PharmaSim OCM Group Allstar Brands - Lab Report Example

? PharmaSim Report OCM Group – Allstar Brands Jian Qin PharmaSim Report OCM Group – Allstar Brands Introduction The objective of PharmaSim exercise was to manage the over-the-counter cold medicine brand for the pharma group Allstar Brand Corporation. Throughout the ten-periods, our team acted as brand managers for OTC cold medicine and made marketing decisions to increase the market share. This report summarizes the decisions we made and its impact on our brand’s performance. Marketing Plan and Strategies Marketing is all about creating shareholder and social value, achieved through products that deliver value to customers in the marketplace by providing an aggregate of benefits that the customers recognize more than competitively substitutable products. A Marketing plan or strategy must describe the key or augmented product characteristics and the kind of benefits they provide to the customer, the pivotal price that bounds company profitability yet providing value for money for the customer, tempting promotions that wil attract people to buy the product and a sound distribution and placement strategy to create access for the customers. Rationale for each product (reformulations, line extension, new product) decisions Allround provides multi-symptom cold relief in liquid form. The product is primarily composed of Analgesics that provides relief for aches and fever. Amongst its competitors, Allround has the best combination of Analgesics, Decongestants and Cough suppresants. The product duration is 4 hours. What target market you chose for each product and why? Our target market segments was basically the retired segment where Allround had the most penetration and the largest (30%) market share. The prime reason for the selection of this market was the fact that they are most prone to body aches due to ageing. Since Allround product had the most amount of Analgesic, it was more suitable for aches and fever than cold symptoms. The brand is the clear market leader in this market segment. Most consumers use this product for nighttime relief because of the strength of the medication and because the alcohol and antihistamine help the patient rest. How you adjusted your pricing, channel, and promotions in response to the changes in: a) Macroenvironment of the Industry: Macro-economic environment changes such as change in government regulations; taxes, demographic changes and political environment highly affect the performance of the brand. For example, decline in industry growth and rise in infaltion negatively affected all the companies (including Allround brands) in the market. The cost of goods sold became higher than the previous period and hence our bottom line took a hit. After a consistent decline in the industry profits and growth, because of the competitive nature of the industry or changes in government policies for OTC, the macroeconomic environment changed in Period 8 when it increased by almost 12% period-over-period growth. Due to anticipatory high growth, the prices of the product were marginally increased ($1) in the respective period in order to leverage the benefits of market boom. b) Consumer Behaviors: Generally speaking, marketing revolves around people. In the words of Peter Drucker, “Marketing is the entirety of the business from the perspective of the customer.” Hence, it is imperative to understand consumer behavior in order to gain customer insights and apply it to one’s brand strategy. In PharmaSim, consumer behavior was studies through market research reports and analysing shopping trends of the customers. The following insights were gained about our target market segments: Majority of the customer bought their over-the-counter medicines from grocery stores Majority of the physicians and pharmacists recommended brands Coughcure and End c) Competitors’ moves: Similar to the real world, one cannot play in insolation in PharmaSim, hence competitors’ reactive and aggressive moves affect your Dripstopperformances and strategies. For example, Besthelp, Coughcure and End launched their product extensions that had a huge negative impact on my business. The other competitor move that affected my business were reduction in the prices of other drugs such as Defogg, Dryup, Dripstop as they had very competitive pricing structures. d) Product Lifecycle: Over time, products conform to a classical pattern of sales and profits called the product life cycle that moves from initial launch or “seeding of the product” to the growth period of increasing sales to a mature market and finally the decline. The following figure illustrates the sales of Allstar product in all periods. The product was at a maturity stage in periods 2 and 3 after which the sales started decling. My response to PLC was launching a product extension and positioning the product only for my target segment through promotions that led to the upswing curve after period 7. What is learned? 1) What were the three good decisions you made in the simulation? Why were they good? ? The three good decisions that I made in the simulation were: Pricing: I priced my product in the middle of the range of my competitors to leverage the affordability pricing of my customers. This was done because my prime target were retired people who on one hand were price sensitive because of their income limits and had high consumption of ache medicines and on the other hand were still willing to pay money for a quality product. This helped me gain maximum market share for the target segment (30%) without eroding any losses from charging higher prices. Sales Force: I had one of the lowest expenditure on sales force since I had more indirect sales people than direct. The strategy was to employ indirect sales force to reduce fixed costs. Shelf Space: I had one of the best shelf-space of all my competitors due to good distribution channel management and promotions. This indicated that retailed thought that our brand was more profitable than the others. 2) What were the three bad decisions you made in the simulation? Why were they bad? The three bad decisions that I think I made in the simulation were: Promotion: In the hindsight, I believe that I should have invested more money in promoting my product as I spent the lowest (10% of M&S budget) in promotions. This led to low share of voice with the physicians and pharmacists and ultimately negatively affected my brand sales. Product Extension: I believe that I should have continued with my augmented product by should have targeted to another market segment such as young families with a different pricing structure and complimentary market. I had launched another product in period 4 but due to continuing losses in the subsequent period, I discontinued the product in period 7. Cost of Goods sold: Despite the fact that I had the lowest expenditure on promotions, advertising and sales force, my cost of goods sold was still one of the highest amongst my competitors ($219). This was primarily due to the fact that I could not generate economies of scale in mass production and manufacturing, partly due to the fact of declining demand for my product. 3) What would you do differently and how, if you can replay the simulation? Answer this question in the form of advices for the next brand manager of AllStar? The advice that I will give to the next brand manager of AllStar is: Focus on target segment such as retired or empty nesters where we have a commandable lead in the market. Price your product with a marginally higher premium than the market so as to differentiate the product with the competitors and increase profitability. Extensively spend on promotions and marketing especially towards physicians and pharmacists, as they are the key influencers in the buying decisions of retired and empty nesters. Read More