Marketing Strategy in Health Care - Research Paper Example

Abstract This paper presents marketing and communication strategy for launching Metabical, a drug for weight-loss in the United States Market. The plan consists of a Situational Analysis in which the internal and external business environment is discussed in detail. Competitors, the prevailing market conditions, company’s internal strengths and abilities along with its weaknesses and threats will be explained in the SWOT analysis which will follow the Situation Analysis. Prior to putting together the dynamics of the marketing plan, the business’s goals and objectives will be formulated around which, the marketing plan will be created. The marketing plan would include the communication plan (the Marketing Mix: 4 P’s) for Metabical. Keeping the external and internal factors in mind, an Implementation plan will be made which will include the control measures which will be taken to implement the marketing strategy and contain procedures which will explain how the marketing activities will be monitored and measured. At the end of the report, a Contingency Plan will be set which will include all the possible hindrances and unforeseen events which the business could face. The end of the report will have control and. 1. Executive Summary All the existing drugs either faced bans or faced heavy claims as much as $25 million because of false marketing claims. Metabical is proved to have lesser side effects than its competitors and even highly effective as compared to the latter. The focus of this report lies in launching Metabical in the market of the United States where more than 30% of the adult population is overweight according to the data of CDC (Centre of Disease Control). This leaves a large potential in the market for a weight loss drug which both the doctors and the customers can trust. Metabical being the only FDA approved prescription drug therefore has a strong potential in the market which this report will explore and aim to exploit it throughout by formulating a marketing plan for launching Metabical. 2. Market Analysis 2.1 Organizational and Product Overview: Cambridge Sciences Pharmaceuticals is primarily associated with producing pharmaceuticals for curing metabolic disorder, chronic diseases and as well as immune deficiencies in people. The company has introduced a weight loss drug after spending $400 million on research and development according to Harvard’s Business Review. Metabical is a drug which has been proved to have the least side effects and is also the only FDA approved prescription drug which could be used by overweight individuals with BMI between 25 and 30 to lose weight. 2.2 SWOT Analysis 2.2.1 Strengths: Matabical’s major strength, as put by its marketers Printup and Bernard Long, is its approval from Food and Drug Administration. After 2008, when FDI began to raise its concerns over negative side effects of weight loss drugs and began to restrict the standards of these drugs to qualify for prescriptions. Another strength which Metabical has is its low side effects as compared to its competitors in the market. Metabical therefore, as one would expect, would be the first preference of the doctors prescribing medicines to those who wish to lose weight. 2.2.2 Weaknesses: As deduced by product development research which Cambridge Sciences Pharmaceutical conducted, Metabical would only be effective to those individuals with a Body Mass Index between 25 and 30. Any person with BMI over and above this index will not be able to get the results. This limits the market of Metabical to a great extent as amongst the 65% of adult American population as Metabical would only be able to cater to a niche of those individuals with BMI between 25 and 30. Besides this, in order to control their weight, Fumento claims in a publication that individuals, besides taking medicines for weight loss, also need to have some level of diet control with the drug itself. Clinical tests found that Metabical would be most effective when overweight individuals would restrict their fat and calorie intake. This makes the drug dependent on the eating behaviour and habits of the consumers which may lead to ineffectiveness and hence, even expensive court claims that the drug is not producing effective results. 2.2.3 Opportunities: Because of strong ramifications of stronger drugs available in the market, amongst foreclosures of different drugs in the market because of false marketing claims, coupled with lack of regulation and safety for the consumers, Metabical has gained approval from the Food and Drug Administration and has a number of endorsements accredited to its name which makes it “the first and the only prescription drug to receive FDA approval” as claimed by Bernard Long, Chief Marketing Officer for Cambridge Sciences Pharmaceuticals. This makes it the only drug which could gain the confidence of the target market. Besides this, the market which Metabical can cater is untouched and hence, Metabical, along with its endorsements can gain the first mover advantage. 