Allstar Marketing Plan

EXECUTIVE SUMMARY

Allstar has seen great success over the past 10 years. Our team has compiled a comprehensive
analysis of the current marketing situation, identified key marketing strategy objectives we
believe offer great potential for Allstar’s future, and finally have created a marketing mix to
ensure consistent positioning strategy moving forward. What follows is a high-level overview of
these suggestions, with more in-depth discussion of the concepts discussed below.

To begin, our team has conducted a thorough analysis of the OTC market, with focus on current
customers, the four-pronged industry, key channel identification, a comprehensive competitor
breakdown, and a conclusive SWOT analysis. In the market, there are five main demographic
groups; Young Singles, Young Families, Mature Families, Empty Nesters, and Retired. Our team
believes that Young and Mature Families are the most viable option for continued targeted, due
to their size (making up 55.4% of the market) and their focus on medicine effectiveness. These
two groups are on-the-go and require quality symptom relief, which Allstar’s premium
positioning and current marketing messaging supports. Industry wise, there are four main
divisions of the OTC market; Cold, Cough, Allergy, and Nasal Spray. The Cold market is the
largest segment of the OTC industry, at 67.2% of the market, with Cough as the second largest
at 14.6%. Currently, Allstar has all three products in our portfolio located in the Cold industry,
and we recommend a potential diversification effort into the Cough market to mitigate
cannibalization.

Channel-wise, there are six main sales channels for the company. Wholesalers represent the
B2B channel and sell to the customer-facing channels, which include Chain Drugstores,
Independent Drugstores, Grocery Stores, Mass Merchandisers, and Convenience Stores. We
recommend continuing to target two largest channels for consumers; Grocery at 43.8% of all
consumer sales and Chain Drugstores representing 24.2% of all retail sales. These two
categories will grow most directly through sales force support enhancement and prioritization
of promotional allowances. Additional focus should also be given to Wholesalers, who allow
Allstar to reach channel retailers they may otherwise not have a relationship with. Wholesalers
currently represent 39.4% of all companies’ sales in the market and can be targeted most
effectively through volume discounts and sales force support.

Allstar has four main competitors; B&B, Curall, Driscoll, and Ethik. B&B owns Besthelp, Allround’s
most direct competitor which holds 23.9% of the market and has a similar price to our own. B&B
also has been highly effective at marketing strategy, boasting the highest sales force support
and incredibly successful advertising and promotional spending. Curall’s Coldcure children’s
cold medicine is the only children’s cold medicine on the market besides Allstar’s own
AllroundPlus. Coldcure holds 6.8% of the market compared to AllroundPlus’ 7.6%, and though
Coldcure has had consistently poor pricing and strategy decisions, they still pose a threat.
Ethik’s Extra is a roughly comparable competitor for Allright, as both are twelve-hour capsules,
though Extra (5.6% market share) is specific to cold symptom relief and Allright (5.1% market
share) is multi-symptom. Ethik doesn’t have a history of great consumer perception, but with
brand reformulation and increased investment into this growingly popular product, Extra could
grow in risk for Allright. Our team concluded the current marketing situation analysis with a
SWOT, where we identified key risks and opportunities for Allstar. Allstar has high brand loyalty and effectiveness perception, but struggles with industry diversification, cannibalization, andunderstanding spending impacts. From an external perspective, there are expansion and
acquisition opportunities, but at the threat of other competitors (both old and new) and legal
sphere requirements potentially impacting growth, in addition to risks of changing consumer
preferences.

Following our current marketing situation analysis, our team completed a marketing strategy
overhaul, identifying key objectives for the coming years in addition to targeting and positioning
strategy alterations. We believe that Allstar has the potential to increase sales volume by 5% and
net income by 12% in the next two years, given proper implementation of marketing mix
recommendations. We also have identified a few market performance objectives, such as
increasing brand awareness by 5% and increasing market share by 4%. Finally, we aim to make
Allstar a more socially responsible company, and have a goal to launch a charity fund campaign
and reinvent our packaging to become more sustainable. We plan to maintain our targeting of
Young and Mature Families, in order to ensure access to the largest, most profitable, and most
strategically relevant categories in the market. We will also continue to operate in the Cold
market sphere, but may consider targeting Cough if an opportunity comes up or if product
expansion occurs. Through all of this targeting, we will aim to increase our strategic positioning
as a premium brand in the market, through purposeful advertising messaging and intentional
pricing elevation to signify quality and brand superiority.

Finally, our team concluded this report with recommendations on marketing mix elements,
including product, price, promotion, and distribution. Our primary takeaway regarding our
product was the need to diversify outside of the Cold market, with the potential of replacing our
current children’s medicine product, AllroundPlus, with a new product in the Cough market. We
also may consider reformulation Allright to improve effectiveness as a relatively new product
type in the market. For price, we believe that it is essential towards our premium imagery to have
a pricing strategy that reflects quality. Therefore, we aim to be above average market prices,
while staying below consumer max-spend hesitancies. In the next year, we will increase all
prices by 15 cents to achieve this. Regarding promotion, our team believes that our new charity
donation interactive campaign will need advertising investment but deliver high returns. We also
plan to increase accessibility for customers to match our premium positioning through an FAQ
page on the website, and will enhance quality control and expand market research to continue
brand development efforts. Lastly, our team will focus distribution efforts on top selling
channels of Grocery and Chain Drugstores, with an emphasis on Wholesaler support and
discounting. We also plan to reduce shipping costs through environmentally friendly packaging,
will look towards increasing factory capacity through potential acquisition opportunities, and
will increase sales force support.

Our team believes that with proper measurement and evaluation of the implementation of the
above strategies, our recommendations will result in growth and prosperity for Allstar and its
products.

