Fuqua School of Business Marketing Planning Professor Carl Mela BA 460 Product Management Fuqua School of Business Brand Management System On Building A Brand Managing Across Brands

Agenda Marketing Planning PharmaSim

The Purpose of Planning “Planning is everything, plans are nothing.” General Eisenhower Planning is to a large extent the job of making things happen that would not otherwise occur.

Obstacles to Planning Good Forecasting Time Lack of Process Lack of Management Commitment

Responsibility for Planning Source: Conference Board

Responsibility for Approving Plans Source: Conference Board

Planning Horizon Source: Conference Board

Top Down v. Bottom Up Bottom Up Top Down Closer to implementation, motivated by control, better forecasts Top Down More vision at the top, more coordination

Planning Process Set Deadlines / Initiate Process Gather Data Analyze Data / Situation Assessment Make Plans & Forecasts Refine Plan Management Approval Disseminate, Monitor & Control

Consider Company Goals Assess Situation Consider Company Goals Set Measurable Objectives Develop Strategies, Action Plans, Responsibility Assignments, and Due Dates Evaluate Programs Against Objectives Attainable Unattainable Draft Marketing Plan Compare Programs to Resources Feasible Infeasible Submit Plan for Approval Approved Not Approved Go Source: Conference Board

The Marketing Plan Where are we now? Where do we want to be? How do we get there?

Marketing Plan Executive Summary Situation Analysis Marketing Objectives Strategy and Tactics Monitors and Controls Financial Documents

Situation Analysis Review of Status and Future Outlook Not just data, but implications Brevity, prioritization of information Diagnostic, not descriptive Contains: Category Analysis and Forecast Trends Sales Analysis 3 C Analysis Planning Assumptions Summary (Problems and Opportunities)

Objectives “If you don’t know where you want to go, any road will take you there” Precise, with dates and numbers Sales, profits, share, etc. Measurable and achievable Subsequent strategy and tactics must demonstrate compliance with objectives

Strategy and Tactics Strategy is means to accomplish goal, e.g., awareness goal will be met by advertising Tactics pertains to the implementation, e.g., media schedule, agency, message, etc. how to, by whom, by when, with what resources

Monitors and Controls 74% of consumer product firms have explicit sales promotion tactics Only 36% monitor 69% of industrial firms have explicit sales tactics Only 46 % monitor Only 1 in 4 firms has a contingency plan Both good and bad events (e.g., competitor merges or leaves) What ifs and appropriate trigger points Source: Conference Board

PharmaSim Goal: Provide context for plan 20% plan, 5% performance Assignment detailed on website Goal: More experience in decision making More brand oriented than Markstrat More promotion and advertising decisions, less production Play against pc, not classmates

PharmaSim Overview of Market 250MM Persons (1% Growth /Year) 2% GNP Growth Moderate Inflation 80% of Population Suffers from Colds OTC Market is $2BB Growth 4% / Yr Manufacturer Sales = $1.5BB Five companies Capacity adjusts automatically to demand

PharmaSim Market Competition Four Trade (not Consumer) Categories Four competitors (B, C, D, and E) Four Trade (not Consumer) Categories Cold, nasal, cough, and allergy Brands Have Five Attributes Symptoms relieved, side effects, form (capsule, liquid, spray), duration of relief, and price

PharmaSim Market

PharmaSim Consumers Buying behavior varies with Buying process Illness/symptom (cold, cough, allergy), age, and usage occasion (day or night, work or home) Thus, can segment by illness, age, or usage Note: mfg. sales study (pre-defined category)  consumer survey (usage) Buying process Awareness  Purchase Intention  In Store Attractiveness  Purchase Usage Satisfaction  Repurchase

PharmaSim Channel Through Wholesale or Direct to:

PharmaSim Decisions Pricing Salesforce Size MSRP Trade <250 Units, <2500 Units, >2500 Units Wholesale Salesforce Size Direct (By Channel) Indirect (Wholesale, Merchandisers - Retail Sales Support, Detailers for M.D.’s)

PharmaSim Decisions Advertising Targeting Message Segments (By Age and Usage) Agency Budget Message Message (primary demand, benefits, competitive comparison, or reminder message) Benefits (e.g., aches, congestion, etc.)

PharmaSim Decisions Trade Promotions Consumer and Trade Allowances (% of MSRP by channel) Co-op Ads (total $ and which channels) Consumer and Trade POP ($ and which channels) Trial Size ($) Coupons ($ and face value)

PharmaSim Decisions Product Reformulation - before decision 2 Line extension - before decision 4 New product - before decision 5 Your own product - before decision 8

PharmaSim Tips Please review tips on website (link from syllabus) Read pages 5-66 carefully. E.g., buried on page 66 is the statement that FC continue when product is dropped. Important, but easily missed. Other examples abound.

Other PharmaSim Tips Think analytically Sales = Share * Market Size Share = f (marketing $ and quality, value/price, synergies among marketing activities, fit with segments selected, positioning relative to competition) Size = f(population, needs, available product benefits, industry marketing $ and quality, product life cycle)

More Tips Marketing $ can interact Deals more effective with ads Stockpiling is possible Understand the role of channel and how to motivate Think about the ramifications of your strategies A leading brand (Allround) should never run comparison ads against a niche brand (Coughcure) Line extensions do not need the same marketing $ as new brands Allocate marketing $ to area with highest returns Key opportunity is chance to introduce new product into a market with a real need (e.g., Allright Allergy). Shift resources to new product

One Last Tip Cost dynamics, margin management, value based pricing, and capacity utilization are essential to profitability.

Marketing Plan Assignment The assignment is detailed on the website and linked to the syllabus. First move of Pharmasim should take 2 hours. Then, about 1 hour + for the remaining 7 moves for a total of 10 hours. Harvard runs 10 moves in 24 hours period.

Marketing Plan Assignment Three parts (4 pages & Exhibits) Situation analysis Marketing program and financials Executive summary, contingencies, and post-mortem 3 reports = 20% , performance = 5% Please turn in copy of diskette and administrator report with the first two parts Note: marketing planning (although not handed in) should occur each period of PharmaSim!

Marketing Plan Assignment Marketing plans represents 20-30% of what you will do. Daily product management is the other 70-80%. This Assignment aligns with both.

Summary Marketing Plan PharmaSim is Vehicle for Plan Executive Summary Situation Analysis Marketing Objectives Strategy and Tactics Monitors and Controls Financial Documents PharmaSim is Vehicle for Plan