Week 23 (23.9.07)

Learnt

Pricing Strategy

What is the pricing going to deliver to the company?

1. Profit Objective - to achieve a quick recovery of the company's investment or a quick payback
2. Volume Objective - is investing for long term growth. Means entering the market with low prices in an effort to gain market share against less efficient producers. They used high quality at a very low price to force out the weaker players.
3. Status Quo Objective - passive strategy; marketer does what the market leader dictates. If the leader wnats high prices, you get high prices, too. This is called follow-pricing and is not a good position to be in because you're not in control of your destiny.

15 different pricing strategies

1. Skim pricing -set pricing very high - unique new product-little competition- has SCA
2. Slide down pricing - often start with skimming-lower the price makes more valuable to larget customer group
3. Penetration pricing-set pricing low with me-too product-jump into the market and try to survive and make a profit before the competitor sinks you
4. Bundling pricing-packaging products and/or services-bundle lower than the combined price of the 2 separate products
5. Price-to-market strategy-tap into the economical or psychological value when customers purchased at different times of the day or at a different place
6. Psychological pricing-makes the pricing sould and look lower than it really is ie 99 vs 100
7. Follow pricing-price just below the level of recognized industry leader-it's not a good place to be if you can avoid it
8. Segment pricing-pricing the same product differently, in different markets or segments because customer in the different markets or segments place a different value on the product or service
9. Cost-plus pricing-simply building price from cost up-add a fair and reasonable profit on top-ie construction projects
10. Preemptive pricing-set price very low to discourage competitive market entry-customers are satisfied wity your product and have no real motivation to move to a competitor
11. Phase-out pricing- set price high-to remove or phase out the product from the line-to discourage customers from continuing to purchase the product- a replacement product or service must be available at a lower price for a phase-out strategy to work out successfully
12. Loss-leader pricing-set pricing low-to attract customers-in consumer market-provide the customer a low-priced product, hoping to generate sales of other higher-margin products at the same time
13. Terms & Conditions of Sale-use by large financially strong companies-ie airlines, automobile rental agencies, retail stores
14. Push vs Pull Strategy-trade off between motivating the sales force with an extra commission and stimulating the customer with a rebate or lower than normal price
15. Closeout-pricing - simply reducing the price to clear out inventory

Unlearnt

Only knew skim, slide-down, penetration, bundling and psychological pricing strategy. There are actually so many different strategies for specific conditions.

Relearn

Product Celebrex faces many challenges from the time the product is launched in 1997. Celebrex is a COX-2 inhibitor that provides pain relief which is different from NSAIDs because it is more efficacious and provides GI safety. Being the first COX-2 in the market, Celebrex was priced at RM4 per tab (skim pricing). Celebrex dosing is twice a day(per day treatment RM8). With the launch of new COX-2 from competitor, Arcoxia, in 2000, taken only once a day, in addition with a lower pricing (RM3.50 per tab), Arcoxia has slowly taken over Celebrex market share.

I believed Arcoxia has used penetration strategy to gain its market share. Even though Celebrex has a SCA over Arcoxia where Celebrex is approved by FDA for it's CV safety, with the vast pricing difference between Celebrex and Arcoxia, more cost-concern doctors would prefer Arcoxia over Celebrex.

Therefore, I proposed in order to gain back Celebrex market share and grow over a long term period, marketer has to adopt a slide-down pricing for Celebrex because the market is still growing. There are lots of potential to convert more users from NSAIDS and Arcoxia with the added CV safety competitive advantage that Celebrex has to offer which NSAIDs and Arcoxia are limited.

Week 22 ( 14.9.07)

Learnt

Aim of strategy - to create and maintain a Sustainable Competitive Advantage (SCA)
SCA - is something Pfizer can leverage in the marketplace that cannot be easily duplicated by a competitor ie product patent, control of raw materials, unique brand image, control of distribution channels etc

1. Market Leader - first position in the market - strategy used to keep its position is a defense strategy. They can set the pricing levels in the market, and followers follow the leader
2. Followers - second position in the market; strategy used is attack!
3. Nichers - third position; strategy used- by flanking into an unoccupied area, entering into small, less well-served markets
4. Guerillas - fourth position - break all existing rules and regulations set up by the leaders and followers and work to satisfy the customer

Unlearnt

Initial thought of there is only defense and attack strategies. Now learning there is also nicher strategies and guerilla strategies (hit and run attack).

Relearn

One of the strategy which i'm going to apply to gain more of Celebrex market share in PH is attack strategy. Celebrex are currently in the 2nd position base on IMS market share versus Arcoxia the market leader. In order to do this, I need to find out the weakness in Arcoxia and attack at that point.

One of the main sustainable competitive advantage for Celebrex over Arcoxia is Celebrex is endorsed by FDA for safety approval but not Arcoxia. With this, my sales force must be confident not only to share on the drug effectiveness but on the safety which is one of the main criteria both clinicians and patients need.

Week 21 (7.9.07)

Learnt ( From Marketing Plan - William Luther)


There are 7 components of planning:

1) Fact Book - Analyze market economic, competition, your business and customers

2) Strategic & Business Plans - Select markets with good profits potential and isolate critical business strengths needed to become competitive

• Strat Plan - state what you should start doing now to end up where you want to be in the future
• Business Plan - given the direction of the strategic plan, what should you be doing right now, in the short term, to get there?

3) Operational Plan - Develop business strengths that can deliver a competitive market position

4) Positioning Statement - Determining how you wnat your business strengths to be perceived by prospective customers

5) Marketing Plan - Translate the positioning statement into recognizable and preferred brands

6) Action Plans - Detailed execution of one or more strategies

7) Feedback - Using controls and market research to monitor existing and future conditions for inclusion in the Fact Book and plans

Unlearnt

Strategic plans sets up the business plan, business plan set up the operational plan. I can't start my planning with the marketing plan until I decided the overall direction of business.

Relearn

In my recent business analysis, Celebrex market share in PH has drop significantly compared to Arcoxia. So, what is the problem?

With the market analysis, I tried to gather more informations on the market economics such as size of the pain market ,OA & RA market, competitor's price/promotions. In terms of competition, PH doctors are more receptive in using COX-2 drug versus NSAIDs because of better tolerability, efficacy and safety. Customers want a product that helps to relieve pain and works for them. Cost must be affordable.

Therefore, I analyze base on the 4 P's : Pricing, Product, Place and Promotion & Customer prospective in 4C's: Convenience, Customer Solution, Communication and Customer Cost. Understand also Celebrex positioning statement and what is Celebrex product different from Arcoxia. Do SWOT analysis for Celebrex.