College of Management - Mahidol University
MGMG 508 – Strategic Marketing Management PharmaSim Project Ajarn Ploeumrudi Devahastin By: Mr. Totsapon Lohachitranont Mr. Goanpon Chongsanguan Ms. Pimploy Pluangmonthin Mr. Yukonthon Pradsarakee Mr. Sivanan Chaipanyawuthikul Ms. Theeraporn Pothipat
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Table of Contents Introduction
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Objective
3
Period 0-3 and decision
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Period 4-7 and decision
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Period 8-10 and decision
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Conclusion
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APPENDIX 1. Product Price
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2. Sales Force Report
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3. Income Statement
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4. Sales Report
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5. Advertising Expenditure
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6. Promotion Allowance
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7. Promotion Expenditure
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8. Market Share
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Introduction PharmaSim is simulation software ideally designed for Marketing and Brand Management classes and is based on the pharmaceutical industry. PharmaSim provides students with simulated area of responsibilities with complexities in making decision by assigning student to take on the role of a brand management team as Brand Assistant, Assistant Brand Manager and Brand Manager respectively. This simulation program also brings together marketing strategies in to practice from marketing mix, segmentation and position, resource allocation across brands, integrated marketing communications, and multiple channels with intermediaries. Students are able to learn how to motivate consumers and channel partners, measuring their progress through marketing research. Each of simulated business environments will develop differently depending on the choices each student team makes and the reaction of their competition. This helps to illustrate the impact a competitor may have on an entire industry. Objective The objective is to critically manage Allstar Brand’s by developing sub brands such as Allround, Allround+ and Allright to be the leaders and maintain its position in the pharmaceutical industry. In doing so, we have to focus on the following frameworks; •
Situation analysis / 5Cs (Company, Collaborators, Customers, Competitors, and Climate)
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STP (Segmentation, Targeting, Tositioning)
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Marketing Mix / 4Ps (Product, Price, Promotion, Place)
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Integrated marketing decision-making and analysis
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Managing the buyer purchase process
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Period 0 – 3 Decision Made – Period 0-3 Segmentation
Allround’s target group are young singles, young families, mature families, empty nesters and retied. As Allround medicine is a four liquid cold medicine, customers use this medicine to relief cold symptom.
The main competitor of Allround in this period is Besthelp, they held 25.2% of the market share in cold medicine market,
Advertising
We chose to do an advertisement focusing on comparing Allround with other brands, the reason why we chose comparing as an advertising message was because Allround already held high market share therefore it was necessary to compare its performance instead of introducing its primary information and benefits. We then sent out the message focusing on comparison, then benefits and primary information respectively.
Product
Allround is a medicine introduced in the cold medicine market which held the highest market share for cold recovery medicine or at 40.4%. As the product already possessed large market share.
At period 1, our group reformulated Allround product by dropping the alcohol to reduce side effect in order to capture more markets.
Brand Formulations
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Price
The beginning MSRP of Allround is $5.29 with gross margin 48.9%. From period 0 3, our group increase MSRP price by average 2% in each period. The price was increased based on the fact that people who buy medicine are not price-sensitive, and our group expected to gain more net income.
Sales Force
We increased sales force from period 0-2 inclusive, and kept the number unchanged in period 3 at 230 pax. The reason we kept increasing sales force was because we believed it will help in increasing market share and bring us to the competitive level. We took our competitors’ sales force number into account in locating our sales force number. Apart from Driscol, all companies total sales force ranked from 207 - 211.
From period 2 to 3, we did not increase number of sales force but we allocated sales to different channels based on the sales volume we received from each distribution channel.
We allocated more sales force to Grocery and Mass Merchandize as we saw upward trend in sales.
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Lesson Learned Sales Force
Grocery sales force allocation was too high, sales contribution was 26.3% while we had 35% (80 out of 230) of total sales force budget allocation.
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Mass Merchandize sales force allocation was too high, sales can contribute at 9% while we had 10% (22 out of 230) of total sales force budget allocation.
