1. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
Report 5
1. Summary of Last Year’s Performance:
For period seven we had an increase in all of our fields. Our net income is in a
growth stage at 26.2 and our revenue is in a growth state at 6.1%. The gross margin is
in a growth stage at 13.5%, and finally our stock price increased again from $81.60 to
$96.69. Our social media is still generating good comments and feedback from both of
our medications. We listened to our Allround customers and gave them coupons this
period. Allstar’s consumer satisfaction for period seven increased some what for
Allround+ at 48.5% and Allround decreased slightly at 63.5%. We increased the price
for both Allround and Allround+ in period seven. Allround was sold at a manufacturing
price of $7.04 and sold 111,800,000 units, which is down from last period. Allround+
was sold at a $6.79 manufacturing price with 28,400,000 units sold, which is a growth
from last period. Our brand awareness for Allround is 84% and Allround+ is 58.2%.
2. Sales Force Allocation:
Sales Force
Allround P7 P8 Change Sales Increase/ Decrease Expected
Direct:
Ind. Drug 13 13 0 3,600,000/13=276,923.1 x0= 0
Chain Drug 35 35 0 23,500,000/35=671,428.57 x0 =0
Grocery Stores 56 55 -1 29,000,000/56=517,857.14 x(-1) = -517,857.14 loss
Conv. Stores 5 5 0 900,000/5=180,000 x0= 0
Mass Merch. 16 16 0 12,400,000/16=775,000 x 0= 0
Total Direct: 125 124 -1 =517,857.14 loss
Indirect/Wholesalers:
Wholesaler Support: 19 18 -1 Data not given
Merchandisers 13 14 +1 Data not given
Detailers 17 17 0 Data not given
Total
Indirect/Wholesalers: 49 49 0 42,500,000/49=867,346.94x0= 0
Total Overall: 174 173 -1 0-517,857.14= 517,857.14 units lost
2. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
SalesForce
Allround+ P7 P8 Change Sales Increase/ Decrease Expected
Direct:
Ind. Drug 13 13 0 1,900,000/13=146,153.85x 0= 0
Chain Drug 35 35 0 6,200,000/35=177,142.86x 0=0
Grocery Stores 56 55 -1 6,000,000/56=107,142.86 x(-1)=107,142.86 loss
Conv. Stores 5 5 0 100,000/5=20,000 x 0= 0
Mass Merch. 16 16 0 2,300,000/16=143,750x 0= 0
Total Direct: 125 124 -1 107,142.86 loss
Indirect/Wholesalers:
Wholesaler Support: 19 18 -1 Data not given
Merchandisers 13 14 +1 Data not given
Detailers 17 17 0 Data not given
Total
Indirect/Wholesalers: 49 49 0 11,800,000/49=240,816.33 x0= 0
Total Overall: 174 173 -1 0- 107,142.86= 107,142.86 units lost
For the last few periods we have taken the industry averages for direct and
indirect sales force and used those calculations to determine what numbers we should
use for our company Allstar. From the math calculations below you can see how we
found the industry averages for period seven. I decided to round up all the averages
that were .2 or higher up. From doing it this way our numbers barely change from the
previous period and we still reach our goal of being in the average for indirect and direct
sales force. Also being in the average helps us to not push more than needed in the
market. This strategy will help us compete with our competitors and not spend more
than needed on sales force.
