PharmaSim Simulation Presented by Group 1 Section 2Mr. Aut Tanwichit ID 5349198Ms. Nichapapa Chayavorakul ID 5349223Ms. Tapanee Tantisavee ID 5349252Ms. Kwanchanok Atthasap ID 5349231Ms. Sasithorn Phuengsomboonying ID 5349260Ms. Thidajit Mukmanee ID 5349277 This report is a part of the assignment of course MGMG508 Strategic Marketing to report to Dr. Ploeumrudi Devahastin
Page |3Introduction Pharmasim is a simulation program which could be used to learn to manage the brandin a simulated situation. Pharmasim is very helpful and useful for the marketer in decisionmaking, how the problem should have been solved. It is a good opportunity to practicemarketing strategy in Pharmasim simulation because once the marketers make a wrongdecision, the Pharmasim can be replayed as many time they needs. However, in the real situation, the marketers have to be careful in every step theymake the decision. Because if they make a wrong decision, they might lose the market shareand get lost in the net income. So the market researches and every piece of informationprovided by Pharmasim are very helpful for the marketers in order to analyze the situation inthe current market and could be criteria to the next period.Project Objectives To manage AllStar to become a leader in pharmaceutical industry by Earning the highest Net Income Earning the highest Stock Price Earning the highest Market Share Earning the highest Manufacturer Sales
Page |4Period 0-1Market News on Period 0-1 Driscol announced the introduction of Dryup (14.9% of total Market share in cold market) Prices increased 2.8% , an inflation rate increased 3.1% Advertising spending increases $3.3 million , Promotion spending increases $1.1 Million The strongest growth this period was Mass merchandiser sales (an increase of 9%) Retail sales grew by $82.1 million , or 4.3%Marketing Mix (ALLROUND) Products Allround was the first launched product and also the market leader who provided the symptom formulations such as relieving aches, nasal and chest congestion or even dry up runny nose and special benefits of curing symptoms like cold, cough. Although Allround could cure the symptom efficiently, but it was in the form of liquid so Allstar would like to expand the product line which was more efficiency and came in the capsule form. In term of product life cycle, Allround was in the stage of maturity, which needed to maintain customers’ awareness. Price The price of Allround was quite high compared to the competitor which was Besthelp+, but it was reasonable price for high performance of it. Place Refer to the multi purposes and medium quality of product, Allround was the best seller in the market and there has dramatically increased in numbers of customers. Therefore, the product has quite sold well to the mass merchandise and the wholesalers.
Page |5 Promotion The product seemed to have the most percentage of the promotional allowance because this kind of medicine was appropriated to mass merchandise and wholesalers, who preferred the increasing in the percentage of allowances. In addition, people have already known our product, so we have just attracted them by arranging the product displays.STP (ALLROUND) Segmentation: Most consumers who use products for relieving in the night time because of the strong efficiency of chemicals and alcohol and antihistamine. Target: Consumers and some physicians who need the shortcut solution by using multi-symptom medicine. Position: The product is set at the medium level of medicine for multiple uses, which suiting to people who have average income.Problem on period 0-1 On this period, we faced the problem from inflation rate that we had not known yet it may be affected to our sales or not. There are many competitors for Allstar.Major Decision and Strategies Price: Increased from $5.29 to $5.45 to adjust with an increase in the market price inflation rate and we bought survey to set the price. Allround was the leading company in the market. As consumers perceive our product being the most effective in cold relief, Allstar could raise the price a bit and consumers were still willing to buy the product. Sales force size: we increased sales force from 127 to 135 in order to gain more revenue form last period. We need to produce more products to gain more selling. Promotion Allowance: we set the promotion allowance is 18%, it does not change from last period because we just launched our product to the market and we decided to give 18% ($74.6 million) to wholesalers incentive them to buy our product and we
Page |6 thought this number is not much and less to give to our wholesalers. Another reason that we set 18% because we did not buy any research about promotion allowance so we made decision to set to be this percentage. For Promotion Expenditures, we set promotion expenditure about $7 million to introduce our product to the market and the amount of expenditure is suggested from the last zero periods. Advertising Expenditures: we spent money in advertising expenditure about $20 million but our budget did not know yet that is allocated in what part of advertising. Anyhow the advertising budget is set to prepare in next period also.Summary on period 0-1 Net income $ 87.5 Million Market Share 23.4% Manufacturing Sales $414.2 MillionPeriod 1-2Market News on Period 1-2 Curall introduced Coldcure Prices increased 2.4% , an inflation rate increased 4.3% Advertising spending increases $14.7 million , Promotion spending increases $1.3 Million The strongest growth this period is convenience store sales (an increased of 19.8%) Retail sales grew by $316.6 million, or 15.9%Problem on period 1-2 We have to think about, we should to reformulate the product or not.Major Decision and Strategies Price: we set the price of Allround product about $5.70 which was increase from last period because we increased the price following the price inflation and we bought the pricing survey to compare with the our competitors and we thought, we can increase the price after we looked about the survey, we found that the our price closely with Tradeoff so we can increase the price from $5.45 to $5.70. Moreover consumers perceive our product being the most effective in cold relief. Therefore Allstar could raise the price a bit and consumers were still willing to buy the product.
