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College of Management - Mahidol University

MGMG 508 – Strategic Marketing Management

PharmaSim Project

Ajarn Ploeumrudi Devahastin

By:

Mr. Totsapon Lohachitranont 5749011

Mr. Goanpon Chongsanguan 5749014

Ms. Pimploy Pluangmonthin 5749023

Mr. Yukonthon Pradsarakee 5749024

Mr. Sivanan Chaipanyawuthikul 5749061

Ms. Theeraporn Pothipat 5749085

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Table of Contents

Introduction

Objective

Period 0-3 and decision

Period 4-7 and decision

Period 8-10 and decision

Conclusion

APPENDIX

1. Product Price

2. Sales Force Report

3. Income Statement

4. Sales Report

5. Advertising Expenditure

6. Promotion Allowance

7. Promotion Expenditure

8. Market Share

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Introduction

PharmaSim is simulation software ideally designed for Marketing and Brand Management

classes and is based on the pharmaceutical industry. PharmaSim provides students with

simulated area of responsibilities with complexities in making decision by assigning student

to take on the role of a brand management team as Brand Assistant, Assistant Brand Manager

and Brand Manager respectively. This simulation program also brings together marketing

strategies in to practice from marketing mix, segmentation and position, resource allocation

across brands, integrated marketing communications, and multiple channels with

intermediaries. Students are able to learn how to motivate consumers and channel partners,

measuring their progress through marketing research. Each of simulated business

environments will develop differently depending on the choices each student team makes and

the reaction of their competition. This helps to illustrate the impact a competitor may have on

an entire industry.

Objective

The objective is to critically manage Allstar Brand’s by developing sub brands such as

Allround, Allround+ and Allright to be the leaders and maintain its position in the

pharmaceutical industry. In doing so, we have to focus on the following frameworks;

• Situation analysis / 5Cs (Company, Collaborators, Customers, Competitors, and

Climate)

• STP (Segmentation, Targeting, Tositioning)

• Marketing Mix / 4Ps (Product, Price, Promotion, Place)

• Integrated marketing decision-making and analysis

• Managing the buyer purchase process

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Period 0 – 3

Decision Made – Period 0-3

Segmentation

Allround’s target group are young singles, young families, mature families, empty

nesters and retied. As Allround medicine is a four liquid cold medicine, customers use

this medicine to relief cold symptom.

The main competitor of Allround in this period is Besthelp, they held 25.2% of the

market share in cold medicine market,

Advertising

We chose to do an advertisement focusing on comparing Allround with other brands,

the reason why we chose comparing as an advertising message was because Allround

already held high market share therefore it was necessary to compare its performance

instead of introducing its primary information and benefits. We then sent out the

message focusing on comparison, then benefits and primary information respectively.

Product

Allround is a medicine introduced in the cold medicine market which held the highest

market share for cold recovery medicine or at 40.4%. As the product already

possessed large market share.

At period 1, our group reformulated Allround product by dropping the alcohol to

reduce side effect in order to capture more markets.

Brand Formulations

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Price

The beginning MSRP of Allround is $5.29 with gross margin 48.9%. From period 0 -

3, our group increase MSRP price by average 2% in each period. The price was

increased based on the fact that people who buy medicine are not price-sensitive, and

our group expected to gain more net income.

Sales Force

We increased sales force from period 0-2 inclusive, and kept the number unchanged

in period 3 at 230 pax. The reason we kept increasing sales force was because we

believed it will help in increasing market share and bring us to the competitive level.

We took our competitors’ sales force number into account in locating our sales force

number. Apart from Driscol, all companies total sales force ranked from 207 - 211.

From period 2 to 3, we did not increase number of sales force but we allocated sales

to different channels based on the sales volume we received from each distribution

channel.

We allocated more sales force to Grocery and Mass Merchandize as we saw upward

trend in sales.

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Lesson Learned

Sales Force

Grocery sales force allocation was too high, sales contribution was 26.3% while we

had 35% (80 out of 230) of total sales force budget allocation.

