ALLROUND BRANDS

MARKETING PLAN
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

Loren Bronczyk,
Matt Latham, Sarah
ODell, Stacy
Sorensen

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.

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
teams 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 companys 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 Greats 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 childrens 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 landscountries that still
have a market to takeoverso 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.

SITUATION ANALYSIS
Current Performance Review

1) The following segments are currently being targeted:

Allround - Cold
Young Singles
Young Families
Mature Families
Empty Nesters
Retired

Allround+ - Cold
X

X
X

X
X

AllrightCold/Nasal
X

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 Allrounds focus

Allround+

At the inception of Allround+ in period 4, the mistake was made of straying from Allround
Brands 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.

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 dont 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.

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
1
2
3
4
5
6
7
8
9
10

Allround
438.8
461.2
493.1
542.7
595.8
636.8
685.5
723.7
788.6
879.5

Allround+
24.1
42.0
81.1
111.3
140.6
171.4
206.8

Allright
15.6
37.9
68.3
101.0
138.5

Total
438.8
461.2
493.1
566.8
637.8
733.5
834.8
932.6
1,061.0
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
1
2
3
4
5
6
7
8
9
10

Allround
49.1
51.1
50.0
49.0
50.2
50.7
52.5
52.1
52.5
53.8

Allround+
55.5
56.5
57.0
57.7
57.3
57.6
58.8

Allright
54.4
56.9
56.7
57.0
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

Gross Profit ($in millions)

Year
1
2
3
4
5
6
7
8
9
10

Allround
215.6
235.7
246.5
265.9
298.8
322.7
359.6
377.0
413.8
472.8

Allround+
13.4
23.8
46.2
64.3
80.6
98.7
121.6

Allright
8.5
21.6
38.7
57.5
80.4

Total
215.6
235.7
246.5
279.3
322.6
377.4
445.5
496.3
570.0
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
1
2
3
4
5
6
7
8
9
10

Allround
26.7
36.5
41.8
43.0
43.6
46.0
45.0
47.0
53.3
60.0

Allround+
13.1
13.0
18.8
19.0
22.0
25.0
31.0

Allright
14
14.9
19.3
21.0
27.1

Total
26.7
36.5
41.8
56.1
56.6
78.8
78.9
88.3
99.3
118.1

Table 5

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

Sales and Admin expense ($ in millions)

year
1
2
3
4
5
6
7
8
9
10

Allround
24.2
26.1
28.9
30.9
32.3
34.1
34.5
35.7
38.3
39.9

Allround+
1.5
2.5
4.8
6.4
7.9
9.5
10.7

Allright
1.1
2.5
4.3
6.4
8.1

Overall
24.2
26.1
28.9
32.4
34.8
40.0
43.4
48.0
54.2
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
2
3
4
5
6
7
8
9
10

$
50.9
62.6
70.7
88.5
91.4
118.7
122.3
136.3
153.5
177.0

%
11.6
13.6
14.3
15.6
14.3
16.2
14.7
14.6
14.5
14.4
Table 7

Marketing has had a varied initial run

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

Market Share (%)

Year
1
2
3
4
5
6
7
8
9
10

Allround
23.7
24.1
24.6
25.4
25.3
25.1
25.5
25.4
26.0
26.5

Allround+
1.1
1.8
3.2
4.1
4.9
5.6
6.2

Allright
.6
1.4
2.4
3.3
4.2

Total
23.7
24.1
24.6
26.5
27
29
31
32.8
35
36.9

Table 8

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

Customer retention (%)

Year
1
2
3
4
5
6
7
8
9
10

Allround
58.2%
64.6%
64.5%
65.9%
65.3%
65.7%
66.1%
66.1%
66.2%
66.6%

Allround+
53.5%
53.4%
53.5%
54.3%
54.6%
55.3%
55.7%

Allright
46.7%
47.2%
47.5%
48.2%
48.6%

Total
58%
65%
65%
65%
64%
64%
63%
62%
62%
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

