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ALLROUND BRANDS MARKETING PLAN

YEARS 10-12

The continuing legend of a resurrected company lies within. What the

future holds is uncertain, but the plan to get there is not

Loren Bronczyk,

Matt Latham, Sarah

O’Dell, Stacy

Sorensen

1

TABLE OFCONTENTS

EXECUTIVE SUMMARY ......................................................................... ERROR! BOOKMARK NOT DEFINED.

SITUATION ANALYSIS ........................................................................... ERROR! BOOKMARK NOT DEFINED.

KEY STATISTICS .................................................................................. ERROR! BOOKMARK NOT DEFINED.

INDUSTRY ANALYSIS ............................................................................ ERROR! BOOKMARK NOT DEFINED.

CHANNEL ANALYSIS ............................................................................ ERROR! BOOKMARK NOT DEFINED.

IMPLICATIONS FOR NEXT TWO YEARS ....................................................... ERROR! BOOKMARK NOT DEFINED.

MARKET DEMAND .............................................................................. ERROR! BOOKMARK NOT DEFINED.

PRICE COMPARISON ............................................................................ ERROR! BOOKMARK NOT DEFINED.

KEY MARKET INFORMATION ................................................................. ERROR! BOOKMARK NOT DEFINED.

PERCEPTUAL MAPS ............................................................................. ERROR! BOOKMARK NOT DEFINED.

SWOT ANALYSIS ............................................................................... ERROR! BOOKMARK NOT DEFINED.

GOALS/OBJECTIVES ............................................................................ ERROR! BOOKMARK NOT DEFINED.

MARKETING STRATEGY ........................................................................ ERROR! BOOKMARK NOT DEFINED.

MARKETING MIX STRATEGY .................................................................. ERROR! BOOKMARK NOT DEFINED.

IMPLEMENTATION .............................................................................. ERROR! BOOKMARK NOT DEFINED.

MARKETING BUDGET AND PROJECTIONS .................................................. ERROR! BOOKMARK NOT DEFINED.

KEY STATISTICS ............................................................................... ERROR! BOOKMARK NOT DEFINED.

BUDGET FOR YEAR 11 ...................................................................... ERROR! BOOKMARK NOT DEFINED.

BUDGET FOR YEAR 12 ...................................................................... ERROR! BOOKMARK NOT DEFINED.

PERFORMANCE EVALUATION – MARKETING METRICS ................................. ERROR! BOOKMARK NOT DEFINED.

2

Executive Summary

From its inception, Allround Brands floundered around as a weak, unfocused

manufacturer of a single cold treatment in a combative arena of aggressive competitors.

Desperate for outside assistance, a new brand management team was employed and

immediately wielded Allround Brands’ arsenal of weapons with proficiency. Under the new

team’s command, the end of the first period saw a shift in power like never before and, over

time, the marketplace was forced to accept Allround Brands as its master. The warpath was set

and the company marched unimpeded towards its goal of market dominance for ten periods

while gaining new products and seeing increases in important metrics across the board.

The driving force behind this movement is the utilization of Allround Brands’ competitive

advantage: its leading position in market share, brand awareness, and higher-than average

customer satisfaction. These important numbers formed an impenetrable wall around Allround

Brands’ profits. Try after try of competitors attempts to scale these walls were thwarted by the

disadvantageous forces of the industry and the company’s direct intervention. At the end of

period 10, these walls have been built up to the point that it would take a disaster of

unfathomable magnitude to bring them down.

The future of this marketing machine remains uncertain, but its plans have been set and

detailed in the pages to come. The most obvious part of the plan is to continue aggressive

growth on a scale most likened to Alexander the Great’s far reaching empire. This growth can

only be fueled by market penetration, market development, product line extensions, or

diversification. Given these options, the brand management team performed an analysis that

will be outlined herein and decided to continue market penetration while introducing a new

product to be positioned as a children’s cold medication. Doing so will mark the acquisition of

the final, currently untapped sector of the familiar cold product category. With these lands

under control, Allround Brands will have to seek growth in foreign lands—countries that still

have a market to takeover—so an analysis of the most profitable nations is set to be conducted.

Supporting the feasibility of this grand plan, financial projections have been included and

everything checks out. Come this time two years from now, Allround Brands will have expanded

its conquest, know which market is ripe for the picking, and be prepared to launch an invasion.

3

SITUATION ANALYSIS Current Performance Review 1) The following segments are currently being targeted:

Allround - Cold Allround+ - Cold Allright–Cold/Nasal

Young Singles X X Young Families X Mature Families X X Empty Nesters X X Retired X X

Table 1

Allround

Allroundstarted by targeting young families and mature families in the cold product category

o At the start of period 6, however, the realization was made that Allroundhad potential to be

a leader in the retired segment, so it was added to Allround’s focus

Allround+

At the inception of Allround+ in period 4, the mistake was made of straying from Allround

Brand’s core-competency in the cold product category and labeling it as an allergy medication

o Correcting this, Allround+ was shifted back to the cold product category

The targeted segments for Allround+ were determined by the assumed appeal of the

formulation to the different segments and by the desire to target the remaining, untargeted

segments

o It seemed intuitive that young singles, mature families, and empty nesters would prefer a

12hr capsule to avoid the necessity of repeated medication

Allright

Deciding to stay within the cold product category, the introduction of Allright as a cold nasal

product helped to fill out the cold product category and establish AllroundBrands as the leader

in that category

2) Our share of cold sales indicates that Allround is the number one product in the cold product

category with Allround+ and Allright having larger and equal shares respectively to their direct

competition.