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Mass Merchandize sales force allocation was too high, sales can contribute at 9%

while we had 10% (22 out of 230) of total sales force budget allocation.

We kept increase sales force to generate more sales, and we also used competitors’

sales force survey as a guideline. We noted that our sales force was lower than other

companies therefore we increased accordingly. Nevertheless, we failed to carefully

calculate number of sales force to match with sales generation which made our sales

force to be too high.

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Part 2 (Period 4-7)

Major Decisions Made

Allround

Product

In period 7, Allround brand added expectorant which helps clear chest congestion

which is the 2nd highest reported symptom after aches as shown in the picture below,

so that the product could also target cough segment. Cough relief was also added in

the communication message.

Price

Increased price by 16.8% on average during periods 4-7 to maximize profitability and

to make up for setting the price too low earlier.

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Promotion

We did not decrease the promotional budget for Allround as we have changed the

formula.

Allround+

Product

Allstar introduced Allround+ in period 4 which is child 4 hour cold liquid. Allround is

already a strong brand and is doing well in the market so we would like to increase

the manufacture sales and explore a potential business opportunity against Coldcure

with the cold medicine for children.

The target market for Allround+ were young families and mature families in the cold

segment the reason we opted for this formulation is because we would like to target

the younger segment, to differentiate itself from Allround.

We saw an opportunity in the cold market as Coldcure’s share was decreasing and

with our strong parent brand we feel that customers would already have confidence in

our brand than our competitors and we think that could do well in this particular

segment. (Pic. Below)

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Price

Allround+ was introduced at 4.99USD, lower than Allround 5.57USD and Coldcure

5.59USD as we wanted to aggressively penetrate the market and capture a lot of

market share.

Promotion

Deployed aggressive advertising to spread product awareness by initially focusing on

Primary benefits and later on emphasize more on reminder.

We emphasized on co-operative advertisement, trials, coupons and point of purchase

to create brand awareness.

Allright

Product

In period 6, Allstar introduced Allright brand, a 4-hour non drowsiness allergy

capsule which was the first of its kind in the market.

We targeted younger segments which are young single and young families because

they are working class of people who would appreciate the non-drowsiness benefit.

Moreover, these groups of people are willing to try new product.

There were two players in the allergy segment which were Believe and Defogg (pic

below), although we do not perceive them as our direct competitors. Believe was

capturing the most market share at that time and we very strongly convinced that with

more benefit that our product is offering we could do serious harm to them and able to

capture big share in the allergy segment.

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Price

Allright was introduced at 6.50 USD, the highest amongst all products in the segment,

exploiting on Allstar‘s brand equity and the exclusivity of the product.

Promotion

We hired same advertising agency as Believe which is different from the first two

brands we launched.

The ad message was emphasized on it benefits and comparison with the market

leader, Believe.

Emphasized on co-operative advertisement and trials to push its position to be a star.

We spent high on trials intended to reach our target customers who might be reluctant

to spend higher than they used to become acquainted with the benefit that our product

can offer them.

The product was still new to the market we did not emphasize on coupons at first

because there was still no market for the product at the time and no one really knew

our product at that time so the coupons would not do us much good at the beginning.

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Sales Force

Increase sales force in the independent drugstore and detailers so that our products

would be recommended more.

Lessons Learned

New Product Launch

After surviving through 4 periods in the industry by having Allround and Allround+ as our

anchor players in cold-cure medicine market, we decided to launch Allright brand in to the

market by focusing on its unique benefit of a non-drowsiness allergy capsule, and targeting

on young singles, young families and later tabbed into mature families group in period 7.

Taken into account the attractiveness of the market where there are only 2 existing rivals;

Believe and Defogg. We hired Sully and Rodgers as advertising agency for Allright to create

different advertising message since this agency is sophisticated in allergy market and also

works for Believe that would also help to better advertise Allright.

Promotion

We learned that having significant number of distributor channels deemed not as necessary as

compared to increasing allowance for retailers where drugs are mostly purchased. In doing

so, we also gained more shelf spaces from retailers.

Spending on consumer promotion was too high.

