Running head: PharmaSim Final Report 1 PHARMASIM FINAL REPORT 2 PharmaSim Final Report Group E Lynsie Cahela Lorenzo Gibbs Alan J. Hasfjord Summar Hudson Saint Leo University MKT 565: Marketing Professor Dr. Stephen L. Baglione, Ph.D. October 8, 2017 Table of Contents Introduction 3 Pricing 5 Advertising 6 Promotions 9 Sales Force Allocation 11 Segmentation 12 Line Extensions 13 Cumulative Net Income and Stock Prices through Each Period 13 Conclusion 14 Appendix 1: Initial Strategy Report 15 Appendix 2: Average Retail Price in Relation to Net Income 21 Appendix 3: Average Discount and its Effects on Unit Sales 22 Appendix 4: Sales Force Allocations and its Effects on Unit Sales Per Channel 23 Appendix 5: Market Share Based on Retail Sales 25 Appendix 6: Promotional Expenditure and its Effects on Brand Awareness 26 Appendix 7: Advertising Expenditures and its Effects on Unit Sales 27 PharmaSim Final Report Introduction In the OTC pharmaceutical market, Allstar brand offers the 4-hour liquid cold medicine, Allround. Initial research suggested the potential of marketing to two distinct groups. The first group is customers in the cold & flu market. As Allround already had a substantial following in this market with 22.6% of the market share and brand recognition at 74.1%, it seemed logical to continue pursuing this market. Conversely, the customer base in the allergy market was negligible, accounting for only 2.3% of the brand’s sales. Given this data, the team chose to aggressively pursue the cold & flu market and accept residual sales in the allergy market, if any, without focused targeting in the allergy market. Allround’s price point began at $5.29, which placed it firmly in the upper region of the price spectrum. Given the high brand recognition and solid market standing, however, the team did not feel the higher prices would have a significant impact on the bottom line and chose to pursue a pull marketing strategy that would showcase Allround as a premium brand and develop customer loyalty and repeat purchases. In addition, the team decided to focus on a target market segment that included mature families, empty nesters, and retirees, as the team surmised that these segments would be more financially stable and would present a lower price sensitivity. At the onset of the simulation, Allround was the only offering with an analgesic, antihistamine, cough suppressant, decongestant, and alcohol in its formula. Recognizing this difference, and the negative sentiment regarding alcohol and multi-symptom treatments, the team chose to pursue a strategy that would highlight the benefits of the multiple ingredients and mitigate the views regarding undesirable side effects. Initial research indicated that grocery stores, chain drug stores, and wholesale markets were the most lucrative channels. To capitalize on the strength of sales in these channels, the team developed its strategy to increase sales in these venues by offering higher volum ...

1. Running head: PharmaSim Final Report 1
PHARMASIM FINAL REPORT 2
PharmaSim Final Report
Group E
Lynsie Cahela
Lorenzo Gibbs
Alan J. Hasfjord
Summar Hudson
Saint Leo University
MKT 565: Marketing
Professor Dr. Stephen L. Baglione, Ph.D.
October 8, 2017
Table of Contents
Introduction 3
Pricing 5
Advertising 6
Promotions 9
Sales Force Allocation 11
Segmentation 12
Line Extensions 13
Cumulative Net Income and Stock Prices through Each Period
13
Conclusion 14
Appendix 1: Initial Strategy Report 15
Appendix 2: Average Retail Price in Relation to Net Income 21
Appendix 3: Average Discount and its Effects on Unit Sales 22

2. Appendix 4: Sales Force Allocations and its Effects on Unit
Sales Per Channel 23
Appendix 5: Market Share Based on Retail Sales 25
Appendix 6: Promotional Expenditure and its Effects on Brand
Awareness 26
Appendix 7: Advertising Expenditures and its Effects on Unit
Sales 27
PharmaSim Final Report
Introduction
In the OTC pharmaceutical market, Allstar brand offers the 4-
hour liquid cold medicine, Allround. Initial research suggested
the potential of marketing to two distinct groups. The first
group is customers in the cold & flu market. As Allround
already had a substantial following in this market with 22.6% of
the market share and brand recognition at 74.1%, it seemed
logical to continue pursuing this market. Conversely, the
customer base in the allergy market was negligible, accounting
for only 2.3% of the brand’s sales. Given this data, the team
chose to aggressively pursue the cold & flu market and accept
residual sales in the allergy market, if any, without focused
targeting in the allergy market.
Allround’s price point began at $5.29, which placed it firmly in
the upper region of the price spectrum. Given the high brand
recognition and solid market standing, however, the team did
not feel the higher prices would have a significant impact on the
bottom line and chose to pursue a pull marketing strategy that
would showcase Allround as a premium brand and develop
customer loyalty and repeat purchases. In addition, the team
decided to focus on a target market segment that included
mature families, empty nesters, and retirees, as the team
surmised that these segments would be more financially stable
and would present a lower price sensitivity.
At the onset of the simulation, Allround was the only offering
with an analgesic, antihistamine, cough suppressant,
decongestant, and alcohol in its formula. Recognizing this

