Sales Force
The sales force (SF) allocation was modest initially, starting at 127 and adding 11 for a total of 138. At this juncture, Allround was in the growth or “rapid market acceptance” phase of the product life cycle (PLC) and the moderate SF designation was satisfactory. Market share grew and the stock price increased.
The team’s strategy was to then base the SF on the distribution channel’s performance with data gathered from the sales report. For instance, if in the prior period the indirect/wholesale group contributed the biggest percent of sales, SF staff was added in that category in an attempt to increase that particular channels sales success. When implemented, Allround as a whole performed poorly, dropping over ten dollars in stock price and losing market share. Zoltners, Sinha, and Lorimer (2006) state that although the growth phase of a company’s product life cycle is often rewarding organizations still make crucial errors in sizing their sales forces resulting in lost opportunities.
With back-to-back periods of poor performance the team chose to purchase the sales force report going into period 4. Zoltners et al. (2006) recommends that in the growth phase of the PLC that, companies must invest in market research and in developing forecasting methods and sales response analytics in order to make better decisions about sales force sizing. The report proved enlightening. In comparison to the competition, Team A was still understaffed significantly. An additional 40 sales force personnel were added. This addition proved beneficial. The SF was now in line with the primary competitor Besthelp, and Allrounds performance improved which resulted in a dramatic increase in market share, net income, and stock price.
Having learned the importance of investing in market research Team A purchased the sales force report again and initiated a more aggressive sales approach for the introduction of the new allergy product, Allright since it was in the first or “introductory” phase of the product life cycle. Zoltners et al. (2006) stresses that by not hiring enough salespeople, companies miss the opportunity to earn tens of millions of dollars in additional sales and profits in their first three years. The team increased the SF significantly from 249 to 377. Heavy sales force emphasis was placed amidst the detailers in an effort to stimulate new sales for the allergy product. Organizations must deploy sales forces strategically so they “call on the right customers, at the right time, in the right way” (Kotler & Keller, 2012, p. 554). This strategy proved successful, the SF designation in line with other marketing decisions helped launch Allright and capture 21.7% of the allergy market. The winning formula proved to be optimizing the sales force’s effectiveness by utilizing the market research to ensure the right size sales force and align the force per proper channel.
Segmentation
The initial market segmentation strategy was to attempt to market Allround in the cough segment (in addition to Cold) by redirecting the Advertising message to compare against the market leader, Coughcure and highlight the cough suppression benefit. Additionally all segment demographics were targeted: young singles, young families, mature families, empty nesters, and retired. There was one cycle of performance improvement and then Allround failed to produce positive revenue and the stock price plummeted. “Regardless of what type of segmentation scheme we use, the key is adjusting the marketing program to recognize customer differences” (Kotler & Keller, 2012, p. 214).
The A Team therefore, invested in the conjoint analysis to identify what the different customer types wanted. It was determined that young families, mature families, and retired consumers, accounting for over sixty-three percent (63%) of the overall target market, were most interested in an alcohol free cold product that also relieved cough symptoms. Subsequently, the Allround product was reformulated with no alcohol in an effort to appeal to this demographic segmentation to improve sales and market share. This strategy proved successful and was maintained throughout the remainder of the cycles for the Allround product.
Allright (4 hour non drowsy OTC allergy capsule) was introduced in period 5 and a new segmentation strategy was required for this product specifically. As a market pioneer in the product life cycle, it was determined that to gain the greatest advantage the product would be marketed specifically in the allergy segment and target all the demographic groups. Kotler and Keller (2012) state that the market pioneer’s brand usually establishes the attributes the product class should have, therefore the strategy is to aim at a broad market. The strategy proved successful, Allright captured a broad portion of the market share, revenues accelerated and the stock price increased.
Line Extensions
Allstar was given the opportunity to add a line extension to Allround in period three and four. The three options were a 4-hour cough liquid for children, a 12-hour multi-symptom capsule, or a 4-hour cough liquid. Team A bought the conjoint analysis survey in period three to aid in our decision. “With conjoint analysis, respondents see different hypothetical offers formed by combining varying levels of the attributes, then rank the various offers. Management can identify the most appealing offer and its estimated market share and profit” (Kotler & Keller, 2014, p. 581). After deliberating the benefits and risks of each choice, we ultimately decided against adding a line extension based on the data presented in the conjoint analysis.
The conjoint analysis revealed that Allround’s current 4-hour liquid multi-symptom product was the highest ranked in preference and product utility according to all respondents. We quickly excluded the 12-hour multi-symptom capsule from consideration based on the conjoint analysis as well as the survey of decision making criteria that we purchased in period two. According to the conjoint analysis, the 12-hour multi symptom capsule is consistently rated least appealing. This conclusion is supported by the survey of decision making criteria that reports form and duration as being rated less important than product effectiveness, side effects, and price. The form and duration would be the primary changes in this line extension so we determined that it would not assist in Allround’s overall success.
Based on the data presented in the conjoint analysis, we chose not to add a 4-hour children’s cough liquid either. Although the report indicated that it was favored over the 12-hour capsule, the product utility was still low for all respondents. Team A concluded that the market would be too specific and it was not in line with the direction we had planned for Allround. Another consideration we took into account for the children’s cough medicine and 12-hour capsule was the similarity between our current 4-hour multi-symptom liquid. We were concerned that these products would be too similar to the parent brand and result in cannibalization of Allround. According to Kotler and Keller (2014), “Even if sales of a brand extension are high and meet targets, the revenue may be coming from consumers switching to the extension from existing parent-brand offerings – in effect cannibalizing the parent brand” (p. 265). Team A decided not to create these line extensions based on these reports and possible outcomes.
We also chose not to add the 4-hour cough liquid line extension so we could focus on our new unique non-drowsy allergy product. After looking back on our decisions, we concluded that not doing a 4-hour cough liquid line extension was a missed opportunity. Our initial strategy was to capture some of the cough market by changing the advertising of Allround to compare to Coughcure and promote the similar ingredients. We quickly saw that this strategy was not working and consumers seemed to be confused. Looking back, we believe that it would have helped our Allround brand by adding the 4-hour cough liquid as a line extension. This possibility is supported by the data from the conjoint analysis. When cough is selected as the illness, the 4-hour cough liquid has the highest rank and product utility. This would have given us an opportunity to focus solely on the cough market and obtain some of that market share as well as building our brand in the cold market.
We had another opportunity in period five and six to add a line extension but chose against it and instead introduced a new allergy product in period six. The new allergy product would be the first of its kind because it is a non-drowsy allergy capsule that does not require a prescription. Allround’s brand recognition likely would have made a line extension successful, however, we decided to take a bigger risk and introduce a unique product in order to set ourselves apart from our competition. This decision proved to be successful and we saw a large increase in our stock price.