ALLROUND BRANDS Loren Bronczyk,

MARKETING PLAN Matt Latham, Sarah

O’Dell, Stacy
Sorensen

YEARS 10-12
The continuing legend of a resurrected company lies within. What the
future holds is uncertain, but the plan to get there is not
TABLE OFCONTENTS
EXECUTIVE SUMMARY ......................................................................... ERROR! BOOKMARK NOT DEFINED.
SITUATION ANALYSIS........................................................................... ERROR! BOOKMARK NOT DEFINED.
KEY STATISTICS .................................................................................. ERROR! BOOKMARK NOT DEFINED.
INDUSTRY ANALYSIS ............................................................................ ERROR! BOOKMARK NOT DEFINED.
CHANNEL ANALYSIS ............................................................................ ERROR! BOOKMARK NOT DEFINED.
IMPLICATIONS FOR NEXT TWO YEARS ....................................................... ERROR! BOOKMARK NOT DEFINED.
MARKET DEMAND .............................................................................. ERROR! BOOKMARK NOT DEFINED.
PRICE COMPARISON ............................................................................ ERROR! BOOKMARK NOT DEFINED.
KEY MARKET INFORMATION ................................................................. ERROR! BOOKMARK NOT DEFINED.
PERCEPTUAL MAPS ............................................................................. ERROR! BOOKMARK NOT DEFINED.
SWOT ANALYSIS ............................................................................... ERROR! BOOKMARK NOT DEFINED.
GOALS/OBJECTIVES ............................................................................ ERROR! BOOKMARK NOT DEFINED.
MARKETING STRATEGY ........................................................................ ERROR! BOOKMARK NOT DEFINED.
MARKETING MIX STRATEGY.................................................................. ERROR! BOOKMARK NOT DEFINED.
IMPLEMENTATION .............................................................................. ERROR! BOOKMARK NOT DEFINED.
MARKETING BUDGET AND PROJECTIONS .................................................. ERROR! BOOKMARK NOT DEFINED.
KEY STATISTICS ............................................................................... ERROR! BOOKMARK NOT DEFINED.
BUDGET FOR YEAR 11 ...................................................................... ERROR! BOOKMARK NOT DEFINED.
BUDGET FOR YEAR 12 ...................................................................... ERROR! BOOKMARK NOT DEFINED.
PERFORMANCE EVALUATION – MARKETING METRICS ................................. ERROR! BOOKMARK NOT DEFINED.

1
 Executive Summary

From its inception, Allround Brands floundered around as a weak, unfocused

manufacturer of a single cold treatment in a combative arena of aggressive competitors.
Desperate for outside assistance, a new brand management team was employed and
immediately wielded Allround Brands’ arsenal of weapons with proficiency. Under the new
team’s command, the end of the first period saw a shift in power like never before and, over
time, the marketplace was forced to accept Allround Brands as its master. The warpath was set
and the company marched unimpeded towards its goal of market dominance for ten periods
while gaining new products and seeing increases in important metrics across the board.

The driving force behind this movement is the utilization of Allround Brands’ competitive
advantage: its leading position in market share, brand awareness, and higher-than average
customer satisfaction. These important numbers formed an impenetrable wall around Allround
Brands’ profits. Try after try of competitors attempts to scale these walls were thwarted by the
disadvantageous forces of the industry and the company’s direct intervention. At the end of
period 10, these walls have been built up to the point that it would take a disaster of
unfathomable magnitude to bring them down.

The future of this marketing machine remains uncertain, but its plans have been set and
detailed in the pages to come. The most obvious part of the plan is to continue aggressive
growth on a scale most likened to Alexander the Great’s far reaching empire. This growth can
only be fueled by market penetration, market development, product line extensions, or
diversification. Given these options, the brand management team performed an analysis that
will be outlined herein and decided to continue market penetration while introducing a new
product to be positioned as a children’s cold medication. Doing so will mark the acquisition of
the final, currently untapped sector of the familiar cold product category. With these lands
under control, Allround Brands will have to seek growth in foreign lands—countries that still
have a market to takeover—so an analysis of the most profitable nations is set to be conducted.

Supporting the feasibility of this grand plan, financial projections have been included and
everything checks out. Come this time two years from now, Allround Brands will have expanded
its conquest, know which market is ripe for the picking, and be prepared to launch an invasion.

2
SITUATION ANALYSIS
Current Performance Review

1) The following segments are currently being targeted:

Allround - Cold Allround+ - Cold Allright–Cold/Nasal

Young Singles X X
Young Families X
Mature Families X X
Empty Nesters X X
Retired X X
Table 1

Allround

 Allroundstarted by targeting young families and mature families in the cold product category
o At the start of period 6, however, the realization was made that Allroundhad potential to be
a leader in the retired segment, so it was added to Allround’s focus

Allround+

 At the inception of Allround+ in period 4, the mistake was made of straying from Allround
Brand’s core-competency in the cold product category and labeling it as an allergy medication
o Correcting this, Allround+ was shifted back to the cold product category
 The targeted segments for Allround+ were determined by the assumed appeal of the
formulation to the different segments and by the desire to target the remaining, untargeted
segments
o It seemed intuitive that young singles, mature families, and empty nesters would prefer a
12hr capsule to avoid the necessity of repeated medication

Allright

 Deciding to stay within the cold product category, the introduction of Allright as a cold nasal
product helped to fill out the cold product category and establish AllroundBrands as the leader
in that category

2) Our share of cold sales indicates that Allround is the number one product in the cold product
category with Allround+ and Allright having larger and equal shares respectively to their direct
competition.