CURRENT MARKETING SITUATION

Customer Analysis

There are five demographic groups in the market that are segmented based on family life cycle
and age. These groups are Young Singles, Young Families, Mature Families, Empty Nesters, and
Retired. Each group requires a different strategy and has different wants and needs.
The first group is Young Singles, which includes young adults living on their own without
children to take care of. Young Singles place high importance on convenience and minimizing
side effects. Roughly half of the people in this market segment look for something to help them
get through the day at work. Because they seek advice from friends and family through social
media, having good brand recognition and a strong media presence is important. We assume
that this market relies heavily on reviews they read online, so we need to take our reviews into
consideration when creating a strategy for the future. Young Singles purchase Allright and
Allround, making up 21.8% of brand share and 14.4% of the market.

The next demographic group is Young Families. This group is similar to Young Singles, but the
adults now have children to care for. The children of families in this group are younger than 12
years old. Parents with young children are often worried about side effects and prefer liquid
medications, to reduce choking hazards. They seek guidance about medicine from trusted
websites and other parents who have more experience than they do. Young Families purchase
all three Allstar products, making up 30.9% of brand share and 26.2% of the market. Because
Young Families tend to shop at Grocery Stores and Mass Merchandisers for their kids’ food, the
logical conclusion is that they would look for medications at these locations as well. When
caring for young children, convenience is important and parents are looking for a one-stop-shop.
We have consistently targeted Young Families throughout the last 10 years, which aligns with
our family-friendly branding goal.

The third demographic group is Mature Families. In this demographic, the children are older and
therefore, use adult formulas. Like the Young Singles category, convenience and minimizing side
effects is important. Older children tend to stay home from school when they’re sick, so the
medication is likely to be used at home. Parents in this demographic visit health-related
websites for more information about relieving symptoms. Over the last 10 years we’ve
consistently targeted Mature Families, which has proven successful. Mature Families make up
26.2% of our current brand share and 29.2% of the market. Because the children are older and
may be able to pick up their own medication, we assume that many of the purchases in this
market are generated in Mass Merchandisers and Chain Drugstores, where families may be
passing through during quick errand stops.

The fourth demographic group is Empty Nesters. This group consists of older adults with no
children at home. At this point, their children have left for college, the workforce, etc., entering
the Young Singles stage themselves. The people in this category use medicine at both work and
home. Again, convenience and minimal side effects is important and they get their information mostly from online resources. Empty Nesters buy Allright and Allround products, contributing to a 22.9% brand share and 14.8% of the market.

The final category is the Retired group. Consumers in this category are above the age of 50 and
are no longer employed. They have a preference for liquid medicines and price becomes an
important factor in their decisions. After a lifetime of gathering knowledge about different
medications, they tend to be very brand loyal. Retired people tend to purchase Allright and
Allround, making up 34.5% of brand share and 15.4% of the market. We have not been targeting
the Retired group because at their age, they have formed their brand preferences and we already
have a disproportionate amount compared to other brands in the market, showing our
reputation and legacy branding. When implementing our strategy for the future, we will continue
to focus on the more competitive markets rather than on retirees.

Industry Analysis

While analyzing the major categories consisting of Cold, Cough, Allergy, and Nasal Spray, it is
important to look at their manufacturer sales, market share, and growth rate. The products in
this market are formulated to treat allergies, colds, coughs or multiple symptoms. Nasal sprays
contain only a topical nasal decongestant that provides faster relief than other forms. Cough
medicine is usually found in liquid to help soothe throat irritation, even though capsules are
generally considered more convenient. The duration for these products is a 4-hour or a 12-hour
period.

The Cold category brought in a total of $2,252.5 million in sales with a growth rate of 7.8% in the
last year. Cold medicine is the largest category, likely due to the fact that it is known for treating
a variety of symptoms. This means consumers may keep cold medicine on hand for general
purposes when they do not feel well. It could be used to help treat those with symptoms in the
other OTC categories, whether purposefully or due to consumers mistaking symptoms of a
cough/allergies with a cold. Cold has consistently shown growth rates comparable to that of the
market on the whole, leading the OTC market growth as the all-symptom-encompassing
category. The Cold market has many competitors, so it’s important to maintain a strong
presence in that category. In this category there are 9 competitors consisting of Allright,
Allround, AllroundPlus, Besthelp, BesthelpPlus, Coldcure, Dryup, DryupPlus, and Extra. Allright
had a market share of 5.1% and manufacturer sales of $113.9 million, Allround has
manufacturer sales of $636.2 million and market share of 28.2%. AllroundPlus had a market
share of 7.6% and manufacturer sales of $171.1 million. Besthelp had sales of $529.8 million
with a market share of 23.5%, BesthelpPlus had a market share of 5.8% and sales of $131.6
million. Coldcure had sales of $153.2 million and a market share of 6.8%. Dryup had a market
share of 5.2% and sales of $116.7 million while DryupPlus had a market share of 12.2% and
sales of $274.1 million. Lastly, Extra had sales of $125.9 million and a market share of 5.6%.
While looking at the Cough category, it brought in $495.4 million in sales and a growth of 13.1%.
The Cough category is not a large one and has remained pretty stable due to the fact that
people may be buying cold medicine to treat their coughs being a symptom versus buying
cough medicine. People may also buy cough medicine instead of cold if that is their main
symptom, and this makes it difficult to see where consumers are spending their money based on symptoms alone; consumers purchasing cold products could only be showing cough
symptoms, and therefore the market counts may not be entirely representative of the industry
categories by intended effect. The Cough category has 3 competitors including Coughcure,
CoughcurePlus, and End. Coughcure has a market share of 37.3% and sales of $184.9 million
while CoughcurePlus has control of only 11.1% of the market with sales of $54.8 million. Lastly,
End has sales of $125.9 million and has control of 51.6% of the Cough market.

