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Pricing, Packaging & Demand

Forecasting

Yuxian
Xue
Akshay
Maheshwari

Priyesh
Iyer

Hemant
Manglani

CEO Dashmeet
Singh Bagga

A Group 5 Presentation

1. Key Product Attributes


2. Target Segments
3. Demand Forecast strategy
4. Packaging strategy
5. Pricing Evaluation
6. ROI

Product Attributes
FDA approved prescription drug
Minimal negative side-effects
1 tablet per day

Customer Satisfaction is key


Completion of 12 week program
Optimum Results
Brand Value goes up
Revenues Increase $$$

Hitting the Bulls Eye!

Primary Target
Segment
Age: 35 65 years
College Education
plus
Income > $80,000
Secondary Target
Segment
Age: 25 40 years
College Education
$50,000 < Income <
$80,000

Forecasting Demand!

Our Choice
Approach

Forecasted Demand (millions)

Scenario 1

7.06

Scenario 2

16.14

Scenario 3

14.79

12% respondents would ask for a prescription


immediately
Higher probability of conversion
Larger Customer Base to tap into
Forecasted Demand (5 years) = 16.14 Million Units of a 4week pack

Packaging Strategy

Factors to consider
Likelihood of program completion by each customer
Packaging and Pricing of competitive products
Cost per pack
Preferred Time interval between 2 prescriptions by
Doctor

And the Winner is


4 week Pack
28 tablets in one
pack

Incentive to
repurchase
Affordability across
primary and
secondary segments
Easy to monitor
monthly progress

Available Alternatives
Price of 12 Week course
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0

Alli

Other OTC drugs Weight Watchers


Price of 12 Week course

Jenny Craig

Gym Membership

Evaluating Pricing Strategies


Price Skimming
Charging higher than competitors because you are different
$75 Retail Price

Brand Driven Pricing


All CSP products are priced considering 70% Gross Margin
$125 Retail Price

Customer Value Pricing


Increase Customers perceived value
$150 Retail Price

Price Skimming ($75 Option)


Advantages

Higher Demand
Affordable by all target
segments
Disadvantages

Brand name associated


with low quality products

Brand Driven Pricing ($125 Option)


Advantages

Inelastic Demand
Consumers are from a
relatively higher income group
Insensitive to price change

Monopolistic Market
Only FDA approved
prescription drug for
combating obesity

Maintains Brand Equity

Disadvantages

Prone to competition
Uncertainty of Perceived
Value
High Price could lead to low
demand
Underlying assumption of
no change in customer
preferences in 5 years

Customer Value Pricing ($150


Option)
Advantages

Perceived as High Quality


and premium product

Disadvantages

Exploitation of Consumer
Surplus
Target Market is further
compressed

Profits & ROI


Retail Price ($)

Profit (millions $)

ROI % (Brand Driven


Pricing Strategy)

75

394.28

(7)

125

932.25

120%

150

1201.31

184%

$75 Retail Price will not help recover initial investment


$125 Retail Price provides an ROI of 122%
Demand is assumed to be the same as the demand for $75
retail price
Demand would be lower in reality but still a profitable option
$150 Retail price gives unrealistic ROI
Demand can be expected to be significantly lower

Available Alternatives
12 Week course price
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0