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1. What are the most relevant dimensions to use to

segment the patient market for ED treatment? Select only the most
relevant!

The most relevant dimensions to use in order to create useful segments for Cialis are:

1. Age
2. Marital Status
3. Income Demographic
4. Education
5. Life Stage/Occupation (Student, Employed or Retired)
6. Values Psychographic
7. Usage Patterns

Firstly, age is a valuable dimension due to the strong positive correlation to erectile
dysfunction (ED) incidence. Secondly, as shown in the demographic data presented by Lilly
ICOS, most men who suffer from ED are either married or living together with their partner.
Being the influence of the spouse one of the strongest factors in seeking solutions for ED, this
reveals as an essential dimension to include in our study. Thirdly, taking into account income
and education allows us to explore different purchasing powers and also how different people
perceive and sense the product.

Concerning the usage patterns, I believe the best way to ungroup potential customers is to
consider the 3 groups suggested by Lilly ICOS’ study: Viagra current users; Viagra dropouts;
never used Viagra. By considering this, helpful advices may be provided about the best, most
effective way to approach different types of customers.

Thereby, there could emerge a lot of different segments, but only a few of them would be
relevant to Cialis. This way, restraining our analysis to the male population with Erectile
Dysfunction, due to the nature of the product, we can find 3 important segments:

A. YOUNG ADULTS. People who belong in this group have ages between 20 and 30. We can
describe them for having sexual relations without great commitment and, therefore,
the great majority is still single. Also, they would be allocated in the never used Viagra
group. Most are students or have just entered in their workplace, showing high levels
of education. In that sense, most do not have any kind of income, and those who do
will try to save a great part of it for big investments (example: buying a house or
paying college loans). They try to have fun as much as possible and give great
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importance to some of these values: Wonder, Curiosity, Amusement, Pleasure, Daring,

Independence, Energy, Open-Mindedness and Sensuality.

B. STABLE HUSBANDS. People who belong in this group have ages between 30 and 65. We
can describe them for being men with enduring relationships with their spouses, being
either married or living together. Their levels of education are significant, therefore,
the great majority has dependable, reliable employment and has gathered a
medium/high amount of savings, due to their considerable level of income. This group
has different usage patterns, so some of them are included in Viagra dropouts and
others in Viagra current users. This segment attaches great consideration for some of
these values: Organization, Competence, Accomplishment, Family, Confidence,
Success, Stability and Credibility.

C. RETIRED SENIORS. People who belong in this group have ages above 65. Most of them
have been living together with their partner for a long time and over the years have
built a strong, solid relationship. They have medium/high level of education and are
currently retired, so most of their time is spent enjoying each other’s company. Even
though they may not have a very fruity income at the moment, they have accumulated
a considerable amount of savings and are willing to spend a great part of it in
appreciating life. This group is mostly included in Viagra current users and strongly
connects to some of these values: Traditionalism, Activeness, Family, Pride, Assurance,
Religiousness, Comfort, Fidelity and Dignity.

2. Of the segments identified, which would you target initially? Why?

Of the 3 segments I have identified, I would choose to target the STABLE HUSBANDS.

The segment of RETIRED SENIORS is the one with the highest prevalence of ED, as shown in
documents provided by Lilly ICOS, and the most attractive target for a drug of this kind, due to
the fact that these men have a lot of free time and tend to appreciate life, holding onto their
pride and honor as matters of great relevance. However, choosing this segment would imply
assuming a “head-to-head” strategy and directly compete with Viagra, a brand that has
become a symbol and has grown an untouchable reputation over the years.

In this sense, I think it would be more reasonable to select a strategy with a differentiated
positioning, being Cialis’ main target the STABLE HUSBANDS with ED. Analyzing the document
provided by Lilly ICOS, of all men between the ages of 30 and 65, in the USA and Europe, about

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15% of men suffer from ED (rough estimate). Since 150 million men worldwide experience
chronic ED, we would be targeting about 22.5 million men plus those with light/moderate ED.
From this market segment we would have to analyze the percentage of men that are
married/living together with their partner (about 80%) and their different purchasing powers,
but would still be left with a greatly significant sample. Even though it is a minority of the
market potential, I believe that this strategy is the most appropriate approach to this market
dominated by Viagra.