Customer life (years)

Year
1
2
3
4
5
6
7
8
9
10

Allround
1.8
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.1
2.1

Allround+
1.7
1.7
1.7
1.7
1.7
1.7
1.7

Allright
1.4
1.5
1.5
1.5
1.5

Average
1.8
2.0
2.0
1.9
1.8
1.7
1.7
1.7
1.8
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
1
2
3
4
5
6
7
8
9
10

Acquisition Cost $
14.9
18.0
29.4
29.5
46.8
37.1
38.7
41.5
50.4
50.4

Acquisition Cost as
% of sales
3%
4%
6%
5%
7%
5%
5%
4%
5%
4%

Retention Costs $
21.6
23.8
26.7
27.2
32.0
41.9
49.6
57.8
67.7
67.7

Retention Costs as
% of sales
5%
5%
5%
5%
5%
6%
6%
6%
6%
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

Threat of Substitutes

Threat of Consumer
Buying Power

Threat of Distributors
Buying Power
Threat of Supplier
Power
Threat of Rivalry

Product Life Cycle

Position

Overall Attractiveness

Low

Efficiencies from economies of scale reduce competitive advantage

possibility of new entrants
High startup capital isrequired
Partial saturation of the market already
Moderate
Those affected by colds can seek alternative treatments
There are many prescription drugs available
Low
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
Low
Distributors depend of Allround Brands to fill their shelves
Allround Brands products are demanded by consumers
Low
Suppliers produce commodity chemicals and sell at near
competitive- parity
Moderate
There are many successful companies in the industry
Having the highest market share, customer satisfaction, and brand
awareness reduces this threat
Growing
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
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%
Indep Drug

25.0%

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

12

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 Brands 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 ProductThese 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
60.9%
50.5%
61.3%
47.6%
61.3%
21.0%

Aches
Nasal Congestion
Chest Congestion
Runny Nose
Coughing
Allergy Symptoms
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
Allround

$8.00

Allround+
$7.50

Believe
Besthelp

$7.00
Price

Besthelp+
Coldcure

$6.50

Coughcure
Coughcure+

$6.00

Defogg
Dripstop

$5.50

Dryup
Effective

$5.00
30%

40%

50%
Customer Satisfaction

60%

70%

End
End+

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 ComparisonTables 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
Product Effectiveness
Product Effectiveness
6.2% care most about price
Mature Family

Key value drivers

Primary benefits sought
Price sensitivity description
Key demographic descriptions
Purchases per year per customer
Number of customers
Revenue per customer
$
Percent margin
Margin per customer
$

Cough
Price
Price
50.4% care most about price
Retired

3.1
99,820,000
22.02 $
45.60%
10.04 $

Allergy
Product Effectiveness
Product Effectiveness
12.2% care most about price
Mature Family

1.8
34,730,000
13.81 $
45.60%
6.30 $

5.2
9,340,000
30.63
45.60%
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 LevelThe same map as in the price attractiveness section, but broken down by
market segment.
Cold Industry

Price

Perceptual Map - Cold

$9.00
$8.00
$7.00
$6.00
$5.00
$4.00
$3.00
$2.00
$1.00
$40%

45%

50%

55%
Satisfaction

60%

65%

70%

Allround
Allround+
Besthelp
Besthelp+
Dryup
End+
Extra

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

Price

Perceptual Map - Cough

$8.20
$8.00
$7.80
$7.60
$7.40
$7.20
$7.00
$6.80
$6.60

Coughcure
Coughcure+
End

48%

48%

49%

49%
50%
Satisfaction

50%

51%

51%

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

Price

Perceptual Map - Allergy

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

Believe
Defogg

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
Market share leader
Economies of scale in production
Strong Brand reputation built over time
Flagship is perceived to be most effective
medicine on the market
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
Driscol has lostsignificant market share
and may be open to takeover or buyout
Cough and allergy markets are in growth
phase and could be entered
A buyout of B & B could provide a major
win in the cough market allowing us to
continue to dominate cold and nasal
markets