Page |7 Sales force size: for this period, we bought customer survey then we knew the satisfaction of product that customers give to Allround. We got 60.4% that customer satisfaction in our product that is the highest percentage when compare with our competitors so we decided to increase sales force following increase in sales volume of Allround, we put the sales force to be 150 from 135. Promotion Allowance: the percentage of promotion allowance that we incentive to wholesaler equal 18% ($76.8 Million). We did not change the percentage because we thought that this percentage is suitable for got in more product sales. Promotion Expenditures, we spent promotion expenditure about $10 million. This budget is increased from $7 million to emphasize our product. This period did not allocate to each type promotion allowance. Advertising Expenditures: we spent on advertising expenditure around $20.7 million that we increased from $20 million because we would like to emphasize on their product via the way to advertising. But we did not put in specific way of advertising yet.Summary on period 1-2 Net income $84.9 Million Market Share 22.5% Manufacturing Sales $426.6 Million
Page |8Period 2-3Market News (Period 2-3) - Prices increased an average of 3.0% compared to an inflation rate of 5.2% - Advertising spending is down $0.4 million, while promotional spending increased $0.3million. - The growth of Mass merchandiser sales increased to 16%. - Retail sales grew by $160.2 million, or 6.9%. - An opportunity to add a line extension this period.Problem on period 2-3 We faced that our Net income decrease about $2 Million We found that our market share decrease to 22.5% from 23.4% We have to choose the new product line for Allstar.Major Decision and Strategies (Allround) Price: Due to the inflation rate increased by 6.4% so the manufacturer decided to increase the price from $5.70 to $6.20. Allstar introduced the line extension named “Allround+” in the form of capsule which cost $7.50. The reason we put the price high because it comes in capsule and more formulate to cure cold. Sales force: This period Allstar increased the sales force to 200 from 150 due to the growth of mass merchandisers and the manufacturer introduced the new product line (Allround+) and we tried to make Allround to gain more market share in the market. Promotional Allowances: It was decreased from $76.8 to $71.8 Million. We spent $8.5 Million or 18 or for the promotional allowances in $2 on Co-op Ad, $3 on Point of Purchase, $0.5 Trial Size, and $3 on Coupons. Advertising Expenditure: Total spending on Allround this time was $16 Million, moreover we would like to remind customer of Allround in order that they would repurchase sooner or later. Moreover, we used BMW (Brewster, Maxwell & Wheeler) to be Ad-Agency because their performance is the best when compared in another two agency but the percentage that this agency would like to get is highest that the other too (15%). Market share: The manufacturer sales this period has dropped dramatically from 22.5% to 20.4% due to the introduction of the new product line. But we still kept reminding the customer to repurchase Allround.
Page |9 Summary on period 2-3 Net Income $ 68.2 Million Market Share 20.4% Manufacturer Sales $398.9 MillionIn Period 2-3 we have to decided about new product for Allstar and we chose about12hr Multi CapsuleIntroduction of new product line of Allstar: Allround+ (12hr Multi Capsule)We selected to launch Allround+ in the form of 12hr Multi Capsule because we need to addmore products to gain some market share from Besthelp.Marketing Mix (ALLROUND+) Products Allround+ is the line extension from Allround. It was more effective formulations which the alcohol has been deleted and changed from the liquid to capsule form. Moreover, Allround+ has been accepted widely as the most quality brand due to the formations and it was easy to carry. Price The price of Allround+ was quite high because we believed that the higher the price, the higher quality. Moreover, the high price would create more value and a better image then we knew target customers of Allround+. Place Allround+ has sold well in the mass and wholesalers which led to the higher market share and the net income. Promotion Due to the high price and quality, people who have high income would purchase Allround+ rather than Allround. Hence, there was not necessary to put too much allowance on this product. The promotional allowances have been invested in product displays and coupons to attract the customers.
