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

5. PharmaSim Environment  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

6. Competitive Companies Allstar Brands $355Allround, 4hr cold liquid B&B Health Care $286Believe, 4hr allergy capsule Besthelp, 4hr cold capsule Curall $199Coughcure, 4hr cold capsule Driscoll Corp. S255Defogg, 4hr allergy capsule Dripstop, nasal spray Dryup, 4hr cold cpasule Ethik Inc. $395Effective, nasal spray End, 4hr cough liquid Extra, 12 hr cold capsule CompanySales Brands

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

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?