a case is attached in here please review the case and answer the question below.Company: What are our goals, and what measures will be used to determine if we are on track? What strengths and weaknesses do we see in our brand and organization?
marketshare_case.pdf

Unformatted Attachment Preview

5
MARKETSHARE
MarketShare Case
6
MarketShare Case
Allstar Brands Corporation is one of the leading manufacturers of packaged goods in the world.
Since its founding in 1924, the company has acquired or merged with a number of smaller
packaged goods companies. The company consists of several divisions, among them the
Pharmaceuticals Division, which is responsible for the marketing and production of ethical and
over-the-counter (OTC) medications. Ethical drugs are available through pharmacies with a
physician’s prescription, whereas OTC remedies are widely distributed without the need for a
prescription.
Allround is Allstar’s product in the OTC cold and allergy remedy market. Though reasonably
successful in the past, Allround has recently been faced with increased competition. In the last
three periods, the industry has seen several product introductions as well as major increases in
promotional and advertising expenditures. Though well positioned for growth, Allround has
major challenges ahead as well.
The management team at the over-the-counter cold medicine (OCM) group of Allstar Brands just
completed its third presentation in the past month to the Pharmaceuticals Division manager
regarding the status of Allround cold medication. It is apparent from all the attention that the
team has received that the Allround brand it manages is of strategic importance to the company.
The OCM group is concerned primarily with the marketing activities of the Allround brand and
any line extensions or new product introductions that might fall under the same category. You
are taking over as a marketing manager in the group, and although all product and marketing
decisions are made as a group, each member of the brand management group may take a
particular role or specialize in different areas of market analysis. How best to divide up
responsibilities among team members is left to the managers.
Allstar Brands
Consumer
Products
Pharmaceuticals
OCM Group
Allround Brand
International
Division
Level
Group Level
7
Industry Overview
Allstar Brands competes with four other firms in the OTC cold and allergy market. These five firms
offer a total of 10 brands in five different product categories (cold liquid, cough liquid, allergy
capsule, cold capsule, and nasal spray) listed in Exhibit 1.1.
Exhibit 1.1: Company and Brand Summary
Company Name
Sales (Millions)
Brands on the Market
Allstar Brands
$285
B&B Health Care
$503
Allround, 4-hr multi-symptom cold liquid
Believe, 4-hr allergy capsule
Besthelp, 4-hr cold capsule
Curall Pharmaceuticals
$345
Driscol Corporation
Ethik Incorporated
$409
$684
Coughcure, 4-hr cough liquid
Defogg, 4-hr allergy capsule
Dripstop, cold nasal spray
Dryup, 4-hr multi-symptom cold capsule
Effective, cold nasal spray
End, 4-hr cough liquid
Extra, 12-hr cold capsule
Cold remedies are designed to relieve several basic symptoms: aches and fever, nasal congestion,
chest congestion, runny nose, and cough. Allergy remedies address many of the same symptoms
and are therefore often grouped with cold remedies. However, products formulated specifically
for allergy relief are available, and it is common in the industry to consider relief from allergy
symptoms as a separate consumer need from cold and flu-like symptom relief. Chronic allergy
sufferers tend to have different usage.
As a member of the OCM marketing team, you face challenging decisions concerning the existing
brand, Allround, and the future launch of a new product. You must consider the four Ps of
marketing in managing your brands: product, price, promotion, and place. That is, you must
decide what product formulation is best for your target customers, how to distribute (place) your
product, what price to charge, and how to promote it.
8
Brand Formulations (4Ps = Product)
In general, various combinations of six basic types of ingredients (see Exhibit 1.2) are used to
formulate OTC brands. Each ingredient targets one of the symptoms listed above, or is used as a
base for the other ingredients.
Exhibit 1.2: Ingredients and Purpose
Ingredients
Analgesics
Antihistamines
Decongestants
Cough Suppressants
Expectorants
Alcohol
Purpose
Provide relief for aches and fever. Common analgesics
are aspirin and acetaminophen (an aspirin substitute).
Reduce the secretions that cause runny nose and watery
eyes.
Reduce nasal congestion by shrinking the blood vessels
in the nose lining to clear the passages and restore free
breathing.
Reduce the cough reflex.
Provide relief from chest congestion by loosening the
phlegm, thereby making each cough more productive.
Provides a base for the other ingredients in some
products and helps the patient rest.
