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Demand/Pricing Formulation Executive Summary: There are three main demand strategys 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.
Population Trying to Year Overweight In US Lose Weight (35%) 24,871,000 24,871,000 24,871,000 24,871,000 24,871,000
Comfortable With Weight Loss drugs (15%) 3,730,650 3,730,650 3,730,650 3,730,650 3,730,650 Medibical Will Capture Population Captured One Supply(20%*24.80) Two Supply(60%*49.60) Full Cycle(20%*74.40)
1 2 3 4 5
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
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Year
US Pop
1 2 3 4 5
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.
Year 1 2 3 4 5
% 30 35 40 45 50
Profit: 1.26 Billion ROI: 215% (Unrealistic) Marketing Communications Executive Summary:
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Metabical will be marketed to overweight women of the age from 25-65. According to a 2007 marketing survey it was Follow men visited a healthcare provider for a yearly physical, 15% more women then men want to change their behavior to
determined that women 10% more women then men are dissatisfied with their current weight, 20% more women then
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every new post delivered live a healthy lifestyle, 30% moreGet women then men failed to lose weight in the past 5 years, 30% more women then toweight your Inbox. men were dissatisfied with current 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 Join 65 other followers 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 address is important to understand in order to have successful weight loss Enter your email with Metabical . The women of these demographic are knowledgeable about the importance of nutrition and exercise,
Sign they are ready to make a change. The women of me this up 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 large but it is necessary to target all of these potential Pow ered is by quite WordPress.com 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 FDAs 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
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November 20, 2012 in Case Studies, Harvard. Tags: Business Case, Case Study, Harvard, Metabical, Solution
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