Project:

Cialis Marketing Plan

Student Name and Number:

Anton Mc Menamin 55403201

Lecturer:
Joanne Lynch

Submission Date:
18/01/2010

Word Count:
9,725
 Table of Contents
Terms of Reference.............................................................................................................................. 4
Executive Summary............................................................................................................................. 4
Business Mission.................................................................................................................................. 5
External Marketing Audit.................................................................................................................. 5
Macroenvironment..................................................................................................................................5
The Market..............................................................................................................................................9
Competition...........................................................................................................................................12
Internal Marketing Audit................................................................................................................ 14
Operating Results..................................................................................................................................14
Strategic Issue Analysis..........................................................................................................................14
Marketing Mix Effectiveness..................................................................................................................16
Marketing Structures and Systems........................................................................................................18
Strategic Alternatives....................................................................................................................... 20
My Recommendation........................................................................................................................ 22
Key Issues facing Lilly ICOS LLC.................................................................................................... 24
Marketing Objectives........................................................................................................................ 25
Strategic Thrust.....................................................................................................................................25
Strategic Objectives...............................................................................................................................25
Core Strategy....................................................................................................................................... 25
Target Markets......................................................................................................................................25
Competitor Targets................................................................................................................................25
Competitor Advantage..........................................................................................................................25
Marketing Mix Decisions................................................................................................................. 27
Product..................................................................................................................................................27
Price.......................................................................................................................................................27
Promotion..............................................................................................................................................28
Place......................................................................................................................................................28
Implementation................................................................................................................................. 30
Who is Responsible?..............................................................................................................................30
What message do Lilly ICOS LLC want to get across?............................................................................31

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 How will they get this message across?.................................................................................................32
When will these campaigns be run?......................................................................................................34
Main message of the campaign?...........................................................................................................34
How will the competition respond?......................................................................................................34
Precautions for side-effects?.................................................................................................................34
Product Extensions?..............................................................................................................................35
Short Term Goals...................................................................................................................................35
Long Term Goals....................................................................................................................................35
Control:................................................................................................................................................. 36
Appendix 1........................................................................................................................................... 37
Appendix 2........................................................................................................................................... 43
Appendix 3........................................................................................................................................... 44
Appendix 4........................................................................................................................................... 44
Appendix 5........................................................................................................................................... 45
Appendix 6........................................................................................................................................... 45
Appendix 7........................................................................................................................................... 45
Bibliography........................................................................................................................................ 46

Declaration:

I, the undersigned, declare that the project material, which I now submit, is my own work. Any
assistance received by way of borrowing from the work of others has been cited and acknowledged
within the work. I make this declaration in the knowledge that a breach of the rules pertaining to
project submission may carry serious consequences. I am aware that the project will not be accepted
unless this form has been handed in along with the project.

Signed: Anton Mc Menamin

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 Terms of Reference

“Providing scientifically proven, safe, reliable, lasting assistance to ED patients, globally”

The below marketing plan for the launch of a new ED Pharma industry drug Cialis must be
implemented with the outlined measures put in place prior to a Quarter 1 2003 launch. The issues
to be addressed are to implement the five year plan and the promotional campaigns outlined to
establish the outlined market share percentages in the related countries, at the time specified. In
order to achieve this, close co-operation will need to be carried out with the affiliate companies
and the physicians that the sales reps will be establishing contact with, in order to gain the
objectified market share.

Executive Summary

In order to assess the market opportunities available to Lilly ICOS LLC when launching their
new ED drug Cialis in the ED Pharma industry, I have undertaken an internal and external
marketing audit. From conducting these audits, it has been established that there is a large market
of ED patients that are not satisfied by the current market offerings, with 75% of Viagra
customers dropping the drug after one year of use. Accompanying this market, 53% of males
suffering from ED have not contacted a physician about the condition. Cialis will target these
markets by informing them of the unique offerings of Cialis which has minimal side effects in
comparison to Viagra, while having a window of intimacy after taking the pill of 36 hours, 900%
the window offered by Viagra.

To enter the ED Pharma market, Lilly ICOS LLC will implement a compete strategy,
establishing a price of $10, identical to that of the market leader Viagra. A five year plan will be
implemented from Quarter 1 2003, the latest date that the New Drug Application (NDA) will be
approved. This plan is flexible in both start date and operations. It will oversee the successful
gain of 25% market share in 10 leading countries including the U.S. and central European
countries. The plan also contains an advance-base strategy which will oversee the gradual gain of
a 15% market share in an additional 10 European countries and a 5% market share in South
American and Asian countries, once market share and experience are obtained from the initial
market entry strategy.

In order to maximise the potential of Cialis in these markets, a promotional strategy will be
implemented and overseen by Lilly ICOS LLC and their affiliates. These promotional campaigns
will carried out using various mediums, including a series of ambient marketing activities and
celebrity endorsement advertisements featuring Michael Jordan and his wife, in order to entice
ED suffers and their partners to visit the Cialis website. The website will contain a specially
tailored informational video on ED and how Cialis can help to control the condition, with the

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intention of persuading the viewer to visit their physician and purchase Cialis. Physicians will
also be targeted as part of a promotional campaign in order to educate them on the ED condition
and the safety and efficacy benefits of Cialis, as in 90% of ED prescription cases it was the
patient that initiated the request for the drug.

Business Mission

A business mission statement can be defined as a statement that “outlines the company’s future
course of action, serving as a guiding concept for what the company is to do and become”
Stauble, 2000. With this in mind, the mission statement for Lilly ICOS LLC will be:

“Providing scientifically proven, safe, reliable, lasting assistance to ED patients, globally”

External Marketing Audit

An external marketing audit is carried out to monitor the key macro (political-legal etc) and
micro (customers, competition etc) environment factors that may affect the firm’s ability to earn
profits. When this is carried out, management can then identify the marketing opportunities and
threats they will face in these environments (Kotler 2001).

Macroenvironment
To assess the issues that Cialis will face when they come to launch we must first analyse the
Macroenvironment. To evaluate this, I will use an altered version of the PESTLE analysis model,
which has been altered to assess the individual issues facing Lilly ICOS LLC.

Political Legal:

In 1997 the FDA revised the rules in regards to promotion of prescription drugs, which allows
firms to advertise directly to consumers. This is a clear advantage to Lilly ICOS LLC as they can
target their core target market directly. However Lilly ICOS LLC should be wary of this rule, as
it may be reversed again if the forms of advertising used abuse the system.

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The recovery of Pfizer from their initial “safety fears”1 with the Viagra brand, and the activities
they undertook to restore confidence in the brand, leading it to become one of the largest
pharmaceutical brand names in the world is remarkable. There were certain legal implications to
this process, such as proving that the product is not harmful and conducting additional testing.
Lilly ICOS LLC must ensure precautionary measures are in place to reduce the risk of such a
legal catastrophe, being cautious of similar problems that may occur with the launch of Cialis.

The FDA regulation process may take up to 18 months for stage three of the process to be
complete. This is also at a cost of between $350-500m, which will severely impact on the
operations of Lilly ICOS LLC. Due to this legal implication, all the market entry strategies will
be designed for a Quarter 1 2003 launch. However, these plans will be in place and are
manoeuvrable if the NDA approval is received at an earlier date.

Also, the profits in the U.S and Europe are shared, whereas all other profits from other regions
are to be obtained by Lilly, with a royalty paid to the joint venture. This may cause difficulty in
the future if a region such as S. Arabia, where Viagra are experiencing a CAGR of 39.8% 2,
becomes a major consumer of the Cialis, and should be addressed in order to ensure a harmony
of operations.

