FINAL

1.     Manufacturer’s suggested retail price

As the board of directors of Allround were recently brought into the company to establish growth of the overall company, the manufacturer’s suggested retail price was quickly identified as a concern and tool to increase the revenue made. Unsure of the elasticity in price within the market place, Allround exercised caution during the initial period of introducing products and decided not to shift pricing within the first three years. In hindsight, this might have reduced the profit margins within the earlier years however the tradeoff was an increase of bulk sales and confirmation of customer loyalty. Once the board of directors felt the increase of price was necessary to maintain profit within the company as well as keep pace with competitors in the industry, the manufacturer’s suggested retail price was raised conservatively in accordance within the elasticity of the market and increases made by competitors.

2.     Volume discounts and promotional allowance

3. Advertising budget

Allround advertising budget was a constant area of interest for the company as the board of directors continuously addressed the demand of advertising. There were three pillars in which the advertising budget depended upon; brand awareness, competitor actions and cost. Brand awareness was the first and most important aspect during the beginning years of the company. Within the first year, Allround allocated $20 million in advertising, $4 million more than the next competitor in the industry, and was acquired 74.1% of brand awareness within the first year of the market. This strong push into the minds of consumers allowed for Allround to stand head and shoulders above its main competitor, Besthelp, who entered the market with 56.6% brand awareness.  Peaking in the highest advertising budget of $24 million for two consecutive years, Allround was to incrementally increase the company’s brand awareness and remain the most well known company within the industry. The secondary pillar was based on the actions of competitors and their budgets within the industry. While the main focus was to maintain dominance in brand awareness, the board of directors understood the actions of competitors must be supervised as the company’s brand awareness and sales could be effected. Each year, competitors continually increased their advertising budgets but never overtook Allround’s ability to fund its advertising sector. The final pillar of advertising budget that was considered was cost of the budget and how it affected the bottom line within the company. Since Allround’s strategic plan was to increase and maintain brand awareness throughout the industry, the inflated budget was planned for and utilized to gain the desired results. Upon achieving the results and realizing competitors would not attempt to gain control of this sector of the industry, the concern of cost was taken into consideration. To increase the value of the company, the board of directors began to reduce the advertising budget once dominance was established.  

4. Selected advertising agency

Allround’s core concept was to present a higher end product to consumer from the launch of Allround primary. With quality on the forefront of the company’s actions, the immediate and only choice of advertising agency was Brewster, Maxwell & Wheeler. Maintaining a consistent quality of advertising created continuity with consumers that Allround products would not waiver regardless of the lifecycle of products provided.

5. Relative emphasis on the four types of advertising messages

Due to the large amount of advertising spent for the company, the four types of advertising messages were critical to achieving the specific areas of advertising that were desired. Changes to the different ratios of advertising conducted were not conduced until the third year as the company was address more vital aspects during this timeframe. Once Allround had achieved a high level of brand awareness and market penetration, alterations were made to the message ratios to compete against BestHelp, main competitor, and mitigate any competitor’s advertising plan to convert

6. Prormotion’s budget with allocations to cooperative advertising and the three types of consumer promotions

7. Sales force (number allocated to the five types of retail stores as well as to wholesale and indirect support functions)

Allround’s sales force allocations were made directly based on amount of retail sales in each area. The board of directors initially allocated sales forces based on the perception of where a higher end product would be purchased. This reduced the amount of allocations in convenience stores as well as wholesalers due to the infantile stage of the market. The initial variance of allocatioins across the different retail stores were made due to the lack of knowledge of each retail performance. Upon further analysis, grocery stores were identified as the largest individual source and quickly began the main focus of further allocations. Understanding that independent and chain stores combined were higher than the leading sales channel, Allround decided to target these two sources as well thus effectively targeting the majority of the market in revenue. As the mass merchandisers grew in size, Allround’s board of directors wanted to ensure a portion of  that revenue stream was captured by the company. The remaining sales channel was convenience stores which was such a small portion of the market that the board of directors did not feel it was necessary to allocate additional funding in that sector. Further increase of the sales force was continued to occupy the market share that was held.

8. Segmentation

9. Line extensions

10. Cumulative net income throughout the simulation and final stock price

As the main objective for the board of directors was to increase the cumulative net income and stock price throughout a eight year period, the overall performance of the company was successful in achieving the desired end state. Starting with a cumulative net income of 67 million and a stock price of $38.35, immediate internal changes with made to begin the steady growth of the company. After the first year, the board of directors were able to increase the cumulative net sales by 94 million and the stock price jumped up $14.09 thus starting the company off on a good pace. Wanting to further increase the rate of growth, the company leaned hard into giving consumers the best incentives for purchases the product and suffered a decrease in the stock pricing bringing it to $47.06 but was still able to increase the cumulative net sales by 76 million. Over the next three years and further study into running a robust but lean company, the board of directors were able to increase the stock price to $82.34 and the cumuluative net income to 558 million. This large growth spurt showcased the value of the company within the marketplace as well as stockholders. In closing out the sixth year of operations, the company reached a pivotal point in regards to reaching the established objectives. With the stock price of $100.91 and cumulative net income of 700 million, the focus of leaning out the company further to increase the value took over all the primary point of conversation for all action points.