Pharmasim Decisions

This week was decisions for Pharmasim 3-7 and it was a crucial decision making process for our group because we introduced a new product, Allround+.  This line extension was a 12-hr multi-capsule, children's liquid cold medicine. The children's liquid cold medicine market was chosen because it was attractive with only one other brand competitor. Also, for Allround in period 3, inflation was forecasted to be 3.0%, so prices increased 3.0% which would brought Allround to $5.76.

Ad messaging was changed to 30%, Benefits to 20% and Comparison was decreased to 30% from 40%.  Additionally, the "help you rest" message was changed to "minimize side effects". We thought that it was a more positive message to convey to consumers. With these decisions customer satisfaction seemed to approve of removing alcohol last period, as it is viewed as a side effect, which helped correlate to our new message. However, nothing was changed in the formula this period. Co-Op Advertising was increased from $1.4M to $2.0M just for more support in advertising of Allround and the sales force remained the same. This was a very successful period for us. Revenue was +14%, Gross Margin +13%, Net Income +30%, and the Stock Price increased to $44.46.

For period we increased the price of Allround, based on inflation forecast to $5.85. We then sacrificed some our profit margins for Allround+ and made the price $5.30. This was to gain ground over our competitor, Coldcure, in the market whose price ultimately dropped with ours to $5.29.  At the same time we didn’t alter the sales force, which left us with $36.6M after the report purchases.  So, there was $11.0M for Allround and $25.6M for Allround+, according to the plan.  Then, this was split between ad and promotion.  Then we decided to cut promo spending for Allround in half and then allocate the rest to ads.  This meant that Allround+ was able to have a somewhat higher promotional allowance. Thus, using our  $47.9M budget we allocated $8M to Allround and $18.8M to Allround+, which aligns with our marketing plan. Allround+ now has 30% primary, 20% benefits, 40% compare w/ Coldcure, and 10% reminder. This allowed for Revenue to increase 4%, Gross Margin +4%, Net Income -12%, and the Stock Price dropped to $44.14. Overall, our product is priced well but there is a desire for more coupons. Our brand perception has started to decrease.

For period five for our special decision we chose to do clinical studies to provide evidence of product effectiveness for $4M as well as train the detailers on side effects, drug interactions, and proper usage for $1M. We also needed to reduce budget by $2.5M so we left sales force and promotions the same and ad spend was reduced by $1M for Allround and $1.5M for Allround+. Since inflation was forecasted at -.5%, the price of Allround was reduced. However, we decided to keep the price of Allround+ the same so that we can start to “increase” prices and grow our product. So far these were our most successful decisions as well as our most successful period. Revenue is +4%, Gross Margin +4%, Net Income +5%, and stock price rose to $46.35.

For period 6 our special decision was in regards to Allstar being pitched new advertising vehicles. We decided to place our product in a movie expected to be popular with young adults for $100K as well as run an ad contest to have customers come up with a clever ad run on the web for $1M. We also decided not to start another line extension. The new product Allright did not align with our marketing plan because we did not discuss the allergy market or a nasal spray. At the same time, inflation was forecasted at +2% so we decided to increase the price of Allround to $5.94 as well as raise the price of Allround+ to $5.50. Lastly, lack of consumer promotion for Allround was putting us at a disadvantage and we were running over capacity at the same time. Therefore, some of Allround+'s ad spending was shifted to Allround promotion. Also, primary spending for Allround was increased again to maintain awareness.  At the same time, Allround was given more promotional allowances, since we were losing some shelf space. We these decisions our figures suffered. Revenue was down -3%, Gross Margin -4%, Net Income -9%, and the Stock Price dropped to $41.68. It was said that there were some mixed comments about Allround+ via social media and that our special decision for marketing appealed to a wide variety of groups, but a more focused approach may have been more effective. Prices dropped 1.3% compared to inflation rising 2.1%. Overall, we had our ups and downs this were and we are not in a favorable position going into period seven but there is also a lot of decisions still to be made and we are still trying to grow our lines in their respective markets.

Marketing Plan Strategy

So this week the strategy of my groups marketing plan was to research different markets to see which are the most penetrable. In our marketing goals there is an emphasis on exploring new markets. I think that it is important to innovate and broaden our company and marketing strategy in order to stay ahead of competition as well as keep our products fresh.