The Allergy category is the second smallest category and brought in $310.9 million with an
increase of 5.3% in growth. Only two companies occupy the Allergy category and it has been like
this for the past 10 years. This makes us believe that there may not be a larger market in such a
low growth market. People may also have found other supplements to handle their allergy
symptoms like taking cold medicine. Additionally, allergies tend to hit a peak in the spring and
typically recede later in the year. While certain allergies (like dust and pet hair) are not explicitly
linked to seasonal change, even these allergies have seasonal effects, such as pets shedding
their undercoats when it begins to warm up. The two competitors in this market consist of
Believe which has a market share of 69.2% with sales of $214.2 million and Defogg which has
sales of $95.7 million and a market share of 30.8%.

Nasal Spray is the smallest category of them all and brought in $291.2 million in sales and had
an increase of 8.9% in growth rate. It is obvious that there is not very much demand in this
market. Like Allergy, Nasal Spray also only has two companies that occupy the market. The
competitors include Dripstop which controls 45% of the market with 131.2 million in
sales and Effective which has a market share of 55% and sales of $160 million. Nasal
Sprays provide faster relief, but tend to have more short-term effects, typically only lasting
around an hour. They also cannot be used for extended periods of time. All of these factors
likely play a part into making this category as small as it is. Consumers are cautious about using
the sprays, and the sprays are not made for all-day relief, meaning many consumers will need to
pair their use of a Nasal Spray with another decongestant, like cold medicine.

Channel Analysis

Within the OTC market, there are both direct channels and indirect channels. There are five
primary direct channels; Grocery, Chain Drugstores, Independent Drugstores, Mass
Merchandisers, and Convenience Stores. Within the indirect channel there is a network of
Wholesalers, who distribute company products to the five direct channels. Wholesalers are
unique in that they do not sell directly to consumers. In order to gain a better understanding of
the other channels popularity among consumers, we must look at retail sales from channels as
opposed to company unit sales to the channels.
The largest direct consumer channel is Grocery, representing $1,908.1 million dollars in sales,
43.8% of all sales in the market to consumers. This channel has an average yearly growth of
10.8%, the second-highest among all channels. The second largest channel is Chain Drugstores,
who represent $1,096.7 million, or 25.2%, of all retail sales. This channel’s annual growth rate is
typically around 7.5%, which is still above the market average growth of 5.3%. These two
channels have very similar needs; both focus on product turnover and promotional allowances,
with an additional need for adequate sales force support. We believe that both channels have seen high growth rates in the market due to consumer shopping preferences beginning to shift towards one-stop-shops, as both of these channels offer a variety of office, grocery, pharmacy, and other needs to appeal to busy consumers. Both are also stable channels, with Chain Drugstores having a larger brand backing their sales efforts and Grocery stores (even non-chain ones) being cornerstones in their communities as a critical stop in a consumer’s shopping journey. The third largest channel is Independent Drugstores.

They represent $712.6 million (16.3%) of all channel sales. This channel’s annual yearly growth rate is 5.27%, slightly below the market average of 5.3%. It is important to note that this growth is not as consistently stable as Grocery and Chain Drugstores’ growth rates, and experiences slight volatility each year. Many years it experienced less than 1% growth, while other years it saw 10+% growth. Independent Drugstores require high co-op advertising allowances and heavy sales support, due to their usually smaller infrastructure. While this channel is growing, it is slowly being outpaced by Mass Merchandisers. Mass Merchandisers represent $513.7 million in sales, approximately 11.7% of the market. Mass Merchandisers have grown at an average yearly rate of 11.6%, the highest of any channel in the market. However, this average rate is derived from high growth about 5 years ago in the market, and more recent rates have it’s growth rate coming in at a more reasonable 6.7%. Mass Merchandisers have started to show signs of growing at a faster rate than Independent Drugstores. This is likely due to the fact that Independent Drugstores have less supporting infrastructure and higher markups, compared to chains of Mass Merchandisers who have the infrastructure and staffing to support deep discounts and widely circulated marketing materials. Mass Merchandisers’ focus their business model on high turnover, so volume discounts are crucial to targeting this channel.

The smallest channel in the market is Convenience Stores, who make up a mere $126.9 million in retail sales, roughly 3% of all channel sales. This channel has experienced extreme volatility in growth rates, even taking severe decreases in size throughout the years; therefore, their growth rate average of 6.3% is inaccurate. When we exclude the outlier (one year they saw 41.8% growth), we find that Convenience stores have an average 2.15% growth rate. This decline in growth shows a trend towards the slowly obsolete need for OTC medications in convenience store locations, as well as consumer shopping habits. The majority of sales in this channel are likely last minute purchases by consumers who enter the store for something else and decide to pick up an OTC product while they are there. Some Convenience Stores may buy direct from the company, but most purchase through wholesalers; this means if this channel were to be targeted it would be most effective to appeal on the consumer end or to wholesalers to get product on the shelves. Taking a step back from the customer-oriented channels, we can measure how many products to each channel were sold indirectly by a wholesaler. Roughly 295.6 million units go through wholesalers, comprising 39.4% of the 751.2 million units sold by companies this past year. They have also shown immense growth. Two years ago, Wholesalers represented 33.6% of all sales, and have now grown an additional 5.8%. Now, representing nearly 2/5ths of all sales across all brands, Wholesalers are a key channel to target given their wide access to smaller, localized brands, as well as seasoned relationships with stores in the other channels. Wholesalers value pricing discounts the most, so volume discounting is essential to guaranteeing continued success in this market. Additional focus can be given to enhancing sales force support to increase access to wholesalers.

