14 Aug I need a PRESTO analysis for the case attached. PRESTO is an acronym for Politic

I need a PRESTO analysis for the case attached. PRESTO is an acronym for Political, Regulatory,Economic,Social/Societal, Technological and Other aspects of environments.The analysis must be built on evaluative(positive and negative) statement with explanations or substantiations. e.g. state the element that is critical and provide the reason why.The political environment that determines how governments and political parties treat business.The regulatory environment that relates to the laws that govern how businesses are behave in a given area.The economic environment in any that creates context for favorable or unfavorable business conditions.The social or societal environment that influences given trends and activities with respect to behaviors and attitudes of people in different customer groupings.the technological environment in any area that provides indicators related to the pace of innovation or the enabling techniques that become available for exploitation.Others aspects of the environmental domain that may provide clues to investment cycles or funding trends, business organizational structures.SECTION 1: THE PHARMASIM CASEALLSTAR BRANDS’ OTC COLD MEDICINE GROUP:The Allround BrandALLSTAR BRANDSCORPORATION. . .. . . is one of the leadingmanufacturers ofpackaged goods in theworld. Since its foundingin 1924, the company hasacquired or merged witha number of smallerpackaged goodscompanies.The management team at the over-the-counter cold medicine(OCM) group of Allstar Brands just completed its thirdpresentation in the past month to the Pharmaceuticals Divisionmanager regarding the status of the Allround cold medication. Itis apparent, from all the attention the team has received, that theAllround brand it manages is of strategic importance to thecompany. Unfortunately for the team and the company, thefourth quarter performance reports for Allround were not aspositive as management expected. Therefore, the OCM team hasbeen under the intense scrutiny of senior management.OverviewAllstar Brands’ Allround product is the market share leader in theover-the-counter (OTC) cold and allergy remedy market. Theconsistent success of the brand in terms of profitability and saleshas made it a critical component of the PharmaceuticalsDivision’s long-term strategic plan. The division anticipates thatthe brand’s cash flow in the coming periods will allow thecompany to pursue new opportunities in emerging markets.However, the division manager responsible for Allround hasbecome concerned with the competitive nature of the OTC coldremedy market. In the past three periods, the industry has seenseveral product introductions as well as major increases inpromotional and advertising expenditures. There is concernamong senior management that this competitive activity will leadto declining market share and profitability for Allround. Thebrand has lost one full share point in the last period. Seniormanagement expects that skillful marketing will prove pivotal tothe long-term success of Allstar Brands.The CompanyThe company consists of three divisions: Consumer Products,International, and Pharmaceuticals. The Consumer ProductsDivision handles a number of packaged goods, such as laundrydetergent, shampoo, and bar soap. The International DivisionThe PharmaSim Case—Page 11distributes Allstar products on a global basis and has a largepresence in the European market. The Pharmaceuticals Divisionis responsible for the marketing and production of ethical andOTC medications.Ethical drugs are available throughpharmacies with a physician’s prescription, whereas OTCremedies are widely distributed without the need for aprescription.The management of Allstar’s Pharmaceuticals Division consistsof a number of market related groups, one of these being theOCM group. This group is concerned primarily with themarketing activities of the Allround brand and any line extensionsor new product introductions that might fall under the samecategory. An overview of the corporate structure of AllstarBrands is presented in Exhibit 1.1.Exhibit 1.1: Allstar Brands Divisional StructureALLSTAR BRANDSConsumerProductsPharmaceuticalsOCM Group-AllroundBrandInternationalDivisionLevelGroupLevelThe Brand Management Group at OCMThe marketing management group responsible for Allroundconsists of a brand manager, an assistant brand manager, and abrand assistant who is a recent business school graduate. Theywork together as a team on all of the marketing decisions relatedto the OTC cold and allergy remedy market. The three managersare concerned with developing the Allround marketing mixstrategy each period, including any reformulation or linePage 12—PharmaSim Student Guideextension options. In addition, if Allstar’s research departmentdevelops any promising new product ideas for the cold medicinemarket, this team will be responsible for the new product launch.Although all