565Discussion
ulehag
my_group_final_simulation_report.docxThe purpose of this paper is to discuss the group’s final simulation results for Allround Brands. Overall, the paper details the decisions and subsequent results for each respective simulation category, as well as what was learned from said decisions and results. Specifically, the paper discusses the group’s decisions and results for the following categories: manufacturer’s suggested retail price, volume discounts and promotional allowances, advertising budget, selected advertising agency, relative emphasis on the four types of advertising messages, promotion budget (to include cooperative advertising and consumer promotions), sales force, segmentation, line extensions, cumulative net income and stock price, and period nine predictions. Of note, while each of these categories is segregated in the simulation, the decisions embarked upon for each category affected the simulation as a whole as would any other business decision. The business environment is not a vacuum and the group appreciated the simulation’s ability to demonstrate the influence a marketing decision in one category placed on another.
Manufacturer's Suggested Retail Price
The manufacturer's recommended retail price (MSRP) is important because it influences consumers’ total perceived value when consumers weigh the perceived price against the perceived effect. In support, according to James, Kinnear, and Deighan (2014), the MSRP is a reference point for consumers and the starting point for other pricing decisions that ultimately affect the final retail price. As such, the group learned that MSRP is about striking the right balance between the price and effect, as well as considering that MSRP influences the retailer’s final price due to cover costs and earn income. A balanced MSRP enables Allstar to compete effectively against other competitors. Additionally, if the price elasticity of demand is high, then it means that any slight increase in the price will be met by a bigger marginal decline of the sales revenue for the period (Kotler & Keller, 2012). Understanding price elasticity of demand and the product life cycle, from the beginning of the simulation the group recognized that the Allround brand was a well-established, market share leader that was already in the late growth or early maturity stages, but with the potential of growth with better marketing. As such, the group decided to initially lower the price due to a high perceived price with an average perceived effect to balance the two. The decision worked since the perceived price and perceived effect married up together as “average,” thus relatively balancing the tradeoffs plots indicating consumers were getting more value for their money. With that said, for all subsequent MSRP decisions, with the exception of period three in which the group froze the MSRP due to removal of an ingredient to counter any perceived overcharging, Allround’s price was simply increased with current and forecast inflation due to price elasticity of demand and the brand’s stage in the product life cycle. For the simulation, Allround’s MSRPs for periods one through eight were, $5.19, then $5.24, then $5.24, then $5.34, then $5.52, then $5.71, then $5.99, and then, $6.28, respectively. The group felt these decisions were beneficial because manufacturer sales subsequently increased every period and the tradeoffs plot indicated that perceived price and effect were balanced, giving customers the best value for their money.
Concerning Allright’s MSRP with the product’s introduction in period six, the initial MSRP was selected based on competitors’ MSRPs for plus forecast inflation. The group realized quick success with Allright and determined that the MSRP was too low due the uniqueness of the product, the tradeoff plot indications, and the accounting department’s comments that the price was too low. As such, the group increased the MSRP significantly based on test market studies while still considering inflation. For the simulation, Allright’s MSRPs for periods six through eight were $5.24, then $5.69, and then $6.07, respectively. The group felt these decisions were beneficial because manufacturer sales subsequently increased every period and the accounting department stopped commenting that Allright’s price was too low.
Volume Discounts and Promotional Allowances
To increase the sales of Allround and Allright, the group adjusted the volume discounts and promotional allowances each period to encourage retailers to purchase higher volume sales buckets and reward the higher-purchasing channels a greater discount. Regarding both brands, since Allstar already had positive brand equity with Allround falling somewhere in between the growth or early maturity stages of product life cycle, the group focused on a push strategy, which according to James et al. (2014) is associated with higher than average volume discounts and promotional allowances. Even though Allright was in the introduction stage for the majority of the simulation, the group believed that the equity from Allround would transfer to Allright as previously discussed. As such, the group decided to keep the volume discounts and promotional allowances slightly above the average across the over-the-counter segment. Initially for volume discounts, the group started off with the industry precedent of 5 percent incremental differences with a 40 percent discount for wholesale sales, a 35 percent discount for 2,500 plus in sales, a 30 percent discount for less than 2,500 in sales, and a 25 percent discount for less than 250 in sales. The group then learned that income could increase significantly if retailers purchased from the higher volume sales categories, so the discounts for the two lower volume sales categories were distanced from the two higher volume sales categories. Eventually, the group arrived at a 10 percent difference between the less than 2,500 sales and 2,500 plus sales categories, which increased sales in the 2,500 plus and wholesale categories significantly. By the end, Allround and Allright’s volume discounted mirrored each other at 39 percent, 34 percent, 24 percent, and 20 percent, respectively for the volume sales categories large too small. The group felt these decisions were successful as sales total shifted towards the higher sales volume categories throughout the simulation, ultimately increasing profit.
