George Hanania

BU-5700-ON Marketing Techniques

2.19.15
I thought the PharmaSim Case was a very interesting tool to help me learn all
about running a business from every angle. It took me some time to learn how to play
with it, as I didnt find it as user-friendly to begin with, but having the practice session
definitely helped. I wish I could have more replays/restarts to get a better feeling of how
I can have a better performance than I did. A few things I realized afterwards were that I
could have had the ability to reformulate Allround, launch a line extension, and launch a
new product. However, I will now discuss the different things I did from period to period
in terms of pricing, advertising, promotion and sales force.
In period 1, I didnt start off too bad; my stock price went up from 38.35 to 48.48.
Prices increased an average of 1 percent compared to an inflation rate of 4.3 percent. I
increased total advertising spending to 12.4 million while promotional spending was
increased by 2.8 million. Convenience store sales showed the strongest growth this
period with an increase of 17.8 percent. Retail sales grew by 280.1 million (14 percent).
Sales force, increased from 143 to 159. Budget increased from 34.2 million to 38.4
million. Advertising Budget was increased by .9 million. Co-op advertising was set at a
budget from 3 million to 6 million. It seemed that the sales force allocation was
improved in the correct areas. It also seemed that the feedback from retailers indicated
that the promotion allowance for Allround is significantly higher than my competition.
Only 3.4 percent were participating in point of purchase and only 1.8 percent were
involved with co-op advertising.

In period 2, my stock price went down by a little from 48.48 to now 44.72.
Prices increased an average of 3.3 percent compared to an inflation rate of 5.2 percent.
Total advertising spending is down 1.1 million while promotional spending decreased .2
million. Mass merchandiser sales showed the strongest growth this period with an
increased of 16.1 percent. Retail sales grew by 161.5 million, or 17.1 percent. My sales
force was increased to 175, up from 159. Now, was the allocation correct? In looking at
the company sales report, it seems that it was allocated correctly, but I wasnt entirely
positive since Allround product sales stayed steady. Budget went from 38.4 million to 40
million. I changed the retail price from 5.49 to 5.59 while volume discount allocation
stayed the same. I dropped advertising from 18.9 to 16 million. I increased promotion
for co-op advertising here to 9.2 million and I think this was a mistake on my part here.
In period 3, Stock price fell again from 44.72 to 39.74. Prices increased an
average of 2.8 percent compared to an inflation rate of 6.4 percent. Total advertising
spending is up 13.3 million while promotional spending increased 8.7 million. Mass
merchandiser sales showed the strongest growth this period with an increase of 10.7
percent. Retail sales grew by 71.9 million or 2.9 percent. I kept making the same
mistake in my opinion of promotion allowance was too high, despite dropping from 17
percent allowance to 15 percent. I wish I could go back and significantly reduce that. I
increased co-op from 9.2 to 10 million when I should have probably dropped it by 5
million. I increased advertising from 16 million to 16.4 million in this period. However,
I did change the advertising agency from Brewster, Maxwell and Wheeler to Lester
Loebol and Company. I took the price from 5.59 to 5.69 and changed the allocation of
volume discounts to see if that would encourage more buyers to buy more in bulk. Sales

force seemed to be allocated correctly, so I kept this variable the same in this period with
a constant of 175.
In period 4, I saw a hike again in stock price from 39.74 to 47.08 so it seems like I
made the right moves here after seeing a decline for 2 periods in a row. Prices increased
an average of 5.1 percent compared to an inflation rate of 7.1 percent. Total advertising
spending is down 4.7 million while promotional spending decreased 0.9 million. I should
have decreased promotional spending even further, but instead just decreased allowance
from 15 percent to 10 percent. Grocery store sales showed the strongest growth this
period with an increase of 9.5 percent. My allocation of grocery stores went down by 2
from 47 to 45 when it should have been increased here to help with the growth. Sales
force stayed the same but seemed all over the place and not correctly allocated. This
caused some retailers to complain about poor sales support. Despite the increase in stock
price, Allrounds trade rating is falling. Pricing went up from 5.69 to 5.89 and my
volume discounts were really all over the place, which could have caused some of those
complaints and trade rating to fall. Advertising was kept constant at 16.4 million with the
same advertising agency. I kept making a similar mistake with promotion this time
increasing from 10 to 12.1. So, with the stock increase I was a little unsure at this point
what to make of it.
In period 5, I saw a very small hike in stock price from 47.08 to 47.40. Prices
increased an average of 4.8 percent compared to an inflation rate of 8.5 percent. Total
advertising spending is up 15.3 million while promotional spending increased 7.4 million.
Mass merchandiser sales showed the strongest growth this period with an increase of 23.6
percent. Retail sales grew by 255.5 million or 9.6 percent. I kept promotion the same at