Period 7 ALLSTAR B&B CURALL DRISCOL ETHIK AVERAGE:
DIRECT
INDEP
DRUGSTORES
13 14 19 5 10 61/5=12.2
CHAIN
DRUGSTORES
35 45 41 18 32 171/5=34.2
4. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
4,000,000= -78,560,000 decrease
Allround+ P7 P8 Change
Sales Increase/Decrease
Expected
Promotion
Allowance
Independent
Drugstores 18% 18% 0%
Chain
Drugstores 18% 18% 0%
Grocery Stores 11.7% 11.7% 0%
Convenience
Stores 11.7% 11.7% 0%
Mass
Merchandisers 11.7 11.7% 0%
Wholesalers 18% 18% 0%
Co-op
Advertising $2,500,000 $607,143 -$1,892,857
Point of
Purchase $1,500,000 $1,097,714 -$402,286
Trial Size $1,000,000 $0.00 -$1,000,000
Coupon Budget $4,000,000 $4,000,000 $0.00
Total: $9,000,000 $5,705,428 -$3,294,572
28,400,000/9,000,000=3.156 X -
$3,294,572= -10,397,669 decrease
Allround remains the leading product in the industry with the highest brand
awareness, purchase intentions, and shelf space. However, each of these values have
dropped slightly. Currently, brand awareness is 84%, which is .05% less than last
period. Purchase intentions are now 19.2%, which is 2% less than last period. Finally,
the overall shelf space across all channels is now 1.6, which is .01 less than last period.
These values have likely dropped due to a reduction in the promotional allowance for all
channels, but we still provide a higher allowance than ten out of twelve of the competing
brands including our closest competitor, Besthelp. With that in mind, we will keep
5. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
promotional allowance at 15.7% in all channels, but if brand awareness, purchase
intentions, and shelf space continue to decline then we will increase the allowance for
all channels in period nine.
Unfortunately our $4,000,000 coupon campaign for Allround was a flop. The
number of coupons redeemed was only 1,265,700 or 1.1% of total sales, so it is
apparent that the $0.25 coupon value was not enough to stimulate more redemptions.
We expected to see an increase in unit sales, but we actually sold 7,700,000 fewer units
than the previous period. With these things in mind we will be pulling coupons entirely
for this period, reducing the coupon budget to $0.00. We will continue monitoring social
media comments and the usefulness of coupons to plan another push in coupons in
period nine.
We will continue purchasing surveys to monitor Allround’s shelf space, purchase
intentions, and brand awareness. If these values continue to fall then we will increase
the promotions budget to increase these values and unit sales. But, since these values
did not decrease significantly in period seven, co-op advertising, point of purchase, and
trial size budgets will stay at $800,000, $893,000, and $0.00 respectively. Co-op
advertising and point of purchase budgets will be applied to all channels except
convenience stores because this channel continues to show no growth.
Allround+ did very well this period as far as unit and dollar sales goes. But it’s
brand awareness, purchase intentions, and shelf space showed very minimal growth.
Brand awareness is now at 58.2%, 0.3% higher than last period. Purchase intentions
are now 4.5%, 0.8% higher than the previous period. Overall shelf space did not
change, but there were increases in independent drug stores, chain drugstores, grocery
stores, convenience stores by 0.1 each. Shelf space for mass merchandisers
decreased by 0.1.
Since Allround+’s values that are pertinent to promotional spending showed
such minimal growth tells us that a higher than average promotional budget is not
required for period eight. With this in mind, we are reducing the co-op advertising and
point of purchase budgets to $607,143, $1,097,714, respectively. The values we chose
are the industry averages for co-op advertising and point of purchase spending, and we
chose to do so because this strategy worked well for Allround in previous periods.
Promotional allowance for Allround+ will remain the same in all channels since shelf
space growth is positive and we want it to continue to grow. Trial sizes will no longer be
offered because Allround’s brand awareness is 30.9% stronger than its direct
competitor, Coldcure, and because brand awareness will see little to no growth with
continued trial size spending. Co-op advertising and point of purchase budgets will be
applied to all channels except convenience stores because this channel continues to
show no growth.
6. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
The Coupon budget for Allround+ will remain at $4,000,000 with coupon values
of $1.00 because this proved to be a successful strategy in period seven. Redemptions
reached 2,006,500, or 7.1% of total sales, so we realized a $6,796,665 increase in
dollar sales.
