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Running head: PharmaSim Final Report 1

PHARMASIM FINAL REPORT 2

PharmaSim Final Report

Group E

Lynsie Cahela

Lorenzo Gibbs

Alan J. Hasfjord

Summar Hudson

Saint Leo University

MKT 565: Marketing

Professor Dr. Stephen L. Baglione, Ph.D.

October 8, 2017

Table of Contents

Introduction 3

Pricing 5

Advertising 6

Promotions 9

Sales Force Allocation 11

Segmentation 12

Line Extensions 13

Cumulative Net Income and Stock Prices through Each Period 13

Conclusion 14

Appendix 1: Initial Strategy Report 15

Appendix 2: Average Retail Price in Relation to Net Income 21

Appendix 3: Average Discount and its Effects on Unit Sales 22

Appendix 4: Sales Force Allocations and its Effects on Unit Sales Per Channel 23

Appendix 5: Market Share Based on Retail Sales 25

Appendix 6: Promotional Expenditure and its Effects on Brand Awareness 26

Appendix 7: Advertising Expenditures and its Effects on Unit Sales 27

PharmaSim Final Report

Introduction

In the OTC pharmaceutical market, Allstar brand offers the 4-hour liquid cold medicine, Allround. Initial research suggested the potential of marketing to two distinct groups. The first group is customers in the cold & flu market. As Allround already had a substantial following in this market with 22.6% of the market share and brand recognition at 74.1%, it seemed logical to continue pursuing this market. Conversely, the customer base in the allergy market was negligible, accounting for only 2.3% of the brand’s sales. Given this data, the team chose to aggressively pursue the cold & flu market and accept residual sales in the allergy market, if any, without focused targeting in the allergy market.

Allround’s price point began at $5.29, which placed it firmly in the upper region of the price spectrum. Given the high brand recognition and solid market standing, however, the team did not feel the higher prices would have a significant impact on the bottom line and chose to pursue a pull marketing strategy that would showcase Allround as a premium brand and develop customer loyalty and repeat purchases. In addition, the team decided to focus on a target market segment that included mature families, empty nesters, and retirees, as the team surmised that these segments would be more financially stable and would present a lower price sensitivity.

At the onset of the simulation, Allround was the only offering with an analgesic, antihistamine, cough suppressant, decongestant, and alcohol in its formula. Recognizing this difference, and the negative sentiment regarding alcohol and multi-symptom treatments, the team chose to pursue a strategy that would highlight the benefits of the multiple ingredients and mitigate the views regarding undesirable side effects.

Initial research indicated that grocery stores, chain drug stores, and wholesale markets were the most lucrative channels. To capitalize on the strength of sales in these channels, the team developed its strategy to increase sales in these venues by offering higher volume discounts and allowances to these channels and reduce the discounts and allowances to those channels that were less profitable.

From the beginning of the simulation, Team E determined that it must consider three key factors to ensure the success of the brand. The first was a comprehensive and continuous situational analysis. The team felt that an understanding of the company’s competition, market, and, most importantly, its customers were crucial to the brand's growth. Secondly, the team determined that a continuous market strategy analysis was imperative. Understanding changes in the OTC market and its customer's needs must remain at the forefront of the decision making process. Finally, the team decided that a proper market mix of product, place, price, and promotion was vital to Allround’s success. The group, therefore, asserted that a thorough understanding of the fluctuations in the market, and the results of the team’s reactions to those variations, was crucial to the overall success of the Allstar brand.

To measure the effectiveness of the initial strategy, the team decided on several performance objectives. The first objective was to increase sales to the company’s top three channels by growing sales force support. The second was to establish strong customer loyalty. The primary method chosen to achieve loyalty was through a customer outreach via a dedicated interactive web portal that would allow direct contact to and from the customer. Long-term objectives included increasing the gross margin from its initial point of $172.3 million to $240 million over 8 years, grow net income from $67.2 million to $135 million in the same period, and, finally, increase Allstar’s stock price from $38.35 to $70.13 during the course of the simulation.