3. difference, and the negative sentiment regarding alcohol and
multi-symptom treatments, the team chose to pursue a strategy
that would highlight the benefits of the multiple ingredients and
mitigate the views regarding undesirable side effects.
Initial research indicated that grocery stores, chain drug stores,
and wholesale markets were the most lucrative channels. To
capitalize on the strength of sales in these channels, the team
developed its strategy to increase sales in these venues by
offering higher volume discounts and allowances to these
channels and reduce the discounts and allowances to those
channels that were less profitable.
From the beginning of the simulation, Team E determined that it
must consider three key factors to ensure the success of the
brand. The first was a comprehensive and continuous situational
analysis. The team felt that an understanding of the company’s
competition, market, and, most importantly, its customers were
crucial to the brand's growth. Secondly, the team determined
that a continuous market strategy analysis was imperative.
Understanding changes in the OTC market and its customer's
needs must remain at the forefront of the decision making
process. Finally, the team decided that a proper market mix of
product, place, price, and promotion was vital to Allround’s
success. The group, therefore, asserted that a thorough
understanding of the fluctuations in the market, and the results
of the team’s reactions to those variations, was crucial to the
overall success of the Allstar brand.
To measure the effectiveness of the initial strategy, the team
decided on several performance objectives. The first objective
was to increase sales to the company’s top three channels by
growing sales force support. The second was to establish strong
customer loyalty. The primary method chosen to achieve
loyalty was through a customer outreach via a dedicated
interactive web portal that would allow direct contact to and
from the customer. Long-term objectives included increasing
the gross margin from its initial point of $172.3 million to $240
million over 8 years, grow net income from $67.2 million to

4. $135 million in the same period, and, finally, increase Allstar’s
stock price from $38.35 to $70.13 during the course of the
simulation.
Pricing
As the team posited that Allround’s initial standing in the
market would be sufficient to allow a premium pricing strategy,
the team decided on an aggressive pricing strategy was believed
would maximize profits. An initial price increase of just under
6%, from $5.29 to $5.59 seemed to confirm the team's original
estimations, as stock price rose from $38.35 per share to $49.92
per share and net income rose by $15 million. The two
subsequent periods, however, revealed that, while not
necessarily incorrect, the team was overly aggressive in its
attempts to maximize profits through price increases. In
determining MSRP for successive periods, the team focused
more on the price sensitivity for the target market segments, as
well as the price elasticity for the previous two years. Using the
data derived from price and product sensitivity and elasticity,
the team was able to make more calculated pricing decisions
that contributed to more positive returns in both stock price and
net income. Though not to the degree expected or desired, the
decisions made in later periods showed success, as
demonstrated in the brand's average retail prices in relation to
net income (Appendix 1). In addition, the team determined in
later periods to ease its focus on pricing Allround as a premium
brand and reduced the prices to fall more in line with the OTC
market and customer expectations.
Team E maintained its pricing strategies from Allround for
Allround+, and the company’s follow-up offering, the allergy
medication Allright. Though both new products did see negative
contributions for their first period, primarily due to a heavy
focus on advertising, the team had anticipated the initial losses
and continued pursuing both brands. In both cases, period two
results rose and each product terminated with positive net
contributions to the Allstar brand. Volume discounts provided
each tier of channels an adjustment to each period’s MSRP as

5. an incentive to buy in larger volumes. If a retailer desired a
higher discount, the retailer would need to increase their
purchase quantity to reach the next higher level of discount
provided. The normal range of volume discounts is 15-40% off
the MSRP per period. The retail channels were divided by
volumes purchased: <250, <2500, 2500+, and
Indirect/Wholesale.
The team based the OCM group’s volume discounts upon
several factors. One factor was whichever channel provided the
highest dollar profit from unit sales would receive a better
discount volume in the next period; keeping in mind our
estimated unit cost and MSRP for that period. For period 3, the
team raised MSRP significantly to $6.99, but lowered volume
discounts which resulted in a drop in unit sales from period 2 of
115.5 unit sales to 61.2 unit sales for period 3. To offset the
significant MSRP increase, the group should have increased
volume discounts. This error in volume discounts also caused
trade rating to fall from 6.9 to 6.5.
Volume discounts were utilized in conjunction with promotional
allowances to maximize Allstar’s profits and gain retailer
support in the sales of Allstar’s various brands. Volume
discounts off MSRP and promotional allowances were directly
tied to Allstar’s brand's trade rating each period. The highest
trade rating that Allstar received was in Period 8 when trade
ratings were 7.7 for Allround and Allround+ and 7.4 for
Allright.
Advertising
The team centered the advertising budget on the product life
cycle of each brand of Allstar which would allow for
appropriate allocation of funds in regards to existing lines and
the addition of new lines. The budget also took into
consideration each period’s number of sales force, promotion
decisions, level of customer brand awareness while trying to
align the overall advertising budget with its competitors
Initially, because the Allround brand had the highest consumer
brand awareness in the market at 74.1%, outspending the