P a g e | 10STP (ALLROUND+) Segmentation: Young singles, young families, mature families, empty nesters and retired persons. Target: People who have only cold and some symptoms such as aches, nasal congestion and runny nose. Position: The product is recognized to be the premium quality of medical solution in term of multiple use.Period 3-4Market News on Period 3-4 B&B announced Besthelp+ Allstar has requests it be allowed to sell one of its new prescription allergy medications over-the-counter. This process is expected to take several years Prices increased 3% , an inflation rate increased 6.4% Advertising spending increased $11.7 million , Promotion spending increased $6.9Million The strongest growth this period is Mass merchandiser sales (an increased of 11.0%) Retail sales grew by $84.7 million , or 3.4%Problem on period 3-4 We faced that our Net income decreased to $68.2 Million from last period. We found that our sales volume decreased to $398.9 Million from $426.6 Million from last period. B&B announced to launch new product line to compete with the new our product line.Major Decision and Strategies (Allround) Price: we set the price for Allround about $6.2 because there is some factors that lead to increase the price such as the price average increased 3% and inflation also increase 6.4%. Moreover from customer survey on Tradeoffs, found that the price of Allround does not higher than Besthelp who are the main of Allround’s competitors. So we decided to increase the price.
P a g e | 11Sales force size: we set the sales force that increase from the last period to be 255people because we think the way to increase sales force, it can be help to increase oursales volume so we decided to increase in every channel however we emphasize ondetail channels more than other channels.Promotion Allowance: we set the promotion allowance equal 18% ($79 Million), itdid not change from last three periods and we spent around $8.5 Million to be theexpenditure of promotion that we focus on Consumer channels more than Tradechannels that we decided to use product display and coupon around $3 Million morethan trial size promotion and for Trade channels we used only $2 Million to spend onthis channels. The reason that we focus on Consumer Channels because we thoughtabout consumers had more effect to our product than Trade Channels.Advertising Expenditures: we decreased to spend for advertising about $12 Millionbecause we thought that Allround had been well-known already so the advertising didnot the main factor that made the customer decided to buy it. Therefore we increased
P a g e | 12 to emphasize on reminder and comparison, 50% and 40% respectively from last period.Summary on period 3-4 (ALLROUND) Net income $ 71.1 Million Market Share 21.8% Manufacturing Sales $ 438.9 MillionAllround+Major Decision and Strategies (Allround+) Price: we start to set the price of Allround+ equal 7.5 because this product is better than the old one and it is a capsule and more formulate to cure cold. So the price should be higher to sell in another group of customers who want to get more benefit from Allround+.
P a g e | 13Promotion Allowance: we set for the promotion allowance equal 15% ($1.8Million), it was less than from the Allround (18%) because Allround+ is the newproduct so the allowance should not be more. Moreover Allround+ focused onconsumer channels by Trial Size about $1.5 Million and did not put the budget oncoupon so the budget on promotion expenditure about $2.4 Million. The reason thatwe focused on Trial Size because we would like to introduce new formula and madethe customers knew so the method was suitable should be Trial Size.Advertising Expenditures: we set the budget about $10 Million and we separated tospent on primary and benefit about 40% for both because Allround+ was the newproduct of Allstar so we decided to emphasize on the benefit and the component ofthis formula type because the customers should get the information of Allround+before they made the decision to buy it. Moreover we hired the BMW ( Brewster,Maxwell & Wheeler) to do about our advertising in spite of this agency would like toget the percentage from our sales about 15% but we decided to hire them becausetheir performance for doing advertising is the best when compare to other theircompetitors.
P a g e | 14Summary on period 3-4 (ALLROUND+) Net income $ 71.1 Million Market Share 0.6% Manufacturing Sales $ 12.3 MillionThe result after made decision 0-3 ALLROUNDPeriod Net Income ($ Million ) Marketing Share (%) Manufacturing Sales ($ Million) 1 87.5 23.4 414.2 2 84.9 22.5 426.6 3 68.2 20.4 398.9 4 71.1 21.8 438.9 ALLROUND+ Period Marketing Share (%) Manufacturing Sales ($ Million) 4 0.6 12.3 During period 0-4, we can conclude that the Net income will drop dramaticallybecause Allstar Company needed to spent on advertising expenditure to launch new productline. In the other hand, when we focused to promote product, sometimes we did not thinkabout other factors that also effected to net income and manufacturing sales.