4

Figure 1

Allround is and has been the market leader for the last ten years

Allround + has seen solid growth since its introduction

Figure 2

Allright has demonstratedincredible growth since its introduction, making it tied for the number

one spot in the nasal spray market

o With the current linear trend, it will be the leader in period 11

Year 10 summary

o Allround has a 40% market share in the cold market, Allround+ has a 9.6% market share of

the cold market, and Allright has 38.9% of the market share of the nasal spray market

o Total market share based on Manufacturers Sales of Allround is 26.5%

o Total market share based on Manufacturers Sales of Allround+ is 6.2%

o Total market share based on Manufacturers Sales of Allround is 4.2%

o Allround Brandsconstitutes 36.9% of the market in Mfr Sales

5

3) The following symptoms and market segments are targeted:

Allround is targeted at the cold market: promising to relieve aches, clear nasal congestion,

suppresses coughing, and minimize side effects

Allround+ is also targeted at the cold market; promising to relieve aches, clear nasal congestion,

dry up runny nose, and minimize side effects

Allright is targeted at the nasal market; promising to clear nasal congestion, dry up runny nose,

minimize side effects

We believe that our productsdeliver on these promises. We have made very slight alterations to

our Value propositions over time, to reflect what we feel that we accomplish. We do not wish to

make major changes, so as to avoid sending mixed messages. However, we do want to be sure

that our product does what we say it does.

4) We focus our products in the following ways:

Allround- A cold medicine that will help cure most conditions, but whom is targeted specifically

at cold symptoms. We decided to remove alcohol early on in order to reduce side effects so that

the product would be more kid friendly.

Allround+ - All the Great benefits of Allround but in a twelve hour capsule form. This is targeted

at those who don’t have time to take a dose of the liquid every four hours.

Allright – A cold spray for when the nose is the primary problem, and targeted at those who

want a cold spray over the liquid or capsule form. We have captured a large segment of the

nasal market in relatively short time, and we hope that we will continue to do so.

We sell our products primarily in grocery and chain drug stores.

In general, we have intended to price our product as a premium brand. Allround and Allround+

are not the most expensive on the market, but are close. We decided to enter the market with a

price penetration strategy with the launch of Allright. Thus, Allright is priced comparatively

lower than other products, but this has helped us capture a large part of the nasal market.

We have promoted our products with a heavy emphasis on point of purchase expenditures. We

have used trials when a product is first launched, but try to reduce that to zero over about two

years after launch. We avoid Co-op advertising as we do not believe it benefits our brand. We

had heavy coupon use early on, but moved away from that in later years. About 50% of our

overall marketing budget went to Advertising, using a premium ad agency. About 30% of our

marketing budget went to promotional allowances. The remaining 20% was spent on sales and

administration.

6

KEYSTATISTICS Here we have a number of key tables, showing results broken down by product, and with our

overall totals for the ten years we have been in business.

Sales Revenue ($ in Millions)

Year Allround Allround+ Allright Total

1 438.8 - - 438.8 2 461.2 - - 461.2 3 493.1 - - 493.1 4 542.7 24.1 - 566.8 5 595.8 42.0 - 637.8 6 636.8 81.1 15.6 733.5 7 685.5 111.3 37.9 834.8 8 723.7 140.6 68.3 932.6 9 788.6 171.4 101.0 1,061.0 10 879.5 206.8 138.5 1,224.8

Table 2

We are seeing good growth in all product areas

Our weak point is that so much of our sales is still based on Allround

Diversification via more consistent sales across product will help limit any sudden market shocks

that could impact Allround

Gross Margin (%)

Year Allround Allround+ Allright

1 49.1 - - 2 51.1 - - 3 50.0 - - 4 49.0 55.5 - 5 50.2 56.5 - 6 50.7 57.0 54.4 7 52.5 57.7 56.9 8 52.1 57.3 56.7 9 52.5 57.6 57.0 10 53.8 58.8 58.1

Table 3

We make the largest % margin on Allround+ and Allright

Increasing our sales of Allround+ and Allright will mean higher profits overall, as they have a

higher margin % then Allround

7

Gross Profit ($in millions)


1 215.6 - - 215.6 2 235.7 - - 235.7 3 246.5 - - 246.5 4 265.9 13.4 - 279.3 5 298.8 23.8 - 322.6 6 322.7 46.2 8.5 377.4 7 359.6 64.3 21.6 445.5 8 377.0 80.6 38.7 496.3 9 413.8 98.7 57.5 570.0 10 472.8 121.6 80.4 674.8

Table 4

Our overall profit is made largely off Allround

If we are to continue our strong profit trend, Allround is going to either need to keep growing,

or our other products are going to need to see a much larger revenue figure

Marketing expense ($ in millions)


1 26.7 - - 26.7 2 36.5 - - 36.5 3 41.8 - - 41.8 4 43.0 13.1 - 56.1 5 43.6 13.0 - 56.6 6 46.0 18.8 14 78.8 7 45.0 19.0 14.9 78.9 8 47.0 22.0 19.3 88.3 9 53.3 25.0 21.0 99.3 10 60.0 31.0 27.1 118.1

Table 5

Marketing expenses are going up, but it’s in line with our increase in revenues

More money spent on marketing has seen a solid Return

8

Sales and Admin expense ($ in millions)

year Allround Allround+ Allright Overall

1 24.2 - - 24.2 2 26.1 - - 26.1 3 28.9 - - 28.9 4 30.9 1.5 - 32.4 5 32.3 2.5 - 34.8 6 34.1 4.8 1.1 40.0 7 34.5 6.4 2.5 43.4 8 35.7 7.9 4.3 48.0 9 38.3 9.5 6.4 54.2 10 39.9 10.7 8.1 58.8

Table 6

Note that specific numbers for Sales and Admin per product are not available. The information

provided assumes that the expense is broken up according to the % of units sold.