Socio-Cultural:

This topic is largely concerned with the perception that the key decision makers/influencers and
gatekeepers have in regards to the product. With this in mind, I will analyse it under the
following headings:

Patients:

In the survey conducted by Lilly ICOS LLC, it was found that 53% of people did not seek
treatment for the condition of ED3. It also became clear from this survey that younger men
were embarrassed talking about the issue, while older men believed that it was a natural part
of ageing with there is no need to discuss the problem with a physician. Accompanying the
survey, the qualitative interviews also highlighted that the condition can lead to a downward
spiral which can destroy relationships and even lead to suicide. This is a worrying condition

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Exhibit 13
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Page 7: Out of the 4,622 people that responded, 2,450 people stated that they did not report suffering from ED.

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 that must be addressed, while portraying Cialis in a positive light. There is currently a large
proportion of men suffering from the condition, yet are not being treated, leaving a notable
gap in the market and proving potential clients for Lilly ICOS LLC. However, when
designing an approach to target these potential customers, Lilly ICOS LLC must show that it
is a common problem and attempt to diminish the social stigma that is attached to this
condition, while adhering to FDA regulations.

The research shows that over 90% of the people in 4 of the 6 countries surveyed, that
currently use Viagra, would be willing to use Cialis. Accompanying this, in 5 out of the 6
countries, 68% or more of the people surveyed, that are Viagra dropouts, state that they
would be willing to use the product4. Additional research by Bayer, a future competitor of
Lilly ICOS LLC, shows that 76% of ED patients would be willing to use an alternative form
of ED medication rather that Viagra5.

Another obstacle that Lilly ICOS LLC will have to overcome is that 90% of all prescriptions
for Viagra issued are initiated by the patient and not by the physician6. With this in mind, it is
clear that there will need to be a campaign run aimed at the patients to highlight the benefits
of Cialis over Viagra.

Partners:

To date partners have a limited amount of information on the topic which has led to many
misconceptions regarding ED medication. Traditionally the partners believed that the cause
of ED was due to their actions, or due to stress at work7. Lilly ICOS LLC need to remove
these current taboos related to ED medication from the partner perspective. Comments such
as “once my partner takes the tablet, I no longer feel like I can refuse having sex” and “my
partner must awkwardly ask me if he should take the pill”, must be addressed and clarified
by Lilly ICOS LLC8. Partners must be directly communicated with by the company and
integrated into the advertising process as they can have a major impact on the consumption
patterns of males in relation to ED medication.

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Table B
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 Physicians:

From the research conducted by Lilly ICOS LLC, it has been found that the two most
important things, from the perspective of the physician in regards to ED medication, are
efficacy and safety. These two factors contribute to 70% of all concerns of physicians9. With
this in mind, Lilly ICOS LLC must focus on the safety and efficacy aspects of their
medication and inform the physicians that there are no major side effects attributed to the
drug, unlike that of Viagra.

It is clear that to date physicians act as facilitators to the patient as in only 10% of cases the
doctor initiates the discussion regarding medication for the condition10. Lilly ICOS LLC need
to educate physicians, particularly PCPs, on the discussion topics and use of ED medication,
as to date they are reluctant to discuss the condition with patients, hence are not prescribing
ED medication as often as they potentially could. As previously mentioned, 53% of ED
suffers do not talk about their condition, which they could if the doctor initiated the
discussion.

Technological:

Due to the major spending power of Pfizer and Bayer on R&D ($4,435.0m and $2,236.2m in
2000), Lilly ICOS LLC (Eli Lilly spent $2,018.5 in 2000) need to increase their spending on
R&D in order to maintain pace with the competition11.

Economic:

Current average annual expenditure on Viagra per user is $430.9512. With this in mind, Lilly
ICOS LLC need to offer the product at a competitive price in order to entice current Viagra
users, while still making a profit.

Demographic:

Figure: 1 below highlights the differences in the core demographics of the potential patients Lilly
ICOS LLC will be catering for. The average age of the ED patients is similar, both 50 years of

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Exhibit 11
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6.63 prescriptions per year*$65 (6.5 doses @ $10) = $430.95

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age plus, with similar marital status. However, there are differences in the retired levels of the
patients, with the U.S. having a significantly higher quantity of retired ED patients. Although not
highlighted in this table, the number of retired ED patients in Spain is below 1% which is
significantly lower than that of the average number of retired ED patients in Europe. Also in the
education of the patients, residents of the U.S are educated to a higher level than ED patients in
Europe. In addition to this, the income of the two regions differs as patients in the U.S. are in a
predominantly higher income level than their European counterparts. With this and the above
factors in mind, it is clear that Lilly ICOS LLC need to integrate an adaptive marketing
campaign in order to relate to the different patients in the different geographical regions.

Figure: 1
Demographic U.S. Europe13
Mean Age 58.4 53.44
Employment: Fulltime/Retired % 50/44 55.4/28.2
Marital Status: Married or Living Together % 80 75.8
Education: Primary/Secondary/Post Secondary % 9 / 24 / 67 46.6 / 27.6 / 24
Yearly Income: Low/Mid/High % 21 / 44 / 35 68/ 26 / 6.2

The Market

Market Size:
The chronic ED patient market consists of 150 million men globally, with 30million of these
patients residing in the U.S. Along with chronic ED patients, 50% of all men between the ages
of 40-70 experience some form of ED.14 In 2001, Viagra reached sales of $1,470.3M15.
Growth Rate:
The growth rate of the ED Pharma industry has been rapid over the past decade. In the U.S there
has been a CAGR of 16.4% in the sale of Viagra. Accompanying this, there has been an average
CAGR of 18.38% over the 5 European countries (France, Spain, Germany, Italy and the U.K.)
that have been surveyed. In total, there has been a global growth rate of 18.6% in the sale of
Viagra, which shows that the ED medication market is an appealing market to enter16.
Trends:

13
Average taken from the five European countries surveyed and shown in Exhibit 6.
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Exhibit 13
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Exhibit 13

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 The industry/sector began when Pfizer released Viagra and has grown ever since, with Bayer
also attempting to enter the market along with Lilly ICOS LLC. Viagra sales have been
increasing quarterly on a global scale17, which has attracted these competitors. The medication
was first released as ED patient medication, but is now a cultural phenomenon, often being seen
as a “playboy drug”18.
Another trend that has appeared in the industry is that pharmaceutical companies are looking for
“blockbusters”19, seeking high gain returns which they feel are achievable through “quality-of-
life” medicines.

Distribution Analysis:
The different types of physicians consulted when seeking treatment for ED vary from family
doctor to Urologists, Cardiologists, Psychiatrists and internet doctors. After consulting a
marketing executive from Pfizer, I was informed that the traditional process used by drug
companies in the ED Pharma industry to distribute drugs is:
Figure: 2

The manufacturer makes the drug and then supplies it to a wholesaler such as United Drug
(United Drug 2010). At this stage the company, such as Lilly ICOS LLC, count this as a sale.
The wholesaler then sells the drug to the drugstore/pharmacy as required. Then, when the
patient is prescribed a drug, the pharmacist dispenses it. However, often the doctor will only
prescribe the active ingredient of the drug and not the brand name. It is then up to the discretion
of the pharmacist to which drug they dispense (Maguire, 2009). Due to this, it is important for
Lilly ICOS LLC to establish a solid relationship with the physicians as they will be writing the
prescription, as the pharmacists must prescribe the drug if a brand name is written on the
prescription.