Pricing

As the team posited that Allround’s initial standing in the market would be sufficient to allow a premium pricing strategy, the team decided on an aggressive pricing strategy was believed would maximize profits. An initial price increase of just under 6%, from $5.29 to $5.59 seemed to confirm the team's original estimations, as stock price rose from $38.35 per share to $49.92 per share and net income rose by $15 million. The two subsequent periods, however, revealed that, while not necessarily incorrect, the team was overly aggressive in its attempts to maximize profits through price increases. In determining MSRP for successive periods, the team focused more on the price sensitivity for the target market segments, as well as the price elasticity for the previous two years. Using the data derived from price and product sensitivity and elasticity, the team was able to make more calculated pricing decisions that contributed to more positive returns in both stock price and net income. Though not to the degree expected or desired, the decisions made in later periods showed success, as demonstrated in the brand's average retail prices in relation to net income (Appendix 1). In addition, the team determined in later periods to ease its focus on pricing Allround as a premium brand and reduced the prices to fall more in line with the OTC market and customer expectations.

Team E maintained its pricing strategies from Allround for Allround+, and the company’s follow-up offering, the allergy medication Allright. Though both new products did see negative contributions for their first period, primarily due to a heavy focus on advertising, the team had anticipated the initial losses and continued pursuing both brands. In both cases, period two results rose and each product terminated with positive net contributions to the Allstar brand. Volume discounts provided each tier of channels an adjustment to each period’s MSRP as an incentive to buy in larger volumes. If a retailer desired a higher discount, the retailer would need to increase their purchase quantity to reach the next higher level of discount provided. The normal range of volume discounts is 15-40% off the MSRP per period. The retail channels were divided by volumes purchased: <250, <2500, 2500+, and Indirect/Wholesale.

The team based the OCM group’s volume discounts upon several factors. One factor was whichever channel provided the highest dollar profit from unit sales would receive a better discount volume in the next period; keeping in mind our estimated unit cost and MSRP for that period. For period 3, the team raised MSRP significantly to $6.99, but lowered volume discounts which resulted in a drop in unit sales from period 2 of 115.5 unit sales to 61.2 unit sales for period 3. To offset the significant MSRP increase, the group should have increased volume discounts. This error in volume discounts also caused trade rating to fall from 6.9 to 6.5.

Volume discounts were utilized in conjunction with promotional allowances to maximize Allstar’s profits and gain retailer support in the sales of Allstar’s various brands. Volume discounts off MSRP and promotional allowances were directly tied to Allstar’s brand's trade rating each period. The highest trade rating that Allstar received was in Period 8 when trade ratings were 7.7 for Allround and Allround+ and 7.4 for Allright.

Advertising

The team centered the advertising budget on the product life cycle of each brand of Allstar which would allow for appropriate allocation of funds in regards to existing lines and the addition of new lines. The budget also took into consideration each period’s number of sales force, promotion decisions, level of customer brand awareness while trying to align the overall advertising budget with its competitors

Initially, because the Allround brand had the highest consumer brand awareness in the market at 74.1%, outspending the competition did not seem to be a critical component. Our chosen competitor brand Besthelp had a decreased brand awareness of 56.6%. The marketing strategy was to decrease, maintain, or increase the funds allocated to the advertising budget for the established Allround brand during its product life cycle which would allow Allround to remain competitive. The marketing strategy would also adjust advertising budget allocation in regards to the addition of new lines.

The ad agency initially chosen by the OCM group was Brewster, Maxwell, and Wheeler (BMW). BMW, a high-quality ad agency charges a 15 percent commission fee for media placements. In Period 1, the team changed the ad agency from BMW to Sully and Rogers who had a lower percent commission of 10%. The team deemed the change to a less expensive ad agency reasonable given the high brand awareness of Allround at 74.1%. Because there was a significant distance between Allround and its nearest competitor, Besthelp (56.6%), the decision was made to decrease advertising expenditures and reallocate funding to other expenses.

