1. Measuring Success
During the pharmasim simulation course, we monitored several key measures to track our performance in the game. They are:
a. Manufacturer’s sales: Allstar is a pharmaceutical company which distributes cough and cold medicines. One of the stronger suit to measure the success rate of the company would be to track its sales. Sales in response to different marketing and response strategies helps us comprehend if the strategies are effective and efficiently working. While lower sales indicate a failed strategy, higher sales indicates success of the applied strategy. Similarly, we compared the manufacture’s sales after each period to learn about the status of sales.
b. Net Income: Net income portrays how the company is
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There are two noticeable dips in the net income in the 4th and the 7th period. The dip in the 4th time period is because of the introduction of a new product called “Allround+” which is a 4-hour liquid cold medicine for the children and the dip in the 7th period is because of the introduction of another new product called “Allright” which is a 4-hour allergy capsule. Whenever, new products are introduced a lot of money is invested in marketing and promoting the new products to encourage or boost the sales of the product. This process increases the expenses of the products and erects a higher threshold for the company to reach to, to make a profit. Hence, it is normal when the net income dips during the introduction of new products in the market. The picture above reflects the stock price in dollars of our company over the frame of 10 periods. While the stock price of our company has thoroughly and exponentially increased in the overall time period, there are two small dips in the 2nd and 3rd time period. One of the few reasons for these dips could be the reformulation of the brand. The brand previously contained alcohol in its original formulation. Only few of these kinds of changes are positively perceived in the market. Hence, with such drastic changes people might be uncertain if they want to buy the stock price reducing the demand of the stock, decreasing the stock price of Allstar.
Thank you for the opportunity to assess your sales data in order to provide recommendations for increasing your sales. The analysis and recommendations below are based on the data you provided, which covers a period from May 2004 through June 2006. The analysis below is based on this data alone. Therefore, our recommendations should be tempered by your knowledge of business realities and your market. Please let us know if we can answer any questions concerning the analysis or the recommendations provided.
In conclusion, the factors related to Oval production and sales are the main factor s for the decrease in income.
The MSRP for Allround suggested retail was $5.29, according to the PharmaSim case study, “The manufacturer’s suggested retail price (MSRP) for Allround is relatively high with volume discounts ranging from 25–40%, not including promotional allowances”. Our pricing decision for the PharmaSim simulation we felt was important because consumers have alternatives to choose from and are better informed. Our initial retail price of $5.45 was an increase from the suggested retail of $5.29 to adjust with inflation rate of 3.1%, which boost sales from $355.3 million to $434 million totaling $78.7 million in sales growth. We purchased survey data to help establish the price. Consumers perceived our product being the most effective in cold relief which allowed Allstar to raise the price incrementally and consumers were still willing to purchase the product.
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Although the inflation rate was 3.6% we decide not to make any changes in the price and we kept it as what it was $5.29. In this period Ethik announced the introduction of End+ which was$ 5.69 but we still decided to keep our price for Allround+ $4.99 .The prices of Allround and Allround + should have been increased in correlation to inflation .Our stock price went down from $39.32 to $35.14 per share. We purchased sales force, advertising, promotion, channel sales and pricing reports to help us with our decisions in this period.
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