* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download PharmaSim Case Preparation
Grey market wikipedia , lookup
Marketing communications wikipedia , lookup
Celebrity branding wikipedia , lookup
Dumping (pricing policy) wikipedia , lookup
Perfect competition wikipedia , lookup
Marketing mix modeling wikipedia , lookup
First-mover advantage wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Price discrimination wikipedia , lookup
Service parts pricing wikipedia , lookup
Product lifecycle wikipedia , lookup
Online shopping wikipedia , lookup
Food marketing wikipedia , lookup
Target audience wikipedia , lookup
Planned obsolescence wikipedia , lookup
Brand equity wikipedia , lookup
Brand awareness wikipedia , lookup
Product placement wikipedia , lookup
Youth marketing wikipedia , lookup
Green marketing wikipedia , lookup
Target market wikipedia , lookup
Consumer behaviour wikipedia , lookup
Global marketing wikipedia , lookup
Neuromarketing wikipedia , lookup
Segmenting-targeting-positioning wikipedia , lookup
Brand ambassador wikipedia , lookup
Brand loyalty wikipedia , lookup
Pricing strategies wikipedia , lookup
Predictive engineering analytics wikipedia , lookup
Advertising campaign wikipedia , lookup
Market penetration wikipedia , lookup
Emotional branding wikipedia , lookup
Marketing strategy wikipedia , lookup
Visual merchandising wikipedia , lookup
Product planning wikipedia , lookup
Retail Brand CBBE and Category Analysis Team Kiss Team Members: Zheng Yang Zhuobin Chen Yung-Pei Lee Wei Wang Xiaoying Ma Jiajia Cai Date: Nov. 1st, 2010 1 PharmaSim Case Preparation Our company is Allstar Brands, the market leader in over-the-counter (OTC) cold medicine market according to the case. The objectives and goals of Allstar are to look for new opportunities in emerging market with support from healthy and growing cash flow, to introduce new product, to maintain leadership and to maintain long-term profitability and market share in an increasingly competitive and changing environment. Certain measurements are introduced to weight the success and progress of the objectives such as feedbacks from customers and retailers, keeping tracks on our marketing report and purchasing and analyzing the marketing research reports. Allstar enjoys certain competitive advantages over other competitors in terms of financial performances and product performances. With increasing budget Allstar has, high market share in cold category and leadership in this market are promised. Moreover, Allstar has the highest brand awareness and large percentage of trail level, most frequently purchased and unaided awareness in a specific and unique market, multi-symptom cold liquid. On the other hand, several disadvantages make the brand lag behind the development. Low retention rate, for example, is the key issue to solve in the simulation. Limitations on product line as Allstar does not manufacture any drugs in the area of cough, allergy and nasal category but cold in liquid form have a huge concern from end-user point of view. Solo dosage form, fairly high price and unsatisfied self space in some channels influence the long-term development of Allstar. As for the customers of Allstar, they have a great need in OTC cold remedy market. Besides, Consumers have negative attitude toward alcohol in the drug formulation and Customers think capsule is more convenient than liquid form. As for the whole market, it seems that There is a second highest demand on cough category and new brands and brands that fill very specific needs often have higher retention rates. Five major competitors are following into the cold category which has the highest growth rate and Allstar has focused on. In order to combat with major competitors, B&B health care, Curall Pharmaceuticals, Discol Corporation and Ethik Incorporated, Allstar has several options to react to the current situation including reformulation or line extensions in terms of formula, increasing sales forces, gaining more support from retailers to get better shelf space placement and promotional programs, issuing more coupons to motivate repurchases to improve our retention rate and adjusting sales force allocation and promotion strategy according to consumers’ shopping habits. Promotional allowance, product turnover, sales force support, co-op advertising allowances, discount volume are effective ways to motivate collaborators to help us achieve our goals. Our direct channels are independent drugstores, chain drugstores, grocery stores, convenience stores, mass merchandisers and wholesalers, merchandisers, detailers are indirect channels. 