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)

Posted in WFU Summer Management Program.