Regarding promotional allowances, the group utilized higher than average promotional allowances as previously mentioned. As such, the promotional allowances were consistently and deliberately measured and adjusted to remain above average but not the highest. For both Allround and Allright the average promotional allowance was between 16 and 17 percent throughout the simulation. Of note, in period six when the group received the ability to adjust the promotion allowance for each channel, the group began adjusting the promotion allowance relative to each channels percentage of sales to encourage more and also eliminated the promotional allowance from convenience stores since sales were negligible in that channel. The group later learned through the market update that such a tactic is not necessary and in turn mirrored all the promotion allowances back. The group felt these decisions were beneficial because the trade rating for both Allround and Allright were high throughout the simulation.
Advertising Budget
Considering Allround was already well-established and well-known brand in the growth and/or mature stage of the product life cycle, the group decided to keep the advertising budget relatively stable throughout the simulation. As the perennial market leader throughout the simulation, the group felt that there significantly increasing the Allround advertising budget was a fruitless effort since the budget could more effectively be used in other business expenditures. Additionally, from running test markets, the group learned that large increases or decreases to the advertising budget significantly affected Allstar’s contribution margin negatively. As such, the group executed relatively small increases and decreases the Allround advertising budget from period to period to adjust for inflation, as well as allow for increases in the promotion budget and other business expenditures such as the sales force, proved successful. Allround’s advertising budget for periods one through eight were $18 million, $19 million, $20 million, $20 million, $23 million, $23 million, $22 million, and $24 million, respectively. These decisions proved successful since despite fluctuating the advertising budget up and down in small increments, unit sales increased in every period of the simulation, and Allround’s brand awareness increased every period from 74.1 percent to 89.9 percent.
Concerning Allright, since the product was in the introduction stage of product life cycle in period six, the group did not expect to make profits in the initial period so the advertising budget was decided upon without regard to initial cost concerns. In support, Kotler et al. (2012) highlighted these circumstances when they said, “profits are nonexistent because of the heavy expenses of product introduction” (p. 310). Additionally, the group acknowledged that during the growth stage Allright would make up for the initial frontloaded expenses when profits increase, as well as the fact that Allright’s introductory costs would initially be covered from a company-wide loss from Allround’s profits. For Allright’s initial advertising budget, a budget that was slightly higher than the specific allergy competitors was selected, and increased incrementally each subsequent period. Allright’s advertising budget for periods six through eight were $12 million, $13 million, and $13 million, respectively. These decisions proved successful since unit sales increased significantly the following periods. Specifically, Allright’s brand awareness increased from 0 percent to 26.3 percent in only three periods, while market share increased from 0 percent to 36.7 percent in only three periods as well because of a large swath of consumers brand switching to Allright from the other two allergy-specific competitors. From this, the group learned that advertising is key in the introduction stage of the product life cycle.
Selected Advertising Agency
Allstar utilized Brewster, Maxwell, & Wheeler (BMW) as the advertising agency throughout the duration of the simulation for both Allround and Allright. According to James et al. (2014), although BMW was the most expensive advertising agency to choose from, BMW was the highest-quality advertising agency to choose from, which was the deciding factor in choosing them over other agencies. As such, the group decided that the cost savings from switching to a lower-cost advertising agency did not outweigh the potential cost savings. Specifically, for the Allround brand, since the product was well established and likely in the growth stage of the product life cycle since the brand was still experiencing growth, the group did not want to “cause irreparable damage to Allround’s brand image” as James et al. eluded to (p. 22). For the Allright brand, since the product was in the introduction product life cycle state, the group wanted to start with the highest quality advertising to convince consumers to brand switch. Additionally, from Kotler et al. (2012), the group learned that brand equity from the Allround would likely transfer to Allright, but wanted to ensure a consistent brand image was posited and the best way to do so was to utilized the same advertising agency. These advertising decisions proved successful since both Allround and Allright earned the highest brand awareness, consumer satisfaction, and brand perception ratings in their respective categories throughout the simulation.