P a g e | 15 Firm Income: ALLSTAR SHARE OF Mfr SALES Net Income MILLION DOLLARS PERIOD Firm Income: ALLSTARD MO IL L Allow.Exp.L L SF Exp.A I Adv.Exp.R O Promo.ExpS N Income PERIOD SHARE OF Mfr SALES SHARE of Mfr SALES (%) SHARE OF Mfr SALES PERIOD
P a g e | 16Period 4-5Market news on period 4-5 Allstar announced the introduction of Allround+ this period Prices increased an average of 8.1% compared to an inflation rate of 7.1% Total advertising spending is up $2.0 million while promotional spending decreased $2.0 million Grocery store sales showed the strongest growth this period with an increase of 9.9% Retail sales grew by $1.45 million, or 5.7%Problem: Period 4 The economy situation effects to the cost of manufacturing that’s inflation situation. After review the price research, we faced to the problem that our prices are higher than the main competitors (Besthelp). The challenge problem of Allstar is the solution how to keep the market share and income by not risen-up the prices.Major Decision and Strategies From the situation updated after launched the new product (All Around+), it seems that the grocery store showed the strongest distribution channel by increasing 9.9%. We have launched the new product to the market and found that the main. competitors are “Besthelp+ and Dryup” Pricing: After reviewing the inflation and Tradeoffs survey, we found that the price of Allround and Allround+ is higher than the other brands along the tradeoff line. Therefore we decided to stable the price of the product in the period 4. This is the better method to keep our market share.
P a g e | 17 Sale Forces: Though some market channels were growth apparently. However, we’ve not to increase the sale force because it’s sufficient for all channels. On other side, we used the strategy to convince the sales by increasing budget to 3% approximately. Promotion Allowance: Allround: From the survey, there is less effect from co-op advertisement so that we decide to select the other method. Moreover the product is well-known in the market so we declined the budget of allowance and decreased in product display. Allround+: According to it’s the new product, we used the strategy to give coupon for the potential customers in order to convincing them. Advertisement: Allround: according to the product already well-known in the market so the advertisement is not main factor for consumers’ selection. From the reason, we’ve decreased some budget of the section. Allround+: We adjust the portion of Advertising statement by reducing the primary and increasing in reminder because it is the second period. And we expect to expand the market share from the competitor so that we increase the comparison in advertisement message.Period 5-6Market News on period 5-6 Ethik announced the introduction of End+ this period. Prices increased an average of 4.6% compared to an inflation rate of 8.5% Total advertising spending is up $15.8 million while promotional spending increased $1.5 million. Mass merchandiser sales showed the strongest growth this period with an increase of 22.0% Retail Sales grew by $ 231.9 million or 8.6%Problem: Period 5 When analyze the targets of Allround and Allround+, it seems that both products of Allstar are the same group effecting to the deduction of market share. Reviewing to the acceptance range of consumers, we found that the prices of Allround+ were so higher comparing to the competitors.
P a g e | 18Major Decision and Strategies Price Allround: We increase price of Allround from $6.2 to $6.9 base on increasing of the inflation rate 8.5%. From survey tradeoffs, we found that Allround product is in the acceptance range of tradeoffs line and our product is the most symptom relief in customer view so if we also can increase price. Allround+: Price of Allround+ is slightly decreased from $7.5 to $7.4 mainly from the tradeoffs line. From survey tradeoffs, we found that Allround+ is out of the acceptance range by customer. And we can’t dramatically decrease in pricing because the positioning of Allround+ is premium capsule that can relief 12-hrs pain.Volume discount: Allround Allround+ < 250 20% 20% < 2500 30% 25% + 2500 34.5% 30% Wholesaler 38% 35% Volume discount is not change from the last period because we think it is sufficient and appropriated.
P a g e | 19Sales Force:Totally sale force for Allstar Company is 255 persons that equal to the last period.From sale force market survey, our sale force has already covered the mass and retailchannel as they are the strongest growth. And our sale force no. is more thancompetitor; B&B already so we have no need to increase the sale force this period.We freeze sale force at level 255 persons since period 3 and we found that net profit iscontinued increase so sale force quantity is not the direct factor to sale volume.Promotion spending:Allround: We decrease promotion allowance from 18% to 14% because competitorresearch observation, we found that our promotion allowance is higher thancompetitor; Best help, so we decided to decrease promotion allowance.We decrease budget in promotion spending of Allround product because this productis already well-known in the market.Allround+: We remained the promotion allowance of Allround+ because we needmerchandise to boost sales of Allround+. We spend on “trial size” to introduceproduct to customer as Allround+ is in the introduction cycle.
