Pharmasim Presentation

Group 2

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

Marketing Objectives

Increase Brand Trials for Allround to 85%

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

Reach a stock price of $150.00

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

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

If Allstar can reach these numbers, then the most frequently purchased for Allright should hopefully increase to around 20%
This would help in getting Allstar to be a leader in the 4 hr Allergy Capsule segment of the market, especially since this is a new area

Put competition out of business

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

Increase sales force

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

Increase Manufacturer sales to a billion dollars a year

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

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

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

SWOT Analysis

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

Research and development team

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

Strengths Cont.
Promotions overall, especially trial sizes and coupons
Allround has the highest conversion ratio For all three brands, about half of our coupons were redeemed Higher percentage of people purchased all of our products than intended

High capacity utilization of 105.9%

Decreases the per unit cost Higher than that of competing companies Helps balance out our high fixed costs

Direct sales force

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

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

Allrights brand awareness at 28.5%

Other brands in the same category have higher awareness percentages Our retention ratio is higher than Believe & Defogg High unit cost, thus a higher brand awareness would help make profit

Obtaining involvement from customers in co-op ads and point of copurchase displays
Allround has 0.4% participating in co-op ads & 1.3% point of purchase coAllround + has 0.5% in co-op ads & 3.1% in point of purchase coAllright has 0.8% in co-op ads & 4.2% in point of purchase coHigher percentages result when we put in more money

Weaknesses Cont.
90 80 Brand Awareness
(% of All Respondents)
7 8 9 10 1 1 0 5 4 2 6 6 5 S&R 7 0 4 3 1 0 3 8 2 9 10

70 60 50 40 30 20 10 0 0

Allround Besthelp

10

20

30

Advertising Expenditures
(Millions of Dollars)

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

Opportunities
Consumer demand to relieve symptoms
Product effectiveness is the most important in decisiondecision-making In the past year the worst symptoms were aches, chest congestion, and coughing Allround is the only product with analgesics, expectorants, and cough suppressants

Produce a cough liquid

Allstar does not have available None of the cough liquids have expectorants and cough suppressants 61.6% people reported coughing as a symptom

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

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

Threats
Ethik is a threat to Allstar
They have the highest gross margin and net income, and their stock price is second to ours End + and Extra combined are receiving double the amount of manufacture sales than Allround + Ethik may create products in other categories

Besthelp is a specific threat to Allround

Its symptom relief fourth, but it is $1.20 cheaper than Allround Not as many people intend to purchase Besthelp as Allround, but they are equal in percentage of sales Besthelp has a greater brand awareness

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

The close to full capacity utilization of Ethik, B&B and even Curall
May try to price aggressively or increase marketing to acquire more market share

Marketing Activities

Increase Brand Trials for Allround to 85%

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

Reach a stock price of $150.00

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

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

Increase sales force

In order for Allstar to remain an industry leader and continue its growth and profit, its sales must also increase each year to consume its available market share Our sales force is crucial to our products success in the market place and in order to support them correctly, there must be a proportionate amount of personnel to handle the growing volume of orders
Using the information from the channel of sales report, a proper decision can be made to allot the correct amount of sale agents to each team handling the different sectors

Increase Manufacturer sales to a billion dollars a year

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

Introduce New Product

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

Increase Price
In order for Allright to recover profits lost to inflation, the prices of its products must be reevaluated annually
Inflation has typically increased 3-6% yearly for the 3past ten years We have found that the best strategy is to adjust each price to the previous years inflation rate. This allows Allright to remain competitive while recovering any potential losses due to rising inflation Our industry trade-off grid has shown our prices have traderemained in the optimal zone for several years Our customers are receiving a quality product at a comparable value

Lessons Learned

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

Stock Price Cont.

Early poor decisions caused our stock price to drop from 48.13 all the way down to 30.94 During fifth year, figured out problem and price rose from 30.94 all the way to 110.54 over the past five years
Stock Price 120

100

80

P r ic e

60

Stock Price

40

20

0 1 2 3 4 5 Period 6 7 8 9 10

First Year Mistakes

Lowered Price
We figured that if we were the leading company in the market for symptom relief we needed to lower our price in order to try and raise our most frequently purchased percentage, ultimately raising sales. Not only did sales decrease, but lowering price caused a shortage in budget down the line.

Increased Sales Force but not Advertising Budget.

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

Decreased Promotional Allowance

Should have never decreased promotional allowance for a new product. Allround was still a new product. Should have taken opportunity to get name out in the market but didnt.

Second Year Mistakes

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

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

Increased Promotional Allowance

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

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

Did not change Pricing Discounts

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

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

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

Year Four Cont.

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

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

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

We made sure to shift the advertising budget to focus more on benefit and comparison for Allround and primary and benefit for Allround+.

Year Six through Ten

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

Increased the price of all products every year. We changed the advertising allowance according to where the products were in their life cycles
This allows the correct type of advertisements for optimum sales

Year Six through Ten Cont.

We made sure to have at least a seven percent increase in the pricing discounts for all of the products.
We decided to give Wholesalers an extra couple of percent because they were generating most of our sales so we felt it was important to give them a bigger discount

It is important to increase the advertising budgets proportionally every year

A large increase is not necessary because all of the products have been on the market for awhile and it is more important to increase your sales force every year

Year Six through Ten Cont.

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