Competitive Analysis

B&B

B&B has shown consistent growth in market share over the period, holding a 26.2% market share after peaking at a 27% market share a few years ago. They have shown consistent growth in manufacturer sales over the past ten years and are our main competitor in the market with over $260 million more in manufacturer sales than the next closest competitor. Their current manufacturer sales are $876.6 million. B&B’s product lines include Believe, Besthelp and BesthelpPlus. Believe and Besthelp have been around for the entirety of the period, while BesthelpPlus was added in year three. BesthelpPlus has received far less attention from B&B and does not seem to be a serious threat in the market. Believe is a four-hour allergy capsule, and isn’t of much concern to us with our plan to stay out of the allergy market for the foreseeable future. However, B&B’s other four-hour cold capsule is a product to take more seriously as a threat. The company has poured resources into this product and have no intentions of slowing down. Advertising expense, digital marketing expense, and promotion of Besthelp have increased consistently over the period and, as a result of the increased spending, the product line has found consistent success. Besthelp is the main competitor of Allround and will be the main threat in the foreseeable future.

B&B has consistently increased their sales force over the period, with seemingly no intention of changing that strategy as it likely contributes to their consistent increase in manufacturer sales over the past ten years. They have also stayed consistent with their pricing strategy with constant increases in Besthelp’s price; B&B knows that this is their most successful product line and they look to pump the product moving forward. We are confident that B&B is focusing their budget towards Besthelp because they believe that it is their most successful product, with the potential to overtake the cold market. With that being said, recent increases in budget towards advertising expense, digital marketing, sales force and promotion towards Besthelp have not created a higher percentage growth in manufacturer sales. We believe they have passed a threshold in most, if not all, of these metrics and are seeing diminishing returns on their investment in the categories.

Curall

Curall has seen their market share decrease over the course of the past seven years with no signs of things changing soon. Their current market share is 11.7%, likely due to the fact that their manufacturer sales have seen the slowest and least consistent growth of any company in the market. Their manufacturer sales after the period was complete was $392.9 million, the lowest of all companies in the market. Curall’s product lines are Coldcure, Coughcure, and CoughcurePlus. Coughcure and Coldcure have been in existence since year one, while CoughcurePlus was introduced in year nine.

Coughcure is a four-hour cough liquid and is not a direct threat to any of our existing product lines. CoughcurePlus is a child four-hour cough liquid that also does not compete directly with any of our existing product lines. However, their child four-hour cold liquid Coldcure is a direct competitor of AllroundPlus. While Coldcure had success in the early years, their failure to promote their product effectively led to a decrease in segment market share for the past seven years, while our product gained a larger portion of the market in year nine. Curall’s salesforce is not the reason for their lack of success as they have the third largest salesforce in the market. We believe the main success factors include advertising expense, digital marketing expense, and promotion. All three of these metrics have similar trends with decreases in spending in each of the three as the years have progressed. We also believe that Coldcure’s struggles are due to overpricing. Coldcure has somewhat low brand perception in the eyes of consumers, yet they price their product as a premier product in the market. This has likely caused consumers to try different products. With stagnant manufacturer sales and lower market share in the industry, we do not see Curall as a major threat.

Driscoll

Driscoll has seen an increase in market share for the past six years and ended the period with a market share of 18.4%. With their current strategies, it would appear that this trend will continue in the foreseeable future. They have seen consistent improvement in manufacturer sales over the past six years and have overtaken two competitors in manufacturer sales over the past five years. Their current manufacturer sales are $617.6 million. Driscoll is becoming a serious competitor in the market, so it is important to understand the strategies that have helped them find success for the past six years. Driscoll’s products in the cold and cough markets include Dripstop, Dryup, and DryupPlus. DryupPlus (direct competitor of Allround) has found instant success in the cold market and has gained enough market share over the past five years to be almost solely blamed for the decrease in Allround’s market share over that same time period. Dryup and Dripstop have not gained market share during that time period and are not going to drastically influence the market any time soon with their current strategies. Driscoll has increased their sales force for the past six years on a consistent basis and they appear to be interested in continuing this trend. In their first four years, they had the smallest salesforce, likely part of the reason they weren’t finding success earlier.

While Dryup and Dripstop have lowered their advertising expense as time has progressed, Driscoll has realized DryupPlus could be their cash cow. They increased DryupPlus’ advertising expense drastically four years ago, and will likely continue increasing their expense due to its contribution to their success. The digital marketing budget allocated to the product lines, though also increasing, is not as drastic. The last factor likely playing into DryupPlus’ success is the pricing strategy that they’ve chosen. With their high brand perception in the eyes of consumers, they have positioned their product as a high value option in the market, fairly priced if not below market standards. Driscoll’s strategies are working. They began at the bottom of the barrel, but sat back and watched what the successful companies in the market were doing. They introduced a product and began to market, sell, and advertise in order to compete. With their high brand perceptionalong with their increases in sales support and enhancement of marketing strategies, they now find themselves in the middle of the pack with potential to continue growth.

Ethik

Ethik has seen a large loss in market share over the past ten years due to their stagnant manufacturer sales. Without expedient changes to their strategies, they will likely drop below their current market share of 16.2%. Their current manufacturer sales are $541.6 million, with their first noteworthy increase in years occurring last year. Though this sounds promising, the entire market had similar increases in manufacturer sales in the past year. Ethik’s products in the cold/cough market include Effective, End, and Extra. Effective and End have seen losses in market share for the past six years and appear to be losing traction in the market as time progresses. Extra, their twelve-hour cold capsule, has found success and gained market share which has been lost by the other two products since its introduction to the market in year six. While it still holds the smallest market share of any of Ethik’s product lines, it is the only product with a positive sales trend. We believe this product will be their focus moving forward. Ethik has found success by consistently lowering sales force, contrary to other competitors in the market.

