Advertising Messages
The team also placed huge emphasis on the four types of advertising messages. The four types of advertising messages are primary, benefits, comparison, and reminder. The major focus of the advertising and of the advertising strategy was promoting the benefits of the products. For the first year, the percentage of advertisement messages focusing on benefits was 40% for Allround, followed by 44%, 40%, 18%, 28%, 37%, 45%, 30% and 30% respectively for the other periods of the simulation. Some of the major benefits outlined during these periods included; reducing aches, clearing nasal congestion, drying up running nose, suppressing coughing, reducing chest congestion, relieving allergy symptoms and helping patients to rest. For this brand, reminder messages also increased throughout the periods in the hopes that we could retain our current customer base throughout the simulation.
For the new Allround+, the percentages of advertisement messages focusing on benefits in a successive order were 30%, 35%, 35%, 20% and 20%. Apart for the benefits highlighted for Allround, the messages for the new brand also emphasized the absence of severe side effects such as it would cause drowsiness from use of the product. The purpose of this message was to convince consumers about the safety of the product and potentially increase their willingness to try and receive needed rest while they were sick. Reminder advertising did not feature prominently in Allround+ since the product was in the initial phases of the product life cycle. The team did not allocate advertising dollars in an arbitrary manner, but rather based the decisions upon the stage of product life cycle. The stable transition from primary advertising to benefits advertising, comparison advertising, and then reminder advertising can help to yield the most of every advertising dollar (Kurtz & Boone, 2014). Because the product was new, we also decided to focus more on primary advertisement. The allocations for the primary messages were 35%, 30%, 25%, 25%, 20% and 20% for the respective periods. In addition, we decided to cut on sales promotion budget for Allround and allocated much of it to Allround+.
Promotion’s Budget
Allocation to cooperative advertising depended on a variety of factors. For Allround, the cooperative advertising allocations were $1.4M for the first period, followed by $1.5M, $1.5M, $1.6M, $2.5M, $2.7M, $2.0M, $2.0M and $2.0M in the successive simulations. During the first periods of the advertisement, the team decided to increase the allocations because of increased revenue generated from the steadfast sales of the product. There were also many brands willing to engage in cooperative advertising with the company. For Allround+, cooperative advertising allocations were $1.0M in the first period, followed by $1.3M, $1.3M, $1.3M and $750K in the following periods. The need to increase brand awareness for the Allaround+ brand also informed the decision to increase cooperative advertising allocations during the initial periods.
We also considered the three other types of consumer promotions, which included point of purchases, trial size, and coupon for both Allround and Allround+. For the point of purchases, we allocated Allround $1.4M during the first period, and then followed by $1.6M, $1.5M, $2.5M, $3.25M, $3.0M, $2.7M, $3.0M and finally $2.5 during the successive periods. For Allround+, the point of purchases allocation was $2.0M in the first period followed by $2.5, $2,.5M, $2.5M and $1.5M. Through using a variety of communication vehicles including in-store advertising, displays, innovative packaging, and sales persons in the point of purchase for both brands, the company was able to have drastic influence on the buying decisions of the customers.
Noteworthy, during the simulation, we decided to decrease coupons for Allround from $4.0M during the first period to $2.0M during the last period of simulation and increased coupons for Allround+ from $1.0M during the first period to $2.0M during the last period. This was primarily because we wanted to maintain our high conversion ratio with Allround. We also decided to increase trial sizes for the Allround+ brand because we felt that not many customers were trying the new product. Increasing trial sizes would help to motivate more people to sample the product, which would subsequently lead to increased brand awareness and sales. For the last period, we also increased coupons and reduced cooperative advertising and trial size in Allround+ in order to free up the budget and increase advertising due to the poisoning incident for the Allaround brand as a recovery measure.
Through improved conversion ratio and increased performance, the team realized the importance of trial sizes to initiate purchases for the new products such as Allround+. Similarly, coupons proved to be very beneficial for products such as Allround+ that were further on the life cycle. Since we aspired to increase brand awareness for the new product, we also had to increase trial sizes (Kotler & Keller, 2012). It is also important to mention that we also increased the advertising budget for Allround+ substantially as the simulations commenced while simultaneously reducing the budget for the original product because the brand was already well established.
