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Fall Term 2008

Marketing I - Block seminar 2


Product team Cialis: Getting ready to market
Dr. Martin Wallin
Jan Henrik Sieg
Peter Jger
Renato Sydler
Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Course Overview
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Exam
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Guest
Lecture 1: EA
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1 Introduction
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2 Segmentation-
Targeting-
Positioning
3 Product
Block
Seminar 1
Block
Seminar 2
4 Promotion
Guest
Lecture 2:
UBS 5 Place
Guest
Lecture 3:
Hilti
6 Price &
Summary
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Agenda

Introduction and practicalities

Case work

Wrap-up (in HG F3 at 16.15)


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Introduction and practicalities
Product Team Cialis: Getting Ready to Market
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Background: Viagra

Pfizer launched Viagra 1998

Treatment of erectile dysfunction (ED)


(male impotence)

150 million men worldwide suffer


(50% of all between age 40 and 70)

Immediate success - 600 000 prescriptions


filled in first month

Viagra set back - deaths reported

Viagra regained confidence

$ 1.8 billion sales (2007)


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Background: New entrants

Cialis from Lilly ICOS LLC

Levitra from Bayer


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Background: First mover vs. Second mover

Introducing a new product on a market dominated by one player

First mover advantage


Technological leadership
Preemption of assets
Buyer switching costs

First mover disadvantage


Free rider effects
Resolution of technological or market uncertainty
Shift in technology or customer needs
Incumbent inertia
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
The Cialis case

How to segment the market and position a


follower product
Viagra well positioned and well-known
Cialis unknown

How to communicate to target audience


Patients
Partners
Doctors

How to price the new product

Competitive response from Pfizer


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Case practicalities
Agenda
13.15 Introduction & Grouping
13.40 Case work
Group 1: HG F3 (Martin Wallin)
Group 2: HG F33.5 (Jan Henrik Sieg)
Group 3: LFO G 25 (Peter Jger)
Group 4: ETZ E81 (Renato Sydler)
15.20 Case presentation (5 min / group)
16.15 Wrap-up (in HG F3)
16.30 End (around)
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Solving a case (90 minutes)

10 minutes: browse the case (individual)

10 minutes: read questions, think about solution (individual)

10 minutes: identify information (individual)

20 minutes: information sharing (group)

10 minutes: identify information (individual)

15 minutes: information sharing (group)

15 minutes: prepare presentation (individual/group)


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Case practicalities
Agenda
13.15 Introduction & Grouping
13.40 Case work
Group 1: HG F3 (Martin Wallin)
Group 2: HG F33.5 (Jan Henrik Sieg)
Group 3: LFO G 25 (Peter Jger)
Group 4: ETZ E81 (Renato Sydler)
15.20 Case presentation (5 min / group)
16.15 Wrap-up (in HG F3)
16.30 End (around)
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Marketing
analysis

Customer

Company

Competition

Collaboration

Context
The 5 Cs
Wrap-up
Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Market
segmentation
Target market
selection
Product and
service
positioning
Adopted from Silk (2006)
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Marketing mix

Product

Place

Promotion
The 4 Ps

Price
Customer
acquisition
Customer
retention
P
r
o
f
i
t
s
Creating
value
Capturing
value
Sustaining
value
Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Launching a new drug as a second mover on a
market dominated by one main player

Segmenting the market

Positioning the product

Communicating the product value

Pricing the product

Competitive response from Pfizer


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
What have we learnt?

What criteria to use when segmenting a market for a new product

Market with existing player introduces new layer of segmentation:


familiarity and usage of existing brand

Objective product attribute improvements do not directly translate


into perceived benefit in all target segments

Question traditional thinking that product dissatisfaction opens up


for switching products

What data can be relevant to make informed marketing decisions


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Segmentation criteria

Demographics
Age
Income
Education

Viagra usage status


Current Viagra users
Viagra dropouts
Never tried Viagra

Benefit of duration
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Segmentation: Age

Strong correlate between


age and reason for not
seeking treatment
Young patients: Temporary
condition
Old patients: Natural aging
process
The rest: Embarrassed and
temporary condition
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!"##$%#&'()'&%%*$+,'(#%"(-%+('./01'
Age 20-39
Age 40-49
Age 30-39
Age 30+
Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Segmentation: Usage status

Current Viagra users


Experience with ED
Good grasp of duration attribute
Most willing to try new drugs that offer improvement in key dimension
Smallest segment

Viagra dropouts
Some experience with ED
Duration probably not key dimension for dropout
Maybe hard to treat group

Viagra never used


Very large segment, but no usage familiarity
Duration not important, but safety important
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Positioning and Pricing

Vertical positioning
36 is much better than 4?

Horizontal positioning
Attitude towards sex: Wild, naughty activity vs. romance

Viagra is priced at $10 (without health coverage)

Pay more for better performance?

If benefit is positioned more horizontally than vertically, unclear if


higher charge is appropriate

If affluent consumer are targeted, higher price OK

If going for broad appeal, consider lower price


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Communication strategy

Communicate to whom?
Patients
Partners
Doctors
Insurance companies
Regulators
Media
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Summing up

How to segment the market and position a follower product

How to communicate to target customers

How to price the new product

Competitive response from the first mover


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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Bottom line

Positioning is not what you do to the product but what you do to


the mind of the consumer!
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Fall Term 2008 Martin Wallin | Strategic Management & Innovation | mwallin@ethz.ch
Course Overview
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Guest
Lecture 1: EA
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2 Segmentation-
Targeting-
Positioning
3 Product
Block
Seminar 1
Block
Seminar 2
4 Promotion
Guest
Lecture 2:
UBS 5 Place
Guest
Lecture 3:
Hilti
6 Price &
Summary
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