Weaknesses
Often over capacity due to growth
Lots of capital tied up in advertising and
promotions
Not very well diversified
No internet based ordering system

Threats
Raising prices could result in lower market
share if customer demand is more elastic
than previously thought
Market could be moving out of growth and
into maturity

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 dont 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 manufacturers 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
Allrounds 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 rivalry4 of
Porters 5 Forces. New entrants face an immense disadvantage in the shadow of Allrounds immense
economies of scale. Buyers depend on Allrounds hefty supply to fill their shelves. Suppliers sell
commodity chemicals and need Allrounds 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 Allrounds 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 whats 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, its no wonder that Allrounds customers are the most satisfied in the
cold product category by a wide margin. Though Allround+ and Allright havent 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 childrens cold product.
i. Allbetter with be a childrens 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. Its 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 familiesthe 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), its 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 Brands Corporation already has an international division responsible for getting
Allrounds 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 isnt to
say that we arent 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 childrens 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
Year 11
Year 12

Allround
7.79
8.09

Allround+
6.99
7.29

Allright
5.79
5.99

Allbetter
7.49
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-coldpharma-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
Promotions
POP
Trial
Coupon
Total

Promotion expenditures:
Allround
12

Allround+
7

Allright
8

Allbetter
4
3

6
18

7
14

5
13

Total
31
3
18
52

Allright
2.4
2.4
6.4
4.8
16

Allbetter
3.5
1.5
3
2
10

Total
15.35
13.35
32.45
27.85
89

Allbetter
4
3

Table 17

o
Promotions
Primary
Benefits
Comparison
Reminder
Total

Advertising expenditures:
Allround
6.45
6.45
15.05
15.05
43

Allround+
3
3
8
6
20

Table 18

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
POP
Trial
Coupon
Total

Allround
12

Allround+
6

Allright
8

6
18

7
13

5
13

Total
30
3
18
51

Allright
2.55
2.55
6.8
5.1
17

Allbetter
3.6
1.8
4.2
2.4
12

Total
16.05
14.25
35.15
29.55
95

Table 19

o
Promotions
Primary
Benefits
Comparison
Reminder
Total

Advertising expenditures:
Allround
6.75
6.75
15.75
15.75
45

Allround+
3.15
3.15
8.4
6.3
21

Table 20

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 childrens cold product Allbetter will target young families and mature families because it is
a childrens 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 childrens 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 childrens 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 Allbetters 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
Allbetters 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 Allbetters 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

Allround

10
11
12
Allround+ 10
11
12
Allright
10
11
12
Allbetter 11
12
Total
10
11
12

Sales
Revenue
879.5
949.96
1025.95
206.8
222.25
240.03
138.5
150.56
162.60
28.7
73.6
1224.8
1351.4
1502.1

GM %

GP $

Promo

Adv

53.8%
53.8%
53.8%
58.8%
59.0%
59.0%
58.1%
59.0%
58.9%
55.0%
55.0%
55.1%
55.3%
55.3%

472.8
514.8
562.8
121.6
137.5
150.8
80.4
99.4
109.5
15.8
40.5
674.8
767.3
863.5

18
18
18
14
14
13
13
13
13
7
7
45.0
52.0
51.0

42
43
45
17
20
21
14.1
16
17
10
12
73.1
89.0
95.0

MktgExp SG&A
60
61
63
31
34
34
27.1
29
30
17
19
118.1
141.0
146.0

129.4
133.8
150.3
34.8
37.3
41.9
26.3
30.7
35.0
4.2
11.0
190.5
206.0
238.1

Table 21a

Allround

Allround+

Allright

Allbetter
Total

10
11
12
10
11
12
10
11
12
11
12
10
11
12

net
MktgContr
412.8
453.8
499.8
90.6
103.5
116.8
53.3
70.4
79.5
-1.2
21.5
556.7
626.3
717.5

