College of Management - Mahidol University

MGMG 508 Strategic Marketing Management

PharmaSim Project
Ajarn Ploeumrudi Devahastin
By:
Mr. Totsapon Lohachitranont
Mr. Goanpon Chongsanguan
Ms. Pimploy Pluangmonthin
Mr. Yukonthon Pradsarakee
Mr. Sivanan Chaipanyawuthikul
Ms. Theeraporn Pothipat

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Table of Contents
Introduction

Objective

Period 0-3 and decision

Period 4-7 and decision

Period 8-10 and decision

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Conclusion

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APPENDIX
1. Product Price

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2. Sales Force Report

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3. Income Statement

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4. Sales Report

22

5. Advertising Expenditure

22

6. Promotion Allowance

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7. Promotion Expenditure

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8. Market Share

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Introduction
PharmaSim is simulation software ideally designed for Marketing and Brand Management
classes and is based on the pharmaceutical industry. PharmaSim provides students with
simulated area of responsibilities with complexities in making decision by assigning student
to take on the role of a brand management team as Brand Assistant, Assistant Brand Manager
and Brand Manager respectively. This simulation program also brings together marketing
strategies in to practice from marketing mix, segmentation and position, resource allocation
across brands, integrated marketing communications, and multiple channels with
intermediaries. Students are able to learn how to motivate consumers and channel partners,
measuring their progress through marketing research. Each of simulated business
environments will develop differently depending on the choices each student team makes and
the reaction of their competition. This helps to illustrate the impact a competitor may have on
an entire industry.
Objective
The objective is to critically manage Allstar Brands by developing sub brands such as
Allround, Allround+ and Allright to be the leaders and maintain its position in the
pharmaceutical industry. In doing so, we have to focus on the following frameworks;

Situation analysis / 5Cs (Company, Collaborators, Customers, Competitors, and

Climate)

STP (Segmentation, Targeting, Tositioning)

Marketing Mix / 4Ps (Product, Price, Promotion, Place)

Integrated marketing decision-making and analysis

Managing the buyer purchase process

Period 0 3
Decision Made Period 0-3
Segmentation

Allrounds target group are young singles, young families, mature families, empty
nesters and retied. As Allround medicine is a four liquid cold medicine, customers use
this medicine to relief cold symptom.

The main competitor of Allround in this period is Besthelp, they held 25.2% of the
market share in cold medicine market,

Advertising

We chose to do an advertisement focusing on comparing Allround with other brands,

the reason why we chose comparing as an advertising message was because Allround
already held high market share therefore it was necessary to compare its performance
instead of introducing its primary information and benefits. We then sent out the
message focusing on comparison, then benefits and primary information respectively.

Product

Allround is a medicine introduced in the cold medicine market which held the highest
market share for cold recovery medicine or at 40.4%. As the product already
possessed large market share.

At period 1, our group reformulated Allround product by dropping the alcohol to

reduce side effect in order to capture more markets.

Brand Formulations

Price

The beginning MSRP of Allround is $5.29 with gross margin 48.9%. From period 0 3, our group increase MSRP price by average 2% in each period. The price was
increased based on the fact that people who buy medicine are not price-sensitive, and
our group expected to gain more net income.

Sales Force

We increased sales force from period 0-2 inclusive, and kept the number unchanged
in period 3 at 230 pax. The reason we kept increasing sales force was because we
believed it will help in increasing market share and bring us to the competitive level.
We took our competitors sales force number into account in locating our sales force
number. Apart from Driscol, all companies total sales force ranked from 207 - 211.

From period 2 to 3, we did not increase number of sales force but we allocated sales
to different channels based on the sales volume we received from each distribution
channel.

We allocated more sales force to Grocery and Mass Merchandize as we saw upward
trend in sales.

Lesson Learned
Sales Force

Grocery sales force allocation was too high, sales contribution was 26.3% while we
had 35% (80 out of 230) of total sales force budget allocation.

Mass Merchandize sales force allocation was too high, sales can contribute at 9%
while we had 10% (22 out of 230) of total sales force budget allocation.