The ad agency was changed back to BMW in Period 3 to increase the quality of ads to bring sales revenue back up due to the of $17.8 million loss in sales revenue. Brand awareness was not taken into consideration in the change even though levels had increased from 77.3% in Period 2 to 80.9%.

During Period 1, Allround’s media expenditure was $20 million while our competitor, Besthelp was only spending $12.7 million. After buying the advertising estimates for all competitors in Period 3, Allround compared to Besthelp, our nearest competitor, had both chosen BMW as the ad agency with Allround’s media expenditure being only $2.5 million higher than Besthelp.

The team began with Sully and Rogers (S&R) as the ad agency because they were very well-established and the 10% fee was reasonable. Our comparison company at the time was Besthelp due to the close similarities. Starting off with an advertising budget, we felt that it was necessary to establish our company as one of the leading brands, and the way to that goal was through advertising. We paid close attention to the website comments and consumer complaints and responded by changing the advertised product benefits from 45% to 50%, due to the team's desire to promote the fact that Allround covers all symptoms. We exercised our methods by implementing an interactive blog with AdWords, which provided consumers with a convenient way to search using keywords. The interactive blog allowed the team to monitor what Allstar's competitors were doing and what consumers desired. By the end of period six, Allround continued to have the highest brand awareness in the market, which the team felt was a direct reflection of the continuous focus on advertising. Once a brand is established, the manufacturer can have a lower advertising budget which is measured as a ratio to sales.

In Period 3, we made the conscious decision to switch ad companies from S&R to BMW, which was a tactical response to the 4.1% decrease in revenue. The decision to go with a top-end ad company increased the quality of Allstar brands advertisements. The group also added singles, young families, and mature families to the targeted segments. By shifting the target group, it would increase retention ratio from 41.2% and 94%. As the simulation progressed, there was some hesitation on the product lifecycle because Allround had such a high brand awareness. However, in launching the new product, Allround +, the team decided not to put such a significant focus on the initial advertising budget. The team reduced the Allround adverting to allow a reasonable advertising budget for Allround +, as the team felt the brand would carry over to the new product, and Allround was a mature offering. The group decided to reformulate Allround in Period 4 and removed the alcohol to compete with other brands that were producing children’s liquid cold medicines. By reformulating, the company showed consumers that it was listening to their desire for a healthier product and was responsive to their needs.

During Period 6, Allstar introduced a new product, Allright, a topical decongestant nasal spray. The team selectively targeted young singles and empty nesters because of the positive utility. The company diverted the necessary advertising funds from Allround's budget. The Allround advertising budget closed out at $7.5M million, with a continuous revenue flow. Allround+ saw a $2 million reduction to the advertising budget.

Promotions

The initial strategy for promotion was to funnel more funds toward advertising and continue to push Allround's top position in brand awareness while minimizing the number of product trials. Additionally, the team increased sales force to maximize proper shelf space and displays through improved channel support. The group later assessed, however, that its attention to promotions, such as coupons, trial sizes, and awareness, was not as high as it should have been. The team made adjustments later during the simulation, resulting in a resurgence of sales. One of the major mistakes the team recognized was that it did not invest as much as it should have in promotions for new products, like Allround + and Allright. The members of the group surmise that they would have experienced a significant difference in sales had that recognition, and its corresponding corrective actions, come earlier in the simulation. Since many consumers make their decision on which product to buy while they are physically in the store, the team maintained spending in POP displays. Although Allround was a mature product, initial sales suffered as a result of not driving harder toward the coupons and trial sizes for Allround +. Allround began with a coupon budget of $4.2 million and increased through Period 2, resulting in a steady incline of sales and awareness. After Period 3, the team reduced the budget for coupons and the trial sizes, in part due to over-confidence position resulting from previous growths in sales. The company introduced Allround+ with a coupon budget of $2 million for trial sizes and $1.5 million for coupons. Though hopes were high, the brand did not experience the encouraging launch expected. By the end of the simulation, the team had reduced Allround + to a budget of $0 for trial sizes and $1 (0.50) for coupons. Allround closed out with $0 for trial sizes and $2 million for coupons. Lastly, Allright began in Period 5 with a budget of $2 million and maintained that budget through the end of the simulation.