product and marketing decisions are made as agroup, each member of the brand management group has adifferent role.In general, the brandmanagement group isresponsible for makingeffective marketingdecisions in all marketingmix areas to maximizethe long-termprofitability of AllstarBrands’ OTC cold andallergy remedy group.The brand assistant has major input on decisions related to retailprice, promotional allowances, consumer and trade promotionalexpenditures, advertising expenditures, and the number of directand indirect sales force personnel committed to the Allroundbrand. The brand manager thought it would be best for the brandassistant to gain experience by understanding the basic marketingvariables before becoming more involved in the detailedimplementation of the marketing plan.The assistant brand manager has input to the aforementionedissues but is also required to make more in-depth marketingdecisions. For example, the assistant brand manager makesrecommendations concerning the allocation of the sales force toretailers and across direct and indirect channels. This person isalso concerned with the development of the pricing discountstructure, as well as more of the specifics of promotionalprograms, including the advertising message, advertising agency,and trade and consumer promotions.The brand manager is responsible for all aspects of the marketingdecisions for the Allround brand. In addition to the decision areasabove, the brand manager is responsible for more detailed aspectsof the advertising message, including which competitor toposition against, the choice of target segments, and the details ofhow promotional allowances and promotions are allocated acrossvarious distribution channels.The PharmaSim Case—Page 13Industry OverviewAllstar Brands competes with four other firms in the OTC coldand allergy market. These five firms offer a total of 10 brands infive different product categories (cold liquid, cough liquid,allergy capsule, cold capsule, and nasal spray) listed in Exhibit1.2:Company NameExhibit 1.2: Company and Brand SummarySales $Brands on the Market(millions)Allstar Brands355"Allround," 4-hr multi-symptom cold liquidB&B Health Care286"Believe," 4-hr allergy capsule"Besthelp," 4-hr cold capsuleCurall Pharmaceuticals199"Coughcure," 4-hr cough liquidDriscol Corporation255"Defogg," 4-hr allergy capsule"Dripstop," nasal cold spray"Dryup," 4-hr multi-symptom cold capsuleEthik Incorporated395"Effective," nasal cold spray"End," 4-hr cough liquid"Extra," 12-hr cold capsuleThe OTC Cold Remedy MarketCold remedies are designed to address five basic symptoms:aches and fever, nasal congestion, chest congestion, runny nose,and cough. Although the cause is different, allergies share manyof the same symptoms and are therefore often grouped with coldremedies. However, products formulated specifically for allergyrelief medicines are available, and it is common in the industry toconsider relief from allergy symptoms as a separate consumerneed from virus and flu related illnesses. Chronic allergysufferers tend to have different usage patterns and more concernsabout side effects because of the duration of the symptoms.Page 14—PharmaSim Student GuideBrand FormulationsIn general, various combinations of six basic types of ingredientsare used to formulate OTC brands. Each ingredient targets one ofthe five basic symptoms, or is used as a base for the otheringredients. The ingredients are:Analgesics: Provide relief for aches and fever. Commonanalgesics are aspirin and acetaminophen (an aspirin substitute).OTC MEDICATIONSIDE EFFECTSSide effects have becomea greater considerationin recent times because ofthe emphasis on healthierlifestyles and concernsabout performance undermedication. Drowsinessdue to antihistamines oralcohol is the most oftenmentioned negative sideeffect, especially whenthese products are usedduring the day. Otherconsiderations includeupset stomach, long-termeffects of nasal spray,and excessivemedication.Antihistamines: Reduce the secretions that cause runny nose andwatery eyes.Decongestants: Reduce nasal congestion by shrinking the bloodvessels in the nose lining to clear the passages and restore freebreathing.Cough suppressants: Reduce the cough reflex.Expectorants: Provide relief from chest congestion by looseningthe phlegm, thereby making each cough more efficient.Alcohol: Provides a base for the other ingredients in someproducts and helps the patient rest. (Some consumers viewalcohol as a negative attribute.)A brand can be made available in one of three forms: liquid,capsule, or spray. A consumer’s choice with regard to form isusually based on personal preference, but some generaldifferences are apparent. Nasal sprays contain only a topicalnasal decongestant that provides faster relief from sinuscongestion than other forms. Capsule and liquid cold medicationsmight contain any combination of ingredients, although coughmedicine is usually found in liquid form to help soothe