We kept increase sales force to generate more sales, and we also used competitors
sales force survey as a guideline. We noted that our sales force was lower than other
companies therefore we increased accordingly. Nevertheless, we failed to carefully
calculate number of sales force to match with sales generation which made our sales
force to be too high.

Part 2 (Period 4-7)

Major Decisions Made
Allround
Product

In period 7, Allround brand added expectorant which helps clear chest congestion
which is the 2nd highest reported symptom after aches as shown in the picture below,
so that the product could also target cough segment. Cough relief was also added in
the communication message.

Price

Increased price by 16.8% on average during periods 4-7 to maximize profitability and
to make up for setting the price too low earlier.

Promotion

We did not decrease the promotional budget for Allround as we have changed the
formula.

Allround+
Product

Allstar introduced Allround+ in period 4 which is child 4 hour cold liquid. Allround is
already a strong brand and is doing well in the market so we would like to increase
the manufacture sales and explore a potential business opportunity against Coldcure
with the cold medicine for children.

The target market for Allround+ were young families and mature families in the cold
segment the reason we opted for this formulation is because we would like to target
the younger segment, to differentiate itself from Allround.

We saw an opportunity in the cold market as Coldcures share was decreasing and
with our strong parent brand we feel that customers would already have confidence in
our brand than our competitors and we think that could do well in this particular
segment. (Pic. Below)

Price

Allround+ was introduced at 4.99USD, lower than Allround 5.57USD and Coldcure
5.59USD as we wanted to aggressively penetrate the market and capture a lot of
market share.

Promotion

Deployed aggressive advertising to spread product awareness by initially focusing on

Primary benefits and later on emphasize more on reminder.

We emphasized on co-operative advertisement, trials, coupons and point of purchase

to create brand awareness.

Allright
Product

In period 6, Allstar introduced Allright brand, a 4-hour non drowsiness allergy

capsule which was the first of its kind in the market.

We targeted younger segments which are young single and young families because
they are working class of people who would appreciate the non-drowsiness benefit.
Moreover, these groups of people are willing to try new product.

There were two players in the allergy segment which were Believe and Defogg (pic
below), although we do not perceive them as our direct competitors. Believe was
capturing the most market share at that time and we very strongly convinced that with
more benefit that our product is offering we could do serious harm to them and able to
capture big share in the allergy segment.

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Price

Allright was introduced at 6.50 USD, the highest amongst all products in the segment,
exploiting on Allstars brand equity and the exclusivity of the product.

Promotion

We hired same advertising agency as Believe which is different from the first two
brands we launched.

The ad message was emphasized on it benefits and comparison with the market
leader, Believe.

Emphasized on co-operative advertisement and trials to push its position to be a star.

We spent high on trials intended to reach our target customers who might be reluctant
to spend higher than they used to become acquainted with the benefit that our product
can offer them.

The product was still new to the market we did not emphasize on coupons at first
because there was still no market for the product at the time and no one really knew
our product at that time so the coupons would not do us much good at the beginning.

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Sales Force

Increase sales force in the independent drugstore and detailers so that our products
would be recommended more.

Lessons Learned
New Product Launch
After surviving through 4 periods in the industry by having Allround and Allround+ as our
anchor players in cold-cure medicine market, we decided to launch Allright brand in to the
market by focusing on its unique benefit of a non-drowsiness allergy capsule, and targeting
on young singles, young families and later tabbed into mature families group in period 7.
Taken into account the attractiveness of the market where there are only 2 existing rivals;
Believe and Defogg. We hired Sully and Rodgers as advertising agency for Allright to create
different advertising message since this agency is sophisticated in allergy market and also
works for Believe that would also help to better advertise Allright.
Promotion
We learned that having significant number of distributor channels deemed not as necessary as
compared to increasing allowance for retailers where drugs are mostly purchased. In doing
so, we also gained more shelf spaces from retailers.
Spending on consumer promotion was too high.
Because we would like to gain more brand awareness for our new products, so we spent high
amount for Allround+ and Allright, however we failed to compare the spending with our
competitors. This made our consumer promotion tended to be too high, this was around 7
times more than our competitors. (photo below)

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Part 3 (Period 8-10)

Major Decisions Made
Allround
Product

Allround moved back to star in this period because our target group got older and they
tended to take more of liquid medicine comparing to young people.