Customer Analysis:

17
Exhibit 13
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Table C
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Figure: 3 below is a modified version of the HCTF model, which has been altered to include the
decision making unit details of the process. From the graph it is evident that there is a clear
thought process to the entire purchasing decision, were you can see that a major influencer on the
ED patient is their partner. They are involved in the integral steps of the HCTM20. Although
every step in this process is crucial, particularly the first four stages, Lilly ICOS LLC need to
focus heavily on stage six – the evaluation of the drug. Viagra have mere 25% of customers are
using Viagra after a year of initiating treatment21, which is a severe loss of customers. Lilly ICOS
LLC cannot afford to have such a significant decrease in customer base if they aim to establish a
strong foothold in the market. As stated by Kotler (2000), “the buying process starts long before
the actual purchase and has consequences long afterward”. Therefore, constant evaluation and
customer centred consultation about their experience of the product will be crucial to the success
of Cialis in the ED market, as it costs five times more to recruit a new customer in comparison to
retaining an existing one (1000ventures 2010).
Figure: 3

Perception Consultation Treatment Delivery Compliance Evaluation

Competition

Lilly ICOS LLC will face three main competitors in the ED Drug Pharm market:
Direct:

20
Figure A
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Pfizer – Viagra: Viagra is manufactured by Pfizer and is the current market leader in the
industry.
Bayer – Levitra: Levitra is a drug not let released and will be targeted towards ED patients that
also have diabetes.

Potential:
Alternative medicines – Acupuncture, herbal therapies etc. are often used by ED patients in order
to overcome the condition.

In order to assess the capabilities of each competitor to Lilly ICOS LLC, I have designed Figure:
4 in order to clearly define the core competencies of each. In addition to this graph, it is also
clear that the parent companies of Levitra (Bayer) and Viagra (Pfizer) are extremely profitable,
achieving net sales of $27,915.2m and $29,574m each respectively in 2000. Both companies also
consistently invest in R&D, spending $2,236.2m and $4,435m each in 2000 respectively. Due to
these heavy investments, their net income as a percentage of sales have only been 6% and 13%
respectively compared to Eli Lilly’s 28%. As Eli Lilly also invest heavily in R&D ($2,018.5m in
2000), it seems they have a more efficient process in place, however they are a smaller firm so
consequently have lower SGA costs22. The alternative medicine stores are harder to trace as they
consist of several separate entities.

Figure: 4 (P.T.O)

22
Exhibit 11

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 Alternative Levitra Viagra

Objective Objective Objective

Offer a substitute Treat ED as a subsidery of Maintain no.1 status in market
to alternative diabetes Reduce no. of dropouts
medicines Improve performance in U.S Maintain relationship with doctors
and improve bottom line and drugstores

Strategy Strategy
Strategy
Target a niche segment of the Aggressive marketing tactics, target
Attract people market
who are all elements of the DMU especially
conscious of partners
Tactics
conventional Invest heavily in R&D and innovation
medicine TBC

Strengths Tactics
Tactics Product is successful at lower Aggresive sales reps
Present a dosages;
Celebrity endorsers
natural lifestyle, Affective for diabetes users
Spent $108m in 2000 on advertising
non prescription Co promotion with
GlaxoSmithKline DTC advertising, Vigorous tone

Weaknesses Strengths
Strengths
Poor U.S. #1 pharmaceutical brand in the
No prescription presence/performance world. Consumers ask for the
Less stigma No clear strategy for the new product/treatment by name
attached drug Large investment in both R&D and
Potential danger of alliance advertising
with GlakoSmithKline Strong CAGR of 18.6% globally and is
a $1.3bn product
Weaknesses Market Share
No scientific TBC
evidence it Weaknesses
works Side affects, death scares
Pfizer have a high SGA
Reluctance of phicians to proactively
Market Share prescribe and follow up on the drug.
Not Available Image as a playboy and as an older man
drug (even when old, you don’t want to be
told it).
Mixed satisfaction with partners
High drop outs; 23% not satisfied in U.S.

Market Share
Viagra have 9million users overall

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 Internal Marketing Audit

“It is one thing to discern attractive opportunities and another to have the competencies to
succeed in these opportunities”. Due to this, an internal marketing audit is carried out in order to
assess the internal strengths and weaknesses of a firm to determine what market opportunities are
best suited to them (Kotler 2001). The internal marketing audit will be analysed under the
following headings:

Operating Results
To date Lilly ICOS LLC do not have a defined set of operating results as they have not yet gone
to market as an alliance with Cialis. However, they have carried out market research in the U.S.
and five European countries with promising results in relation to interest in the product should it
be distributed in these countries. They will also have intentions to distribute Cialis in Canada,
Australia, Mexico and Brazil in addition to these countries.23

Strategic Issue Analysis

Marketing Objectives:

The primary marketing objective facing Lilly ICOS LLC is to reach annual sales of at least
$500m24. With this in mind, Lilly ICOS LLC must develop a marketing campaign that appeals
to the demographics of all the core countries that they intend to distribute the drug (outlined
above). Lilly ICOS LLC must also meet the five year forecast outlined by the GMSO by
satisfying all the demands stated in this forecast25. A tactic often used in the drug industry is the
marketing of negatives, where the ad highlights the negative connotations associated with the
health condition. However, Lilly ICOS LLC must determine if this tactic is sufficient in creating
awareness in the brand. Also, due to the 75% of Viagra users who no longer use the product26,
Lilly ICOS LLC should encourage consistent usage of the drug in order to retain existing
customers when launched.

How is the market segmented?

“Segmentation is the process of dividing a potential market into distinct subsets of consumers
with similar needs or characteristics...the marketing manager searches for areas of homogeneity,

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and then focuses resources and energy on meeting those needs better than anyone else”
(Stauble2000)

There are several segmentation options available to Lilly ICOS LLC. The main factor to consider
is to ensure that they tailor their marketing campaign in order to maximise their market potential.
The options for Lilly ICOS LLC to segment the market are:

Figure: 5

Competitive Advantage:

The competitive advantages of Lilly ICOS LLC’s drug Cialis are:

The drug allows a thirty-six hour window period, in comparison to the market leader
Viagra which allows a four hour window, for sexual intimacy27
The drug is not affected by food intake in comparison to Viagra which effects deteriorate
as a high fat food is consumed28
There are less known side affects with the Cialis drug compared to Viagra which has
numerous including visual irregularities, facial flushing, headaches, indigestion and
safety fears due to deaths in the initial launch of the product with patients suffering from
cardiovascular related conditions29

Core Competencies:

The core competencies that Lilly ICOS LLC must portray are vast. As Lilly ICOS LLC have
limited experience in the ED drug industry to date, they must communicate the vast market
research that they have conducted, accompanied with the scientific and legislative approval of

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the drug. This evidence can be used to show that Lilly ICOS LLC are serious about entering the
ED market, while also presenting the image that this is a consumer focused product, not a
product manufactured solely for profit. A penultimate core competency of Lilly ICOS LLC is the
competitive advantages of Cialis. Finally, a core competency of Lilly ICOS LLC is the
experience and dedication that both companies bring to the alliance. This alliance takes the form
of a ‘product or service alliance’, where two companies jointly market their new product (Kotler,
2000). The effective relationship between Eli Lilli and ICOS, which has seen a sharing or core
competencies, has benefited both firms to date and seen the NDA submission for Cialis being
completed in record time from a Lilly standpoint30.

Marketing Mix Effectiveness

“A marketing mix is a set of tools that the firm uses to pursue its marketing objectives in the
target market” (Kotler 2001)

After conducting the external and internal marketing environments analysis, the marketing mix
effectiveness can now be evaluated. This marketing mix is only used as a guide to the options
available to Lilli ICOS LLC in their market entry strategy; it is not the finalised marketing mix
for Cialis.

Product:

The product is a drug which combats the condition of ED, containing an active ingredient of
tadalafil. It works by temporarily inhibiting the phosphodiesterase type 5 enzyme that normally
interferes with the increased blood flow necessary for attaining an erection, without significantly
inhibiting the PDE6 enzyme that was believed to contribute to the side effects found in
Viagra.31It has a neutral name, with no negative connotations, to allow the team to mould the
brand name once they gained a superior understanding of the market32. This is an important
feature as Aaker (1991 cited in Muzellec and Lamkin 2007) believes “names are the critical, core
sign of the brand; they constitute the basis for the corporate communications programme and for
consumers’ awareness and images”. The product will be distributed in a box containing the
Cialis name and web address.

