1. Kelly E. Smith Lauren A. Ruiz Leah C. Mcmenimen Nathan C. Hanson
PharmaSim Final Presentation FALL 2014, MKTG  Abendroth, Lisa J.  P-Sim 4 Team   Due Date: 12/07/2014
Kelly E. Smith
Lauren A. Ruiz
Leah C. Mcmenimen
Nathan C. Hanson

2. Objective /Agenda Objective
Share the knowledge, output, experience, and lessons learned from P-Sim 4 Team’s last 8 weeks
Agenda
Goals and Objectives of the simulation
Analysis and Strategies
Allroun
Allround +
Allright
Advice to the Replacement
Key Take-Away’s
Summary
Questions

3. OTC Goals and Objectives
Strategic Objectives
Grow Share of Manufacturer Dollar Sales: CAGR ≥ 5% annually (or ≥ 35.2%)
Grow Net Income: Cumulative Average Growth Rate (CAGR) ≥ 15% annually
Meet or Exceed Annual Marketing ROI ≥ 20% (ΔMarketing Expense/ΔNet Income)
Increase Stock Price: CAGR ≥ 20% (or ≥ $165/share)
Guiding Principles
Maintain a customer-centric focus with regard to all decisions
Never sacrifice long-term success for short-term gains
Build and maintain win-win relationships with all partners within the supply chain
Be transparent – never deploy manipulative or deceptive marketing practices

4. S.W.O.T. Analysis Strengths: Weaknesses: Opportunities: Threats:
Allround is the market leader in the cold remedy market
Allround has the highest brand awareness (74.1%); brand trials (47.1%); most frequently purchased (21.8%); and the 2nd highest conversion ratio (63.6%)
Allround has the highest product satisfaction (58.3%)
Weaknesses:
Allstar’s current product offering only focuses on the cold category – which only represents 59% of the Cold and Allergy remedy market
Allround has a low customer retention rate compared to some competitors
Allstar has a relatively small sales force to promote its product
Opportunities:
Allstar has the ability to expand the breadth and depth of its product line
Allstar can improve shelf space, trade rating, and its return on marketing expense
Threats:
Consumers perceive alcoholic content in OTC medication negatively
Introduction of new products by competitors can erode Allstar’s market share
Other OTC competitors are receiving higher doctor recommendations than Allround

5. Price Strategy Increase prices to at least match annual inflation rate
Monitor “Survey of Tradeoffs” to balance the price to symptom relief ratio
Maintain pricing leadership position relative to each product category
New product introductions will be priced at a leadership position. Subsequently, when awareness and perceived effectiveness increase, pricing will expand further
Discounts will be optimized relative to competitors

6. Product Strategy
Develop a competitive suite of cold and allergy medications that provide remedies to resolve basic symptoms, including aches and fever, nasal congestion, chest congestion, running nose, and cough
Continue to investment in R&D to improve composition of existing and new products that meet the varying needs relative to each of the consumer segments
Exploit opportunities to capture market share by comparing formulations and differentiating Allstar products relative to category-specific competitors, including:
Allround (Multi-Symptom Cold) ⇒ Besthelp; Dryup; and Dryup+
Allround+ (Children’s Cold) ⇒ Coldcure
Allright (Allergy) ⇒ Believe and Defogg

7. Placement Strategy
Emphasize product placement to channels where, according to the “Shopping Habits” reports, consumers buy cold and allergy medications
Sales Channel: Sales Shopping Habits: Cold Cough Allergy
Grocery 36.7% 43.1% 34.6% 30.0%
Chain Drug 28.0% 24.6% 31.1% 36.7%
Independent 21.9% 18.1% 22.0% 24.1%
Mass Merch 9.4% 10.0% 9.3% 5.7%
Convenience 4.0% 4.2% 3.8% 3.5%
Maintain distribution of headcount between Direct and Indirect to the same proportion reported in the “Sales by Distribution Channel”
Develop a powerhouse Sales Force relative to competitors – targeting approximately 25% of the overall annual marketing budget to grow, hire, and train sales representatives
Sales team allocated by comparing # headcount to unit sales in each channel
Maintain distribution of headcount between Direct and Indirect/Wholesalers to the same proportion reported in the “Sales by Distribution Channel”
Direct Sales ~ 64%
Indirect/Wholesaler Sales ~ 36%