The team provided promotional allowances to our retailers as an added discount incentive to display and advertise our brands within their stores. Allstar offered Promotional Trade Allowances to Independent Drugstores, Chain drugstores, Grocery Stores, Convenience Stores, Mass Merchandisers, and Wholesalers. Allstar’s promotional allowance averaged about 24.4% of the overall budget for all three lines.

Allround’s promotional allowance was compared to our competitor Besthelp’s promotional allowance as a benchmark. Allround’s average promotional allowance was 17.5% which was 2% higher than Besthelp’s promotional allowance. The team also noted that Besthelp kept their promotional allowance at 15.8 from Period 1 and never changed it from period to period. Keeping the trade allowance steady may have been advantageous, as it did not affect the retailers/channels price sensitivity.

Trade promotions also provided retailers with additional funding/budget for cooperative advertising to share in the overall cost of advertising within the retailer’s store. The Co-op Advertising side of the simulation for Allround, Allround +, and Allright presented a somewhat complicated challenge. During Period 1 the group decided to change allowances/discounts for chain drug stores, grocery stores, mass merchandisers and wholesalers from 17% to 20% in response to requests for higher allowances and discounts in return for adequate shelf space. The return on investment for the listed changes was significant. As mentioned previously, the group concluded that its lack of attention on the trial size and coupon budgets was instrumental in the decrease in sales, stocks, and revenue.

Sales Force Allocation

Group E began the simulation with a sales force of 152, with grocery stores leading with 43. As the simulation progressed, the team aggressively increased its sales force throughout the simulation. In Period 1 alone, direct sales force for independent drugstores showed an increase to 15 in exchange for product shelf placement and to remain competitive with B&B and CureAll. The group increased direct sales force for mass merchandisers to 20 in response to a projected 9% increase in sales through those channels. The team also raised the indirect sales force, increasing the detailers from 8 to 16 to maintain sales competitiveness with B&B, which employed 24. The increase in sales force was a significant factor in raising revenue from $130.3 million to $152.5 million. The group made even more substantial changes for Allround and Allround+ in period 6, after increasing chain drugstore sales force from 47 to 60, indirect wholesaler support to 21, merchandisers to 19, and detailers to 25. By Period 6's end, the sales force totaled 360. One of the driving forces of this massive increase was the desire to remain competitive with B&B. By the end of the simulation, Allstar's sales force totaled 384, with salaries totaling $15.3 million, expenses of over $7 million, and training expenditures of $1 million.

Segmentation

For all products in the simulation, decisions centered on the potential segment size, symptoms, differentiation, and the possibility of driving effective messaging to each. The team experienced a massive decline in revenue, sales, and stocks during period 3, likely due to a misstep in which the group increased the MSRP of Allround by 25%. The resulting negative impact on revenue and stock prices caused the team to return to baseline to figure out what went wrong, and what could be done to recover the ground lost. Despite the near catastrophic decrease in sales, stocks, and revenue, The team stayed the course and continued to target the mature families, young and single families that were in search of a solution for colds. The emphasis, from the beginning, was to focus on the desire of the consumers and maintaining our brand awareness, while at the same time, increasing revenue and sales, and retain lifelong customers. In period 3, the group launched Allround+ with a firm emphasis on answering the consumer need for longer lasting cold and cough remedy. This offering targeted only young families, single families, and mature families, which was in line with the team's initial strategy focus. Additionally, the group decided to target advertising for Allround toward empty nesters and young singles, with a more direct focus on colds and decongestion. Following a very detailed look at the conjoint analysis and the decision summary from Allround +, the team decided on an aggressive expansion strategy with the launch of the new product. Allstar introduced Allright, a targeted allergy medication, at $4.69, which was significantly lower than the brand's other products, to undercut competition and establish a strong foothold with consumers, a strategy point the team felt it missed during the launch of Allround+.

