Strategic Use of Social Media for Small Business Based on the AIDA Model - Research Paper Example

Strategic Use of Social Media for Small Business Based on the AIDA Model Executive Summary Allstar Brands is the leading pharmaceutical dealer since 1924. The Allstar Brands main mission is to ensure a healthy living to families and working hard to improve their existing services as well as to incorporate new ones to ensure customer satisfaction. The objectives of Allstar Brands is to increase Allround cold medicine retention ratio of ten percent, to raise brand awareness, maintain and improve brand perception and customer satisfaction for cold medicine by at least five percent in the next two years, and to increase shelf space of Allstar Brands. This paper examines both internal and external factors that affect Allstar Brands to find ways that can fuel growth. The growth can be as a result of market penetration, development of the market, extensions in the product line. Financial projections for periods 11 and 12 are included to help realize the objectives. By period 12, Allstar Brands will have new products introduced in the market. Situation Analysis The demand for cold medicine is highly dependent on the number of patients reporting various diseases and seasonal changes. Therefore, there are fundamental changes in health concerns that can only be noted by tracking physician recommendations to a patient or through the purchasing decisions made by customers. Allstar Brands Allstar Brands is committed to ensuring health in every family. It works towards meeting customer needs and improving existing services as well as creating new products to ensure customer satisfaction. The objectives of the company include: to ensure Allstar Brands remains the leader in the pharmaceutical sales, to increase sales and net income, to successfully manage the Allround product line extensions and launch new OTC cold and allergy medications, and to expand Allround cold medicine shelf space. Allstar Brands sells three different types of products: Allround, Allround+ and Allright. Allright+ was pushed out of the market since it was meant for children only and Allround could cater for the same purpose. However, Allstar Brands encounter some challenges that hinder it from achieving its targets. It also has specific strengths and opportunities which can help it maintain the top position in selling over-the-counter medication. Below is a table showing the internal and external factors that may boost or hinder the performance of Allstar Brands. SWOT Analysis STRENGTHS WEAKNESSES A strong brand name Loyal customers A good marketing strategy for Allround product It has captured a more significant market, thus a high market share. Brand satisfaction Uniquely high-quality products Goods sold are costly There are budget restrictions; thus Allstar Brands cannot allocate a large amount of money to help in promoting its products It is slow in responding to trend shifts. Entering into other markets is a problem. OPPORTUNITIES THREATS It covers a large market, therefore, can make massive profits to help it expand and make the less known products available in the market. It can use the technology to market its products. More people can access smartphones and computers; thus online marketing is possible. Economic growth in the United States means that more people can afford to buy the medications even at high prices. Population growth in the United States means there will be a high demand for the Allstar Brands products. Competition from other over-the-counter medications like Dryup. Established brand competition. Trends with negative consequences and the environment state of being. Inflation. Inadequate sales force Consumers Consumers mostly seek ways to relieve common symptoms of cold and allergies including aches, nasal and chest congestions, and runny nose, coughing and allergy symptoms. Coughing and chest congestion are the most common symptoms consumers have. Approximately 62% of the patients suffer from these two symptoms per year. Consumers use a specific criterion when buying OTC medicines: the price, effectiveness of the products, side effects, and its form and the how long it can stay useful (Hassan, Nadzim &Shiratuddim, 2016). The efficacy of the product and duration are the critical determinants of the decisions made by a consumer. Consumers also tend to compare a variety of products before deciding on which to buy as shown in figure 1. According to Lavinsky (2016), at least 50% of consumers compared three different types of medications serving the same purpose before deciding on which one to buy as shown in Figure 1. Figure 1. Collaborators Collaborators determine the purchasing patterns of a patient or customer, and therefore