8. Promotion Strategy
Continuously increase annual funding to support both push and pull strategies – targeting ~ 25% of the overall annual marketing budget
Push strategies include targeting sales force growth to high-profile channels and increasingly growing Detailers to influence health care professionals
Pull strategies will be deployed with annual budgets positioned to be higher than any other competitor. increasing Promotional Allowances to top-tier
Promotional mix will be adjusted annually based on regression analysis to optimize the primary drivers of unit sales, product margin, and the marketing efficiency index
Consistently outspend competitors relative to product advertising – targeting ~ 50% of the overall annual marketing budget
Continue relationship with top-tier advertising agency (BMW) to maintain high-quality brand image. If budgets were temporarily constrained – consider use of mid-tier agency (S&R), but never for two years in a row

9. Total Portfolio Share of Manufacturer Sales: 39%
Contribution Rate Growth: 5.4%
Tactics to achieve success:
Consumer based product decision making
Standard approach to pricing across portfolio and over time with inflation rates
Emphasis on benefit and competitive advertising
Competitive promotional spending to incent shelf space with retail channel partners and trial purchases with consumers
Consistent budget allocation between ads, sales force and channel partner promotional support

10. Allround Share of Mfr Sales: 26.2% Contribution Rate Growth: 15.9%
Tactics to achieve success:
Consumer focused decision making – Reformulation
Maintain price leadership inline with inflation and symptoms solved
Re-implemented compare marketing and achieved highest mfr share growth period thereafter. Maintained this in perpetuity.
Created consistent investment plan in channel partners based on growth rate and volume across sales force and promotion spending – with an initial focus on gaining shelf space

11. Allround + Share of Mfr Sales: 7.1%
Sales and Gross Margin growth: 105.3%
Tactics to achieve success:
Consumer focused and targeted marketing to a narrow audience of young and mature families
Maintain price leadership inline with inflation and current brand in the portfolio, Allround
Used competitive advertising to drive conversion consideration in conjunction with deep coupon discounts to incent trial
Maintained spending on coupons in response to consumer concerns on our price/value perception
Increased detailer support for channel partners at the time of launch based on the number of trips to physicians by families with children

12. Allright Share of Mfr Sales: 5.7%
Sales and Gross Margin growth: 329.4%
Tactics to achieve success:
Consumer focused and targeted marketing
Maintain price leadership inline with inflation and both brands in the current portfolio
Used competitive advertising to drive conversion consideration in conjunction with deep coupon discounts to incent trial
Maintained spending on coupons in response to consumer concerns on our price/value perception
Increased detailer support for channel partners at the time of launch based on the number of trips to physicians by those with allergies for diagnosis
Overall we used similar launch tactics as those in Allround+ given the success of that launch and track record of growth

13. Advice to the Replacement
Strategy
Stay with your current marketing ad partners
Continue the coupon strategy
Focus on your key markets
Children
Families (Young / Mature)
Analysis
Regression equation
Added a lot of value
Can provide more value with the larger amount of data collected
Implementation
Which elements in the marketing mix have been most helpful
Which require extra caution
What are the key metrics to track
What marketing research is most useful

14. Key Take-Away’s Utilize each person's unique talents and strengths
If you feel strongly about something share it early
Discuss upfront how members of the group prefer to complete tasks (or be assigned to them)
Communication:
Discuss alternatives of communication outside of UST
Set expectations regarding access to UST upfront
For example: cannot access during the work day because of company firewall
Trust that when someone says they will complete a test, trust them
Do not set high expectations on others unless it is shared with them

15. Summary
Objective
Share the knowledge, output, experience, and lessons learned from P-Sim 4 Team’s last 8 weeks
Agenda
Goals and Objectives of the simulation
Analysis and Strategies
Allround
Allround +
Allright
Advice to the Replacement
Key Take-Away’s
Summary
Questions

16. Questions

17. Thank you Kelly E. Smith (smit2865@stthomas.edu)
Lauren A. Ruiz
Leah C. Mcmenimen
Nathan C. Hanson