6. competition did not seem to be a critical component. Our chosen
competitor brand Besthelp had a decreased brand awareness of
56.6%. The marketing strategy was to decrease, maintain, or
increase the funds allocated to the advertising budget for the
established Allround brand during its product life cycle which
would allow Allround to remain competitive. The marketing
strategy would also adjust advertising budget allocation in
regards to the addition of new lines.
The ad agency initially chosen by the OCM group was Brewster,
Maxwell, and Wheeler (BMW). BMW, a high-quality ad agency
charges a 15 percent commission fee for media placements. In
Period 1, the team changed the ad agency from BMW to Sully
and Rogers who had a lower percent commission of 10%. The
team deemed the change to a less expensive ad agency
reasonable given the high brand awareness of Allround at
74.1%. Because there was a significant distance between
Allround and its nearest competitor, Besthelp (56.6%), the
decision was made to decrease advertising expenditures and
reallocate funding to other expenses.
The ad agency was changed back to BMW in Period 3 to
increase the quality of ads to bring sales revenue back up due to
the of $17.8 million loss in sales revenue. Brand awareness was
not taken into consideration in the change even though levels
had increased from 77.3% in Period 2 to 80.9%.
During Period 1, Allround’s media expenditure was $20 million
while our competitor, Besthelp was only spending $12.7
million. After buying the advertising estimates for all
competitors in Period 3, Allround compared to Besthelp, our
nearest competitor, had both chosen BMW as the ad agency
with Allround’s media expenditure being only $2.5 million
higher than Besthelp.
The team began with Sully and Rogers (S&R) as the ad agency
because they were very well-established and the 10% fee was
reasonable. Our comparison company at the time was Besthelp
due to the close similarities. Starting off with an advertising
budget, we felt that it was necessary to establish our company

7. as one of the leading brands, and the way to that goal was
through advertising. We paid close attention to the website
comments and consumer complaints and responded by changing
the advertised product benefits from 45% to 50%, due to the
team's desire to promote the fact that Allround covers all
symptoms. We exercised our methods by implementing an
interactive blog with AdWords, which provided consumers with
a convenient way to search using keywords. The interactive
blog allowed the team to monitor what Allstar's competitors
were doing and what consumers desired. By the end of period
six, Allround continued to have the highest brand awareness in
the market, which the team felt was a direct reflection of the
continuous focus on advertising. Once a brand is established,
the manufacturer can have a lower advertising budget which is
measured as a ratio to sales.
In Period 3, we made the conscious decision to switch ad
companies from S&R to BMW, which was a tactical response to
the 4.1% decrease in revenue. The decision to go with a top-end
ad company increased the quality of Allstar brands
advertisements. The group also added singles, young families,
and mature families to the targeted segments. By shifting the
target group, it would increase retention ratio from 41.2% and
94%. As the simulation progressed, there was some hesitation
on the product lifecycle because Allround had such a high brand
awareness. However, in launching the new product, Allround +,
the team decided not to put such a significant focus on the
initial advertising budget. The team reduced the Allround
adverting to allow a reasonable advertising budget for Allround
+, as the team felt the brand would carry over to the new
product, and Allround was a mature offering. The group decided
to reformulate Allround in Period 4 and removed the alcohol to
compete with other brands that were producing children’s liquid
cold medicines. By reformulating, the company showed
consumers that it was listening to their desire for a healthier
product and was responsive to their needs.
During Period 6, Allstar introduced a new product, Allright, a

8. topical decongestant nasal spray. The team selectively targeted
young singles and empty nesters because of the positive utility.
The company diverted the necessary advertising funds from
Allround's budget. The Allround advertising budget closed out
at $7.5M million, with a continuous revenue flow. Allround+
saw a $2 million reduction to the advertising budget.
Promotions
The initial strategy for promotion was to funnel more funds
toward advertising and continue to push Allround's top position
in brand awareness while minimizing the number of product
trials. Additionally, the team increased sales force to maximize
proper shelf space and displays through improved channel
support. The group later assessed, however, that its attention to
promotions, such as coupons, trial sizes, and awareness, was not
as high as it should have been. The team made adjustments later
during the simulation, resulting in a resurgence of sales. One of
the major mistakes the team recognized was that it did not
invest as much as it should have in promotions for new
products, like Allround + and Allright. The members of the
group surmise that they would have experienced a significant
difference in sales had that recognition, and its corresponding
corrective actions, come earlier in the simulation. Since many
consumers make their decision on which product to buy while
they are physically in the store, the team maintained spending in
POP displays. Although Allround was a mature product, initial
sales suffered as a result of not driving harder toward the
coupons and trial sizes for Allround +. Allround began with a
coupon budget of $4.2 million and increased through Period 2,
resulting in a steady incline of sales and awareness. After
Period 3, the team reduced the budget for coupons and the trial
sizes, in part due to over-confidence position resulting from
previous growths in sales. The company introduced Allround+
with a coupon budget of $2 million for trial sizes and $1.5
million for coupons. Though hopes were high, the brand did not
experience the encouraging launch expected. By the end of the
simulation, the team had reduced Allround + to a budget of $0