3
 Figure 1

 Allround is and has been the market leader for the last ten years
 Allround + has seen solid growth since its introduction

Figure 2

 Allright has demonstratedincredible growth since its introduction, making it tied for the number
one spot in the nasal spray market
o With the current linear trend, it will be the leader in period 11
 Year 10 summary
o Allround has a 40% market share in the cold market, Allround+ has a 9.6% market share of
the cold market, and Allright has 38.9% of the market share of the nasal spray market
o Total market share based on Manufacturers Sales of Allround is 26.5%
o Total market share based on Manufacturers Sales of Allround+ is 6.2%
o Total market share based on Manufacturers Sales of Allround is 4.2%
o Allround Brandsconstitutes 36.9% of the market in Mfr Sales

4
3) The following symptoms and market segments are targeted:
 Allround is targeted at the cold market: promising to relieve aches, clear nasal congestion,
suppresses coughing, and minimize side effects
 Allround+ is also targeted at the cold market; promising to relieve aches, clear nasal congestion,
dry up runny nose, and minimize side effects
 Allright is targeted at the nasal market; promising to clear nasal congestion, dry up runny nose,
minimize side effects
 We believe that our productsdeliver on these promises. We have made very slight alterations to
our Value propositions over time, to reflect what we feel that we accomplish. We do not wish to
make major changes, so as to avoid sending mixed messages. However, we do want to be sure
that our product does what we say it does.

4) We focus our products in the following ways:

 Allround- A cold medicine that will help cure most conditions, but whom is targeted specifically
at cold symptoms. We decided to remove alcohol early on in order to reduce side effects so that
the product would be more kid friendly.
 Allround+ - All the Great benefits of Allround but in a twelve hour capsule form. This is targeted
at those who don’t have time to take a dose of the liquid every four hours.
 Allright – A cold spray for when the nose is the primary problem, and targeted at those who
want a cold spray over the liquid or capsule form. We have captured a large segment of the
nasal market in relatively short time, and we hope that we will continue to do so.
 We sell our products primarily in grocery and chain drug stores.
 In general, we have intended to price our product as a premium brand. Allround and Allround+
are not the most expensive on the market, but are close. We decided to enter the market with a
price penetration strategy with the launch of Allright. Thus, Allright is priced comparatively
lower than other products, but this has helped us capture a large part of the nasal market.
 We have promoted our products with a heavy emphasis on point of purchase expenditures. We
have used trials when a product is first launched, but try to reduce that to zero over about two
years after launch. We avoid Co-op advertising as we do not believe it benefits our brand. We
had heavy coupon use early on, but moved away from that in later years. About 50% of our
overall marketing budget went to Advertising, using a premium ad agency. About 30% of our
marketing budget went to promotional allowances. The remaining 20% was spent on sales and
administration.

5
KEYSTATISTICS
Here we have a number of key tables, showing results broken down by product, and with our
overall totals for the ten years we have been in business.

Sales Revenue ($ in Millions)

Year Allround Allround+ Allright Total

1 438.8 - - 438.8
2 461.2 - - 461.2
3 493.1 - - 493.1
4 542.7 24.1 - 566.8
5 595.8 42.0 - 637.8
6 636.8 81.1 15.6 733.5
7 685.5 111.3 37.9 834.8
8 723.7 140.6 68.3 932.6
9 788.6 171.4 101.0 1,061.0
10 879.5 206.8 138.5 1,224.8
Table 2

 We are seeing good growth in all product areas

 Our weak point is that so much of our sales is still based on Allround
 Diversification via more consistent sales across product will help limit any sudden market shocks
that could impact Allround

Gross Margin (%)

Year Allround Allround+ Allright

1 49.1 - -
2 51.1 - -
3 50.0 - -
4 49.0 55.5 -
5 50.2 56.5 -
6 50.7 57.0 54.4
7 52.5 57.7 56.9
8 52.1 57.3 56.7
9 52.5 57.6 57.0
10 53.8 58.8 58.1
Table 3

 We make the largest % margin on Allround+ and Allright

 Increasing our sales of Allround+ and Allright will mean higher profits overall, as they have a
higher margin % then Allround

6
Gross Profit ($in millions)

Year Allround Allround+ Allright Total

1 215.6 - - 215.6
2 235.7 - - 235.7
3 246.5 - - 246.5
4 265.9 13.4 - 279.3
5 298.8 23.8 - 322.6
6 322.7 46.2 8.5 377.4
7 359.6 64.3 21.6 445.5
8 377.0 80.6 38.7 496.3
9 413.8 98.7 57.5 570.0
10 472.8 121.6 80.4 674.8
Table 4

 Our overall profit is made largely off Allround

 If we are to continue our strong profit trend, Allround is going to either need to keep growing,
or our other products are going to need to see a much larger revenue figure

Marketing expense ($ in millions)

Year Allround Allround+ Allright Total

1 26.7 - - 26.7
2 36.5 - - 36.5
3 41.8 - - 41.8
4 43.0 13.1 - 56.1
5 43.6 13.0 - 56.6
6 46.0 18.8 14 78.8
7 45.0 19.0 14.9 78.9
8 47.0 22.0 19.3 88.3
9 53.3 25.0 21.0 99.3
10 60.0 31.0 27.1 118.1
Table 5

 Marketing expenses are going up, but it’s in line with our increase in revenues
 More money spent on marketing has seen a solid Return

7
Sales and Admin expense ($ in millions)

year Allround Allround+ Allright Overall

1 24.2 - - 24.2
2 26.1 - - 26.1
3 28.9 - - 28.9
4 30.9 1.5 - 32.4
5 32.3 2.5 - 34.8
6 34.1 4.8 1.1 40.0
7 34.5 6.4 2.5 43.4
8 35.7 7.9 4.3 48.0
9 38.3 9.5 6.4 54.2
10 39.9 10.7 8.1 58.8
Table 6