Relative Emphasis on the Four Types of Advertising Messages
The group believed that the advertising message focus was of critical importance. For Allround, since the product was in the growth and/or mature stages of product life cycle, the group and the market leader in brand awareness, perceived effectiveness, and perceived satisfaction, the group decided to not focus on primary or benefits approaches, but rather comparison and reminder approaches. The group learned this because the initial focus was on the primary and reminder approaches, but later determined was not as beneficial for brand switching and repurchase as comparison and reminder. In support, according to Jones et al. (2014), primary and benefits approaches are focused on creating awareness to stimulate demand and emphasizing product benefits, respectively; however, from the survey results the group concluded that Allround already achieved those focuses. Instead, for Allround, after analyzing similar competitors, the group chose to focus on the comparison and reminder approaches to encourage brand switching and repurchase. Allround’s advertising message approach allocation for the majority of the simulation was 10 percent towards primary, 10 percent towards benefits, 40 percent towards comparison with Besthelp, and 40 percent towards reminder. Additionally, the group selected the promote benefits based on the formulation, which was straightforward.
These decisions proved successful since Allround’s conversion and retention ratios increased throughout the simulation.
Concerning Allright, the product was in the introduction stage of the product life cycle for most of the simulation, the advertising message approach was the opposite. Initially, the primary and benefits approaches were emphasized to create awareness to stimulate demand as well as emphasize the products benefits, especially since it was a unique product in the fact that it was non-drowsy and prescription strength. Going forward, the group learned that focusing on comparison more so than benefits will encourage brand switching more so than benefits. Allright’s advertising message approach allocation for the majority of the simulation was 30 percent towards primary, 20 percent towards benefits, 35 percent towards comparison with Believe, and 15 percent towards reminder. Additionally, the group selected the promote benefits for Allright based on the formulation as well, which was straightforward. These decisions proved successful since Allright’s conversion and retention ratios increased throughout the simulation.
Promotion Budget
Although Allstar sought a push strategy with more emphasis on sale force, the promotion budget was of vital important to ensure the brand received the best co-op advertising and point-of-purchase displays in the industry. According to James et al. (2014), utilizing co-op advertising and point-of-purchase displays, “increase shelf space and make…product more appealing,” thus encouraging consumers to switch brands at point of purchase. As such, the group chose to keep promotion budget expenditures above all competitors for both Allround and Allright. Concerning Allround as a growth/mature product in the product life cycle, the group knew that brand awareness was already extremely high so more of a focus on point-of-purchase displays would prove more beneficial than co-op advertising, trials, or coupons. Additionally, the group learned from the promotion reports that the co-op participation, trial conversion, and coupon utilization ratios were extremely low and averaged lower than 1 percent, rendering the expenditures in those particular areas wasteful. On the other hand, the participation rate for point-of-purchase averaged over 13 percent. As such, the majority of the promotion budget for Allround when to point-of-purchase displays, with negligible amounts going towards co-op, trials, and coupons. These decisions proved successful from Allround receiving double the average shelf space, which ultimately ensured more consumers bought Allround than intended throughout the simulation, to a tune of over 2% of consumer, according to the purchase intention surveys.
Concerning Allright, the group took a different approach considering Allright was in the introduction stage of the product life cycle as far as trials and coupons were concerned, but still bested all competitors in expenditures. The group believed that utilizing trials and coupons would encourage brand switching. Of note, the group also believed that point-of-purchase displays so more money was apportioned each subsequent period from introduction.
These decisions proved successful since the participation rates for trials and coupons were almost 300 percent higher than Allround, and Allright received the greatest amount of shelf space in the allergy category.
