...Marketing Assignment YP53B – Metabical Price M. Ray Akbar Mutalibov 29115113 For the case study of Metabical Price, I would recommend Option 2 ($125 in 4-week supply) as the price recommendation. This recommendation decision was mostly made of target return pricing, but combined with a little bit element of value-based pricing and psychological pricing. The reason I would choose the target return pricing as a main tools to pick the price is because the CSP’s Metabical informed us that they wanted to achieve a minimum 5% ROI within five years of the new product’s launch. Thus, target return pricing was picked since this kind of pricing would set a price based on the achieved target of ROI. The reason why I include value-based and psychological pricing would be explained later in paragraph below. Based on the calculations from Metabical Worksheet, I get several different results of ROI in 5 years, based on different method and different manufacturer gross margin. For the ROI’s manufacturer gross margin of $24,8, I have 210% (Method 1) and -26% (Method 2). For the ROI’s manufacturer gross margin of $58,13, I have 627% (Method 1) and 74% (Method 2). For the ROI’s manufacturer gross margin of $74,8, I have 835% (Method 1) and 124% (Method 2). There were 2 different method in my worksheet calculation, the first one is Method 1 which taken the US’s overweight population who actively trying to lose weight and comfortable using diet pills into potential customer. The second one...
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...Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug 1- Discuss Metabical’s points of differentiation compared to current weight-loss options? After 10 years of testing and spending a significant amount in research and development. Cambridge Sciences Pharmaceuticals (CSP) discovered one of the best weight- loss drug that called Metabical. Metabical has unique characteristics that make it different in market. People are always concerned about the side effect of any drug and sometime they preclude taking drug just because they are doubtful. Metabicals is differentiated by the Food and Drug Administration (FDA) approval. It is the first and only prescription drug that received FDA approval to meet the needs of consumer. Negative side effects disgrace many previous prescription weight loss drugs and most people become more cautious of using any weight loss drugs. While, metabicals has very minor side effects, it becomes the optimum option to who are concerned about the negative consequences. Metabicals gained consumers’ confidence who are looking to effective method to reach a desirable weight and improve their overall health. Metabical effectiveness is one of the keys that drive the product to success. The study shows people who are taking Metabical loss an average of 26 pounds, while other who is using a placebo loss an average of 6 pounds. One of the differences is Metabical maintained weight loss levels within 10% of the clinical trials...
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...Metabical Pre-Launch Opportunity There is an opportunity to address a few potential issues in the upcoming marketing campaign for CSPs’ newest weight loss drug Metabical. CSP needs to be certain that we are addressing the right opportunities leading up to our launch. As the Director of Marketing I have been asked to present a brief overview identifying issues with our current launch strategy. The following report represents the area that has been identified as the biggest opportunity that we are faced with moving forward. The context of this report is broken into separate categories’ that will each be addressed. Ultimately the goal of the report is make certain that we all are on the same page and agree that the issue at hand is the one we should attack. The most appropriate way to frame this problem/opportunity is structural (Schacter, 2014). Opportunity/Problem that is Import to CSP With any new product opportunity that our company brings to market there are always some key identified items that need to be addressed prior to that launch. The main problem we currently face is the pricing configuration of the product Metabical. We are seeking to exploit a multi-million dollar market with this new product. Statistics indicate that a significant number of Americans are overweight. For instance, by the year 2008, approximately 65% of the whole two hundred and thirty million adults in the country were obese (Quelch & Becham, 2010). It affects both the men and women. Research...
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...Reinald Nathaniel 29115153 – Syndicate 1 Metabical Case According to the data and our calculation, there are two methods that could be used to be consider in Metabical’s pricing strategy. First we would narrow the population into a niche market by filtering the numbers. It is done by taking the number of people who tries to lose weight, then the next filter that we put is: to sort out by the number of people who are comfortable in using pills (Method 1). The other method is to get the number from people who wants to consume drugs with prescription (Method 2). Year | Americanswith 25>BMI>30 | Population Trying to Lose Weight (35%) | Comfortable using diet pills (15%) | Medibical Will Capture | Population Captured | Sales | 1 | 71,060,000 | 24,871,000 | 3,730,650 | 10% | 373,065 | 37,300,381.73 | 2 | 71,060,000 | 24,871,000 | 3,730,650 | 15% | 559,598 | 55,950,572.60 | 3 | 71,060,000 | 24,871,000 | 3,730,650 | 20% | 746,130 | 74,600,763.47 | 4 | 71,060,000 | 24,871,000 | 3,730,650 | 25% | 932,663 | 93,250,954.34 | 5 | 71,060,000 | 24,871,000 | 3,730,650 | 30% | 1,119,195 | 111,901,145.20 | | Total sales | 373,003,817.34 | | Total Investment | 488,730,000 | | ROI | -23.68% | METHOD 1: Total investment (marketing costs, manufacturing overhead $ 1.2 million per year, R&D with sunk cost $400 million). ROI = (total sales-total investment)total invesmentx 100% METHOD 2: Year | Americanswith 25>BMI>30(34% overweight) | Population gotothedoctortorequestprescription...