 Note that specific numbers for Sales and Admin per product are not available. The information
provided assumes that the expense is broken up according to the % of units sold.
 We have has about 20% of our marketing budget go to S & A over the last ten years
 We believe that our high sales force (both direct and indirect) have helped us gain a dominate
position in the market

Net Marketing Contribution ($ in Millions)

Year $ %
1 50.9 11.6
2 62.6 13.6
3 70.7 14.3
4 88.5 15.6
5 91.4 14.3
6 118.7 16.2
7 122.3 14.7
8 136.3 14.6
9 153.5 14.5
10 177.0 14.4
Table 7

 Marketing has had a varied initial run

 Marketing contribution as a % has stabilized over the last 4 periods

8
Market Share (%)

Year Allround Allround+ Allright Total

1 23.7 - - 23.7
2 24.1 - - 24.1
3 24.6 - - 24.6
4 25.4 1.1 - 26.5
5 25.3 1.8 - 27
6 25.1 3.2 .6 29
7 25.5 4.1 1.4 31
8 25.4 4.9 2.4 32.8
9 26.0 5.6 3.3 35
10 26.5 6.2 4.2 36.9
Table 8

 Our products are dominate in the market; overall and by market segment

Customer retention (%)

Year Allround Allround+ Allright Total

1 58.2% - - 58%
2 64.6% - - 65%
3 64.5% - - 65%
4 65.9% 53.5% - 65%
5 65.3% 53.4% - 64%
6 65.7% 53.5% 46.7% 64%
7 66.1% 54.3% 47.2% 63%
8 66.1% 54.6% 47.5% 62%
9 66.2% 55.3% 48.2% 62%
10 66.6% 55.7% 48.6% 62%
Table 9

 Total % reflects weighted average based on unit sales

 Allround is driving our high customer satisfaction level
 Allround+ and Allright need to have increased customer retention in order to help drive up sales

9
Customer life (years)

Year Allround Allround+ Allright Average

1 1.8 - - 1.8
2 2.0 - - 2.0
3 2.0 - - 2.0
4 2.0 1.7 - 1.9
5 2.0 1.7 - 1.8
6 2.0 1.7 1.4 1.7
7 2.0 1.7 1.5 1.7
8 2.0 1.7 1.5 1.7
9 2.1 1.7 1.5 1.8
10 2.1 1.7 1.5 1.8
Table 10

 We can expect that a customer is going to keep using our product for an average of two years

AcquisitionCosts ($ in millions, % of sales) VsRetention Costs ($ in millions, % of sales) – this table

shows how much money we spend per year to acquire new customers, and how much we spend per
year to retain existing customers. It is worth noting that normally it is expected to cost about five times
as much to acquire a new customer as to retain an existing customer. The data suggests that we are
more interested in retaining customers, and thus, our dominate market position, than growing our
market base.

Year Acquisition Cost $ Acquisition Cost as Retention Costs $ Retention Costs as

% of sales % of sales
1 14.9 3% 21.6 5%
2 18.0 4% 23.8 5%
3 29.4 6% 26.7 5%
4 29.5 5% 27.2 5%
5 46.8 7% 32.0 5%
6 37.1 5% 41.9 6%
7 38.7 5% 49.6 6%
8 41.5 4% 57.8 6%
9 50.4 5% 67.7 6%
10 50.4 4% 67.7 6%
Table 11

Strategic Implications

 The breakdown of the marketing budget has been very effective

 Our company is showing solid growth
 Revenues and profits are both increasing
 More money is spent on retaining customers than acquiring new ones, which has been effective

10
INDUSTRY ANALYSIS
Explanation (all answers are relative to Allround Brands)
Threat of New Entrants Low
 Efficiencies from economies of scale reduce competitive advantage
possibility of new entrants
 High startup capital isrequired
 Partial saturation of the market already
Threat of Substitutes Moderate
 Those affected by colds can seek alternative treatments
 There are many prescription drugs available
Threat of Consumer Low
Buying Power  Consumers have the unimpeded ability to buy whatever cold
medication they want
 Allround Brands’ exceptionally high customer satisfaction tends to
create customers who prefer Allround Brands
Threat of Distributors’ Low
Buying Power  Distributors depend of Allround Brands to fill their shelves
 Allround Brands’ products are demanded by consumers
Threat of Supplier Low
Power  Suppliers produce commodity chemicals and sell at near
competitive- parity
Threat of Rivalry Moderate
 There are many successful companies in the industry
 Having the highest market share, customer satisfaction, and brand
awareness reduces this threat
Product Life Cycle Growing
Position  Constant levels of about 8% growth per year
 This is expected to diminish in the near future as the industry starts
to enter the mature phase

Overall Attractiveness High

 Because the market is still growing and all the threats are low or
moderate, the industry Is highly attractive
Table 12

11
CHANNEL ANALYSIS

Channel Distributions for Allround Brands

35.0%

30.0%

25.0% Indep Drug

Chain Drug
20.0%
Grocery
15.0% Convenience

10.0% Mass Merch

Wholesalers
5.0%

0.0%
Allround Allround+ Allright

Figure 3

 Channel Analysis reveals that most of our sales are to Chain Drug, Grocery, and Wholesalers.
 Convenience and independent drug stores are probably not worth investing much capital in.
 Mass merchants are worth some investment, but focus should stay on the big three.
 Sales force should be highly focused on both Grocery Channels and Wholesalers, as well as
supporting any needs they might have. We should plan on putting about 65% of our personnel
budget into these areas.
 Chain Drugstores and Mass Merchants should not be neglected, as they make up a total of
about 30% of our buyers; so about 30% of our personal budget should be devoted to this
channel.
 Promotions by channel should be determined by who we sell to. Thus, about 30% of our
Allround sales come from Grocery, so about 30% of the promotional budget should go to
Grocery, in so far as dollars can be distributed via channel

