Pharmasim Markting Plan

Birmingham Business School

University of Birmingham

Introduction
Established in 1924, Allstar Brands Corporation is the leading
manufacturer of packaged goods in the world. The company comprises of
three separate divisions: Consumer Products, International, and
Pharmaceuticals. The Pharmaceutical division is responsible for the
production and marketing of ethical drugs & OTC medications.
Allround is the cash cow product for Allstar - with 40.4% market share in
the OTC remedy market. Its recent success in terms of sales and
profitability were mainly due to its strong brand awareness and product
effectiveness which enabled it to achieve a high customer satisfaction. As
a result, Allround will act as a crucial component in the implementation
and success of the long term strategic plan of Allstar Brands Corporation.

Mission Statement:
To develop innovative products to cure diseases and ease the
suffering of patients

Vision Statement:
To offer a complete solution to customers, in order to enhance their
quality of life

Market Overview:
Strategic Objectives
Short-term Objectives:
1.
2.
3.
4.

Increase sales by 3.75% to $475 Million

Increase stock price to $42 per stock
Increase overall Market share to 25 %
improve relationship between the company and the suppliers,
retailers and customers

Long-term Objectives:
1. expand the business product portfolio in 3 years with a new product
2. be the market leader in the pharmaceutical industry in the next 5year period
3. enhance our shareholder value
4. increase market penetration to 75% in the next 5 years

Segmentation, Targeting, Positioning

Allround products will address the multi-symptom market indiscriminately. The
focus symptoms will be aches and fever, chest congestion and cough (common
to both colds and allergies).
The adopted positioning strategy will be based on the motto: because were
here all-round the year showing that Allround is suitable for all seasons and
can appease all symptoms.
Value Proposition: superior-formulated product to alleviate consumers cold
and/or allergy symptoms in a short time with minimal side effects.
The trade-off will based on the concept for a superior product priced equally that
brings comfort to consumers in a brief period of time.

Marketing Strategy
1. First period (year 1-2):
As seen in the SWOT analysis (appendix 1), Allround has a low retention
rate (appendix 3). One of the reason might be that multi-symptom
medication usually suffers from low retention rates. However, this impacts
negatively on the overall sales.
To address this issue, the adopted Allround marketing strategy is Market
Penetration during the first period Year 1-2 of the plan.
The production capacity will be increased to almost 100% by investing
into the production facility to achieve its long term objectives. Short term,
Allround aims to maintain its advertisement budget to $20 Million,
however it may be reduced in the future as the Allround has already
established itself in the market and has the highest brand awareness.

2. Second period - Years 3 5

During the next planning period, assuming that 1) the results from the
first period are positive, 2) the sales target was achieved and 3) retention
rate was increased, Allround will pursue a Need-based Strategy.
This strategy will translate into further investment into the R&D based on
the available market research and will develop a new product, much more
focused on market demand and customer needs.

Marketing activities:
1. Product
Product development will be a secondary focus for Allround with a new product
development taking place in the second part of the planning period.

A product formulation will be proposed during Years 1-2 to answer the market
demand of a more focused product. Also, research into consumer preferences
showed a strong preference for 12h-capsule product formulation.
During years 3-5, Allround will propose a new product to complement the
existing offering on the market. This product will be more focused on reducing
higher level cold/allergy symptoms.

2. Price
For the first period, we will maintain its price to $5.29, as inflation rate
continues to increase to 3.1%.
During the second planning period, the new product will be priced
similarly. In calculating the MSRP, a combination of benchmarking with
similar offerings on the market, production costs and overhead will be
used.
The price of the current product will decrease by approximately 15-20%
during year 3 and will continue to decrease to up to 30% by the end of the
period, until completely withdrawn from the market.

3. Place
Push strategy: In the short run, Allround will try to improve its relationships

with its suppliers, retailers, wholesalers and customers by increasing the

trade promotion to $2 Million and consumer promotion to $6 Million to
promote sale of its products.
Distribution Channels:
1. Direct Channels: urban and suburban stores and retail chains.
2. Indirect channels: wholesalers

4. Promotion
Push Strategy: Allround will be looking to increase its direct sales force to

100 and indirect sales force to 45 to further increase its sales through
direct & indirect channels that are growing rapidly.

Pull strategy: Allround currently enjoys the highest market share, highest brand
awareness rate and highest brand trials and most frequent purchases, the pull
strategy is considered to be sufficiently sound and healthy.
The advertising budget for the integrated marketing communications will
increase by approximately 10-20% with a special focus given to the following
areas:
1. Advertising to ensure a good pull approach from the consumers
2. Social media integration and viral marketing through activities engaging
consumers to share their stories
3. A new special packaging to reflect the new product formulation and a
completely new, refreshed packaging for the second product.

Contingency plan:
At the end of the first planning period (Year 1-2), the management team will
evaluate the current results against the objectives and measure the results.
If the results achieved do not meet the objectives set, in terms of overall sales,
market share and retention rate, Allround will change the planned strategy.
In the plan, we envisage a new product launch in the second period of time.
However, should the results not be in line with the objectives, Allround will
continue with a Need-based strategic approach, market development.
In this we envisage an extension of the distribution channels to reach more
remote areas. As seen from the SWOT and the Pestel Analysis (appendix 2-3),
the current customer reach extends to only 75% of the population.
Therefore, extra efforts will be put into reaching those customers as well, through
indirect channels and increasing the number of direct as well.
Also, special attention will be given to the direct sales force who will be more
proactive in these area by organizing a special structure in the sales department.

