Metabical Case Solution

Topics: Price, Marketing, Price point, Pricing / Pages: 4 (976 words) / Published: Apr 11th, 2013
B Problem Statement
Barbara Printup must determine the packaging for Metabical that will best capture the accurately forecasted demand of the target market. With many substitutes for weight loss in a variety of packages and price points, it will be important to create a package that can be priced in a way to both drive sales and continued use of the 12-week drug.
Printup must also develop a pricing model to align with the packaging and the price expectations of the target market. Since this is the first prescription drug for overweight people, reference prices are compared to many "non-exact" substitutes that will factor into the price sensitivity of the market. Additionally, unlike other drugs in CPS ' portfolio, it 's unlikely that healthcare payors will cover the cost of Metabical.
Since medically, the drug is most effective when taken for a full 12 weeks and financially, profits are maximized when consumers purchase a full 12 weeks, Barbara must consider what mix of pricing and packaging will create the best balance to maximize both of these.
Printup must first address her packaging issue to manufacturing can commence. Given the pricing options and demand models, I recommend that CSP packages Metabical in 4-week blister packs. In any of the demand models created by Printup, CSP can expect demand to drop off for the second and third unit of sales. CSP can also expect a high ROI from the 4-week packs, provided the pricing is right.
With packaging addressed, Printup must select the most effective price point for Metabical 4-week packs. With 3 demand models and 3 price point recommendations, Printup has 9 scenarios that can be evaluated for ROI, acceptance by the market, and strength. I recommend Printup selects the $125 price point for Metabical. CSP can expect an acceptable ROI under any of the demand models and likely will at least 36%, for $1.6 billion in profit over 5 years. (See attachment for analysis.)

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