Topics: Marketing, Price, Pricing Pages: 5 (1340 words) Published: March 6, 2013
Executive Summary
The single most rewarding opportunity faced by the company is how to position Datril to the general public in 1975 and gain substantial and sustainable market share in the analgesics market. This situation is an opportunity because Bristol-Myers needed to figure out how to successfully price and promote Datril as it launched in the analgesics market. Two main options are available (1) whether to promote Datril as a direct point of sale towards the consumer or (2) to adopt the traditional and more conservative route as that of Tylenol and promote Datril towards the trade only. Ultimately, to establish a price point that allows Datril to compete with Tylenol given like functionality. The company should target aspirin users through direct marketing and position Datril as an effective functional alternative given the absence of side effects that are typically present with aspirins. Marketing through extensive advertising campaigns would be required to encourage and increase market share. Bristol-Myers could also leverage other brand association on the packaging. Situation Overview

Datril’s goal was to solidify Bristol-Myers’ position in the analgesic market and gain share in the rapidly growing acetaminophen market. Because the acetaminophen market was dominated by Tylenol, it was only natural that the strategic options that Bristol-Myers was considering involved price cutting and/or comparison marketing to Tylenol. Action Overview

To take advantage of this opportunity the company should target current aspirin users since that market share is 90% and not target current Tylenol users since they are already converts and therefore, perceive no value in changing to Datril. The aspirin market is dominated by 3 main players and Bristol-Myers’ has two of the brands. Attracting current aspirin user will no doubt also benefit Tylenol, while at the same cannibalize Bristol-Myers own aspirin brands. A vertical brand extension using Datril as the upscale brand, positions it at a potential $680 million dollar market of which Tylenol/acetaminophen’s current share is a mere $55 million.

The target customers are current aspirin users because this represents a 90% share of the analgesics market. •Tylenol is Datrils main competitor and is currently dominating a fast growing Acetaminophen market. Tylenol and Datril have the exact same components with Datril being the cheaper alternative of acetaminophen.

Value Proposition:
The value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups. It is also a positioning of value, where Value = Benefits – Cost.

Customer value
Datril offered a greater inherent value from a functional perspective; that of raising the pain threshold and reducing fever without having any anti-inflammatory effects of aspirin. This would make Datril more likely to be adopted. Since Datril’s lower retail price of $1.85 and a trade of $1.05 is a greater cost benefit than Tylenol which retails at $2.85 with a trade price of $1.69. Additionally, acetaminophen provided a sense of feeling better than aspirin.

Competitive advantage
Datril and Tylenol both consisted of the same ingredients and thus had no differentiation other than cost. Datril did have brand association and recognition given other well established Bristol-Myers brands promoted through main advertising channels. McNeil Labs promoted Tylenol, limited to physicians and the trade. Tylenol had a market share of 8% and Datril potential could get a larger market share by targeting aspirin users.

Company value
Increased profitability is achieved by either increasing revenues or by lowering costs. Bristol-Myers strategy of pricing Datril $1.00 cheaper than Tylenol this potentially results in increased sales volume and thus increase revenues. Reducing costs could also increase revenue....
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