Chapter 5

The Gamble

SNAPSHOT

Institutions: Generations Pharma, a pharmaceutical company specializing in dietary supplements that are distributed via retail channels

Santos Research, a market research firm working on behalf of Generations Pharma

Location: Charleston (population 114,916), located in the Pacific region of the United States

Characters: Ms. Stephanie Grant, Chief Marketing Officer

Mr. Bill Mitchell, Chief Executive Officer

Mr. Douglas Sawyer, Founder (deceased)

(all of Generations Pharma)

Context: In this case, the top marketing executive of a pharmaceutical company endeavors to revitalize product packaging and is met with impressive results.

Stephanie Grant, Chief Marketing Officer for Generations Pharma, has just formulated a plan to take her companys product offerings to an entirely new level. Specifically, she plans to significantly upgrade product packaging to make it more contemporary, which she believes will attract greater attention and help to reposition the offerings, making them champions instead of contenders in a field of very powerful competitors and fiercely brand-loyal customers. The stakes are high, as this represents a significant gamble, but Stephanie is confident that her efforts will result in greater fortunes, both for herself and her company. Based in Charleston (population 114,916), located in the Pacific region of the United States, Generations Pharma specializes in the production and distribution of dietary supplements through retailers across the United States. The firms key product offering is known as Generations Daily, a multivitamin that is taken once per day to supplement dietary intake as part of a regimen to ensure proper health and nutrition. Generations Daily accounts for 37% of the annual sales volume of Generations Pharma, making it the key product in a portfolio of 27 offerings, with most products being niche dietary supplements holding much less significance in relative terms. Generations Daily, in fact, was the first product to be marketed by Generations Pharma, which was founded 75 years ago by Douglas Sawyer, a chemist with a penchant for developing products that addressed health and wellness. Douglas formulated a health supplement that contained a robust array of vitamins, minerals, and other nutrients to ensure good health. With excellent results from product testing, he decided to market the product under the Generations brand name because he viewed the supplement to be conducive to long-term health and believed that the brand name conjured images of longevity. To house the multivitamins, Douglas selected unique gold packaging that prominently featured the silhouette of a butterfly, accompanied by stylized lettering permitting easy product identification. While the ingredients of Generations Daily had changed over the years, improved based on the latest scientific research on health and wellness, the packaging components of the product have endured, being lightly refreshed periodically to stay current. Packaging elements, in fact, are shared across the entire product line of Generations Pharma with only modest variations being incorporated to distinguish one item from the other. Needless to say, the gold packaging and butterfly image are firmly associated with Generations Pharma products in the minds of people familiar with dietary supplements. The mere fact that Generations Pharma had survived 75 years served as a testament to the companys ability to adapt to the changing environment, outlasting a revolving door of competitors who entered the market over past years and decades, most ultimately failing. The firm has been and continues to be successful, but it has only rarely been able to secure premier positions in the marketplace, almost always finding its various products falling into fourth-, fifth-, and sixth-place positions in the battle for market share. Generations Daily, in a few markets, does occupy the position of market leader, but this is atypical; the product usually occupies the lower rungs of the market leadership ladder. This is sufficient for a viable business, but Stephanie wants more than simple viability. As a growth-oriented marketer, Stephanie has long since viewed market stagnation to be a source of frustration over the course of her 7-year tenure at Generations Pharma. She is not experiencing any pressure to improve sales, as the companys Chief Executive Officer, Bill Mitchell, finds the current results to be in line with business projections. Instead, Stephanies push for increased growth is motivated internally by her simple desire to always move one step ahead. In investigating what possibly could be done to bolster sales, Stephanie viewed additional marketing communications to be an inappropriate pathway. As Generations Pharma products are distributed exclusively through retail channels, such as discount stores and groceries, Stephanie has worked tirelessly with these establishments to promote the companys various health and wellness offerings. She has been especially aggressive on price, frequently running special discounts advertised through the sale papers of the various retailers. While this has served to maintain market share and, at least in some cases, stimulate modest growth, the results are not as pleasing as she desires. She views additional marketing communications dollars dedicated to the product line to be wasteful as the products already are well-known and are prominently featured in advertisements and other promotional vehicles. The saturation point has been reached in Stephanies estimation. Probing deeper, Stephanie came to believe that, in current form, Generations Pharma products might potentially have peaked and are incapable of achieving growth without product enhancements that will attract an increasing number of buyers. Stephanie decided to comprehensively review the companys entire product portfolio from the ground up, looking for weaknesses that might be stemming growth. This required gaining the perspectives of consumers and, as Generations Pharma products are sold nationally, it was necessary for Stephanie to outsource major parts of this significant undertaking. With Bills endorsement, Stephanie authorized Santos Research, a market research firm specializing in buyer behavior in the retail sector, to conduct a series of focus groups across the nation with the primary goal being to ascertain consumer perspectives on dietary supplements, generally, and Generations Pharma offerings, specifically. Over a period of several months, Santos Research carried out the focus groups, with chief findings generally indicating favorable perceptions regarding Generations Pharma products and their associated performance as dietary supplements, but unfavorable perceptions regarding product packaging. Additional research conducted by Santos Research validated the findings of the focus groups. Hearing of the negative consumer perspectives regarding the packaging of Generations Pharma products came as no surprise to Stephanie as she herself never viewed the packaging to be especially attractive. She, however, had never addressed the issue before because the companys packaging had extensive historical meaning, dating back to the origins of the company. But now that she had evidence that consumers disliked Generations Pharmas packaging, Stephanie believed that it was time to act. Having extensive work experience, along with a Master of Business Administration, she certainly knew that poor packaging could sabotage the success of otherwise excellent products. Perhaps this was the culprit that was prohibiting Generations Pharma from achieving greater success in the marketplace. Meeting with Bill, Stephanie presented Santos Researchs findings and additional data that she had collected in-house. Over multiple discussions, the two agreed that perhaps it was time to alter the companys packaging. Over subsequent weeks and months, packaging prototypes were developed and tested. Ultimately, a final version was selected. The new packaging incorporated a rainbow of colors, rather than the gold containers of the past. Gone, too, was the butterfly, being replaced by a multicolor depiction of people, designed to resemble a family, holding hands to form a ring. These revolutionary changes completely altered the look and feel of Generations Pharma products. Focus groups loved the comprehensive revision, indicating the potential for increased visibility and sales of Generations Pharma products in the market. The national rollout of Generations Pharma products in their new packaging ensued shortly thereafter, complemented by a robust television and magazine advertising campaign heralding the upgrade, noting that the same great Generations Pharma products now had new, exciting packaging to better represent the enclosed health and wellness contents. One month after the rollout, sales reached an all-time high for the given period, with product orders from retailers being received at a record pace. Stephanie was ecstatic.