the overall sales made by a company. In the case of Allstar, collaborators affect the quantity demanded by customers. The doctors and pharmacists are likely to recommend the best medication to a patient without being swayed by the advertisements made. However, if two products work the same, the doctor will prescribe the product they are familiar with; therefore, severe promotion and publicity for Allstar products should be done to ensure that they are well known. Allstar Brands should collaborate with wholesalers, retailers and drug stores as well. Wholesalers will buy goods in bulk, thus high profits once an order is made, the retailers are more convenient for customers as they will avail products to prospective consumers in the desired quantities. It is the drug stores where consumers go when sick and therefore more Allstar drugs will be sold. To motivate the wholesalers, retailers and drug stores the company should give them trade allowances. The PESTLE Analysis Political. The government can ban some activities which might, in turn, affect the overall business performance of a business. In some countries like Iran, Vietnam, and Korea, Facebook is forbidden. In China, North Korea, and Turkey, Twitter, Facebook, and YouTube are not allowed (Ozuem, 2016). The banning of these activities is a great challenge to those businesses which use social media to advertise their products. Allstar Brands is as well affected as the above-banned activities are most popular in other countries; therefore, the brand has to find different ways of advertising their products. One advertising channel cannot work in all others since politics differ from one country to another. Economic. The internet has created diverse pricing options which if there were no internet it would not have been possible. There are the 24-hour sales meaning businesses can be operating 24-hours, there is dynamic pricing based on the available quantity, opportunity to advertise one's products. Allstar Brands can use this opportunity and increase brand awareness. Allstar Brands can also be emailing the customers of their available commodities and inform that the products are available in all drug stores. Sociological. It is important to note the socio-cultural differences within the society. Some of the emerging technology may be highly acceptable in a specific culture while in others it is not allowed. If the use of the internet is permitted in many cultures, Allstar Brands then has a more significant opportunity of increasing awareness of their product. However, in areas where it is not allowed or people have lagged behind regarding technology, then better tactics should be used to ensure the information about Allstar products reaches to all people. Some cultural beliefs may not allow the use of any medication. The culture can only allow the use of herbs to treat specific diseases or symptoms. Introducing a new drug in such areas is an excellent challenge to all companies dealing with over-the-counter medicines; including Allstar. A new approach should be developed on how to convince people of a particular culture by showing them the benefits of using Allstar Brands products. Technological. The emergence of social media can play an essential role in ensuring brand awareness. However, for the social media and technology strategy to work best, the company has to define its goals and objectives. Some of the achievable social media goals are increased traffic, improved brand awareness, high search engine rankings, management of reputation and improvements in the total sales registered in a year. It is crucial to listen and pass information with the target groups regularly. According to Ozuem (2016), the primary goal for social media is to engage people as the interaction will lead to the intended outcome. The primary expected result is for the customer to purchase Allstar Brands or recommend to a friend. One can engage people in the social media through collaboration, communication, education, and entertainment. Legal. All legal procedures have to be followed for a successful sale of medication in any country. Allstar Brands may wish to create their website or application where the consumers can get more information about the products sold and any introduction of a new product. However, to establish one, the Brand has to get all legal requirements which means an extra cost. Taking risks can increase the sales of a commodity. Therefore, Allstar Brands should be ready to take any risks including those of launching an application to help consumers access information online, even though all the legal requirements must be included. Environmental. The mode of packaging of all types of products sold affects the decision made by customers significantly. Allstar