Sales Force
With a push strategy, the group determined that Allstar must primarily increase the sales force to capitalize off the company’s already well-established brand image and equity. The group felt the push strategy was not appropriate since through Allround, as a growth/mature stage product life cycle product, the company and brand already had both a well-defined and positive brand image and brand equity. According to James et al. (2014), a pull strategy would have meant spending the majority of the budget on promotion and advertising, which according to all the test markets the group ran each period would have negatively influenced the contribution margin. As such, the group believed spending more on the sales force would prove more beneficial. According to James et al. (2014), the emphasis of a push strategy is to increase the sales force with the focus on merchandisers and the direct sales force. Merchandisers focus on supplemental sales support such as in-store support to promotions, shelf location, and other needs, while the direct sales force sells to and supports the direct sales channels such as grocery stores, mass merchandisers, chain drugstores, independent drugstores, and convenience stores (James et al., 2014). As such, the group set an initial goal of increasing the sales force by 15 percent within the first two years and was able to exceed that goal by a longshot. Overall, Allstar increased the sales force from 127 to 690 employees for a total increase of 443 percent. Initially, the biggest increases went to the indirect sales force to increase merchandisers and detailers for the first four periods, followed by equal increases to both the direct and indirect sales forces from thereafter. Starting in period five, the group learned that the sales force should be proportionate to the percentage of sales in each channel from the market update. As such, the group reapportioned the sales force to ratios proportionate from the percentage of sales in each channel according to each period’s sale report. Additionally, the group learned that the wholesalers, grocery stores, and chain drugstores were the biggest and most profitable customers and ensured those channels had the largest sale force numbers. Regarding Allright, as a product in the introduction stage of the product life cycle, Allstar’s large sales force was already positioned and capable of providing ample in-store support while still supporting Allround. The group posits that the sales force decisions were essential to both Allround and Allright earning 42.6 percent and 44.2 category market share for a total of 33 percent over-the-counter market share by the end of the simulation.
Segmentation
Concerning segmentation, once the group was able to adjust demographic targets and symptom targets, the group decided to refine Allround and Allright’s segmentation. With Allround as a product somewhere between the growth and mature stages of the product life cycle, the group decided to go from all demographic targets under a mass-market approach to target multiple segments specialization approach instead since the group learned that more effective and focused targeting could result in increased profits. According to Kotler et al. (2012), under a multiple segment specialization approach an organization selects the most profitable segments. As such, for Allround, the group chose to not target the empty nesters and retired demographic categories to focus on young singles, young families, and mature families to increase customer lifetime value. Additionally, older people are generally brand loyal so advertising would be more effectively utilized elsewhere. For Allround’s symptom targets, the group decided to keep targeting all three symptoms (cold, cough, and allergy) since the product was after all a multi-symptom medication with ingredients for all symptoms in the formulary. These decisions proved successful as market share increased for Allround.
Concerning Allright as product still in the introduction and transitioning to the growth stage of the product life cycle, the group chose initially start with a mass-market approach to gauge which demographics would lead brand share. Eventually, the learned that the same segmentation approach that was taken with Allround would result in more effect use of advertising so the retired demographic was dropped. For Allright’s symptom target, the group concluded that only the allergy segment was to be targeted since the product was allergy-specific. The decisions to refine segmentation for both Allround and Allright were successful since market share increased for all demographic segments, even the empty nesters and retired.
Extension
Concerning line extensions, the group decided to forgo any line extensions to Allround since the product was already in the growth/mature stage of the product life cycle and the brand was well received. The group believed that an extension would result in cannibalization and was not needed to increase market share or sales since the brand was already a market leader by several metrics. According to Kotler et al. (2012), line extensions can resulting in cannibalization and customer confusion if not needed, so the group decided to reformulate Allround wait for the opportunity to introduce a new product instead. The alcohol was removed to mitigate concerns of side effects and resulted in an increase to young family market share. Additionally, Allright was introduced specifically over a cold spray or one of the previously passed up line extensions due to the fact it would be the first non-drowsy, prescription strength allergy-specific medication on the market. The group chose the new allergy product to capture first-mover advantage, as Allright was a truly unique value proposition and offering. As a product in the introduction stage of the product life cycle, Allright did not yet receive the option for an extension; however, if given the option the group would not likely pursue an extension in order to prevent self-cannibalization and consumer confusion. These decisions proved successful as both Allround and Allright flourished throughout the simulation.
Cumulative Net Income and Stock Price
While initially unable to classify Allround as a growth or mature stage product in the product life cycle, the group learned from the substantial and consistent cumulative net income and stock price growth each quarter that Allround was still indeed in the growth stage. Concerning Allright, the product was undoubtedly in the introduction stage in period six as the product was operating at a loss, but already in the growth stage in periods six and seven as the product was already turning a relatively large profit. The effect Allright has on Allstar’s cumulative net income and stock price was even more substantial and consistent each quarter after its introduction. Specifically from the beginning, Allstar’s cumulative net income and stock price were $67.2 million and $38.35, respectively. Overall, the cumulative net income skyrocketed to $1,148.9 million for a 1,610 percent increase, while the stock price elevated to $161.34 for a 321 percent increase. Of note, the MSRPs chosen had a positive impact on the cumulative net income, and ultimately the stock price, since the group kept prices just below consumers’ price, which kept the right balance for value that increased sales and in turn net income each period. The extraordinary growth in the cumulative net income and stock price confirmed the group was making the right marketing decisions.