Men with ED that belong to this segment go from the newly-weds to the golden wedding
stages, meaning that they value relationship stability and accomplishment. And, commonly,
when the husband’s ability to perform sexually starts being inconsistent, his confidence, self-
assurance, self-identity and other values start to shiver. In most cases, the husband starts
losing focus of his role, thus creating a distant connection with his spouse. This fact is a
remarkable trait for the success of Cialis in this segment, because this product offers the
possibility of maintaining a coherent sexual performance without close previous planning
(“The Weekend Pill”), helping the relationship to become more fluent, natural and
spontaneous, thus increasing the happiness and fulfilment of both husband and wife. This
intensifies the sense of achievement of the couple and structures foundations for a long lasting
marriage.

On the other hand, assuming that most men with ED in this segment are either Viagra
dropouts or Viagra current users, we can conclude that duration and safety with nitrates
present a great level of value (about 50% in both groups), following Lilly ICOS source. The
durable effect of Cialis offers the couple more freedom and removes pressure from their
sexual life, allowing their moments to be more genuine and affectionate throughout their life
together.

3. What is Viagra positioning in 2002? How would you characterize the

Viagra brand?

Initially, in 1998, Viagra started targeting older people (to whom Bob Dole reached with much
effectiveness at the time), and due to the absence of other players in the market, it was mainly
focused on reaching and acquiring share in more segments. In 2001, Viagra was still alone in
the market and it already started targeting a new age group: middle-aged men. This was
greatly implemented by using a well-known race car driver promoting the product.

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By 2002, due to the notable success observed since its launch, Viagra was a brand with a global
accomplished market impression and a widely diffused brand image (it was cultural topic of
conversation). It started to be so well-known among the general population (even among
people that did not relate in any way to ED) that the name Viagra became a synonym of the
product’s category.

Nevertheless, it was not all rainbows and unicorns. The product had a remarkably low rate of
consumer loyalty in comparison to its assertive, disseminated positioning. In 2001, a study
showed that of all people who acquired Viagra and initiated ED treatment, just ¼ were still
consuming Viagra one year after.

4. What would be the most effective way to position Cialis in the

marketplace?

“For Stable Husbands, Cialis is the ED treatment pill that delivers the longest duration effect,
the greatest effectiveness and the highest safety levels, because only Cialis understands love.”

Target

As previously described, Cialis should target the segment of STABLE HUSBANDS.

Demographically, these middle-aged men (30-65) take part in durable, deep-seated
relationships (married or living together). They are highly educated (mostly superior) and have
secure, trustful jobs. Average levels of income in this group range from medium to high. In
terms of Viagra usage behavior they are either included in Viagra dropouts or Viagra current
users. Referring to personality, the great majority has such attributes as willingness, talent,
family-intimacy and prosperity.

Frame of Reference

Cialis competes in the market of Erectile Dysfunction Treatment Drugs. In 2001, there was a
global estimation showing that there are about 150 million men worldwide suffering from
chronic ED and roughly 50% of all men between the ages of 40 and 70 experience
light/medium forms of ED. In this market, the main and most remarkable player is Viagra.

Points of Difference

In my opinion, Cialis has exceptional competitive advantages in comparison to other market

players, especially Viagra.

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1. Duration - Cialis has an incredible drug effectiveness length, surpassing Viagra’s by

900%, since its sexual stimulation period of time can last until 36 hours. This allows
intimacy to flow naturally, giving a higher level of freedom for couples to decide the
most appropriate moment, taking pressure off the occasion.
2. Safety – The body’s absorption of Cialis is not influenced by the type of food ingested
and common side effects of Viagra, like visual irregularities, were particularly rare with
Cialis.
3. Efficacy – Both the previous factors of Cialis increase the drug’s efficacy in solving the
problem for ED patients, making its treatment more simple, approachable and
friendly. In 2002, data of Cialis trial showed that 8 in every 10 men suffering from male
impotence responded to sexual stimulation for an extended period of time.

