Happy Thursday!
The weekend is near and we are already a week into August. Where did the summer go?!
This week we began our oh-so-anticipated team play in the PharmaSim simulation. It seemed like we had little time to truly discuss as a group what decisions we wanted to make each period before advancing to the next (although we were only allowed to advance 2 periods total). Our team communication seemed to be slow and a little lacking due to everyone's different busy schedules. Nonetheless, we were able to make some decisions and see/evaluate the outcomes.
Disclaimer: I was not the individual making decisions on our team's PharmaSim account, I simply participated in group discussion. That being said, I may not be 100% accurate on reporting the changes and decisions made by our group in the first two periods.
In the first (0) period, I don't believe that we made a whole lot of changes. Our market update said that mass merchandisers were the largest group increasing in growth so as a result, we increased our sales force that was focused on mass merchandisers by a few people. Additionally, we rose our price about ten cents to compensate with the increase in prices and inflation. Our competition also introduced a new cold liquid that was similar to our Allround brand cold liquid. Because of this, we chose to use this product as a comparison product in our advertising. We also introduced trial sizes of our product and purchased all of the research reports. Lastly, we chose to make a Facebook and Twitter account for our brand along with some web advertising.
Now that I re-read all that I typed I suppose we made more decisions than I originally thought! Surely not as many as our next period though...
So the results were in and our stock price had dropped a bit.. along with sales. We couldn't seem to figure out what we did wrong. The newest market update said that we should check our sales force to see if it was ideal but we only increased the mass merchandising sales force by a couple of people and compared to other companies we seemed to be equal to them. Our Facebook and Twitter accounts were doing well. What could've been the problem?!
In the second (1) period, we made A LOT of decisions... I mean A LOT! Perhaps this was our downfall since the outcomes of this period were also not that hot. We had been over the budget by about 2 million I believe (don't know how it got there!) so we had to make some budget cuts. Since we had purchased the research reports showing advertising and promotion spending for other companies, we were able to see that these budgets were much larger from our company than any other brand... by quite a bit (maybe a few million). So we cut the advertising budget from 20million to 18million which was still higher than most advertising budgets of the competition. Similarly, we cut the promotion budget from 1.4 million to 1.2 million for both co-op and consumer promotion. We increased our co-op to 17% allowance since we found our percent participating to be only 0.9%. We decided to add "relieves allergies" to our advertising messages since previously it had not been included (our product has the maximum allowable amount of antihistamine which is used to treat allergies). We decreased the amount of advertising used in comparison messages and increased the amount of advertising by benefits and primary messages. We also put more budget money towards trial sizes and coupons. Since convenience stores were reported to be the highest in growth by the market update, we increased our sales force by a few people in this area.
There were multiple incidents within these first two periods in which our group had to make tough decisions. For time and length sake, I will speak of two. The first incident was that we had a batch of medicine that was shortly expiring. We had the option to sell it anyways but have to accept returns back and risk our good reputation/relationship with these retailers, dump the batch and lose $100,000, or sell it below price to a special buyer who would not pay full price. We did not feel that it would be a good decision to try and sell it anyways because we did not want to risk our relationship with our customers. We also didn't want to sell that batch for less than it was worth to a semi-sketchy buyer. So we chose to bite the bullet and dump the batch and lose $100,000.
The second incident was that we had the choice to reformulate our product. We had the choice to drop the alcohol or switch from a cough suppressant to an expectorant. We decided not to drop the alcohol because we didn't find it to have much of a benefit. The small amount of alcohol in the product helps the patient to rest, so in some ways this would actually decrease the benefits of our product. We chose not to switch from a cough suppressant to an expectorant. While these two classes of drugs do very different things, the same percent of symptoms were reported (60% reporting cough and 60% reporting chest congestion). So by looking at the reported symptoms, there was no benefit of one or the other. Competition wise, no matter what formulation we chose, we would be one of two brands offering it. If the switch made us the only company to offer a product with a class of drug than we would have chosen this choice. But because we would have had the same number of competitors with the same amounts of reported symptoms, we chose not to reformulate and leave the original formula.
To wrap this up, I know this post was mostly about what I did in PharmaSim but the truth is... that's all that I really focused on this week. The lecture surrounded itself around the module as did much of the discussion. So while this post may not have been about articles or videos or chapters from textbooks, I most certainly am advancing my marketing knowledge by virtually testing the outcomes of my group's various marketing decisions.
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