Period Nine Predictions
For period nine, the group predicts continued growth for both Allstar brands, since both are still in the growth stage of the product life cycle. For decisions, the group would reallocate the sales force proportionally with sales channels, and look to specifically reapportion the indirect sales force per the market updates suggestion. Pricing decisions would continue to increase MSRP with inflation and retain the volume discounts. Advertising decisions would likely remain similar with the exception of specifically adjusting Allright’s advertising message allocation. Promotion decisions would also likely remain similar with the exception of specifically reducing Allright’s trial size and increasing Allright’s point-of-purchase allocation. With these decisions, the group is confident both Allround and Allright will increase Allright’s cumulative net income and stock price in period nine.
References
James, S. W., Kinnear, T. C., & Deighan, M. (2014). PharmaSim: The marketing management
simulation. Retrieved from
http://schools.interpretive.com/fsui/data.php?token=0&c=filedl&id=ugohfu/mnmxohy_
ugohfu&z=1436398910566
Kotler, P. & Keller, K. L. (2012). Marketing Management (14th ed.). Upper Saddle River, NJ: Prentice Hall.
Appendix A
Group C Initial Strategy Report
Appendix B
Team Decisions, Results, and Interpretations
Overall Results
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Period |
Manufacturer Sales (million $) |
Cum. Manufacturer Sales (million $) |
Net Income (million$) |
Cum. Net Income (million $) |
Share of Manufacturer Sales (%) |
Stock Price ($) |
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0 |
355 |
355 |
67 |
67 |
23.8 |
38.35 |
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1 |
433 |
788 |
92 |
159 |
239 |
52.92 |
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2 |
452 |
1240 |
100 |
258 |
24.2 |
57.89 |
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3 |
492 |
1732 |
110 |
369 |
25.1 |
66.54 |
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4 |
544 |
2276 |
119 |
487 |
26.2 |
75.75 |
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5 |
600 |
2876 |
132 |
619 |
26.6 |
84.83 |
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6 |
710 |
3586 |
193 |
759 |
29.6 |
104.30 |
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7 |
812 |
4397 |
177 |
935 |
31.6 |
133.57 |
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8 |
909 |
5306 |
214 |
1149 |
33 |
161.34 |
Individual Decisions, Results, and Interpretations by Period
Running head: FINAL SIMULATION REPORT: ALLSTAR BRANDS 1
FINAL SIMULATION REPORT: ALLSTAR BRANDS 18
Appendix C
Graphs
Period #1
Decisions, Results, & Interpretations.docx
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Performance Summary for Allstar, Results for Period 1 |
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Summary of Results
Decision Summary
Creative Design Decision
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Interpretations
For pricing, the “Perceived Price” was high compared to the “Perceived Effect.” Because of this, Allround’s sales didn’t suffer with a higher price. Allround wasn’t receiving consistent brand placement. Therefore, indirect sales force was increased more than the direct sales force. Allround was leading in brand awareness for the cold/allergy segment and sales in the cold category. This lead was advantageous because it allowed for the advertising price to be dropped slightly. Trade promotions and consumer promotions were increased. The co-op advertising was increased to allow Allround to be featured in store advertising, and the point-of-purchase vehicles to display and promote the brand in the store to encourage brand switching.
Period #2
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 2 |
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Performance Summary for Allstar, Results for Period 2 |
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Summary of Results
Decision Summary
Creative Design Decision
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Interpretations
A decision to slightly increase the price from $5.19 to $5.24 was made because of increasing inflation. Indirect and direct sales force were both increased again to continue receiving consistent brand placement and advertising was increased to continue keeping Allround’s name out there. Trade promotions and consumer promotions were both increased 10% and 70% respectively for the same reasons listed in Decision #1. The alcohol was removed from the ingredients to increase usage among daytime workers and children. Alcohol is viewed as a negative attribute because of the drowsiness it causes.