Price:

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The price of the market leader Viagra is currently $10, with no other company releasing an
alternative to date. With the prospected release of Levitra closing, Bayer have not yet released
information regarding their pricing plans. With this in mind, Lilly ICOS LLC have three options
available.

1. Price lower than Viagra ($8-9 per pill) in order to entice the price sensitive patients that
may not be able to afford Viagra
2. Match the price of Viagra to show that Lilly ICOS LLC are competing head on with
Pfizer in this market
3. Price above the cost price of Viagra ($11-15 per pill) to reflect the longer duration of
intimacy available with this drug in comparison to Viagra

Any promotional pricing campaigns that will be conducted in conjunction to the launch of the
product must also be established, such as buy three weeks get a week long supply free. However,
this may not be advisable in the ED market as patients may see value as a weaker drug.

Promotion:

The promotional choices available to Lilly ICOS LLC are numerous. When designing the
promotional campaigns, the GMSO must consider and communicate the following elements to
their respective affiliates:

Geographical Location
“Global marketing activities are influenced by the national/local, regional, and global
levels of the environment” (Stauble 2000). In light of this statement and the external
analysis, Cialis will be promoted through varying techniques depending on their
geographical location market. Due to this, Lilly ICOS LLC need to promote Cialis in the
U.S. differently to the U.K., Italy, Germany and France, which can be targeted with one
campaign due to the similarity in the core demographics33. Lilly ICOS LLC then need to
develop a tailored campaign to promote Cialis in Italy as less than 1% of retired people
are ED patients in this region. In addition to this, Lilly ICOS LLC also need to conduct
further market research in Canada, Australia, Mexico and Brazil in order to determine
what promotional techniques are required in each region.

33
Exhibit 6

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 Intended Target
As alluded to above, the target markets for all the countries may not match, with Spain
being the only country that will not entail a campaign that will be targeted towards retired
ED patients, at this present time. Another factor that will have to be considered is to
whom the promotional campaign will be targeted towards, in regards to either patient or
partner. This will subsequently demand different techniques and campaigns, which will
need to be clearly outlined as it may be seen as alienating the males if too many ads are
targeted towards the partners. Also, there will need to be a promotional campaign run in
order to entice physicians to prescribe the drug over Viagra. This campaign can be
similar in all countries.

Medium
There are various mediums available to Lilly ICOS LLC such as radio, TV, social media,
outdoor advertising, DTC advertising, print advertising, scare advertising, press releases
etc. The best suited mediums must then be used in order to ensure maximum publicity
with limited expenditure.

Place:

As previously discussed, the drug will be distributed through drug stores/pharmacies after the
completion of a prescription by a physician.

Marketing Structures and Systems

The establishment of the GMSO has assisted Lilly ICOS LLC greatly to date. It consists of the
GMR, GMP and the GMST, whose activities involve marketing the drug at every stage of the
process. GMR are involved in stage 1, GMP and GMP at stage 2 and finally GMST and the
aforementioned teams at stage 3. After successful FDA approval and providing the team
approval at each stage, the drug proceeds to the next stage of development.
Due to this and the finely balanced board of managers which is evenly split between Eli Lilly
and ICOS representatives, where Eli Lilly brought the experience and resources and ICOS
brought the initial drug and the flexibility and reactive resources required, Lilly ICOS LLC are
ready to bring Cialis to launch.
Swot Analysis – Figure: 6

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19
 Strategic Alternatives

After analysing all the options available to Lilly ICOS LLC (please see Appendix 1), the three
strategic options available to the firm for the launch of Cialis are:

Strategic Alternative 1

Implement a niche strategy, segmented to patients with a co-morbidities cardiovascular disease,

targeted toward patients and physicians, at a price of $12, which is higher than the market
average. Cialis will be distributed everywhere Viagra is under this strategy.

Pro: Targets a niche segment of the market, with a price that will increase revenue, while
maximising distribution potential with a large geographical market entry strategy. Potential sales
of $121.2M if 5% of market share is gained within 12 months of the drugs launch34.

Con: This strategy will stretch Lilly ICOS LLC’s operations to the maximum limit due to the
market experience and firm capacity that will be required to construct this entry mode.

Strategic Alternative 2

Implement a compete strategy, aimed towards the general ED patient segment of the market,
with a focus on Viagra drop outs patients, while also targeting physicians and partners, at a price
matching the industry average of $10. With this recommendation, Cialis will be distributed in the
U.S., Brazil, Mexico, Canada, Australia, Spain, Italy, France and Germany and the U.K.

Pro: Targets a segment of the market that is currently unsatisfied with the offerings available,
while providing a price that does not provoke the market leader. Also, by entering the selected
countries that Lilly ICOS LLC have carried out sufficient market research upon (with the
exception of Brazil, Mexico, Canada, and Australia) the firm will be able to adapt quickly to the
needs of the patients in these locations. Potential sales of $101M if 5% of market share is gained
12 months subsequent to the launch of Cialis.

Con: The limited number of countries entered at this point of time is low in relation to the targets
set up by the CEO of Eli Lilly.

34
Please see Appendix 2 for breakdown of these figures.

20
 Strategic Alternative 3

Implement a Beat strategy, aimed towards the duration conscious patient segment of the market,
while also targeting physicians and partners, at a price lower than the market price of $8. With
this recommendation, Cialis will be distributed in the U.S., Brazil, Mexico, Canada, Australia,
Spain, Italy, France and Germany and the U.K.

Pro: States clearly the intentions of Lilly ICOS LLC, while not over stretching the operations of
the firm by entering a limited quantity of markets at this stage. Potential sales of $80.8M if 5%
market share is gained 12 months subsequent to the launch of Cialis.

Con: This strategy may provoke Pfizer to defend the Viagra brand. Due to the resources
available to Pfizer, they will be able to overwrite the cost of Cialis and invest heavily in
advertising campaigns in order to ensure they maintain their market share.

21
 My Recommendation

Hutt et. al (2007) believe that “top-performing firms execute the new-product-development
process proficiently, provide adequate resources to support new product objectives, and develop
clear new product strategy”. With this in mind, the most appropriate strategic alternative for Lilly
ICOS LLC to implement at this stage is strategic alternative 2. This alternative will allow Lilly
ICOS LLC to enter the ED drug market with a positive market entry approach that will compete
will Pfizer’s Viagra, while avoiding to enter a direct price and promotion war with Viagra due to
the identical price and fewer geographical regions entered by Cialis. The primary target of this
approach will be Viagra dropouts and those still not receiving treatment for the condition. With
this strategy, Lilly ICOS LLC will attempt to gain a 5% market share of the ED Pharma industry
market each year. As 50% of the male population have some form of ED35, with over 20% of
people unsatisfied with Viagra in some regions36, this is a large target market combined to the
market Viagra is currently serving.

It is essential for Lilly ICOS LLC to adapt a cautious yet positive approach to this market entry
scheme. This will include a realistic five year plan in which to match the ambitions of the CEO,
while gaining a substantial market share (please see Figure: 7). The plan will be outlined to begin
in the Quarter 1 of 2003 to allow the completion of the NDA approval from the FDA37, to avoid
any setbacks to the schedule. However, these plans are flexible and can be implemented in
Quarter 3 2002 if the approval is received at this stage.

