Warner-Lambert, an international pharmaceutical and consumer products company in Ireland, planned to launch a new product in 1990 called Niconil which was made for those people who would like to quit smoking. Niconil were different than the existing smoking cessation products in the market. Managers of the company believed that Niconil had many competitive advantages over its competitors and were very confident of the product. But there were some arguments about pricing strategy and marketing communication: Should Niconil be priced at a premium over cigarettes or on a par with cigarettes?What kind of advertising and promotion method they should use? Before launch the product in the market, Warner-Lambert managers need to decide the most effective pricing strategy and communication program in order to make Niconil successful.
Smoking Cessation Market
In 1989, 30% of the 2.5 million Irish adult citizens smoke cigarettes. Irish smokers would spend nearly £600 million on 300 million packs of cigarettes. Since 1950s, the harmful effects of smoking had been researched and documented and media was reporting the dangers of smoking. There were more and more anti-smoking campaigns and legislative restrictions against cigarettes. Within the 0.75 million smokers, there were at least about 75,000 smokers would like to quit smoking.
There were already some products targeted on those people in the smoking cessation market: Accudrop, Nicobrevin and Nicorette. Accudrop helped to trap tar from cigarette and Nicobrevin just eased smoking withdrawal symptoms. Nicorette was more special than the other two products. It was the only nicotine-replacement product and was in the form of chewing gum. It released nicotine into human’s body through mouth.
WLI had noticed the increasing quit-smoking trend and saw a good opportunity in the smoking cessation market, it also launched Niconil to compete in this market. Niconil’s basic function was the same as Nicorette’s, it served as nicotine replacement and substituted cigarettes. It released nicotine to human body for reducing uncomfortable symptoms caused from cigarette withdrawal. Unlike Nicorette, which released nicotine directly through mouth, Niconil released nicotine indirectly through skin. Niconil was the first transdermal patch-type product, users simply stick it on the skin and it released nicotine into bloodstream. Niconil had less negative side effects and was safer than Nicorette although it had some minor problem such as skin irritation.
Niconil could only be sold with a prescription so advertising of it was restricted. Moreover, while 70% of all drugs could be reimbursed by Ireland’s General Medical Service, Niconile had not qualified as a reimbursable drug.
The craving for cigarettes has physical symptoms (stomach cramps & nausea) as well as psychological effects (anxiety & irritability). To quit smoking successfully, a smoker needs to overcome these two aspects. Niconil was the first product focusing on the both parts. Besides the physical patch, Niconil had a support program which provided psychological support to those people who wanted to stop smoking. This help people quit smoking more effective by using Niconil and provided a competitive advantage to Niconil. The other advantage of the support program was that it could be sold to consumers without prescription if they were separately packaged from the patch product. In addition, it can also be advertised directly to consumers. Thus, WLI could use the support program to build Niconil’s brand awareness.
WLI had limited budget for the support program. Development cost was £3000 and the variable cost per support program was £3.50. Due to this, WLI had to decide how to distribute it efficiently before launch the program. Should they concentrate on doctors prescribing Niconil? or should...