P a g e | 20Advertising Ad message Allround Allround+ Primary Change from Change from 5% => 20% 10% => 25% Benefit Change from Stable at 40% 5% => 25% Comparison Change from Stable at 30% 40% => 5% Reminder Stable at 50% Change from 20% => 5%Allround: Advertising budget is slightly decreased from $10 million to $9.7 millionbecause Allround is the leader in the market and it is in the mature cycle so we candecrease advertising budget. We need to send Ad message of primary and benefitinstead of comparison because Allround is the most market share in the market so wehave no need to emphasize on comparison message.Allround+: Advertising budget is slightly increased from $11 million to $12 millionfrom the spending relating to Allround+ launch together with the introduction period.We decrease ad message of “reminder” to “primary” in order to emphasize theformulation of the product. Following the decision making criteria of customer fromsurvey, we found that product effectiveness is the first criteria for customer so ad-message that emphasize on “benefit” and “primary” would be encourage customer tohave an intention to buy our products.
P a g e | 21 Demographic targets: Our decision is base on the top 3 segmentation from purchases survey detail of Allround in column of percentage of brand. Allround: From purchases survey detail of Allround in section they reported that the top 3 brand share percentage of segment Retired, Empty Nesters and Mature families. So our target groups of Allround are Retire, Empty Nesters and Mature families as we expected that we can increase. Allround+: From purchases survey detail of Allround+ in section they reported that the top 3 brand share percentage of segment Mature families, Empty Nesters and Young singles. Mature families and Empty Nesters are the same target as Allround product so we considered that we should have the same target group as Allround so target group of Allround+ are Mature Families, Empty Nesters and Retires.Period 6-7Market News on Period 5-6 Driscol has reformulated its Defogg brand. Prices increased an average of 7.7% compared to an inflation rate of 6.7% Total advertising spending is down $6.9 million while promotional spending decreased $2.2 million. Mass merchandiser sales showed the strongest growth this period with an increase of 9.3% Retail Sales grew by $ 174 million or 5.9%
P a g e | 22Problem: Period 6 Firstly, Allround and Allround+ focus on the same target group and it seemed that the income of the second product is not well. Therefore, Allstar would plan the new strategy to be suitable for the new product (Allright).Major Decision and Strategies Price: We increase price both Allround and Allround+ follow the inflation rate of 6.5% as table below: Allround Allround+ Price Increase from $6.9 to $7.4 Increase from $7.4 to $7.6 Volume discount Allround Allround+ < 250 20% 21.5% < 2500 30% 26.5% + 2500 34.5% 30% Wholesaler 38% 36.5% We increase volume discount by 1.5% for Allround+ as we need to encourage customer to buy more and it can help the economy of scale. Sales Force: There’s slightly increasing on sale force from 255 to 264. As we freeze sale force for 3 periods so we decided to increase sale force in retail market such as grocery and chain drug store like mentioned in market update that retail sales growth by 5.9%. Advertising: Allround: We continue decrease advertising budget for Allround from $9.7 million to $9.2 million as mentioned that Allround is already well-known product so we no need to spend a lot on advertising.
P a g e | 23 As an increasing of Mfg sale of competitor, Best help in last period so we change ad- message from “primary” and “benefit” to emphasize on “comparison”. We expected that we can divide mfg sales from competitor in the next period. Allround+: We continue increase advertising budget for Allround+ from $11 million to $13 million as mentioned that Allround+ is new to the market and we need to boost sales from this products. And we still remained percentage of ad-message as the result of sale report that there’s till continue growth in Allround+. Promotion: Allround: There’s increasing in total promotion spending for Allround from $3.2 million to $4 million that we turn to spend in Co-op advertising and Coupon in amount of $1.4 million per each. Follow the promotion survey , our competitor is spend a lot on Co-op and has coupon so we turn into the market trend. Allround+: there’s stable in total promotion spending for Allround+ but we change in type of promotion method instead. We change to spend on co-op advertising as a result from promotion survey that Besthelp spend in Co-Op advertising in amount of $1.14 million so we spend on Co-op in amount of $1.2 million.Introduction of new product line of Allstar: ALLRIGHTMarketing Mix (ALLRIGHT) Products Allright was another product of Allstar which has specific purposes on curing allergy symptom. Moreover, Allright has no alcohol input in it so there was no drowsiness.