9. for trial sizes and $1 (0.50) for coupons. Allround closed out
with $0 for trial sizes and $2 million for coupons. Lastly,
Allright began in Period 5 with a budget of $2 million and
maintained that budget through the end of the simulation.
The team provided promotional allowances to our retailers as an
added discount incentive to display and advertise our brands
within their stores. Allstar offered Promotional Trade
Allowances to Independent Drugstores, Chain drugstores,
Grocery Stores, Convenience Stores, Mass Merchandisers, and
Wholesalers. Allstar’s promotional allowance averaged about
24.4% of the overall budget for all three lines.
Allround’s promotional allowance was compared to our
competitor Besthelp’s promotional allowance as a benchmark.
Allround’s average promotional allowance was 17.5% which
was 2% higher than Besthelp’s promotional allowance. The
team also noted that Besthelp kept their promotional allowance
at 15.8 from Period 1 and never changed it from period to
period. Keeping the trade allowance steady may have been
advantageous, as it did not affect the retailers/channels price
sensitivity.
Trade promotions also provided retailers with additional
funding/budget for cooperative advertising to share in the
overall cost of advertising within the retailer’s store. The Co-op
Advertising side of the simulation for Allround, Allround +, and
Allright presented a somewhat complicated challenge. During
Period 1 the group decided to change allowances/discounts for
chain drug stores, grocery stores, mass merchandisers and
wholesalers from 17% to 20% in response to requests for higher
allowances and discounts in return for adequate shelf space. The
return on investment for the listed changes was significant. As
mentioned previously, the group concluded that its lack of
attention on the trial size and coupon budgets was instrumental
in the decrease in sales, stocks, and revenue.
Sales Force Allocation
Group E began the simulation with a sales force of 152, with
grocery stores leading with 43. As the simulation progressed,

10. the team aggressively increased its sales force throughout the
simulation. In Period 1 alone, direct sales force for independent
drugstores showed an increase to 15 in exchange for product
shelf placement and to remain competitive with B&B and
CureAll. The group increased direct sales force for mass
merchandisers to 20 in response to a projected 9% increase in
sales through those channels. The team also raised the indirect
sales force, increasing the detailers from 8 to 16 to maintain
sales competitiveness with B&B, which employed 24. The
increase in sales force was a significant factor in raising
revenue from $130.3 million to $152.5 million. The group made
even more substantial changes for Allround and Allround+ in
period 6, after increasing chain drugstore sales force from 47 to
60, indirect wholesaler support to 21, merchandisers to 19, and
detailers to 25. By Period 6's end, the sales force totaled 360.
One of the driving forces of this massive increase was the desire
to remain competitive with B&B. By the end of the simulation,
Allstar's sales force totaled 384, with salaries totaling $15.3
million, expenses of over $7 million, and training expenditures
of $1 million.
Segmentation
For all products in the simulation, decisions centered on the
potential segment size, symptoms, differentiation, and the
possibility of driving effective messaging to each. The team
experienced a massive decline in revenue, sales, and stocks
during period 3, likely due to a misstep in which the group
increased the MSRP of Allround by 25%. The resulting negative
impact on revenue and stock prices caused the team to return to
baseline to figure out what went wrong, and what could be done
to recover the ground lost. Despite the near catastrophic
decrease in sales, stocks, and revenue, The team stayed the
course and continued to target the mature families, young and
single families that were in search of a solution for colds. The
emphasis, from the beginning, was to focus on the desire of the
consumers and maintaining our brand awareness, while at the

