Marketing Case: Burroughs Wellcome

Case: Burroughs Wellcome and AZT

Key Players: Shepherd, Haigler, Berry

Action Required:  Key players must decide whether to:

  1. Option 1:  Maintain status quo – no change to price or dosage
  2. Option 2:  Drop price per dosage only
  3. Option 3:  Drop recommended dosage amount only
  4. Option 4:  Drop both price and recommended dosage

Company Factors – Strengths: R&D Focus, reputation/notoriety/Nobel prizes, high social capital, sole producer, strong financing, multi-national – Weaknesses: Bad PR from ACT-UP and others, high R&D costs to cover.

Channel Factors – No BW marketing, anti-BW campaign – ACT-UP (grassroots, bad PR), prescription/knowledge only doctor access

Consumer Factors – Homosexuals, drug-addicts, hemophiliacs, limited insurance, limited-to-no income, no cure/growing demand

Competitor Factors – No current competitors, future competitors could emerge, govt. regulations/restrictions barrier to entry, new drug development being fast-tracked, underground providers, overseas imports

Marketing Environmental Factors – FDA regulated steps/trials, Congressional hearings, growing awareness could slow spread of HIV, boycotts of other product lines threatened. 

(see Exhibits 3&4 for Industry Analysis and Product Life Cycle Predictions)

Pros & Cons of Options:
 Option 1: Maintain status quo – no change to price or dosage
 Pros: Maintain current market share, appear not to cave to pressure
 Cons:  Competitors, vulnerability, boycotts, ACT UP attention
 Option 2: Drop price per dosage only
 Pros: More affordable, more prescriptions, better PR
 Cons: High rates of anemia/toxicity, less healthy consumer, death-rate turnover higher)
 Option 3: Drop recommended dosage amount only
 Pros: Less toxicity, consumer price savings on quantity of pills needed, less toxicity from reduced dosage yields longer life/longer lasting customers and pill use
 Cons: Lower revenue, less positive PR
 Option 4: Drop both price and recommended dosage
 Pros: Overt/obvious price savings to consumer, better product value, better dosage, less heat from protestors, no impact on other lines, potential boost to stock
 Cons: Lot less revenues than status quo, but would grow from possible expansion of market due to greater access and demand

(see Exhibit 1 for price results comparison of Options 1-4)

Recommendations:
We recommend Option 4, reduce the dosage to 500mg/day and reduce the price by 20% to $1.20/100mg pill.  This option allows us to access a broader market, reduce/eliminate bad publicity and its effects on stock prices and stockholders, and better serve price demands of the target market. Further, drop in dosage offsets product price reduction. (Exhibit 2)