throatirritation. According to a recent survey, most consumers find thatcapsule form is somewhat more convenient than liquid. Exhibit1.3 shows each of the current brand formulations on the market.Two other basic considerations are duration of the product andpossible side effects. Product duration is typically either 4-hourThe PharmaSim Case—Page 15or 12-hour. The United States Food and Drug Administration(FDA) regulates the amount of medication for various periods ofrelief, including the maximum for a 24-hour period without aprescription. The maximum dosage used in 4-hour formulationscannot be taken more than four times each day due to overmedication concerns. Twelve-hour formulations contain half thedaily maximum medication. Nasal sprays are considered instantrelief products because they act much faster than standard coldmedicines, but their effectiveness wears off faster. The durationfor each brand is listed in Exhibit 1.3.As can be seen in Exhibit 1.3, the Allround brand is a 4-hourliquid cold medicine that provides multi-symptom relief. Itcontains an analgesic, an antihistamine, a decongestant, a coughsuppressant, and alcohol. Most consumers use this product fornighttime relief because of the strength of the medication andbecause the alcohol and antihistamine help the patient rest.Allround is viewed as one of the most effective brands on themarket at reducing multiple cold symptoms. However, consumergroups and some physicians have attacked the multi-symptom"shot-gun" approach as providing excessive medication in manycircumstances..Exhibit 1.3: Current Brand FormulationsAnalgesicMax AllowAllroundBelieveBesthelpCoughcureDefoggDripstoppDryupEffectiveEndExtraAntihistDecngestCoughSuppExpectAlcohol1,0001000000001000000444404040006060060300606060012030300030000000200000000002000202000100000100Page 16—PharmaSim Student GuideDescription(mg/4-hr dose)4-hr multi liquid4-hr allergy capsule4-hr cold capsule4-hr cough liquid4-hr allergy capsulecold spray4-hr multi capsulecold spray4-hr cough liquid12-hr cold capsuleMarket Segmentation and the Market SurveyThe trade typically segments the OTC cold and allergy market onthe basis of how the brands are labeled. The four standardproduct categories in the OTC market are cold, cough, allergy,and nasal spray. The brand management group often uses theinformation presented in Exhibit 1.4 as a basis for determining thebrand’s direct competition, but also realizes that the report fails toaccount for the cross-usage of brands (e.g., using a cold medicineto relieve allergy symptoms)..Exhibit 1.4: Market Share by Product CategoryMfr. Sales (M$)GrowthAllroundBelieveBesthelpCoughcureDefoggDripstoppDryupEffectiveEndExtraCold879.76.6%%40.40.025.20.00.00.014.90.00.019.5Cough366.43.2%%0.00.00.054.30.00.00.00.045.70.0Allergy126.15.9%%0.050.70.00.049.30.00.00.00.00.0Nasal119.14.5%%0.00.00.00.00.052.00.048.00.00.0Total1491.25.1%%23.84.314.913.34.24.28.83.811.211.5A major marketing research firm offers a nationwide survey ofOTC cold and allergy consumers. The market research firmclaims that this survey provides a great deal more information onhow consumers perceive and use cold and allergy products. Thefirm also suggests that demographic segmentation could revealimportant information about the market. Survey data areprovided with two segmentation options: illness (cold, cough, andallergy) and demographics (young singles, young families, maturefamilies, empty nesters, and retired). The marketing researchfirm conducts this survey every period.Curious about possible new market insights, the OCM groupobtained partial non-segmented results of the market survey on aThe PharmaSim Case—Page 17"free to examine" trial basis. If the group finds the sample datainformative, it may purchase the complete survey for $100,000.The OTC cold and allergy market could then be analyzed basedon any or all combinations of illness and demographics that theOCM group desires.Survey DataThe consumer survey consists of the following reports: 1) marketshare based on consumer brand purchases; 2) purchase decisionmaking criteria used by consumers; 3) brand awareness, trial, andrepurchase percentages; 4) brand satisfaction; 5) a comparison ofintended versus actual purchases; 6) a comparison of brandsbased on consumers’ perceptions of their ability to relievesymptoms; and 7) the tradeoff that consumers perceive betweensymptom relief and price. The sample data for awareness, trial,and repurchase are presented in Exhibit 1.5.The survey results on Brands Purchased, Purchase Intentions, andSatisfaction are based on units sold. Brand Awareness, DecisionCriteria, Brand Perception, and Tradeoffs are based on surveypopulation. This distinction reflects multiple purchases from onesurvey respondent (usage rates)..Exhibit 1.5: Market Survey—Brand Awareness, Trials and RepurchaseBrandTrialsBrandAwarenessMost Freq.PurchasedConversionRatioRetentionRatio%Brand%%%Allround74.1 %47.1 %21.8 %63.6 %46.3 %Believe18.9 %9.2 %3.8 %48.5 %41.9 %Besthelp56.6 %30.0 %13.0 %53.1 %43.2 %Coughcure49.0 %29.0 %18.4 %59.1 %63.6 %Defogg24.1 %13.0 %4.1 %53.9 %31.8 %Dripstopp20.2 %11.3 %3.6 %56.1 %31.4 %Dryup23.2 %10.9 %7.2 %47.0 %65.6 %Effective22.0 %12.0 %3.1 %54.5 %26.2 %End46.9 %30.6 %15.6 %65.3 %50.8 %Extra60.1 %31.8 %9.5 %52.8 %29.9 %Page 18—PharmaSim Student GuideThe OCM group found the data insightful. They were pleasedthat Allround had the highest awareness of any brand. Currently,74.1 percent of those queried mentioned the Allround brandwithout prompting, which is considered “unaided awareness.” Inaddition, the Allround brand had the highest trial level and wasthe brand most frequently purchased. Allround’s conversion ratio(the percentage of those aware of a brand who have tried it) is63.6 percent. The brand manager noted that the retention ratio(the percentage of those who have tried the brand who nowpurchase it most often) for Allround was lower than that forseveral other brands. The OCM group wondered if this might bea signal of future problems, but the brand assistant recalled thatnew brands and brands that fill very specific needs often havehigher retention rates than brands that are mature or not highlytargeted.A sample market survey questionnaire immediately follows thissection.MARKETINGRESEARCHThe OCM group believesthat these studies containuseful information, butthat they also need toexamine the trade-offbetween the cost of thesestudies and theinformation for decisionmaking that these studiesprovide. They also needto recognize that allmarketing researchstudies have some errorin them.Other Marketing ResearchIn addition to the survey data, other information about the marketis available. Market trade publications, similar to Exhibit 1.4, arefree to the OCM group and provide data for industry outlook onpopulation, market growth rate, inflation, wholesale/directdistribution, and symptoms reported by consumers. Other dataconcerning competition and distribution are available for a fee.These include a comparison of relevant operating statistics foreach company; competitive estimates of sales force allocation,advertising expenditures, and message and promotional programs;and studies of distribution regarding share of channel sales,pricing, consumer shopping habits, average shelf space, andphysician and pharmacist recommendations. A new conjointstudy will be available to the Brand Manager to help with productintroduction decisions starting in period 1. All of these reportsare discussed in Section 2.The PharmaSim Case—Page 19SAMPLE MARKET SURVEY QUESTIONNAIREThis market survey questionnaire was designed to be asked to consumers at the point ofpurchase (drugstore, grocery store, convenience store).PURCHASE INFORMATION1. Did you purchase any cold medicine?YESNO— If you answered “NO” above, go to question 5 —2. Which brand of cold medicine did you purchase?__________________________3. Which brand of cold medicine did you intend to buy?__________________________SATISFACTION4. Overall, are you satisfied with the product you just purchased?YESNOAllroundBelieveColdcureCoughcureDripstopDefoggEffectiveExtraEndOtherAllroundBesthelpBelieveColdcureCoughcureDripstopDefoggEffectiveExtraEndOtherAllroundBesthelpBelieveColdcureCoughcureDripstopDefoggEffectiveExtraEnd5. Which brands of cold medicine have you heardof?BesthelpOther6. Which brands of cold medicine have you tried?7. Which brand of cold medicine do you purchasemost frequently?Page 20—PharmaSim Student GuideDECISION CRITERIA8. Please rank the following product attributes in order of importance in your decision topurchase cold medicine:______________________Product Effectiveness______________________Side Effects______________________Price______________________Form______________________DurationBRAND PERCEPTIONS / TRADEOFFS9. Of the brands you mentioned having heard of (from question 5), how effective would yourate the ________________ brand of cold medicine in relieving the following symptoms:< Not AtAllEffectiveExtremelyEffective >Aches12345Nasal Congestion12345Chest12345Runny Nose12345Cough12345Allergy1234510. What is your perception of the priceof ____________ brand?InexpensivePrice1Affordable23Expensive45SEGMENT INFORMATION11. Age: ___________12. Household Size: _______________13. What illness are you suffering from?ColdCoughAllergyThe PharmaSim Case—Page 21INDUSTRYCOMPETITIONThe OCM groupmonitors competitiveactivity in a number ofareas, including pricingand promotionalallowances, advertising,consumer and tradepromotion, and salesforce allocation.Pricing and Promotional AllowancesIt is industry practice for manufacturers to suggest retail prices toretailers, although retailers ultimately set the price to consumers.Manufacturers commonly offer volume discounts of 15-40percent of the manufacturer’s suggested retail price plus anadditional "promotional allowance" of 10-20 percent.Allowances are necessary to gain retail distribution, obtaindesired shelf facings in retail outlets, and gain retailer