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IMPLICATIONS FOR NEXT TWO YEARS
 Average growth rate for over the last 10 years is 8.64% overall
 Average growth rate for over the last 10 years for the cold industry is 9.7%
 Average growth rate for over the last 10 years for the cough industry is 3.0%
 Average growth rate for over the last 10 years for the allergy industry is 8.6%
 Average growth rate for over the last 10 years for the nasal industry is 11.9%
 Growth last year was over 10% for grocery, and over 9% for mass merchant and independent
drug
 Keepa focus on Grocery, chain Drug and Wholesalers for the next two years. This is consistent
with our current strategy.
 Ignore Convenience and Independent Drug stores for next two years, then revisit data
 The nasal industry has the largest growing market segment. Keep our nasal product (Allright) in
a dominate position, by continuing to fund the advertising campaign for it should show solid
growth
 Over the last ten years, we have maintained a 50%/30%/20% split of our ad budget,
promotional budget, and sales/admin budget respectively. We believe that this has been a solid
breakdown, and is key to our success. Continuing this breakdown over the next two years
should allow us to continue our dominance.

13
MARKET DEMAND

Market Share by Firm and Product Category

70

60

50
Total
40 Cold
Cough
30
Allergy
20 Nasal

10

0
Allstar B&B Curall Driscol Ethik

Figure 4

 Allround Brand’s products are best known for both Cold and Nasal, as indicated by market share
 B&B Brand Products are best known for allergy, as indicated by market share
 Curall Brand Products are best known for Its cough Medicine, as indicated by market share
 Driscol Brand Products are best known for Allergy, though based on market share, they are
beginning to fail as a business
 Ethik Brand Products are best known for Cough and Nasal, as indicated by market share

14
Brand Awareness by Product—These Charts shows what % of people are aware of the various brands
that exist within the industry.

Cold Market

Extra
End+
Dryup
Coldcure
Besthelp+
Besthelp
Allround+
Allround

0% 20% 40% 60% 80% 100%

Figure 5

 Allround is the most known of brand across the cold industry

Cough Market

End

Coughcure+

Coughcure

0% 20% 40% 60% 80%

Figure 6

 High brand awareness for competition could prove a challenge if we decide to enter this market

15
 Allergy Market

Defogg

Believe

0% 10% 20% 30% 40% 50%

Figure 7

 Low Awareness of existing Brands could make the allergy market a tempting market to enter

Nasal Market

Effective

Dripstop

Allright

0% 10% 20% 30% 40% 50%

Figure 8

 Allright is relatively unknown, and needs to have a more effective marketing campaign

16
Level of Need for the Product Segment – The first table shows what % of the overall market each
market segment makes up. The second table shows what % of people report each symptom shown.

Need for product segment

Cold 69.9%
Allergy 6.3%
Cough 23.8%
Table 13

Need by Symptom %
Reporting
Aches 60.9%
Nasal Congestion 50.5%
Chest Congestion 61.3%
Runny Nose 47.6%
Coughing 61.3%
Allergy Symptoms 21.0%
Table 14

 Cold products have the greatest need

 Allergy products have the least need

17
Price ATTRACTIVENESS
Price vs. Satisfaction Level – This map shows overall value for a product. Customer satisfaction shows
on the bottom, and as a product is more to the right, the more effective it is. How high a product is
shown indicates how expensive that product is. Thus, the greatest value to the customer is located to
the bottom right. A further breakdown by industry is included in the perceptual map section

Relation of Price to Customer Satisfaction

$8.50
Allright
$8.00 Allround
Allround+
$7.50 Believe
Besthelp
$7.00 Besthelp+
Price

Coldcure
$6.50 Coughcure
Coughcure+
$6.00
Defogg
Dripstop
$5.50
Dryup
Effective
$5.00
End
30% 40% 50% 60% 70%
End+
Customer Satisfaction

Figure 9

 Allroundis the most effective thing on the market

 Allround+ is priced below its value, but is not perceived to be as effective
 Allright is positioned as a relatively ineffective medicine, but the price is very attractive

18
Price Comparison—Tables showthe overall MSRP in dollars per product within their respective market
segment

Price Comparison of Cold Products

Extra
End+
Dryup
Coldcure
Besthelp+
Besthelp
Allround+
Allround

$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00

Figure 10

 Allround is second highest priced product in the cold market

 High price is consistent with our premium product strategy for Allround
 Allround+ is a midrange priced alternative to Allround

Price Comparison of Cough Products

End

Coughcure+ Series1

Coughcure

$6.00 $6.50 $7.00 $7.50 $8.00

Figure 11

 Coughcure is the clear premium leader based on price in the cough market
 Coughcure+ appears to be a low-cost flanker

19
 Price Comparison of Allergy Market

Defogg

Believe

$- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00

Figure 12

 Prices in the allergy market are even. Either a premium or cost-leader strategy could be effective
in this market if Allround Brands were to enter it
 Premium strategy would be consistent with Allround Brands Corporation

Price Comparison of Nasal Market

Effective

Dripstop

Allright

$5.30 $5.40 $5.50 $5.60 $5.70 $5.80 $5.90 $6.00

Figure 13

 When Allright was introduced, it utilized a market penetration pricing strategy

 Allright is still using the same strategy today, as when it was introduced
 Large part of Allright's dominate market position is likely due to this strategy