Line Extensions

In Period 4, Allstar introduced a new line in response to the ever-growing demand for a cold and cough capsule. Allround+, a 12-hour multi-symptom capsule containing an analgesic, antihistamine, and decongestant, hit the shelves and initially appealed to young singles and empty nesters in the introduction phase of its life cycle. During the growth stage, it saw increased demand from retirees, and Besthelp became its biggest competitor.

In Period 6, Allstar introduced its third line in response to nasal congestion, which held a top position on the list of symptoms being reported by consumers. Allright, a nasal spray with a topical decongestant, experienced a slow start through its introduction phase. However, it increased in popularity as it entered its growth stage as evidenced by its increase in sales. Young singles and empty nesters appeared to be the top segments purchasing this new product, and it became a top competitor with Effective.

Cumulative Net Income and Stock Prices through Each Period

Allstar had a cumulative net income of $732.2 million and a final stock price of $66.75. Throughout the simulation, the stock price seemed to vary the most and was a good indicator of how its customers perceived marketing decisions. In Period 1, stock prices rose from $38.35 to $ 49.92, indicating positive perception of the increased sales force, volume discounts, and allowances. However, stock price exhibited a slight decrease to $41.82 in Period 2, likely due to the 5.5% increase in MSRP and a small reduction of allowances. By Period 3, Allstar's stock price plummeted to $17.65, indicating a marked adverse reaction to the 25% increase in MSRP, decrease in volume discounts, and decrease in some of the allocated sales force. Allstar saw a slight increase in stock price during Period 4 to $18.58, which was most likely due to the slight decrease in MSRP. However, an increase in volume discounts, as well as a reduction in MSRP was met with positive results in Period 5 when stock prices rose to $34.45. Continued price reductions in Periods 6 and 7, as well as increases in sales force and promotions, saw positive results with stock prices, which rose to $42.85 and $60.31 respectively. In Period 8, the final stock price rose to $66.75.

Conclusion

As with any project, strengths and weaknesses become evident throughout the process. Team E experienced a rocky start at the beginning of the simulation, likely due to the misunderstanding of the importance or meaning of some of the data contained within the purchased reports. However, as the simulation progressed, the team began to interpret the data more accurately and efficiently, which allowed a more decisive and deliberate approach to the marketing strategy. The improvements in strategy development included monitoring channel sales and customer satisfaction, along with analyzing the statistical probability of how each decision would affect the overall outcome of each period.

The most valuable lesson that Team E took away from the PharmaSim project is that the market is always changing and evolving. What works well one period might not necessarily be met with positive results in the next. All in all, to become a successful marketing manager, one must be able to adapt and change with the market.

Appendix 1: Initial Strategy Report

Initial Strategy Report

Business Definition

In the OTC pharmaceutical market, Allstar Brands Corporation offers Allround, a 4-hour multi-symptom liquid cold medicine. Research has shown two segmentation options: illness and customer demographics. While the symptoms of allergies and sicknesses are often very similar, Allround’s multi-symptom approach has placed it firmly in the cold and flu category, with little, if any, customer base in the allergy relief market. Given its formulation, it seems reasonable to continue pursuing this course, as opposed to trying to develop a following in allergy relief. The top competitors in this product category are Coughcure, with 54.3% of the market share, and End, with 45.7% of the market share. Cutting the market share of these competitors in half will allow for Allstar to obtain 50% of the market share in the cough product category. Although the cough product category has only had a 3.2% growth, it represents an untapped source of sales. Allstar should strongly consider a strategy that focuses on converting customers of these brands to Allround. Additionally, the introduction of a new brand, a children's cough syrup that contains an alcohol-free cough suppressant formulation only, will allow Allround to target a new segment: young families. Introducing a children’s cough liquid will allow Allstar Brands to expand its market towards young families and will have a cough suppressant formulation only. As parents of young children are likely to have concerns regarding the side effects, alcohol will not be an ingredient in the children’s line. To increase the attractiveness of the new children’s cough syrup launch, Allround will incorporate no-dye grape, cherry and bubble gum flavors that will provide options for parents that are more likely to appeal to their children’s individual preferences. Providing child-friendly options such as flavored syrups will allow Allround to tap into a new market base while expanding the brand. Given Allround's customer loyalty and positive brand image, breaking into this new market will allow Allround to cut their competitors' market share in half.