A brand can be made available in one of three forms: liquid, capsule, or spray. A consumer’s
choice with regard to form is usually based on personal preference, but some general differences
are apparent. Nasal sprays contain only a topical nasal decongestant that provides faster relief
from sinus congestion than other forms. Capsule and liquid cold medications might contain any
combination of ingredients, although cough medicine is usually found in liquid form to help
soothe throat irritation. According to a recent survey, most consumers find that capsule form is
somewhat more convenient than liquid. Exhibit 1.3 shows each of the current brand formulations
on the market.
Product duration is typically either 4-hour or 12-hour. The United States Food and Drug
Administration (FDA) regulates the amount of medication for various periods of relief, including
the maximum for a 24-hour period without a prescription. The maximum dosage used in 4-hour
formulations cannot be taken more than four times each day due to over-medication concerns.
Twelve-hour formulations contain half the daily maximum medication. Nasal sprays are
considered instant relief products because they act much faster than standard cold medicines,
but conversely, they also wear off faster. The duration for each brand is also listed in Exhibit 1.3.
9
Side effects have become a greater consideration in recent periods because of the emphasis on
healthier lifestyles and concerns about performance under medication. Drowsiness due to
antihistamines or alcohol is the most often mentioned negative side effect, especially when these
products are used during the day. Other considerations include upset stomach, long-term effects
of nasal spray, and excessive medication.
As can be seen in Exhibit 1.3, the Allround brand is a 4-hour liquid cold medicine that provides
multi-symptom relief. It contains an analgesic, an antihistamine, a decongestant, a cough
suppressant, and alcohol. Most consumers use this product for nighttime relief because of the
strength of the medication and because the alcohol and antihistamine help the patient rest.
Allround is viewed as one of the most effective brands on the market at reducing multiple cold
symptoms. However, consumer groups and some physicians have attacked the multi-symptom
“shot-gun” approach as providing excessive medication in many circumstances. However,
consumers appreciate the convenience of only having one brand in their medicine cabinet that
can address several different kinds of cold and flu symptoms.
Exhibit 1.3: Current Brand Formulations
Max.
Allowed
Allround
Believe
Besthelp
Coughcure
Defogg
Dripstop
Dryup
Effective
End
Extra
Analgesic
Antihist
Dcngest
Cough
Supp
1000
4
60
30
200
20
(mg/4-hr dose)
1000
0
0
0
0
0
1000
0
0
0
4
4
4
0
4
0
4
0
0
0
60
0
60
30
0
60
60
60
0
120
30
0
0
30
0
0
0
0
0
0
0
0
0
0
0
0
0
0
200
0
20
0
0
10
0
0
0
0
10
0
4-hr multi liquid
4-hr allergy capsule
4-hr cold capsule
4-hr cough liquid
4-hr allergy capsule
cold spray
4-hr multi capsule
cold spray
4-hr cough liquid
12-hr cold capsule
Expect Alcohol
Description
10
The OCM group has important product development and management decisions to make over
the next decade and must work closely with the product research and development (R&D) area
within Allstar Brands. R&D will provide two major types of product development for the Allround
brand group: reformulation of the ingredients in Allround and development of a new brand. The
table below shows the options that will be available as a special decision.
Decision
Product Decision
Decision Options
1
2
3
4
5
Allround
Reformulation
Allround
Reformulation
New Product
Introduction
New Product
Introduction



drop alcohol
replace cough suppressant with expectorant
keep original formula



children’s cold medicine
4-hour cough remedy
non-drowsy allergy product
6
Note that the new product introduction will only be available for the fifth decision if no choice was
made in the previous period. The non-drowsy allergy medication is based on a product that is now
available by prescription only, but the company is planning on submitting the product for
government approval.
Pricing and Promotional Allowances (4Ps = Price)
It is industry practice for manufacturers to suggest retail prices to retailers, known as the
Manufacturer’s Suggested Retail Price (MSRP), although retailers ultimately set the actual selling
price to consumers. Most discounts to the channel are set based on MSRP. There are two primary
types of discounts: a volume discount (between 15–40%) and a promotional allowance (typically
between 10–20%). Thus, distributors usually pay somewhere in the range of 25–50% off the
MSRP depending on the volume discount and promotional allowance passed on to the retailer.
Allowances are incentive discounts given to the distribution channel to help promote a product
that ultimately impact the product’s retail price. Allowances are necessary to gain retail
distribution, to obtain desired shelf facings in retail outlets, and to gain support for a brand
advertised and promoted by the retailer.
