There are four firms that compete directly with AllStar Brands in the over the counter (OTC) cold and allergy market. The competition is: B&B Health Care, Curall Pharmaceuticals, Driscol Corporation, and Ethik Incorporated. AllStar Brands produces Allround, a 4-hr multi-symptom cold liquid. Retail sales place Allround second behind Ethik Incorporated by approximately $40 million. While the brand management team is pleased with these results, their goal is to outperform their competitors and gain a higher share of the market. The Allround brand contains an analgesic, an antihistamine, a decongestant, a cough suppressant, and alcohol. Customers prefer to use Allround at night because the strength of the medication helps them rest. Allround is viewed as one of the most effective brands treating multi-symptoms on the market, providing Allround a competitive advantage in this category of OTC cold medications (James, Kinnear, & Deighan, 2014, p. 16).
While Allround is the preferred medication for consumers with multi-symptoms, many consumers and physicians argue that patients are often over medicated when using multi-symptom products (James, Kinnear, & Deighan, 2014, p. 17). In addition, the alcohol in Allround causes drowsiness in some patients. In order to gain market share from its competitors, AllStar Brands must take advantage of the brand recognition it has previously established and develop products that target more specific symptoms. There is also opportunity to develop a capsule form of the medication. A recent survey indicates that capsules are often preferred by consumers over liquid (James, Kinnear, & Deighan, 2014, p. 17).
Because Allround is labeled as multi-symptom cold medication, it falls into the cold category. After a thorough review of the market share data, there is opportunity to capture market share in the cough, allergy and nasal categories. See table 1 below (James, Kinnear, & Deighan, 2014, p. 18).
The brand management team recommends the purchase of survey information offered by a national marketing research firm which will provide a more thorough report of information regarding the use of allergy and cold medication. In addition, the report will provide demographic information that might provide insightful information regarding who is purchasing these products. The team suspects that there are segments of the market that are not being reached and as the team considers opportunities for development of new products there may be opportunities in specific demographics. The cost of the survey is $100,000. The team is requesting consideration for the purchase of this information within the next few years to assist in their future decision making (James, Kinnear, & Deighan, 2014, p. 19) .
Brand awareness is very high for Allround. In addition, consumers are more likely to mention the brand when questioned about cold medications. However, the team is concerned about the brand’s retention ratio because it was lower than other brands. This may be because brands who target specific symptoms are more likely to be repurchased over multi-symptom brands like Allround. Again, the team sees opportunity for AllStar Brands by taking advantage of the brand’s awareness among consumers and creating a product that targets more specific symptoms for targeted demographics (James, Kinnear, & Deighan, 2014, p. 20).
A company must understand their position in the market before determining their metrics. It is important to understand who your customers are and what your position is in the market. Allround is the market leader is over the counter cold medicines so using market share as a metric would make sense (James, Kinnear, & Deighan, 2014).
Completing the competitive analysis will provide our team with a complete understanding of our position in PharmaSim. Determining a better pricing strategy may help to increase profits. Since the situation analysis allows the purchase of marketing reports, data will be provided to use in the decision making processes. The reported symptoms, brand perception and purchasing decisions reports will provide information on how to better understand how the customers picked a product and how we can better address our target market (James, Kinnear, & Deighan, 2014).. The most important decision the team will have to make in PharamSim is price. If the price is increased, the team predicts a rise in revenue, gross margin and net income. Selling Allround at the low price will create operating over capacity by 2- 17%. This increases costs of goods sold tremendously and decreases gross margin and net income. With the higher price, unit sales and gross margin will decrease. This allow for a better bottom line. In the first four periods the team must sell high, and then moderate, then low it is very important to our strategy (Holbert, 2013).
Next, marketing and innovation produce results and all other aspects are costs. Making sure the team stays on schedule and within costs keeps our customers satisfied. There are various aspects of innovation during the project that can help us tackle obstacles. Marketing and innovation during the project will contribute to the success of the team (Holbert, 2013).
When bringing new products to the market there are two useful strategies. First is the skimming strategy. Second is the penetration strategy. Skimming is the process of pricing a new product high when it first enters the market and then lower the price overtime. (Holbert, 2013). This strategy could work when introducing a new product to market. Next is the penetration strategy. This strategy is the process of bringing a new product to the market where a competitor’s product is very similar (James, Kinnear, & Deighan, 2014). Using this strategy, will allow Allround to steal customers from our competition.
Net marketing contribution is a measure of contribution to company profits after marketing and sales expenses are accounted for. The net marketing contribution formula is NMC = Market demand, Market share, Selling price, Consumer demand, Margin percentage, and Marketing expenses. Different pricing strategies will affect how a company views their NMC (Holbert, 2013). Companies using a pricing strategy of profit oriented will analyze the entire NMC and look for higher contributions. Sales oriented companies will look for a high market share. Companies that are customer oriented will look at market demand and market share while competitor oriented companies will look at market share and selling price (James, Kinnear, & Deighan, 2014). Based on the company’s pricing strategy the NMC will be different. The NMC will be used to determine if the marketing strategy can cover the total costs associated with marketing, advertising and sales (Holbert, 2013).