P a g e | 24 Price As the high power of curing an allergy symptom, Allright has been set in a high price in order to promote the higher benefits and the effectiveness of the medicine. Place Due to the specific purpose treatment, Allright has the best selling at the grocery and chain stores. Promotion As a result of specific purpose, Allright has hardly sold in mass merchandise and wholesalers compared to the retailers such as chain store and grocery. Therefore, we reduced the percentage of allowances and paid more attention to release trial size.STP (ALLRIGHT) Segmentation: Most consumers who have allergy problem and don’t want to feel drowsy. Target: Patients who have only allergy symptoms. Position: The product is accepted as the high quality of products when used in relieving allergy symptoms only.Major Decision and Strategies (Allright) We selected to launch Allright in the form of 4 hrs allergy capsule because we need to specialize in allergy market that has a small competitor. Price: Allright was introduced in the form of 4hrs allergy capsule which price $6.8. The reason we put the price in lower among Allstar product but it is higher in Allergy product among competitors: Defogg and Believe because under the Allstart product that is well-known in pharmaceutical industry so we can set the price high. Sales force: As mentioned above, we slightly increase a number of sales force due to the introduction of new product line (Allright) and we tried to gain some market share from Defogg and Believe who were our direct competitors.
P a g e | 25 Promotional Allowances: We provided promotion allowance to merchandise with 15% at the same rate of Allround+ .We spent $3.9 Million and emphasize on trial size and product display as Allright was new in the market so trial size may be the best method to introduce our new product to customer. Advertising Expenditure: We spend totally on advertising budget in amount of $12.1 million which is considered as a new product so we spend a lot on advertising. At the first introduction we emphasize ad-message on “primary” and benefit” to customer to let them know the product effectiveness. At first period, we communicate advertising to all category of customer and we will separated it in the future period.The result after decision period 4-7:
P a g e | 26 Period Net Income ($ Million ) Marketing Share (%) 4 74.6 21.6 5 106.6 21.3 6 107.1 23.1 During period 4-6, we can conclude that the net incomes of Allstar are increasingcontinuously. From expenditures of Allstar, they are adjusted a little depended upon thesituation in the period, for example; when launched the new product (Allround+), we spentmore expense for advertising to promote the product. Finally, the expenditures are less thanthe income as shown in Firm income graph. For market share, the Allround+ can expand themarket share because the consumers accepted to the product well as shown in the share ofmanufacture sales chart. However, the Allstar is declined in market share. As described by tradeoff line Allstar product is over this line becasue are positioningAllstar’s product as premium grade, so we set the higher price with a higher quality withhigher symptom relief comparing to each competitor. Allright(A) is compared to Defogg(I)and Believe(D) . Allround (B) is compared to Besthelp (E). As a result in Allstar portfolio, there’s more new entry into the market resulted inAllround is droped from star to cash cow and both Allround+ and Allright are dog.
P a g e | 27Period 7 The marketing updated for period 7 concerned to the growth of Mass Merchandise(8.2%) that is the strongest distribution channel and retail sales also grew up by ranking3.2%. According to review in market situation and servey (such as; Customer or Pricingservey), we plan and make the decision as the following;Major Decision and Strategies (ALLROUND) Sales force: We still be stable the Sales Force same as in period 6 though the budget were allocated to the section more than the prior period. Hence the budget of Advertising and Promotion were decreasing priority according to the market already known our products. Pricing: It’s risen up a little according to the market situation (prices from the competitors by servey). And we set more special discount for convincing the volume of Sales, especially more than 2,500 (from 31-32.5). According to the market already known our product so we made the decision to reduce the budget of Advertisement. Promotion Allowance: we’ve not emphasized to give the strategy. Therefore the product display, Trial size and giving coupon were reduced.Major Decision and Strategies (Allround +) Pricing: it’s still adjusted per the market situation and comparing to the competitors by using survey (such as; Trade off survey and competitors price setting.) However, the special discounts for sales volume were not changed from the period 6. Advertising: there’re $10 million same as the period 6. Promotion Allowance: Each distribution channel has the same portion as in period 6 but we would reduce the percentage of each allowance. For example; Co-op Advertising decreased from 1.2 to 0.7 and Product display is changed to 0.5 (from 1.0).Major Decision and Strategies (Allright) Pricing: The price of product was risen 11% approximately. When review to distribution survey and growth of market, we would increase some discount to promote the volume of sales. For example; Gain the special discount to wholesaler by 33.5% and volume (more than 2500) could get 25% discount.