20
KEY MARKET INFORMATION
Cold Cough Allergy
Key value drivers Product Effectiveness Price Product Effectiveness
Primary benefits sought Product Effectiveness Price Product Effectiveness
Price sensitivity description 6.2% care most about price 50.4% care most about price 12.2% care most about price
Key demographic descriptions Mature Family Retired Mature Family
Purchases per year per customer 3.1 1.8 5.2
Number of customers 99,820,000 34,730,000 9,340,000
Revenue per customer $ 22.02 $ 13.81 $ 30.63
Percent margin 45.60% 45.60% 45.60%
Margin per customer $ 10.04 $ 6.30 $ 13.97
Table 15

 Weighted average price of Cold products is currently $7.10

 Weighted average price of Cough products is currently $7.67
 Weighted average price of Allergy products is currently $5.89
 Cough market is the only market that cares primarily about price
 Mature Families are key Demographic in Cold and Allergy markets
 Highest margin per customer in Allergy Market
 Allergy market is smallest, but each customer is worth more than other markets
 Prices are relatively inelastic

21
PERCEPTUAL MAPS
Price vs. Satisfaction Level—The same map as in the price attractiveness section, but broken down by
market segment.

Cold Industry

Perceptual Map - Cold

$9.00
$8.00
$7.00 Allround
$6.00 Allround+
$5.00
Price

Besthelp
$4.00
$3.00 Besthelp+
$2.00 Dryup
$1.00
End+
$-
Extra
40% 45% 50% 55% 60% 65% 70%
Satisfaction

Figure 14

 We can see that Allround has the highest level of customer satisfaction
 After Allround, the next closest competitor is Besthelp, but they are about to be overtaken by
Allround+
 We are in a strong position when it comes to product value

22
Cough Industry

Perceptual Map - Cough

$8.20
$8.00
$7.80
$7.60 Coughcure
Price

$7.40 Coughcure+
$7.20 End
$7.00
$6.80
$6.60
48% 48% 49% 49% 50% 50% 51% 51%
Satisfaction

Figure 15

 We can see that customer satisfaction is fairly low in this industry. If we were to entry the
market here, we might have some luck taking away from competing products, due to their low
satisfaction level

Allergy Industry

Perceptual Map - Allergy

$7.00
$6.00
$5.00
$4.00 Believe
Price

$3.00 Defogg
$2.00
$1.00
$-
40% 42% 44% 46% 48% 50%
Satisfaction

Figure 16

 Much like the cough industry, customers within this segment are reasonably unsatisfied.
Entering the market could result in several immediate converts as they want to get away from a
brand that they are not very satisfied with

23
SWOT Analysis
Strengths Weaknesses
 Market share leader  Often over capacity due to growth
 Economies of scale in production  Lots of capital tied up in advertising and
 Strong Brand reputation built over time promotions
 Flagship is perceived to be most effective  Not very well diversified
medicine on the market  No internet based ordering system
 Several supporting brands help diversify
the product portfolio and stabilize overall
demand
 Economies of scale on sales force, they can
sell all our products simultaneously
 Relative price inelasticity in thecold
industry
Opportunities Threats
 Driscol has lostsignificant market share  Raising prices could result in lower market
and may be open to takeover or buyout share if customer demand is more elastic
 Cough and allergy markets are in growth than previously thought
phase and could be entered  Market could be moving out of growth and
 A buyout of B & B could provide a major into maturity
win in the cough market allowing us to
continue to dominate cold and nasal
markets

Table 16

 Due to Allround Brands’ size, there exist more options for the future than other, less fortunate
companies
o Can buyout another company in order to expand
o Introduce our own product to compete in an underserved market
 Grocery and wholesalers have market power, as they are our key customers
 Lack a contender in two potential growth markets
 Could raise prices to help even out demand so we don’t have to build a factory every other year

Strategic Implications

 Raising price could increase profit and reduce demand, thus limiting our need to build more
factories, but at the cost of market share
 Need to keep grocery and wholesalers happy, as most of our business comes from them
o Co-op advertising could be used to strengthen relationship with key customers
 Should decide whether we want to enter either Cough or Allergy markets, and If so, how
 A buyout could be viable, depending on our objectives

24
GOALS/OBJECTIVES

1. Increase market share of current markets (as measured by percent of manufacturer’s sales) to
40.3% by the end of period 12.

2. Create a new product that is targeted toward children to complete the cold product lineup at
the start of period 11.

3. Conduct feasibility analysis of expanding current products into new markets through
geographical expansion by the end of the period 11.

MARKETING STRATEGY

Allround Brands’ sustainable competitive advantage rests in its market share, brand awareness,

and higher-than-average customer satisfaction in the cold product category. These are all traits that will

either take other firms a long time to develop or will be impossible for them to develop considering

Allround’s ability to inhibit them and the disadvantageous forces of the industry acting against them.

Wielding such tremendous market share is essential to Allround Brands’ continued success because

it reduces the threat of new entrants, buyer power, supplier power, and competitive rivalry—4 of

Porter’s 5 Forces. New entrants face an immense disadvantage in the shadow of Allround’s immense

economies of scale. Buyers depend on Allround’s hefty supply to fill their shelves. Suppliers sell

commodity chemicals and need Allround’s business to stay in afloat. Finally, the largest competition in

the cold product category is less than half the size of Allround and lacks the capability to endorse its

products on Allround’s scale.