11
The current MSRP of Allround is $5.49. Distributors that buy direct receive a volume discount of
30%, so the manufacturer’s selling price (MSP) is $3.84. Distributors also receive a promotion
allowance of 13% of MSP. The group noted that Allround’s price was significantly higher than the
competition. However, the Brand Manager reminded them that the higher price gives them an
above average contribution margin, and that the retailer is able to make more money on each
unit sold when compared to competitive products. Nonetheless, they all agreed that the MSRP
and overall pricing structure should be reviewed in the coming year.
Exhibit 1.4: MSRP, Volume Discount, Promotional Allowance, and Retail Price
MSRP
Vol. Disc.
Promo. Allow.
Drug-store
Grocery
$ 5.49
30.0%
13.0%
$ 5.42
$ 5.16
$ 4.58
Believe
3.99
33.5%
15.6%
3.68
3.55
3.15
Besthelp
4.59
34.5%
13.3%
4.26
4.11
3.65
Coughcure
4.69
28.5%
16.7%
4.62
4.38
3.87
Defogg
4.09
22.5%
11.1%
4.44
4.27
3.75
Dripstop
4.09
21.5%
13.3%
4.42
4.26
3.75
Dryup
4.79
21.5%
15.6%
5.10
4.91
4.33
Effective
4.09
30.0%
14.4%
3.96
3.82
3.38
End
4.49
31.0%
12.5%
4.45
4.20
3.72
Extra
4.09
31.0%
12.5%
3.99
3.83
3.39
Allround
Mass Merch.
Advertising and Promotion (4Ps = Promotion)
Advertising and promotion for Allround is one of the more significant decision areas. In addition
to creating a general advertising campaign for multiple media outlets, the management group
must also make several choices in consumer and trade promotion—important aspects of
improving distribution effectiveness. Thus, this part of the management decision process
includes elements of both pull (consumer-oriented promotion) and push (trade-oriented
promotion).
The OCM group must make three basic advertising decisions each period: the amount of dollars
allocated to the advertising budget, the content of the advertising message, and, if using the
comparison message, the target competitor. Last period, $7 million was spent on Allround’s
advertising campaign, primarily for commercials aired on network television. Competitive
12
advertising budgets for last period ranged from $1.45 million for the Defogg brand to $22.3
million for Coughcure.
There are four basic advertising message types that the OCM group considers potentially useful
for Allround: (1) a primary demand stimulation to focus the advertising message on increasing
overall demand for OTC remedies while increasing Allround’s unaided awareness, (2) a benefits
approach that states the symptomatic relief properties of Allround, (3) a comparison approach
that positions Allround against another brand, and (4) a reminder advertising message to
maintain consumer awareness and stimulate the repurchase of Allround. The advertising
message used in any period can be a combination of these types. Last period, Allround’s
advertising was 25% primary demand, 25% benefits, 25% comparison, and 25% reminder. The
group wondered if a more effective choice of message might be implemented.
Consumer promotions are a significant part of marketing in the OTC cold and allergy remedy
market. Allstar Brands spent $3.2 million on consumer promotions for the Allround brand last
period, which placed it somewhere in the midrange of its competition.
The purpose of point-of-purchase items, such as sale racks, on-shelf advertisements, or end-ofaisle displays, are to promote a brand to the consumer in the retail outlet. The OCM group
believes that these displays promote brand switching when the consumer is purchasing OTC
products. Point-of-purchase money is paid to the retailer, but the promotion targets the end
consumer. Last period, $0.8 million was spent on point-of-purchase displays for Allround.
Coupons distributed to consumers in special newspaper or magazine supplements offer
additional discounts off the retail price when redeemed at the time of purchase. In the last
period, $2.4 million was spent on coupon support of the Allround brand. This included money
spent on printing, inserts, and mailings.
Exhibit 1.5 provides a summary of last period’s promotional activity for the Allround brand.
Exhibit 1.5: Promotional Activity for Allround Brand (in $000s)
Promo
Promo Allowances
Point of Purchase
Coupons
$ (Millions)
26.5
0.8
2.4
13.0% of MSP
13
Retail Channels (4Ps = Place / Distribution)
OTC cold and allergy remedies are sold retail in drugstores, grocery stores, and mass
merchandisers. A recent study shows that there is some difference in where consumers purchase
different types of cold medicine. These are shown in Exhibit 1.6.