Brands packs its products in a way that can be deemed attractive to the consumers. The packaging design of Allstar Brands products especially the Allround OTC medicine has a large logo of Allstar Brands thus due to the popularity of the company, consumer gain trust in the drug. It has two images at the bottom showing its ability to provide relieve day and night. The company should use this packaging technique to draw the attention of consumers thus capture a diverse market. It should, therefore, strive to maintain the image of the existing products such that even when introducing new medications, people can easily relate them to the company. Porter’s Five Forces The supplier power. Suppliers of the contents which make Allstar Brands can affect the success of the company. The suppliers can choose a competitor who uses the same ingredients in making a similar medication. Allstar Brands should be careful when dealing with customers. Suppliers may decide to raise the price of their supplies, and this affects business as it will be forced to charge high rates to consumers. However, the pricing advantage by Allstar Brands makes it possible to maintain the suppliers and customers because, Allstar Brands sets the price of its products above those of other competitors, therefore, it will not be affected. Buyer power. Consumers influence the performance of a business. The utility obtained from a product determines whether they remain loyal to the supplier or not. Allstar Brands meets the requirements of its customers and therefore has the advantage of the consumers trusting them and being faithful to the products they sell. The threat of Substitutes. In the market for OTC drugs, there are a variety of companies selling drugs to relieve cold, allergies, nasal and chest congestions. Allstar Brands faces substitution challenges. Other medications serve the same purpose as the those offered by Allstar Brands. Allstar Brand should, therefore, ensure that its drugs satisfy its consumers to maintain its market share. The threat of new entrants. Allstar Brands is well established, and its products are sold globally. New businesses find it hard to enter the industry hence an advantage to Allstar Brands. Competitive Rivalry. There is a stiff competition in the Allstar Brands industry. Many companies have emerged selling the similar product as Allstar Brand. However, Allstar Brands remains at the lead as it is well known and has loyal customers who trust in the Brands’ products. Marketing Strategy Allstar Brands sustainable competitive advantage depends on its market share, brand awareness and the satisfaction to customers in the OTC drugs market. These traits will take other firms a long time to develop, or they might be completely impossible to create due to the ability of Allstar to hide them and all the hostile market forces in the industry. Having such a high market share for Allstar is of great significance because it reduces the threat of new entrants, the power of the buyers and suppliers and also the competition; it overcomes all Porter's five forces. Allstar enjoys economies of scale, therefore, a challenge for any new entrant in the business. Buyers rely on Allstar's hefty supply to fill their shelves while suppliers have to sell their chemicals, therefore, need Allstar to survive. A large business is expected to generate more profits. To get the profits Allstar Brands requires a different advertising and promotion budget. Allstar being a large company has invested in advertising, thereby has the highest level of brand awareness. The brand formulation grants effectiveness, therefore, more customers are satisfied with it. The primary strategy set for the next two years is to expand and perpetuate these advantages through a continued market share, brand awareness, and customer satisfaction growth. Market Penetration Strategy Allstar Brands products have to stay ahead of other competitors concerning brand awareness and customer satisfaction. The company will have to increase the sales force so that more products are sold, and this will, in turn, increase the shelf space. The company should employ more salespersons to ensure that all the units that can help in the selling of the medications are well stocked and introduce the products to the marketplaces where they are not yet known. The company should be ready to invest in the advertising and promotion sector. Allstar will make decisions reflecting the needs of their customers to keep them satisfied and loyal to Allstar Brands products. Product Strategy Allstar should work towards having a vertical extension of the product line. The expansion can be done by introducing a cold medication for children. Allbetter is a 4-hour cold liquid meant for children with 