From Quarter 1 2002 Viagra have recorded sales in the U.S., Brazil, Mexico, Canada, Australia,
Spain, Italy, France and Germany and the U.K. totalling $321.6M. Of this amount, the U.S.
represents 74% of these sales.38 In addition to this, in 2001 Pfizer achieved total sales of
$1,470.3M from Viagra in these regions. With a CAGR of 18.6%, Pfizer can expect sales to top
$1,705M in 2002 and $2,022.13M in 2003. As the price of Viagra is $10 dollars per pill, Pfizer
will sell over 202 million pills in these regions in 2003. If Lilly ICOS LLC are to gain a 5%
market share of the ED Pharma industry in the first year of their operations in these markets, they

35
Page 2
36
Table A
37
NDA application submitted in June 2001 and will take 12-18 months to approve
38
Exhibit 13

22
need to sell over 10.1 million pills of Cialis, with totalling sales of $101m with a sale price of
$10 per pill (Please see Appendix 4 for total breakdown of unit sales and market share).

As the market is expanding at a rate of 18.6% each year, it can be assumed that Pfizer are
persuading men with ED to discuss the problem and purchase Viagra. Due to this, the forecasts
outlined in Appendix 2 account for this and the additional patients acquired by Lilly ICOS LLC
during the promotional campaigns run.

In order to meet the ambitions of CEO Taurel to reach $500m in sales, Lilly ICOS LLC need to
sell 50 million pills of Cialis. In addition to the growth in these markets, it is essential that Lilly
ICOS LLC capitalise in any expansion in the core markets by expanding the geographical
regions that Cialis is distributed, while continuing to acquire ED patients that are currently not
being treated for the condition (discussed further in the marketing mix).

It can be assumed that there are no other competitors in the market, apart from alternative
therapies, Viagra and Levitra, with the latter not yet entering the market39.

Figure: 7

39
Therefore, the sales of Viagra will be treated as the entire sales in the ED drug market.

23
This strategy has been developed after analysing and modifying Dolan’s Global Competitive
Framework (1991). This framework was created to help managers develop a global competitive
strategy (please see Appendix 3), highlighting the competitive advantages to be gained from
location, world scale volume and global brand distribution. Although this framework also takes
into consideration domestic position and national fragmentation for the market leader, I am only
focusing on the global market strategy. This will allow Lilly ICOS LLC to develop an advance-
base strategy, where “the company uses concentrated efforts to gradually capture ‘neutral’
markets, seeing gradual expansion as one step in a larger offensive plan” (Stauble 2000), which
directly answers the question posed by the management of Lilly ICOS LLC, ‘should we swing
for a home run or merely reach first base’?

Key Issues facing Lilly ICOS LLC

How they going to compete with Pfizer’s 1st mover advantage

How to leverage the product attributes over the competition
Lack of experience in the market
How will they develop a brand identity in a market with a well established market leader
and powerful brand
Currently a lack of information on the ED condition and possible treatments available
How do Lilly ICOS LLC demolish the social stigma associated with ED and persuade
men to openly discuss their condition
How do Lilly ICOS LLC persuade physicians to discuss ED and to prescribe Cialis over
Viagra

24
 Marketing Objectives

Strategic Thrust
The launch of Cialis will see Lilly ICOS LLC enter a new product into an existing market which
can be classified as product development as it is a superior product to the one currently available.
Due to this, the above outlined strategy will need to implemented correctly in order to ensure
maximum market share potential is achieved.

Strategic Objectives
The strategic objective that Lilly ICOS LLC are implementing are to build sales and market
share, as it is a new product launch. This will be done by overcoming the key issues, outlined
above, by persuading men with ED who have not discussed the problem to visit a doctor and
purchase Cialis. In addition to this, it is an objective to gain a 5% market share increase in the
core market regions before expanding the operations in year three and again in year five to
additional geographic locations to expand the reach of Cialis.

Core Strategy

Target Markets
The core target market will consist of ED patients who are Viagra dropout and all men with ED,
while aiming to obtain an annual 5% market share in the ED Pharma industry. Cialis will be
released in the core countries, before being released in the additional countries, as will be
discussed in the marketing mix.

Competitor Targets
As Pfizer’s Viagra is the only competitor in the market at present, Lilly ICOS LLC will compete
against them directly. However, the impending launch of Levitra from Bayer will see an
additional competitor in the market.

Competitor Advantage
Cialis will compete in the market by communicating the unique offerings of the drug in addition
to the safety features associated. Lilly ICOS LLC and the respective affiliates will attempt to
establish a unique bond with ED patients in order to create customer loyalty. This in turn can

25
help increase profits, as discussed by Reichheld (2000), who believes that in order for a firm to
achieve customer loyalty, they must have dedicated employees who will cater to the needs of the
customer, be contactable and answer and queries the customer may have. This can be achieved
through the company’s website and direct telephone line, which will be on all the prescription
tablet boxes distributed by the pharmacists/drug stores.

26
 Marketing Mix Decisions

A marketing mix can be defined as “the multifaceted blend of all the elements that comprise an
organization’s operations”. It is used to help compile and narrow the options available to
managers of a company, allowing them to develop a suitable strategic focus for the firm (Dolan
2001).

Product
Cialis is an ED drug that will be launched in the market at latest date of Quarter 1, 2003. It is part
of an incremental innovation process developed by Lilly ICOS LLC to compete directly with
Pfizer’s Viagra; in order to establish a significant market share, which will be achieved by
implemented the outlined five year plan. Incremental innovation can be defined as “the small
changes to a product, which increase its capabilities or its quality” (Herrmann 1999).

Price
Cialis will follow a product-quality leadership pricing strategy and will be distributed and sold
for a long-term set price of $10 (or the currency equivalent in the related countries). This strategy
is used when firms offer a premium brand at a premium price due to the unique offerings of their
product, such as the Cialis drug with unique offerings such as proven safety and duration (Kotler
2001). This price will subsequently see Lilly ICOS LLC compete in the same price bracket as
Pfizer’s Viagra, allowing Lilly ICOS LLC to recoup the costs of product development and
market entry. It will also reduce the need to increase the price in future, which may be required if
a price lower than $10 is implemented due to operational and logistical costs which will be
encountered throughout the firms expansion in the market place. This would result in customer
dissatisfaction and may harm the image of the brand (Jain 2000).

This price will also help Lilly ICOS LLC achieve their sales goals in three years (please see
Appendix 5), while setting a base upon which Cialis can grow in the market place. If these
attributes are communicated correctly, it will help create awareness in the Cialis brand while
gaining a substantial market share, allowing the growth outlined in the five year plan. This
pricing strategy allies the belief of Jain (2000), who states that “the pricing of a new product,

27
following the relationship between the market share and the cost, should be dictated by a
product’s projected future growth”.

Promotion
The promotion of Cialis will undertake several forms, depending on the stage of the product life
cycle and the country the drug is being distributed. Due to this, the relationship that Lilly ICOS
LLC builds with their affiliates in the respective regions will need to be excellent in order to
ensure the Cialis brand is a high priority for the affiliates. The affiliates will need to portray and
communicate the brand image of Cialis that Lilly ICOS LLC are trying to establish. To ensure
this Lilly ICOS LLC need to offer financial incentives to represent the work that is required from
the affiliates. As outlined in the external analysis, Lilly ICOS LLC need to develop adaptive
campaigns to ensure maximum market entry success in each country.

The promotional campaigns ran will include the use of T.V advertisements, the company
website, YouTube, social media sites, outdoor advertising and press publications (discussed
further in implementation).