We kept increase sales force to generate more sales, and we also used competitors’ sales force survey as a guideline. We noted that our sales force was lower than other companies therefore we increased accordingly. Nevertheless, we failed to carefully calculate number of sales force to match with sales generation which made our sales force to be too high.
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Part 2 (Period 4-7) Major Decisions Made Allround Product
In period 7, Allround brand added expectorant which helps clear chest congestion which is the 2nd highest reported symptom after aches as shown in the picture below, so that the product could also target cough segment. Cough relief was also added in the communication message.
Price
Increased price by 16.8% on average during periods 4-7 to maximize profitability and to make up for setting the price too low earlier.
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Promotion
We did not decrease the promotional budget for Allround as we have changed the formula.
Allround+ Product
Allstar introduced Allround+ in period 4 which is child 4 hour cold liquid. Allround is already a strong brand and is doing well in the market so we would like to increase the manufacture sales and explore a potential business opportunity against Coldcure with the cold medicine for children.
The target market for Allround+ were young families and mature families in the cold segment the reason we opted for this formulation is because we would like to target the younger segment, to differentiate itself from Allround.
We saw an opportunity in the cold market as Coldcure’s share was decreasing and with our strong parent brand we feel that customers would already have confidence in our brand than our competitors and we think that could do well in this particular segment. (Pic. Below)
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Price
Allround+ was introduced at 4.99USD, lower than Allround 5.57USD and Coldcure 5.59USD as we wanted to aggressively penetrate the market and capture a lot of market share.
Promotion
Deployed aggressive advertising to spread product awareness by initially focusing on Primary benefits and later on emphasize more on reminder.
We emphasized on co-operative advertisement, trials, coupons and point of purchase to create brand awareness.
Allright Product
In period 6, Allstar introduced Allright brand, a 4-hour non drowsiness allergy capsule which was the first of its kind in the market.
We targeted younger segments which are young single and young families because they are working class of people who would appreciate the non-drowsiness benefit. Moreover, these groups of people are willing to try new product.
There were two players in the allergy segment which were Believe and Defogg (pic below), although we do not perceive them as our direct competitors. Believe was capturing the most market share at that time and we very strongly convinced that with more benefit that our product is offering we could do serious harm to them and able to capture big share in the allergy segment.
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Price
Allright was introduced at 6.50 USD, the highest amongst all products in the segment, exploiting on Allstar‘s brand equity and the exclusivity of the product.
Promotion
We hired same advertising agency as Believe which is different from the first two brands we launched.
The ad message was emphasized on it benefits and comparison with the market leader, Believe.
Emphasized on co-operative advertisement and trials to push its position to be a star.
We spent high on trials intended to reach our target customers who might be reluctant to spend higher than they used to become acquainted with the benefit that our product can offer them.
The product was still new to the market we did not emphasize on coupons at first because there was still no market for the product at the time and no one really knew our product at that time so the coupons would not do us much good at the beginning.
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Sales Force
Increase sales force in the independent drugstore and detailers so that our products would be recommended more.
Lessons Learned New Product Launch After surviving through 4 periods in the industry by having Allround and Allround+ as our anchor players in cold-cure medicine market, we decided to launch Allright brand in to the market by focusing on its unique benefit of a non-drowsiness allergy capsule, and targeting on young singles, young families and later tabbed into mature families group in period 7. Taken into account the attractiveness of the market where there are only 2 existing rivals; Believe and Defogg. We hired Sully and Rodgers as advertising agency for Allright to create different advertising message since this agency is sophisticated in allergy market and also works for Believe that would also help to better advertise Allright. Promotion We learned that having significant number of distributor channels deemed not as necessary as compared to increasing allowance for retailers where drugs are mostly purchased. In doing so, we also gained more shelf spaces from retailers. Spending on consumer promotion was too high. Because we would like to gain more brand awareness for our new products, so we spent high amount for Allround+ and Allright, however we failed to compare the spending with our competitors. This made our consumer promotion tended to be too high, this was around 7 times more than our competitors. (photo below)
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Part 3 (Period 8-10) Major Decisions Made Allround Product
Allround moved back to star in this period because our target group got older and they tended to take more of liquid medicine comparing to young people.