11. same time, increasing revenue and sales, and retain lifelong
customers. In period 3, the group launched Allround+ with a
firm emphasis on answering the consumer need for longer
lasting cold and cough remedy. This offering targeted only
young families, single families, and mature families, which was
in line with the team's initial strategy focus. Additionally, the
group decided to target advertising for Allround toward empty
nesters and young singles, with a more direct focus on colds and
decongestion. Following a very detailed look at the conjoint
analysis and the decision summary from Allround +, the team
decided on an aggressive expansion strategy with the launch of
the new product. Allstar introduced Allright, a targeted allergy
medication, at $4.69, which was significantly lower than the
brand's other products, to undercut competition and establish a
strong foothold with consumers, a strategy point the team felt it
missed during the launch of Allround+.
Line Extensions
In Period 4, Allstar introduced a new line in response to the
ever-growing demand for a cold and cough capsule. Allround+,
a 12-hour multi-symptom capsule containing an analgesic,
antihistamine, and decongestant, hit the shelves and initially
appealed to young singles and empty nesters in the introduction
phase of its life cycle. During the growth stage, it saw increased
demand from retirees, and Besthelp became its biggest
competitor.
In Period 6, Allstar introduced its third line in response to nasal
congestion, which held a top position on the list of symptoms
being reported by consumers. Allright, a nasal spray with a
topical decongestant, experienced a slow start through its
introduction phase. However, it increased in popularity as it
entered its growth stage as evidenced by its increase in sales.
Young singles and empty nesters appeared to be the top
segments purchasing this new product, and it became a top
competitor with Effective.
Cumulative Net Income and Stock Prices through Each Period

12. Allstar had a cumulative net income of $732.2 million and a
final stock price of $66.75. Throughout the simulation, the
stock price seemed to vary the most and was a good indicator of
how its customers perceived marketing decisions. In Period 1,
stock prices rose from $38.35 to $ 49.92, indicating positive
perception of the increased sales force, volume discounts, and
allowances. However, stock price exhibited a slight decrease to
$41.82 in Period 2, likely due to the 5.5% increase in MSRP and
a small reduction of allowances. By Period 3, Allstar's stock
price plummeted to $17.65, indicating a marked adverse
reaction to the 25% increase in MSRP, decrease in volume
discounts, and decrease in some of the allocated sales force.
Allstar saw a slight increase in stock price during Period 4 to
$18.58, which was most likely due to the slight decrease in
MSRP. However, an increase in volume discounts, as well as a
reduction in MSRP was met with positive results in Period 5
when stock prices rose to $34.45. Continued price reductions in
Periods 6 and 7, as well as increases in sales force and
promotions, saw positive results with stock prices, which rose
to $42.85 and $60.31 respectively. In Period 8, the final stock
price rose to $66.75.
Conclusion
As with any project, strengths and weaknesses become evident
throughout the process. Team E experienced a rocky start at the
beginning of the simulation, likely due to the misunderstanding
of the importance or meaning of some of the data contained
within the purchased reports. However, as the simulation
progressed, the team began to interpret the data more accurately
and efficiently, which allowed a more decisive and deliberate
approach to the marketing strategy. The improvements in
strategy development included monitoring channel sales and
customer satisfaction, along with analyzing the statistical
probability of how each decision would affect the overall
outcome of each period.
The most valuable lesson that Team E took away from the
PharmaSim project is that the market is always changing and

13. evolving. What works well one period might not necessarily be
met with positive results in the next. All in all, to become a
successful marketing manager, one must be able to adapt and
change with the market.
Appendix 1: Initial Strategy Report
Initial Strategy Report
Business Definition
In the OTC pharmaceutical market, Allstar Brands Corporation
offers Allround, a 4-hour multi-symptom liquid cold medicine.
Research has shown two segmentation options: illness and
customer demographics. While the symptoms of allergies and
sicknesses are often very similar, Allround’s multi-symptom
approach has placed it firmly in the cold and flu category, with
little, if any, customer base in the allergy relief market. Given
its formulation, it seems reasonable to continue pursuing this
course, as opposed to trying to develop a following in allergy
relief. The top competitors in this product category are
Coughcure, with 54.3% of the market share, and End, with
45.7% of the market share. Cutting the market share of these
competitors in half will allow for Allstar to obtain 50% of the
market share in the cough product category. Although the cough
product category has only had a 3.2% growth, it represents an
untapped source of sales. Allstar should strongly consider a
strategy that focuses on converting customers of these brands to
Allround. Additionally, the introduction of a new brand, a
children's cough syrup that contains an alcohol-free cough
suppressant formulation only, will allow Allround to target a
new segment: young families. Introducing a children’s cough
liquid will allow Allstar Brands to expand its market towards
young families and will have a cough suppressant formulation
only. As parents of young children are likely to have concerns
regarding the side effects, alcohol will not be an ingredient in
the children’s line. To increase the attractiveness of the new
children’s cough syrup launch, Allround will incorporate no-dye