Place
The distribution and sale of Cialis will also undertake different strategies throughout the
development of the drug in the market place. In stage one; Cialis will be primarily distributed in
the ‘core countries’ of the U.S., Canada, Mexico, Brazil, Australia, France, Germany, Spain,
Italy and the U.K. After establishing a solid market share in these countries, gaining the valuable
market knowledge required and conducting the necessary market research, Lilly ICOS LLC can
then move to stage two of the Cialis market launch by entering Switzerland, Netherlands,
Belgium, Norway, Austria, Greece, Hungry, Turkey, Poland and the Czech Republic (please see
Appendix 6 for financials). These locations have been selected due to their close proximity, ease
of information in order to gain the required market research, and the growth potential in each
country40. After establishing a market share in these countries, Cialis will need to initiate stage
three of the market entry process in year five (2007) by launching Cialis in Venezuela, Central
America, Puerto Rico, Taiwan, Korea, Malaysia and Hong Kong (please see Appendix 7 for
40
Exhibit 13

28
financials). These countries have been selected due to the same reasons as stage two above. After
successful completion of stage three, the GMSO will need to adjust the strategy implemented in
order to retain and control market share while attempting to over throw Viagra as the ED Pharma
industry drug leader.

In each of these areas, Lilly ICOS LLC will sell Cialis to the regional drug distributer/wholesaler
i.e. McKessen or Cardinal Health (Drug Channels 2009), who in turn will distribute Cialis to the
pharmacists/drug stores. The distributor/wholesaler in each geographical location will need to be
established and an agreement in place before Cialis is launched in order to provide swift market
entry.

29
 Implementation

Marketing Implementation can be defined as “ the process that turns marketing plans into action
assignments and ensures that such assignments are executed in a manner that accomplishes the
plan’s stated objectives” (Kotler 2000).

Due to the established power of Pfizer and their brand Viagra, it is essential for Lilly ICOS
LLC’s strategy to be implemented correctly in order to create brand awareness. To analyse this
correctly, I have broken this into the following headings:

Who is Responsible?
As previously mentioned, it is essential to communicate effectively with the affiliates in each
region. In order to do this, the product team must hold separate meetings with the affiliates from
each country every quarter in order to build a relationship with them, while stating the aims of
the company and receiving constant feedback on market performance. This may be time
consuming but will be crucial to the successful implementation of the campaigns.

In the initial affiliate meetings, the product team must get the following points across to the
respective regions:

The U.S.: Targeting males aged 50+.

General advertising campaign aimed predominantly to well educated, middle class (or higher)
males. Also essential to target the partner of the males, however avoid alienating the males.
Physicians must also be targeted with sales reps communicating with the physicians on a regular
basis.

Europe and other core countries: Targeting males aged 50+.

General advertising campaign aimed predominantly at low income males with a low education.
Same aims for the partners and physicians as outlined above.

30
 What message do Lilly ICOS LLC want to get across?
Show it’s a proven treatment:

An essential part of the implementation and promotional campaign by Lilly ICOS LLC will be to
communicate the scientifically proven attributes of Cialis. This will play an essential role in the
campaign if Lilly ICOS LLC are to successfully convince ED patients to switch from Viagra to
Cialis, while also convincing non-treated patients to seek treatment. One way to do this is to use
testimonials from users in the advertising campaigns.

Physicians:

As previously mentioned, it is essential to educate physicians on the topic in order to boost their
confidence in discussing the matter, and communicating what the potential steps to controlling
the condition are. Although this is part of the affiliates job, for the product launch process it will
be essential for the sales team of Lilly ICOS LLC to tour the respective countries, hosting
information nights for physicians on the topic. These nights will consist of a wine reception,
three courses of a meal, a presentation on the safety, efficacy and duration aspects of Cialis,
followed by the remaining two courses of a five course meal and concluding with a presentation
on how to discuss the ED condition with patients, The dinner will be split into these sections in
order to maximise the potential impact of the presentations and attendee participation.

Increase circulation of ED information:

To date, there is a lack of information on ED available in comparison to the amount of males

who suffer from the condition. Due to this, Lilly ICOS LLC will construct an information video
which will inform patients of the ED condition, how to cope with the condition and the possible
help available. This video will also demonstrate the benefits of Cialis and the steps necessary in
order to obtain the drug, to help encourage brand involvement, which concerns “policies of
attracting and maintaining customer interest in a specific brand” (Anderson 2004). The video
will be posted on the company website, with viewers of the TV ad campaigns, both ads aimed at
ED patients and their partners, being instructed to visit the Cialis website for more information.
If the patient or partner has any other queries they can view the FAQ section of the Cialis
website or submit a confidential email which will be responded to within 48hours. There will
also be an anonymous chat room set up, where ED patients can log on and discuss issues and
opinions with other ED patients. This is an essential part of marketing in the 21st century, where

31
“communication is a prerequisite for trust building” (Anderson & Narus 1990, cited in Anderson
2004). This will require an investment in the video production and the website development,
however, is essential if Lilly ICOS LLC are to convince ED patients, undiagnosed ED sufferers
and Viagra dropouts to use the drug.

How will they get this message across?

T.V Advertising/Celebrity Endorsements:

Celebrity endorsements have the potential to increase the awareness in the brand due to their
high profile standing in the public eye, particularly if used correctly in DTC advertising.
“Marketers generally assume that a spokesperson, as a reference group, should ‘be like’ the
target audience (e.g. same gender, same age) to enable the target audience to relate to the ad
(Wells et al. 1989).

With this in mind, potential celebrity endorsers for the Cialis brand are Tiger Woods and
Michael Jordan. Both are world renowned icons due their respective sporting successes. Also,
due to the recent controversy over Tiger Woods love life, he would be an ideal candidate as the
campaign could be spun that Cialis helped his sexual performance; however, the partners of the
males may not appreciate this along with the fact Tiger Woods may not want to portray himself
in this light. Due to this, a high profile celebrity such as Michael Jordan would be ideal to
promote the product. Jordan is famous worldwide, especially in the U.S. which is the largest
market for ED drugs41.

In the TV ads, Jordan will encourage males to visit the Cialis website and watch the free video
about the ED condition and the help Cialis can provide, while also catering for any questions the
patients may have. Jordan will also encourage them to visit their physician and ‘ask for Cialis
today as it is safe, scientifically tested to the highest standards and will improve your
performance and duration’, the latter two attributes being attributes that Jordan was renowned
for, on the basketball court. These ads will be aired during male orientated shows such as
American football, Hockey, Basketball and 24 in the U.S and similar programming in the other
countries Cialis will be distributed.

Due to budget restraints it may be difficult to add an additional male to the celebrity endorser to
the campaign, but if future budget increases permit, it may be essential to expand the reach of the
41
Exhibit 13

32
celebrity endorsement by attracting an ageing male such as famous French actor Jean Reno, in
order to appeal to the European market. These ads will also be accompanied by user testimonials
at the end of the ad in order to help the ED patients relate to the product even further and show it
appeals to everyone.

In order to help women relate to the product, Michael Jordan’s wife could be cast in the partner
focused ads, or a famous actress such as Helen Mirren. In these ads, Mrs. Jordan/Helen Mirren
will state how Cialis and the Cialis website can help them. On the website there will be
instructions for partners on how to handle the situation and the best method to approach the
situation, along with a FAQ section and a confidential email line, similar to the males. These ads
will not be aired at the same time as the male orientated adds, instead they will be aired during
primetime female orientated shows such as Desperate Housewives, Loose Women and in the
United States aired on the new ‘must have’42 TV channel the food channel.

Lilly ICOS LLC will be responsible for organising the production of these adds, who will then
pass them to the respective affiliates who will organise the allotted times they are aired in the
respective countries in order to reach the target market.

Guerrilla Marketing Techniques:

Due to the mass advertising that we are exposed to in modern society, it is essential to stand out
from the crowd. Therefore, accompanying the informational TV advertisements outlined above
will be an ambient advertising campaign which will be run in alliance with the affiliates in the
respective countries. These campaigns will include guerrilla marketing techniques such as
graffiti advertising campaigns in which comments and murals will be drawn (cleaned in) in bus
and train stations in all the countries targeted by Cialis (Guerrilla Innovation 2004). These ads
will include the drug name and the website and the line, ‘Hard Problem, Simple Solution’ in
order to install a sense of curiosity in the readers mind to increase the probability of them visiting
the Cialis website.

