Case Facts

Metabical- a safe and First and only It caters to the

Guaranteed weight
effective weight-loss prescription drug to needs of moderately
loss in 12 weeks.
drug introduced by CSP. receive FDA approval. overweight individuals.

The main negative
Not effective in helping
It leads to a healthier effect experienced when
individuals of BMI of 30
lifestyle. users consumed high
or greater.
level of fat and calories.
Metabical compared to current weight-loss options

•  few other weight reduction alternatives in the market contending with

Metabical are Meridia and Xenical. 
• Alli was the only true over-the-counter weight loss solution approved by
the FDA. Alli's problem was that he had many negative side effects with
more than 30 reports of liver damage. 
• Currently Available drugs are endorsed for utilize just by obese and
extremely fat people. 
•  At the same time there were serious side effects, which meant that
only one doctor could approve. 
Metabical compared to current weight-loss options

• However, this prescription drug option did not account for

the overweight segment of BMI between the ages of 25 and 30
seeking weight loss solutions.
• Other over-the-counter solutions were accepted by the FDA as herbal or
dietary supplements, so they were not regulated. 
• The final weight loss option was a diet plan, exercise plan, mealy
replacement products, weight management support programs, or pre-
packaged food distribution services. 
• Metabolic, on the other hand, would be the first prescription drug
specifically approved  so Metabical had a good chance. 
Demand forecast
model-1
Population of US in 2008= 230 million

Percentage of people who have BMI Between 25 and 30=

35.5%
No. of people within over-weight category= 0.355*230
million=81.65 Mn
% of people who actively try to lose weight= 35%
No. Of people who try to lose weight= 0.35*81.65mn=28.57 Mn
% of overweight who are willing to lose weight using
medication=15%
No. Of people in demand forcast-1= 0.15*28.57mn=4.29
million
Demand Demand
forecast model-2 Forecast Model-
Population of US in
Percentage of people
who have BMI
3CSP research determined the ideal
2008= 230 million Between 25 and 30= target consumer- educated
35.5%
females ,35-65 of age with BMI
No. of people within % of overweight who
between 25 and 30= 4.3 million
over-weight will go to health care
category= 0.355*230 provider for
million=81.65 Mn prescription=12%

No. Of people in
demand forcast-2=
0.12*81.65mn=9.79
million
 Demand Model for 5 Years
Market Acquisition for Model-1 and model-2 will be same for 1st five
years.

Model-1 Model-2 Model-3

Initial Market 4.3 Mn 9.8Mn 4.3Mn

Market
Acquisition 10% 10% 30%
in 1st year
2-5 year 5% each 5%each 5% each
Total @ 30%=2.15 Mn 30%=2.94 50%=
5 years Mn 2.15Mn
Factors considered for packaging
Effective
number of
pills in a
Minimal pack
Usage of
cost in the
packaging​ consumer​

Factors
Likeliness of Purchasing
the power or
completion
of course
capacity of
subject to the target
packaging Easiability i consumers
n tracking
of doses.
 Recommended Package Size

• Package size must be of 4 weeks containing 28 pills.

• Also, a bundle of 12-week supply consist of 3 pack of 4 weeks.
• Packing the whole 12-week supply in one package will cause higher
pricing and it will affect the number of potential customers.
• Package of 4-week supply will be more affordable for everyone
as having 12-week supply pack will limit the customers.
• Bundle pack would be an option for who can afford 12-week supply.
  Price Strategy Approaches For
Metabical
COMPETITION BASED COST BASED DEMAND BASED

Premium Market Average Gross Customer Value Model

Placement (75$) Margin (125$) (150$)

OTC Weight-loss Drugs. Average Gross Margin Ideal Target Customer

Starts around 65$ CSP= 70% Value Offer

MODEL 1 MODEL 2 MODEL 3

Actively Trying to lose Ready to request a

weight Prescription Ideal Target Market

Initial  Initial 
Market 4.3Million Market 9.8Million Initial Market 4.3Million
             Advantages / Disadvantages of Pricing
1) Approach 1 - $75: Advantages are; Low price, high demand and high market
penetration. On the other hand, disadvantages are; Pricing nearer to Alli, and therefore
less predictable, financially less able to distinguish himself as a FDA-approved prescription
drug. Competitive pricing can be reversed. 

2) Approach 2 - $ 125: Advantages are; better market penetration, better ROI,  priced
above Alli, premium factoring prescription drug with FDA approval and higher financial
forecast. Disadvantage are chance of missing out on getting maximum price. Aligns with
corporate strategy Pricing is just right to compete in unique market segments while
communicating value of the product Pricing makes Metabical a premium. 

3) Approach 3 - $ 150: Advantage is maximum profit. Disadvantage is lower demand due

to high price. Pricing is too high as market research indicates. This pricing may alienate
many consumers from considering Metabical.  Pricing a new product at $150 a per week
could be a non-starter in a highly competitive marketplace
           Impact of pricing Decisions on Profitability
1)Approach 1 - $75: Competitive pricing can be reversed. A metabolic consumer does not
have to compete at all price points he wants. It does not comply with CSP's corporate
strategy. It's not attractive. Return on Investment (ROI) is 25%.

2)Approach 2 - $ 125: Pricing is just right to compete in unique market segments while
communicating value of the product Pricing makes Metabical a premium. Fits well with
company strategy. Although revenues are lower in the short term, Metabical will be able
to project itself as a premium product over the long term.ROI is close to 75%, which
surpasses the expected minimum ROI of 5% by a large margin. Pricing is sensible, in line
with market expectations.
3)Approach 3 - $ 150: This pricing may alienate many consumers from considering
Metabical. Given the high starting price, the product may not attain required market
share. Although ROI is 126%, pricing is unrealistic. Pricing a new product at $150 a per
week could be a non-starter in a highly competitive marketplace.
Metabical should be sold at a premium
price. As in approach 2 ($125).

•  Higher retail price, leads to higher estimated profit 

•  Quicker recovery of costs incurred 
•  Satisfied shareholders 
•  Brand Value in the market is made 
•  Reduced cost of new customer acquisition
Thank You!