14. grape, cherry and bubble gum flavors that will provide options
for parents that are more likely to appeal to their children’s
individual preferences. Providing child-friendly options such as
flavored syrups will allow Allround to tap into a new market
base while expanding the brand. Given Allround's customer
loyalty and positive brand image, breaking into this new market
will allow Allround to cut their competitors' market share in
half.
Allround brand’s price point, $5.29, places it at the upper end
of the price spectrum. The next direct competitor in terms of
cost is Dryup, with an MSRP of $5.09, followed by Besthelp at
$4.89 and Extra at $4.49. Allround’s retention ratio, however,
was second at 46.3%, nearly 20% behind the top competitor,
Dryup, at 65.6%. Allround’s customer satisfaction rate,
however, beat Dryup by 3.9% at 58.3%, compared with Dryup at
54.4%. Maintaining visibility on customer satisfaction is
critical to Allstar Brands strategy, particularly with the
proposed new product launch. Purchasing the consumer
shopping habits report, therefore, will be a necessary
expenditure. Additionally, as the cost of retaining a customer is
much less than acquiring new customers, establishing a social
media platform with interactive communication capabilities will
reaffirm the value of our current product, provide helpful
recommendations on the use of our product, and increase the
momentum of our new product launch. An interactive website
will also aid in keeping the customer informed of the benefits of
the product. Maintaining open and responsive communication
with our consumers through social media will assist in customer
retention, and will help in securing and increasing consumer
loyalty. Increasing the brand’s customer base may require an
aggressive advertising campaign to highlight significant
benefits over Dryup, or, perhaps, a reduction in MSRP, though
the latter may be counterproductive in maintaining the brand’s
prestige.
Given Allround brand's high level of consumer awareness and
slightly higher price point, one logical approach to increase

15. sales and market share would be to initiate an advertising
campaign focused on mature families, empty-nesters, and
retirees for the current multi-symptom formula, and young
families for the up-and-coming formula geared for children.
Competitive Advantage
Allround has an established loyal consumer base with the
highest satisfaction rate in the market. Additionally, as a cold
OTC medication, the perceived effect is high, though the
perceived price is also considered high.
Allstar Brands has formulated the Allround brand with an
analgesic, antihistamine, decongestant, cough suppressant, and
a moderate dose of alcohol. Though this formulation sets it
apart as the only OTC offering that provides relief from nearly
all cold and flu symptoms, it is Allstar’s only offering in the
OTC cold remedy market. Dryup is the only other product to
offer analgesic properties, and also includes an antihistamine
and decongestant, but does not contain a cough suppressant or
expectorant. Extra is formulated strictly as a decongestant, and
Besthelp contains only an antihistamine and a decongestant.
While many have criticized the multi-symptom approach as a
potential for over-medicating, Allstar brand should pursue an
aggressive marketing campaign highlighting this difference as a
positive factor.
Performance Objectives
Allround brand already enjoys the highest consumer awareness
in the OTC cold remedy market. There is, however, room for
improvement. According to research, Allround brand does not
receive premium shelf placement in all channels, which has a
direct influence on brand-switching at point-of-purchase.
Allround brand should focus on the requirements of its channels
to secure better shelf placement. Larger channels, such as
grocery stores and chain drugstores, focus on turnover and
allowances when assigning product placement. To secure
premium placement, Allround should consider increasing the
allowances and discounts to these channels. Smaller,
independent stores are more concerned with sales support. To

16. meet this need, Allround should redistribute or increase the
sales force available to these channels. Furthermore, Allround
should consider the possibility of introducing samples of the
existing formulation.
Allstar Brand Corporation also has the opportunity to expand its
OTC cold remedy market by introducing a new product brand of
children’s cough liquid. Distributing the children’s formula to
physicians, pediatricians, walk-in clinics, and urgent care
centers would increase consumer exposure to the Allround
brand, and enhance the legitimacy of the offering. Implementing
these initiatives should increase point-of-purchase sales, and
grow the brand’s market share by 5%-10% in the first three
periods. Additionally, the Allround brand should see a $10
million-$15 million increase in revenue and a 10%-15%
increase in stock price.
Allround brand will meet the following short–term performance
objectives:
1. Increase and/or redistribute sales force from the current total
of 127 to accommodate various areas of growth, new product
line, and mass merchandisers.
2. Establish a website (www.Allstarmeds.com/Allround) with
interactive communication capabilities to maintain our loyal
customer base and provide a platform to inform current and new
customers of new products and offerings.
Allstar Brands Corporation will also meet the following long-
term objectives:
1. Increase the gross margin from 172.3 million (48.5%) to 240
million within the next eight years.
2. Increase net income from 67.2 million (18.9%) to $135
million within the next eight years.
3. Increase common stock price from $38.35 to a comparable or
superior price of the market leader, Ethik, which has a stock
price of $70.13, within the next six years.
4. Increase our capacity utilization percentage from 85.1% to
100%, which will allow Allstar Brand Corporation to increase
our production volume without incurring excessive overhead