We have has about 20% of our marketing budget go to S & A over the last ten years

We believe that our high sales force (both direct and indirect) have helped us gain a dominate

position in the market

Net Marketing Contribution ($ in Millions)

Year $ %

1 50.9 11.6 2 62.6 13.6 3 70.7 14.3 4 88.5 15.6 5 91.4 14.3 6 118.7 16.2 7 122.3 14.7 8 136.3 14.6 9 153.5 14.5 10 177.0 14.4

Table 7

Marketing has had a varied initial run

Marketing contribution as a % has stabilized over the last 4 periods

9

Market Share (%)


1 23.7 - - 23.7 2 24.1 - - 24.1 3 24.6 - - 24.6 4 25.4 1.1 - 26.5 5 25.3 1.8 - 27 6 25.1 3.2 .6 29 7 25.5 4.1 1.4 31 8 25.4 4.9 2.4 32.8 9 26.0 5.6 3.3 35 10 26.5 6.2 4.2 36.9

Table 8

Our products are dominate in the market; overall and by market segment

Customer retention (%)


1 58.2% - - 58% 2 64.6% - - 65% 3 64.5% - - 65% 4 65.9% 53.5% - 65% 5 65.3% 53.4% - 64% 6 65.7% 53.5% 46.7% 64% 7 66.1% 54.3% 47.2% 63% 8 66.1% 54.6% 47.5% 62% 9 66.2% 55.3% 48.2% 62% 10 66.6% 55.7% 48.6% 62%

Table 9

Total % reflects weighted average based on unit sales

Allround is driving our high customer satisfaction level

Allround+ and Allright need to have increased customer retention in order to help drive up sales

10

Customer life (years)

Year Allround Allround+ Allright Average

1 1.8 - - 1.8 2 2.0 - - 2.0 3 2.0 - - 2.0 4 2.0 1.7 - 1.9 5 2.0 1.7 - 1.8 6 2.0 1.7 1.4 1.7 7 2.0 1.7 1.5 1.7 8 2.0 1.7 1.5 1.7 9 2.1 1.7 1.5 1.8 10 2.1 1.7 1.5 1.8

Table 10

We can expect that a customer is going to keep using our product for an average of two years

AcquisitionCosts ($ in millions, % of sales) VsRetention Costs ($ in millions, % of sales) – this table

shows how much money we spend per year to acquire new customers, and how much we spend per

year to retain existing customers. It is worth noting that normally it is expected to cost about five times

as much to acquire a new customer as to retain an existing customer. The data suggests that we are

more interested in retaining customers, and thus, our dominate market position, than growing our

market base.

Year Acquisition Cost $ Acquisition Cost as % of sales

Retention Costs $ Retention Costs as % of sales

1 14.9 3% 21.6 5% 2 18.0 4% 23.8 5% 3 29.4 6% 26.7 5% 4 29.5 5% 27.2 5% 5 46.8 7% 32.0 5% 6 37.1 5% 41.9 6% 7 38.7 5% 49.6 6% 8 41.5 4% 57.8 6% 9 50.4 5% 67.7 6% 10 50.4 4% 67.7 6%

Table 11

Strategic Implications

The breakdown of the marketing budget has been very effective

Our company is showing solid growth

Revenues and profits are both increasing

More money is spent on retaining customers than acquiring new ones, which has been effective

11

INDUSTRY ANALYSIS

Explanation (all answers are relative to Allround Brands)

Threat of New Entrants Low

Efficiencies from economies of scale reduce competitive advantage possibility of new entrants

High startup capital isrequired

Partial saturation of the market already Threat of Substitutes Moderate

Those affected by colds can seek alternative treatments

There are many prescription drugs available Threat of Consumer Buying Power

Low

Consumers have the unimpeded ability to buy whatever cold medication they want

Allround Brands’ exceptionally high customer satisfaction tends to create customers who prefer Allround Brands

Threat of Distributors’ Buying Power

Low

Distributors depend of Allround Brands to fill their shelves

Allround Brands’ products are demanded by consumers Threat of Supplier Power

Low

Suppliers produce commodity chemicals and sell at near competitive- parity

Threat of Rivalry Moderate

There are many successful companies in the industry

Having the highest market share, customer satisfaction, and brand awareness reduces this threat

Product Life Cycle Position

Growing

Constant levels of about 8% growth per year

This is expected to diminish in the near future as the industry starts to enter the mature phase

Overall Attractiveness High

Because the market is still growing and all the threats are low or moderate, the industry Is highly attractive

Table 12

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CHANNEL ANALYSIS

Figure 3

Channel Analysis reveals that most of our sales are to Chain Drug, Grocery, and Wholesalers.

Convenience and independent drug stores are probably not worth investing much capital in.

Mass merchants are worth some investment, but focus should stay on the big three.

Sales force should be highly focused on both Grocery Channels and Wholesalers, as well as

supporting any needs they might have. We should plan on putting about 65% of our personnel

budget into these areas.

Chain Drugstores and Mass Merchants should not be neglected, as they make up a total of

about 30% of our buyers; so about 30% of our personal budget should be devoted to this

channel.