This is interesting, as they have three product lines and one would think they would need a larger sales force. However, they currently have the smallest salesforce and that trend looks to continue. Extra again appears to be the focus of Ethik when looking at advertising expenses. While End is receiving a larger budget than the other two product lines, their market share has continued to diminish as their four-hour cough liquid is priced too high and positioned poorly. Extra is likely gaining traction in the cold market due to its large advertising budget for a newer product line, and its price positioning in the market. That being said, its low brand perceptions lead us to believe the increase in marketing spending is the driving force behind its success over the past five years. With this trend, we foresee Extra soon surpassing Ethik’s other two product lines in market share.

We believe Ethik’s strategy has the potential to be successful, but we do not believe they are finding success at this moment. Their failure to consistently increase manufacturer sales, which has led to massive decline in market share, has set them back in the market. We do believe that Extra, their twelve-hour cold capsule, has the potential to gain traction and became a frontrunner in the cold market. However, this will only happen if the product undergoes a reformulation, as brand perception is too low right now to allow the product to become a frontrunner at this time. We foresee Ethik making Extra their main priority and expect an increase in advertising expenses in the near future.

SWOT Analysis

Strengths

• High brand loyalty amongst customer base
• A well recognized brand name and legacy brand establishment
• Steady growth in manufacturer sales, net income, and stock price over the past 10 year period, showing company growth and management competency
•  3.5-3.9/5.0 effectiveness ratings for each product’s targeted symptoms relief, demonstrating Allstar’s products formulations’ viability and dependability
• Second largest sales force in the market, giving Allstar an edge when it comes to channel communications and risk management

Allstar’s strengths are the foundation of the success we will find moving forward. We have a loyal customer base who trusts our products to perform when they need them most. Our strategies have allowed us to position ourselves in whatever way we see fit moving forward. We are currently positioned as the largest market share in the most rapidly growing category of the OTC market, and look to continue that success moving forward.

Weaknesses

• Few product categories and few effort to expand beyond the cold industry; this could lead to Allstar missing out on other profitable market segments, such as Cough
• Currently running 3.5% over capacity, which could lead to threat of inability to fulfill orders placed and keep up with demand; shows a slight need for factory expansion
• Inconsistent pricing strategies have caused Allstar’s products to fall out of the ‘premium’ category
• High spending on advertising expense, digital marketing, promotion, and sales force without an idea of which metrics are driving sales
• Potential cannibalization with similar products Allstar has in the Cold market Allstar’s current biggest weakness has been our sole focus of the cold market.

While it is the largest and fastest growing market in the industry, the lack of diversity leaves us vulnerable. It also may be causing us to cannibalize our own products. We currently run over capacity and are missing out on higher manufacturer sales. Our sporadic pricing strategies have left us without a true identity in the market, and we have been allocating money to different expenses without knowing which metrics are driving sales, causing us to be potentially wasting money.

Opportunities

• Opportunity for new product lines in other OTC markets because of established brand name and lack of success from other companies in other markets
• High growth rates in the Cold industry over the period make for intriguing opportunities ahead, such as revamping current brands, flushing competitors out of the largest market in the industry, and leading the future of the Cold market. The opportunity to be ahead of the curve in terms of digital marketing as we already have allocated budget towards it over the past ten years and are starting to see other companies increase their spending on it
• The potential to buy out competitors because of their lack of success in the OTC market over the past ten years

Because of our reputable name, we have the opportunity to introduce new line extensions and products, and find success because of our loyal customer base. Our current position in the cold market gives us the opportunity to grasp increasingly greater shares of the Cold market, the fastest growing and largest market in the industry. We are ahead of the market in terms of understanding digital marketing and allocating resources to it, giving us an advantage over other companies when marketing on social media, the internet, etc. We also have the financial backing to potentially acquire other companies.

Threats

• New products from competitors could pose risks towards current market shares or consumer expectations
• A new competitor entering the market (e.g. Johnson and Johnson, Bayer, etc.) could throw the market into disarray
• The Food and Drug Administration could make changes in drug ingredients allowed, either forcing us to reformulate to remove disallowed drugs, or leaving us behind the market when new (and potentially more effective) drugs became standardized with other competitors
• Changes in consumer preferences; everyone wants to go towards more holistic/homeopathic remedies.

Other companies have already shown they have the ability to produce new products that steal market share from our existing product lines. Because the market is fairly even in terms of market share, it is also possible that a new competitor (like Johnson and Johnson) enters the market, and that consumers begin to buy from the established household name that may hold more weight than our own name. There is also always the possibility that the FDA changes guidelines and rules, and with our non-diverse portfolio of products, we are vulnerable to a situation where we are forced to reformulate, or shut down business for some time while we reinvent products. Another threat that is unlikely, but possible to occur, is a major change in consumer preference. Our products are all similar to each other, and if the current norm of consumer preference changes, our non-diverse products are at risk of sinking in the market.

MARKETING STRATEGY

Objectives

Financial Performance

• We plan to increase our sales volume for Allstar by another 5% in the next two years.
  ○ The biggest increase we have seen in the past 10 years was 10.6% in year 5. In
  looking to increase unit sales, we will need to raise our Allstar products by
  another 10 cents. This will help us grow our sales volume and fully take control
  over the market.
• We will increase Allstar’s stock price by another 15% in the next year.
  ○ Increased profits can be a cause to stock price increases. If we do increase our
  product’s prices, we will be more profitable. Stock price is mainly driven by price
  due to the supply and demand in the market at that time. As long as we raise
  prices by 10 cents, I fully believe that we will achieve our goal within the next
  year.
• Our plan is to increase our net income for Allstars by 12% in the next two years.
  ○ We can increase our net income by increasing prices or cutting costs. We believe
  the best option for Allstar would be to increase our prices like we have mentioned
  previously. This will allow us to create more revenue and increase growth overall.
  As long as we maintain a dominant performer in the market and continue to gain
  more control of the market in general, we believe this will be a goal well in reach.