By appealing to this positive differentiation of Cialis when comparing to Viagra, not only Viagra
dropouts could be interested in giving another opportunity to this kind of treatment, but also
Viagra current users would at least try it once, since it appears to be a product of better quality
and higher performance.

5. What marketing mix activities should accompany the launch of Cialis?

a. What would be the most important messages to communicate to the target

patients? To physicians? To partners?

Target Patients

Whilst trying to reach STABLE HUSBANDS, the main communication content should focus on
mentioning the extensive duration of Cialis’ effect and the advantages of having a product with
such feature. This trait of Cialis has to be transmitted as an impeccable help to the fluency and
accomplishment of the relationship between the couple and as an aiding to the building of
spontaneous moments of intimacy, thus giving notice of Cialis’ emotional value to customers.
Ultimately, the message has to make men who suffer from any type of ED understand and
associate Cialis as an essential pole of a successful relation.

Also, safety that comes mainly from the inexistence of side effects must be mentioned to the
targeted patients, due to the fact that, as Lilly ICOS source displays, it is Viagra Current Users
and Viagra Dropouts second most important attribute for a drug of this kind, since it affects
the patient’s well-being.

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In my opinion, while transmitting these messages to the market, Cialis should try to do it in a
way that it would break the topic’s taboo, by presenting it as a perfectly normal problem, since
it is not as uncommon as people think, for which there is now a remarkable solution. This
would make men more comfortable to talk about it and they would confront the disease with
less psychological trauma, consulting their doctor rapidly to provide them with a solution.

Physicians

On the other hand, the most important message to focus on whilst reaching Physicians would
be the safety of the product consumption. By referring the elimination of side effects that
other drugs of this kind produce and the needlessness of cares that the patient has to have
about earlier food consumption before taking the pill, physicians should see Cialis as the best
drug in every aspect to prescribe to their patients who experience some kind ED. Also, since
doctors worry about the patient well-being, I think that enhancing the product’s effectiveness
could be a strong topic to pass along to this community, arguing that after an experimental
investigation it was shown that 81% of men who experienced ED responded to sexual
stimulation for an enlarged lapse of time after taking just 20mg of Cialis’ oral dose.

Partners

In my opinion, there are several important messages to pass to the partners of ED sufferers.
Firstly, present the solution to the husband’s condition as a way of not just increasing the
stability of his sexual performance, but also as a way of bringing his confidence and original
identity back. It is important to mention that this would reduce the man’s psychological
anxiety and thus increase the affection and care shown for each other. Another relevant
aspect to transmit, is that it represents an opportunity for the partner to help their soul mate
revert the downward spiral he has got into after realizing his condition. Thus, by helping him
find a sense of placement in the world, this would reflect positively in their relationship.

Secondly, since most partner knowledge about Viagra was associated with the media report
stating that there were men dying from heart attacks after taking the pill, I believe that a
special enhancement should be given to the safety of Cialis consumption, in order to eliminate
any kind of union between thoughts of health risk and Cialis’ ED treatment pills.

Thirdly, Cialis’ length of effectiveness should also be highlighted when reaching partners, since
partners often complained about the awkwardness felt moments after the husband had taken
the pill, or the psychological unavoidability of not having sexual relations after Viagra was
taken. In this sense, it is essential to promote the message that Cialis would eliminate those

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awkward moments and unpleasant feelings, since the husband could take the pill Saturday
morning and during the whole weekend the couple had the freedom to choose the most
appropriate time to share their intimacy, thus taking pressure off of their sexual life.

b. What medium would you use to reach each of these parties and what would
your relative resource allocation be?

Target Patients

In order to best reach the targeted patients I would firstly use such mediums as newspapers
and magazine articles mostly dedicated to men (like “Men’s Health”). In these means of
communication I think that the best alternatives would be to either lay an advertisement of
Cialis or to produce an article about Erectile Dysfunction stating Cialis’ solution to the problem.
Secondly, as the internal Lilly ICOS document shows, TV or Radio Shows are an effective way to
influence treatment seeking, so I would invest in advertising after/before programs that are
dedicated to men (sportswise, for example).

