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
– Allstar’s stock price went from $30.94 to
$110.00 in that time
Allright’s 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
things 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
 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 brand’s well-known brand name
– 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
Allstar’s 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.
Allright’s 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
purchase displays
–
–
–
–
Allround has 0.4% participating in co-op ads & 1.3% point of purchase
Allround + has 0.5% in co-op ads & 3.1% in point of purchase
Allright has 0.8% in co-op ads & 4.2% in point of purchase
Higher percentages result when we put in more money
Weaknesses Cont.
90
7
(% of All Respondents)
Brand Awareness
80
S&R
5
6
8
5
9 10
1
70
6
4
2
7
0
4 3
1
10
2
8
9
0
3
1
60
0
50
Allround
Besthelp
40
30
20
10
0
0
10
20
30
Advertising Expenditures
(Millions of Dollars)
OCM group’s 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
decision-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 Allround’s 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.
Allright’s 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
– Believe’s brand formulation consists of only four units of
Antihistamine, whereas Alright consists of the Antihistamine and
a decongestant. Therefore comparison ads being run on
Believe’s lack of effectiveness and the inferior formulation should
be beneficial to Allright’s 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%
– 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
Allstar’s income
Introduce New Product
In accordance with relative product lifecycles 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
past ten years
– We have found that the best strategy is to adjust each
price to the previous year’s 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
remained 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.
120
100
80
Price
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
60
Stock Price
40
20
0
1
2
3
4
5
6
Period
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 didn’t 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 didn’t.
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
didn’t think it would be beneficial to the company if we
spent money we didn’t know weather or not we would
make back quickly.
Did not change Pricing Discounts
– Our discounts weren’t 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.
Didn’t 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
didn’t 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
co-op advertising and put it into coupons
– We found that co-op advertising is a waste of
money. Only about one percent of the sales
population utilized co-op advertising.
– Trial sizes are only necessary early in the life
of a product