Market Performance

• We will increase our market share by 4% for all Allstar products in the next two years.
  ○ Growth will be measured annually to ensure that we are on track with our goals.
  We have seen consistent growth over the last three years and we believe that our
  promotional strategies are strong enough to accomplish a 4% growth.
• Increase Allright’s brand awareness by 5% in the next two years.
  ○ Allround already has an exceptionally high brand awareness level at 91.9%.
  AllroundPlus has also been steadily increasing over the last few years, now at
  67.1%. We believe that enough resources have been allocated to Allround and
  AllroundPlus to increase their brand awareness, but we need to focus more on
  Allright. Allright is currently sitting at 49.6%, which is relatively average compared
  to other companies, but we would still like to see an increase in that category.
• Increase customer satisfaction for all three Allstar products by 2% in the next year.
  ○ Although customer satisfaction rates are consistent, it is important that they
  continue to grow. None of our products have ever seen more than a 1% increase
  in customer satisfaction rates. Moving forward, we would like to build upon the
  relationships we already have with customers and prioritize them when making
  decisions for our marketing mix.

Social Responsibility

• Going forward, we want to contribute more to corporate social responsibility.
  ○ As a company with many resources and a large customer base, we believe it’s
  important to give back to the communities we serve. In the next year, we will
  select three charities that we will donate to. For every Allstar product our
  customers purchase, they will receive one “vote.” They can then vote on which
  charity they would like to see us donate to, and we will allocate funds accordingly
  amongst the three charities we support every year.
• Environmentally friendly initiatives
  ○ We’ll be switching to more environmentally friendly packing materials including
  reusable plastic and thinner cardboard boxes.

Market Selection Strategy

Throughout the last seven years, we have targeted Young and Mature Families; We made the
decision early on to remove the alcohol from the product ingredients because both of these
markets tended to have daytime usage of our products, where non-drowsy formulations are
essential. For both target markets, convenience and minimizing side effects is very important.
We plan to continue targeting Young and Mature families because we believe that we have a
good awareness and perception with those two markets right now, and we’d like to continue to
grow that relationship. With this targeting, we also are able to reach Young Singles before they
have a chance to grow up and move out from their parents’ homes, as well as pre-target the
families who will be Empty Nesters in the future. By targeting the family segments, we enter
consumer consciousness as a trusted, legacy brand, which creates emotional ties with
customers. We have specifically chosen not to target the Retired demographic because at their
age, they have already formed preferences for brands/medications. We also already show
higher than average recognition and purchase rates with this group, reflecting our established
image and brand familiarity in the market with older consumers.

The Cold category is the largest in the market, bringing in $2,252.5 million in sales with a 7.8%
growth rate last year. The Cold market has always been our biggest focus, and will remain as
our main focus in the future. One of the biggest reasons we chose to focus on the Cold category
is because of how generalized and multifunctional it is. Cold medicine can be used for
numerous purposes, including Cough and Allergy symptoms, as well as alleviating congestion
typically solved through Nasal Sprays. We also made the assumption that many people keep
cold medicine on hand for general purposes and because colds are so unpredictable. Many
times when people get colds, they don’t know it’s coming on. When they get sick, they likely don’t
want to have to drive to the store and get medicine. Therefore, they like to keep cold medicine
on hand for when they need it. The Cold category includes 9 competitors, which is also why it’s
important to focus our efforts there. If we slip away from the Cold category, we may lose our
strong presence in the market and have to work to rebuild our customer base.
The Cough category is the second largest category with $495.4 million in sales and a 13.1%
growth rate. The reason this category is so much smaller than the Cold category is likely due to
the fact that many people use cold medicine to treat cough symptoms as well. Rather than buying medicine for one symptom, it’s easier for consumers to purchase a general medicine that will treat many symptoms at once. The Cough category has also been a focus of ours in the
past, but we do not prioritize it as much as we do for the Cold category; even without explicitly
targeting this segment, we do entertain a portion of our sales in this segment. In the future, we
will continue to focus more of our strategies on both the Cold and Cough categories. In terms of
what we have decided not to pursue, we do not plan to focus on the Allergy and Nasal Spray
categories going forward. The Allergy category only brings in $310.9 million and the Nasal Spray
category $291.2 million. While this is a large amount, it is insignificant compared to the Cold
category. Both of these categories are highly specified, contributing to their lower growth rates;
Allergy sees volatile seasonal sales while Nasal Sprays are still being studied for long-term
safety and adopted by consumers cognizant of risks. We have found success with our current
market strategies in the Cold and Cough categories and we do not believe it will be very
beneficial to expand that focus.

Positioning

We would consumers to view our brand as a premium brand. While what we offer can be
expensive, we are also offering high-quality products with great benefits that make them worth
the price. Our products are more effective at symptom-relief in general, and draw consumers to
our brand even to cure other categories’ symptoms, like Allergy or Cold. Our products being
stronger is a benefit for our consumers. With this premium positioning, we also have high
visibility in stores thanks to established promotional relationships with channels that allot us the
more effective shelf space possible. This gives our products better visibility in stores, making it
easier for consumers to find.