12.1 million and 10 percent but it seemed like this wasnt enough now. I significantly
dropped my sales force from 143 to 122 to cutback on my budget from 42.6 to 46 and use
the money elsewhere. Price increase from 5.89 to 5.99 and changed volume discounts
again with some minor tweaking to find the perfect percentages based on how much
product they buy. With the extra money I increased advertising from 16.4 million to now
20 million with Brewster, Maxwell and Wheeler. Co-op advertising went from 12.1 to
12.8, at a solid allowance of 10 percent.
In period 6, it seems that my promotion rates are still too low which is affecting
my trade rating. Stock price dropped from 47.40 to 37.61, and I was not happy with this.
Prices increased an average of 7.4 percent compared to an inflation rate of 6.7 percent.
Total advertising spending is down .7 million while promotional spending decreased .8
million. Mass merchandiser sales showed the strongest growth this period with an
increase of 6.3 percent. Retail sales grew by 93.9 million, or 3.2 percent. Something
seemed wrong with my promotion as I change promotion allowance to 20 percent, up
from 10 percent for each decision but retailers were complaining that I didnt provide
enough promotion allowance for Allround compared with the competition. I dropped
sales force from 122 to 111 and it seemed like there wasnt an issue with that. I dropped
pricing by a whole dollar but prices increased which I was not sure why this happened.
In period 7, accounting was concerned that Allrounds price is too low, so I knew
I had to bring it back up by a whole dollar to where it was. Now retailers are telling me
that promotion allowance is significantly higher than the competition. I was having a
very difficult time with this part of the project. One period its up, one period its down,
and here stock price went from 37.61 to a low of 8.77. I was extremely disappointed here

at this low. Prices increased an average of 2.5 percent compared to an inflation rate of
4.8 percent. Total advertising spending is up 1.8 million while promotional spending
increased 4.8 million. Independent drugstore sales decreased by 13.5 percent and Retail
sales took a hit as well, declining by 149.9 million, or 5 percent. Kept my sales force the
same and I were very disappointed with the stock price drop. I knew I had to really do
something different the next period.
So in period 8, I was able to recover the stock price from 8.77 to 22.21, still not
quite happy with it, but I made some changes. Prices increased an average of 4 percent
compared to an inflation rate of 2.6 percent. Total advertising spending is up 7.4 million
while promotional spending held steady at 55.9 million. Mass merchandiser sales
showed the strongest growth this period with an increase of 19.2 percent. Retail sales
grew by 262.3 million, or 9.2 percent. I increased sales force to 120 and refocusing on
retail sales. I increased the price to 6.50 working with a much lower budget of 32.8
million and tried adjusting the volume discounts to a higher percentage. I switched to
Sully and Rogers advertising agency. Promotional advertising allowance was set at 15
percent with co-op advertising at 8 million. It seemed to work for me this period and I
was satisfied of the stock price increase with the changes I made.
In period 9, I was focusing on finishing strong with the last 2 periods but again I
saw a stock price drop from 22.21 to 15.36. I was getting really frustrated but I wanted to
figure out what the problem was. It looks like some of the problems I encountered were
my sales force allocation needed to be improved and my price for the Allround product
was too low. I think I increased the sales force way too much from 120 to 183 and it

wasnt properly allocated. I thought I had increased pricing too much all the way to 7.45
but it seemed that it still was too low.
In period 10, the last period, I really wanted to finish on a positive result, but
unfortunately, I dropped again from 15.36 to 10.37. I was not too happy with this, but
lets look at what I did. I kept sales force the same, just reallocating. Pricing was also
kept the same, at 7.45 but I changed the volume discounts again. I dropped advertising
from 8.7 million to 10.3 million and stuck with the same ad agency. I finished off with
prices increasing an average of 4.3 percent compared to inflation rate of 3.7 percent.
Total advertising spending was down 4 million while promotional spending decreased 3.6
million. Mass merchandiser sales showed the strongest growth this period with an
increase of 10.7 percent. Retail sales grew by 197.8 million or 6.4 percent.
I wish I could have done the simulation again and play around with the numbers
more to really be able to learn from my mistakes. Also, I wish I had introduced other
Allround products to diversify along with purchasing other reports that could have been
handy. I also was wondering how it would have been affected had I put in a new creative
design logo but I didnt use that feature. All in all, I learned a considerable amount from
this simulation and thought it was fun at the same time, I just wish my results for my
stock price of the company were a lot higher.