P a g e | 28 Advertisement: We increased the budget to advertise in order to promote the sales but the portions of statement still be same as the previous period. Promotion Allowance: Each distribution channel has the same portion as in period 6 though we would adjust a few allowances apparently. The changing is increasing the trial size (from 1.4 to 2.2) and gain more coupon in order to supporting the large amount of sales.Period 8-10Market new on period 8-10 Allstar announced the introduction of Allright this period Prices increased an average of 5.1% compared to an inflation rate of 4.8% Mass merchandisers sales showed the strongest growth this period with an increase to 8.2% Retail sales grew by 3.2%Problems At the beginning of period 7, we received a decreasing in marketing budgets because our strategies from the previous period fail to increase overall operation. Causing a limitation in our budgets during this period. Allround sales decreased a lot. Allround+ do fall in the dog section of BCG of Allstar, we need to push more effort to it. Allright entered the market during our bad time.Major decisions and Strategy - Increase price for all products. - Reformulate Allround by adding chest congestion. - Keep support to Allright. Price: We rise up price a little for both Allround and Allround+ according to the market situation (prices from the competitors by survey). And we set more special discount
P a g e | 29 for convincing the volume of Sales, especially more than 2,500 (from 31-32.5). For Allright, we increase a price more than market situation, since we checked up with surveys tradeoffs. We found out that customer thought Allright can provide more benefit than its price. So, we charged additional prices in Allright by 11%. However, we did provide more volume discounts in order to encourage additional volume sales. Sale Force We maintained the number of the Sales Force same as in period 6 though the budget were allocated to the section more than the prior period. Hence the budget of Advertising and Promotion were decreasing priority according to the market already known our products. Advertising A We did reduced the advertisement budgets for Allround, keep maintained the same budget for Allround+ and adding more expense in Allright. Allright was new to the market and had enough potential to compete with Believe which is our arch rival in Allergy market. Therefore, we increased the advertisement budgets for Allright Promotion According to our company product promotion report, both Allround and Allround+ received a little participation and additional sales by using those promotions. Therefore, we decided to cut their promotion budgets and relocate budgets to promote Allright instead.Allround reformulateWe added more Expectorants to Allround to improve Allround benefit to solve chestcongestion and improving effectiveness of cough suppression. We tried to make Allroundmore usefulness to maintain its sales.The Result Net Income: After the decision in the period 8, the result showed that Allstar earned more income by approximately 33% (from 133.5 to 171.8) Market Share: Allround market share seems to decrease a little bit, while Allright and Allround+ increase slowly.
P a g e | 30Period 8-9Market News on period 8-9 Cureall announced the introduction of Coughcure+ this period Allstar has reformulated Allround brand. Prices increased an average of 4.7% compared to an inflation rate of 2.6% Total advertising spending is up $13.1 million while promotional spending increased $1.8 million Grocery store sales showed the strongest growth this period with an increase of 19.9% Retail sales grew by $323.9 million, or 10.1% Allstar opened a new plant, increase capacity by 20 million units.Problems Allround+ do fall in the dog section of BCG of Allstar, we need to push more effort to it. Allround and Allright sales did not increase much as we expect.Major decisions this period - Increase price for all products. - Increase point of purchase product display dramatically. Price We increase price for our products according to increase price average. In addition, we also increase volume discount for Allround and Allround+ in other to stimulate the sale. While Allright still maintain the same volume discount, since we observe that Allright keep increasing in sales. Sale Force As we bought Sale Force report to observe our competitors, we saw that our competitors B&B increase their sale force in Chain Drugstores, Grocery Stores, Convenience Store, and Mass Merchandisers to be more or equal with Allstar. Therefore, we increase our sale force in those sections also.
