main competitors for Allright are
Believe and Defogg
Believe is not as strong as Allright or Defogg
which have the same ingredients
You should focus on putting Believe out of
business within two years and Defogg out of
business within five years

Increase sales force


Our company just opened up a new plant
Within the first year the total sales force
should be increased from 260 to 300
One way to figure out how to disperse
direct sales force is to buy the channel of
sales report
divide the sales in each category by the total
sales and multiply that number by the total
number of people in the sales force

Increase Manufacturer sales to a


billion dollars a year
This should occur in the next two years.
Our total Manufacturer sales our currently
at 836.9 million dollars a year
With production up, if the sales force is in the
right place then it should not be hard to
accomplish this goal

New Product
With respect to the Product Life Cycle, a
new product should be introduced within
the next 2-4 years depending on how
things are going with Allround+ and Allright
We can put money form Allround which is a
star in the BCG Matrix and into the new
product and hopefully get a cash cow or
another star to come out of it.

Increase Price
The prices of Allround, Allstar. And Allround+
should all be increased annually, in correlation to
inflation
Inflation should not outweigh the price increase for
Allround at all because it is still our leading product
and has the highest percentage of most frequently
purchased along with having the most symptom relief
The prices for Allround+ and Allright should not be
outweighed by inflation either, but be more careful in
how much the prices are raised each year, because
these products are still fairly new and until the Most
frequently purchased percentage is at least 40% the
price should stay closer to inflation increase.

SWOT Analysis

Strengths
Allstar brands well-known brand name
has brand awareness of 76.1% and Allround +
has an awareness of 57.3%.
15.9% purchased Allround, 5.8% purchased
Allround +, and 5.7% purchased Allright

Research and development team


Allround leading in symptom relief, Allround +
is third and Allright in the top
Allstar brands have 3 of the highest 6
retention ratios at 36.5%, 32.5%, and 44.3%

Strengths Cont.
Promotions overall, especially trial sizes and coupons

Allround has the highest conversion ratio


For all three brands, about half of our coupons were redeemed
Higher percentage of people purchased all of our products than
intended

High capacity utilization of 105.9%

Decreases the per unit cost


Higher than that of competing companies
Helps balance out our high fixed costs

Direct sales force


Highest average square feet of shelf space all channels
Allstar brands have highest percentage of retail sales compared
to products in their categories

Weaknesses
Allstars pricing

Doing well in symptom relief and have the highest Retail and
Manufacturer sales
Highest promotional allowance and cost of good sold
Gross margin is lower than both B&B and Ethik.

Allrights brand awareness at 28.5%

Other brands in the same category have higher awareness percentages


Our retention ratio is higher than Believe & Defogg
High unit cost, thus a higher brand awareness would help make profit

Obtaining involvement from customers in co-op ads and point of


purchase displays

Allround has 0.4% participating in co-op ads & 1.3% point of purchase
Allround + has 0.5% in co-op ads & 3.1% in point of purchase
Allright has 0.8% in co-op ads & 4.2% in point of purchase
Higher percentages result when we put in more money

Weaknesses Cont.

OCM groups decision to drastically lower advertising


expenditures on Allround from 20 million to 5 million
between periods 4 and 7
Besthelp raised their advertising, and their brand awareness
rose to 6.7% higher than us
Allround is a star

Opportunities
Consumer demand to relieve symptoms

Product effectiveness is the most important in


decision-making
In the past year the worst symptoms were aches,
chest congestion, and coughing
Allround is the only product with analgesics,
expectorants, and cough suppressants

Produce a cough liquid

Allstar does not have available


None of the cough liquids have expectorants and
cough suppressants
61.6% people reported coughing as a symptom

Opportunities Cont.
Industry growth rate is at 10.1%
Health is a big trend
No invention is underway that would eliminate the need for OCM
Allround, Allround +, and Allright have 16.7%, 5.6% and 5.4%
respectively
Allround is a star in the BCG Matrix, but Allround + and Allright
are question marks