Promotions by channel should be determined by who we sell to. Thus, about 30% of our

Allround sales come from Grocery, so about 30% of the promotional budget should go to

Grocery, in so far as dollars can be distributed via channel

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

Allround Allround+ Allright

Channel Distributions for Allround Brands

Indep Drug

Chain Drug

Grocery

Convenience

Mass Merch

Wholesalers

13

IMPLICATIONS FOR NEXT TWO YEARS Average growth rate for over the last 10 years is 8.64% overall

Average growth rate for over the last 10 years for the cold industry is 9.7%

Average growth rate for over the last 10 years for the cough industry is 3.0%

Average growth rate for over the last 10 years for the allergy industry is 8.6%

Average growth rate for over the last 10 years for the nasal industry is 11.9%

Growth last year was over 10% for grocery, and over 9% for mass merchant and independent

drug

Keepa focus on Grocery, chain Drug and Wholesalers for the next two years. This is consistent

with our current strategy.

Ignore Convenience and Independent Drug stores for next two years, then revisit data

The nasal industry has the largest growing market segment. Keep our nasal product (Allright) in

a dominate position, by continuing to fund the advertising campaign for it should show solid

growth

Over the last ten years, we have maintained a 50%/30%/20% split of our ad budget,

promotional budget, and sales/admin budget respectively. We believe that this has been a solid

breakdown, and is key to our success. Continuing this breakdown over the next two years

should allow us to continue our dominance.

14

MARKET DEMAND

Figure 4

Allround Brand’s products are best known for both Cold and Nasal, as indicated by market share

B&B Brand Products are best known for allergy, as indicated by market share

Curall Brand Products are best known for Its cough Medicine, as indicated by market share

Driscol Brand Products are best known for Allergy, though based on market share, they are

beginning to fail as a business

Ethik Brand Products are best known for Cough and Nasal, as indicated by market share

0

10

20

30

40

50

60

70

Allstar B & B Curall Driscol Ethik

Market Share by Firm and Product Category

Total

Cold

Cough

Allergy

Nasal

15

Brand Awareness by Product—These Charts shows what % of people are aware of the various brands

that exist within the industry.

Figure 5

Allround is the most known of brand across the cold industry

Figure 6

High brand awareness for competition could prove a challenge if we decide to enter this market

0% 20% 40% 60% 80% 100%

Allround

Allround+

Besthelp

Besthelp+

Coldcure

Dryup

End+

Extra

Cold Market

0% 20% 40% 60% 80%

Coughcure

Coughcure+

End

Cough Market

16

Figure 7

Low Awareness of existing Brands could make the allergy market a tempting market to enter

Figure 8

Allright is relatively unknown, and needs to have a more effective marketing campaign

0% 10% 20% 30% 40% 50%

Believe

Defogg

Allergy Market

0% 10% 20% 30% 40% 50%

Allright

Dripstop

Effective

Nasal Market

17

Level of Need for the Product Segment – The first table shows what % of the overall market each

market segment makes up. The second table shows what % of people report each symptom shown.

Need for product segment

Cold 69.9% Allergy 6.3% Cough 23.8%

Table 13

Need by Symptom % Reporting

Aches 60.9%

Nasal Congestion 50.5%

Chest Congestion 61.3%

Runny Nose 47.6%

Coughing 61.3%

Allergy Symptoms 21.0%

Table 14

Cold products have the greatest need

Allergy products have the least need

18

Price ATTRACTIVENESS Price vs. Satisfaction Level – This map shows overall value for a product. Customer satisfaction shows

on the bottom, and as a product is more to the right, the more effective it is. How high a product is

shown indicates how expensive that product is. Thus, the greatest value to the customer is located to

the bottom right. A further breakdown by industry is included in the perceptual map section

Figure 9

Allroundis the most effective thing on the market

Allround+ is priced below its value, but is not perceived to be as effective

Allright is positioned as a relatively ineffective medicine, but the price is very attractive

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

$8.50

30% 40% 50% 60% 70%

Pri

ce

Customer Satisfaction

Relation of Price to Customer Satisfaction

Allright

Allround

Allround+

Believe

Besthelp

Besthelp+

Coldcure

Coughcure

Coughcure+

Defogg

Dripstop

Dryup

Effective

End

End+

19

Price Comparison—Tables showthe overall MSRP in dollars per product within their respective market

segment

Figure 10

Allround is second highest priced product in the cold market

High price is consistent with our premium product strategy for Allround

Allround+ is a midrange priced alternative to Allround

Figure 11

Coughcure is the clear premium leader based on price in the cough market

Coughcure+ appears to be a low-cost flanker

$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00

Allround

Allround+

Besthelp

Besthelp+

Coldcure

Dryup

End+

Extra

Price Comparison of Cold Products

$6.00 $6.50 $7.00 $7.50 $8.00

Coughcure

Coughcure+

End

Price Comparison of Cough Products

Series1

20

Figure 12

Prices in the allergy market are even. Either a premium or cost-leader strategy could be effective

in this market if Allround Brands were to enter it

Premium strategy would be consistent with Allround Brands Corporation

Figure 13

When Allright was introduced, it utilized a market penetration pricing strategy

Allright is still using the same strategy today, as when it was introduced

Large part of Allright's dominate market position is likely due to this strategy

$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00

Believe

Defogg

Price Comparison of Allergy Market

$5.30 $5.40 $5.50 $5.60 $5.70 $5.80 $5.90 $6.00

Allright

Dripstop

Effective

Price Comparison of Nasal Market

21

KEY MARKET INFORMATION Cold Cough Allergy

Key value drivers Product Effectiveness Price Product Effectiveness

Primary benefits sought Product Effectiveness Price Product Effectiveness

Price sensitivity description 6.2% care most about price 50.4% care most about price 12.2% care most about price