Also, Lilly ICOS LLC will need to develop an alliance with a leading coffee company in the
U.S. to place promotions for Cialis on the coffee cup sleeves in order to resonate with the
educated, high income males that will be targeted in the country. A similar campaign can be run
in the other countries that are entered also.
42
Very popular in the U.S. at the moment from personal experience

33
Print Press:

By releasing press packs to the local press and placing advertisements in health conscious male
magazines such as Men’s Health, Cialis can increase the awareness of the brand while putting
across a positive image of the drug.

When will these campaigns be run?

These activities will be run from the launch of Cialis in Quarter 1 2003. Due to the five year plan
established, the implementation of the marketing plan will need to be monitored, with the
promotional activities altered as required in order to meet the goals outlined in the plan.

Main message of the campaign?

ED is a common condition, visit the Cialis website for more information. Then consult your
doctor and ask for Cialis.

How will the competition respond?

Pfizer will not treat the entry of Cialis to the ED market lightly. Although the advertising budget
of Pfizer is already enormous, it will be expected that they will increase their budget while
expanding the markets that Viagra is provided in order to offset any potential sales that Cialis
may appropriate from them. Bayer, who have not yet entered the market at this date, will monitor
the success of Lilly ICOS LLC and Cialis in order to assist their own market entry strategy.

Precautions for side-effects?

In the event of a product default that is only realised after the drug has gone to market, Lilly
ICOS LLC must have a contingency plan in place in order to control the situation. One of these
steps is to have an agreement with the wholesaler/distributer that all Cialis pills can be recalled
within 12 hours of notification, this being the most drastic eventuality. Another step is to have a
press release drafted and released ASAP after news of the situation arises. If in the case of a
fatality, Lilly ICOS LLC need to follow the successful steps taken by Pfizer when they
approached an identical catastrophe. Cialis must be retested with the results (positive) being
released immediately to experts in the related areas, along with an advertising campaign to
restore the brand to a positive image.

Product Extensions?
Product extensions can be extremely profitable and are a potential source of revenue if the initial
product is successful. This process is part of the long-term strategy.

34
 Short Term Goals
The short term goals are outlined in the five year plan. In summary these goals are to achieve a
25% market share in the core country ED Pharma industry market by 2007. In addition to this,
Cialis aim to have a 15% market share in the extension countries and a 5% market share in the
additional extension markets by this date (please see exhibits 4-7 for full details of the financial
breakdowns of these goals).

Long Term Goals

The long term goal of Cialis is to become the market leader in the ED drug industry. This will
involve overtaking Viagra in terms of sales and global operations. To do this, after the five year
compete strategy is successfully implemented, Lilly ICOS LLC must implement a beat strategy
in order to achieve these goals. Product extensions, additional celebrity endorsement, investment
in R&D and additional investment in advertising will be required in order to meet these goals.

Control:

The establishment of the GMSO has to date been extremely successful for Lilly ICOS LLC. Due
to this success, it is essential that this team is kept in place to promote this drug and oversee its
operations, while continuing to develop new drugs through the alliance. As this will essentially

35
test the resources of both firms, it is essential that both firms recruit new employees and assign
them to the GMSO, particularly sales reps that can make calls to the physicians.

Although Paul Clarke, CEO of ICOS, believes the firm are now ready to bring products to the
market on their own, I would strongly suggest that they do not. I suggest that Clarke and ICOS
limit the amount of products that they release separate from the current alliance until at the
earliest the three year mark in order to gain the experience essential to market drugs in current
society. Although Clarke feels that the company are ready, I do not believe they have the market
experience to handle this step at present. With this in mind, a NDA will take at least three years
to complete from the start of production, so after this time they will have gained the necessary
experience.

Appendix 1

Strategic Alternative Analysis

36
Lilly ICOS LLC have several strategic alternatives to consider when deciding how to enter the
market. In order to develop the outlined strategic alternatives these options were analysed under
the following headings, detailing each option available in regards to the launch of Cialis. The
proposed strategy, as outlined in the strategic recommendations section, contains a collaboration
of all the alternatives that are best suited to Lilly ICOS LLC and the launch of Cialis.
Strategy
Lilly ICOS LLC have three options available to position themselves in the new market they are
entering. These strategies must consider the implications of entering a market with an established
leader already present.

Implement a Niche Market Strategy

A niche market can be defined as a “narrowly defined group, typically a small market whose
needs are not well served” (Kotler 2000). This strategy allows Lilly ICOS LLC to focus on a
specialised segment of the market, while developing a differential advantage over the
competition. This can be defined as “the creation of a competitive situation consistent with the
company’s capabilities and skills” (Stauble 2000). Bayer are currently planning to use this
strategy with their drug Levitra, by targeting the drug at ED patients who also have diabetes. A
niche category that is available to Lilly ICOS LLC is to target ED patients who were seeking a
drug which allows a longer window for sexual intimacy after consuming the drug, which Cialis
can provide over its competitors. Another differentiation strategy available is to target patients
with high fat diets, which has caused problems with previous medication in the past. Also, age
and co-morbidities are an option to differentiate upon, with ageing ED patients becoming
increasingly concerned with possible side effects of Viagra.

Pro: Avoids competing with the industry leader head on, while still targeting a potentially
profitable segment of the market.
Con: Narrows the reach of the target market and closes the potential for the product to be
targeted towards all ED patients at a later date.

Implement a Compete Strategy

This strategy involves competing head on with the market leader Viagra. The main aim of this
strategy is to establish Cialis in the ED drug market, while being wary of the power of the market

37
leader Viagra. Lilly ICOS LLC could use this strategy to establish them in the market while
gaining the essential experience required to challenge an established leader such as Viagra. After
time, if successful, Lilly ICOS LLC could alter the strategy to a beat strategy and attack Viagra
head on.

Pro: Allows Lilly ICOS LLC to gain experience in the market place, competing against Viagra,
without provoking a serious retaliation from Pfizer.
Con: May be seen as a lack of ambition and a sitting on the fence strategy in the industry. Also,
as it is a cautious approach, it may lack the promotional span to reach all elements of the target
market.

Implement a Beat Strategy

This would involve implementing a strategy that will overtake the current market leader Viagra.
A strategy available to Lilly ICOS LLC in this scenario is to implement a low-cost leadership
strategy, where the firm price Cialis at a price significantly lower than Viagra in order to attract
price sensitive patients, while establishing a foothold in the marketplace. This strategy defends
the company “against powerful buyers because buyers can exert power only to drive down prices
to the level of the next most efficient competitor” (Stauble 2000). An example of a firm who
have successfully completed implementing this strategy is Ryanair, who entered the saturated
airline industry, and successfully completed and gained a substantial market share by offering
flights at a lower price than the competition.

Pro: Will show that Lilly ICOS LLC are serious about entering the industry and portray their
intentions from the fore, with the potential to gain a substantial market share.
Con: This approach will provoke Pfizer to defend their Viagra brand. Due to the finances and
personal at hand, they will be able to create an advertising campaign to overshadow the initial
success made by Lilly ICOS LLC and cut the price of Viagra if required to do so. At this present
time, Lilly ICOS LLC does not have the experience, capacity, finance or contacts in the industry
to implement this type of strategy.

Target Market

38
Lilly ICOS LLC have three main options when it comes to targeting for the Cialis drug. These
three options all participate in the decision making unit, outlined in Figure: 3. The three options
are:
Patients
Patients are the most obvious and potentially the most important person to target Cialis to. As it
will be the patient who will be using the drug, the final decision ultimately comes to them
whether they purchase the drug or not.
Pro: Gets straight to the decision maker.
Con: As previously highlighted, males often are aware they have a problem and are aware of the
help available, yet due to social stigma, are not willing to pursue with seeking a solution.