Period #3
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 3 |
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Performance Summary for Allstar, Results for Period 3 |
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Summary of Results
Decision Summary
Creative Design Decision
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Interpretations
Since the alcohol was removed, it was decided that the price should stay the same. It should not be increased because taking the alcohol out actually saved the brand $0.10. The sales force continued to be strengthened, especially the indirect sales force since the alcohol was removed. The sales force needed to be reallocated to increase detailers and merchandisers to increase retention through brand placement overall. The direct sales force was increased by 10% to a total of 203 because most of the direct sales came from grocery stores and chain drugstores. The indirect sales force had 50% of it transferred from wholesaler support to merchandisers and detailers with each getting 25%. In addition, an overall increase of 10% was applied for an overall total of 165. Keeping advertising at $19M would be fine since it was already the highest along with the brand awareness. However, the advertising was increased to $20M and promotion was decreased to 16.5%. The ad message was split between primary (30%), benefits (15%), comparison (15%), and remainder (40%). Being the market leader in brand awareness and satisfaction, the focus needs to be on primary and remainder advertising. Co-op advertising stayed the same at $2.64M but point-of-purchase increased 100% to $3,000 to help increase sales. Coupons were decreased from $4.5M to $1M.
Period #4
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 4 |
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Performance Summary for Allstar, Results for Period 4 |
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Summary of Results
Decision Summary
Creative Design Decision
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Interpretations
To adjust with inflation, the MSRP was increased by $0.10 to $5.34. The volume discounts needed to be looked at. It was decided that the <250 and <2500 discounts had to be decreased to increase sales volume in the 2500+ and Wholesale categories. To have adequate customer support for a possible extension and continue to grow the sales force, direct was increased to 245 while indirect was increased to 200. The advertising budget remained the same. Trade promotions were kept the same and promo allowance was lowered to 16%. As far as consumer promotion, the point-of-purchase was increased by $1M, trial size for children’s product was increased by $1M, and the coupons were kept the same.
Period #5
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 5 |
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Performance Summary for Allstar, Results for Period 5 |
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Summary of Results
Decision Summary
Creative Design Decision
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Interpretations
Period #6
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 6 |
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Performance Summary for Allstar, Results for Period 6 |
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Summary of Results
Summary of Decisions (Company)
Summary of Decisions (Allround)
Summary of Decisions (Allright)
Creative Design Decision
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Interpretations
For Allround the price was increased $0.19 to adjust with inflation to an overall price of $5.71. Both the direct and indirect sales force was increased by 15%, with the final numbers being 393 and 219 respectively. The advertising budget remained the same and the “retired” category was not much of a focus anymore since those consumers prefer liquid and are brand loyal anyway. Co-op advertising was lowered while the trial size was increased. Allright, the new allergy specific brand was introduced. Its price started out at $5.24 since the parent brand’s name was well known and highly respected. The advertising budget was started at $12M so it would be more effective getting across to consumers and not very basic. It was decided to mass market to all demographic targets and let it be known that it specifically helps with allergies.
Period #7
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 7 |
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Performance Summary for Allstar, Results for Period 7 |
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Summary of Results
Summary of Decisions (Company)
Summary of Decisions (Allround)
Summary of Decisions (Allright)
Creative Design Decision
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Interpretations
Allround’s price was increased to $5.99 due to forecast inflation. The price was still considered lower for the perceived effect. Sales force was increased for both direct and indirect by 2.5%. The advertising budget was decreased by $1M since Allround was well known already. Young families and young people were the target market so that the customer lifetime value would increase. For promotion, all trade decisions remained the same while some consumer decisions changed. Trial size and coupons decreased to save for Allright’s budget. Allright’s price was $5.69 since the perceived price was too low in the last period. Promotion changed somewhat; Point-of-purchase was increased while the trial size was decreased since the introduction of the product was completed.
Period #8
Decisions, Results, & Interpretations.docx
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Performance Summary - Period 8 |
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Performance Summary for Allstar, Results for Period 8 |
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Summary of Results
Summary of Decisions (Company)
Summary of Decisions (Allround)
Summary of Decisions (Allright)
Creative Design Decision
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Interpretations
Allround’s MSRP was increased to $6.28 to keep up with forecast inflation. The sales force was also increased by 10% based on the channel sales. The advertising budget was increased by $2M and the message decision remained the same. The point-of-purchase was increased to continue to help Allround’s name stay out there. Allright’s MSRP was increased to $6.07. “Retired” was uncheck in the target market section for the same reasons it was unchecked for Allround. The primary ad message was decreased since the parent brand had already been established for two years and the product is unique. The promotion allowance was synced at 16% per the Market Update, and consumer decisions remained the same.