Being a premium brand is a competitive advantage because people are going to see our brand
as the “best” in the market. This doesn’t necessarily mean the cheapest, but instead means that
Allstar products are the best option for symptom relief solutions. This, tied with our legacy
branding and established presence in the market, has allowed us to create a trustworthy image
for ourselves as a company. As consumers utilize our premium products, they will also become
more loyal and trust our brand the most due to the benefits and symptom relief that supersedes
other competitors. The benefit is what is going to get more consumers to buy our product.
Overall consumers see our brand and our products as having a huge advantage over
competitors due to the higher price being equated to greater benefits. This legacy, trustworthy
branding is essential to continued competitive advantage in the future.

MARKETING MIX

Product

Moving forward, we plan to retain Allround and Allright, with potential interest in discontinuing
AllroundPlus. We would like to improve manufacturer sales in Allround and continue its
successful trend as the top holder of market share in the market moving forward. We are
excited about the future of Allright as it has gained market share every year since its launch. We
believe that a fraction of the loss of market share for Allround is due to current customers
switching from it, to Allright. AllroundPlus has not found the success that we had intended for it
when we launched the new product line. The child cold medicine category is stagnant, and
AllroundPlus doesn’t have a return on investment that meets our expectations. We feel it would
be wiser to launch a new product in the Cough market after discontinuing AllroundPlus some
time in the near future.

We feel that we should launch a new product in the Cough industry because it is the second
largest and fastest growing market in the industry. We also feel confident that we could grasp
up to 40% market share after five years in the market. There are only two competitors in the
adult cough medicine market, Coughcure and End. End currently holds over 50% market share
while Coughcure holds just over 37% market share. End has lost market share over the past few
years, while Coughcure has been losing market share consistently for the past ten years. With
our brand name and the perception of our other product lines, we are confident we can enter
this market and see a market share of almost 40% after five years, which would currently equate
to almost $200 million in manufacturer sales.

While we look to expand beyond the Cold market in the near future, we do still believe that the
most money can be made there. Our current products are rated higher than 3.5/5 effectiveness
by consumers, demonstrating premium status and matching our strategic objectives. Because
of our brand perception, we have the opportunity to increase prices and become the premier
option in the market in the future. Our products are currently positioned in the middle of the
pack due to inconsistent pricing strategies. We look to find a successful pricing strategy as
soon as possible in order to effectively price our products in a way that fairly matches consumer
perceptions of the brand’s effectiveness. .

Allround has been our cash cow over the years, and is the foundation of Allstar’s brand. It
contributes more manufacturer sales and higher market share than any other product in the
market. It holds 28.2% market share in the Cold market and holds 19% market share in the OTC
industry. It has an effectiveness rating of around 3.8/5 in factors that are looked for in a cold
medicine. This product has shaped the trajectory of our company and we look to find continued
success with the product in the future. Allright is our upgraded version of Allround. Instead of
four-hour relief, it provides twelve-hour relief. We look to improve its manufacturer sales and
market share as time goes on. With that being said, we are prepared for Allround’s market share
to slightly decrease as people may choose Allright over Allround. Allright currently holds 5.1 %
market share in the cold industry, and we look to increase its effectiveness ratings in the future
as it has lower ratings than Allround. A reformulation may be needed in order for this to happen.

AllroundPlus is a product line that we will more than likely discontinue moving forward. If we
were to keep the product line, we expect to see manufacturer sales of $1,200 million in five
years with a market share of 29% due to a decrease in Allround’s market share, but an increase
in Allright’s market share. The product has 3/5 effectiveness ratings, signifying that it is a good
product. However, it is a good product in a small market. While it gained market share in the
child cold market quickly, it has become stagnant in the market and we feel resources can be
better allocated to expansion into the Cough market to increase net income.

Price

Price is a major competitive weapon due to the fact it’s one of the first things consumers
consider when making purchase decisions. When consumers are deciding which brand to
choose from, price can signify a multitude of things. Low price adds value, but high pricing can
signify premium status, and potentially associate a brand with higher-status and better quality.
Consumers will be drawn in with our expensive, premium-branded pricing strategy and this will
allow us to generate revenue. With this premium pricing strategy, we must still establish a fair
price for our product. We will base the price of our products and services on production, labor,
and advertising expenses. We will also consider market pricing and product effectiveness, to
ensure consumers find our price fair and worth the cost. We want to give our consumers a
reasonable price while at the same time offering them a quality product that will fulfill their
symptoms.

Throughout AllStars three products, we have mainly targeted Young and Mature Families. These
consumers have busy lives and need OTC products to guarantee those lives can be led
symptom-free. Our products offer high-quality, effective symptom relief through a brand name
that can be trusted. Throughout our three products, Allround is set at $6.69, Allright at $6.39,
and AllroundPlus priced at $6.59. Allround has a consumer satisfaction of 65.4% which is the
highest in the market. Our targets are not always looking for the cheapest product, they want a
product that will work and that is what we offer. Our target market is willing to spend more on a
premium product that promises great results. The way we price our products also impacts our
positioning strategy and targeting specificity. If we price products higher, then we have to target
people willing to splurge when it comes to medicine. We must be aware of industry standards,
basig price off of average prices in the market. We need to pay attention to what has been going
on in the industry as a whole, in order to follow and exceed customers’ expectations of OTC
companies and their products.

Pricing supports the marketing and financial objectives because pricing is one of the most
influential factors on income, and income determines marketing capability for future years.
Price also affects how we advertise and promote our products. For example, if our Allstar
products have a high price, then our advertisements must also match this positioning, utilizing
high-quality agencies, pushing benefits and quality, and targeting the intended consumer market
of Young and Mature Families. Price determines the financial outcome metrics of our company;
the higher the price, the greater the profit. However, if we price too high, we may see heightened
margins but at the cost of lowered sales.