350ml analgesic, 2ml antihistamine, 30mg decongestant, and 10mg cough suppressant. The formulation of Allbetter mirrors the already well-established Allround but with reduced quantities in its formulation to suit children. The focus is on Allbetter product because it is in the cold product category and already has a 70% of market share and Allround has already been successful in the market (Hassan, Nadzim & Shiratuddin, 2015). Allround has coldcure as the only competitor. Customers have not been satisfied with it. Lastly, Allbetter targets both the young and mature families as these are the groups that have people who may be in need of Allstar Brands medication. Adjusting to Current Market Conditions Strategy In every market, there are economic fluctuations which affect a product either adversely or positively. Allstar Brands will have to adapt to the current market conditions to keep operating. During economic recessions and booms, it will have to choose wisely its pricing techniques. When there is an inflation in the country, Allstar can remain at the top by setting its price slightly below the inflation rates. When there is an economic boom, Allstar can set its price above the prevailing market prices, and by doing so, customers will remain loyal to the Brand's products. Allstar should also adjust to fit the channels of distributions available. It can decide to grow the channels to reduce some to best suit their customers and their set goals. Apart from growth by market penetration and adjusting to market conditions, Allstar can grow through market development strategy. Over the past decade, the OTC medication market growth had been approximately 8% (Lavinsky, 2016). A decline in growth is expected when a market is heading towards saturation. Therefore, the market has not yet reached saturation, the more it continues to grow the more profits Allstar Brand will gain. In a few years, Allstar products will enter into the maturity stage, and therefore new strategies have to be put in place to enable the company keeps growing. It has the options for expanding geographically, diversifying concentric in cough and allergy products and to conglomerate diversification. Although Allstar Brands Corporation already has an international body to ensure Allstar products are availed to consumers overseas, there always exists a room for improvement. Pharmasim case page 12 state that the international division distributes Allstar products on a global basis and has a significant presence in the European market. Pharmasim talks of European market yet it is not the only market Allstar serves, the information ignores the fact that Allstar serves globally and therefore gives customers contrary information. Allstar divides customers into five segments based on age and family status. However, the division is only of use if customers are homogeneous on non-age or family demographics. Marketing Tactics Promotion Strategy According to Lavinsky (2016), Allstar Brands uses promotional allowances, advertising, trade promotions, free samples and displays at the points of purchase. It uses sales force, consumer and trade-oriented strategies and promotion to consumers as tools for development. Much focus should be directed towards maintaining the market share through increased product differentiation and identifying new markets. To ensure product awareness, Allstar Brands should use different forms of advertising which include: primary advertising, thereby creating awareness and stimulating primary demand, benefits which put more emphasis on the significance of the product to the consumes, comparison whereby the outcomes on sales are compared with those of the competitors and finally reminder which maintains awareness and calls for repurchase. Using promotion and advertising is vital as it will help to develop marketing tactic for allocating resources. Reminder advertising should be minimized as more effort is put on prime advertising. The comparative and beneficiary advertising should be moderate. The budget set for advertising the products for Allstar Brands should be high to increase its quantity supplied. Efforts on advertising will raise the performance of the overall products, thus helping the company to advertise more efficiently in future. One should do more research to define the target market. Price Strategy Allstar Brands should focus on reasonable pricing, advertising and identifying the target markets to have a successful promotion. According to Lavinsky (2015), fair pricing, advertising, and a defined target market mean an increase in customer base thus more sales, hence profits. Pricing in Allstar Brands has been done competitively compared to its top competitors. This strategy was established to use in part both