DISCUSSION

1. In this case, Stephanie gambles that enhanced packaging will improve the sales of Generations Pharma products and it appears that her gamble has paid off. The gamble was perhaps all the more risky in that the companys sales were deemed by Bill to be meeting expectations. While enhanced packaging might be viewed to facilitate sales, it also could result in adverse consequences, especially given the lengthy history of the companys packaging. Discuss the upside potential and downside risks associated with altering packaging, especially for products that are already experiencing satisfactory sales. How would you go about determining if the potential benefits outweigh the associated risks involved with such alterations?

2. What are your thoughts on the manner in which Stephanie went about investigating consumer perspectives of the product offerings provided by Generations Pharma? Prepare a critical review of the process initiated by Stephanie. Would you make any changes? Why or why not?

3. Prior to engaging in comprehensive investigations of the product offerings of Generations Pharma, Stephanie opted against directing more resources to marketing communications, indicating that she believed that the saturation point had been reached. This showed discipline as some individuals are of the belief that throwing additional money into advertising and other forms of marketing communication serves as the catch-all answer to marketing problems. How would you go about determining cut-off points after which additional marketing communications funds will not be extended?

4. Stephanies gamble could just have easily had the reverse effect, resulting in declining sales. While it might seem that upgraded packaging would naturally yield better sales results, there are no guarantees. What might prompt declining sales in the face of major packaging upgrades?

5. This case dealt with healthcare goods, as opposed to services. Just as goods can be packaged, so too can services. Provide a detailed overview of the elements that constitute the packaging of services in the healthcare industry.

Fortenberry Jr., John L.. Cases in Health Care Marketing (p. 27). Jones & Bartlett Learning. Kindle Edition.