First we looked at the market attractiveness matrix to determine which markets were the most attractive to enter. The cold market, which we already have success in, has the most competitive advantage as well as a highly attractive market. With factors such as a large market size of 329.8 million and a market penetration percentage of 67%, we thought that it would be a good market to enter a new product.

The cough market was also looked at more closely because it was somewhat attractive with a market penetration of 62.9%, low price rivalry, only 2 barriers for entry and only one substitute.

Lastly, we chose children’s cold for all households because of the 675 score on the rubric. Even though there was a small market size, the growth rate is 74.6%. There is also no price rivalry and only one barrier for entry. At the same time the customer familiarity is almost 90%.

The whole point of entering one of these target markets would be to expand Allstar to generate more profit. However, it is also important that we have the same success that we attained with Allround as well as maintain effectiveness. This all comes down to how well we market our product. This may be by coupons or reminders but it is crucial to show the customer the value in our product and why we are better than all competitors.

Evaluations - Week 7

So this week in lecture we talked about metrics to evaluate each team in Pharmasim. The five that I thought to be most important are:

1. Customer Satisfaction: We are always drilling in Marketing, the fact that the customer is the most important aspect. Their needs, desires, happiness etc.. comes first because ultimately they will be the ones buying your product(s).
2. Brand Awareness: I think that this proves how well you marketed your product. If it is high then you were able to spread the word and advertise about what you have to offer as well as help to gain more consumers.
3. Market Share: This is a great measure of competition. It will be able to show who dominates which market and by how much.
4. Gross Margin: This margin shows the percent total of sales that a company retains after cost of goods sold is retracted. This is important to see how much is actually being retained by the company which will only add to the success of the business.
5. Units sold: In the end, its all about how much you are selling. High sales=high profits and is a get measure of how well your business is doing. It is a very important factor in other margins as well.

I really wanted to put Brands Perception in here but couldn't get myself to put it on the list. It is a close #5 because I think that your image in the market is very important. At the same time, certain advantages from this measure can be seen in other aspects.

Simulation Incidents - Week 6

This week was tough for me with the little Internet access that I had but my group members were great. So going into period one there was the incident with social media. We had to choose between a website with interactive blog or Facebook and Twitter as well as deciding whether to allocate funds to Google Adwords. Personally, I know that I skip over the advertisements on Facebook and Twitter. Even though the apps are extremely popular, most are on them for their own social networking. It was decided that we would have a full website for our product in order to convey all of the necessary information about it. The safety of consumers is a priority and making sure they know all of the information about the product rather than just seeing a passerby ad is most important. Also, with that website was an interactive blog so that we can constantly update the consumer.

Now going into period two there was an incident with quality assurance. So we could have spent money ($100,000) to dispose of an expiring batch of product or tried to push the product into the market and tried to quickly sell. In this case, the product, if sold, would be less effective due to its nearing expiration and could have hurt the Allround brand image. Therefore, it was decided that we were dispose of the product. Even at the extra cost, in the long run it was the best decision for the company.

This second decision reminded me of something discussed in class, should Blackberry stop pouring its money into its product when it cannot compete with Apple. I just think that Blackberry needs to innovate and find their niche. It is clear with other product such as the Android, Samsung Galaxy and even Nokia have been displaying features in their smart devices that are comparable or even better than features of an iPhone. However, like someone said in class, its all about interconnectibility. Its not a secret and can be seen everywhere you go that the iPhone is dominant in the market. There was a time when a lot of people with Blackberrys had BBM and then Apple took over with imessage. I want to be able to feel like I fit in, when it comes to communicating. I can still remember when all five of my roommates in college had an iPhone and I had one of those phones with no internet. I would get twenty random text messages but with the iPhone I wouldn’t have to leave the screen I was on. 

Overall, we had some ups and downs in the first few decisions of the simulation. At first we thought that pouring some more money into the detailers would help us with connecting to more doctors. However, it caused us to lose market share meaning that in order to gain more support for the product, sending promoters out was not the way to go.  Therefore, to address the health concerns that came along with our product, we dropped the alcohol contained in it. By this time we were still over budget so it was decided to drop the overall advertising budget, get rid of trials, reduce the amount allocated to coupons, and drop the number of mass merchandisers from the sales force. At the same time, the volume discounts for <250 and <2500 were lowered, but we took a 1% increase to both 2500+ and wholesale. This allowed us to be under budget as well as raise our revenue, gross margin, and net income.