Advertising:
P7 P8 Change
Sales Increase/ Decrease
Expected
Allround 16,825,000 17,475,000 +650,000
111,800,000 / 16,825,000 =
6.645 x 650,000 =
4,319,250
Allround+ 5,950,000 5,950,000 0
28,400,000 / 5,950,000 =
4.773 x 0 = 0
We decided to continue using Sully and Rogers in period eight because they are
the most cost effective, reliable, and they are meeting our requirements. The best way
to allocate the budget for advertising would be to make them both top priorities so we
maintain top brand awareness. We decided to change the advertising expense to,
$17,475,000 to go toward Allround for period eight because the average expense out of
the top four leaders for period five is $17.475 million. Allround already has high brand
awareness which is why we decided on only spending the average budget of all top four
leaders. The top four advertising leaders are End, Allround, Besthelp, and Coughcure.
The budget for End in period eight was $20 million, then Allround was $16.8 million,
Besthelp was $16.8 million, and finally Coughcure with $16.3 million. Adding these
expenses up and dividing by four gives an average advertising budget of $17.475
million. So by changing our advertising expense to $17.475 million we are still applying
the same system, of using the average amount, to compose Allrounds advertising
expense budget. Advertising is a form of communication to create awareness for
products or services. Allround already has high brand awareness so spending the
average instead of the highest amount would be saving the company money and would
be the most ideal system to compose the advertising budget. For the Ad messages in
Allround we decided to keep them the same as period seven and mirror our
percentages with Dryup+ Ad message percentages. With Primary and Benefits at 33%
and Compare and Reminder at 17%. Dryup+ is the only other 4 hour multi-symptom
medicine liquid which is why they would be the better comparison. We want to represent
7. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
Allround as a multi-symptom liquid for all age groups; separate from Allround+. Our
target segments are young singles, young or mature families, empty nesters, the retired,
and cold symptoms that relieves aches, clear nasal congestion, chest congestion, dries
up runny nose, and suppresses coughing. Because those are the most outstanding
symptoms that comes along with having a cold, we want Allround to cover all of the
main cold symptoms and that is why we chose to target those segments.
We decided to spend the same amount for Allround+ in period eight which is
$5,950,000 million of the advertising budget. We are still trying to grow our brand
awareness because we have not been on the market for as long as Coldcure so we are
going to keep the advertising budget the same. Compared to the portfolio graph for
period six Allround+ was a dog that turned into a question mark for period seven
because we increased our advertising; we are now striving to push for a star. We want
Allround+ to have high brand awareness which is why we are using 5.95 of our
advertising expense to compete with coldcure sales and take their potential customers.
We continued to work with Sully and Rogers Advertising agency for Allround+ because
we are now familiar with their work and it is the best cost for us when we still are trying
to make a strong stand in the children’s medication market. The break down for our Ad
messages from last period was, Primary at 40%, Benefits at 40%, Comparison at 10%,
and Reminder at 10%. For period eight we decided to change the Ad message
percentages and mirror Coldcure. From the advertising report it shows that Coldcure
focused more on Compare and Reminder giving us an example to mirror. With Primary
and Benefits at 13% and Comparison and Reminder at 37%. We are also comparing
the Ad message comparison with coldcure because they are the only other children's
medication on the market. We want to represent Allround+ as a children oriented
product for families with young children; separate from Allround. Our target segments
are young families, mature families with grandchildren, and cold symptoms that relieve
aches, clear nasal congestion, chest congestion, dries up runny nose, and suppresses
coughing. Because those are the most prominent symptoms that come along with
having a cold, we want Allround+ to cover all basic cold symptoms for children and that
is why we chose to target those segments.
8. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
5. Price
P7 P8 Change
Sales
Increase/
Decrease
Expected
Average
Discount for
the year:
Allround
MSRP:
$7.04
$7.45
(7.04+0.40) $0.40 increase Allround +0.315
Actual
Selling Price:
$4.82
7.04(1-0.315)
$5.10
7.45(1-0.315)
0.28 increase Allround+ +0.353
Allround+
MSRP:
$6.79
$7.29
(6.79+.50) $0.50 increase
Actual
Selling Price:
$4.39
6.79(1-0.353)
$4.72
7.29(1-0.353)
$0.33 increase
For Allround we decide to implement a 0.40 increase for our price in period eight.
