Transcript Pages.drexel.edu ~jrb52 Allstar Group 5

Allstar Company
The Management Team:
Lucian Herciu
Jim Brenneck
Sharona Gonen
Greg Acquaviva
Jon Briones
Mission Statement
The Allstar Company is an international
organization catering to customers seeking
symptomatic relief in the cold and allergy
over-the-counter market. Our goal is to understand
and fulfill the needs of our customers by providing
them with an effective product that allows them to
get better. Allstar wants to assure our customers
that our products are safe, reliable and convenient.
Marketing Objective 1
Increase retail sales by 15% in the next two years by
increasing promotional expenditures on coupons by 10%.
To achieve this objective research indicates the following
activities: increase distribution of coupons by including
them within the packages to encourage product
repurchases. The team also suggests adding coupons to
college campus advertisements during the cold and flu
season. The management team believes that in two years
these actions will lead to a 15% increase of retail sales.
Marketing Objective 2
Lower cost of goods sold by 10% through
increased research and development using 10% of
retained earnings to finance it in 2006.
To achieve this, research indicates that Allstar’s research
and development should focus on upgrading production
lines, and streamlining the new product development
research process to make it quicker and more productive.
The results of these upgrades should be geared toward
maintaining product quality while decreasing costs through
better procedures. This should be financed by using a
maximum of 10% of Allstar’s retained earnings per year.
Marketing Objective 3
Increase market share by 25% in the next
three years by increasing Allstar’s advertising
budget by 10%.
To achieve this objective research indicates the following
activities: expand the advertising campaign budget by 10%
to include internet advertising, with websites such as
Google, Yahoo, and Msn. Allstar’s research also suggests
sponsorship of winter activities and events such as skiing
and snowboarding events (X-Games) to take advantage of
the adventurous youth market that is exposed to the
elements. The management team believes that this will
increase the market share in the next year by 25%.
Marketing Objective 4
Expand current distribution networks and create new ones
by increasing promotional allowances to distributors from
13% to 15% over the course of two years.
To achieve this research indicates the following
activities : increasing the discount allowances from 13% to
15% in the course of two years will give potential outlets
greater incentives to purchase Allstar products. This will
attract more distribution networks and eventually lead to
greater profits.
Marketing Objective 5
Managing sales force and budget to keep Allstar’s
utilization within the 85% to 95% range for the year 2006.
To achieve this objective research indicates the following
activities : closely monitor Allstar’s utilization by analyzing
past and present data to prevent the over and under
utilization experienced during the first five years. Further
studies of past utilization show that maintaining an 85% to
95% capacity has had a positive effect on stock price and
profits.
Marketing Objective 6
Designate $500,000 dollars each year for the next two
years toward redesigning Allround’s product packaging and
logos to refresh its image.
To achieve this research indicates updating the company
image, logo, and product packaging colors within the next
two years. Allstar will use $500,000 each year to conduct
research surveys to identify what color schemes
customers will associate with Allstar’s message of security,
reliability, and convenience.
Marketing Objective 7
Raise brand awareness by 20% over the next two years.
To achieve this research indicates implementing a pricing
strategy that keeps Allstar’s products priced above its
competitors while maintaining tradeoffs between symptom
relief and price. Allstar will portray Allround products
through commercial advertisement as high quality items
that are worth paying for.
Marketing Objective 8
Increase Allstar’s product prices by 1% over the
economy’s inflation rate in the next year.
To achieve this research indicates hiring a market analyst
to assess the economic inflation rate will be necessary to
keep product prices at 1% above the inflation rate.
Marketing Objective 9
Create a task force to examine and decrease cognitive
dissonance in the next two years, by developing
methods to counteract it, using 15% of Allstar’s
advertising budget to reinforce customer post
purchase satisfaction.
Research indicates investing 15% of Allstar’s advertising
budget should be sufficient for establishing a task force to
decrease customer cognitive dissonance. The task force
should achieve this through reminder advertisements that
will assure customers their decisions were sound. These
advertisements should consist of commercials emphasizing
doctor recommendations as well as billboards emphasizing
symptom relief.