Group C Initial
Strategy Report.docx
Running head: INITIAL STRATEGY REPORT: ALLROUND 1
INITIAL STRATEGY REPORT: ALLROUND 10
Initial Strategy Report: Allround
Saint Leo University
Danielle Murray, Melanie Neal, Ulesha Ortiz, Rory Peters, & Samantha Pomerantz
Abstract
The purpose of this paper is to discuss the group’s initial strategy for marketing management of the Allround over-the-counter cold and allergy remedy provider over the next seven periods. First, the paper provides an executive summary of Allstar Brands Incorporated to include a brief history of the company, the organizational structure, and the Allround brand’s product and market segment specifics. Second, the paper discusses Allround’s business definition, along with the organization’s specific target markets and consumer needs. Third, the paper discusses Allround’s competitive advantage, specifically the brand’s segment leading brand awareness, segment leading average effectiveness perception, and segment leading satisfaction to provide a few examples. Ultimately, all these contribute to Allround’s category leading market share in the cold category and second overall market share for the segment. Fourth, the paper discusses Allround’s performance objectives as determined by the most recent strength, weaknesses, opportunities, and threats analysis. Last, the paper discusses Allround’s key success factors, which will include a new allergy product and a social media campaign.
Executive Summary
Allstar Brands Corporation was founded in 1924, and is one of the leading manufacturers of packaged goods in the world. Since 1924, it has acquired or merged with multiple smaller packaged goods companies. Currently, the company has three divisions that include the Consumer Products Division, the International Division, and the Pharmaceuticals Division. The Consumer Products Division handles packaged goods such as soap and detergent; the International Division makes sure all of Allstar’s products are distributed on a global basis; and the Pharmaceuticals Division is responsible for the marketing and production of ethical (prescriptions) and over-the-counter (OTC) medicines. Currently, the Allround brand product is the market share leader in OTC cold and allergy medicine. The current product offered is a 4 hour multi-symptom cold liquid and provides relief to the five basic symptoms, which are aches and fevers, nasal congestion, runny nose, watery eyes, and cough, by way of five ingredients. Those five ingredients are analgesics, antihistamines, decongestants, cough suppressants, and alcohols. The Allround management team consists of a brand manager, an assistant brand manager, and a recent college graduate as the brand assistant. This team executes marketing strategies to convert sales and maximize profits. The team is also responsible for any possible line extensions or new product introductions into the cold and allergy segment. Market research and consumer reports show Allround is safe, effective, and chemically efficient (James, Kinnear, & Deighan, 2014).
Business Definition
At Allstar Brand Corporation, the Allround brand serves the consumer market by providing a valuable, effective, and high-quality OTC cold and allergy remedy. Kotler and Keller (2012) stated that the consumer market consists of companies that sell mass consumer goods and services. Allround has established a strong brand image by developing a strong product offering with an attention-grabbing package, making sure the product is always available, and having continuous communication with reliability. Allstar is a well know brand and that is advantageous on because loyal consumers will likely use any product that they come out with, as long as it is what they need. Because everyone has different wants and needs, Allround divided the market into segments.
Target Market
The target market includes physicians and consumers that want a quick solution by utilizing a multi-symptom cold and allergy medicine that is cost-effective. Young consumers without families (young singles), families with small children (young families), adults with no children at home, but still working (empty nesters), and adults in retirement (retired), are the main targets within the market. This is because they are able to take the proper dosage of medicine and know to get up every four hours to take it because they want to get better. Allround’s goal is to eventually serve each and every segment, so some new product lines will be introduced in the future as Allround wants to serve children and adults more conveniently.
Consumer Needs
Some consumers do not know exactly what they want so there have been five different types of needs. They include stated needs, real needs, unstated needs, delight needs, and secret needs (Kotler et. al, 2012). If Allstar only responds to stated needs, then they will not fulfill all the consumers’ needs. Consumers are looking for a reasonably priced medicine that works quickly to relieve the symptoms associated with having a cold or allergies. Allround products will most assuredly satisfy their needs!
Competitive Advantage
While Allround is the leading cough formula on the market, the brand is widely regarded for its effectiveness, customer satisfaction, affordable price, market share, and brand awareness. Allround focuses on the 5 C’s (Context, Competitors, Collaborators, Customers, and Company), and understands that the dynamic make up of competition is necessary for the success of their marketing plan. The top competitors include Besthelp and Coughcure, but with continuous innovation, Allround will eventually dominate the entire segment.