support fora brand in advertisements and promotions undertaken by theretailer. Allowances are usually discussed with retailers inconjunction with price levels, but are also considered to be a typeof promotional expense. Thus, allowances appear on the incomestatement as a separate variable cost line item. Exhibit 1.6displays the current pricing policies for the Allround brand.Exhibit 1.6: Price / Volume Discount Schedule for Allround ($)By Discount ScheduleVolumePrice toUnitsDollarsDirectDiscountChannelSold (M)Sold ($M)Suggested Retail: $ 5.29< 250<25002500 +Indirect / Wholesale25 %30 %35 %40 %$ 3.973.703.443.1710.535.415.141.1$ 41.8131.251.9130.3% of TotalSales11.8 %36.9 %14.6 %36.7 %Note: This information is only available at the Assistant Brand Manager level and above in the simulation.The manufacturer’s suggested retail price (MSRP) for Allround is$5.29, with volume discounts ranging from 25–40%, notincluding promotional allowances. However, the OCM groupbelieves that Allround’s sales have not suffered because of thehigher price. In fact, the brand’s effectiveness, high recognition,and level of loyalty have allowed it to maintain a price leadershiprole in the market. Exhibit 1.7 provides the MSRPs for all brandsin the market.NOTE:A market research reportshowing the averageretail price by channel isavailable for $20,000.Exhibit 1.7: Manufacturer’s Suggested Retail PricesAllround$ 5.29 Dripstop$ 4.29Believe4.39Dryup5.09Besthelp4.89Effective4.39Coughcure5.49End5.29Defogg4.29Extra4.49Page 22—PharmaSim Student GuideAdvertisingAdvertising plays a major role in establishing brand awarenessamong consumers and in helping to shape consumers’ perceptionsof products. Last period, $20 million dollars was spent onAllround’s advertising campaign, primarily for commercials airedon network television. Competitive advertising budgets for lastperiod ranged from $1 million for the Effective brand to $16million for Coughcure.NOTE:The OCM group mustmake three basicadvertising decisionseach period: the amountof dollars allocated to theadvertising budget; thecontent of the advertisingmessage; and the choiceof an advertising agency.There are four basic advertising message types that the OCMgroup considers potentially useful for Allround: a primarydemand stimulation to focus the advertising message onincreasing overall demand for OTC remedies while increasingAllround’s unaided awareness; a benefits approach that states thesymptomatic relief properties of Allround; a comparison approachthat positions Allround against another brand; and a reminderadvertising message to maintain consumer awareness andstimulate the repurchase of Allround. The advertising messageused in any period can be a combination of these types. Lastperiod, Allround’s advertising was 5 percent primary demand, 45percent benefits, 45 percent comparison, and 5 percent reminder.The advertising message can also target product use (cold, cough,and/or allergy) and demographics (young singles, young families,mature families, empty nesters, and/or retired). This targetingprovides guidance to the advertising agency for creative aspectsof the ad design and selection of specific media placements.The OCM group is considering the selection of a new advertisingagency. Allround’s current agency is Brewster, Maxwell andWheeler (BMW). This agency is known for its high quality workbut charges a 15 percent commission on media placements.There is some concern that BMW costs too much and is havingan adverse impact on Allround’s profits. The OCM group hasreceived solicitation from two other advertising agencies. Sully& Rodgers (S&R) has a reputation of providing mid-range qualitywork but charges only 10 percent on media placements. LesterLoebol & Company (LLC) charges only 5 percent on mediaplacements, one-third as much as BMW, but its advertisingcampaigns are of significantly lower quality. It could be arguedthat, since the Allround name is well established, a decrease in thequality of advertising might not hurt the brand significantly.The PharmaSim Case—Page 23Potential cost savings could result in an increase in profits, but thegroup is concerned that lower quality advertising might causeirreparable damage to Allround’s brand image.ALLSTAR BRANDSAllstar Brands spent $7million on consumer andtrade promotions for theAllround brand lastperiod (not includingpromotional allowancesof 17 percent). As wasthe case in advertising,the OCM group believesthat Allround has morepromotional support thanany other brand on themarket.Consumer and Trade PromotionTrade promotions include promotional allowances and co-opadvertising. Promotional allowances, also discussed in thepricing section, are an additional discount to the channel. Co-opadvertising provides incentives to the channel to feature a specificbrand in their own advertising. Money is made available toretailers to pay for a portion of the retailer’s advertising when…

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