Allround brand’s price point, $5.29, places it at the upper end of the price spectrum. The next direct competitor in terms of cost is Dryup, with an MSRP of $5.09, followed by Besthelp at $4.89 and Extra at $4.49. Allround’s retention ratio, however, was second at 46.3%, nearly 20% behind the top competitor, Dryup, at 65.6%. Allround’s customer satisfaction rate, however, beat Dryup by 3.9% at 58.3%, compared with Dryup at 54.4%. Maintaining visibility on customer satisfaction is critical to Allstar Brands strategy, particularly with the proposed new product launch. Purchasing the consumer shopping habits report, therefore, will be a necessary expenditure. Additionally, as the cost of retaining a customer is much less than acquiring new customers, establishing a social media platform with interactive communication capabilities will reaffirm the value of our current product, provide helpful recommendations on the use of our product, and increase the momentum of our new product launch. An interactive website will also aid in keeping the customer informed of the benefits of the product. Maintaining open and responsive communication with our consumers through social media will assist in customer retention, and will help in securing and increasing consumer loyalty. Increasing the brand’s customer base may require an aggressive advertising campaign to highlight significant benefits over Dryup, or, perhaps, a reduction in MSRP, though the latter may be counterproductive in maintaining the brand’s prestige.

Given Allround brand's high level of consumer awareness and slightly higher price point, one logical approach to increase sales and market share would be to initiate an advertising campaign focused on mature families, empty-nesters, and retirees for the current multi-symptom formula, and young families for the up-and-coming formula geared for children.

Competitive Advantage

Allround has an established loyal consumer base with the highest satisfaction rate in the market. Additionally, as a cold OTC medication, the perceived effect is high, though the perceived price is also considered high.

Allstar Brands has formulated the Allround brand with an analgesic, antihistamine, decongestant, cough suppressant, and a moderate dose of alcohol. Though this formulation sets it apart as the only OTC offering that provides relief from nearly all cold and flu symptoms, it is Allstar’s only offering in the OTC cold remedy market. Dryup is the only other product to offer analgesic properties, and also includes an antihistamine and decongestant, but does not contain a cough suppressant or expectorant. Extra is formulated strictly as a decongestant, and Besthelp contains only an antihistamine and a decongestant. While many have criticized the multi-symptom approach as a potential for over-medicating, Allstar brand should pursue an aggressive marketing campaign highlighting this difference as a positive factor.

Performance Objectives

Allround brand already enjoys the highest consumer awareness in the OTC cold remedy market. There is, however, room for improvement. According to research, Allround brand does not receive premium shelf placement in all channels, which has a direct influence on brand-switching at point-of-purchase. Allround brand should focus on the requirements of its channels to secure better shelf placement. Larger channels, such as grocery stores and chain drugstores, focus on turnover and allowances when assigning product placement. To secure premium placement, Allround should consider increasing the allowances and discounts to these channels. Smaller, independent stores are more concerned with sales support. To meet this need, Allround should redistribute or increase the sales force available to these channels. Furthermore, Allround should consider the possibility of introducing samples of the existing formulation.

Allstar Brand Corporation also has the opportunity to expand its OTC cold remedy market by introducing a new product brand of children’s cough liquid. Distributing the children’s formula to physicians, pediatricians, walk-in clinics, and urgent care centers would increase consumer exposure to the Allround brand, and enhance the legitimacy of the offering. Implementing these initiatives should increase point-of-purchase sales, and grow the brand’s market share by 5%-10% in the first three periods. Additionally, the Allround brand should see a $10 million-$15 million increase in revenue and a 10%-15% increase in stock price.

Allround brand will meet the following short–term performance objectives:

1. Increase and/or redistribute sales force from the current total of 127 to accommodate various areas of growth, new product line, and mass merchandisers.

