Group D’s Marketing Plan

By: Sean Ching, Zhuoyun Xu, Deanna Walton, Nicholas Njotowidjojo, Travis Mackenzie, Alison Antoku

Marketing Challenge - SWOT● Adult consumption of Pedialyte has risen about 60% since 2012.

● Hangover remedy, Intra and Post-Activity, and Dehydration Prevention.● CEO - “Today we (Abbott) know that more than a third of our sales actually come from

that adult use". Though this new market has been recognized by Abbot, they have resisted any formal change to the product.

● Social Media Campaign “See The Lyte”.● Why should change anything when Pedialyte is already a market leader?● Strength - Proven product invented by Dr, Gary Cohen, trusted by consumers, organically

created market.● Weakness - Product Name, New T.M awareness.● Opportunity - New market is 3X times larger than current market.● Threat - Late to party? Entering a market dominated by huge brands (Gatorade. Powerade)

STP Analysis

For Pedialyte for instance, the various segments that are include in the marking plan are age, lifestyle and market economy.

Based on segmentation, targeting and positioning analysis, the specific target group selected for this product are the active adults living in the developing countries.

Positioning Statement

“For active adults, ACTIVE-lyte is the electrolyte recovery drink that delivers superior hydration because only ACTIVE-lyte is the proven industry leader backed by science.”

The word lyte is used to show the relationship between the product and the Pedialyte brand. The word electrolyte is also used to show the intentions of the product in the market.

Marketing Objectives - By December 2016

1. Reach sales of 100 million bottles

3 in 5 ad viewers become newly exposed to

ActiveLyte

#SeeTheNewLyte#SeeTheNewLyte#SeeTheNewLyte#SeeTheNewLyte

Marketing Objectives - By December 2016

2. Get 500,000 social media tags tracked via

#SeeTheNewLyte

Marketing Objectives - By December 20163. Follow Marketing Budget of $75 million

Sales Promotions: $12.5 million-Coupons for Discounts-Free Sampling-Sweepstakes

EXPENSE BREAKDOWN:Advertising: $ 62.5million-Billboard: $2.5 million-Commercials: $50 million

-SuperBowl: $5 million-Prime time TV: 45 million

Two Celebrity Endorsements: $5million each

Commercial per 30 sec exposure: $50,000

The Calculation

With 100 million bottles sold,

$5 per bottle,

$500 million net sales

15% of Sales =

Budget of $75 mil

Action PlansCelebrity Endorsements and Brand Ambassadors

SuperBowl advertisement

TV advertisements

Billboard advertisement

Social Media Sweepstakes

#SeeTheNewLyteACTIVE-lyte

Why let yesterday’s

activities stop you today?

IBEV for Celebrity Endorsement

Unit Price = $5Unit Variable Cost = $2.5Unit Margin = $5-$2.5 = $2.5Endorsing Selena Gomez and Rob Gronkowski = $10 million ($5 million each)IBEV = Incremental Cost/Unit Margin

= $10 million/$2.5 = 4,000,000 bottles.

#SeeTheNewLyte#SeeTheNewLyte#SeeTheNewLyte#SeeTheNewLyte

IBEV for Advertisements

Unit Price = $5Unit Variable Cost = $2.5Unit Margin = $5-$2.5 = $2.5Advertisements Cost = $52.5 millionIBEV = Incremental Cost/Unit Margin

= $52.5 million/$2.5 = 21,000,000 bottles.

Market Demand

Assumptions:Total Adults: age 20-64 years (United States)

= 167,449,000“Active Adults” (subset): (25%)(167,449,000) =

41,862,250Year One Customers (subset): (16%)

(41,862,250) = 6,697,960Unit Price: US$5.00Average Spending on ACTIVE-lyte per year:

US$10020-1 liter bottles per year at $5 per bottle = 5

gallons per yearMarket Demand = (6,697,960)(US$5)(20) =

US$669,796,00016%

2.5% 13.5%

Required to calculate market demand:Predicted No. of Customers in

year oneAverage No. Sold per

CustomerUnit Price

Sensitivity Analysis

Assumptions:Total Adults: age 20-64 years (United States) = 167,449,000

“Active Adults” (subset): (25%)(167,449,000) = 41,862,250Year One Customers (subset): (32%)(41,862,250) = 13,395,920

Unit Price: US$3.00Average Spending on ACTIVE-lyte per year: US$100

20-1 liter bottles per year at $5 per bottle = 5 gallons per yearMarket Demand = (13,395,920)(US$3)(20) = US$803,755,200

FLAWED Method

32%

2.5% 13.5% 34%

Assumptions based on historical data: ● Aggregate Income Statement - NOT to be confused with incremental analysis● Sales and COGS (Variable Costs): Constant Growth by $600m and $110m per year, respectively

○ Incremental increase in net sales by $500 million (100m. bottles X $5)○ ALL Expenses (COGS, Fixed, Miscellaneous): Remain relatively constant, despite random fluctuations and inflation.

● (Total) Net Earnings: $3,683,000,000 by end of 2016

Abbott 2016 Annual Report

Consolidated Statement of Earnings(in millions) Year Ended December 31 ___________2016 __2015_________Net Sales___________________________ 22,347 20,847________Cost of Products Sold 9438 9328Amortization of Intangible Assets 500 520Research and Development 1350 1350SG&A 6500 6500________Total Operating Costs & Exp. ____________17,788 17,698_______Operating Earnings 4559 3149Interest Expense 150 150Interest Income (80) (80)Net loss on extinguishmentof debt - -Net foreign exchange (gain) loss (20) 40Other (income) expense, net _____________75 45________EBT - Continuing Operations 4434 2994Taxes - Continuing Operations ________ _1300 900_______Earnings - Continuing Operations 3134 2094Earnings - Discounted Operations 550 550_______ Net Earnings _______ 3684 2644_______

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