Key demographic descriptions Mature Family Retired Mature Family

Purchases per year per customer 3.1 1.8 5.2

Number of customers 99,820,000 34,730,000 9,340,000

Revenue per customer 22.02$ 13.81$ 30.63$

Percent margin 45.60% 45.60% 45.60%

Margin per customer 10.04$ 6.30$ 13.97$

Table 15

Weighted average price of Cold products is currently $7.10

Weighted average price of Cough products is currently $7.67

Weighted average price of Allergy products is currently $5.89

Cough market is the only market that cares primarily about price

Mature Families are key Demographic in Cold and Allergy markets

Highest margin per customer in Allergy Market

Allergy market is smallest, but each customer is worth more than other markets

Prices are relatively inelastic

22

PERCEPTUAL MAPS Price vs. Satisfaction Level—The same map as in the price attractiveness section, but broken down by

market segment.

Cold Industry

Figure 14

We can see that Allround has the highest level of customer satisfaction

After Allround, the next closest competitor is Besthelp, but they are about to be overtaken by

Allround+

We are in a strong position when it comes to product value

$-$1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00

40% 45% 50% 55% 60% 65% 70%

Pri

ce

Satisfaction

Perceptual Map - Cold

Allround

Allround+

Besthelp

Besthelp+

Dryup

End+

Extra

23

Cough Industry

Figure 15

We can see that customer satisfaction is fairly low in this industry. If we were to entry the

market here, we might have some luck taking away from competing products, due to their low

satisfaction level

Allergy Industry

Figure 16

Much like the cough industry, customers within this segment are reasonably unsatisfied.

Entering the market could result in several immediate converts as they want to get away from a

brand that they are not very satisfied with

$6.60

$6.80

$7.00

$7.20

$7.40

$7.60

$7.80

$8.00

$8.20

48% 48% 49% 49% 50% 50% 51% 51%

Pri

ce

Satisfaction

Perceptual Map - Cough

Coughcure

Coughcure+

End

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

40% 42% 44% 46% 48% 50%

Pri

ce

Satisfaction

Perceptual Map - Allergy

Believe

Defogg

24

SWOT Analysis

Strengths

Market share leader

Economies of scale in production

Strong Brand reputation built over time

Flagship is perceived to be most effective medicine on the market

Several supporting brands help diversify the product portfolio and stabilize overall demand

Economies of scale on sales force, they can sell all our products simultaneously

Relative price inelasticity in thecold industry

Weaknesses

Often over capacity due to growth

Lots of capital tied up in advertising and promotions

Not very well diversified

No internet based ordering system

Opportunities

Driscol has lostsignificant market share and may be open to takeover or buyout

Cough and allergy markets are in growth phase and could be entered

A buyout of B & B could provide a major win in the cough market allowing us to continue to dominate cold and nasal markets

Threats

Raising prices could result in lower market share if customer demand is more elastic than previously thought

Market could be moving out of growth and into maturity

Table 16

Due to Allround Brands’ size, there exist more options for the future than other, less fortunate

companies

o Can buyout another company in order to expand

o Introduce our own product to compete in an underserved market

Grocery and wholesalers have market power, as they are our key customers

Lack a contender in two potential growth markets

Could raise prices to help even out demand so we don’t have to build a factory every other year

Strategic Implications

Raising price could increase profit and reduce demand, thus limiting our need to build more

factories, but at the cost of market share

Need to keep grocery and wholesalers happy, as most of our business comes from them

o Co-op advertising could be used to strengthen relationship with key customers

Should decide whether we want to enter either Cough or Allergy markets, and If so, how

A buyout could be viable, depending on our objectives

25

GOALS/OBJECTIVES

1. Increase market share of current markets (as measured by percent of manufacturer’s sales) to

40.3% by the end of period 12.

2. Create a new product that is targeted toward children to complete the cold product lineup at

the start of period 11.

3. Conduct feasibility analysis of expanding current products into new markets through

geographical expansion by the end of the period 11.

MARKETING STRATEGY

Allround Brands’ sustainable competitive advantage rests in its market share, brand awareness,

and higher-than-average customer satisfaction in the cold product category. These are all traits that will

either take other firms a long time to develop or will be impossible for them to develop considering

Allround’s ability to inhibit them and the disadvantageous forces of the industry acting against them.

Wielding such tremendous market share is essential to Allround Brands’ continued success because

it reduces the threat of new entrants, buyer power, supplier power, and competitive rivalry—4 of

Porter’s 5 Forces. New entrants face an immense disadvantage in the shadow of Allround’s immense

economies of scale. Buyers depend on Allround’s hefty supply to fill their shelves. Suppliers sell

commodity chemicals and need Allround’s business to stay in afloat. Finally, the largest competition in

the cold product category is less than half the size of Allround and lacks the capability to endorse its

products on Allround’s scale.

