METABICAL
-
Upload
robert-young -
Category
Documents
-
view
552 -
download
6
description
Transcript of METABICAL
Demand/Pricing Formulation Executive Summary:
There are three main demand strategy’s that make reasonable sense to asses the demand for
Metabical within the first five years. To get the most out of each demand scenario the most
optimal pricing structure was applied to each. Scenario 2 was chosen with the lowest pricing
structure to market to a wider audience during the launch with and affordable price. Pricing
can always been tweaked and justified if the product is successful and there is respective
demand by the consumer base.
Scenario #1
The first scenario narrows down the target market by the follow process: 1st take the # of
overweight individuals in the United States (71.06 million), 2nd
reduce 71.06 million by 35%
which is the estimated population trying to lose weight, 3rd
reducing this by 15% which is the
amount comfortable with weight loss drugs which is 3.73 million, 4th
Metabical will capture
10% in year one, 15% in year 2, 20% in year 3, 25% in year 4, and 30% in year 5. The
Lowest pricing structure was chosen because the population chosen was very general and
may contain a large percentage of people who are price sensitive. I believe this is not an
effective demand function for Metabical because the audience is too broad. This model also
in theory will capture a small % of the target market in relation to the other models which
makes it very difficult to attain a positive ROI. This model will only bring in 185 million in
revenue and is not acceptable to create a 5% ROI. This is not even enough to cover the R&D
and marketing costs.
Year Overweight
In US
Population
Trying to
Lose Weight
(35%)
Comfortable
With
Weight
Loss drugs
(15%)
Medib
ical
Will
Captu
re
Population
Captured
One
Supply(20
%*24.80)
Two
Supply(60%
*49.60)
Full
Cycle(20%*74.40)
1 71,060,000 24,871,000 3,730,650 10% 373,065 1,850,402 11,102,414 5,551,207
2 71,060,000 24,871,000 3,730,650 15% 559,598 2,775,604 16,653,622 8,326,810
3 71,060,000 24,871,000 3,730,650 20% 746,130 3,700,805 22,204,829 11,102,414
4 71,060,000 24,871,000 3,730,650 25% 932,663 4,626,006 27,756,036 13,878,018
5 71,060,000 24,871,000 3,730,650 30% 1,119,195 5,551,207 33,307,234 16,653,621
Profit- 185,040,200 ROI -53% in 5 Years
Scenario #2 (Chosen Scenario)
The Second Strategy is more aggressive which takes the US population (209 million) and
takes 34% of it who are people who are overweight which comes out to 71.06 million. Next
12% which is the target for Metabical is taken out which comes out to 8.527 million.
Metabical will capture 10% in year one, 15% in year 2, 20% in year 3, 25% in year 4, and
30% in year 5. The lowest pricing structure was chosen because this demographic may look
into other methods to lose weight such as Jenny craig. This model produces a ROI of 5.7%
which meet the requirements of upper level management on making a 5% ROI on 400million
in research and development costs. The pricing structure is the low which will lower the
financial risk to customers. This gives the product a better chance to sell its predicted volume.
This studied demographic contains individuals who are ready to take a pill to lose weight.
Marketers cannot always predict how a specific demographic will react to a product so a
slightly broad approach will lead to opportunity for a huge amount of revenue from not only
the target market but other similar markets. (possibly a % of overweight women of other ages
may buy into the product)
Ye
ar US Pop
34%
Overweight
12% Target
Market
Meta
bical
Capt
ures
Captured
One
Supply(20%
* $24.80)
Two
Supply(60% *
$49.60)
Full
Cycle(20% *
$74.40)
1 209,000,000 71,060,000 8,527,200 10% 852,720 $4,229,491 $25,376,947 $12,688,474
2 209,000,000 71,060,000 8,527,200 15% 1,279,080 $6,344,237 $38,065,421 $19,032,710
3 209,000,000 71,060,000 8,527,200 20% 1,705,440 $8,458,982 $50,753,894 $25,376,947
4 209,000,000 71,060,000 8,527,200 25% 2,131,800 $10,573,728 $63,442,368 $31,721,184
5 209,000,000 71,060,000 8,527,200 30% 2,558,160 $12,688,474 $76,130,842 $38,065,421
Profit: 422,949,120
ROI: 5.7% In 5 Years.(Bottom Line)
The 5.7% ROI in this scenario shows steady growth for Metabical and is consistent with the
goals of management. In this pricing scenario a feasible number of potential customers will
be targeted and captured. It is important to analyze the demographics of what kind of
customers are purchasing each year and tweak the demand forecast or marketing strategy if
necessary. For the initial forecast a broad approach is taken with the goal of matching the 5%
ROI on the 400 million dollar research and development costs. The forecast was built in
Microsoft excel and can easily be modified if management feels the need to tweak any of the
factors.
