Marketing Assignment YP53B Metabical Price

M. Ray Akbar Mutalibov

29115113

For the case study of Metabical Price, I would recommend Option 2 ($125 in 4-week
supply) as the price recommendation. This recommendation decision was mostly made
of target return pricing, but combined with a little bit element of value-based pricing and
psychological pricing. The reason I would choose the target return pricing as a main tools
to pick the price is because the CSPs Metabical informed us that they wanted to achieve
a minimum 5% ROI within five years of the new products launch. Thus, target return
pricing was picked since this kind of pricing would set a price based on the achieved
target of ROI. The reason why I include value-based and psychological pricing would be
explained later in paragraph below.
Based on the calculations from Metabical Worksheet, I get several different results of ROI
in 5 years, based on different method and different manufacturer gross margin. For the
ROIs manufacturer gross margin of $24,8, I have 210% (Method 1) and -26% (Method
2). For the ROIs manufacturer gross margin of $58,13, I have 627% (Method 1) and 74%
(Method 2). For the ROIs manufacturer gross margin of $74,8, I have 835% (Method 1)
and 124% (Method 2).
There were 2 different method in my worksheet calculation, the first one is Method 1
which taken the USs overweight population who actively trying to lose weight and
comfortable using diet pills into potential customer. The second one is Method 2, which
taken the USs overweight population who would go to a doctor to request prescription.
Since Metabical is a prescription drug, I do not consider Method 1 is an appropriate
choice in this case, thus making Method 2 into my prioritization. Since prescription drug
is one of the value that Metabical had offered, I include value-based pricing into
consideration, regardless of the ROIs that Method 1 resulted.
Since Method 1 was eliminated, what is left is ROIs Method 2, based on different
manufacturer gross margin which mentioned above. Because in ROIs manufacturer
gross margin $24,8 result was -26%, it had to be eliminated as well. Now what is left is
the $58,13 (with ROI as 74%) and the $74,8 (with ROI as 124%). The Metabical study
case informed us that when the retail price of $150 (this retail price aligned with the
manufacturer gross margin of $74,8) was tested with the general overweight market,
this price was above what customers indicated they would be willing to pay. That is why,
based on psychological pricing reason which customers feel this price was too high, this

option also eliminated. This left us with the only option, which is Option 2, with ROIs
manufacturer gross margin of $58,13 is 74% and the retail price of $125.