When looking at competitors in each category and their prices, we have 6 in the cold category
which is where our products lie. Besthelp has a price of $6.69 and a market share of 23.5%.
BesthelpPlus has a price of $6.29 with a small percentage of the market. Coldcure has the
highest price in the cold category with $7.09 but with a small market share. Lastly, Extra has a
price of $6.39 and a small market share of 5.6%. The current price of Allstar’s products are all
roughly matched by their most direct competitor. Allround is currently set at $6.69, Allright at
$6.39, and AllroundPlus priced at $6.59. We recommend increasing our prices in all three
products by 15 cents, in order to achieve pricing premium positioning over competitors without
drastically exceeding customer expectations of price and therefore potentially losing sales.

Promotion

Throughout the past 10 years, we have established Allstar as a family-friendly brand for
consumers. Our ultimate goal is to be a trusted company that people can rely on, where
consumers believe that the brand is worth their time and money. We’ve made special decisions
over the years that show our customers how committed we are to their safety and symptom
relief. One example of our commitment to our customers is a previous issue of contaminated
Allround Cold medicine. Rather than making the cheap decision that would cost the least
amount of money, we spent $3 million to resolve the issue. We have also worked to expand
product lines, improve formulations, and increase brand visibility and trust through
comprehensive marketing strategy and advertising. Going forward, we will continue to promote
our brand as one that people can trust and feel confident purchasing.

Additionally, we would like to increase our brand awareness, sales, and market share by
investing more in digital marketing. Both Young Families and Mature Families are heavily
influenced by social media and the internet, so it’s important to focus our promotional efforts on
what aligns best with their daily lives. A large part of our target market is made up of Millennials,
a generation that has grown up with technology all of their lives. Because we plan to continue
targeting Young and Mature Families that heavily rely on technology, we need to prioritize quick,
easy, and convenient modes of communication to reach them. In the next year, we plan to invest
$1 million more in our digital advertising budget and potentially increase the investment from
there depending on the feedback and results we receive.

We also plan to improve our public relations team and create a more accessible way to connect
our customers with the company. People today, especially our target markets, feel the need for
instant gratification. We need to conduct market research to discover more convenient ways to
get the product into the hands of our customer. We also want to have a fast-response chat
option for our customers to utilize when they have questions or concerns regarding our
products or their symptoms. Another tool that will be useful is an FAQ page on our website that
also assists our customers in their information search about our brand, products, etc.

Because we are incorporating more corporate social responsibility efforts into our business
model, we will share our plans with our customers to help boost promotional efforts. Our team
has found that many people today, especially millennials, prefer to support businesses that do
something to give back to the community. In fact, they’re happy to pay more for a product that
they know supports a good cause. As stated above, we will donate to three charities per year and allow customers to vote on how we allocate our charitable funds based on their purchases throughout the year. Doing so will help customers feel like they are contributing to something bigger than themselves when they purchase Allstar products. This movement is going to be our biggest promotional campaign this coming year and will likely contribute to all of our marketing and financial objectives. If people are willing to pay more for a product from a company that supports a charity of their choice, we can gradually increase the price as well. Over the last several years we have been operating under a push strategy by pushing our brand in front of customers through targeted channel promotions and sales force support. However, this year we will shift to a pull strategy by creating interest in our corporate social responsibility model. Throughout the last 10 years, we have created a strong enough brand awareness and customer base that consumers no longer question who we are or what Allstar products can do for them. Now, we need to create something interesting and unique that will make them want to support our company, and the charitable donation campaign will do that. In order to fully realize this pull campaign, we will increase our advertising spending by an additional $5 million, heavily marketing our charity campaign in all advertisements. Some comparison messaging will also be used in our media ads, in order to differentiate our environmentally friendly packaging from competitors with less focus on corporate social responsibility.

Distribution

It is incredibly important that our customers are able to access products where and when they wish to purchase them. Customers expect to have access to the product in the channels in which they frequently shop. Both Independent and Chain Drugstores are the clearest channel needed for consumers, as they both have their brick and mortar stores centered on over the counter drugs and pharmaceuticals. Any customer looking to purchase medicine is likely to think of these locations first, and when consumers are visiting these channels they expect to be able to find the products easily. Grocery Stores and Mass Merchandisers are also a location that consumers shop for bathroom needs, but may not necessarily be a certain location for specific brands. Consumers are likely to visit the medication section of these channels looking for a solution to their problem, but understand that their desired brand may not be available as the retailer doesn’t specialize in OTC goods. At the moment, Wholesalers comprised a rough 1/3rd of the sales our company does, while direct sales to channels make up the other 2/3rds. Wholesalers have access to localized stores, smaller chains, and potentially have long-standing relationships with larger clients. They are able to reach the spaces which AllStar cannot afford to have a sales force for. For direct to channel sales, AllStar’s focus on maintaining access and shelf space in top channels like Grocery and Chain Drugstores has allowed their presence to flourish before consumers. We have also ensured adequate support for Independent Drugstores and Mass Merchandisers by providing sales support higher than almost all of our competitors, with 61 combined sales support members for those channels compared to the industry average of 47.6 people. Only one competitor provides greater support, with B&B providing 69 sales staff for the two channels combined. Still 61 is roughly comparable to 69, and we believe this support is enough to support the size of the channel and remain competitive.

While none of our products have special characteristics that could affect distribution, Allstar will need to remain cognizant of package weight in the future as new technologies become available. Lighter plastic bottles in thinner cardboard boxes are ideal to reduce weight, increase efficiency, and minimize shipping costs. In the past year, Allstar’s factories were running 3.5% over capacity, meaning we still have some flexibility in production and aren’t overdrawing our resources. This means we have the capability to deal with increased orders; if our capacity reaches over 10% beyond factory limits, Allstar may need to consider altering the production to improve efficiency, or potentially evaluate the possibility of expansion to a new factory. Another way to improve capacity could be through acquisition.