Demand/Pricing Formulation Executive Summary: ‘There are three main demand strategy’s that make reasonable sense fo assess the demand for Metabical within the first five years, To get the most out of each demand scenario the most ‘optimal pricing structure was applied to each. Scenario 2 was chosen with the lowest pricing structure to market to a wider audience during the launch with and affordable price. Pricing can always been tweaked and justified if the product is sucessful and there is respective demand by the consumer base. ‘Scenario #1 ‘The first scenario narrows down the target market by the follow process: I take the # of overweight individuals in the United States (71.06 million), 2"' reduce 71.06 million by 35% which is the estimated population trying to lose weight, 3" reducing this by 15% which is the amount comfortable with weight loss drugs which is 3.73 million, 4" Metabical will capture 10% in year one, 15% in year 2, 20% in year 3, 25% in year 4, and 30% in year 5, The Lowest pricing structure was chosen because the population chosen was very general and may contain a Jarge percentage of people who are price sensitive. I believe this is not an effective demand function for Metabieal because the audience is too broad. This model also in theory will eapture 4 small of the target market in relation to the other models which makes it very difficult to attain a positive ROL This model will only bring in 185 million in revenuee and is not acceptable to create a 5% ROL This is not even enough to cover the R&D and marketing costs, Y] Overweight | Popalation ] Comfonabl | Med ] Population | One Two Full efinus — | trying tofe — With] ibiea | Captured | Supply(20 | Suppiy(60% | Cycle(20% a Lose Weight | 224,80) | *49.60) | *74.40) r Loss drugs | Will se) — ase | Cape ure T | 71,060,000 | 24.871,000 [3.730.650 | 10% | 373,063 | 150402) 11,l02a14 | 5551207 2] 71,060,000 | 24,871,000 | 3,730,650 | 15% [559,598 | 2,775,008 | 16,653,022 | 8.326810 3] 71,060,000 | 24,871,000 | 3.730.650 | 20% [746.130 | 3.700.805 | 23.208,829 | 11102818 4] 71,060,000 | 24,877,000 | 3.730.650 | 25% [932,663 | 4,626,006 | 27,756,036 | 13878.018 3] 71060000 | 24,871,000 | 3730650 | 30% | 1119105 | 5581207 | A8a07I3 | 16OS60T 185040200 ROI -S3% in 5 Years‘The Second Strategy is more aggressive whieh takes the US population (209 million) and takes 34% of it who are people who are overweight which comes out to 71.06 million. Next 12% whieh is the target for Metabical is taken out whieh comes out to 8.527 million, Metabical will capture 10% in year one, 15% in year 2, 20% in year 3, 25% in year 4, and 30% in year 5. The lowest pricing structure was chosen because this demographic may look into other methods 10 lose weight such as Jenny craig. This model produces a ROI of 5.7% which meet the requirements of upper level management on making a 5“ ROI on 400million in research and development costs. The pricing structure is the low which will lower the financial risk to customers. This gives the product a better chance to sell its predicted volume. This studied demographic contains individuals who are ready to take @ pill to lose weight, Marketers cannot always predict how a specific demographic will react to a product so a slightly broad approach «will lead (0 opportunity for a huge amount of revenue from not only the target market but other similar markets, (possibly a ‘ of overweight women of other ages may buy into the product) UsPop | Me Be Meta] Captured] One Two Full ¢ Overweight Target | bical Supply(20% | Supply(60% | Cycle(20% ql Market | Capt $24.80) | * $49.60) | * $74.40) 1] 209,000,000 [71,060,000 | 8. 200 | 10% [852,720 S12.688A74 2] 209,000,000 [71,060,000 | 8.527.200 | 15% | 1,279,080 | $6.344237 319,032,710 3} 209,000,000 | 71,060,000 | 8,527,200 | 20% | 7,7058.480 | S¥.458.982 $25,376,957 4 209,000,000 [71.060.000 | 8.527.200 | 25% | 2.151.800 | S10.573.728 S372. 184 3) 209,000,000 [71,060,000 BOW | 2.558.160 | SIZ6RR ATH) $76,130,942) $38,065,221 Profit: 422,949,120 ROLS.% Ins Years (Bottom Line) ‘The 5.7% ROI in this scenario shows steady growth for Metabical and is consistent with the goals of management. In this pricing scenario a feasible number of potential customers will be targeted and captured. It is important to analyze the demographics of what kind of customers are purchasing each year and tweak the demand forecast or marketing strategy if necessary, For the initial forecast a broad approach is taken with the goal of matching the 5% ROI on the 400 million dollar research and development costs. The forecast was built in Microsoft excel and ean easily be moditied if management feels the need to tweak any of the factors.Scenario #3 ‘The third scenario targets Educated Females from ages 35-65 who are overweight (BMI of 25- 30) which equates to a population of 4.3 million people. In year one Metabical expects to have a capitalization of 30%, then 35%, 40%, 45%, 50% respectively in the following 4 years, The highest tier of pricing was chosen due (o the demographic selection, Females who are 35-65 have the money to purchase weight loss products and will fork over the money for a prescription. The: prescription nature of the product justifies the high tier of pricing as well as the coveted FDA approval. The ROI comes out to 67% which is a best cast scenario, I believe the pricing structure and demand forecast is justified because this in many cases will be a life saving product, and a pioneer in prescription weight loss. The problem with this scenario is that the ROI seems to be Uunrealistic when management is only expecting a 5% ROL, Capturing 50% of such a specific ‘market over 5 years may be unreasonable and contain a fundamental flaw. Of course, the price could be lowered but we feel that this is an appropriate price for the demographic and lowering