S.W.O.T Analysis
•Strengths
•Weaknesses
•Opportunities
•Threats
Strengths
Image:
*Perception of high quality of product as a share leader in the OTC
market
Marketing Skills:
*Team successful at creating high brand awareness for Allstar
product line.
Technology:
*Reformulation - elimination of alcohol decreases production costs.
*Streamlined distribution methods and overall efficiency and
improvement of production.
Finance:
*High profit margins lead to allocating resources to other areas
within organization. This stimulates growth, higher profits and
investor potential.
Weaknesses
Image:
*Tainted due to inability to adapt to changing
environment. May steer consumers away.
Financial:
*Extensive labor costs due to size. Financial
resources spent on promotion requires a high
sales force. Results in profit decrease.
Technology:
*Technological improvements in production
grant better access to Allround brand but
increase overhead costs.
Opportunities
Demographics:
*Growing elderly population and annual birth rate (1% )
presents a profit opportunity, since those market
segments are more dependent on OTC medication.
Economical:
*Decrease in inflation > decrease in price >Increase in
sales volume = Higher Revenue
Technological:
*Technological advances = More efficient and effective
production methods.
Competitive Advantage:
* High volume discounts for buyers = high volume
purchases= high turnover rates = Increased Sales
Threats
Social:
*Poor quality of product as a negative consumer attitude, due to a
decrease in product price. May decrease perceive value, leading to a
decrease in revenue.
Economical:
*Rising inflation rates decrease disposable income. Decrease in
consumer purchasing power leads to a decrease in revenue.
Technology and competition:
*Competing firms’ superior applied research advancements hinder
teams accelerated production pace.
Demographics:
* Reduced occurrences of illness in warmer climate areas. May
cause a decrease in sales and revenue.
Lessons Learned
Heavily relied on surveys
– Operating Statistics
– Share of Channel Sales
– Performance Summary
– Tradeoffs
Marketing decisions were made based
upon the information from surveys.
Marketing Mix
Implemented the 4 P’s
– Promotion
– Price
– Place (Distribution)
– Product
Promotion
Advertising
– Allocation of budget
– Advertising message
Primary
Benefits
Comparison
Reminder
– Improve product image
– Increase sales
Income Graph
Income Statement
140
130
120
Dollars (millions)
100
99.5
94.3
87.3
80
80
79.4
79.8
69.6
67.2
Income
67.3
63.6
60
40
20
0
0
1
2
3
4
5
Period (years)
6
7
8
9
10
Retail Sales
Retail Sales
800
752.9
700
647
Dollars (millions)
600
626.2
685.3
656.9
647.8
584.2
532.1
524
500
551.4
468.1
400
Retail Sales
300
200
100
0
0
1
2
3
4
5
Period (years)
6
7
8
9
10
Stock Price
Stock Price
60
52.46
50
48.39
45.73
45.19
43.91
44.98
43.69
41.58
40
Price
47.72
41.12
38.35
30
Stock Price
20
10
0
0
1
2
3
4
5
Period (years)
6
7
8
9
10
Pricing
PROBLEMS
Tradeoffs Survey
Overlooked Inflation Rate
ACHIEVEMENTS
Discount Price
Tradeoffs
Placement
Distribution channels
– Groceries & Mass Merchandisers were
company’s main focus (strongest growth)
– Raised sales force within these channels
– Gave high volume discounts to influence
particular channel sales
Positioned product in prominent locations
– Shelf space & point-of-purchase
Product
Allround brand reformulation
– Dropped alcohol
– Reduced production costs
– Led to an increase in retail sales
Introduction of Allround Plus
– Gain higher market share
– Brand’s symptom relief highly sought after by
consumers
Conclusion
Pay attention to key details
– Inflation
– Industry trends
– Budget allocation
Q&A
Any questions?