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Digg It - How to Win a Price War
Any economics student can tell you that price is a matter of supply and demand. The market will bear a certain price point and settle into equilibrium. This is not very helpful when trying to determine the price for a new product.
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
Price is a very confusing area of marketing for many people. The reason is probably because price is one of the most misused and abused marketing tools. Traditionally, there are three ways to set the price for a product:
• Competit
• Competit
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
ive Parity- Charging the same price or average price of the competition
• Standard Markup- Always adding the same percentage markup to the cost of products (i.e., cost plus 50%)
• Zero-Based Pricing- Receiving a small margin per it
• Standard Markup- Always adding the same percentage markup to the cost of products (i.e., cost plus 50%)
• Zero-Based Pricing- Receiving a small margin per it
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
m with a high volume of sales
The problem with all three of these methods is they do not take into account the customer’s perceived value of the product. Let’s assume you are going to sell hats. The hats cost you $10 to make so you
The problem with all three of these methods is they do not take into account the customer’s perceived value of the product. Let’s assume you are going to sell hats. The hats cost you $10 to make so you
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
decide to sell them for $15. What if the people buying your hats only think they are worth $5? You are in big trouble. You cannot afford to sell hats for less than they cost you to make, but if that is the perceived value to your
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
customers you will not sell any at $15. On the other hand, what if customers love your hats and would actually be willing to pay $20 per hat? You are cheating yourself out of $5 per hat. So how do you know what people will pay? D
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
the research before going to market. Either hire a market research firm, or do it yourself if you are on a budget. If people are willing to pay less than your cost to produce the hats, you will be avoiding disaster by knowing this
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
information ahead of time. If people are willing to pay more than your perception of a fair price, you can be even more successful than you imagined.
Price Wars
Your price must be based on the perceived value to the customer. Pric
Price Wars
Your price must be based on the perceived value to the customer. Pric
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
e is a double-edged sword, and many companies find themselves falling into the trap of competing on price. Price is NOT a competitive advantage by definition because it can be copied easily and immediately by the competition. Price
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
ars with the competition hurt everyone. Customers will be happy at first because they will get better deals, but be disappointed in the long term when prices go back up or their favorite company goes out of business. Price wars des
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
troy the perceived value of the product in the marketplace. Even if your company wins the price war by undercutting the competition, customers will feel cheated when prices return to normal levels.
I went to McDonald’s to get my 39-
I went to McDonald’s to get my 39-
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
cent hamburger the other day, and to my dismay what had been 39 cents the previous six months is now all of a sudden 79 cents. I felt cheated, but if they had not been 39 cents the week before when I bought them, I would not have fe
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
t that paying 79 cents was a big deal. Like millions and millions of other people, I have been going to McDonald’s since I was a child. A few years ago they panicked and jumped into the price wars with their competition. This was a
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
mistake. By creating their own “value menu,” they started looking like everyone else. There is now nothing special about going there because they are just like their copycat competition. I just heard on the radio that McDonald’s i
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
s closing almost 200 locations. It does not sound like the low price strategy is working.
Low price is not a valid competitive advantage, yet companies spend millions of dollars saying they are the low price leaders. Low price has
Low price is not a valid competitive advantage, yet companies spend millions of dollars saying they are the low price leaders. Low price has
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
o distinguishing characteristic about it, particularly when everyone is saying the same thing. Companies are also telling their customers to shop based on price. Therefore, if their competition has a lower price, they should go to t
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
hem. Let me repeat, companies are paying for advertising that tells their customers not to be loyal, but to shop based on low price! Besides encouraging a price war and creating disloyalty, this violates Marketing Key 5: Building Re
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
lationships. By telling people that the lowest price is the best criterion for choosing a product, companies are discouraging customer loyalty based on reputation or quality of service. This practice is so prevalent that it is no wo
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
der many people are confused about the proper place of price in a marketing plan. The good news is that after reading this, you now know better than your competition.
How to Win a Price War
The answer to how to win a price war is t
The answer to how to win a price war is t
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
o not get into one in the first place. If you find yourself in this situation, find a competitive advantage aside from price to promote then differentiate yourself and focus your marketing promotions on the advantage instead of price
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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