2.2.4 Threats: One of the major threats which Metabical would face is from the dietary habits of the consumers. Metabical’s effectiveness is left at the mercy of the eating habits of the consumers. If the consumers do not control their fat and calorie intake, the drug will not produce desired results which could lead to claims in court. Besides this, another threat is imposed by the competitors who would follow the lead as me-too products. However, this could be avoided by patents. 2.3 Customer Analysis: The prime target of Metabical as mentioned by Printu, is set to be females between the BMI of 25 and 30. These women are educated, between the more health-conscious and pay frequent visits to doctors and tend to control their diet. Metabical would segment the market via lifestyle segmenting i.e., the advertisements would feature upbeat women who have a flare for losing that extra weight and lead a healthy lifestyle. This brand would hence create an association with health rather than just lose weight. These women would belong to SEC A, B and C and would be professionals willing to stay fit. Miranda Hitti states in her article that increasingly, high income earners are also becoming obese as opposed to the past where obesity was more common among the lower class. 3. Environmental Analysis: 3.1. Macro-Environmental Analysis: The market for drugs like Metabical is a lucrative one. According to the CDC and the US Department of Health and Human Services, nearly 60% of the adult population of the United States is considered was overweight in the year 2000. However, this number has grown to 65% according to CDC’s studies. As put by Kolodinsky & Reynolds in their Journal: Segmentation of overweight Americans and opportunities for social marketing, there is still a huge potential in the overweight market. Out of this 65% overweigh individuals, the segments of those who are in between the BMI of 25 and 30 is a virgin market which is not targeted by any drug. Even in this market, there was only one drug called Alli which was approved as an Over-the-Counter (OTC) for weight-loss by the Food and Drug Administration. However, this drug was only a lighter version of a heavier drug called Xenical and also had strong side-effects. Because of these concerns, the drug industry went through perusal by the FDA and a dietary supplement ephedra was banned owing to reported cases of sudden cardiac arrests and other life threatening dangers of the side-effects caused by these drugs. As Day and Bailey put in their Journal: Review: Pharmacological approaches to reduce adiposity; that taking drugs for obesity is unsafe and risky as the latter is full of harmful side-effects leading to vascular diseases. US News and World Report claims, many companies had made a lot of money with false marketing claims and high side-effect products. Metabical on the other hand, is FDA approved and is also tested for its effects with the conclusion that Metabical has light side-effects as compared to its competitors. Besides the drugs in the market, there were also herbal dietary solutions available which needed no regulations. However, these were less effective and required strict diet control whereas, Metabical being a drug itself, could produce better results in 12 weeks time. With a green signal from the FDA, Metabical therefore is ready to enter the market and launch a fully fledged campaign for not only the consumers, but for businesses and doctors as well as it is a prescription drug. This channel available to market Metabical presents a strong opportunity to itself and an edge amongst the competitors which impose high risk side-effects. 3.2. Micro-environmental Factors: Metabical is a drug has Food and Drug Administration’s approval as being an effective weight-loss drug amongst its competitors. It is claimed by the company’s Chief Marketing Officer Bernard Long that Metabical is a new and improved version of all the other drugs for weight-loss in the market with dramatically reduced side effects. However, the drug seems to be effective only on people with Body Mass Index (BMI) between 25 and 30. Metabical’s effectiveness also relates to its nature as because of its formulation, the drug would be highly effective when the consumer does not consume calories and fat with his/her diet. Besides that, the side effects will also be reduced with lower levels of fat and calorie consumption. This way, the drug even controls the diet of the consumers. Besides this, being the only FDA approved prescription drug in the market, the doctors and as well as the patients will be more than confident to bring the drug in normal use. Moreover, Metabical can also gain the first-mover advantage because of this FDA approval. It will be a while till me-too products could give Metabical some competition more so; the brand will already have grown. The company will use the traditional mode of distribution through Sales executives who would take orders from the pharmacies. 4. Marketing Goals and Strategies: 4.1 Goals for the Marketing Plan: Metabical’s primary focus should be to target doctors through a strong distribution channel as it is a prescription drug. Besides that, an ATL activity needs to go in line with this customer marketing and the company also must undertake PR Activities and CSR activities in order to build the brand of Metabical: Your gateway to a healthy lifestyle. 