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...Do you remember… – CURRENT SOLUTIONS – ™ WEIGHT LOSS DRUGS ™ DIET PLAN ™ EXERCISE PLAN ™ WEIGHT MANAGEMENT SUPPORT PROGRAM BETTER SOLUTION – Group 7 -AJINKYA-DIVYANGANA-KETAKI-SUHAIL-TEAM- OBJECTIVES: – ™ Product benefits ™ Target customers ™ Packaging strategy ™ Forecasting demand ™ Pricing strategy ™ Profitability and ROI Metabical – only through a ™ FDA approved and can be bought prescription ™ Lesser negative effects as compared to other available drugs ™ Only 1 tablet per day ™ Promotes a healthier lifestyle (behavioural modifications) ™ Came with a support plan ™ First drug in the overweight segment Our priority – ™ Overweight females (BMI 25-30) ™ Age group of 35-65 years ™ Income level of $50,000 - $80,000 ™ College-educated ™ The group of women wanted to lose 10- 30 pounds ™ Ready to change their lifestyle to stay healthy “ I want to make a difference to my life.” Factors affecting packaging – ™ To ensure the value addition of the consumer is maximum ™ Target customers’ willingness to spend ™ Likelihood of the completion of the program ™ Customer perception of the brand ™ Cost benefits in packaging cost ™ Reaching breakeven point ™Package size decision : 12 weeks (84 pills) Why the 12 week program – ™ The target market is women who are relatively price inelastic. So, they don’t mind paying whatever price is set ™ Usually when the consumer pays so high she is willing to try the drug...
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...Project Part 4 11/13/2012 “Consumers Change Their Behavior in Response to the Gas Prices” The article starts by talking about how higher gas prices and higher tolls ultimately did what Mayor Bloomberg’s ambitious congestion pricing was supposed to do. When gas prices climbed to more than 4 dollars per gallon, traffic on bridges and tunnels dropped 4.7 percent compared with the previous years. While at the same time, subway, bus and commuter train riders increased by 6.5 percent. From Manhattan to New Jersey there was a 9 percent increase of people taking the train. That goes to show you that pricing does matter and people do respond to it. And do to the higher gas prices and people driving less tolls took a major hit 4 million below budget. The fact that the price elasticity of demand for a product such as gas will be larger the longer the period of time involved. It takes buyers time to adjust their routines as a result of a change in price. Consumers began to explore alternatives to driving when gas rose over 4 dollars a gallon. So if high gas prices persist consumers will make adjustments, such as driving less and taking public transportation more. Those demand for gasoline will become the more elastic. There for demand becomes more elastic other longer period of time and the quantity of gas demanded will decline further. Thinking Critically 1. I don’t 100% agree with Joe, yes sure initially you’ll make up the loss in quantity sold with the higher price. But if...
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...Resellers Benefits of Becoming a Reseller Reselling new products to an existing customer base is a quick and easy way to grow your business and maximise the revenue potential for each existing customer. Adding new products or services to your business can help you win new customers and expand into new territories. An expanding business portfolio increases value benefits for all customers and increases customer satisfaction experienced, encouraging repeat sales and loyalty. If you are considering starting a business can you become a reseller of a product or products that have already been researched and developed significantly reducing your capital outlay and risk. If you are a small business or are starting out in business you can resell products for larger companies that have the resources to support and maintain them after the point of sale enabling you to increase your revenues without increasing your ongoing work load. The ability to resell products or services online with out the need for stock or premises means makes it possible to start as business as a reseller from home with virtually no risk or investment. By finding merchants on The Reseller Network you may be able to resell for international companies at better rates enabling you to maximise your revenue. The cost of marketing to generate product and brand awareness is reduced by the collaboration of reseller partnerships promoting the same products or services. How to become a reseller Register as a reseller with...