Higher percentage increase in sales prices than the


inflation rate of 4.4%
Our prices are already relatively low
Chance to make up for our high promotional costs and fixed
costs without making a huge price jump compared to other
brands

Threats
Ethik is a threat to Allstar

They have the highest gross margin and net income,


and their stock price is second to
ours
End + and Extra combined are receiving double the
amount of manufacture sales than Allround +
Ethik may create products in other categories

Besthelp is a specific threat to Allround

Its symptom relief fourth, but it is $1.20 cheaper than


Allround
Not as many people intend to purchase Besthelp as
Allround, but they are equal in percentage of sales
Besthelp has a greater brand awareness

Threats Cont.
Defogg is a threat to Allright
Have the same ingredients in the same form,
and the same symptom relief
Defogg has a higher price than Allright, but
they have better brand awareness and a
higher conversion ratio.

The close to full capacity utilization of


Ethik, B&B and even Curall
May try to price aggressively or increase
marketing to acquire more market share

Marketing Activities

Increase Brand Trials for Allround


to 85%
In order to achieve an increase in brand
trials for Allround to 85%, we must use
marketing tools to raise awareness and
create a demand.
Coupons are effective for converting our
competitors customers to our own product by
offering a comparable product at a reduced
price
Trial sizes are an efficient way of getting our
product into the hands of the consumer

Reach a stock price of $150.00


In order to achieve a stock price of $150.00 in
the next three years, Allstar must promote is
products proportionate to its sales
Allround has now received a new formulation
and will need to be promoted again as new &
improved
This will revitalize Allrounds sales and improve the
overall condition of the company as a whole
Taking this opportunity in to consideration, as well as
two new products beginning to ascend through the
industry an increased stock price is within reason.

Allrights Brand Awareness to be at


75%, and the Brand Trials to be at
least 40%
In order to achieve our objective of making Allright the
industry leader in 4hr Allergy Capsules, we must divert
as much sales as possible from the other two competing
products
Believes brand formulation consists of only four units of
Antihistamine, whereas Alright consists of the Antihistamine and
a decongestant. Therefore comparison ads being run on
Believes lack of effectiveness and the inferior formulation should
be beneficial to Allrights share of the market.
Alright and Defogg have similar brand formulations and similar
symptom relief, therefore we must compare on the basis of price
and benefit
Defogg is currently over priced and continues to match inflation to
consistently be just higher than the market average

Increase sales force


In order for Allstar to remain an industry leader
and continue its growth and profit, its sales must
also increase each year to consume its available
market share
Our sales force is crucial to our products success
in the market place and in order to support them
correctly, there must be a proportionate amount
of personnel to handle the growing volume of
orders

Using the information from the channel of sales report,


a proper decision can be made to allot the correct
amount of sale agents to each team handling the
different sectors

Increase Manufacturer sales to a


billion dollars a year
In order to increase total manufacturer sales to
one billion dollars a year, a strategy of increasing
plant size and sales force must be followed.
For the past four years, Allright has been running
its plants at or above capacity. Twice in the past
four years Allright has seen an overage in
capacity of 4-5%
This overage needs to be converted to income used
to build larger and more efficient facilities
Growth in sales force as well as proper allotment of
sales force has accounted for the substantial boost in
Allstars income

Introduce New Product


In accordance with relative product lifecycles a new product should be introduced
within the next four years in order to
sustain market competitiveness and
broaden growth throughout the industry
Possible new products could be a
reformulated version of Allround with a
decreased amount of alcohol marketed
toward child use

Increase Price
In order for Allright to recover profits lost to
inflation, the prices of its products must be
reevaluated annually

Inflation has typically increased 3-6% yearly for the


past ten years
We have found that the best strategy is to adjust each
price to the previous years inflation rate. This allows
Allright to remain competitive while recovering any
potential losses due to rising inflation
Our industry trade-off grid has shown our prices have
remained in the optimal zone for several years
Our customers are receiving a quality product at a
comparable value

Lessons Learned

Stock Price
The most obvious way to tell how well the
company is doing is the change in the
stock price
Poor decisions will cause the stock price
to drop, and as well as the opposite
Poor decisions made by us early allowed
us to ratify the situation and make our
stock price climb out of the basement

Stock Price Cont.