This will make our price for Allround meet the average of our top four competitors
allowing us to reach our goal of being one of the price leaders in the market with a high
price, high quality medication. We took the average of the top four price leaders which
were: Coughcure $8.09, End $7.59, Dyrup+ $7.09, and Allround $7.04. Then we divided
by four and the results were $7.45. We then decided to raise our price to $7.45 to meet
the average of our competitors. We decided to keep our volume discounts the same
because we meet our competitors discount volumes. Coughcure’s volume discount for
period eight are 19% for <250, 24% for <2500, 34% for 2500+, and 38% for
Wholesale.Therefore making our volume discounts at 19% for <250, 24% for <2500,
34% for 2500+, and 38% for Wholesale.
For Allround+ we decided to implement a 0.50 increase for our price in period
eight, which meets Coldcure price for period seven which is $7.29.We want to position
our product as the best quality children's medication, so that is why we have to raise our
price to meet the only other children’s medication, Coldcure.We decided to keep the
same volume discounts for Allround+, because we want to continue to push our
discounts to attract new customers. Therefore making our volume discounts at 27% for
<250, 31% for <2500, 35% for 2500+, and 42% for Wholesale.
9. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
6. Margins
P7 P8 Change
Sales Increase/
Decrease Expected
Allround 270.4/111.8=2.41 2.41+0.28-0.05=2.64 0.23 increase
Allround+ 61.8/28.4=2.17 2.17+0.33-0.05=2.45 0.28 increase
Est. Unit
Cost:
P7 P8 Change
Allround 111.8 $1.67 $1.72 0.05 increase,margin down
Allround+ 28.4 $1.53 $1.58 0.05 increase,margin down
7. Allround Sales Calculations:
7.Sales Calculations:
Allround: 270,400,000/2.64=102,424,242
Last year's sales: 111,800,000
Amt needed to make
same as last yr: 102,424,242-111,800,000=9,375,758
Allround+: 61,800,000/2.45=25,224,489.8
Last year's sales: 28,400,000
Amt needed to make
same as last yr: 25,224,489.8-28,400,000=3,175,510.2
● 102,424,242 is less than last year sales of 111,800,000.So we will need to sell
9,375,758 less due to a margin increase to make the same gross as last year.
● 25,224,489.8 is less than last year sales of 28,400,000 .So we will need to sell
3,175,510.2 less due to a margin increase to make the same gross as last year.
10. Kacy Juneau
Ian Wall
Sade Adelakun
Janelle Harrison
8. Marketing Research:
For this period we decided to buy six reports. First we purchased the promotion
report for $53,095. We used it to compare promotional allowances with our competitors
to see what numbers to use for Allround and Allround+ by viewing the map and the
promotion allowances percentages. Then we purchased the sales force report for
$30,340. We used this to compare the averages for all the direct and indirect sales force
for Allround and Allround+. Then we purchased the pricing report for $30,340. From this
we discovered we are not the price leader for our new children’s medication, Allround+
when you compare it to the only other children’s medication Coldcure. We also can take
the averages of the four top price leaders and make sure what we need our price to be
to stay in the competition with them. Then we bought the advertising report for $53,095.
From this report we can see who our competitors are using as their marketing agency
and compare the total media expenses with the top four price leaders to find the
average and from there decide what our budget expense should be for both Allround
and Allround+. Then we purchased the purchase survey report for $151,700. From this
report we can see who our brand is most attracted to demographically. We can
compare totals with our competitors to see who is leading in the young family market
because that is the one we need to focus on for our new medication Allround+. Finally
we purchased the shelf space report for $37,925, it helped us decided the promotion
percentages needed for Allround+.