4.2 Marketing Objectives: Metabical’s primary objective would be to maximize the sale in the first year of the brand launch. The market of overweight women would be penetrated in the first year of the business’s operations and 4.3 million of this target market would be covered through mass campaign of BTL throughout and a strong distribution channel dispersed throughout major health centres of the country which get most cases of weight-loss. As the brand could not be sold directly to the consumers, it has to establish a strong trust amongst the doctors who would recommend it to them. The Sales need to be measured as per the number of prescriptions and the sale at the selected pharmacies. 4.3 Demand Forecast: As per Barbara Printup, Senior Director for Marketing of CSP, the brand is expected to cover 20% to 30% of the market of 4.3 million women of the target market in the first year. For the following years, the percentage share of Metabical would then increase steadily by 5% each year. The demand expected in the following years would however narrow down as only 60% of the first time users would repurchase Metabical for course completion whereas, only 20% of the first-time buyers would actually complete the course. Therefore, out of 4.3 million overweight women, Metabical would penetrate in approximately 40% of the total market towards the end of third year. 4.4 Financial Goals: Metabical has the target to increase the revenue by 80% in 2012 and 30% in 2013 and achieve a Contribution Margin of 70% to 85% in the years 2011, 2012 and 2013 respectively; based on the above demand forecast. All marketing and selling activities and sales figures will be monitored closely to determine whether the company is following its set objectives or not. (A three year budget is attached as Annexure which shoes increasing income throughout). 4.5 Marketing Mix: 4.5.1 Product: The product Metabical is approved by the Food and Drugs Administration for prescription after strict perusal of its formulation and clinical research worth $400 million. Metabical is proved to have the least side effects as compared to other drugs which have either been banned or have faced heavy fines. Besides this, the drug is highly effective for weight loss amongst people with BMI between 25 and 30. However, in order to be most effective, the amount of fat and calorie intake needs to be at a minimal extent which would complement the effects of Metabical. Because of this, Metabical would come with a diet plan included in the packaging. 4.5.2 Price: In order to generate a steady payback, Metabical must charge a premium price of $150 for a 4-week course. As observed by Printup, overweight people spend nearly $450 yearly on health-care therefore, $150 for a drug with minimal side effects, less hassle of one dose per day and highly effective treatment for excess weight. It would no doubt be higher than the competitors but studies and research have shown that the ideal target market would be willing to pay a higher price in return of less side-effect. Fixed Costs are supposed to be at $ 1.2 million and variable costs are set at $25.2 per unit. 4.5.3 Place: Metabical needs to be available at major pharmacies across the country. Moreover, the Sales Representatives need to make frequent calls to the doctors in order to create awareness so that the doctors feel confident while prescribing it. Moreover, Metabical’s ATL activities would generate a strong pull in the market and hence, would even lead to consumers requesting the prescriptions. 4.5.4 Promotion: Metabical will launch a fully fledged 360○ marketing campaign for promoting it and making people aware of the drug. The drug will be advertised on both to the consumers so that they can request their prescriptions and the doctors who would be authorized to prescribe Metabical. Besides advertising on the mass media at the right aperture of the target market, both on print and electronic, Metabical should send out focused mails and corporate giveaways as PR Activities to the doctors. Besides this, as planned by Printup, Metabical would also conduct Brand Activations where the consumers would be engaged and encouraged to take part in the form of participants in different weight loss competitions. The sales force would be utilized to make sales calls to the doctors by paying visits and qualifying Metabical up to their expectations and standards. 4.5.5 Packaging: The ideal packaging for Metbical, as a reasonable option for the consumer would be, to introduce the whole package of 12 weeks with one pill per day. This would ensure that 60% of first time users would be completing the whole dose of Metabical as compared to the other option of introducing a 4 week dose which would require refilling. As refilling would require a hassle, Printup therefore expected 40% of those 60% of first time users to discontinue. However, a 12 week pack would also cost more and the consumers would not be able to spend so much in lump sum. Therefore, a rational choice would be to launch the drug in a 4 week pack with day and time marks on the container like birth control pills as in order for the drug to be effective, it needs to be taken at the same time daily with proper diet control. Because of this, the pack would also include a diet plan for the consumers so that the drug could produce positive results. 