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    Epgp MM1 Session 09 20 09 20 PDF

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    Koneru Krishnakant
    1) The document discusses marketing strategies for Metabical, a new weight loss drug, including target segment identification, value proposition development, pricing considerations, packaging options, and demand forecasting methods. 2) Key questions posed include determining the appropriate price for Metabical and optimal pack size to meet business goals. 3) Demand forecasting for Metabical is suggested to use an NQP approach factoring the number of potential customers, estimated quantities purchased based on treatment periods, and price.

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    Epgp MM1 Session 09 20 09 20 PDF

    Uploaded by

    Koneru Krishnakant
    23 views49 pages
    1) The document discusses marketing strategies for Metabical, a new weight loss drug, including target segment identification, value proposition development, pricing considerations, packaging options, and demand forecasting methods. 2) Key questions posed include determining the appropriate price for Metabical and optimal pack size to meet business goals. 3) Demand forecasting for Metabical is suggested to use an NQP approach factoring the number of potential customers, estimated quantities purchased based on treatment periods, and price.

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    Manjunath_Metabical_Positioning_Communication_Strategy

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    EPGP_MM1_SESSION_09_20_09_20.pdf

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    1) The document discusses marketing strategies for Metabical, a new weight loss drug, including target segment identification, value proposition development, pricing considerations, packaging options, and demand forecasting methods. 2) Key questions posed include determining the appropriate price for Metabical and optimal pack size to meet business goals. 3) Demand forecasting for Metabical is suggested to use an NQP approach factoring the number of potential customers, estimated quantities purchased based on treatment periods, and price.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    23 views49 pages

    Epgp MM1 Session 09 20 09 20 PDF

    Uploaded by

    Koneru Krishnakant
    1) The document discusses marketing strategies for Metabical, a new weight loss drug, including target segment identification, value proposition development, pricing considerations, packaging options, and demand forecasting methods. 2) Key questions posed include determining the appropriate price for Metabical and optimal pack size to meet business goals. 3) Demand forecasting for Metabical is suggested to use an NQP approach factoring the number of potential customers, estimated quantities purchased based on treatment periods, and price.

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    of 49

    MARKETING

    DEEPAK S KUMAR MANAGEMENT


    SESSIONS – 17 & 18
    EPGP -12
    METABICAL : POSITIONING & COMMUNICATIONS
    STRATEGY
    QUESTIONS TO PONDER

    1) What is the Target Segment and Value Proposition for the Metabical?
    Using the Marketing Strategy/ Brand Positioning Strategy Statement
    template discussed earlier in the class, develop Marketing strategy statement
    for Metabical. Using the research data/ case facts, justify your strategy.
    2) What do you think would be the better advertising message for
    consumers, for caregivers? How is it aligned to the strategy articulated by in
    the statement above.
    3) Comment on the proposed marketing program and examine what is
    their role in marketing of Metabical.
    THREE CIRCLE POSITIONING FRAMEWORK

    CONSUMERS’ COMPETITORS’
    NEEDS OFFERING
    Their
    POD

    POP
    Our
    POD
    Whole?
    White space?
    Benefit consumers
    do not need?

    COMPANY’S
    OFFERING
    PROMOTION MIX STRATEGIES
    PROMOTIONAL MIX STRATEGIES
    TRADITIONAL APPROACH (PUSH)

    Health Care
    Pharma Co. Patients
    Providers
    Sales Force

    METABICAL APPROACH (PUSH & PULL)

    Health Care
    CSP Patients
    Sales Force Providers

    DTC ad campaigns, PR, Social and Virual Marketing


    ELABORATION LIKELYHOOD MODEL
    MEDIA STRATEGY

    • Mass Media vs. Addressable


    Media
    • Synchronous vs. Asynchronous
    Communication
    • Owned vs. Paid Media
    • Other - controlled Media vs.
    Consumer - controlled Media
    PRICING STRATEGIES
    DISCRIMINATORY PRICING
    WHAT IS PRICE?
    • Price is the amount of money charged for a
    product or service. It is the sum of all the values
    that consumers give up in order to gain the
    benefits of having or using a product or service.
    • Price is the only element in the marketing mix that
    produces revenue; all other elements represent
    costs
    3 KEY DECISION AREAS
    • How to Fix the Price?
    • How to Adapt the Price?
    • How to Initiate & Respond to Price
    Changes?
    CUSTOMER PERCEPTIONS OF VALUE
    CUSTOMER PERCEPTIONS OF VALUE..2
    THE 5 C’S OF PRICING
    1ST C: COMPANY OBJECTIVES

    Company Objective Examples of Pricing Strategy Implications


    Profit-oriented Institute a companywide policy that all products must provide
    for at least an 18 percent profit margin to reach a particular
    profit goal for the firm.