the price will affect the brand image of an elite product in the target market. Y ] Market % | Capitalization | One Supply | Two Full ea (20%°74.80 | Supply(60%*149.6) | Cycle(20%*224. r ) 2 T | £300,000 [30 [1.390.000 | $19,398,400 | $115.790-400 $57,895,200 P [4.300.000 | 35 | 1,505,000 | $22,514,800 | $135,088.80 367.544 400 3 [4.300.000 | 40) 1.730000 | $25,731,200 | $154,387.20 ‘$77,193,600 + [4300000 [45 [7.935.000 | $28,947,600 | $173.685,600 $86,842,800 3 [4.300.000 [50 [2,150,000 | $32,164,000 | $192,985,000 396,492,000 Profit: 1.26 Billion ROL 215% (Unreal Marketing Communications Executive Summary: Metabical, a prescription weight loss pill will be marketed to overweight women in the age group of 25-65. There are two main groups that Metabical is targeting to- end users and doctors. The powerful message that being overweight can lead to life threatening diseases and that Metabical ‘can help will be the focus of the marketing message to both end users and Doctors, Tracking and control after the launch is a key component to a successful venture for Metabical ‘Target MarketMetabical will be marketed to overweight women of the age from 25-65. According to a 2007 ‘marketing survey it was determined that women 10" more women then men are dissatisfied their current weight, 20% more women then men visited a healthcare provider for a yearly physical, 15% more women then men want to change their behavior to live a healthy lifestyle, 30% more women then men failed to lose weight in the past 5 years, 30% more women then men \were dissatisfied with current weight loss options on the market. These results make it clear that ‘women are the most likely gender to purchase Metabical. The age group of 25-65 is justified because these women have expendable income which would allow them to purchase an expensive prescription weight loss drug. It is important to maintain a healthy lifestyle and diet ‘when taking Metabical; this is important to understand in order to have successful weight loss Metabical . The women of these demographic are “knowledgeable about the importance of nutrition and exercise, they are ready to make a change.” The women of this demographic are also “focused on reclaiming former weight they are motivated and willing to alter current behavior” These psycho graphic behaviors are consistent with the marketing message of Metabical. This age demographic is quite large but itis necessary to target all of these potential customers in order understand who is buying into the produet as the marketing plan evolves over the next few years, We anticipate that other demographics will also purchase the product and this Metabical is unique product to market due to the Fact that message has to be conveyed to the end user as well as health care providers who recommend and write prescriptions (doctors). The target market as stated above is overweight women aged 25.65. It is important to reach the ‘market through a variety of venues to instill the importance of purchasing the preser Of Print media, television, radio and online advertising will be exploited to reach the majority of the target market. Print advertising will come in the form of pamphlets and other informative documents that will be placed at medical clinics, weight loss facilites, doctors’ offices and other relevant institutions that promote weight loss and a healthy lifestyle, They must instill a sense of urgency to the end user, that the time 10 act is now and they should contact their health care provider to leam more about this new FDA approved weight loss diug. Online Advertising is effective for targeting the specific target market of women who are searching for weight loss supplements and are of age 25-65. The success of these campaigns can be measured by the amount of impressions the advertisement has received as well as successful requests for more information when an advertisement is clicked an an interaction takes place. Television and radio will be utilized weeks before the drug is released to the public in order to ereate hype and a viral ‘marketing effect. The types of channels thatthe advertisements will be shown are news channels, innels refating to health and also channels that women watch frequently in onder to reach ourtis important to determine Metabical’s positioning in the weight loss market in order to carry ‘out a sound marketing plan. Metabical is different then over the counter weight loss supplements because it can only be obiained via prescription. This gives an image of an elite product that is, effective, FDA approved and can only be prescribed a doctor, People trust their doctors and the FDA which gives Metabical a distinct advantage from over the counter wight loss products. Women who have not has success in the past with over the counter weight Joss supplements ae ready for a prescription strength option such as Metabical. After 5 years on the market Metabical should be considered the most trusted, effective and #1 prescribed weight loss drug on the market. ‘Time line Prior To Launch 1 Year Prior + Develop Advertising Campaigns and Marketing Materials 6 Months Prior + Utilize Focus groups to test effectiveness of chosen campaign 3 Months Prior + Direct Marketing to Doctors and healthcare providers Day of Launch — Press Release, Viral Media C Day of Launch — Press Release, Viral Media Campaign After Launch —+ Tracking and Control ~ Make sure the target demographic is being reached. Every year analyze effectiveness of price, packaging, and target market. Budget After analyzing the budget it has been concluded that the money allocated is appropriate. The marketing budget should decline by a small percentage every year as the product gains brand ‘awareness and receives free PR from blogs, news mediums, and word of mouth recommendation from customers and doctors.