Pharmasim Case Summary

Topics: Pricing, Target market, Brand Pages: 8 (2648 words) Published: February 19, 2013
Executive Summary
As the brand manager for Allround cold medicine, there were many decisions regarding product formulation, strategy, line extensions and product launches over the company’s last 10 periods. The brand was focused on remaining a profitable, mature product family within the cold medicine category, but also maintaining a premium brand image.

ALAN’S INITIAL STRATEGY. Please add, it should only be around 1 paragraph.

After a period of declining sales for Allround, we increased the advertising budget to be consistent with our competitor’s budget. We decided to be very consistent with our strategy over the ten periods; however, in hindsight we should have implemented a more dynamic strategy that factored in the changing preferences of our target segments, cannibalization from Allround, and channel relationships. After the ten periods, we had a lower stock price than most competitors, an average cumulative net income, and average cumulative manufacturing sales. The high net income is attributable to the fact of Allright’s high margins, accounting for a growing part of our sales. We often saved part of our budget that could have been used more effectively to boost sales and therefore the stock price. Looking forward, we will change our product mix and pricing to better target specific cold relief usage to alleviate the cannibalization from Allround and to provide a complete cold relief product portfolio. This will be accomplished by reformulating Allround to be used for nighttime cold relief with Allright becoming the daily cold relief medicine. Additionally, Allround+ will continue to focus on children’s cold relief. A new allergy relief product will be released in order for AllStar to venture into this market.

General Strategy
Our general strategy was based on our desire to increase: sales, stock price, and net income. This was achieved by realizing that AllStar was the premium brand on the market, and our pricing, promotions, products and place should reflect that. We created a strategy whereby AllStar’s products could specifically target different segments so that each product matched the benefits sought be each target segment. This was done by pricing Allround and Allround+ as a premium product because our target markets were the least price sensitive. Allright was then priced at a lower cost to reflect the price sensitivity of its target market. As a whole, we wanted the AllStar brand to be viewed as providing the highest promotional support as well premium advertising for its products. This was accomplished by providing a large sales force for each channel, and, where effective, a high co-op and point of sales budget.

The Allround product is the leader in the over-the-counter cold remedy market. It is a 4-Hr liquid cold medicine that focuses on treating the five basic symptoms of a cold. These include: aches and fever, nasal congestion, chest congestion, runny nose, and coughs. While Allround is an all-in-one product that can treat most cold and allergy symptoms, however, our customers base typically purchase Allround for cold relief and is typically taken at night due to the strength of the medication and because the alcohol and antihistamine help the patient rest.

We decided to drop the alcohol from Allround because drowsiness due to antihistamines or alcohol was the most often mentioned negative side effect, especially when used during the day. We believed that dropping the alcohol would increase consumption during working hours, and thus, would increase sales of our product. By dropping alcohol, parents felt more comfortable giving Allround to their kids. This decision was successful, as sales increased in both of our target segments (young families and mature families).

We decided to not reformulate Allround, as we believed the product composition suited our target audience. Also, as we focused Allround as a cough suppressant, adding expectorant would not have matched the...
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