Pharmasim

Allstar Brands' Allround product is a 4-hour multi-symptom, over-the-counter, liquid medicine used to treat colds, coughs, and allergies. Allround is typically used at night because of the strength of the medication and because the alcohol and antihistamine helps consumers rest. When LSD&J took over as Brand Managers, our strategy was two-fold; grow the top and grow the bottom of the company. Our goal was to make the company strong and stable to ensure Allstar remains one of the top brands of medicine for years to come. Our strategy to grow the bottom was to focus on keeping our gross profit margin stable by minimizing operating cost, manufacturing cost and fixed cost. Our strategy to grow the top was to increase sales and net income. This strategy of slow and stable growth allows our foundation to remain healthy and our brand to maintain long-term success.

Period 0

When LSD&J took over as Brand Managers, Allround was advertised as a cold medicine for all demographics; young singles, young families, mature families, empty nesters, and retired. Allround's MSRP was $5.29 and the Marketing Update report listed a price increase of 2.8% compared to an inflation rate of 3.1%. Mass merchandiser sales showed the strongest growth with an increase of 9.0%. Dryup was introduced by Driscol and had a comparable formulation to Allround. Dryup was the only other multi symptom medicine to offer analgesics which is the ingredient to relieve body aches and reduce fever. Body aches was one of the most frequently reported symptoms in period 0. Allround had been compared to Besthelp, however, since Dryup was new and offered benefits that only Allround had, we changed our advertising campaign to compare Allround to Dryup and increased our advertising budget from $20M to $24M.

Max Allow (mg) Analgesic

1000 Antihist

4 Dcngst

60 Cough Supp

30 Expect

200 Alcohol

20

Allround 1000 4 60 30 0 20

Besthelp 0 4 60 0 0 0

Dryup 1000 4 60 0 0 0

The benefits were not changed, but our advertising target was modified. Since Allround had the active ingredients needed for coughing as well as a multi-symptom cold, we targeted both cold and cough. The demographics were selected based on decision criteria. We focused on the groups seeking product effectiveness and who were not as concerned with side effects and price.

We raised the price of Allround by 4%, slightly above inflation, to a price of $5.50 and left the volume discounts the same. Allstar decided not to hire additional sales people but to reallocate their current resources from the marketing data available. LSD&J took the advise from our predecessors on channel choices, "Retailers considered four basic factors regarding shelf space allocation: product turnover (number of units sold in a given period of time), promotional allowances, sales force support, and co-op advertising allowances. In general, large grocery stores, mass merchandisers, and chain drugstores were more apt to focus on turnover and allowances, whereas independent drugstores paid greater attention to sales force support." (The PharmaSim Case, p 15) In addition, mass merchandiser sales showed the greatest growth so the following decisions were made.

Period 0 Decisions Growth (%)

Independent Drugstores 6 11 0.3

Chain Drugstores 28 18 4.5

Grocery 43 33 5.5

Convenience 3 8 4

Mass Merchandisers 14 24 9

Wholesalers 15 8

Merchandisers 8 15

Detailers 10 10

The sales force for wholesalers was reallocated to merchandisers since our market analysis for sales force indicated, "The wholesaler support sales force provides similar services, but tailored to the wholesale channel. Typically,