The Promotional and Pricing Strategies Employed GlaxoSmithKline Plc in the Marketing Advair - Case Study Example

Running Head: PROMOTION AND PRICE PAPER Promotion and Price Paper in APA Style by Introduction One of the primary goals of a business organization is the creation of products and services which provides customer value. Being a profit making institution, companies make use of strategic marketing efforts in order to take advantage of the various opportunities in the market. Companies utilize a wide range of promotional tools and techniques as well as appropriate pricing strategies according to the product’s life cycle. Generally, business organizations promote their products more intensely during the introduction stage. Higher prices can be charged during the introduction and growth stage. This paper will look at the promotional and pricing strategies employed GlaxoSmithKline (GSK) Plc in the marketing Advair. Focusing on the promotional efforts of the company, this report will identify the general strategy utilized by GSK. Next, the more specific efforts will be examined including the choice of media, content, and the message which is being conveyed. This paper will also look at the life cycle stage of Advair and how GSK prices according to this factor. Lastly, the appropriateness of the promotional and pricing strategies to the marketing mix will be examined. GlaxoSmithKline and Advair GlaxoSmithKline Plc is engaged in the “creation, discovery, development, manufacture, and marketing of pharmaceutical and consumer health related products worldwide” (GlaxoSmithKline Plc Profile 2007). In furthering its quest in becoming an innovator and pioneer in the world’s pharmaceutical industry, GSK launched Advair, a combination of Serevent and Flitoxide which offers a long acting bronchodilator and an anti-inflammatory in a single inhaler (GlaxoSmithKline Annual Report 2005) in 2001. With the company’s aggressive and intensive promotion effort, Advair is currently recognized brand in the treatment of asthma and chronic obstructive pulmonary disease (COPD). Among the products in the portfolio of GSK, Advair generates the highest revenue and total profit. During 2005, Advair is GSK’s bestseller, posting annual double-digit growth. In order to support this growth, GSK also allocates chunk of its budget in Advair promotional strategy. Being a relatively new market product in the market, Advair is launched and introduced through the use of different media like print ads, televisions, direct mail, internet, telemarketing, radio, and point of purchase. During the first 11 months of 2006, AC-Nielsen reports that GSK spent $120.5 million for Advair. This represents 16% of GSK’s total promotional expenditures (Lopatto 2006). Advair Promotion The promotional strategy of GSK has gone a long way in introducing and enhancing the position of Advair in the global pharmaceutical industry. In 2005, Advair is ranked 7th in terms of global turnover. There has also been an increased used of the product since it was launched in the COPD market in January 2004 (Timmons 2005). Both in Europe and United States, Advair is becoming a number one alternative for the treatment of COPD. Thus, GSK is intensifying its effort in marketing Advair as a treatment for this disease. During May 14, 2005 the product is also approved for the treatment of asthma in children ages 4-11 (GlaxoSmithKline 2006). Advair capitalizes on the strength of GSK in the treatment of asthma and COPD. The promotional strategies of Advair, thus, centers on this core competence. As mentioned above, GSK’s effort in the promotion of Advair has been both extensive and intensive, making use of almost all available channels. Advair is generally promoted as an essential component of COPD treatment and the most effective and convenient choice in asthma treatment. In order to simplify the analysis of the message and content of the advertisement, this paper will limit itself on the following channels: print, television, and internet. The main message and content of the advertisement of Advair is simple: Advair gives you the freedom to do more. The print ads for the product often features happy individuals engaged in activities which are not usually enjoyed by people with asthma and COPD. One print ad shows the picture of an ecstatic woman in a surfboard. Underneath the picture is a caption which reads “Freedom to do More.” Another advertisement for Advair which is geared for kids with asthma, is an energetic toddler on his skateboard. Within these print advertisements, it is apparent that Advair, instead of focusing on the use of influential doctors and children in verifying its claim, shows that it enhances the quality of life by instilling people suffering from asthma and COPD with the health and vitality that they need in order to perform strenuous activities The print messages are also in line with the television commercials. Take for instance, the Advair advertisement which features the trumpet player whose passion for music is hindered because of his asthma. Another is the man who is scared to go up the stairs because of his sickness. After taking Advair, he is now capable of going home and bond with his son. This television advertisements also highlight the significance of Advair in letting people do the more important things in life. Compared to the ads shown in print ads, these TV commercials convey stronger impact as it appeals more to the emotional side of the individual. While print ads concentrate on more entertaining and leisurely activities, the TV ads target the passion and sentiment. Recognizing the importance of the internet technology in this information age, GSK also creates a website devoted to Advair. As opposed to the print and TV ads, the website contains information about the product, the diseases that it treats, and everything that a customer needs to know about the product. The promotional strategy crafted by GSK for Advair shows consistency with the other factors in the marketing mix. As mentioned above, this extensive promotional effort has been very instrumental in capturing a larger portion of the market share. Through these efforts, Advair is positioned in the market not just as a cure to asthma and COPD but as an indispensable instrument in the pursuit of happiness, wellness, and achievement. Pricing Strategy Advair is currently sold by distributors at a price ranging from $90-$99 which is relatively higher than its competitors in the industry (GalxoSmithKline 2007). The rationale of this pricing strategy rests on three factors: research and development; patent; and product life cycle. As one of the most cost-intensive in terms of research and development, the pharmaceutical industry’s high prices are often justified by the costs incurred in manufacturing the product. Secondly, the patent of Advair will only expire in 2008 indicating that GSK can charge a high price for this product because of little or low threats from substitutes. Lastly, the company’s pricing strategy is justified because Advair is still in the growth stage of its life cycle. Each product or service usually goes through four major life cycle stages: introduction; growth; maturity; and decline. The introduction stage is a period of slow sales growth as the product is introduced in the market. The high level of costs incurred makes it unlikely or impossible for companies to make profit. The growth stage is characterized by rapid market acceptance and substantial profit improvement. Maturity is reached when sales growth slow down or stabilize because it also reached all the potential buyers. Lastly, decline is a period when sales and profit continuously decline (Kotler 2002). During 2001, Advair is introduced in the global market. Against the high number of competitors in the market, the company is able to capture a sizeable share in the market especially in the treatment of asthma. Currently, Advair enjoys high acceptance in the market and sizeable profit for GSK. This is the general characteristics of a product which is in the growth stage according to Kotler. As mentioned above, Advair is enjoying double digit growth. The company reports that in 2005, Advair accounts for £3million of the total annual revenue representing a robust growth of 22% (GlaxoSmithKline 2007). References GlaxoSmithKline. (2007). GlaxoSmithKline website. Retrieved 12 February 2007, from http://www.gsk.com GlaxoSmithKline Annual Report. (2005). Retrieved 12 February 2007, from http://www.gsk.com/investors/reps05/annual-report-2005.pdf GlaxoSmithKline Plc Profile. ( 2006). Retrieved 12 February 2007, from http://finance.yahoo.com/q/pr?s=GSK Lopatto, E. (2006). Drugmaker Spending on Consumer Advertisement Grows in 2006. Bloomberg. Retrieved 12 February 2007, from http://www.bloomberg.com Kotler, P. (2005). Marketing Management. Prentice-Hall: New York Timmons, H. (2005). Is Glaxo’s Pipeline Half-Full or Half Empty. New York Times. Retrieved 12 February 2007, from http://www.nytimes.com/2005/08/12/business/worldbusiness/12glaxo.html?ex=1171429200&en=6c290bba72b95c67&ei=5070 Read More