Scenario #3
The third scenario targets Educated Females from ages 35-65 who are overweight (BMI of
25-30) which equates to a population of 4.3 million people. In year one Metabical expects to
have a capitalization of 30%, then 35%, 40%, 45%, 50% respectively in the following 4
years. The highest tier of pricing was chosen due to the demographic selection. Females who
are 35-65 have the money to purchase weight loss products and will fork over the money for
a prescription. The prescription nature of the product justifies the high tier of pricing as well
as the coveted FDA approval. The ROI comes out to 67% which is a best cast scenario. I
believe the pricing structure and demand forecast is justified because this in many cases will
be a life saving product, and a pioneer in prescription weight loss. The problem with this
scenario is that the ROI seems to be unrealistic when management is only expecting a 5%
ROI. Capturing 50% of such a specific market over 5 years may be unreasonable and contain
a fundamental flaw. Of course, the price could be lowered but we feel that this is an
appropriate price for the demographic and lowering the price will affect the brand image of
an elite product in the target market.
Ye
ar Market %
Capitalizatio
n
One
Supply(20%*74.
80)
Two
Supply(60%*149.6)
Full
Cycle(20%*224.2)
1 4,300,000 30 1,290,000 $19,298,400 $115,790,400 $57,895,200
2 4,300,000 35 1,505,000 $22,514,800 $135,088,800 $67,544,400
3 4,300,000 40 1,720,000 $25,731,200 $154,387,200 $77,193,600
4 4,300,000 45 1,935,000 $28,947,600 $173,685,600 $86,842,800
5 4,300,000 50 2,150,000 $32,164,000 $192,984,000 $96,492,000
Profit: 1.26 Billion
ROI: 215% (Unrealistic)
Marketing Communications Executive Summary:
Metabical, a prescription weight loss pill will be marketed to overweight women in the age
group of 25-65. There are two main groups that Metabical is targeting to- end users and
doctors. The powerful message that being overweight can lead to life threatening diseases and
that Metabical can help will be the focus of the marketing message to both end users and
Doctors. Tracking and control after the launch is a key component to a successful venture for
Metabical.
Target Market
Metabical will be marketed to overweight women of the age from 25-65. According to a 2007
marketing survey it was determined that women 10% more women then men are dissatisfied
with their current weight, 20% more women then men visited a healthcare provider for a
yearly physical, 15% more women then men want to change their behavior to live a healthy
lifestyle, 30% more women then men failed to lose weight in the past 5 years, 30% more
women then men were dissatisfied with current weight loss options on the market. These
results make it clear that women are the most likely gender to purchase Metabical. The age
group of 25-65 is justified because these women have expendable income which would allow
them to purchase an expensive prescription weight loss drug. It is important to maintain a
healthy lifestyle and diet when taking Metabical; this is important to understand in order to
have successful weight loss with Metabical . The women of these demographic are
“knowledgeable about the importance of nutrition and exercise, they are ready to make a
change.” The women of this demographic are also “focused on reclaiming former weight they
are motivated and willing to alter current behavior” These psycho graphic behaviors are
consistent with the marketing message of Metabical. This age demographic is quite large but
it is necessary to target all of these potential customers in order understand who is buying into
the product as the marketing plan evolves over the next few years. We anticipate that other
demographics will also purchase the product and this is a major consideration in the ensuing
years in what the final evolution of the product will be.