2. Establish a website (www.Allstarmeds.com/Allround) with interactive communication capabilities to maintain our loyal customer base and provide a platform to inform current and new customers of new products and offerings.

Allstar Brands Corporation will also meet the following long-term objectives:

1. Increase the gross margin from 172.3 million (48.5%) to 240 million within the next eight years.

2. Increase net income from 67.2 million (18.9%) to $135 million within the next eight years.

3. Increase common stock price from $38.35 to a comparable or superior price of the market leader, Ethik, which has a stock price of $70.13, within the next six years.

4. Increase our capacity utilization percentage from 85.1% to 100%, which will allow Allstar Brand Corporation to increase our production volume without incurring excessive overhead costs associated with the purchase of new equipment or property.

5. Introduce a children’s cough liquid, which will provide Allstar the ability to develop a new market segment.

6. Achieve and maintain the highest customer satisfaction rate at 58.3%. It is essential that Allstar maintain a strong brand name and keep the consumer in the forefront in decisions about pricing, value, and new product development.

Key Success Factors

To achieve the listed goals, Allstar Brands Corporation must maintain focus on three strategic elements:

1. Situation analysis. 5Cs (context, competitors, customers, collaborators, and company). Allstar Brands must keep its customers’ needs at the forefront of all decision making.

2. Market strategy analysis: Allstar Brands must remain current with fluctuations in the overall OTC market.

3. Market mix: (product, place, price, promotion). Allstar must maintain an appropriate state within fluctuating economic conditions inflation rates, increase in sales in a particular channel.

Allstar must maintain its position as first in its market, particularly in brand recognition and consumer awareness. While the price point is slightly higher than the competition, research indicates that this will not negatively impact sales. Further, the higher price aids in creating and maintaining the brand’s prestige. Developing an advertising campaign targeted at a more affluent and financially stable market will also further the brand’s image.

As the Allround brand has the highest consumer awareness in the market, outspending the competition is not a critical requirement. That said, however, Allstar should not decrease the pressure on the competition. By maintaining or slightly increasing marketing spending, Allstar Brands will force the competition to do the same.

Although the convenience of a capsule product should not negatively affect sales in the older demographic, the added convenience of a capsule will likely have a positive effect on the secondary and tertiary markets of the younger segment. Allstar Brands Corporation should, therefore, strongly consider investing in product development along that line in the future.

In conclusion, Allstar executives have recognized the importance of increasing a focus on marketing in order to implement new ideas that would promote, support, and drive the success of the company's short-term and long-term goals. The marketing team will ensure that all channels of the company will receive equal promotion and attention. This will be the deciding factor for this marketing strategy success. The marketing team looks forward to launching the new childrens' brand and ensuring that consumers are aware that we are determined in addressing their entire family needs for colds and allergy relief.

Appendix 2: Average Retail Price in Relation to Net Income

Appendix 3: Average Discount and its Effects on Unit Sales

Appendix 4: Sales Force Allocations and its Effects on Unit Sales Per Channel

Appendix 5: Market Share Based on Retail Sales

Appendix 6: Promotional Expenditure and its Effects on Brand Awareness

Appendix 7: Advertising Expenditures and its Effects on Unit Sales

Avg Discount Compared w/ Unit Sales

Avg Discount PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 0.34200000000000008 0.35500000000000009 0.35500000000000009 0.255 0.26300000000000001 0.3050000000000001 0.3050000000000001 0.33100000000000013 0.33100000000000013 Unit Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1 127.2 115.5 61.2 69.3 102.1 121.3 148.4 173.4

Sales Force compared w/ Unit Sales

Indep Drugstores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 15 18 10 22 22 22 22 22 22 Unit Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1 127.2 115.5 61.2 69.3 102.1 121.3 148.4 173.4

Sales Force compared w/ Unit Sales

Chain Drugstores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 28 33 45 55 47 60 70 75 75 Unit Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1 127.2 115.5 61.2 69.3 102.1 121.3 148.4 173.4