Early poor decisions
caused our stock
price to drop from
48.13 all the way
down to 30.94
During fifth year,
figured out problem
and price rose from
30.94 all the way to
110.54 over the past
five years

First Year Mistakes


Lowered Price

We figured that if we were the leading company in the market for


symptom relief we needed to lower our price in order to try and
raise our most frequently purchased percentage, ultimately
raising sales.
Not only did sales decrease, but lowering price caused a
shortage in budget down the line.

Increased Sales Force but not Advertising Budget.


We didnt put any money into Advertising for Allround
Caused us to miss out on sales

Decreased Promotional Allowance

Should have never decreased promotional allowance for a new


product.
Allround was still a new product. Should have taken opportunity
to get name out in the market but didnt.

Second Year Mistakes


Made many of the same decisions as year one.
Should have learned form mistakes early

Increased Price
Increased the price, but not even enough to deal with
inflation so ultimately served no purpose

Increased Promotional Allowance


Should have been done the year before, resulted in a
catch up rather than company growth.

Year Three
Decided not to start a new product
This was not necessarily the incorrect thing to do, but
it did contribute to the large drop in our stock price
over the year
Starting a new product takes a lot of money and we
didnt think it would be beneficial to the company if we
spent money we didnt know weather or not we would
make back quickly.

Did not change Pricing Discounts


Our discounts werent large enough to make it worth
buying larger quantities
Lost a lot of wholesaler business as a result of this

Year Four
Finally introduced Allround+
Took money from budget of Allround in order to
increase the promotion and advertising of Allround+

We changed our discount percentages to try and


make up for the loss we incurred the year before
Changed was our sales force lay out.
When looked at other companies, found we were
concentrating on little areas like convenience stores
and not as much on grocery stores and wholesalers.

Year Four Cont.


Dispersed Advertising Budget according to
where the product fell in the Product Life Cycle.
We made sure to push coupons for Allround
because it had been on the market for awhile,
and push trial sizes for Allround+ because it was
a brand new product and we wanted people to
try it.
Didnt raise the price of Allround
it was already on the best fit line for price and
symptom relief
Caused us to have a loss the following year because
didnt recover initial cost of launching Allround+

Year Five
Forced to make budget cuts
Took money away from the advertising budget of Allround but not
Allround+ because it was still a new product.
Decreased our sales force as little as possible
If we had suffered a similar loss the following year, the cuts
would have been a big problem.

Increased Price
Decided that an increase of between 30 and 40 cents each year
would keep us ahead of inflation and increase our budget from
year to year

We made sure to shift the advertising budget to focus


more on benefit and comparison for Allround and primary
and benefit for Allround+.

Year Six through Ten


Introduced yet another product, Allright.
The increase in our budget over the previous year
allowed us to do so.
New products result in more sales in the long run

Increased the price of all products every year.


We changed the advertising allowance
according to where the products were in their life
cycles
This allows the correct type of advertisements for
optimum sales

Year Six through Ten Cont.


We made sure to have at least a seven percent
increase in the pricing discounts for all of the
products.

We decided to give Wholesalers an extra couple of


percent because they were generating most of our
sales so we felt it was important to give them a bigger
discount

It is important to increase the advertising


budgets proportionally every year

A large increase is not necessary because all of the


products have been on the market for awhile and it is
more important to increase your sales force every
year

Year Six through Ten Cont.


As products get older, it is better to take
money away from product displays and
co-op advertising and put it into coupons
We found that co-op advertising is a waste of
money. Only about one percent of the sales
population utilized co-op advertising.
Trial sizes are only necessary early in the life
of a product