    Sales-oriented Set prices very low to generate new sales and take sales away
    from competitors, even if profits suffer.
    Competitor-oriented To discourage more competitors from entering the market, set
    prices very low.
    Customer-oriented Target a market segment of consumers who highly value a
    particular product benefit and set prices relatively high
    (referred to as premium pricing).
    2ND C: CUSTOMERS
    DEMAND CURVES

    Not all are downward


    sloping

    Prestigious products or
    services have upward
    sloping curves
    PRICE ELASTICITY OF DEMAND
    3RD C: COST - BREAK EVEN ANALYSIS AND
    DECISION MAKING
    4TH C: COMPETITION
    STEPS IN SETTING PRICE
    1. Selecting the pricing objective

    2. Determining demand

    3. Estimating costs

    4. Analyzing competitors’ costs, prices, and offers

    5. Selecting a pricing method

    6. Selecting final price


    PRICING METHODS
    • Markup Pricing (unit cost/ (1-desired return on
    sales))
    • Target Return Pricing (unit cost + (desired
    return*invested capital/ unit sales))
    • Perceived Value Pricing
    • Going-Rate Pricing
    • Sealed-Bid Pricing
    PRICING METHODS
    • Discounts and Allowances (Cash/ Quantity/ Seasonal)
    • Promotional Pricing (Special event/ financing/ Longer
    payment terms/ Warranty & service contracts)
    • Discriminatory Pricing (Customer-segment pricing,
    Product-form, Channel, Location,Timing)
    • Product Mix Pricing (optional-feature pricing, captive-
    product pricing, 2-part pricing, product bundling)
    PRODUCT LINE PRICING
    CAPTIVE PRODUCT PRICING
    PRODUCT BUNDLE PRICING

    BY PRODUT PRICING
    INITIATING PRICE CHANGES
    • Initiating Price cuts
    • Low-quality trap
    • Fragile MS trap
    • Shallow-pocket trap
    • Initiating Price increases
    • Delayed Quotation Pricing
    • Escalator Clauses
    • Unbundling
    • Reduction of Discounts
    • Others (Shrink the product, less expensive
    raw material, reduce product features/
    services, less expensive packaging material)
    PRICING ARITHMETIC

    • Fixed costs:
    • Costs that remain fixed regardless of the volume of production/ sales
    • Variable Costs:
    • Costs directly traceable to volume activity
    • Total Costs:
    • TC= FC+VC
    • Contribution:
    • Funds available to seller after deducting the variable costs associated with it from the revenue
    • Common reference is Unit Contribution – contribution per each item sold.
    • Eg. Price is Rs. 100. Cost of the item is Rs. 30 per unit. Rs. 3 costs to transport the unit. 5%
    commission to sales people for each item sold. • The variable costs would be 30+3+5. Unit
    Contribution would be Rs. 62 (100-38)
    PRICING ARITHMETIC..2

    • Break-even:
    • Volume sold is just enough to pay for total costs (Variable+Fixed)
    • Eg. if fixed costs are Rs. 100000 and contribution is Rs. 62, BE =Fixed costs/ unit contribution
    = 1613 units
    • Gross Marketing Contribution (GMC):
    • GMC= Unit contribution* volumes sold
    • Eg. 2000 units sold (more than break-even vol). GMC= 62*2000= Rs. 124000
    • Profit Impact/ Net Markering Contribution (NMC):
    • NMC = GMC – Fixed Costs
    • Also referred as Profit impact
    • Eg. NMC = 124000-100000 = Rs. 24000
    PRICING ARITHMETIC..3

    • Market Share
    • Suppose, the total market size is 10000 units and current
    sales is 2000. ie. MS=20%
    • As brand manager, you decide to increase the advertising
    expenditure by Rs.50000.
    • In order to maintain the NMC, MS goal has to be 28.06%
    (assuming that market is stable) as additional 806 units
    would be required to cover Rs. 50000 @ Rs. 62 unit
    contribution
    PRICING ARITHMETIC..4