2 In a broader view, some external factors influence and at least limit our option selection. First, the technology development of drug manufacture enable more formulations and functions while cut down the cost. As a result, formulation selection is brought to a level of importance that we can never neglect. Moreover, current inflation rate was increased by 3.1% and thus increase on retail price and decrease on channel margin is inevitable, which pricing strategy is ought to be draft carefully. Last but not least, public have an increasing concern about their health issues. Promotion and advertising information need to be cautiously picked to convey the appropriate messages. Place/Channel Motivation After visiting three major retail outlet in Chicago, several comparisons are made to address characteristics of each brand that influence the success of a certain brand based on two charts in Appendix, General Description of Outlet as it Applies to the OTC Cold Medication Product (Chart 1) and Compare a Particular OTC Liquid Multi-Symptom Cold Medication Across Channel Outlets (Chart 2). Walgreens attracts traditional customer, professionals and baby-boomers and appropriately 2.5 percent of store is dedicated to ZiCAM as we selected among all three retailer for comparison. What’s more, Walgreens has about 17 brands sold in allergy category, and with a pharmacist area in the store. Target attracts fashion followers, quality pursuers and more female customers and appropriately 1.5 percent of store is dedicated to ZiCAM as we selected among all three retailer for comparison. What’s more, Walgreens has about 20 brands sold in allergy category, and with a pharmacist area in the store. Wal-mart attracts f brand aspirationals, price-sensitive affluent and value-price shoppers and appropriately 1 percent of store is dedicated to ZiCAM as we selected among all three retailer for comparison. What’s more, Walgreens has about 15 brands sold in allergy category, and with a pharmacist area in the store. Compared with ZiCAM sold among all three retail stores, mass merchandisers offer the cheapest price at $8.96 versus several cents higher in drug stores and a buck higher in grocery stores. However, ZiCAM occupies more shelf space in drug stores than grocery stores and mass merchandisers. We realized how much important shelf space is for brands to have as much shelf space as possible. Past experience, firstly, proves that 70% of all purchase decisions are made in-store. Having a spot in a store increases the possibility of in-field purchase and it is much better than not being able to purchase in the store. Then, shelf allocation and display are crucial in decision making process. The pharmacies displayed in good positions such as eye-level shelf are much easier for customers to notice or reach and thus attract customers at the first opportunity. Also important to mention, nearby products within the same category would be selected by customers to make comparisons. As a result, the more shelf space a brand has, the more chance it is for customers to select that brand. In order to gain shelf space, especially new brands, the volume of sales brought to the channel partners is one important measure. Other critical measures incorporate the profit margin for retailers, the competitiveness relation with the private label products of retailers and unique or 3 competitive functions or features of the new brand to penetrate into a new market. Some other factors also motivate channel of distribution to sell a certain brand of products such as customer demands, profit margin earned by selling products, Less direct competitiveness relations with the own private label products, good relationship with retailers and manufactures and Logistics cooperation. Product Cannibalization It happened all the time when cannibalization occurred in the process of product line extension and so does it happen in PharmaSim simulation. We are facing three options to move about product line extension: 4-hour cold liquid for children, 12-hour multi-symptom capsule and 4 hour cough liquid. Our selection of line extension of Allround is 4 hour cough liquid and we believe it has the least degree of cannibalization compared with other two options. 4-hour cough liquid will have the least degree of cannibalization since the current product 4-hour multi-symptom liquid emphasizes multi-symptom function with heavy drug effect and has less effectiveness to relieve cough; 4-hour cough liquid emphasizes its function to relieve cough. Both of the other two choices: 4-hour cold liquid for children and 12-hour multi-symptom capsule mainly function to relieve cold. 12-hour multi-symptom capsule keeps its core product value to cure multi-symptoms, but only in capsule form; while 4-hour cold liquid for children is one subset of children’s products---these two are similar to current core products, yet product differentiation will result in the least degree of brand cannibalization. The new line extension will have a good outcome largely depending on the brand awareness of current core products. In the cough-cure category, two brands Coughcure and End are taking up the whole market share, which is 366 million in sales. Our new added line, 4-hour cough liquid will directly compete with these two products. Although it will be newly launched, with high brand awareness and recognition of Allround brand, we believe that the new added line can immediately take up at least 20 percent in market share. While the current product, 4-hour multi-symptom liquid generates approximate sales of 400 million with a market share of 40%, we strongly believe that our main sales come from core product, but core product’s brand awareness largely and positively influence purchasing of our new products. We