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...really enjoy the driving experience Successful businessman and governor who usually lie in better neighborhoods Trucks and Buses SCANIA, MAN Target: big enterprise and government Public transportation group Financial Services: Target: conservative people who paying closer to the total cost of mobility People who decide just to use a car not buy one The car buyers who need financing and insurance Price Volkswagen has consistently acted with a premium pricing strategy. Their products typically have a high price, on average 10 percent higher than competitors (reference: consumer report by Volkswagen, 2012); however, the return is more upscale driving and ownership experience. In recent years, their pricing strategy has decreased to only 5 percent higher (reference: the interview with the PR president). This decrease in price was due in fact to the belief among consumers that Volkswagen passenger cars are too expensive for the quality delivered. Their premium pricing strategy has caused them to lose some market share to competitor brands. This was not a substantial problem in the past,...
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...1. One factor influencing Divine Chocolate Ltd’s pricing decisions is the fact Kuapa Kokoo owns 45% of Divine Chocolate Ltd and influences the company’s decisions and receives a share in the profit. This means that the company will have to think about what price to make the chocolate bar in order to still receive a good amount of profit after Kuapa Kokoo takes their share of it. If they don’t consider this, they make not make much profit, if any at all, and their business will be unsuccessful leading to loss of sales and no profit. A second factor affecting their pricing decisions is the competition they have with Cadbury’s. Cadbury’s bars of chocolate cost 82p and Divine Chocolate Ltd’s chocolate bars are 81p. They have to consider their pricing because Cadbury’s is a well known brand which is very popular so if they had their chocolate bar more expensive than Cadbury’s then customers are more than likely going to purchase the Cadbury’s bar because not only is it more popular but it is cheaper too. So in order for Divine Chocolate Ltd to do well, they have to make sure they are cheaper than their competitors. 2. A rivalry of two or more businesses that target the same customers. Business competition tends to result in increased efficiency as firms attempt to reduce expenses. One advantage to show that Divine Chocolate Ltd has become more competitive is the cheaper prices they offer. If customers see a chocolate bar, that would probably taste the same as a Cadbury’s bar, cheaper...
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...Game Theory Application on Pricing Strategies Used by the Retail Supermarket Industry Everyday low pricing (EDLP) and High-Low Pricing are the most popular pricing strategies used by companies in the retail supermarket industry. In this part of the project, the two pricing strategies are analyzed using a game-theoretic framework and compared to the observed behavior of supermarket within the industry. First, the definitions of both strategies are provided to better understand the analysis. Everyday low pricing (EDLP) is a pricing strategy that provides consumers with low prices without the need of using of coupons or waiting for sales price events. This strategy was started by Wal-Mart and Procter & Gamble and it is believed that EDLP saves retailers the time and expense of applying short-term promotional pricing, as well as, the cost of distributing and processing of coupons. Companies who often adopted this strategy also believed that it creates shopper loyalty. (Barron's Educational Series, Inc., 2000) The basic premises that suppliers are basing on when using EDLP are the following: * Steady, competitive prices will lead to even demand for products. * Inventory and other logistical costs will drop due to effective management of product flows. * There will be reduction of promotional costs and other forms of trade. * The costs of saving due to consistent demand and better management of inventory will result to lower final price of the products. (Hurwich...
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...review chapters 11-21 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A new-product strategy: a. | links the new-product development process with the objectives of the marketing department, the business unit, and the corporation | b. | is part of an organization's overall marketing strategy | c. | specifies the roles new products play in the organization's overall plans | d. | describes the characteristics of products the organization wants to offer and the markets it wants to serve | e. | is accurately described by all of these | ____ 2. The first stage of the new-product development process is: a. | screening and concept testing | b. | establishing the new-product strategy | c. | exploring opportunities | d. | developing a business analysis | e. | the building of a prototype | ____ 3. A manufacturer of office furnishings is finding it difficult to compete with cheaper imported merchandise. Which of the following is a potential source of new-product ideas that would allow it to compete more effectively? a. | current retailers who carry the manufacturer's equipment | b. | its foreign competitors | c. | the company's employees | d. | customers who have requested its catalogs | e. | all of these | ____ 4. Which of the following stages of the new-product development process is the first filter in the new-product development process and serves to eliminate new-product ideas...
