Introduction to PharmaSim

1. Introduction to PharmaSim Marketing 6202 June 29, 2010

2. Purposes of PharmaSim To introduce and reinforce the logical process of marketing planning Situation analysis and assessment Development of integrated plans – linking strategic and tactical decisions Monitoring and evaluating results; using lessons learned in subsequent planning cycles

3. Purposes of PharmaSim To understand that the keys to profitability are market driven and customer-focused decisions To learn by doing in a low stakes environment

4. Situation Analysis • Identification of Problems and Opportunities • Identify and Evaluate Alternatives • Make Decisions • Monitor Results PharmaSim Decision Process

5. Similar to the United States in the Early 1990s • Population = 250 Million • GNP = 2% per year • Moderate Inflation (2-4%) • Over 80% of the population suffered from some cold-related symptoms in the past year • OTC cold-medicine retail sales = $2B with growth of 4% per year • 5 companies competing in the industry PharmaSim Environment

6. Company Sales Brands Competitive Companies Allstar Brands $355 Allround, 4hr cold liquid B&B Health Care $286 Believe, 4hr allergy capsule Besthelp, 4hr cold capsule Curall $199 Coughcure, 4hr cold capsule Driscoll Corp. S255 Defogg, 4hr allergy capsule Dripstop, nasal spray Dryup, 4hr cold cpasule Ethik Inc. $395 Effective, nasal spray End, 4hr cough liquid Extra, 12 hr cold capsule

7. Basic Consumer Needs Relief of Symptoms Aches and Fever--------------Analgesic Runny Nose-------------------- Antihistamine Nasal Congestion-------------Decongestant Cough---------------------Cough Suppressant Chest Congestion-------------Expectorant Allergy Symptoms------------Antihistamine Trouble Sleeping--------------Alcohol

8. Side Effects • Drowsiness, Upset Stomach, Alcohol • Form • Capsule, Liquid, or Nasal Spray • Duration • 4 to 12 hours • Price • MSRP, Discounts, Channels, Promotions Produce Attributes Affecting Basic Consumer Needs

9. Consumer Buying Behavior Is Based on: Illness/Symptoms Age Day vs. Night Use/Work vs. Home Use

10. Consumer Purchase Process Awareness Intention to Buy In-store Attractiveness Purchase Post Purchase Usage/Satisfaction Repurchase

11. Segmentation Process By Illness Cold Cough Allergy By Demographics Young singles Young Families Mature Families Empty Nest Retired

12. Distribution Options Retail Outlets Independent Drugstores------------ 22% of sales Chain Drugstores----------------------28% of sales Grocery Stores------------------------37% of sales Convenience Stores-------------------4% of sales Mass Merchandisers-------------------9% of sales

13. Distribution Options Considerations for Shelf Space, Stocking & Sales Force: Margin earned per unit [volume discounts and promotional allowances] Sales volume and turnover rates Sale Force Influences Direct and indirect Co-op advertising funds Other promotional activity

14. Preliminary Questions Who is the likely Allround Customer? Their likely purchase process Marketing mix elements-most effective What advantages does Allround brand offer? Who are Allround’s competitors?

15. Preliminary Questions What do you think of Allround’s pricing? How many units to maintain net contribution at $5.00 or $5.60 What are the advantages of a higher price, lower price?