conclude two options to minimize the degree of cannibalization of the line extension. The first one is always emphasizing different functions between two brands to help shape consumer’s insight about products performance and imagery, thus to form their view that these two products are not substitutes for each other. The second option is to encourage consumer trials by cross selling two products together to make consumers feel different about these two products. In conclusion, to minimize the degree of cannibalization, the key is to emphasize product differences. Once deliver the message about product differences and create appropriate strategy to shape consumer’s judgments and feelings about the new product lines, brand cannibalization 4 will be greatly reduced. Pricing/Margin Promotion – buyer behavior After interviewing two people, we have some pieces of information on how to outline promotional plan. About the question “How does the consumer realize that he/she needs an OTC cold remedy?”, we concluded that after symptoms of catching a cold are manifested, they will realize the needs of purchasing the OTC products. One respondent answered “When I cannot breathe” and the other mentioned “When a cold lasts longer than 1 week or when I cannot sleep at night when I am sick.” About the question “How does the consumer gather information about potential solutions?”, we concluded that the in-store information and others’ suggestion are important to them. One respondent answered “By scanning the shelf in the drug store and my own past experience” and the other mentioned “Friends and family” Customers have distinct ways in evaluating alternative solutions based on their decision making criterion. In conclusion, the quality, functionality, safety and effectiveness of the products are core criterion in decision making process. One respondent said “Whatever I have to buy it from the pharmacy – the more potent product are sold behind the counter.” And the other stated “Safety and scientific evidence of effectiveness.” When asked what brand they actually selected, they have very different responses. In general, we might say they choose the product depending on their own preference. One respondent picked Sudafed because “Sudafed with Ephedrine – it is the strongest drug available” and the other chose very different ones, private label as “I usually choose private label or generic brands.” Speaking about post-purchase evaluation, these two people have different opinions about the brand chosen. One of them sticks to her habitual brand. The other does not believe that OTC product can satisfy his needs. 5 One respondent talked about Sudafed “Very satisfied with Sudafed – it is the only product that relieves the nasal congestion.” and the other said “Cold medicines do not always seem to work very well for me so I am not totally satisfied. I know of no better alternatives so I do not plan on switching. ” Other topics have been studied by observation research such as the level of satisfaction the consumers have with the brand chosen. Most consumers will base on their symptoms to choose the products. Many consumers will find and compare the price of OTC products in the stores. Some consumers will consider the safety and side effect of OTC products. Referrals from customers and pharmacists in the stores are common as well. Also, some sources have positive influences on customer’s decision such as friends, family, relatives, pharmacists, doctors, spokesman and advertising. Relatives, for example, are one critical resource. When consumers purchase the OTC product, they hope they can get useful information from the close ones. Pharmacists play an important role as when consumers have questions in the stores; they ask sales staff for answer, for example, “which product is the effective one to me.” For doctors, if consumers have their own primary doctors, they will not purchase the OTC product that often. If spokesman’s image and sense of reliability can bring about the positive effect to consumers, they will be more willing to purchase that OTC brand. Media effect influences some level of consumers’ decision. Answering to the question of “Does the consumer purchase for himself/herself or for someone else?”, as for the first two questions, consumers not only purchase OCT products for themselves, but also for others, such as friends, families, or relatives. Consumers highly rely on their habitual brands or someone’s suggestions to select the OTC products. When purchasing the product for others, consumers will purchase it according to others’ needs. Thereby, the decision making process in PharmaSim influences buyer behavior and leads to our promotional plan in terms of advertising message, point of purchase displays and coupons. For advertising messages, consumers care about the functionality and safety of a product. They are less price-sensitive but pay more attention to the in-store information and depend upon their past experiences. Word of mouth is also useful to them, especially from family and friends. They believe those are the reliable sources. As for point of purchase display, shelf space is important. For example when purchasing the OTC product, consumers mentioned the more potent product is sold behind the counter. We can hardly conclude any coupon plan according to the talking of those two interviewees because they did not mention any, but we believe it is really important from past experience and the knowledge learned in the class. 