With size comes profit. With profit comes a huge advertising and promotion budget. This budget

has enabled Allround to achieve the highest level of brand awareness in the industry at 92.6%. It has

25
also contributed to making customers aware that Allround Brands cares about what’s important to

them. 79.5% of respondents in a survey for cold treatment products in period 10 claimed that product

effectiveness is their main decision criteria. With a brand formulation that grants this effectiveness and

advertising that clearly states it, it’s no wonder that Allround’s customers are the most satisfied in the

cold product category by a wide margin. Though Allround+ and Allright haven’t been around as long as

Allround to accomplish such high figures, these two products have seen continued growth where their

competing products have stagnated. Currently, Allround+ and Allright are leaders in satisfaction with

their direct competition and that gap is widening with time. Allround+ leads Besthelp+ in brand

awareness and Allright will easily pass its competition within the next two periods. Having the highest

brand awareness and the highest customer satisfaction are key to Allround Brands’ triumph in the

industry because these are the factors that affect consumer buying decisions. Consumers have got to

know who Allround Brands is to build trust and they have got to be happy with the product they

purchase. Allround Brands are the best at doing both.

The main strategy going into the next two years will be perpetuating and expanding these

advantages through continued market share, brand-awareness, and customer satisfaction growth.

These will be developed by:

1. Product Development Strategy:

a. Vertical product-line extension: completing the cold product category with the
introduction of a children’s cold product.

i. Allbetter with be a children’s 4hr cold liquid with 350mg analgesic, 2mg
antihistamine , 30mg decongestant, and 10mg cough suppressant
1. This formulation mirrors the already successful Allround, but the
quantities are reduced for children
b. Why this product?
i. It’s in the cold product category

26
 1. 70% of the market
2. Within the product category Allround Brands’ has already established
the leading name in
ii. Coldcure is the direct competition
1. The only direct competitor
2. Customers are more dissatisfied with Coldcure than on average
iii. This product would be targeting young and mature families—the two biggest
segments of the cold product category
2. Market Penetration Strategy:

a. Increase market share by staying ahead of the competition on important metrics:

i. Brand Awareness

1. Size of Sales Force

a. Shelf Space

2. Dollars in Advertising

3. Dollars in Promotion

ii. Customer Satisfaction

1. Message decisions reflecting customer decision criterion

3. Adapting to Market Conditions:

a. Price

i. Adjusted in relation to competitors’ prices and inflation

b. Channel Distribution

i. Adjusted by growth/decline in various distributors

In addition to growing through market penetration and product development strategies, there

exists and opportunity to grow through a market development strategy. Over the past 10 years, the

OTC medication market has seen a fairly constant growth of about 8%. When a market is reaching

saturation, growth is expected to decline. This indicates that market saturation has not yet taken place.

As favorable as the current situation is, growth at this level is not sustainable indefinitely. As

27
AllroundBrands’ products enter the maturity phase of the product lifecycle, the natural growth of the

industry will slow and Allround Brands will need to seek new alternatives for growth. These options

include:

1. Geographic Expansion

2. Concentric Diversification

a. Cough products

b. Allergy products

3. Conglomerate Diversification

Conglomerate diversification is easy to rule out because it strays too far away from our group-level

competitive advantages in the cold product market. While this may be an option for our parent

company (Allstar Brands Corporation), it’s not the right fit for Allround Brands. Concentric diversification

into cough and/or allergy products is certainly a feasible option. After Allround Brands finishes

dominating the largest market within the scope of its competitive advantage, these smaller product

categories will provide a way to break out into new markets and see further growth. The option with

the greatest growth potential, however, is gaining a foothold in emerging foreign markets that still have

large room to grow.

Though Allstar Brand’s Corporation already has an international division responsible for getting

Allround’s products in the hands of overseas consumers, there is reason to believe room for

improvement exists. The case states that, “The International Division distributes Allstar products on a

global basis and has a large presence in the European market” (Pharmasim Case Page 12). While the

European market is certainly important, nothing is stated about other geographic markets. This isn’t to

say that we aren’t serving those markets, but the way Pharmasim breaks down the demographics of our

customers provides evidence to the contrary. As it stands, our market research divides our customers

28
into five segments that are based on age and family status. We assume that our market research is as

useful as possible. This division is only useful, however, if our customers are largely homogenous on

non-age/family demographics. One would expect this to be the case if Allstar served mainly Western

countries. If we served any of the Eastern markets, one would expect to see different buying behaviors

and different decision criteria that would be best identified with heterogeneous demographic

breakdowns. This in mind, it seems reasonable that increasing the scope of Allround Brands

international availability will ensure continued growth of the company up to and through the maturity

phase of the product lifecycle. No information currently exists to conduct an analysis, so an objective

has been set to complete an analysis by the end of period 11.

29
MARKETING MIX STRATEGY
Product -

 Year11 Strategic Plan:

o Keep existing products Allround, Allround+, and Allright with current formulations
o Vertical product extension through launch new product children’s cold liquid Allbetter
o Allbetter with be alcohol free cold formulation with 350 analgesic, 2 antihistamine , 30
decongestant, 0 cough suppressant, 100 expectorant
 Year 12 Strategic Plan: Keep Allround, Allround+, Allright, and Allbetter and continue current
formulations

Pricing Strategies -

 Positioned as a premium product (see perceptual map)

 Priced higher than competition to maintain premium perception

Prices Allround Allround+ Allright Allbetter

Year 11 7.79 6.99 5.79 7.49
Year 12 8.09 7.29 5.99 7.79
Table 16

Place -

 Year 11+12: Maintain current channel strategy with emphasis on grocery stores and chain
drugstores and place the least amount of emphasis on convenience stores
 Year 11: Expand geographically by offering our products overseas to increase market share and
capture new customer segments in geographical regions such as Asia
o Develop R&D to determine best area, possibly India because of rapid expansion
o Market research indicates that there is a large market for cold and cough products in
India because of the climate and that market is growing exponentially
(http://www.dancewithshadows.com/pillscribe/sohm-launches-26-generic-cough-cold-
pharma-products-in-india/)
o Develop new packaging/product formulations for foreign markets