Mktg
Share
26.5%
26.7%
27.0%
6.5%
6.5%
6.6%
4.7%
4.7%
4.8%
0.8%
1.9%
37.7%
38.7%
40.3%

Cust ret
%
66.6%
66.6%
66.6%
55.7%
55.7%
55.7%
48.6%
48.6%
48.6%
50.0%
50.0%
62.1%
61.6%
66.3%

Cust life
(yr)
2.1
2.1
2.1
1.7
1.7
1.7
1.5
1.5
1.5
1.6
1.6
1.9
1.9
2.1

Acq $

Acq %

24.3
24.45
24.75
16.55
17
16.15
15.115
15.4
15.55
10.5
10.6
56.0
67.4
67.1

2.8%
2.6%
2.4%
8.0%
7.6%
6.7%
10.9%
10.2%
9.6%
36.6%
14.4%
4.6%
5.0%
4.5%

Ret $

Ret %

35.7
4.1%
36.55
3.8%
38.25
3.7%
14.45
7.0%
17
7.6%
17.85
7.4%
11.985 8.7%
13.6
9.0%
14.45
8.9%
6.5
22.7%
8.4
11.4%
62.1
5.1%
73.7
5.4%
79.0
5.3%

Table 21b

34

Budget for Year 11

Market Share
Year 11
Price
Avg Price
Units
% Total Units
Manf Sales
Promo allow
COGS
Gross Margin
GM %
Promo Exp
AdvExp
Total P/A
Sales Force
Admin
Fixed
Total SG&A
Operating Inc

Allround Allround+ Allright Allbetter

Total

26.7%
Allround
7.79
5.1
185.9
65.0%
957.12
169.0
273.4
514.8
53.8%
18
43
61
18.8
22.7
92.3
133.8
319.9

38.7%
Total

6.5%
Allround+
6.99
4.5
51.8
18.1%
233.01
36.5
59.0
137.5
59.0%
14
20
34
5.2
6.3
25.7
37.3
66.2

4.7%
Allright
5.79
3.9
42.7
14.9%
168.48
28.5
40.6
99.4
59.0%
13
16
29
4.3
5.2
21.2
30.7
39.6

0.8%
Allbetter
7.49
5.0
5.8
2.0%
28.7
4.3
8.6
15.8
55.0%
7
10
17
0.6
0.7
2.9
4.2
-5.4

286.1
100.0%
1387.29
238.3
381.6
767.3
55.3%
52
89
141
29
35
142
206.0
420.3

Table 22

Budget for Year 12

Market Share
Year 12
Price
Avg Price
Units
% Total Units
Manf Sales
Promo allow
COGS
Gross Margin
GM %
Promo Exp
AdvExp
Total P/A
Sales Force
Admin
Fixed
Total SG&A
Operating Inc

Allround Allround+ Allright Allbetter

Total

27.0%
Allround
8.09
5.3
195.5
68.3%
1045.31
184
298.6
562.8
53.8%
18
45
63
20.5
27.3
102.5
150.3
349.4

40.3%
Total

6.6%
Allround+
7.29
4.7
54.4
19.0%
255.52
40
64.7
150.8
59.0%
13
21
34
5.7
7.6
28.5
41.9
74.9

4.8%
Allright
5.99
4.1
45.5
15.9%
185.83
31.5
44.8
109.5
58.9%
13
17
30
4.8
6.4
23.8
35.0
44.5

1.9%
Allbetter
7.79
5.1
14.3
5.0%
73.6
11.0
22.1
40.5
55.0%
7
12
19
1.5
2.0
7.5
11.0
10.5

309.7
100.0%
1560.22
266.5
430.2
863.5
55.3%
51
95
146
30
40
150
220.0
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+ (childrens 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 wasnt 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