With size comes profit. With profit comes a huge advertising and promotion budget. This budget

has enabled Allround to achieve the highest level of brand awareness in the industry at 92.6%. It has

26

also contributed to making customers aware that Allround Brands cares about what’s important to

them. 79.5% of respondents in a survey for cold treatment products in period 10 claimed that product

effectiveness is their main decision criteria. With a brand formulation that grants this effectiveness and

advertising that clearly states it, it’s no wonder that Allround’s customers are the most satisfied in the

cold product category by a wide margin. Though Allround+ and Allright haven’t been around as long as

Allround to accomplish such high figures, these two products have seen continued growth where their

competing products have stagnated. Currently, Allround+ and Allright are leaders in satisfaction with

their direct competition and that gap is widening with time. Allround+ leads Besthelp+ in brand

awareness and Allright will easily pass its competition within the next two periods. Having the highest

brand awareness and the highest customer satisfaction are key to Allround Brands’ triumph in the

industry because these are the factors that affect consumer buying decisions. Consumers have got to

know who Allround Brands is to build trust and they have got to be happy with the product they

purchase. Allround Brands are the best at doing both.

The main strategy going into the next two years will be perpetuating and expanding these

advantages through continued market share, brand-awareness, and customer satisfaction growth.

These will be developed by:

1. Product Development Strategy:

a. Vertical product-line extension: completing the cold product category with the

introduction of a children’s cold product.

i. Allbetter with be a children’s 4hr cold liquid with 350mg analgesic, 2mg

antihistamine , 30mg decongestant, and 10mg cough suppressant

1. This formulation mirrors the already successful Allround, but the

quantities are reduced for children

b. Why this product?

i. It’s in the cold product category

27

1. 70% of the market

2. Within the product category Allround Brands’ has already established

the leading name in

ii. Coldcure is the direct competition

1. The only direct competitor

2. Customers are more dissatisfied with Coldcure than on average

iii. This product would be targeting young and mature families—the two biggest

segments of the cold product category

2. Market Penetration Strategy:

a. Increase market share by staying ahead of the competition on important metrics:

i. Brand Awareness

1. Size of Sales Force

a. Shelf Space

2. Dollars in Advertising

3. Dollars in Promotion

ii. Customer Satisfaction

1. Message decisions reflecting customer decision criterion

3. Adapting to Market Conditions:

a. Price

i. Adjusted in relation to competitors’ prices and inflation

b. Channel Distribution

i. Adjusted by growth/decline in various distributors

In addition to growing through market penetration and product development strategies, there

exists and opportunity to grow through a market development strategy. Over the past 10 years, the

OTC medication market has seen a fairly constant growth of about 8%. When a market is reaching

saturation, growth is expected to decline. This indicates that market saturation has not yet taken place.

As favorable as the current situation is, growth at this level is not sustainable indefinitely. As

28

AllroundBrands’ products enter the maturity phase of the product lifecycle, the natural growth of the

industry will slow and Allround Brands will need to seek new alternatives for growth. These options

include:

1. Geographic Expansion

2. Concentric Diversification

a. Cough products

b. Allergy products

3. Conglomerate Diversification

Conglomerate diversification is easy to rule out because it strays too far away from our group-level

competitive advantages in the cold product market. While this may be an option for our parent

company (Allstar Brands Corporation), it’s not the right fit for Allround Brands. Concentric diversification

into cough and/or allergy products is certainly a feasible option. After Allround Brands finishes

dominating the largest market within the scope of its competitive advantage, these smaller product

categories will provide a way to break out into new markets and see further growth. The option with

the greatest growth potential, however, is gaining a foothold in emerging foreign markets that still have

large room to grow.

Though Allstar Brand’s Corporation already has an international division responsible for getting

Allround’s products in the hands of overseas consumers, there is reason to believe room for

improvement exists. The case states that, “The International Division distributes Allstar products on a

global basis and has a large presence in the European market” (Pharmasim Case Page 12). While the

European market is certainly important, nothing is stated about other geographic markets. This isn’t to

say that we aren’t serving those markets, but the way Pharmasim breaks down the demographics of our

customers provides evidence to the contrary. As it stands, our market research divides our customers

29

into five segments that are based on age and family status. We assume that our market research is as

useful as possible. This division is only useful, however, if our customers are largely homogenous on

non-age/family demographics. One would expect this to be the case if Allstar served mainly Western

countries. If we served any of the Eastern markets, one would expect to see different buying behaviors

and different decision criteria that would be best identified with heterogeneous demographic

breakdowns. This in mind, it seems reasonable that increasing the scope of Allround Brands

international availability will ensure continued growth of the company up to and through the maturity

phase of the product lifecycle. No information currently exists to conduct an analysis, so an objective

has been set to complete an analysis by the end of period 11.

30

MARKETING MIX STRATEGY Product -

Year11 Strategic Plan:

o Keep existing products Allround, Allround+, and Allright with current formulations

o Vertical product extension through launch new product children’s cold liquid Allbetter

o Allbetter with be alcohol free cold formulation with 350 analgesic, 2 antihistamine , 30

decongestant, 0 cough suppressant, 100 expectorant

Year 12 Strategic Plan: Keep Allround, Allround+, Allright, and Allbetter and continue current

formulations

Pricing Strategies -

Positioned as a premium product (see perceptual map)

Priced higher than competition to maintain premium perception

Prices Allround Allround+ Allright Allbetter

Year 11 7.79 6.99 5.79 7.49 Year 12 8.09 7.29 5.99 7.79

Table 16

Place -

Year 11+12: Maintain current channel strategy with emphasis on grocery stores and chain

drugstores and place the least amount of emphasis on convenience stores

Year 11: Expand geographically by offering our products overseas to increase market share and

capture new customer segments in geographical regions such as Asia

o Develop R&D to determine best area, possibly India because of rapid expansion

o Market research indicates that there is a large market for cold and cough products in