demand-oriented and competition oriented approaches including prestige and customary pricing. Demand for Allstar Brand products is elastic, and thus the price can be high, low or average. However, due to the brand's perception and satisfaction to consumers, customers are willing to purchase the commodity at high prices relative to the competition. Allstar Brands should, therefore, be priced slightly above the competitors' price. Place Strategy Allstar takes part in both direct and indirect selling for selling its products. Currently, wholesalers have purchased a high number of Allstar Brands products. For direct sale, Allstar Brands products can be traded using many channels of distribution, including independent and chain drug stores, grocery stores, convenience stores, and mass merchandisers. Salesforce is usually allocated across channels based on channel share, the pattern of sales, rate of growth, and overall trends (Lavinsky, 2016). The circuits used in the distribution of Allstar Brands products should be maintained. The distributors should remain loyal to their customers and ensure a constant supply of the products. New routes can be identified to increase the market share and ease in distributing the products. Product Strategy Allstar Brand is a well-known company, and most people will pay dearly to get their products. The company should, therefore, take this chance to ensure all the products that it produces are fit for human consumption and serve their purpose. The strategic plan here is to launch a medication for children. They can introduce other over-the-counter medications to relieve or cure other health problems. A consumer will go for medicine from a trusted company and that which meets their needs. Financial Projections The following financial projections based on the past growth patterns of Allstar Brand. The market share and costs of Allstar Brands; Allround, Allround+, Allright, and Allbetter will be as indicated in Figure 2. Over the counter market will grow by 8% based on how the market has been increasing historically ( Stein, 2017) Allbetter will only be recorded as costs until period 13 when it will either be included in the product line or removed. Its data will be shown as net increases. The retention ratio for Allbetter will be 50% for the next two periods. Figures 1 & 2 show the projections for each product segment. Figure 2. Projected Budget for Period 11 Allround Allround+ Allright Allbetter Total Market share 26.7% 6.5% 4.7% 0.8% 38.7% Price 7.79 6.99 5.79 7.49 Average price 5.51 4.5 3.9 5.0 Units 185.9 51.8 42.7 5.8 5286.1 %Total units 65.0% 18.1% 14.9% 2.0% 100.0% Manf sales 957.12 233.01 168.48 28.7 1387.29 Promotion allowance 169.0 36.5 28.5 4.3 238.3 COGS 273.4 59.0 40.6 8.6 381.6 Gross margin 514.8 137.5 99.4 15.8 767.3 %GM 53.8% 59.0% 59.0% 55.0% 55.3% Promo exp 18 14 13 7 52 AdvExp 43 20 16 10 89 Total P/A 61 34 29 17 141 Salesforce 18.8 5.2 4.3 0.6 29 Admin 22.7 6.3 5.2 0.7 35 Fixed 92.3 25.7 21.2 2.9 142 Total SG&A 133.8 37.3 30.7 4.2 206.0 From, “Pharmasim Marketing Strategy,” by C. Stein 2017. Figure 3. Projected Budget for Period 12 Allround Allround+ Allright Allbetter Total Market share 27.0% 6.6% 4.8% 1.9% 40.3% Price 8.09 7.29 5.99 7.79 Average price 5.3 4.7 4.1 5.1 Units 195.5 54.4 45.5 14.3 309.7 %Total units 68.3% 19.0% 15.9% 5.0% 100.0% Manf sales 1045.31 255.52 185.83 73.6 1560.22 Promotion allowance 184 40 31.5 11.0 266.5 COGS 298.6 64.7 44.8 22.1 430.2 Gross margin 562.8 150.8 109.5 40.5 863.5 %GM 53.8% 59.0% 58.9% 55.0% 55.3% Promo exp 18 13 13 7 51 AdvExp 45 21 17 12 95 Total P/A 63 34 30 19 146 Salesforce 20.5 5.7 4.8 1.2 30 Admin 27.3 7.6 6.4 2.0 40 Fixed 102.5 28.5 23.8 7.5 150 Total SG&A 150.3 41.9 35.0 11.0 220.0 Operating Inc 349.4 74.9 44.5 10.5 497.5 From, “Pharmasim Marketing Strategy,” by C. Stein 2017. Figure 4. Allround’s Break-Even Data Description $ million Unit volume 102.1 Unit selling price 3.49 Promotion allowance 60.4 Cost of goods sold 122.6 Unit variable costs 1.79 Total Marketing expense 42.8 Fixed costs 62.4 Market budget break even= Fixed cost + total marketing expense/ unit selling price – variable cost. (62.4+42.8) / (3.49-1.79) = 61.88 From Figure 4, one can conclude that Allround is making profits as the units sold are more than the break-even point (Lavinsky, 2016). Controls Maintain the Target Market The target market for Allround product will remain to be young families, mature families and the retired. The cold spray will continue targeting the young singles, empty nesters and the retired. Allbetter will target young and older families as it a product meant for children. Increase Market Share To capture a market share of 37% by the end of period 10. To have 4.3% Allright, 26.5% Allround and 6.2% Allround+. The