6 Marketing Plan Overall This marketing plan is drafted for period 3 to 8 in PharmaSim simulation based on what we have so far. 1. 5Cs. Company: The goals are to look for new opportunities in the market while maintain the competitive leadership status in current market. The measures to determine our direction are customer feedbacks and marketing reports. Strengths of Allstars are its multi-functionality, high effectiveness and high brand awareness and market share. Weaknesses of Allstars include solo dosage form, low retention rate, no specific target area. Customers: The underlying needs we are trying to satisfy are quality, functionality, safety and effectiveness of the products. The benefit they seek is to relieve from illness earlier and safer. The current trends in the market are Great needs in the OTC cold remedy market; Consumers have negative attitude toward alcohol in the drug formulation. Customers think capsule is more convenient than liquid form; there is a second highest demand on cough category; new brands and brands that fill very specific needs often have higher retention rates. Competitors: Our primary competitors are B&B health care, Curall Pharmaceuticals, Discol Corporation and Ethik Incorporated. They are following after us entering cold remedy market, which is the fastest growth market. Our reaction could be reformulation, line extension, sales force changes and adjustment on pricing and promotion strategies. Collaborators: Direct channel partners including Independent drugstores, chain drugstores, grocery stores, convenience stores, mass merchandisers and indirect channel partners including wholesalers, merchandisers and detailers are the ones to help us create and deliver value, and we are going to motivate them by promotional allowance, discount, sales force and etc. Context: There are many external influences limiting our selection including technology development, inflation rate and public knowledge and perception transition. 2. STP Segmentation: There are a lot of segments for selection in PharmaSim. Cold, cough, allergy and multi-symptom in the form of liquid and capsule for adults and children. 7 Targeting: We are targeting at adult multi-symptom area and we are trying to target at adult cold area. Hopefully, cough in the long run. Positioning: The value proposition to our target markets will be high quality, highly effective, absolute safe and relatively cheaper price. Our pricing strategy as a market leader will be moderate high but not highest. In order to prevent new entry, we might reduce the price temporarily to a level that new entry can’t afford. The advertising strategy will be stressing on new functions of the products and its effectiveness. In-store setting and shelf allocation by channel partner make it easier for customers to have in store shopping decisions. 3. 4Ps Channels/ Pricing: Cannibalization: Our choice of line extension will be 4 hour cough liquid and we believe it has the least degree of cannibalization because it is specifically for cough remedy while the current product line is in cold remedy area. The new line will definitely benefit a lot from current core product because of its high brand awareness in cold remedy area. Two options here are to minimize the degree of cannibalization. The first one is always emphasizing different functions between two brands to help shape consumer’s insight about products performance and imagery, thus to form their view that these two products are not substitutes for each other. The second option is to encourage consumer trials by cross selling two products together to make consumers feel different about these two products. 8 9 Appendix Chart 1 General Description of Outlet as it Applies to the OTC Cold Medication Product OTC Cold Remedies Drug Stores Grocery Stores Mass Merchandisers Name of Outlet Walgreen Target Wal-Mart Fashionista, Brand aspirationals; Quality pursuers, Price-sensitive affluent; Value-price shoppers. Baby-boomers. Female customer. 2.5% 1.5% 1% Yes Yes Yes 20 15 Describe Typical of Traditional customer customer, Professionals, Approx. % of Store Dedicated to Product category Pharmacist Present? Approximate 17 Number of brand carried Chart 2 Compare a Particular OTC Liquid Multi-Symptom Cold Medication Across Channel Outlets Here, we choose ZICAM as the brand to investigate, through which we can find the impact of shelf positioning on pharmacy brand. Brand Drug Stores Grocery Stores ZICAM # of SKUs brand Mass Merchandisers for 5*10 13/13/13/6/7/2/2 7/10/4/3 10 O whole shelf floor Approximate linear feet of shelf 6 feet space dedicated to brand MSRP of primary N/A Part of one shelf A small portions of floor one shelf floor 4 feet 2 feet N/A N/A $ 9.89 $ 8.96 $ 9.89 $ 8.96 N/A N/A SKU (if available) Standard price retail $ 12.49 Promotion price $ 8.99 Describe any As advertised (Sale) promotion vehicles (Pops, coupons, etc.) 11