Essay About Market Segment And New Product

Datril Marketing Strategy
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Date: 07/10/1975
Executive Summary
The single most rewarding opportunity faced by Bristol-Myers (BM) is the chance to launch a new non-prescription acetaminophen drug branded as Datril. This situation is an opportunity because it is an alternative analgesic to Aspirin with fewer negative side effects. This market segment which growing at 50% and has only one major competitor offering – Tylenol.

To take advantage of this opportunity the company needs to present Datril as a new product at a similar price to Tylenol, from the same company that produces Bufferin and Excedrin, thus leveraging the existing brands to foster a sense of trust and reliability with the consumer. This is contrary to the best option currently before Mr Koslow, which was to present Datril as a cheaper Tylenol (Chernev, 2009). The problem with this approach is that Tylenol can easily match or beat any price advantage we attempt to introduce and it will force them to defend their brand aggressively.

Situation Overview
The opportunity to move into the acetaminophen market is very exciting for BM. BM have to make a decision as to how to differentiate Datril from Tylenol who the current market leaders. As Datril provides pain relief similar to Aspirin based products, which are the core of the BM product line, the two suggested options were both avoiding market cannibalization (Chernev, 2014) by brand leverage or directly targeting Tylenol customers.

Tylenol primarily marketed to physicians and trade (Chernev, 2009) so BM has the option to market Datril directly to consumers and therefore target the much larger general consumer market and it is expected that many consumers will purchase Datril as a combination or alternative rather than a substitute for Aspirin based products.

Action Overview
To fully take advantage of this opportunity the company should proceed with the following proposal, which combines elements from the two discussed options and a targeted approach at each stage of the distribution process.

The marketing campaign will include direct marketing to consumers through targeted advertisements in newspapers, magazines and television to create brand awareness. It will avoid comparing the product to Tylenol, or trying to undercut the established market leader regardless of how promising the initial market research was (Chernev, 2009). Instead, Datril will be presented as a new product from BM for customers looking for an additional over the counter pain relief option.

This will be combined with indirect marketing which will target retail outlets and medical professionals. This will be done by providing high quality promotional displays for retail outlets that will prominently display all current BM product offerings. This will enable us to leverage the current brand recognition of Bufferin and Excedrin and build upon that trust with the consumer.

Further incentives will be offered to the trade and medical profession which will offer extended payment terms and promotional material and it is anticipated that these channels will educate the consumer on the substitute nature of the product (i.e. they have the same active ingredient).

Lastly, a hybrid strategy will be used by choosing a price point of $2.75 at launch which will provide the consumer with a cheaper substitute albeit marginally. This should avoid a defensive marketing strategy (Exhibit 1) from the market leader with pricing at launch being described as an ‘introductory offer’. This is in line with a non-price competitive strategy designed to avoid a price war with the market incumbent, Tylenol. Should Tylenol react by lowering its price then we should aim to match the price but not better it to avoid price competition (Exhibit 2).

Strategy
The $680 million analgesic market is currently divided into two types of pain relievers, aspirin and acetaminophen. It is recommended that a one-for-each strategy is adopted with Datril specifically targeting customers with a sensitivity to aspirin and those looking to minimize or avoid the negative side effects of aspirin. This is a medium risk strategy as it involves marketing a new product to existing customers and sits within the product development quadrant of Ansoff’s Matrix (Ansoff, 1957) (Exhibit 3). There is currently only one competitor in the market, Tylenol, to which Datril is a perfect substitute.

The Datril’s value proposition differs for each entity in the distribution chain with some of the benefits identified being:
End User/consumer – perfect substitute for Tylenol and aspirin from a trusted supplier at a reduced cost. Very slight price differential focus on branding and product positioning within the stores;

Physicians / doctors – Alternative pain relief for Aspirin. Promotional material and kickbacks;
Trade / wholesalers – New product offering, heavily marketed, driving increased customer traffic. Incentives/discounts allow for increased margins. Premium product displays and favourable terms of trade (e.g. 90 day accounts versus 30 day accounts);

Company – potential sales from entering a new market, increase brand awareness.
The combination of these factors and value creation for each part of the distribution chain will help develop and build brand equity which will in turn enable Datril to capture market share (Exhibit 4).

Tactics
Some of the key aspects of the marketing mix to be used in establishing Optimal Value Proposition (OVP) are as follows:
Product