5. Monitor And Control 5.1 Implementation: Metabical expects to sell to the 30% of 4.3 million units to be sold in the first year. This number is further expected to increase by 5% as Printup observers, on average in the following years. As Metabical possesses a Sales Team of 32 sales-reps, they would be segmented on a geographical basis i.e., they will be spread across and responsible for medical centres and clinics located in a certain geographical area. They will be responsible for qualifying the product with the doctors and pharmacies. Besides this, the marketing team will be actively involved in PR activities and Brand Activation activities and the existing Marketing team will be delegated the responsibility of doing so. There will be 2 hour meetings after every quarter to assess results. The Sales figures will be monitored at the end to every year to see whether the business is meeting its targets or not. Moreover, the sales force will also be closely monitored by the Area and Territory Sales Managers. These Sales Managers will ensure that the sales representatives are meeting the above mentioned monthly targets which will be broken down to daily and weekly numbers. Moreover, the marketing activities will also be monitored and resulting effects in the sales figures will be recorded to gauge the mileage of the activity. Besides launching a Public Relations campaign for leveraging the brand equity in the consumer market, Metabical being a prescription drug, must establish enough trust amongst the doctors who would actually be recommending the drug to the consumers because of certain fat blocking chemicals included in its formulation. Because of this, advertising in the mass market would not be feasible for the business as it would not actually result into direct sales from the consumers. Pertaining to this aspect, Metabical needs to have a strong sales force in order to bring the doctors into confidence and educate them about the minimal side effects of Metabical and positive changes what this drug could bring about in the consumers. With the doctors confident about the drug and the brand of Metabical, prescriptions of the drug would increase and hence the sales. 5.2 Contingency Plans: New promotional campaigns, both ATL and BTL and sales promotions would have to be launched if there is a reaction from the competition. To execute this, the marketing team will be given the responsibility to design, plan, manage, execute and control the marketing campaigns. If the competitors launch a new product in direct competition to Metabical, the brand can then be penetrated towards a different segment of men. The packaging could be altered especially for men. Secondly, the brand mantra can be changed from the Gateway to a healthy lifestyle to the Gateway to a healthy family with a more emotional feel to it. This would also widen the market and as the women would already be influenced by the brand and even in the middle of their dosage, they could be used as influencers as well. Conclusion Metabical has strong potential in the market by being an FDA approved prescription drug with low side effects and high effectiveness. Besides strong marketing efforts, Metabical also needs to have a sound process of Supply Chain and all important business processes must be integrated via Information Technology as the success of any business is highly dependent on its efficiency which comes with swift processes and speedy response to all internal and external influences. Annexure 2011 2012 2013 Advertisements $ 5,500,000 $ 4,000,000 $ 4,000,000 Promotions & Discounts $ 4,000,000 $ 3,500,000 $ 3,000,000 Training Costs $ 100,000 $ - - Salaries $ 550,000 $ 550,000 $ 550,000 Websites $ 250,000 $ 100,000 $ 100,000 Sponsorships $ 4,000,000 $ 2,000,000 $ 4,000,000 Administrative Costs $ 550,000 $ 550,000 $ 550,000 CSR Costs $ 3,250,000 $ 3,000,000 $ 5,000,000 Manufacturing Cost (1.29m x 100) $ 129,000,000 $ 150,500,000 $ 172,000,000 Total Expenses $ 147,200,000 $ 164,200,000 $ 186,500,000 Total Sales (30% x 4.3m x 150) $ 151,290,000 $ 225,750,000 $ 258,000,000 Total Expenses/Sales (%) 21.4% 16.8% 16.8% Contribution Margin $ 118,782,000 $ 187,824,000 $ 214,656,000 Contribution Margin/Sales (%) 78.5% 83.2% 83.2% References Quelch, J. A., Beckham, H., (2010). Metabical: Pricing, Pricing, Demand Forecasting for a new weight-loss drug. Harvard Business Publishing, 4183 Quelch, J. A., Beckham, H., (2010). Metabical: Positioning and Communications Strategy for a new Weight-Loss Drug. Retrieved from Harvard Business Publishing, 4240 Centre for Disease Control and Prevention (2011, March 3). Retrieved from CDC Website http://www.cdc.gov/obesity/data/trends.html Hitti, Miranda, (2005). Rich-Poor Gap Narrowing in Obesity. Retrieved from WebMD Website http://www.webmd.com/diet/news/20050502/rich-poor-gap-narrowing-in-obesity Statistical Abstract of the United States, (2006). Retrieved from US Census Bureau Website. http://www.census.gov/prod/2005pubs/06statab/pop.pdf Overweight and Obesity Health Concerns (2001). US Department of Health and Human Services, Retrieved from Office of the Surgeon General Website http://www.surgeongeneral.gov/topics/obesity/ Fumento, M. (1997). The fat of the land: The obesity epidemic and how overweight Americans can help themselves. New York, N.Y., U.S.A: Viking. 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