    • Margin:
    • Margin is similar to Unit contribution
    • In context of Reseller
    • Markup is same as margin. Expressed generally in %. However there
    could be different interpretation depending on the base (cost or price)
    • Manufacturer generally considers cost as base while a merchant/
    reseller considers price as base.
    • Markup price = Unit Cost / (1-markup)
    • Eg. Unit cost is Rs. 100, how much should be the price to get reseller
    the margin of 20% on price? Rs. 125
    PEN EXERCISE

    • A ball-point seller has following info:


    • Plastic tubes (top & tip) costs = 0.12 pu
    • Ink costs = 0.02 pu
    • Direct labour = 0.02 pu
    • Advertising = 80000
    • Managerial and staff salaries = 200000
    • Factory overheads = 120000
    • Sales people’s commission = 10% of selling price
    • Total Market size = 10000000 pieces at around selling price of 40 paisa
    PEN EXERCISE..2

    • Compute:
    • Unit contribution
    • Break-even volume in units
    • Share of total market to break even
    • Total NMC for 3 mn. Sales
    • Volumes sales required for NMC of Rs. 500000
    PEN EXERCISE..3

    • Selling Price per unit = 0.40


    • Variable cost = (0.12+0.02+0.02)+0.04 sales commission = 0.2
    • Fixed costs = (120+200+80)000 = 400000
    • Unit contribution = 0.4-0.2 = 0.2
    • Break-even volume = 400000/0.2 = 2 mn.
    • Break-even volume MS = 10 mn/2mn = 20%
    • NMC (profit impact) for 3 mn. Sales. Which is 1 mn. More than break even. Every unit
    contribution adds to NMC. 1mn*0.2 = 200000
    • Volume required = (FC + Target Profit impact)/ u c = (400+500)000/0.2 = 4.5 mn
    METABICAL : PRICING, PACKAGING,
    DEMAND ESTIMATION
    QUESTIONS TO PONDER

    • What are the benefits of Metabical?


    • Who is the target segment?
    • What price should Barbara keep for Metabical?
    • What is the packsize?
    • Price that Meets the Goal
    METABICAL – WHAT'S THE VALUE?

    • Target Segment: Over weight (BMI 25-30)


    • Competition
    • No prescription drug
    • FDA Approved OTC Drugs
    • Liver failure reports
    • Herbal dietary supplements
    • No FDA approval, Food safety concerns
    • Ephedra – sudden cardiac deaths!
    • Deceptive claims/ Unsubstantiated claims - $25 mn. Settlement
    • Weight control programs
    • Pre-packaged diet foods
    • Exercise Programs and Gymnasium
    METABICAL – WHAT'S THE VALUE?..2

    • FDA approval – credibility


    • Prescription drug – additional credibility
    • Fewer side effects
    • Clinically proven weight-loss results
    • Better weight maintenance (with 10% of results for 3 years)
    • Low dose – requires only one pill a day
    DEMAND FORECASTING

    • NQP approach
    • Number of individuals *Quantities purchased* Price
    • Optimum treatment period – 12 weeks
    • Goals achieved and after that only minimum loss
    • Packaging could be 1 (7), 2 (14), 3 (21), 4 (28), 8 (56), 12 (84) week treatment
    • Estimation of potential = Number of individuals with need
    • Overweight, trying to lose weight, comfortable using drugs to lose weight
    • Estimated penetration
    • Tied to marketing plan
    • Pricing, availability and communication/ promotion
    • Likely to increase in following years
    • Estimation of Quantities
    • Repeat purchases
    • Loyalty – Exit barriers/ switching
    • Superiority of value
    • Test market/ other benchmarks / experience
    DEMAND FORECASTING..2

    • Method 1 & 2:
    • 230 mn. 2008 population* 34% overweight = 78,200,000
    • Growth rate of Population for next 5 years - CAGR of over-weights’
    population from 1999-2008
    • A = P(1+R)^N
    • Narrow down to target audience
    • Method 3:
    • 4.3mn*30%
    • Growth rate of segment
    PRICING METHODS

    • Option 1: Going-Rate Pricing /Competitive Benchmark


    Oriented Pricing
    • Compare with Alli
    • Option 2: Markup Pricing/ Cost Plus Pricing
    • Standard margin of CSP
    • (unit cost/ (1-desired return on sales))
    • Option 3: Perceived Value Pricing/Demand Oriented Pricing
    • How much consumers are willing to pay?
    • Target Return Pricing
    • (unit cost + (desired return*invested capital/ unit sales))
    THANK YOU

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