Datril should pursue a modified version of strategy #2 and position themselves as a low-priced alternative to Tylenol. However, we recommend setting the trade price at $1.39 and the retail price at $2.55 per bottle. Below is an in-depth analysis of Datril’s target consumers, Datril’s position in the market, and the benefit of advertising in the mass media channel over historical forms of advertising in the industry.

Target Consumers:

Using a benefit based segmentation model (Exhibit A), Datril should target consumers who are “self-diagnosed”. This target group consists of both consumers who are currently in pain and do not have time to visit a physician and the consumer who plans ahead and purchases pain relievers for themselves and/or families even though they are not currently in pain. Per our analysis, these consumers place a high value on the product’s effectiveness, health-benefits, speed, price, and reliability. These values are consistent with Datril’s positioning and provide a robust target market in the rapidly growing acetaminophen-based market segment.

Positioning:

By positioning themselves as the low-priced alternative to Tylenol, Datril provides multiple points of parity with the established Tylenol brand and differentiates themselves on the single-benefit of price. Since the acetaminophen-based market represents only 10% of the total analgesics market and is dominated by the Tylenol brand, Datril can gain market share by showing the target consumer that their product shares the same functional benefits of Tylenol and provides consumers with a reason for choice based on price.

We recommend Datril sets their trade price at $1.39 and retail price at $2.55. Adjusting these prices allows Datril to match the margin Tylenol is providing to the retailer while still positioning themselves as the low-priced alternative to the end consumer. This