Introduction to PharmaSim
Marketing 6202
June 29, 2010
Purposes of PharmaSim
To introduce and reinforce the logical
process of marketing planning
Situation analysis and assessment
Development of integrated plans –
linking strategic and tactical decisions
Monitoring and evaluating results; using
lessons learned in subsequent planning
cycles
Purposes of PharmaSim
To understand that the keys to
profitability are market driven and
customer-focused decisions
To learn by doing in a low stakes
environment
PharmaSim Decision Process
Situation Analysis
Identification of Problems and
Opportunities
Identify and Evaluate Alternatives
Make Decisions
Monitor Results
PharmaSim Environment
Similar to the United States in the Early
1990s
Population = 250 Million
GNP = 2% per year
Moderate Inflation (2-4%)
Over 80% of the population suffered from
some cold-related symptoms in the past year
OTC cold-medicine retail sales = $2B with
growth of 4% per year
5 companies competing in the industry
Competitive Companies
Company
Sales
Brands
Allstar Brands
$355
Allround, 4hr cold liquid
B&B Health Care
$286
Believe, 4hr allergy capsule
Besthelp, 4hr cold capsule
Curall
$199
Coughcure, 4hr cold capsule
Driscoll Corp.
S255
Defogg, 4hr allergy capsule
Dripstop, nasal spray
Dryup, 4hr cold cpasule
Ethik Inc.
$395
Effective, nasal spray
End, 4hr cough liquid
Extra, 12 hr cold capsule
Basic Consumer Needs
Relief of Symptoms
Aches and Fever--------------Analgesic
Runny Nose-------------------- Antihistamine
Nasal Congestion-------------Decongestant
Cough---------------------Cough Suppressant
Chest Congestion-------------Expectorant
Allergy Symptoms------------Antihistamine
Trouble Sleeping--------------Alcohol
Produce Attributes Affecting
Basic Consumer Needs
Side Effects
Drowsiness, Upset Stomach, Alcohol
Form
Capsule, Liquid, or Nasal Spray
Duration
4 to 12 hours
Price
MSRP, Discounts, Channels, Promotions
Consumer Buying Behavior
Is Based on:
Illness/Symptoms
Age
Day vs. Night Use/Work vs. Home Use
Consumer Purchase Process
Awareness
Intention to Buy
In-store Attractiveness
Purchase
Post Purchase Usage/Satisfaction
Repurchase
Segmentation Process
By Illness
Cold
Cough
Allergy
By Demographics
Young singles
Young Families
Mature Families
Empty Nest
Retired
Distribution Options
Retail Outlets
Independent Drugstores------------ 22% of sales
Chain Drugstores----------------------28% of sales
Grocery Stores------------------------37% of sales
Convenience Stores-------------------4% of sales
Mass Merchandisers-------------------9% of sales
Distribution Options
Considerations for Shelf Space,
Stocking & Sales Force:
Margin earned per unit
[volume discounts and promotional
allowances]
Sales volume and turnover rates
Sale Force Influences
Direct and indirect
Co-op advertising funds
Other promotional activity
Preliminary Questions
Who is the likely Allround Customer?
Their likely purchase process
Marketing mix elements-most effective
What advantages does Allround
brand offer?
Who are Allround’s competitors?
Preliminary Questions
What do you think of Allround’s
pricing?
How many units to maintain net
contribution at $5.00 or $5.60
What are the advantages of a higher
price, lower price?