As a less relevant mean of communicating Cialis positioning I would consider creating score
boards in highly busy areas of the cities and also near health centers and hospitals.

Physicians

Reaching Physicians would be a bit more elaborated since I believe it would be extremely
effective to contact National Associations of Urology of the countries where Cialis would
proliferate and prepare conferences with doctors to present them Cialis so that they would
know perfectly what kind of treatment it is and why they should be prescribing it to their ED
patients. The ultimate objective of using this mean is to get the medical community to
recognize the product’s superior quality and performance.

Also, I believe that the sales force of Cialis are an important mean of reaching physicians, since
they allow a strong human contact between the doctor and the salesman, giving the doctor
opportunity to clarify doubts about the product and better understand the product’s
attributes.

Finally, I consider that having studies about Cialis published in scientific journals would be a
great way of promoting the product’s credibility among Physicians and Urologists.

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Partners

As targeted patients, I believe that the best way of reaching partners is, firstly, by
advertisement in newspapers and magazine articles, but this time dedicated to
women/unisex’s interests, like Vogue, Elle, or Destak. Secondly, TV or Radio Shows dedicated
mostly to women (for example, “Fashion TV”), since they are being watched by a great amount
of people.

Again, as a less relevant mean of communicating Cialis positioning I would also consider posing
score boards in highly busy areas of the cities and near health centers and hospitals.

c. How would you price Cialis? What type of promotions would you offer?

As Cialis presents top attributes when compared to the other competitor’s offers I would price
this product above the competitor’s reference price of 10$ (Viagra), for example: 14$. Cialis
has to capture value and I believe that the positive differentiation value that it presents to
buyers is the wideness of characteristics (duration, safety and effectiveness) and also
psychological worth, meaning that the price has to reflect this added value of the product in
order for consumers to perceive its superior results. This is consistent with the targeted
audience, since they have medium/high purchasing power and advanced levels of education.

Regarding promotion structure, I consider that it would be fruitful to offer a sample the first
time an ED patient is prescribed with Cialis so that he can easily give an opportunity to this
new brand entering the market. Also, I think that prices for men who suffer from chronic ED
should be 25% less than to light/medium sufferers of ED, since they will tend to become loyal
to Cialis, and thus represent a segment with less risk of dropping the product.

6. What competitive response do you anticipate from Pfizer? From Bayer-

GlaxoSmithKline?

Pfizer

From this company I think that it could be expected an aggressive response in terms of
resources and effort in R&D and also from a marketing outlook.

Firstly, I believe that Pfizer, a company that spent more than 5 billion dollars in R&D in 2002,
will start allocating more resources in developing a new improved version of Viagra, covering
the attributes of duration, safety and effectiveness that Cialis presents. Not only they will
probably achieve this objective but they could very possibly enlarge their product’s features.

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For example, in a few years it may come out a version of Viagra with a duration length of 72
hours, with close to none side effects and that is perfectly safe to ingest with nitrates.
Secondly, I strongly suppose that they will adapt their marketing strategy in order to create an
assertive response to Cialis and its positioning, since they are known for their remarkable and
bold marketing stunts and achievements. In this context, Lilly ICOS should expect an
affirmative move from Pfizer, since it is penetrating a segment which, although it is not
Viagra’s strongest (they have their biggest market share with 60+ segment) they also compete
in.

Bayer-GlaxoSmithKline

From Bayer I have two main reasons that lead me to consider that there will not exist any
expressive reaction. First, they adopted a “niche” strategy, since their main target are diabetic
men, considered a hard-to-treat segment, meaning that they have this segment assured. They
would not benefit if they confront Cialis or Viagra, for that matter. Second, although their
presence in Europe is strong, their North-American marketing coverage is relatively weak, this
meaning that they do not have much margin of action to answer to Cialis with the strength
needed.