The PharmaSim Case Period Review Prepared by: Nik Rentas Turgut Tezir August 10, 2006

OUTLINE General Period Review Period Performance Period 4 Period 5 Conclusions I & II

General Period Review Period 4 introducr PERIOD 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 8 Introduce New Products Dryup Coldcure Besthelp+ Allround+ Curall Children Ethick End+ AllStar Allright Advertising Spending 3.3Mil. +17.7Mil. +7.3Mil +17.2Mil +14.4Mil +12.3Mil +21.3Mil +2.7Mil Promotional Spending +1Mil +17Mil +3.5Mil +7.8Mil +3.7Mil +10.1Mil +3Mil +4.1Mil +1.5Mil SALE Mass Merchandiser +9% +13.7% +13.6% +19% Retail 82.1Mil 4.3% 380.7Mil 19.1% +57.4Mil 2.4% +106.2Mil 4.4% +168.4Mil 6.6% +345.6Mil 12.8% +223.8Mil 7.3% +164.1Mil 5% +316Mil 9.2% Convenience +36.4% -21.8% +29.1% Grocery 9.9% +7.5% Period 4 introducr

General Period Review Period 1 2 3 4 5 6 7 8 Net Income (millions$) 67 1 2 3 4 5 6 7 8 Net Income (millions$) 67 91 69 52 112 206 98 141 Compare Groups in Class* 10 14 Stock Price ($) 38.35 50.71 39.14 37.5 35.42 52.98 57.7 61.75 80.68 9 Return on Expenditures (%) 203.6 257.3 182.7 200.8 90.1 217.6 139.4 132.8 192.7 13 11 12 Return on Sales (%) 18.9 21.3 16.9 11.7 24.6 18.4 16.0 19.9 Share of Manufacturer Sales (%) 23.8 23.4 21.9 20.8 21.4 22.0 22.8 22.4 Cumulative Net Income (millions$) 158 227 296 349 460 567 665 806

General Period Review

Period Performance Period 1 was below average compared to groups in the class. Period 8 was above average We were in the top 3 best company based on net income, return on expenditures and return on sale. We were in the top 4 best company based on stock price. We were in the top 5 best company based on share of manufacturer sales, cumulative net income

Period 4 Allround + 12hr Multi Capsule Capsule & Stronger Net Income and Stock Price climb Advertising & promotional spending high Grocery and retail store sale grew Curall has also requested permission to sell children cough medicine

Period 5 Advertising & promotional spending high Product awareness high but declining New competitor products introduced with better marketing strategies, more focused segmentation. Ethik introduced End+ Net Income increased almost double size Stock prices increased Retail sales grew by 12.8% We were marketing our products to too wide of a market. In period 6 we received the performance sheet which questioned some of our decisions. After making changes in accordance with the recommendations we saw all aspects of the business improve.

Period 6 Allright children medicine introduced Total advertising and promotional spending increased Sales force increases caused major improvements Net Income and Stock prices grew Retail sales grew by 7.3% Convenience store sales decreased 21.8 %

Period 7 Advertising and promotional spending increased We continue to increase sales force Grocery stores showed the strongest growth in this period with an increase of 7.5%. Retail sales grew by $164.1 million.

Conclusions I An average advertisement and promotional allowance help us to increase product awareness although didn’t help retention. The best advertising company had a marginal effect. We switched over cheaper advertisement company to reduce advertising cost. Through cost cutting in advertising we increased our sales force to attempt to match that of B&B. Doing so made retail sales skyrocket and brought us within 10 million dollars of B&B.

Conclusions II Through cost cutting in advertising we increased our sales force from period 6 on to attempt to match that of B&B. Doing so made retail sales skyrocket in period 8 bringing Allstar within 103 million dollars of B&B in retail sales. Period 7   Allstar B & B Retail Sales 805.9 943.9 Manufacturer Sales 615 729 Promotional Allowance 116.5 111.9 Cost of Goods Sold 219.8 192.7 Gross Margin 278.6 424.4 Cons. & Trade Promo. 16.5 21.7 Advertising 43 50.6 Sales Force 14.6 21.1 Administration 16.9 19.5 Contrib. after Mkting 187.7 311.5 Fixed Costs 89.3 109.5 Net Income 98.4 202 Stock Price 61.75 129.95 Capacity Utilization 108.9 96.7 Period 8   Allstar B & B Retail Sales 925.3 1028.3 Manufacturer Sales 706.1 794.5 Promotional Allowance 134 122 Cost of Goods Sold 240 219.1 Gross Margin 332.1 453.4 Cons. & Trade Promo. 15 23.8 Advertising 44 55.7 Sales Force 14 22.9 Administration 18.8 21.2 Contrib. after Mkting 240.3 329.8 Fixed Costs 99.7 113.5 Net Income 140.6 216.3 Stock Price 80.68 144.47 Capacity Utilization 100.2 104.6