India because of the climate and that market is growing exponentially

(http://www.dancewithshadows.com/pillscribe/sohm-launches-26-generic-cough-cold-

pharma-products-in-india/)

o Develop new packaging/product formulations for foreign markets

Promotion -

Will include our communication strategy (advertising and message to consumer) that our

products are premium

Year 11:

o Focus promotion efforts on new product Allbetter through point of purchase displays,

trial size, and coupons

o Maintain point of purchase and reminder advertising for other products

31

o Promotion expenditures:

Promotions Allround Allround+ Allright Allbetter Total

POP 12 7 8 4 31 Trial 3 3

Coupon 6 7 5 18 Total 18 14 13 7 52

Table 17

o Advertising expenditures:


Primary 6.45 3 2.4 3.5 15.35 Benefits 6.45 3 2.4 1.5 13.35

Comparison 15.05 8 6.4 3 32.45 Reminder 15.05 6 4.8 2 27.85

Total 43 20 16 10 89

Table 18

o Total Promotion and Advertising $141m

Year 12:

o Continue emphasis on Allbetter with slight toning down

o Continue maintenance for other three products

o Promotion expenditures:


POP 12 6 8 4 30 Trial 3 3

Coupon 6 7 5 18 Total 18 13 13 7 51

Table 19

o Advertising expenditures:


Primary 6.75 3.15 2.55 3.6 16.05 Benefits 6.75 3.15 2.55 1.8 14.25

Comparison 15.75 8.4 6.8 4.2 35.15 Reminder 15.75 6.3 5.1 2.4 29.55

Total 45 21 17 12 95

Table 20

o Total Promotion and Advertising $146m

32

IMPLEMENTATION Target Market

Our 4 hour multi liquid Allround will continue to target young families, mature families, and

retired

Our 12 hour multi capsule Allround+ will continue to target young singles, mature families, and

empty nesters

Our cold spray Allright will continue to target young singles, empty nesters, and retired

Our children’s cold product Allbetter will target young families and mature families because it is

a children’s product

Increase market share

As of the end of year 10 we capture 36.9% (Allright 4.2%, Allround 26.5%, Allround+ 6.2%) of the

market which includes cold, cough, allergy, and nasal

We are not concerned with increasing market share in allergy because this sector is not lucrative

We currently hold almost half of the cold market and would like to see that increase (Allround

40%, Allround+ 9.4%)

Allbetter will help increase market share of the cough and cold industry by reaching segments of

the market who use our products for cough and cold and would like a children’s version

Increase domestic market share of the OTC market for our entire product line to 40.3% by the

end of year 12

Stretch goal will be achieved through promotion of current premium products and through

introduction of new premium children’s cold product that will reach previously underserved

segments of the market

Increase overall market share through geographic expansion overseas beginning in year 11

33

MARKETING BUDGET AND PROJECTIONS Assumptions:

OTC medicine market will grow at 8% for the next two years o Based on historical growth rate for the OTC industry

Cold and Nasal will grow at the same rate as the overall market o Growth for these markets are expected to grow proportionally with the overall OTC

medicine industry

Average purchases per year per customer remain at year 10 levels for all products o Customer buying behavior is expected to remain the same as previous years

Average discounts by product will remain at year 10 levels and Allbetter’s discounts will be at the average discount level

o Channel distribution is not expected to change for the next two years

New Allbetter product will have a gross margin ratio of 55%, and the other products will have the same gross margins as year 10

o New product will cost the same as the average product to produce, and costs will remain consistent for the next two years

Market share and prices of Allround, Allround+, Allright, and Allbetter will be at assumed levels in chart/budget included below

o Based on historical trends and previous product launch data

Allbetter’s sales data will be shown as net increases (cannibalization impact removed) o In its introductory phase, Allbetter will only be accrued incremental costs until year 13

when it will either be permanently added to the product lineup or discontinued based on its net contribution to the Allround brand

Expenses related to Allbetter will move proportionally with increases in units at the average rate for that expense

o Allbetter’s expenses will not exceed the average level for other products

Allbetter's retention % will be 50% for the next two years o New product will likely have lower retention than established products

Based on the preceding assumptions, projections for each product segment and for AllstarOTC

cold medicine group as a whole have been calculated and included below.

34

Key Statistics–

Sales Revenue

GM % GP $ Promo Adv MktgExp SG&A

Allround 10 879.5 53.8% 472.8 18 42 60 129.4

11 949.96 53.8% 514.8 18 43 61 133.8

12 1025.95 53.8% 562.8 18 45 63 150.3

Allround+ 10 206.8 58.8% 121.6 14 17 31 34.8

11 222.25 59.0% 137.5 14 20 34 37.3

12 240.03 59.0% 150.8 13 21 34 41.9

Allright 10 138.5 58.1% 80.4 13 14.1 27.1 26.3

11 150.56 59.0% 99.4 13 16 29 30.7

12 162.60 58.9% 109.5 13 17 30 35.0

Allbetter 11 28.7 55.0% 15.8 7 10 17 4.2

12 73.6 55.0% 40.5 7 12 19 11.0

Total 10 1224.8 55.1% 674.8 45.0 73.1 118.1 190.5

11 1351.4 55.3% 767.3 52.0 89.0 141.0 206.0

12 1502.1 55.3% 863.5 51.0 95.0 146.0 238.1

Table 21a

net MktgContr

Mktg Share

Cust ret %

Cust life (yr)