Bibliography
2GC, n.d. 2GC Active Management. [Online]
Available at: http://2gc.eu/resource_centre/balanced-scorecard
[Accessed 02 2015].
Age, T. M. A. C. o., 1989. The Marketing Audit Comes of Age. Philip Kotler, William
T. Gregor and William H. Rodgers III.
Graham Hooley, B. N. N. P., 2011. Marketing Strategy and Competitive
Positioning. 5 ed. Harlow: Financial Times/ Prentice Hall.
Hill, C. W. L., 1988. Differentiation versus Low Cost or Differentiation and Low
Cost: A Contingency Framework. The Academy of Management Review, 13(3),
pp. 401-412.
Levitt, T., 1980. Marketing Success Through Differentiationof Anything. Harvard
Business Review.
Porter, M. E., 1996. What Is Strategy?. Harvard Business Review.
Porter, M. E. et al., 2011. HBR's 10 Must Reads on Strategy. s.l.:Harvard Business
Review.
Robert S. Kaplan, D. P. N., 2000. Having Trouble with Your Strategy? Then Map It.
Harvard Business Review.

Appendix 1

Financial Summary:
Industry Sales
Industry sales growth

$1,491.2 M
5.50%

Retail sales
Manufacturers Sales
Promotional Allowance
Cost of goods Sold
Gross Margin
Consumer & Trade Promotion
Advertisement
Net Income
Stock Price
Production Capacity Utilization

$468.1 M
$355.3 M
$60.4 M
$122.6 M
$172.3 M
$ 7.0 M
$20 M
$67.2 M
$38.35
85.10%

(Source: PharmaSim Simulation, Period 0)

The Economic prospective for the industry appear to be highly positive as

the industry sales continue to grow by 5.50% to $1,491.2 Million of which
Allround accounts for $468.1 Million. Moreover, Allround has a net Income
of $67.2 Million and is the market leader in the OTC cold and allergy
market, as it continues to focus on brand awareness and trade distribution
for which it has devoted around $20 Million in Advertisement and $7
Million in consumer and trade promotion. However, its resources are being
under-utilized as the production capacity can be enhanced to support the
long term objectives of the company.

Appendix 2

P.E.S.T.E.L Analysis
- High government taxes.
Political - Pressure on pricing of drugs by the governments (Price Control).
- Government concerns with regard to drug usage and the market
segment to which it will be used to cater
- Consumers perceive medicine to be expensive.
- Strong Entry Barriers, such as high cost of capital investment
Economic - Global Economic growth of 5.5% in the industry
- Highly competitive market, as companies increase their
al
spending on advertisements and promotions
- Increase in Inflation rate to 3.1%
- International exchange rate
- Global increase in the growth of population
Social
- Changes in consumer attitude, as consumers are becoming
more health conscious
- Product side effects and effectiveness can have a strong
impact on purchase decision of consumers
- Increase usage of drugs by senior citizens
- Significant improvement in research and development.
- Efficiency in production facilities.
Technolog - Increased use of social media, print media and internet for the
purpose of advertising.
ical
- Customized treatments.
- Increased legislation on the advertising of drugs.
- Highly regulated
Legal
- Global law inconsistencies.
- Strict regulations regarding the
- Safe dispose of toxic waste
Environme - Impact of chemicals on the environment
- Environmental pressure groups
ntal

Appendix 3

S.W.O.T Analysis
Strengths
-

Highest market share in OTC cold segment

Highest brand awareness in the
market (74.1%)
Highest brand trials and most
frequent purchases
Highest customer satisfaction
(58.3%)
Marketing
Efficiency
Index
rating of 2.04
Strong brand perception for
aches, nasal, runny, cough and
allergy
Strong base of loyal customers

Weaknesses
-

Opportunities
-

Growing demand for nasal

spray
Growing demand for coldalleviating medicine, by 6.6%
Growth in overall industry sales
by 5.5%
Still a low market penetration
rate for OTC (only 64%)
Strong
growth
in
various
indirect distribution channels

Low retention rate (46.3%)

Under-utilisation of resources
and product capacity
Allround is only offered in liquid
form

Threats
-

Highly competitive market: 5

players and 10 brands in total.
Heavily
regulated
by
government
Capsule product formulation is
demanded by consumers
Brand Switching customers

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Appendix 4

Porters Five Forces

Competitive Rivalry:
Allround brand competes with five other firms in the OTC cold and allergy
market. Since its establishment, it has achieved incredible level of growth
and success. However, it faces stiff competition from its direct competitor
Ethik Incorporated.

Threat of New Entrants:

Allround has the highest level of brand awareness and is the most
frequently purchased brand in the market for this market segment. Its
strong brand awareness in the market along with its product effectiveness
have enabled Allround to create a base of loyal customers. As a result, it
has been able to maintain a price leadership in the market. Therefore, the
threat of a new entrants is very low, as significant investment is required
to enter into any of the well-established market segments.

Bargaining power of buyer:

There are five key players that are operating in the market. Therefore, if
the customer is dissatisfied by a brand then they can switch the brand,
due to which the retention rate of Allround has plummeted down, as
compared to its competitors.

Threat of Substitution:
Threat of substitution is quite low as Allround is the market leader in the
OTC cold and allergy market segments. However, it is only sold in liquid
form, which can be a cause for concern for Allstar brand, as consumers
prefer the capsule formulation as it is more convenient.

Bargaining power of Supplier :

The supplier can increase the input price of the product based on the level
of demand in the market and can have a strong impact on the production
supply chain. Therefore, companies keep multiple suppliers to curb the
power of suppliers. Since, consumers dont make their decisions based on

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price, therefore all round can charge higher price for its products from the
customers.

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R EFERENCES:
http://www.novartis.com/about-novartis/our-mission/index.shtml
http://www.ukessays.com/essays/international-business/global-pharmaceuticalindustry.php

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