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...demand for the product is always high. The company under evaluation is Apple Inc and the product they recently introduced into the market the IPhone. Focus will be on the strategies the company uses to make the demand curve steeper when the prices are high. The company is well established in the global market and has a high local following. The company announced the iPhone in July 2009 and it has a price tag of 599. This price discrimination strategy was aimed at ensuring that the product is associated with prestige and attracts the upper end of the market. After record high sales began to drop, the company reduced the cost of the devices to maintain the high profits. The company was able to derive high profits from low pricing strategy that the high pricing strategy. Apple had introduced a new piece of technology that had not been available in the market. The period between the July and September saw the company enjoy a period of no competition as the product was unique in the market. Company which had focused on computers and entertainment gadgets had ventured in to the communication industry to diversify its sales (Swaim 96). A niche strategy was used by apple to increase it profits during the launch of the iPhone. This strategy is utilized by the organizations that can not afford to use wide scope cost leadership...
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...Pricing strategies of low cost airlines Keith J Mason Air Transport Group Cranfield University K.Mason@Cranfield.ac.uk 1. Introduction Low cost airlines such as EasyJet, and Ryanair have developed quickly in the European market in the last five years. The UK market has seen the most dramatic development where by the summer of 2001, these carriers accounted for over 22% of the short haul capacity from London and were present in 58% of the 128 short haul routes operated from this city (source: OAG, 2001). During a five-year period from 1997, the seat capacity offered from London has risen by 17%, and virtually all of this rise (95.4%) was attributable to the low cost carriers. The low cost carriers have both penetrated and grown these markets, principally by garnering a consumer perception that the fares offered are very low. This perception has been developed in no small part by extensive advertising and effective use of public relations. For example, Ryanair has offered fares as low as one penny (plus taxes), and therefore it is not surprising that there is great media coverage of these carriers, which in turn generates more interest in the services. Both Ryanair and EasyJet have been very effective in using media coverage of their legal wrangles with traditional carriers such as British Airways and Lufthansa to promote their services and low fares. While the media has helped these airlines communicate their message of low fares to the public...
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...decisions a firm has to make relates to pricing its products or services. If consumers or organizational buyers perceive a price to be too high, they may purchase competitive brands or substitute products, leading to a loss of sales and profits for the firm. If the price is too low, sales might increase, but profitability may suffer. Thus, pricing decisions must be given careful consideration when a firm is introducing a new product or planning a short or long- term price change. Price and Pricing defined Price is the money, good or service exchanged for the ownership or use of a good or service. Examples of various names of price are tuition for education, rent for use of asset, interest for use of money and fare for use of taxi or a bus ride. Pricing may be defined as those activities involved in the determination of the price at which products that will be offered for sale considering the various objectives of the firm. Demand Influences on Pricing Decisions Demand influences on pricing decisions concern primarily the nature of the target market and expected reactions of consumers to a given price or change in price. Three primary considerations are demographic factors, psychological factors and price elasticity. 1. Demographic Factors In the initial selection of the target market that a firm intends to serve, a number of demographic factors are usually considered. Demographic factors that are particularly important for pricing decisions include the following: ...
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...Chestnut pricing Having completed a market assessment study and also a risk assessment study the Management of Chestnut Ridge wanted to take a relook at the pricing strategy of the country club. The annual fees due to the country club from existing members currently stood at $2000 per annum. The Management wanted to carry out a consumer based pricing analysis from potential customers so as to check if they needed to charge a different pricing level from new applicants. Proposed consumer based pricing approach. The price scale, which Chestnut Ridge wanted to use had three basic elements : (1) Beginning price level (2) Price interval, and (3) Ending price The price scale : ------------------------------------------------- $.1500 ------------------------------------------------- $.1750 ------------------------------------------------- $.2000 ------------------------------------------------- $.2250 ------------------------------------------------- $.2500 ------------------------------------------------- $.2750 ------------------------------------------------- $.3000 ------------------------------------------------- $.3250 ------------------------------------------------- $.3500 ------------------------------------------------- $.3750 ------------------------------------------------- $.4000 ------------------------------------------------- $.4250 ------------------------------------------------- $.4500 The Management assigned two researchers...
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