17. costs associated with the purchase of new equipment or
property.
5. Introduce a children’s cough liquid, which will provide
Allstar the ability to develop a new market segment.
6. Achieve and maintain the highest customer satisfaction rate
at 58.3%. It is essential that Allstar maintain a strong brand
name and keep the consumer in the forefront in decisions about
pricing, value, and new product development.
Key Success Factors
To achieve the listed goals, Allstar Brands Corporation must
maintain focus on three strategic elements:
1. Situation analysis. 5Cs (context, competitors, customers,
collaborators, and company). Allstar Brands must keep its
customers’ needs at the forefront of all decision making.
2. Market strategy analysis: Allstar Brands must remain current
with fluctuations in the overall OTC market.
3. Market mix: (product, place, price, promotion). Allstar must
maintain an appropriate state within fluctuating economic
conditions inflation rates, increase in sales in a particular
channel.
Allstar must maintain its position as first in its market,
particularly in brand recognition and consumer awareness.
While the price point is slightly higher than the competition,
research indicates that this will not negatively impact sales.
Further, the higher price aids in creating and maintaining the
brand’s prestige. Developing an advertising campaign targeted
at a more affluent and financially stable market will also further
the brand’s image.
As the Allround brand has the highest consumer awareness in
the market, outspending the competition is not a critical
requirement. That said, however, Allstar should not decrease the
pressure on the competition. By maintaining or slightly
increasing marketing spending, Allstar Brands will force the
competition to do the same.
Although the convenience of a capsule product should not
negatively affect sales in the older demographic, the added

18. convenience of a capsule will likely have a positive effect on
the secondary and tertiary markets of the younger segment.
Allstar Brands Corporation should, therefore, strongly consider
investing in product development along that line in the future.
In conclusion, Allstar executives have recognized the
importance of increasing a focus on marketing in order to
implement new ideas that would promote, support, and drive the
success of the company's short-term and long-term goals. The
marketing team will ensure that all channels of the company
will receive equal promotion and attention. This will be the
deciding factor for this marketing strategy success. The
marketing team looks forward to launching the new childrens'
brand and ensuring that consumers are aware that we are
determined in addressing their entire family needs for colds and
allergy relief.
Appendix 2: Average Retail Price in Relation to Net Income
Appendix 3: Average Discount and its Effects on Unit Sales
Appendix 4: Sales Force Allocations and its Effects on Unit
Sales Per Channel

19. Appendix 5: Market Share Based on Retail Sales
Appendix 6: Promotional Expenditure and its Effects on Brand
Awareness
Appendix 7: Advertising Expenditures and its Effects on Unit
Sales
Avg Discount Compared w/ Unit Sales
Avg Discount PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8
0.34200000000000008 0.35500000000000009
0.35500000000000009 0.255 0.26300000000000001
0.3050000000000001 0.3050000000000001
0.33100000000000013 0.33100000000000013 Unit
Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1
127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Indep Drugstores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7
PD 8 15 18 10 22 22 22 22 22 22 Unit
Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1
127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Chain Drugstores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7
PD 8 28 33 45 55 47 60 70 75 75 Unit
Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1

20. 127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Grocery Stores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 43
58 48 100 125 125 125 125 125 Unit Sales
PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1
127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Convenience Stores PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7
PD 8 3 5 5 7 7 7 3 3 3 Unit
Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1
127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Mass Merch PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 20
14 24 30 30 30 35 35 35 Unit Sales
PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1
127.2 115.5 61.2 69.3 102.1 121.3 148.4
173.4
Sales Force compared w/ Unit Sales
Indirect PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 43 53
70 70 53 65 105 124 124 Unit Sales PD 0
PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 102.1 127.2
115.5 61.2 69.3 102.1 121.3 148.4 173.4
Market Share by Retail Sales
Market Share PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8
0.23800000000000004 0.21800000000000005 0.221
0.15400000000000005 0.15300000000000005
0.17200000000000001 0.18600000000000005
0.21000000000000005 0.22800000000000001
Allround: Promo Exp. w/ Brand Awareness
Allround PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 7
8.8000000000000007 10.5 7.5 5 4 5 6 6
Allround Awareness PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6

