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Introduction
Established in 1924, Allstar Brands Corporation is the leading manufacturer of packaged
goods in the world. The company comprises of three separate divisions: Consumer Products,
International, and Pharmaceuticals. The Pharmaceutical division is responsible for the
production and marketing of ethical drugs & OTC medications.
Allround is the cash cow product for Allstar - with 40.4% market share in the OTC remedy
market. Its recent success in terms of sales and profitability were mainly due to its strong
brand awareness and product effectiveness which enabled it to achieve a high customer
satisfaction. As a result, Allround will act as a crucial component in the implementation and
success of the long term strategic plan of Allstar Brands Corporation.
Mission Statement:
To develop innovative products to cure diseases and ease the suffering of patients
Vision Statement:
To offer a complete solution to customers, in order to enhance their quality of life
Market Overview:
Strategic Objectives
Short-term Objectives:
1.
2.
3.
4.
Long-term Objectives:
1.
2.
3.
4.
Marketing Strategy
1. First period (year 1-2):
As seen in the SWOT analysis (appendix 1), Allround has a low retention rate (appendix 3).
One of the reason might be that multi-symptom medication usually suffers from low retention
rates. However, this impacts negatively on the overall sales.
To address this issue, the adopted Allround marketing strategy is Market Penetration during
the first period Year 1-2 of the plan.
The production capacity will be increased to almost 100% by investing into the production
facility to achieve its long term objectives. Short term, Allround aims to maintain its
advertisement budget to $20 Million, however it may be reduced in the future as the Allround
has already established itself in the market and has the highest brand awareness.
During the next planning period, assuming that 1) the results from the first period are positive,
2) the sales target was achieved and 3) retention rate was increased, Allround will pursue a
Need-based Strategy.
This strategy will translate into further investment into the R&D based on the available market
research and will develop a new product, much more focused on market demand and
customer needs.
Marketing activities:
1. Product
Product development will be a secondary focus for Allround with a new product development taking
place in the second part of the planning period.
A product formulation will be proposed during Years 1-2 to answer the market demand of a more
focused product. Also, research into consumer preferences showed a strong preference for 12hcapsule product formulation.
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During years 3-5, Allround will propose a new product to complement the existing offering on the
market. This product will be more focused on reducing higher level cold/allergy symptoms.
2. Price
For the first period, we will maintain its price to $5.29, as inflation rate continues to increase
to 3.1%.
During the second planning period, the new product will be priced similarly. In calculating the
MSRP, a combination of benchmarking with similar offerings on the market, production costs
and overhead will be used.
The price of the current product will decrease by approximately 15-20% during year 3 and will
continue to decrease to up to 30% by the end of the period, until completely withdrawn from
the market.
3. Place
Push strategy: In the short run, Allround will try to improve its relationships with its suppliers,
retailers, wholesalers and customers by increasing the trade promotion to $2 Million and
consumer promotion to $6 Million to promote sale of its products.
Distribution Channels:
1. Direct Channels: urban and suburban stores and retail chains.
2. Indirect channels: wholesalers
4. Promotion
Push Strategy: Allround will be looking to increase its direct sales force to 100 and indirect sales
force to 45 to further increase its sales through direct & indirect channels that are growing
rapidly.
Pull strategy: Allround currently enjoys the highest market share, highest brand awareness rate and
highest brand trials and most frequent purchases, the pull strategy is considered to be sufficiently
sound and healthy.
The advertising budget for the integrated marketing communications will increase by approximately
10-20% with a special focus given to the following areas:
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Contingency plan:
At the end of the first planning period (Year 1-2), the management team will evaluate the current
results against the objectives and measure the results.
If the results achieved do not meet the objectives set, in terms of overall sales, market share and
retention rate, Allround will change the planned strategy.
In the plan, we envisage a new product launch in the second period of time. However, should the
results not be in line with the objectives, Allround will continue with a Need-based strategic
approach, market development.
In this we envisage an extension of the distribution channels to reach more remote areas. As seen
from the SWOT and the Pestel Analysis (appendix 2-3), the current customer reach extends to only
75% of the population.
Therefore, extra efforts will be put into reaching those customers as well, through indirect channels
and increasing the number of direct as well.
Also, special attention will be given to the direct sales force who will be more proactive in these area
by organizing a special structure in the sales department.
Bibliography
2GC, n.d. 2GC Active Management. [Online]
Available at: http://2gc.eu/resource_centre/balanced-scorecard
[Accessed 02 2015].
Age, T. M. A. C. o., 1989. The Marketing Audit Comes of Age. Philip Kotler, William T. Gregor and
William H. Rodgers III.
Graham Hooley, B. N. N. P., 2011. Marketing Strategy and Competitive Positioning. 5 ed. Harlow:
Financial Times/ Prentice Hall.
Hill, C. W. L., 1988. Differentiation versus Low Cost or Differentiation and Low Cost: A Contingency
Framework. The Academy of Management Review, 13(3), pp. 401-412.
Levitt, T., 1980. Marketing Success Through Differentiationof Anything. Harvard Business Review.
Porter, M. E., 1996. What Is Strategy?. Harvard Business Review.
Porter, M. E. et al., 2011. HBR's 10 Must Reads on Strategy. s.l.:Harvard Business Review.
Robert S. Kaplan, D. P. N., 2000. Having Trouble with Your Strategy? Then Map It. Harvard Business
Review.
Appendix 1
Financial Summary:
Industry Sales
Industry sales growth
$1,491.2 M
5.50%
Retail sales
Manufacturers Sales
Promotional Allowance
Cost of goods Sold
Gross Margin
Consumer & Trade Promotion
Advertisement
Net Income
Stock Price
Production Capacity Utilization
$468.1 M
$355.3 M
$60.4 M
$122.6 M
$172.3 M
$ 7.0 M
$20 M
$67.2 M
$38.35
85.10%
The Economic prospective for the industry appear to be highly positive as the industry sales
continue to grow by 5.50% to $1,491.2 Million of which Allround accounts for $468.1 Million.
Moreover, Allround has a net Income of $67.2 Million and is the market leader in the OTC
cold and allergy market, as it continues to focus on brand awareness and trade distribution
for which it has devoted around $20 Million in Advertisement and $7 Million in consumer and
trade promotion. However, its resources are being under-utilized as the production capacity
can be enhanced to support the long term objectives of the company.
Appendix 2
P.E.S.T.E.L Analysis
Political
Economical
Social
Technological
Legal
Environmental
Appendix 3
S.W.O.T Analysis
Strengths
-
Weaknesses
-
Opportunities
-
Threats
-
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Appendix 4
Competitive Rivalry:
Allround brand competes with five other firms in the OTC cold and allergy market. Since its
establishment, it has achieved incredible level of growth and success. However, it faces stiff
competition from its direct competitor Ethik Incorporated.
Threat of Substitution:
Threat of substitution is quite low as Allround is the market leader in the OTC cold and allergy
market segments. However, it is only sold in liquid form, which can be a cause for concern for
Allstar brand, as consumers prefer the capsule formulation as it is more convenient.
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REFERENCES:
http://www.novartis.com/about-novartis/our-mission/index.shtml
http://www.ukessays.com/essays/international-business/global-pharmaceutical-industry.php
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