Pharmasim Paper - Grade: A PDF

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MAR 499 Markovitz Advanced Marketing Management Fall 2020...

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Pharmasim Paper

Team 2

Year 1: Our initial strategy was to spend most of our available budget and attempt to push our product through to the consumer. We had a long-term goal of improving retention rates, an area we were lacking in. Although we initially wanted to increase the sales force significantly for more of a push strategy, according to the market operating statistics report, those who had a high sales force did not see the benefits reflected in their sales; they actually had the least retail sales. With that in mind, we decided to slowly increase our total sales force. We reduced the alcohol in our formula because it was shown to increase side effects and was commonly looked at negatively by consumers (as per the consumer surveys). We kept the price of Allround the same because consumers already saw the current price as high, relative to the effectiveness, and we did not want to lose customers. We also could not lower the price as we needed to maintain the margins that we had. We decreased our ad spending so we could put more of the budget into digital. We decided to increase our trade promotion budget because it would allow us to utilize the push strategy initially discussed in the case, while also satisfying the wholesalers. We allocated 5.5% of the budget to digital marketing since nowadays it is important to establish and have an online presence. Through this we also received consumer feedback which was a cost-effective way of gaining further consumer insights. For the special decision we chose to offer the additional discount because the losses we would incur from losing that market share of two million units would be greater than the cost of the additional discount. Year 2: We increased our total sales force this round as the demand for our product had increased significantly. We reformulated our product by dropping the alcohol in order to improve based on the consumer feedback we had received. We decided to slowly raise the price of our product to adjust to the current year’s inflation and account for better margins. We increased our advertising and promotional spending because we had increased the price and wanted to offset any negative sentiments about the increase. We increased our marketing so we would maintain a positive consumer-to-brand relationship and gain more comprehensive feedback from consumers. We decided to sell to the jobber because we did not want to tarnish our relationship with our distributors. Selling to the jobber would also reduce our losses to only $50k. Year 3: Because we had the second lowest both direct and indirect sales force, we decided to increase our sales force by a lot this round. We slightly altered the volume discounts for channels that were not moving as many units as the other categories were. We did this to encourage those distribution channels to purchase more. We also decided to keep our current ad agency as they had a reputation for producing high quality ads, and we did not want to negatively impact our band image. We adjusted our ad messaging based on our consumer reports. This year we increased our point of purchase efforts because we had the lowest amount compared to competitors, and 4.4% of our consumers utilized it. We decided to increase our digital marketing to make up for the loss in exposure when we reduced our advertising. All the marketing channels were utilized to saturate our exposure and test which was the most effective. For the special decision we chose the cough formula because a 12-hour capsule would cannibalize our current market with Allround since it was essentially the same product. It would be more of a product improvement than a line extension. By introducing a new product such as the cough formula, it specifically treated our customer’s number one reported symptom in the last year. Year 4: We introduced a new product, Allround+, a Child 4 Hour Cold Liquid medicine. We increased our sales force to account for the added volume being sold in addition to our original product. We concluded that the new product would have the least cannibalization and there was little competition in the children’s market. According to the consumer trade-offs report, duration was not as important a factor as the previous years (which is why we did not opt for the longer lasting product. We did set the price of Allround+ to $5.89 because it was a premium product and would have high interest. To appropriately promote Allround+ we reallocated capital by lowering our spending on Allround and putting that money into Allround+. Based on the consumer surveys we adjusted our ad messaging accordingly (see Exhibit B). For example, we noticed that our retention was suffering so we boosted our reminder advertising from 35% to 40%. For Allround+ we focused 40% of the ad messaging on primary because it was a new product and did not need as much reminder messaging. Year 5: We reallocated the sales force amount based on the sales from the previous year for each of the various channels. We kept the same products. We decreased the price of Allround+ by $.10 because our consumers found that the price point was high, and the effectiveness was average. We maintained the same price for Allround; however, we did decrease the volume discounts by 1% for all the categories except...