Submitted by: Submitted by ands
Views: 1355
Words: 590
Pages: 3
Category: Business and Industry
Date Submitted: 11/04/2012 04:08 PM
y
Pricing makesMetabical apremium qualityproduct in linewith product effectivenessStrategic fit
y
Does not fit wellwith CSPscorporatestrategy
y
While Metabicalwill be able togain a large userbase initially theoption does not fit the strategic goalof 70% marginsover the longterm
y
Being a moreeffective product in the market place, Metabicalloses the edgewithout anyreason.
y
Fits well withcompany strategy
y
Althoughrevenues arelower in the short term, Metabicalwill be able toproject itself as apremium product over the longterm
y
Given the highstarting price,the product maynot attainrequired market share
y
Product may not be able tocompeteeffectively giventhe intensecompetition inthe market.FinancialAttractiveness
N
ot attractive.
y
ROI is negative (-25%)
y
Target market size is too lowcompared toother twomethods , hencegenerates loweroverall revenuesover 5 years NPV of $709.5million
y
Attractive Recommended
y
ROI is close to75%, whichsurpasses theexpectedminimum ROI of 5% by a largemargin
y
Pricing issensible, in linewith market expectations
y
NPV of approx.$1.5 billion
A
ttractive not recommended
y
Although ROI is126%, pricing isunrealistic
y
Pricing a newproduct at $150a per week couldbe a non-starterin a highlycompetitivemarketplace.
Noteworthyrisks
y
Product will endup competingagainst productsthat are not even
y
Product may not be acceptedreadily given thehigher than
y
Very high entryprice point
y
Revenueexpectations
in the samesegment
y
Brand messagecould beconfusing
y
Revenues not attractive
y
Assumption isthat the thismarket portion isnot highlysegmentedaverage pricepoint of the drug
y
Revenueexpectation couldbe exaggerateddue to point estimate value of market size.
y
Assumption isthat the thismarket portion isnot highlysegmentedmore unrealisticcompared toother pricingstrategies
y
ROI althoughattractive maybe...