P a g e | 31 Advertising We decide to decreased the advertisement our products and change Allright ads messages by increasing its benefit, and primary use, while reducing competitor. Since our products already represent their usefulness in customer perception by checking in awareness Survey. Promotion For Allround, and Allround+, we still maintain promotion allowance for both products and increase only in Allright. Since we try to encourage Allright to enter the market as it is our new product. In addition, we also increase Product Display dramatically for all products, because we observe our competitors “B&B” has increase their Product display. Moreover, we increase the coupon for both Allround and Allround+, since coupons method would motivate consumer to purchase our products at lower price than competitors.The Result Net Income: After the decision in the period 8, the result showed that Allstar earned more income by approximately 33% (from 133.5 to 171.8) Market Share: Allround market share seems to decrease a little bit, while Allright and Allround+ increase slowly.Period 9-10Market News on period 9-10 Prices increased an average of 3.8% compared to an inflation rate of 3.7% Total advertising spending is down to $9.6 million while promotional spending increased $7.8 million Mass merchandiser sales showed the strongest growth this period with an increase of 11.9% Retail sales grew by $268.5 million, or 7.6% Allstar opened a new plant, increase capacity by 20 million units.
P a g e | 32Problems Allround+ fell in the dog section of BCG of Allstar, we needed to push more effort to it.Major decisions this period - Increase price for all products. - Decrease promotion allowance for all products. - Increase point of purchase product display. - Increase advertisement expense. Price We also increased the price for our products according to the increase price average. Sales Force We added up a few sales force to compete with our competitors. Advertising As we gained more net income from the previous period, we decided to put some budget into advertising to maintain our customer awareness. Promotion We reduced promotional allowances for all products in order to increase our revenue. However we concerned the side effect of reducing the sales force in the next period, then we checked closely in our promotion report. Our company stills offered the highest promotional allowances for retailers. Therefore, we could reduce promotional allowance as we planned. In addition, we also kept increasing product display expense to attract our customers, because from the result of the previous period which cause our revenue to increase dramatically. In addition, we also increased the expenses in coupons to gain more sales to compensate our sales reduction in the next period. However, we removed the coupons expense for Allright, because we observed from our product promotion report and found out that there were few people who used coupons program for Allright. So, we thought we could relocate this budget to other expenses.
P a g e | 33The Final Result on period 8-10 Net Income: After the decision in the period 8, the result showed that Allstar earned more income by approximately 28% (from 171.8 to 221.5), which was the highest net income among our competitors. Market Share: Both Allround and Allround+ seemed to increase a little bit. However, Allright was slowly gaining a little market share when comparing to other products. Period Net Income Mfr. Sales 8 133.5 23.9 9 171.8 24.9 10 220.5 26.5 Period Market Share 8 23.9 9 24.9 10 26.5 Million ($) Firm income: Allstar Net Income Mfr. Sales Period Market Share Share of Manufacturing Sale (%) Market Share Period
P a g e | 34The Final result Result of Total Allstar Net income, market share and growth of Allstar 250 50.00% 40.00% 200 30.00% Net Income Million Baht 150 20.00% Units 10.00% 100 0.00% Marketing -10.00% Share (%) 50 -20.00% 0 -30.00% Growth 0-1 1-2 2-3 3-4 4-5 5-6 6-7 7-8 8-9 9-10 Introduction of Introduction of Allright Allround+ Firm income: Allstar
P a g e | 35Share of Mfr Sales Allstar Portfolio
P a g e | 37Lesson Learn 1) From the Pharmasim Simulation, we can learn to plan the market mix (price, Promotion, Advertisement, etc) that they’re main factors to support the business or expand the volume of sales. For instance; giving the special discount to some distributors for convincing the sales. 2) Further, we learn to solve the problem, such as; the market shares are slow down that we would combine the market strategy to solve the mention. 3) We learned that, we should observe the survey on customer behavior as customer as god and look on the competitor (market) to help us in decision making. 4) Allocation the sales forces, we learn to analyze the marketing research, for example; the distribution channels, the competitors’ sales force. And the result leads to allocate the sales forces suitably. 5) To understand the cycle of product and we could plan the strategies to be suitable in each period of products. For example; Allround+ launched to the market then we would design the statement of advertisement to present the information to the consumers. 6) Stock Price, may reflect our company operations. We can use stock price as one of the indicator to check our company strategy whether it is good or bad. 7) By launching Allround and Allround+ which contain the same benefits, will cause a market cannibalization. 8) Pharmaceutical product seems to have less effect from time, people stills buying the same medicine even it is almost 10 years product. 9) Trail sizes are best for introducing new products. While coupons are best to promote outdated products.
P a g e | 38 Appendix1. Graph of Income report