Promotion -

 Will include our communication strategy (advertising and message to consumer) that our
products are premium
 Year 11:
o Focus promotion efforts on new product Allbetter through point of purchase displays,
trial size, and coupons
o Maintain point of purchase and reminder advertising for other products

30
 o Promotion expenditures:

Promotions Allround Allround+ Allright Allbetter Total

POP 12 7 8 4 31
Trial 3 3
Coupon 6 7 5 18
Total 18 14 13 7 52
Table 17
o Advertising expenditures:

Promotions Allround Allround+ Allright Allbetter Total

Primary 6.45 3 2.4 3.5 15.35
Benefits 6.45 3 2.4 1.5 13.35
Comparison 15.05 8 6.4 3 32.45
Reminder 15.05 6 4.8 2 27.85
Total 43 20 16 10 89
Table 18

o Total Promotion and Advertising $141m

 Year 12:
o Continue emphasis on Allbetter with slight toning down
o Continue maintenance for other three products
o Promotion expenditures:

Promotions Allround Allround+ Allright Allbetter Total

POP 12 6 8 4 30
Trial 3 3
Coupon 6 7 5 18
Total 18 13 13 7 51
Table 19
o Advertising expenditures:

Promotions Allround Allround+ Allright Allbetter Total

Primary 6.75 3.15 2.55 3.6 16.05
Benefits 6.75 3.15 2.55 1.8 14.25
Comparison 15.75 8.4 6.8 4.2 35.15
Reminder 15.75 6.3 5.1 2.4 29.55
Total 45 21 17 12 95
Table 20

o Total Promotion and Advertising $146m

31
IMPLEMENTATION
Target Market

 Our 4 hour multi liquid Allround will continue to target young families, mature families, and
retired
 Our 12 hour multi capsule Allround+ will continue to target young singles, mature families, and
empty nesters
 Our cold spray Allright will continue to target young singles, empty nesters, and retired
 Our children’s cold product Allbetter will target young families and mature families because it is
a children’s product

Increase market share

 As of the end of year 10 we capture 36.9% (Allright 4.2%, Allround 26.5%, Allround+ 6.2%) of the
market which includes cold, cough, allergy, and nasal
 We are not concerned with increasing market share in allergy because this sector is not lucrative
 We currently hold almost half of the cold market and would like to see that increase (Allround
40%, Allround+ 9.4%)
 Allbetter will help increase market share of the cough and cold industry by reaching segments of
the market who use our products for cough and cold and would like a children’s version
 Increase domestic market share of the OTC market for our entire product line to 40.3% by the
end of year 12
 Stretch goal will be achieved through promotion of current premium products and through
introduction of new premium children’s cold product that will reach previously underserved
segments of the market
 Increase overall market share through geographic expansion overseas beginning in year 11

32
MARKETING BUDGET AND PROJECTIONS
Assumptions:

 OTC medicine market will grow at 8% for the next two years
o Based on historical growth rate for the OTC industry
 Cold and Nasal will grow at the same rate as the overall market
o Growth for these markets are expected to grow proportionally with the overall OTC
medicine industry
 Average purchases per year per customer remain at year 10 levels for all products
o Customer buying behavior is expected to remain the same as previous years
 Average discounts by product will remain at year 10 levels and Allbetter’s discounts will be at
the average discount level
o Channel distribution is not expected to change for the next two years
 New Allbetter product will have a gross margin ratio of 55%, and the other products will have
the same gross margins as year 10
o New product will cost the same as the average product to produce, and costs will
remain consistent for the next two years
 Market share and prices of Allround, Allround+, Allright, and Allbetter will be at assumed levels
in chart/budget included below
o Based on historical trends and previous product launch data
 Allbetter’s sales data will be shown as net increases (cannibalization impact removed)
o In its introductory phase, Allbetter will only be accrued incremental costs until year 13
when it will either be permanently added to the product lineup or discontinued based
on its net contribution to the Allround brand
 Expenses related to Allbetter will move proportionally with increases in units at the average rate
for that expense
o Allbetter’s expenses will not exceed the average level for other products
 Allbetter's retention % will be 50% for the next two years
o New product will likely have lower retention than established products

Based on the preceding assumptions, projections for each product segment and for AllstarOTC
cold medicine group as a whole have been calculated and included below.

33
Key Statistics–

Sales GM % GP $ Promo Adv MktgExp SG&A

Revenue
Allround 10 879.5 53.8% 472.8 18 42 60 129.4
11 949.96 53.8% 514.8 18 43 61 133.8
12 1025.95 53.8% 562.8 18 45 63 150.3
Allround+ 10 206.8 58.8% 121.6 14 17 31 34.8
11 222.25 59.0% 137.5 14 20 34 37.3
12 240.03 59.0% 150.8 13 21 34 41.9
Allright 10 138.5 58.1% 80.4 13 14.1 27.1 26.3
11 150.56 59.0% 99.4 13 16 29 30.7
12 162.60 58.9% 109.5 13 17 30 35.0
Allbetter 11 28.7 55.0% 15.8 7 10 17 4.2
12 73.6 55.0% 40.5 7 12 19 11.0
Total 10 1224.8 55.1% 674.8 45.0 73.1 118.1 190.5
11 1351.4 55.3% 767.3 52.0 89.0 141.0 206.0
12 1502.1 55.3% 863.5 51.0 95.0 146.0 238.1
Table 21a

