PharmaSim Case

Wednesday, May 14, 2014

11:15 AM

Introduction:
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 the Allround cold medication.

Problem:
Allround brand it manages is of strategic importance to the company. Unfortunately,
the fourth quarter performance were not as positive as management expected.

Overview:

Allround is market share leader in the OTC cold and allergy remedy market.
o
Consistent success of the brand in terms of profitability and sales, critical
component of the Pharmaceuticals Division's long-term strategic plan.
o
Brand's cash flow in the coming periods will allow the company to pursue
new opportunities in the emerging markets.

Competitive nature of OTC cold remedy market is a concern.
o
Industry has seen several product introductions.
o
Major increases in promotional and advertising expenditures.
o
Competitive activity leading to declining market share and profitability for
Allround (the brand has lost on full share point in the last period).
Company

Three divisions- Consumer, International, and Pharmaceuticals.

Consumer handles packaged goods (e.g. laundry detergent, shampoo, soap).

International distributes products on global basis and large presence in European
market.

Pharmaceuticals responsible for marketing and production of ethical and OTC
medications.
o
Management consists of number of market related groups, one being OCM.
o
OCM is concerned primarily with marketing activities of Allround brand and
any line extensions or new product introductions.

Brand Management Group at OCM

Marketing management group responsible for Allround consists of brand
manager, assistant brand manager, and brand assistant.
o
Brand assistant has major inputs on decisions related to retail price,
promotional allowances, consumer and trade promotional expenditures,
advertising expenditures, and number of direct and indirect sales force
personnel committed to Allround brand.
o
Assistant brand manager has input to aforementioned issues but is also
concerned with development of pricing discount structure as well as more of
the specifics of promotional programs, including advertising message,
advertising agency, and trade and consumer promotions.
o
Brand manager is responsible for all aspects of marketing decisions for
Allround program. Is also responsible for more detailed aspects of
advertising messsage, competitor to position, choice of target segments, and
details of how promotional allowances and promotions are allocated across
various distribution channels.

Industry Overview

Allstar Brands competes with four other firms in OTC cold and allergy market.

Company
Name
Sales ($,
million)
Brands on the Market
Allstar Brands 355 Allround, 4-hr multi-symptom
cold liquid
B&B 286 Believe, 4-hr allergy capsule
Besthelp, 4-hr cold capsule
Curall 199 Coughcure, 4-hr cough liquid
Driscol 255 Defogg, 4-hr allergy capsule
Dryup, 4-hr multi symptom cold
capsule
Dripstop, nasal cold spray
Ethik 395 Effective, nasal cold spray
End, 4-hr cough liquid
Extra, 12-hr cold capsule

OTC Cold Remedy Market

Cold remedies are designed to address five basic symptoms: aches and fever,
nasal congestion, chest congestion, runny nose, and cough.

Allergies share many similar symptoms to cold and therefore often grouped with
cold remedies.

Products formulated specifically for allergy relief medicines are available, common
in industry to consider relief from allergy symptoms as a separate consumer need.
o
Chronic allergy sufferrers tend to have diff. usage patterns and more
concerns about side effects because of the duration of the symptoms.
Brand Formulation

Six basic types of ingredients used to formulate OTC brands. Each ingredient
targets one of five basic symptoms.
o
Analgesics provided relief for aches and fever.
o
Anthihistamines reduce secretions that cause runny nose and watery eyes.
o
Decongestants reduce nasal congestion by shrinking blood vessels in nose
lining to clear passages and restore free breathing.
o
Cough suppressants reduce cough reflex.
o
Expectorants provide relief from chest congestion by loosening the phlegm.
o
Alchohol provides base for other ingredients in some products and help
patient rest (Some consumers view talchohol as a negative attribute).

Brand can be made availabe in three forms: liquid, capsule, spray. Consumers
choice is based on personal preference, but some general differences are
apparent.

Nasal sprays contain only a topical nasal decongestant that provides faster relief
from sinus congestions than other forms.

Capsule and liquid contain any combination of ingredients. Cough medicine is
found in liquid form to help soothe throat irritation. Consumers find capsule
form more convenient than liquid.