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Case Analysis Note 2

METABICAL:
Pricing, Packaging, And Demand Forecasting
For A New Weight-Loss Drug

Submitted by:

PGP 17 | Section B | Group B15


Tamaraiselvi | Satyanarayan | Ankita | Nikhil

1. Compare Metabical to current weight-loss options.

Metabical

First prescription drug for overweight individuals with BMI


between 25 - 30
Dual layered- appetite suppressant and fat absorbent
Less adverse impact and side effects
Low dosage- only 1 tablet per day
Behaviour modification and healthier eating habits

Prescription
weight loss drugs
(Meridia and
Xenical)

Used for obese (BMI>30) and severely obese (BMI>40)


individuals
Serious life threatening side effects - hypertension, heart
palpitations, seizures

Alli

Herbal or dietary
supplements
Other Options:
Weight Watchers,
Jenny Craig Direct,
Gym membership

Over The Counter drug


Approved by FDA
One pill with each meal
Shares negative side effects of orlistat including liver damage
$ 190 for 3 months supply

Unregulated by FDA
Faced safety concerns
Deceptive marketing claims
In limited use publicly- difficult to determine related health
complications
$ 300 for 3 months supply

Required greater time and effort to show results


No guarantee of results
Dissatisfied customers migrated to other options
$ 120 - 1600 for 3 months

2. What are the advantages/ disadvantages of the forecasting methods presented? How
would you go about forecasting the demand? Calculate the forecasted demand for first
five years in units.
Forecasting Method 1: From the number of overweight individuals in the US, narrow down to
those comfortable with weight loss drugs
Pros:
1. The Method is very structured.
2. The whole over-weight market is considered in the forecast and very little data is
assumed. This data is available from existing market research.

Cons:

1. Considering Metabical as a first of its kind, full value is not being leveraged.
2. There is no distinction in acceptance by different consumer groups. For example, it
may not be accepted as easily by the low-income groups as compared to the high-

income groups.
3. It is difficult to create a brand across multiple demographics.
Forecasting Method 2: From the number of overweight individuals in the US, narrow down to
those immediately looking for a prescription.
Pros:
1. The Method is aggressively priced and estimated.
2. Leverages the uniqueness of the product.
3. Targets the customers who will most likely consider a trial.
Cons:
1. May not be able to meet forecasted results due to aggressive pricing.
2. The estimate is still spread very broad. It is hard to predict the behaviour of such a
broad segment of customers without knowing their reaction to their product.
Forecasting Method 3: Focus on ideal target consumer- educated females, 35-65 of age with
BMI 25-30
Pros:
1. The Method is aimed at the ideal target segment who will most likely purchase.
2. Aggressively priced, but portrayed as a niche brand for a particular segment.
3. Provides a clear picture of the market they are targeting and attractive pricing in
relation to the benefits the product is delivering.
Cons:

1. There is very small room for failure as it is being promoted as a niche product.
2. Gender bias may mean loss of half the segment in a single shot.

Forecast
Summary
Year
Option 1
Option 2
Option 3

1
0.706146
1.614048
2.2188

2
1.059219
2.421072
2.5886

3
1.412292
3.228096
2.9584

4
1.765365
4.03512
3.3282

5
2.118438
4.842144
3.698

Total
7.06146
16.14048
14.792

3. What price would you recommend to Printup? What is the ROI for the first five years
for the recommended price?
Retail Price $75 Being more of necessity, people might be ready to pay more prices
Advantages:

Very High market penetration


High consumer awareness

Disadvantages:

Low profit margin


Low brand image

Retail Price $125


Advantages:

Moderate market penetration


Moderate consumer awareness

Disadvantages:

Selling price much less than true economic value


Moderate brand image

Retail Price $150


Advantages:

Higher per unit profit margin


Higher brand image

Disadvantages:

Very low market penetration


Low market share

Calculation of ROI
$75
$125

$150

Forecast Method 1
-0.663869083
-0.212125394
0.013814219

Method 2
-0.23170076
0.800856243
1.317289643

Method 3
-0.295889443
0.650401075
1.123688292

4. What pack size would you recommend? What are the considerations to arrive at this
decision?

Days-of-the=week, Blister-style package


Two pack size can be launched targeted at different Income levels:
o 4- week supply of 28 pills
o 12-week supply of 84 pills

Reasons:

Since it is a prescription medication, the doctors based on consumers Income level


can prescribe pills
The lower income level customers need to visit the doctor three times for the 4-week
supply prescription, but the amount that they will have to pay at the outset will be less
4-Week Supply to the Ideal Metabical consumer (Women consumers, age 35 65
years, college educated) will work out since they visit doctors periodically
4-week supply would be in the reach of maximum target individuals to pay at the
outset

The 12 week supply will capture those customers who have higher income levels and
are willing to pay the full price at the outset or might not visit the doctor periodically
The 12 week supply will be bought by the customers who are too busy to get their
prescription refilled