market share includes the cold, cough, allergy and nasal congestion market. To see the current cold market share increase. Allround to increase by 40% and Allround+ by 9.4%. To increase the domestic market share of over the counter drugs to 40.3% by the end of period 12. To increase the overall market share by geographic expansion globally by the start of period 11. The projected stretches will be achieved by introducing the children's cold product and by the promotion of the existing OTC medications. Summary Allstar Brands' products are a widely recommended and well known and used OTC drug. Therefore, customers would like to know that the company cares about their well-being and listens to their feedback. The alcohol ingredient in Allround makes some potential consumers not to purchase the medicine; hence, it should be removed but still maintain the effectiveness of the drug. Promotion and advertisement should be increased to match with the influx of competition in the market. To gain the trust and for collaborators to prescribe this drug, Allstar Brand has to remove the alcohol content. A doctor or physician is likely to recommend the brand that is alcohol-free thus making the Allstar Brands lose its market. Allstar Brands have reasonable shelf space. However, the increasing number of the competitors is slowly pushing out the medication. The company should work towards increasing the number of channels used in selling their medicines including the wholesalers and merchandisers. The company should also support the independent drug stores and allocate more workforce to ensure a good flow of the medication. Promotion and advertising should be a priority for the Allstar to increase its awareness. Allstar Brands Company should engage in increasing brand awareness and continue making efforts to capture a broader market. Promotion and advertising are one of the critical measures that can be undertaken to make more people know about the product. It should make an effort to quickly respond to the emergence of new trends in the market to overcome its competitors. More research should be done on Allstar products to know what ingredients can be added or removed to achieve better results. All 4Ps strategies should be used to capture and ensure a more extensive market, and the management should work to try to transform their weaknesses into strengths. From the financial analysis section, Allstar Brands is doing well in the market, and more should be done to maintain its reputation. References Hassan, S., Nadzim, S. Z., & Shiratuddin, N. (2015). Strategic Use of Social Media for Small Business Based on the AIDA Model. Procedia - Social and Behavioral Sciences, 172, 262-269. doi:10.1016/j.sbspro.2015.01.363 Lavinsky, D. (2016, August 16). Marketing Plan Template: Exactly What To Include. Retrieved from https://forbes.com/sites/davelavinsky/2013/09/30/marketing-plan-template -exactly-what-to-include/#3f91bcf73503 . Ozuem, W. (2016). Competitive social media marketing strategies. IGI Global. Stein, C. (2017, February 7). Pharmasim marketing strategy [Web log post]. Retrieved from https://www.slideshare.net/ColinStein1/pharmasim-marketing-strategy-project Appendix. Figure 1. Figure 2. Projected Budget for Period 11 Allround Allround+ Allright Allbetter Total Market share 26.7% 6.5% 4.7% 0.8% 38.7% Price 7.79 6.99 5.79 7.49 Average price 5.51 4.5 3.9 5.0 Units 185.9 51.8 42.7 5.8 5286.1 %Total units 65.0% 18.1% 14.9% 2.0% 100.0% Manf sales 957.12 233.01 168.48 28.7 1387.29 Promotion allowance 169.0 36.5 28.5 4.3 238.3 COGS 273.4 59.0 40.6 8.6 381.6 Gross margin 514.8 137.5 99.4 15.8 767.3 %GM 53.8% 59.0% 59.0% 55.0% 55.3% Promo exp 18 14 13 7 52 AdvExp 43 20 16 10 89 Total P/A 61 34 29 17 141 Salesforce 18.8 5.2 4.3 0.6 29 Admin 22.7 6.3 5.2 0.7 35 Fixed 92.3 25.7 21.2 2.9 142 Total SG&A 133.8 37.3 30.7 4.2 206.0 Figure 3. Projected Budget for Period 12 Allround Allround+ Allright Allbetter Total Market share 27.0% 6.6% 4.8% 1.9% 40.3% Price 8.09 7.29 5.99 7.79 Average price 5.3 4.7 4.1 5.1 Units 195.5 54.4 45.5 14.3 309.7 %Total units 68.3% 19.0% 15.9% 5.0% 100.0% Manf sales 1045.31 255.52 185.83 73.6 1560.22 Promotion allowance 184 40 31.5 11.0 266.5 COGS 298.6 64.7 44.8 22.1 430.2 Gross margin 562.8 150.8 109.5 40.5 863.5 %GM 53.8% 59.0% 58.9% 55.0% 55.3% Promo exp 18 13 13 7 51 AdvExp 45 21 17 12 95 Total P/A 63 34 30 19 146 Salesforce 20.5 5.7 4.8 1.2 30 Admin 27.3 7.6 6.4 2.0 40 Fixed 102.5 28.5 23.8 7.5 150 Total SG&A 150.3 41.9 35.0 11.0 220.0 Operating Inc 349.4 74.9 44.5 10.5 497.5 Figure 4. Allround’s Break-Even Data Description $ million Unit volume 102.1 Unit selling price 3.49 Promotion allowance 60.4 Cost of goods sold 122.6 Unit variable costs 1.79 Total Marketing expense 42.8 Fixed costs 62.4 Read More