Acq $ Acq % Ret $ Ret %

Allround 10 412.8 26.5% 66.6% 2.1 24.3 2.8% 35.7 4.1%

11 453.8 26.7% 66.6% 2.1 24.45 2.6% 36.55 3.8%

12 499.8 27.0% 66.6% 2.1 24.75 2.4% 38.25 3.7%

Allround+ 10 90.6 6.5% 55.7% 1.7 16.55 8.0% 14.45 7.0%

11 103.5 6.5% 55.7% 1.7 17 7.6% 17 7.6%

12 116.8 6.6% 55.7% 1.7 16.15 6.7% 17.85 7.4%

Allright 10 53.3 4.7% 48.6% 1.5 15.115 10.9% 11.985 8.7%

11 70.4 4.7% 48.6% 1.5 15.4 10.2% 13.6 9.0%

12 79.5 4.8% 48.6% 1.5 15.55 9.6% 14.45 8.9%

Allbetter 11 -1.2 0.8% 50.0% 1.6 10.5 36.6% 6.5 22.7%

12 21.5 1.9% 50.0% 1.6 10.6 14.4% 8.4 11.4%

Total 10 556.7 37.7% 62.1% 1.9 56.0 4.6% 62.1 5.1%

11 626.3 38.7% 61.6% 1.9 67.4 5.0% 73.7 5.4%

12 717.5 40.3% 66.3% 2.1 67.1 4.5% 79.0 5.3%

Table 21b

35

Budget for Year 11–

Allround Allround+ Allright Allbetter Total

Market Share 26.7% 6.5% 4.7% 0.8% 38.7%

Year 11 Allround Allround+ Allright Allbetter Total Price 7.79 6.99 5.79 7.49

Avg Price 5.1 4.5 3.9 5.0 Units 185.9 51.8 42.7 5.8 286.1

% Total Units 65.0% 18.1% 14.9% 2.0% 100.0% Manf Sales 957.12 233.01 168.48 28.7 1387.29

Promo allow 169.0 36.5 28.5 4.3 238.3 COGS 273.4 59.0 40.6 8.6 381.6

Gross Margin 514.8 137.5 99.4 15.8 767.3 GM % 53.8% 59.0% 59.0% 55.0% 55.3%

Promo Exp 18 14 13 7 52 AdvExp 43 20 16 10 89

Total P/A 61 34 29 17 141 Sales Force 18.8 5.2 4.3 0.6 29

Admin 22.7 6.3 5.2 0.7 35 Fixed 92.3 25.7 21.2 2.9 142

Total SG&A 133.8 37.3 30.7 4.2 206.0 Operating Inc 319.9 66.2 39.6 -5.4 420.3

Table 22

Budget for Year 12 –

Allround Allround+ Allright Allbetter Total

Market Share 27.0% 6.6% 4.8% 1.9% 40.3%

Year 12 Allround Allround+ Allright Allbetter Total Price 8.09 7.29 5.99 7.79

Avg Price 5.3 4.7 4.1 5.1 Units 195.5 54.4 45.5 14.3 309.7

% Total Units 68.3% 19.0% 15.9% 5.0% 100.0% Manf Sales 1045.31 255.52 185.83 73.6 1560.22

Promo allow 184 40 31.5 11.0 266.5 COGS 298.6 64.7 44.8 22.1 430.2

Gross Margin 562.8 150.8 109.5 40.5 863.5 GM % 53.8% 59.0% 58.9% 55.0% 55.3%

Promo Exp 18 13 13 7 51 AdvExp 45 21 17 12 95

Total P/A 63 34 30 19 146 Sales Force 20.5 5.7 4.8 1.5 30

Admin 27.3 7.6 6.4 2.0 40 Fixed 102.5 28.5 23.8 7.5 150

Total SG&A 150.3 41.9 35.0 11.0 220.0 Operating Inc 349.4 74.9 44.5 10.5 497.5

Table 23

36

Performance Evaluation Marketing Metrics Allround

Increase customer satisfaction o At 65.5% at the end of year 10 o To 70% by the end of year 12

Maintain brand awareness o At or above 97.5%

Increase OTC market share o At 26.5% at the end of year 10 o To 26.7% by the end of year 11 o To 27% by the end of year 12

Allround+

Increase brand awareness o At 64.8% at the end of year 10 o To 75% by the end of year 11 o To 80% by the end of year 12


Increase market share o At 6.4% at the end of year 10 o To 6.5% by the end of year 11 o To 6.6% by the end of year 12

Allright

Increase brand awareness o At 34.6% at the end of year 10 o Increase to 45% be the end of year 11 o Increase to 55% by the end of year 12


Increase market share o At 4.6% at the end of year 10 o To 4.7% by the end of year 11 o To 4.8% by the end of year 12

Prepare to position product as a premium version in year 13 (end penetration pricing)

37

Allbetter

Increase brand awareness o To 40% by the end of year 12

Increase customer satisfaction o To 55% by the end of year 12

Take market share from Coldcure and End+ (children’s cold competition) o Net increase of 0.8% in year 11 o Net increase to 1.9% in year 12

Expected to have a negative net marketing contribution for the first year o If net marketing contribution is more negative than 10% of sales, prepare to phase out

product in year 12 by reducing marketing expenditure (advertising) o If net marketing contribution is still negative in year 12 after reducing marketing

expenditure, discontinue production of Allbetter If marketing expenditure wasn’t decreased in year 11, decrease marketing in

year 12 and prepared to discontinue in year 13

If sales in year 11 exceed expectations then increase marketing expenditure proportionally

Allround Brands

Increase overall brand awareness

Increase overall customer satisfaction

Increase market share o To 40% of overall OTC market by the end of year 12

allround brands marketing plan years 10-12 · allround brands marketing plan years 10-12 the...

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