Metabical Case Study free essay sample

There are only several other weight-loss options in the market competing with Metabical. The first is prescription drugs. These are prescribed for use only by obese and severely obese individuals. This meant that only individuals with BMI of over 30 who were prescribed weight-loss drugs were using appetite suppressants and fat-absorbing blockers. They had serious side effects associated as well, which meant only a doctor could approve them. But these prescription-drug options did not account for the overweight segment with BMIs between 25 and 30 who were looking for weight-loss solutions as well. The second option was the over-the-counter weight-loss drugs. However, the only real over-the-counter weight-loss solution approved by the FDA was Alli. The problem with Alli, though, was that it had many negative side effects, with over 30 reports of liver damage. Other over-the-counter solutions were considered herbal or dietary supplements by the FDA so they were no regulated. The issue with these supplements was that they negative side affects were not discovered until after the product was widely in use. We will write a custom essay sample on Metabical Case Study or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The last weight-loss option was using a diet plan, exercise plan, mealy replacement products, weight management support programs, or pre-portioned packaged food delivery services. Metabical, on the other hard, would be the first prescription drug approved specifically for overweight individuals. The current weight-loss options did not capitalize on such market so Metabical had a good opportunity to excel in. These were individuals who had hopes of losing about 10 to 30 pounds but did not need to prescribe to obese weight-loss solutions or commit to a diet/exercise plan. 2. What are the pros and cons of forecasting methods presented by Printup? Barbara Printup used three different approaches to forecast demand of sales for Metabical. The first approach was to look at the number of overweight individuals and then narrowing it down to a population of those who were actively trying to lose weight. From this number, she would narrow it down again to those who were actually comfortable with using weight-loss drugs. This was a good method to focus on a target market that was open to the idea of a new weight-loss drug and wanted to commit to using it. The problem with this method, however, was that this did not distinguish the individuals who were already committed to a weight-loss solution. This did not tell us also about whether or not people wanted a new solution. It was a very broad population of consumers that was not specified further enough to solidify a target market. The second approach was conducting a CSP survey. The results showed that there was a considerable amount of consumer interest in a prescription weight-loss drug for the overweight. Printup would then narrow this pool of individuals to a number of those who were ready to immediately go to their health care provider to request a prescription. This approach was a good indicator of which consumers were generally interested in trying a new weight-loss drug. And by narrowing the population to those who would prescribe immediately, Printup is expediting the process of targeting a specific market and generating sales. The problem with this approach, however, is its ambiguity. Though it is true that these consumers are interested in the new drug, this was mostly based on assumption that these consumers would actually switch over to Metabical. The third approach of forecasting demand was to directly market to the ideal target consumer. These consumers were educated females between the ages of 35 and 65 with BMIs between 25 and 30. This would help Printup focus directly on this market since it was estimated that they would make up most of the sales for Metabical. This way, Printup can build a strong foundation of loyal consumers because she targeted them from the beginning. However, the problem with this approach is that it is so specific; it limits the possibility of reaching out to other markets. There could be other consumers who would surprisingly commit to Metabical that Printup does not see yet. If I had to estimate demand, I would probably agree with Printup’s first approach. It allows Metabical to get closely as possible to its target market without restricting itself too specifically to the ideal consumer. The approach also considers who would really be interested in a new weight-loss drug and are actively trying to lose weight. This means Metabical has a great chance of introducing something new and effective to these individuals who are open to another solution. 3. What considerations should be taken into account when making decisions about the package count? There are several considerations to take into account when deciding on a package account. Printup concluded that Metabical was most effective for 12 weeks. This meant consumers taking Metabical would be most satisfied with their results if they were consistently committed to taking the pill on a daily basis. If the individual missed a day, he or she would not yield long-lasting results and most likely regard the drug as a failure. Printup also had to consider that there was enough for individuals to take a pill a day without forgetting or skipping a day. In order to do so, Printup believed designing a package similar to birth control pills so consumers were aware of the importance to take Metabical on a daily basis. However, placing enough Metabical pills for a 12-week program would deem costly for most individuals and automatically be dismissed if the individual felt it was too expensive. Printup had to find the right balance between individuals’ ability to pay and maximizing the likelihood that they would complete the entire program without interruptions. 4. What package size would you recommend? I think the best package size for consumers would be to have enough pills for 6 weeks in a package similar to birth control packages. This way, consumers can experience half the program and decide whether or not they are satisfied with it. This also reduces costs for consumers since a package of pills for 12 weeks would be too expensive for most consumers. 5. What pricing strategy approaches would you suggest Printup explore? Printup has considered three different pricing strategies to decide on how to price Metabical. The first was to use the current over-the-counter drug, Alli, as a benchmark and price Metabical as a premium to it. This would mean $75 for a four-week program. The advantages of this would be that individuals would regard Metabical as better since it is generally believed that higher price means higher quality. And because Alli is the only real competitor in over-the-counter weight-loss drugs, individuals won’t have a hard time distinguishing between the two. The disadvantage with this pricing strategy is that it is difficult for a new product to enter the market and generate sales with an expensive pricing. There is much skepticism with new drugs if consumers are unaware of its benefits and side effects. With premium pricing, it may take a while for Metabical to gain high profit margins. The next pricing strategy approach was to base pricing compared to other CSP drug margins. The average CSP gross margin for a new prescription drug was about 70%. This means for a four-week program, Metabical would be priced at $125. The advantage of this is that CSP can continue to enjoy their 70% gross margin on new products. Since it was proven successful in the past, it may work for Metabical to price it this way. However, the disadvantage of this approach is that it is still expensive and CSP is assuming Metabical will yield similar successful results as its past products. This is risky and not completely accurate. The third approach is to concentrate on the value consumers will receive after completing the program. CSP researched that overweight individuals spent about $450 out-of-pocket more each year on health care than individuals who did not carry excess weight. Understanding this, Printup can price Metabical at $150 for a four-week supply. The advantage of this approach is that the pricing study was conducted to focus on the ideal consumer. This means CSP will have a better understanding of how their consumers will respond to this price and have found out that they thought this price was acceptable. The disadvantage, however, is that the price is well over what consumers indicated they would be willing to pay. I think the best price CSP can set for Metabical would be in between $125 and $150. I liked the last pricing strategy approach the best just because there is more of a focus on the value consumers will get from the new drug. Consumers pay for the value and will be willing to pay if they see positive results with Metabical but if price is set too high, consumers will choose a cheaper alternative and not use Metabical. 6. What impact does your pricing decision have on profitability? The pricing decision has a huge impact on profitability. Printup calculate costs associated with Metabical and she needed a price that was enough to cover its costs while generating profits for the company. CSP needed to cover much of its fixed costs, marketing budget cost, and the generous amount contributed to research and development. When considering a price for Metabical, Printup has to make sure that the return on investment will be quick enough to prevent the company from completely failing on this new drug.