Performance Objectives
To determine the performance objectives going forward, Allround devised both a long- and short-term strategy based of the firm’s most recent strategic planning initiative. The strategic planning initiative produced both a new mission and vision statement (see Appendix A for full mission and vision statements) to facilitate long- and short-term strategy, as well as a strength, weaknesses, opportunities, and threats (SWOT) analysis to facilitate performance objectives.
Long- and Short-Term Strategy
Both of these new statements are in direct accord with the firm’s long-term strategy of maintaining and growing long-term profitability and market share in a highly fluid business segment (James et al., 2014). To achieve such profit and market share growth, the firm is undertaking an intensive growth course of action where the firm will identify growth opportunities within the current business (Kotler et al., 2012). The short-term strategy is to utilize the intensive growth frameworks (market-penetration strategy, market-development strategy, product-development strategy, and diversification strategy) to not only maintain the firm’s cold category leading market share, (40.4%; 15.25 ahead of next closest competitor), but also grow market share overall to capture the leading in the overall cold and allergy segment to increase profitability.
Objectives and Goals
With the SWOT analysis completed (see Appendix A for complete SWOT analysis results), Allround formulated goals and objectives to achieve the long- and short-term strategy. The objectives and goals are (a) increase the retention ratio by a minimum of 10% by emphasizing benefits and reminder-focused advertising within 5 years; (b) add a line extension in the form of either capsule form option, a 12-hour dose option, or children’s option within 3 to 4 years; (c) create a new product in the form of either allergy or cold spray within 5 to 6 years; (d) increase the sales force by a minimum of 15% to enhance product placement within 1 to 2 years; (e) increase marketing channels from one to three within 7 years; (f) consider an Allround reformulation at 1 to 2 years and 6 to 7 years.
Key Success Factors
In order to continue the success of the Allstar Brands organization, it is important to not only address weaknesses but also strive to maintain strengths. A primary weakness within the company is the lack of offerings for consumers, specifically regarding the consumers who suffer from severe allergies. Currently the Allround product on the market does address allergy symptoms; however, an individual who is not suffering from cold or flu like symptoms would be overmedicating by taking this product solely for allergy relief. By entering into an allergen capsule production, we intend to compete directly with B&B Health Care who currently has the allergy product Believe on the market with a 50.7% market share, as well as Driscol Corporation who currently has the Defogg product with 49.3% market share.
In addition to entering this new market, Allstar Brands plan to implement a fresh new advertising campaign for the current Allround product in order to renew interest in a product that otherwise could become stale or outdated. Social media marketing campaigns will include setting up a Facebook account to which any individual who “likes” the Allstar Brand Facebook page will be eligible to receive a trial size Allround product. Additionally, Facebook friend referrals will further receive via email a coupon for 10% off their next Allround product purchase. In order to keep up with this increased demand, Allstar Brands will be adding two new facets to the family. Part one is the creation and implementation of a social media department within the organization to monitor and oversee all media transactions. Secondly, it will be necessary to create trial size products to effectively utilize this promotion, which may require additional technicians.
While adding a new product such as the allergy capsule and/or spray or implementing a new strategy will cost more for Allstar Brand initially, the firm is confident that the benefits will outweigh the initial cost and result in increased market share and profit. Adding a new product line to the company’s offerings will result in more satisfied customers who can choose more appropriately according to their symptoms while reducing unnecessary side effects. Additionally, by increasing marketing and advertising, brand awareness will increase and place our product in the hand of potential new customers at no initial cost to the consumer.
Conclusion
The management team for Allstar Brands Corporation seeks to create marketing strategies to convert sales, maximize profits, and possibly develop a new product. Having a successful marketing strategy will give Allstar Brands Corporation the tools needed for market power.
Appendix A
Allround Mission and Vision Statements
Appendix B
Allround SWOT Analysis
References
James, S. W., Kinnear, T. C., & Deighan, M. (2014). PharmaSim: The marketing management
simulation. Retrieved from
http://schools.interpretive.com/fsui/data.php?token=0&c=filedl&id=ugohfu/mnmxohy_
ugohfu&z=1436398910566
Kotler, P. & Keller, K. L. (2012). Marketing Management (14th ed.). Upper Saddle River, NJ: Prentice Hall.