Physicians
As highlighted in Figure: 3, the doctor acts as a gate keeper in the process. As previously
highlighted, pharmacists have to prescribe the drug that physicians prescribe, however they often
only write the active ingredient in the drug and not the brand name. Due to this, physicians need
to be targeted and shown the safety and efficacy features of Cialis, as well as the benefits, in
order to persuade them to prescribe Cialis over the industry alternatives. In addition to this,
physicians must also be targeted and educated on Cialis in order to ensure that they are fully
aware of the drugs offerings in order to encourage them to initiate the discussion with patients
where needs be, and to follow up on the patients satisfaction with the drug.
Pro: Gets to the gatekeeper in the DMU and a potential key influencer to the consumption of
Cialis.
Con: Physicians may not feel comfortable being directly targeted by a drug company or may
have an established bond with Pfizer/Viagra already established.

Partners
As highlighted in Figure: 3, partners often act as the key influencer and decision maker in the
process. Due to this, partners are an essential target market as they can influence their male
partner to discuss the problem with the doctor, and potentially purchase Cialis.
Pro: Can act as an influencer and decision maker.
Con: Targeting partners may alienate males as they see it as the drug company going behind
their back and being a female focused problem, not them who have the problem.

39
 Price
There are three main price alternatives available to Lilly ICOS LLC to sell Cialis in the market
place:
Higher than current market price43 ($12 per pill)
This option is available to Lilly ICOS LLC due to the duration period of the Cialis that
differentiated the drug from the competition.
Pro: By charging a premium price, patients may feel that Cialis is a superior drug to Viagra
due to this and the attribute qualities Cialis possesses.
Con: In a price sensitive market, where Viagra is an already established leader, charging a
premium price may exclude Cialis from a large proportion of potential patient customers.

Lower than the market price ($8 per pill)

Charging a lower price may be a suitable option for Lilly ICOS LLC to establish themselves
in the market place due to the power of Pfizer and Viagra. This is also a form of a low-cost
leadership strategy.
Pro: Provides an efficient, scientifically proven, new drug to a price sensitive market at a
lower price than the competition. This will allow Lilly ICOS LLC to establish themselves in
the market place while acquiring a core client base.
Con: By supplying a drug at a price lower than the current market price, Cialis may be seen
as an ineffective drug. Also, Pfizer may react in an aggressive manner, cutting the price of
Viagra to below or matching the price of Cialis in order to maintain market share.

Matching the market price

Matching the market price will see Lilly ICOS LLC competing against Viagra head on in
order to gain ground in the marketplace.
Pro: This option will show that Lilly ICOS LLC are not afraid to challenge Pfizer in the ED
drug market place. It will also avoid a price war with Pfizer, who may react strongly to a cut
in price due to the size of the firm.
Cons: It will portray an image that Viagra and Cialis are similar products, with similar
attributes, which will diminish from the differentiated qualities of the drug.
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Current market price is $10, the price charged per pill by Pfizer for Viagra.

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 Segmentation
There are several possible options for Lilly ICOS LLC to segment the ED patient market in order
to maximise the potential sales of Cialis, as previously mentioned in the internal analysis. These
options are:

Viagra Usage Dropout

Due to the high number of Viagra dropouts, there is a clear gap in the market where ED
patients are not currently being satisfied by the current market offerings.
Pro: Have an already established market, with no competition as the market are not satisfied
by the current offerings in the market.
Con: May be seen as a negative approach as Lilly ICOS LLC will not be competing directly
with Viagra as the patients have stopped using Viagra before the release of Cialis.

Co-Morbidities
Several ED patients also have an underlying health condition. Due to this, there is potential
for Lilly ICOS LLC to target patients that have an additional health problem such as diabetes
or cardiovascular disease.
Pro: Targeting a large potential market.
Con: Potential fatalities due to a reaction to Cialis and a combination of other drugs may ruin
the drugs brand before it is even launched fully.

Duration
As mentioned previously, duration of Cialis can be a differentiating factor in the
marketplace.
Pro: Can attract a large potential market due to the unique offering of a 36 hour sexual
intimacy window.
Con: May be seen as a ‘playboy’ drug and not receive the pharmaceutical credit it deserves.

Fat Meals
Meals with high degrees of fat have traditionally diminished the effects of competitor’s
drugs. However, this does not occur with Cialis.

41
Pro: Potential target market who are dissatisfied with the interruption fat filled foods make to
Viagra.
Con: The market may not be large enough to match the sales targets of Lilly ICOS LLC.

Location of Market Entry

Everywhere Viagra does
The option of selling in each region that Viagra does would see Cialis compete directly with
the market leader.
Pro: Competing directly with Viagra and maximising market potential.
Con: Lilly ICOS LLC currently do not have the capacity to compete on such a global scale.

Launch in the U.S., Brazil, Mexico, Canada, Australia, Spain, Italy, France and Germany
and the U.K.
By entering the regions that Lilly ICOS LLC have already conducted substantial market
research the firm will be able to instruct their affiliates on exactly what campaigns to run,
through which mediums and at a set cost.

Pro: Existing knowledge of the areas will give Lilly ICOS LLC an advantage when entering
these markets. By narrowing the market selection, Lilly ICOS LLC will also avoid stretching
their resources and provide excellent service to each area.
Con: Excluding other geographical areas such as S. Arabia etc. may narrow the potential of
growth of the Cialis brand.

U.S. only
Pro: Lilly ICOS LLC will be able to focus on a key market solely, focusing all their skills in
this area
Con: May be too narrow of a market for Lilly ICOS LLC to meet the sales demands set by
management.

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 Appendix 2

Breakdown of sales of each strategic alternative.

Appendix 3

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 (Dolan 1991)

Appendix 4

Year on year market share gain in relation to Viagra’s sales.

Appendix 5

Breakdown of the total sales received over the four years after initial implementation.

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 Appendix 6

Financials Outlining the Sales forecasted for the entry to the extension markets in year 3 in
relation to Viagra’s sales.

Appendix 7

Financials Outlining the Sales forecasted for the entry to the additional extension markets in year
5 in relation to Viagra’s sales.

Bibliography

Books

45
Dolan, R.J. 1990. Strategic Marketing Management. 1st Ed. U.S.A. McGraw-Hill.

Hutt, M.D. and Speh, T.W. (2007). Business Marketing Management. 9th Ed. USA. South-
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Jain, S.C. 2000. Marketing Planning & Strategy. 6th Ed. U.S.A. Dave Shaut.

Kotler, P. 2001. A Framework for Marketing Management. 1st Ed. New Jersey, U.S.A. Prentice
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Kotler, P. 2000. Marketing Management. Millennium Ed. New Jersey, U.S.A. Prentice Hall, Inc.

Stauble, V.R. 2000. Marketing Strategy a Global Perspective. 1st Ed. U.S.A. Dryden Press.

Wells, W., Burnett, J. and Moriarty, S. 1989. Advertising Principles and Practice. New Jersey,
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Anderson, P.H. (2004). Relationship marketing and brand involvement of professionals through
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Herrmann, D.K. (1999). Tracking Systems as a Catalyst for Incremental Innovation. Journal of
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Muzzellec, L. And Lamkin, M. 2007. Does Diageo make your Guinness taste better?. Journal
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1000ventures. [Online]. Available from:
http://www.1000ventures.com/business_guide/crosscuttings/customer_retention.html [Accessed
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Drug Channels. [Online]. Available from: http://www.drugchannels.net/2009/04/drug-channel-
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Interview:
Interview with Ms. Teegan Maguire. Marketing Executive, Pfizer Inc. Interview held: 27
December 2009.

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