Exhibit 1.6: Consumer Purchases by Channel
Retailer
Cold
Cough
Allergy
Drugstores
28.5%
35.1%
44.3%
Grocery Stores
52.6%
44.8%
38.7%
Mass Merchandisers
18.8%
20.1%
17.0%
Gaining the support of the channel is an important part of a brand’s success, and shelf space
allocation and placement can have a significant effect on brand sales. Because of this importance,
the OCM group asked their sales force to query retailers about shelf space allocation among
brands. The results from this informal survey showed that retailers considered four basic factors
regarding shelf space allocation: product turnover (number of units sold in a given period of
time), product profitability, promotional allowances and sales force support. In general, large
grocery stores, mass merchandisers, and chain drugstores were more focused on turnover and
allowances, whereas independent drugstores paid greater attention to sales force support. The
OCM group hoped that this information might prove useful in determining how to allocate their
resources across distribution channels.
The support of a manufacturer’s sales force is critical to the success of a brand in the OTC cold
and allergy market. Part of the sales force sells directly to retail outlets. This direct sales force is
responsible for maintaining relationships with current retailers and for developing new retail
accounts. The direct sales force also presents trade promotions, allowances, and new product
introductions to retailers.
Manufacturers also maintain an indirect sales force, which includes wholesaler support and
merchandisers, designed to sell into and support the indirect distribution system. Wholesalers
sell OTC brands to smaller, independent retailers that are not reached by the direct sales force
of the manufacturer. Merchandisers provide special support to retailers for their in-store
activities, such as shelf location, pricing, and compliance with special promotions.
The OCM group determines the total size of the sales force, including the proportion of direct
and indirect support. Sales force allocation (# of sales people) for Allstar Brands is listed in Exhibit
1.7.
14
Exhibit 1.7: AllStar – Sales Force Allocation
Channel
Drugstores
Grocery Stores
Mass Merchandisers
Indirect Support
Total Sales Force
#SF
30
40
10
30
110
Getting your product to where your target customers shop is important to the success of your
brand in MarketShare. To allocate marketing resources efficiently, you will need to understand
your collaborators in the channel.
Distribution Channel Descriptions
Drug Stores
These retail stores consist of pharmacies selling prescription and OTC medicines, as
well as other household items. Independent drug stores tend to order from the
manufacturer in smaller volumes or buy product through a wholesaler, while most
chain drug stores buy in larger volumes direct from the manufacturer. Markups are
from mid-range to high, depending on the retailer.
Grocery stores primarily sell food to consumers, but may also sell medicine and
household items. Some smaller grocery stores will buy through wholesalers, but
Grocery Stores most will buy direct in medium to high volumes. Like chain drug stores, sales force
support and promotion allowances are important factors in their decision to carry a
brand. Markups are in the mid-range for retailers.
Mass merchandisers are large retail outlets that generally offer discount prices on
items and have a high level of sales. Most buy product direct from the manufacturer
Mass
Merchandisers in medium to high volumes. Mass merchandisers attract customers with low prices,
and turnover is important when allocating shelf space.
Wholesalers
Wholesalers do not sell to the end consumer, but buy product from different
manufacturers and resell it to retailers. They serve smaller retail outlets and more
rural areas, providing their own sales force to sell the many product lines they carry.
High volume discounts and promotion allowances are important to wholesalers.
15
Market Segmentation
The trade typically segments the OTC cold and allergy market on the basis of how the products
are labeled. The three standard product categories in the OTC market are cold, cough, and
allergy.
Colds have a wide range of symptoms, including sore throat, cough, runny nose, sneezing, stuffy
nose and head. A slight fever, and some aching or tiredness are also possible. Cold sufferers use
a wide range of products for relief, including products not labeled for colds. They may take
medication for specific symptoms, for example, an antihistamine for runny nose or a pain reliever
for aches, or they may take a multi-cold medicine for relief of a full range of symptoms. Users
seek cold products in capsule, liquid, or spray form, depending on the symptoms and how they
are used. For example, capsules are easily carried around, and are most convenient for use away
from home, while liquids might be fine for home use. Adult formulas are not recommended for
children, but some parents may give them a reduced dose of a liquid cold medicine if a children’s
product is not available. Some cold suffers may use home remedies, while others may just put
up with the symptoms until they get over the cold.
A cough can occur with a cold or other infectious diseases, or it may be in response to
environmental conditions. Sufferers may take a cough medicine by itself, or along with a cold
product. Some may prefer a multi-symptom product to relieve cough and cold sympto …
Purchase answer to see full
attachment