21. PD 7 PD 8 0.74100000000000021 0.77300000000000124
0.80900000000000005 0.83800000000000019
0.83000000000000018 0.81900000000000017
0.81500000000000017 0.81 0.80300000000000005
Allround+: Promo Exp. w/ Brand Awareness
Allound+ Exp PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 8.5 6.5 4.8
3.8 5 5 Allround+ Awareness PD 3 PD 4 PD 5
PD 6 PD 7 PD 8 0.4880000000000001
0.52800000000000002 0.55500000000000005
0.57600000000000118 0.58599999999999997
Allright: Promo Exp. w/ Brand Awareness
Allright Promo Exp. PD 6 PD 7 PD 8 6 6 6 Allright
Awareness PD 6 PD 7 PD 8 9.8000000000000143E-2
0.18000000000000005 0.24200000000000005
Allround: Ad Exp w/ Unit Sales
Advertsing Exp. PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7
PD 8 20 25 25 12 9.5 7.5 7.5 7.5 7.5
Allround Unit Sales PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6
PD 7 PD 8 102.1 127.2 115.5 61.2 62.7 86.5 97
109.3 123.8
Allround+: Ad Exp w/ Unit Sales
Advertsing Exp. PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 10.8 8.9 10
8 8 8 Allround+ Unit Sales PD 3 PD 4 PD 5
PD 6 PD 7 PD 8 6.7 15.6 20.8 29.5 33.6
Allright: Ad Exp w/ Unit Sales
Advertsing Exp. PD 5 PD 6 PD 7 PD 8 9 9 9 9
Allright Unit Sales PD 5 PD 6 PD 7 PD 8 3.5
9.7000000000000011 16
Allround: Avg Retail Price Compared w/ Net Income
Avg Retail Price PD 0 PD 1 PD 2 PD 3 PD 4 PD 5 PD 6 PD 7
PD 8 4.58 4.3199999999999976 4.6099999999999977
6.78 6.53 5.41 5.21 5.05 4.83 Net Income PD 0 PD 1
PD 2 PD 3 PD 4 PD 5 PD 6 PD 7 PD 8 67.2 82.2 75.3
65.400000000000006 60.4 88 89.7 109 95
Allround+: Avg Retail Price Compared w/ Net Income
Avg Retail Price PD 4 PD 5 PD 6 PD 7 PD 8 5.03

22. 5.0199999999999996 5.01 4.67 4.7699999999999987
Net Income PD 4 PD 5 PD 6 PD 7 PD 8 60.4 88 89.7
109 95
Allright: Avg Retail Price Compared w/ Net Income
Avg Retail Price PD 6 PD 7 PD 8 4.18 4.3099999999999996
4.4300000000000024 Net Income PD 6 PD 7 PD 8
89.7 109 95
Period 1 Decisions:
Sales Force Indirect Sales: 30
Advertising decrease to: 17 mil to better align with competitors
Digital Marketing increase to 3.6
Special: Redefine territories based on workload so that Steve
can keep his existing relationships and the other employee has a
level playing field
Overall, getting a feel for how the system works and what
decisions will impact our results. Results for this period where
comparative to other teams. Stock price increase from 38.35 to
51.72.
Period 2 Decisions:
Special Decision: Sell the batch for a $50,000 loss. This is the
lowest risk option. We don’t want to lose our relationships with
our customers because of expired medications which could be a
more detrimental loss in the long run.
Brand reformulation option opened in period 2. We decided to
drop alcohol ingredient hoping to expand our customer base and
market to children. Alcohol causes the drowsiness. By removing
it, consumers can take both day and night and it’s safe for
children. We can also use this as a marketing opportunity and
price increase opportunity
Purchased salesforce report for $20,000 due to retailers
complaining of poor salesforce support. The report showed us
that our competitors have a similar distribution of direct to
indirect sales force but have a much higher volume than we do.

23. We decided to wait until period 3 to make any further changes
to the salesforce as we anticipate a change in our formula might
require more salesforce
Increase price by $.50 to $5.79. We made a small change,
hoping that this will pair with our decision to market the brand
as safe for children and alcohol free. Something parents want to
spend a few extra cents on.
Created tag line for new brand formulation: Better Choices to
Keep You Moving
Created Packaging with our logo and tagline
Stock price increased from 51.72 to 53.05
Period 3 Decisions:
Stock price increased from 53.05 to 55.03
Period 4 Decisions:
Special decision: Decided to conduct clinical studies to show
product effect which will allow indirect sales reps to quote a
clinically researched case based on Allround allowing
physicians and medical professionals to reliably refer their
patients to our brand.
Added Line Extension and chose 12 hr multi capsule. We
decided on the multi capsule because it was convenient and
could target the working adult who needed to make it through
the day. Did not choose the childrens cold liquid because we re-
branded our product two years ago to appeal to families.
Set price of new line at 5.99. We wanted to make it over 6 but
thought it would be more appealing at 5.99.
Discounts:
Chose to provide higher discount for wholesale and large
quantity sales
Promotional budget and allocation:
Made these similar to allround but decided on higher busgets

24. for the new line.
Advertising:
Decreased our advertising budget for allround to 10 mil and
made allround+ 10 mil. Thought being that the allround brand is
established and now that we have two products, they can be
advertised together while still advertising the company overall.
Chose to put more of the budget into benefits and primary since
it is a new line.
Set digital marketing to 5 million and decreased allround to 2
million
Increased direct salesforce within the chain drug stores by 4 due
to complaints from our retailers about lack of sales support. Our
sales report two years ago indicated that our competitors have a
larger salesforce than we do and given, the recurring feedback,
we needed to make a change.