Price

During period 8 9, price was $7.34 or increased by 10.2% from period 7. According
to cost was increased when we changed brand formulation, hence we have to increase
price in order to maintain profitability. Although Allround price was slightly higher
than key competitor like Besthelp, customer perceived that symptom relieved of
Allround was still much better than Besthelp.

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Promotion

From the research among competitors, Besthelp seemed to be able to keep their
market share stable or only slightly decreased.

From the Advertising Expenditure report, Besthelp used ad budget more than
Allround therefore we took that into account so we increased advertising budget
considering from our direct competitor ad expenditure.

We added point of purchase promotion in convenience store because we adjusted

formulation of Allround, so we do promotion at all sales channels we can in order to
compare if changing of formulation would affect our sales volume.

Moreover, as this is the late period, we tried to promote to boost more brand
awareness.

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Allround+
Product

Allround+ shifted from Dog to Question Mark due to the demography segment,
children of young family in the first period had grown up to be adults in the young
family. Therefore, Allround+ became their choice again for their children as it is
easier for children to take medicine in liquid form rather than pills.

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Price

Allround+ price was $7.3 or increased by 10.3% from period 7 (period 7 was $6.62).

Allright
Price

During period 8 9, price was $7.76 or increased by 10.2% from period 7. As

Allright had highest market share in allergy, we increased price in order to maximize
profitability and maintain brand image. Therere two key competitors which were
Believe and Defogg. Allright price was level off to Defogg but still higher than
Believe.

Promotion

The ad message was still emphasized on its benefits and comparison to maintain
growth.

As we captured market of young single, young family and mature family, we did
market penetration by stretching to target empty nester as our customers got older.

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Sales Force

We increased Sales Force in merchandisers and detailers as we would like to push

more product volume as we believed that information they can provided would push
more sales to retailers.

Merchandisers and detailers would also advise retailers on promotion.

Lesson learned
Customers perception towards benefit received

Although Allround price was increased as we adjusted formula, if we advertised and

informed our customers on benefits they will receive, they are willing to pay higher
price.

Adding advertising budget to Allround

By adding advertising in Allround helps us to maintain market share in Cold market at

30.2% comparing to period 7 at 32.7%.

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Extending market segment of Allright

As we did market penetration to capture more market shares, our market share in
allergy sales increased period by period respectively.

At period 9, we are able to possessed more market share from Believe. However, this
was also an opportunity causing by their product life cycle which tended to lower
down from period 6 onwards.
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Conclusion
Apart from 4Ps; product, price, place and promotion, we should also analyzed our SWOT so
that we know our strengths and weaknesses in order to find the solutions to improve our
business and serve the customers needs.
Messages used to communicate to customers give impact on their perception towards
products, the company needs to consider what message to be sent out. Launching of new
products need to be well communicated due to the fact that people do not change brand of
medicine purchased. Not only launching new products are important, market penetration will
also help the company to stretch themselves towards their existing customers in a long-term
basis.
For medicine industry, price does not seem to be a factor people take into consideration prior
to purchase decision. People are willing to buy medicine at any price as long as it serves their
current needs.
To successfully operate a business, ist is not only income that is important, we need to focus
on other aspects such as market share, sales growth, customer perception, promotion
spending, and portfolio profile. These elements are the main factors that affect our business
performance.

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Allstar Product Prices Changed

Prices of Allstar Products

9
8
7
6
5
4
3
2
1
0
P00

P01

P02

P03

P04

Allround

P05
Allround+

P06

P07

P08

P09

P10

Allright

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Sales Force Report

Income Statement

21

Sales Report

Advertising Expenditure

22

Promotion Allowance

23

Promotion Expenditure

Market Share

24