Elastic Drugs

Time is quickly winding down for the trial periods of pharmasim.  This week they get reset and it goes on for real. So the try its were on determine price elasticity and channel marketing.  Two excel spread sheets help to guide the work.  Also in class we discussed the market demand and market value from the previous week.  Again I feel that I have not gathered the right information or enough information to make the decisions as the professor but hey that is how it goes when you are learning it.  Also I haven't gotten to advance the simulation much past session four or five because we have to keep restarting it for the try its of the week. 

If we go back to last week we can see the three different line extension for Allround+ : child 4hr cold liquid, 12hr multi capsule and 4hr cough liquid. So we should define the market for these options. Child 4hr cold- Allround+ is an OTC four hr children cold medicine for young and mature families.

12h4 multi cap- Allround+ is a OTC cold remedy for all users.

4hr cough liquid - Allround+ is an OTC cough remedy for adults.

This week the try it for price elasticity showed that the prices were inelastic if the prices were within +8% and -15% of the starting price. Since Pharmasim has a limit to the number of replays period. I ran it at +/-10 percent and refereed to the completed sheet for the full analysis. A liner interpolation of the unit volume holds true but not for the product contribution so the values over to% increase are skewed. This shows that the customers are agreeing to the value of the product for the cost and do not increase sales with a drop in price.  This could be due to best used by date, seasonal affects and that cold medicine is purchased when people are sick not preemptively. 

The channel pricing work sheet is a cool way to show how the cost roll down hill. Using the pricing and sale reports it can be found what each place is selling an item for and the price they are paying for it. Some prices had to be assumed by such as the price each place paid for it.  By doing the math for the unit selling price at the whole sale level is was the same as the unit cost because it was based on profit and unit sale.  So to ensure there was profit of the wholesalers I increased the cost by 12%.  This was then passed to the retailers.  Their unit selling price was calculated from profit (I suppose this is the incorrect word and total unit dollars might be better but anyway) and the number of units sold.  The customer price was from the pricing sheet and shows how it is broken down by point of sales pricing.

Pricing strategies are important to be implemented in pharmasim.  By doing these two activities and evaluating the different strategies of pricing (sales, profits, customer, competitor), it can been how the price of a product is very important the NMC.  The market share and selling price are two of the main parts of the NMC. If there are large fluctuations of these there can be a drop or increase of NMC and hopefully that is an increase.