Marketing Communications
Metabical is a unique product to market due to the fact that a message has to be conveyed to
the end user as well as health care providers who recommend and write prescriptions
(doctors). The target market as stated above is overweight women aged 25-65. It is important
to reach the market through a variety of venues to instill the importance of purchasing the
prescription. A mix of Print media, television, radio and online advertising will be exploited
to reach the majority of the target market. Print advertising will come in the form of
pamphlets and other informative documents that will be placed at medical clinics, weight loss
facilities, doctors offices and other relevant institutions that promote weight loss and a
healthy lifestyle. They must instill a sense of urgency to the end user, that the time to act is
now and they should contact their health care provider to learn more about this new FDA
approved weight loss drug. Online Advertising is effective for targeting the specific target
market of women who are searching for weight loss supplements and are of age 25-65. The
success of these campaigns can be measured by the amount of impressions the advertisement
has received as well as successful requests for more information when an advertisement is
clicked an an interaction takes place. Television and radio will be utilized weeks before the
drug is released to the public in order to create hype and a viral marketing effect. The types of
channels that the advertisements will be shown are news channels, channels relating to health
and also channels that women watch frequently in order to reach our target market.
Being overweight is a serious health concern that leads to life threatening diseases, judgment
from society and an overall lower quality of life. The marketing message to the target market
must address this point. “Those extra 20 pounds could be killing you. Being overweight leads
to heart disease, high blood pressure, diabetes, and gallbladder disease. Its time to get healthy
– Let Metabical guide you to a happier, healthier you.” This is a powerful message that will
speak to these women who are serious about losing weight and is consistent with our goal to
spread awareness of the dangers of being overweight. It is also essential to make sure
customers as well as doctors are aware of the coveted FDA Approval because people will be
hesitant to buy the drug if they are unaware of FDA’s approval.
Targeting the professional and medical community requires a different approach. We will
utilize print ads in leading medical publications (journal of the American medical association)
and interactive ads adjacent to online physician resource information (PDR.net) to raise
awareness about the drug and its benefits. The marketing communication geared towards
professionals will be formulated to educate them about the safety, research and development,
and compliance. (proper way to prescribe Metabical) The marketing message chosen is:
“Atherosclerosis, coronary artery disease, high blood pressure, diabetes, and gallbladder
disease. Your overweight patients are dying for help. Introducing Metabical – FDA Approved
Weight loss drug.” This message has all of the elements of a successful advertising campaign
for Metabical. Like the consumer message, this message is consistent in that it is meant to
shock the doctor by listing the actual diseases associated with weight loss. The end of the
message gives credibility to the product by announcing that the FDA approves the drug. It is
essential to be equally successful in the marketing to doctors as patients because if the
Medical Community accepts the drug as an effective and safe method of loosing weight,
more and more doctors will recommend it to patients and positive PR will follow.
Support Program
A comprehensive support program will be implemented to enable customers to receive the
support they need during their weight loss journey. The center of the support system is the
website that will be developed and will include: Reference materials, a weight loss tracker,
food diary, nutritional and calorie calculator and a forum for personal support. Other weight
loss programs have support programs that have proven to be successful in the past, therefore
it is essential to include this component during the launch of the product. The website will
include Social media functionality including a Twitter and Facebook where customers and
doctors can talk about their successes when taking Metabical. It is important to model the
program after other successful weight loss supplements to make sure no important aspect is
missed: An internal case study of Alli, the OTC weight loss supplement will be conducted by
the marketing department to gain a greater understanding of their support program. Goals for
the support program will be tracked and controlled including extracting data from doctors
about how the patient found out about Metabical as well as the success of interaction with the
website and social media initiatives.
Positioning
It is important to determine Metabical’s positioning in the weight loss market in order to
carry out a sound marketing plan. Metabical is different then over the counter weight loss
supplements because it can only be obtained via prescription. This gives an image of an elite
product that is effective, FDA approved and can only be prescribed a doctor. People trust
their doctors and the FDA which gives Metabical a distinct advantage from over the counter
wight loss products. Women who have not has success in the past with over the counter
weight loss supplements are ready for a prescription strength option such as Metabical. After
5 years on the market Metabical should be considered the most trusted, effective and #1
prescribed weight loss drug on the market.
Time line Prior To Launch
1 Year Prior → Develop Advertising Campaigns and Marketing Materials
6 Months Prior → Utilize Focus groups to test effectiveness of chosen campaign
3 Months Prior → Direct Marketing to Doctors and healthcare providers
Day of Launch → Press Release, Viral Media Campaign
After Launch → Tracking and Control – Make sure the target demographic is being reached.
Every year analyze effectiveness of price, packaging, and target market.
Budget
After analyzing the budget it has been concluded that the money allocated is appropriate. The
marketing budget should decline by a small percentage every year as the product gains brand
awareness and receives free PR from blogs, news mediums, and word of mouth
recommendation from customers and doctors.