Pricing Viagra
Pfizer introduced Viagra y'day in Indian markets at Rs 594 (for a 100 mg) & Rs 463 (for a 50 mg). How would one price Viagra in India? Lets try to force-apply some concepts learnt recently.
Always Safest bet: Value based pricing or the EVC animal- 'Economic Value to the Customer'
Not sure if the value here is economic in nature. Premise here could be that since Viagra is positioned as bringing charm back in relationships, customers should be willing to pay a premium for such emotional benefits. But isnt EVC more relevant in case of products which are used repeatedly not a one shot use like a pill?
My bet: Psychological pricing
No doubt that psychology plays a major part in this whole ED stuff. So, why not exploit the same in pricing a cure for it. Price as an indicator of quality here. Maybe what company is assuming is that only people will get this drug prescribed would be the ones who are able & willing to pay the premium. Maybe company is trying to exploit the already near 100% brand awareness & not willing to educate/develop the market in India initially.
Price skimming
Get the 'early adopters' (i.e. those who are in dire need in this case) to pay a premium & later on reduce the price. btw, generics are already available in the market @ Rs20,etc. but Pfizer still plans to garner 10-15% of the Rs 100 cr ED drug market in India in next 1 year. Would be interesting to see how a drug priced at 25x a substitute can garner 10-15% market share in an year. Call this marketing.
Cost Plus?
Read that product for Indian market would be imported from France & would be available in some special packaging. Wonder that could have a bearing on costs. But a marketing savvy company like Pfizer cant be using the worst strategy of em all.
Anyways, whatever maybe the strategy, it appears that it is definitely not the 'penetration pricing' strategy. No pun intended.
Now, lemme think of some alternative pricing schemes for such a product ...
Segmentation pricing
Can one segment the market for such a product on the basis of 'criticality of need' & then price accordingly?
Bundling possible?
With complimentary products from Durex, etc to reduce the price of the overall bundle?
Have exhausted my jargon.
Always Safest bet: Value based pricing or the EVC animal- 'Economic Value to the Customer'
Not sure if the value here is economic in nature. Premise here could be that since Viagra is positioned as bringing charm back in relationships, customers should be willing to pay a premium for such emotional benefits. But isnt EVC more relevant in case of products which are used repeatedly not a one shot use like a pill?
My bet: Psychological pricing
No doubt that psychology plays a major part in this whole ED stuff. So, why not exploit the same in pricing a cure for it. Price as an indicator of quality here. Maybe what company is assuming is that only people will get this drug prescribed would be the ones who are able & willing to pay the premium. Maybe company is trying to exploit the already near 100% brand awareness & not willing to educate/develop the market in India initially.
Price skimming
Get the 'early adopters' (i.e. those who are in dire need in this case) to pay a premium & later on reduce the price. btw, generics are already available in the market @ Rs20,etc. but Pfizer still plans to garner 10-15% of the Rs 100 cr ED drug market in India in next 1 year. Would be interesting to see how a drug priced at 25x a substitute can garner 10-15% market share in an year. Call this marketing.
Cost Plus?
Read that product for Indian market would be imported from France & would be available in some special packaging. Wonder that could have a bearing on costs. But a marketing savvy company like Pfizer cant be using the worst strategy of em all.
Anyways, whatever maybe the strategy, it appears that it is definitely not the 'penetration pricing' strategy. No pun intended.
Now, lemme think of some alternative pricing schemes for such a product ...
Segmentation pricing
Can one segment the market for such a product on the basis of 'criticality of need' & then price accordingly?
Bundling possible?
With complimentary products from Durex, etc to reduce the price of the overall bundle?
Have exhausted my jargon.
posted by Amit at
2:35 PM
4 Comments:
This comment has been removed by a blog administrator.
By
itheabsolute, at 6:46 PM
amit
unless u have a patent or a monopoly, u r a price taker and not price setter. unfortunately for pfizer, despite having a patent , it will be a price taker beacuse, as u have mentioned, ranbaxy and a few others had introduced variants of viagra long time ago at rates which are much much cheaper. these are said to be equally errective...err...effective. obviously, pfizer is constrained not to release it at a competitive price because its american customers will feel offended. and there will be an arbitrage too. it will be very difficult for pfizer, quoting u again, to 'penetrate' the market.
cheers
By
itheabsolute, at 7:03 PM
your depth of Jargon usage is not befitting an ISB MBA student.Please work on these skills more (it is the only thing you will carry) :-)
By
Ferrari, at 10:04 PM
As you say sire, my lord of Jargon, Bundle of faff, Master of Gas.
By
Amit, at 6:21 AM
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