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Lecture 5

ADM3326 Lecture 5: Comtrex in Canada.pdf

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Department
Administration
Course
ADM3326
Professor
Raluca Balan
Semester
Winter

Description
COMTREX IN CANADA A Business Development Manager for Bristol-Myers Squibb Canada reached for the priority projects file and gave one to an aspiring student who was starting an internship. Here is a description about Comtrex and the over-the-counter cold & cough market. There are many product formats and Comtrex competes within the caps, tabs and gels category. We need to answer a simple question – should we introduce Comtrex into Canada? The product, launched previously in the US, will have a parity price with its major competitors and use a broker for distribution. What we need is a clear one-year marketing communication plan commencing in September, only three months away, that has all relevant calculations to decide whether the launch would be a success or not. BRISTOL-MYERS SQUIBB Bristol-Myers Squibb (BMS) is a highly reputable and respected pharmaceutical manufacturer that historically developed and marketed prescription drugs prescribed by doctors for infectious diseases (i.e., HIV), cardiovascular problems and cancer. In the 1990's, BMS entered the over- the-counter (OTC) drug market in many countries where medications did not require doctor’s prescription. Consumers decided for themselves the treatment they needed from a variety of information sources. In such cases, consumers relied on their product knowledge and consulted with pharmacists and doctors who could influence a consumer's final decision. BMS entered the American consumer market with headache treatment brands Bufferin and Excedrin, and entered the Canadian market with these two products a couple of years later. These brands were not immediately successful in Canada, but sales accelerated in the third year. Some executives at BMS Canada felt that the marketing budget was not sufficient to execute an effective marketing campaign throughout Canada for the first two years. COMTREX BMS enhanced its presence in the OTC market when the U.S. division developed Comtrex for the cold & cough market with caplet, tablet and gel formats. Comtrex's product line contained specialized and multi-symptom products. Each specialized Comtrex product offered a formula for a particular 'type of cold' (i.e., common cold, head cold & sinus, chest cold). With both specialized and multi-symptom products, Comtrex offered consumer's expanded choice. In the beginning of the cold, consumers may start out using a single ingredient product to treat their specific symptom. As more symptoms set-in to their original minor illness, consumers used a multi-symptom product to treat all their symptoms. Comtrex also contained an analgesic known by its chemical name Acetaminophen which helped reduce headaches, body aches and fevers. This case was written by Michael A. Guolla and Giulio Tortolano for the purpose of providing material for class discussion. It is designed to be an illustration of a managerial decision ad makes no claim regarding the effectiveness or ineffectiveness of any management issues. Any reproduction is prohibited except with permission by the authors. Copyright 2000  The University of Ottawa. Revised 2011. 1 MAJOR NORTH AMERICAN COMPETITORS Warner Lambert is a well-known and respected company selling consumer and health care products. Along with cold products Sudafed and Sinutab, it markets well-known products like Halls, Listerine, Trident, Benadryl and Certs. Warner Lambert flourishes because of its high quality products; for example Sudafed and Sinutab cover every type of cold and cough experienced by consumers. Warner Lambert typically has strong sales and marketing support. Its advertising and promotion expenditures allowed placement of its products in the best shelve position in both drug and other outlets and extended it reach to 6 sku's in most retail outlets. McNeil Consumer is a division of Johnson & Johnson and is broken down into consumer products, responsible for providing OTC products for retail outlets and pharmaceutical products, responsible for marketing prescription drugs to pharmacies. McNeil’s achieved its first success with Tylenol which became the best-selling analgesic. McNeil grew into a diversified OTC firm, with products such as Imodium, Lactaid and Motrin. It entered the cold & cough market by introducing a brand extension of Tylenol with 6 sku's in most retailers. COMTREX IN THE US The cold & cough and allergy, and analgesic treatments (Tylenol, Aspirin, Excedrin, etc.) represent the first and second largest markets respectively for OTC drug products. BMS faced reputable competitors; Sudafed/Sinutab and Tylenol cold. Both established brands featured extensive product lines treating every type of cold and contained acetaminophen. BMS launched Comtrex, an OTC product, using 15% of its forecasted sales for its marketing campaign. Three years later, Comtrex attacked the cold & cough market more aggressively. Comtrex increased its budget by 67% and spent $6 million among many forms of advertising and promotion and set the price equal to Tylenol cold. Comtrex achieved 3% market share while Sudafed and Tylenol cold captured 9% and 7% respectively. Comtrex sales increased by 19% compared to an 8% sales increase for the total market. Over the years, thirty-second television commercials communicated the benefits of using the multi-symptom Comtrex compared to using the specialized products of its three major competitors for three different symptoms. The ads often used a testimonial from a woman who showed or talked about all four brands. The final shot showed a close-up of the Comtrex package and claimed that Comtrex could relieve all cold symptoms. The most recent ad featured a woman talking about and showing all the products as she placed them in her medicine cabinet. She claimed that Sudafed could be used for a stuffy nose, Robitussin for chest congestion and Tylenol for pain; but Comtrex Deep Chest Cold could be used instead for all cold symptoms since “Comtrex does it all” as the ad ended. In conjunction with the Florida Department of Citrus during the winter season, consumers received a free Comtrex product by mail for every two cartons of orange juice purchased. BMS offered a dollar off coupon between October and January and gave its distributors greater incentives to obtain a minimum goal of five sku's per store. 2 CANADIAN DRUG MARKET The total retail market of all goods sold in Canada approximated $217 billion with a 3% growth rate. Drug sales (prescription and OTC drugs sold in all outlets) accounted for approximately 6% or $13 billion and increased steadily at 5% annually. OTC drugs represented 12% of the total drug sales (approximately 1.5 billion dollars) and grew by 7%. The rapid growth of OTC drugs was a response to the following trends:  Complementary medicines. More non-prescription drugs were being developed and approved to be sold as an OTC product.  Canadians active role managing their health. People were more educated and understood how to manage their health more effectively and used more OTC products on a regular basis.  Economic considerations. Canadians perceived higher prices for prescription drugs. A change in the patent laws favoured pharmaceutical firms and reduced insurance plan payments for senior citizens and welfare recipients by government fuelled this view.  Private label. Retailers launched their own generic medications. Price-sensitive consumers were more willing to buy an OTC product without a brand name. Research showed an increase in the number of Canadians buying private brands because they are cheaper.  Distribution to supermarkets. Distribution to other outlets such as supermarkets made OTC products more available and convenient to the consumers and sales growth to non-drug stores out-paced drug store sales (i.e., 11% compared to 3%). CANADIAN COLD & COUGH TREATMENT MARKET OTC drugs included many markets (analgesic, cold & cough and allergy, nutrients, hair treatment shampoos,
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