Advertising Agency
Team A
Introduction……………………………………………………………………………………………………………………..3
Manufacturer’s Suggested Retail Price………………………………………………………………………………..4
Volume Discount and Promotional Allowances……………………………………………………………………5
Advertising Budget…………………………………………………………………………………………………………..5
Advertising Agency………………………………………………………………………………………………………….6
Advertising Messages……………………………………………………………………………………………………….6
Promotions………………………………………………………………………………………………………………………7
Sales Force…………………………………………………………………………………………………………………….10
Segmentation………………………………………………………………………………………………………………….11
Line Extensions………………………………………………………………………………………………………………12
Cumulative Net Income and Stock Price……………………………………………………………………………14
Period Nine……………………………………………………………………………………………………………………15
Conclusion…………………………………………………………………………………………………………………….16
References……………………………………………………………………………………………………………………..17
Appendix A……………………………………………………………………………………………………………………19
Initial Strategy……………………………………………………………………………………………………..19
Decisions, Results, and Interpretations……………………………………………………………………21
Appendix B……………………………………………………………………………………………………………………28
Net Income Graphs and Charts………………………………………………………………………………28
Manufacturer Sales and Stock Price Graphs and Charts……………………………………………29
Introduction
Marketing strategies only result in superior returns for an organization when they are implemented successfully. Kotler (1997) describes implementing a marketing strategy as the process that turns plans into action. Team A’s PharmaSim plan was to utilize the initial strategy report as a template for decisions and adjust accordingly based on market conditions and performance. Accordingly, the team’s initial short-term strategy was to steal market share in the cough segment by adjusting the advertising, segmentation, and demographics and competing against the market leader Coughcure. This strategy proved ineffective, most likely due to the competitor pursuing a focus strategy that allowed them to achieve an even greater differentiation in the cough market segment.
The team then altered the strategy to strive to improve Allround’s market share and sales by further penetrating the existing market base. Kokemuller (2016) contends that this approach requires additional marketing and more focused sales efforts to penetrate more deeply into an existing customer base. This approach worked, only after a significant amount of additional money was invested in the sales force and promotions.
In the early stages of the simulation the team acted conservatively in terms of budget and was hesitant to spend resources on research or analytics. Over two consecutive periods, the stock price lagged and net income declined. Therefore, in an effort to identify the issues, the team began to invest in reports relevant to the performance challenges so that educated decisions could be made. McClymont and Jocumsen (2003) suggest that the use of customer research to pursue segmentation and targeting strategies has afforded opportunities to significantly improve marketing effectiveness and reduce costs. This proved to be an effective use of resources and performance improved.
Having learned from Allround’s performance, and making the necessary strategy adjustments, Team A was prepared to implement the long-term marketing strategy and launch Allright. The team purchased and reviewed numerous reports, aligned the pricing and advertising to enter the market as a pioneer in the product life cycle, and adjusted the sales force and promotions accordingly. The Allright launch was a success. The Allstar brand experienced rapid revenue growth and the stock price increased. This formula subsequently served as the foundation in making the remainder of the PharmaSim decisions. “The road to successful execution is full of potholes that must be negotiated for execution success” (Hrebiniak, 2005, p. 5).
Manufacturer’s Suggested Retail Price
In marketing a product many key factors should be considered, the price is amongst one of the most important. There are several important things to consider such as the target group purchasing the product, the effectiveness of the product, and brand loyalty. Pricing of a product depends on all these things and can be detrimental to an upcoming product if you don’t get it just right.
The team decided to increase the price in period 1 after purchasing the pricing report. The pricing report allowed us to compare our price to our competitors and adjust accordingly. We quickly learned how sensitive changes in pricing could be in period 2 when we increased our price significantly from $5.39 to $5.61. In the PharmaSim report for that period we were told that our MSRP was too high also evidenced in the decline in stock price from $49.82 to $39.89. Consumers did not react well to the price increase and as a result, our net income and stock price significantly decreased. In the following period we lowered our price down to $5.61 in response to the negative feedback we received.
We purchased the pricing report in period 5 in order to establish a price for our new non-drowsy product, Allright. We set the beginning price conservatively at $5.50 for Allright based on other allergy products on the market but soon realized that this was not the best approach since Allright had the pioneer advantage of a new unique product. We purchased the pricing report again in period 6 when we got the feedback that our price was too low and increased Allright’s price a whole dollar to $5.50.