Sales Force
The sales force plays a very important part toward achieving growth in sales and net profits and the success of the brand in the over the counter cold and allergy market. The sales force is responsible for building customer relationships by relationship marketing which can be best defined as constructing a satisfying long term relationship with customers in order to earn and retain their business (Kotler & Keller, 2012). The sales force has close physical proximity to the customers and retailers and can help in communicating the value of Allround and Allround+ (Clark, Rocco, & Bush, 2007). Each period, we decided on how many direct and indirect sales force would be needed. The direct sales force includes independent drug stores, chain drugstores, grocery stores, convenience stores and mass merchandisers. The indirect sales force includes wholesalers, merchandisers, and detailers.
In periods 1, 3, 5, 6, 7, and 8, sales force surveys were purchased in order to compare the allocation against the competition. We had two questions to address when it came to the sales force: how much money to allocate to the sales force and how to allocate and determine which channels and activities to support. The sales force surveys were helpful because they allowed us to understand what our main competitors were doing. The competition that we focused on was Besthelp (B & B Health Care) for Allround and Coldcure (Curall Pharmaceuticals) for Allround+ due to similarities in product features.
We started period 1 with a total of 127 sales force personnel with 94 direct sales force personnel and 14 indirect sales force personnel. At the beginning of the product life cycle, we felt that we did not need to hire many sales force personnel and chose to allocate similar to the competition according to the sales force survey for period one. We slowly increased with each period as the product brand and awareness expanded. We felt that we needed to keep up with product demand and felt that it was logical to slowly increase sales force according to the surveys and recommendation. We ended the simulation with a total of 224 sales force personnel with 149 direct sales force personnel and 75 indirect sales force personnel with the ending of the product life cycle. We utilized the sales force survey, market updates, company sales reports, What If analysis, budget allocation analysis and the company dashboard for Allstar mostly to see whether we should increase or decrease certain areas in the sales force. One of the significant increases that we made to the sales force was from period four to period five which is shown in Table C3. In period five, we received the recommendation that the sales force is below industry norms at 1.6% vs. average 2.8%. We quickly realized that we had to increase the sales force if we wanted to make profits. For period five, we decided to increase the total sales force from 109 to 177.
We realized that our indirect sales force was way below norm according to the sales force survey so we decided to more than triple the indirect sales force from 16 to 58. We realized that the indirect sales force should be increased because they also play a vital role in spreading brand awareness and that there are some missed opportunities to increase net sales. The wholesaler role is to sell to small independent retailers and pharmacies that are not reached by the direct sales force. The merchandisers assist retailers by providing support for their in-store activities and the detailers contact doctors and encourage them to try our brand and recommend it to the patients. With periods five through eight, we decided to slowly increase the sales force but making sure that it was still within range and comparable to our sales and expenditures.
Segmentation
The segmentation was important to consider because we needed to understand who are the target consumers and which target symptoms should we focus on. There were a total of five groups: young singles, young families, mature families, empty nesters, and the retired. For Allround we targeted all of the segments at the beginning of the product life cycle in period one. We felt that it was very important to get our brand name out to as many different segments as possible. We believed that the cold and cough symptom targets would attract the most customers and chose not to spend additional money on the allergy symptom targets based on the Symptoms Reported Publication. According to the social media comments for Allround, consumers expressed that they liked to use Allround for the chest congestion, cough, fever, runny nose and nasal congestion.
For period three, we decided to only target the young singles, young families and mature families because it would allow for us to allocate more money and target the consumers that we felt were most profitable. We believe that the empty nesters and the retired are more likely to go to their doctor for cold and cough medicine. Children are more likely to get sick and spread the illness to their family and thus the parents are more likely to buy at a grocery store and other retailers. Eventually, in period six, we learned that we should also change our target symptoms to include all: cold, cough and allergy target symptoms because we noticed that our competitors were doing targeting all the symptom targets and their profits were increasing at a higher rate than our brand. In period four, Allround+ was introduced. For Allround+ we targeted young families and mature families since this was a cold medicine for children and only these two segments have children in their household. We chose to target cold and cough symptom targets because we felt that these symptoms were going to attract the most customers according to the Symptoms Reported Publication.