Because we would like to gain more brand awareness for our new products, so we spent high

amount for Allround+ and Allright, however we failed to compare the spending with our

competitors. This made our consumer promotion tended to be too high, this was around 7

times more than our competitors. (photo below)

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Part 3 (Period 8-10)

Major Decisions Made

Allround

Product

Allround moved back to star in this period because our target group got older and they

tended to take more of liquid medicine comparing to young people.

Price

During period 8 – 9, price was $7.34 or increased by 10.2% from period 7. According

to cost was increased when we changed brand formulation, hence we have to increase

price in order to maintain profitability. Although Allround price was slightly higher

than key competitor like Besthelp, customer perceived that symptom relieved of

Allround was still much better than Besthelp.

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Promotion

From the research among competitors, Besthelp seemed to be able to keep their

market share stable or only slightly decreased.

From the Advertising Expenditure report, Besthelp used ad budget more than

Allround therefore we took that into account so we increased advertising budget

considering from our direct competitor ad expenditure.

We added point of purchase promotion in convenience store because we adjusted

formulation of Allround, so we do promotion at all sales channels we can in order to

compare if changing of formulation would affect our sales volume.

Moreover, as this is the late period, we tried to promote to boost more brand

awareness.

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Allround+

Product

Allround+ shifted from Dog to Question Mark due to the demography segment,

children of young family in the first period had grown up to be adults in the young

family. Therefore, Allround+ became their choice again for their children as it is

easier for children to take medicine in liquid form rather than pills.

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Price

Allround+ price was $7.3 or increased by 10.3% from period 7 (period 7 was $6.62).

Allright

Price

During period 8 – 9, price was $7.76 or increased by 10.2% from period 7. As

Allright had highest market share in allergy, we increased price in order to maximize

profitability and maintain brand image. There’re two key competitors which were

Believe and Defogg. Allright price was level off to Defogg but still higher than

Believe.

Promotion

The ad message was still emphasized on its benefits and comparison to maintain

growth.

As we captured market of young single, young family and mature family, we did

market penetration by stretching to target empty nester as our customers got older.

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Sales Force

We increased Sales Force in merchandisers and detailers as we would like to push

more product volume as we believed that information they can provided would push

more sales to retailers.

Merchandisers and detailers would also advise retailers on promotion.

Lesson learned

Customers perception towards benefit received

Although Allround price was increased as we adjusted formula, if we advertised and

informed our customers on benefits they will receive, they are willing to pay higher

price.

Adding advertising budget to Allround

By adding advertising in Allround helps us to maintain market share in Cold market at

30.2% comparing to period 7 at 32.7%.

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Extending market segment of Allright

As we did market penetration to capture more market shares, our market share in

allergy sales increased period by period respectively.

At period 9, we are able to possessed more market share from Believe. However, this

was also an opportunity causing by their product life cycle which tended to lower

down from period 6 onwards.

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Conclusion

Apart from 4Ps; product, price, place and promotion, we should also analyzed our SWOT so

that we know our strengths and weaknesses in order to find the solutions to improve our

business and serve the customers’ needs.

Messages used to communicate to customers give impact on their perception towards

products, the company needs to consider what message to be sent out. Launching of new

products need to be well communicated due to the fact that people do not change brand of

medicine purchased. Not only launching new products are important, market penetration will

also help the company to stretch themselves towards their existing customers in a long-term

basis.

For medicine industry, price does not seem to be a factor people take into consideration prior

to purchase decision. People are willing to buy medicine at any price as long as it serves their

current needs.

To successfully operate a business, ist is not only income that is important, we need to focus

on other aspects such as market share, sales growth, customer perception, promotion

spending, and portfolio profile. These elements are the main factors that affect our business

performance.

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Allstar Product Prices Changed

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1

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6

7

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P00 P01 P02 P03 P04 P05 P06 P07 P08 P09 P10

Prices of Allstar Products

Allround Allround+ Allright

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Sales Force Report

Income Statement

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Sales Report

Advertising Expenditure

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Promotion Allowance

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Promotion Expenditure

Market Share