Price
During period 8 – 9, price was $7.34 or increased by 10.2% from period 7. According to cost was increased when we changed brand formulation, hence we have to increase price in order to maintain profitability. Although Allround price was slightly higher than key competitor like Besthelp, customer perceived that symptom relieved of Allround was still much better than Besthelp.
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Promotion
From the research among competitors, Besthelp seemed to be able to keep their market share stable or only slightly decreased.
From the Advertising Expenditure report, Besthelp used ad budget more than Allround therefore we took that into account so we increased advertising budget considering from our direct competitor ad expenditure.
We added point of purchase promotion in convenience store because we adjusted formulation of Allround, so we do promotion at all sales channels we can in order to compare if changing of formulation would affect our sales volume.
Moreover, as this is the late period, we tried to promote to boost more brand awareness.
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Allround+ Product
Allround+ shifted from Dog to Question Mark due to the demography segment, children of young family in the first period had grown up to be adults in the young family. Therefore, Allround+ became their choice again for their children as it is easier for children to take medicine in liquid form rather than pills.
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Price
Allround+ price was $7.3 or increased by 10.3% from period 7 (period 7 was $6.62).
Allright Price
During period 8 – 9, price was $7.76 or increased by 10.2% from period 7. As Allright had highest market share in allergy, we increased price in order to maximize profitability and maintain brand image. There’re two key competitors which were Believe and Defogg. Allright price was level off to Defogg but still higher than Believe.
Promotion
The ad message was still emphasized on its benefits and comparison to maintain growth.
As we captured market of young single, young family and mature family, we did market penetration by stretching to target empty nester as our customers got older.
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Sales Force
We increased Sales Force in merchandisers and detailers as we would like to push more product volume as we believed that information they can provided would push more sales to retailers.
Merchandisers and detailers would also advise retailers on promotion.
Lesson learned Customers perception towards benefit received
Although Allround price was increased as we adjusted formula, if we advertised and informed our customers on benefits they will receive, they are willing to pay higher price.
Adding advertising budget to Allround
By adding advertising in Allround helps us to maintain market share in Cold market at 30.2% comparing to period 7 at 32.7%.
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Extending market segment of Allright
As we did market penetration to capture more market shares, our market share in allergy sales increased period by period respectively.
At period 9, we are able to possessed more market share from Believe. However, this was also an opportunity causing by their product life cycle which tended to lower down from period 6 onwards. 18
Conclusion Apart from 4Ps; product, price, place and promotion, we should also analyzed our SWOT so that we know our strengths and weaknesses in order to find the solutions to improve our business and serve the customers’ needs. Messages used to communicate to customers give impact on their perception towards products, the company needs to consider what message to be sent out. Launching of new products need to be well communicated due to the fact that people do not change brand of medicine purchased. Not only launching new products are important, market penetration will also help the company to stretch themselves towards their existing customers in a long-term basis. For medicine industry, price does not seem to be a factor people take into consideration prior to purchase decision. People are willing to buy medicine at any price as long as it serves their current needs. To successfully operate a business, ist is not only income that is important, we need to focus on other aspects such as market share, sales growth, customer perception, promotion spending, and portfolio profile. These elements are the main factors that affect our business performance.
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Allstar Product Prices Changed
Prices of Allstar Products 9 8 7 6 5 4 3 2 1 0 P00
P01
P02
P03
P04
Allround
P05 Allround+
P06
P07
P08
P09
P10
Allright
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Sales Force Report
Income Statement
21
Sales Report
Advertising Expenditure
22
Promotion Allowance
23
Promotion Expenditure
Market Share
24