net Mktg Cust ret Cust life Acq $ Acq % Ret $ Ret %
MktgContr Share % (yr)
Allround 10 412.8 26.5% 66.6% 2.1 24.3 2.8% 35.7 4.1%
11 453.8 26.7% 66.6% 2.1 24.45 2.6% 36.55 3.8%
12 499.8 27.0% 66.6% 2.1 24.75 2.4% 38.25 3.7%
Allround+ 10 90.6 6.5% 55.7% 1.7 16.55 8.0% 14.45 7.0%
11 103.5 6.5% 55.7% 1.7 17 7.6% 17 7.6%
12 116.8 6.6% 55.7% 1.7 16.15 6.7% 17.85 7.4%
Allright 10 53.3 4.7% 48.6% 1.5 15.115 10.9% 11.985 8.7%
11 70.4 4.7% 48.6% 1.5 15.4 10.2% 13.6 9.0%
12 79.5 4.8% 48.6% 1.5 15.55 9.6% 14.45 8.9%
Allbetter 11 -1.2 0.8% 50.0% 1.6 10.5 36.6% 6.5 22.7%
12 21.5 1.9% 50.0% 1.6 10.6 14.4% 8.4 11.4%
Total 10 556.7 37.7% 62.1% 1.9 56.0 4.6% 62.1 5.1%
11 626.3 38.7% 61.6% 1.9 67.4 5.0% 73.7 5.4%
12 717.5 40.3% 66.3% 2.1 67.1 4.5% 79.0 5.3%
Table 21b

34
Budget for Year 11–

Allround Allround+ Allright Allbetter Total

Market Share 26.7% 6.5% 4.7% 0.8% 38.7%
Year 11 Allround Allround+ Allright Allbetter Total
Price 7.79 6.99 5.79 7.49
Avg Price 5.1 4.5 3.9 5.0
Units 185.9 51.8 42.7 5.8 286.1
% Total Units 65.0% 18.1% 14.9% 2.0% 100.0%
Manf Sales 957.12 233.01 168.48 28.7 1387.29
Promo allow 169.0 36.5 28.5 4.3 238.3
COGS 273.4 59.0 40.6 8.6 381.6
Gross Margin 514.8 137.5 99.4 15.8 767.3
GM % 53.8% 59.0% 59.0% 55.0% 55.3%
Promo Exp 18 14 13 7 52
AdvExp 43 20 16 10 89
Total P/A 61 34 29 17 141
Sales Force 18.8 5.2 4.3 0.6 29
Admin 22.7 6.3 5.2 0.7 35
Fixed 92.3 25.7 21.2 2.9 142
Total SG&A 133.8 37.3 30.7 4.2 206.0
Operating Inc 319.9 66.2 39.6 -5.4 420.3
Table 22

Budget for Year 12 –

Allround Allround+ Allright Allbetter Total

Market Share 27.0% 6.6% 4.8% 1.9% 40.3%
Year 12 Allround Allround+ Allright Allbetter Total
Price 8.09 7.29 5.99 7.79
Avg Price 5.3 4.7 4.1 5.1
Units 195.5 54.4 45.5 14.3 309.7
% Total Units 68.3% 19.0% 15.9% 5.0% 100.0%
Manf Sales 1045.31 255.52 185.83 73.6 1560.22
Promo allow 184 40 31.5 11.0 266.5
COGS 298.6 64.7 44.8 22.1 430.2
Gross Margin 562.8 150.8 109.5 40.5 863.5
GM % 53.8% 59.0% 58.9% 55.0% 55.3%
Promo Exp 18 13 13 7 51
AdvExp 45 21 17 12 95
Total P/A 63 34 30 19 146
Sales Force 20.5 5.7 4.8 1.5 30
Admin 27.3 7.6 6.4 2.0 40
Fixed 102.5 28.5 23.8 7.5 150
Total SG&A 150.3 41.9 35.0 11.0 220.0
Operating Inc 349.4 74.9 44.5 10.5 497.5
Table 23

35
Performance Evaluation
Marketing Metrics

Allround

 Increase customer satisfaction

o At 65.5% at the end of year 10
o To 70% by the end of year 12
 Maintain brand awareness
o At or above 97.5%
 Increase OTC market share
o At 26.5% at the end of year 10
o To 26.7% by the end of year 11
o To 27% by the end of year 12
Allround+

 Increase brand awareness

o At 64.8% at the end of year 10
o To 75% by the end of year 11
o To 80% by the end of year 12
 Increase customer satisfaction
o At 56.5% at the end of year 10
o To 60% by the end of year 12
 Increase market share
o At 6.4% at the end of year 10
o To 6.5% by the end of year 11
o To 6.6% by the end of year 12
Allright

 Increase brand awareness

o At 34.6% at the end of year 10
o Increase to 45% be the end of year 11
o Increase to 55% by the end of year 12
 Increase customer satisfaction
o At 51.3% at the end of year 10
o To 55% by the end of year 12
 Increase market share
o At 4.6% at the end of year 10
o To 4.7% by the end of year 11
o To 4.8% by the end of year 12
 Prepare to position product as a premium version in year 13 (end penetration pricing)

36
Allbetter

 Increase brand awareness

o To 40% by the end of year 12
 Increase customer satisfaction
o To 55% by the end of year 12
 Take market share from Coldcure and End+ (children’s cold competition)
o Net increase of 0.8% in year 11
o Net increase to 1.9% in year 12
 Expected to have a negative net marketing contribution for the first year
o If net marketing contribution is more negative than 10% of sales, prepare to phase out
product in year 12 by reducing marketing expenditure (advertising)
o If net marketing contribution is still negative in year 12 after reducing marketing
expenditure, discontinue production of Allbetter
 If marketing expenditure wasn’t decreased in year 11, decrease marketing in
year 12 and prepared to discontinue in year 13
 If sales in year 11 exceed expectations then increase marketing expenditure proportionally

Allround Brands

 Increase overall brand awareness

 Increase overall customer satisfaction
 Increase market share
o To 40% of overall OTC market by the end of year 12

37