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Cases - Pricing Strategies in Marketing
Price is an often overlooked marketing strategy, as many tend to focus on promotions or advertising. Pricing strategies, however, can have a large impact on sales and (more importantly) profit. The price is what your customer pays and/or what the end consumer pays for a product or service. In the case of produc
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
ts not sold directly to the end user, pricing is often described as “wholesale” and “retail.” When the distribution channel is long (such as when there is a manufacturer, broker/distributor, retailer, and end consumer), multiple mark-ups can occur between the wholesale and the retail price.
Your optimal pricin
Your optimal pricin
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
g strategy will depend on more than your costs. Forces within your business environment such as your competitors, your suppliers, the availability of substitute products, and your customers come into play as well. Positioning (how you want to be perceived by your target audience) is also a consideration.
Pr
Pr
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
icing Strategies
There are a variety of pricing strategies in existence. Each strategy is used in a different set of circumstances. Some of the things to consider when choosing the best strategy for your situation are your costs; both short term and long term sales and profit goals; competitors’ activities
There are a variety of pricing strategies in existence. Each strategy is used in a different set of circumstances. Some of the things to consider when choosing the best strategy for your situation are your costs; both short term and long term sales and profit goals; competitors’ activities
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
; and customer lifetime value. While there are others, a few of the more popular pricing strategies available to you are:
Cost plus mark-up. Here, you decide the profit you want to make before setting the price. Figure out your costs and your selling price is simply your costs plus your pre-determined p
Cost plus mark-up. Here, you decide the profit you want to make before setting the price. Figure out your costs and your selling price is simply your costs plus your pre-determined p
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
rofit number. This approach helps keep your profitability top-of-mind, but may also result in prices that are out-of-line with customer expectations and competitor pricing.
Competitive pricing. When competitive pricing, you look at the prices your competitors are charging and use those prices as a bench
Competitive pricing. When competitive pricing, you look at the prices your competitors are charging and use those prices as a bench
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
mark when pricing your own products. You and your competitors’ positioning strategies will determine whether you price at par, slightly below, or slightly above the competition.
Price skimming. This technique is used when you offer a unique or scarce product with few or no substitutes. The price is set
Price skimming. This technique is used when you offer a unique or scarce product with few or no substitutes. The price is set
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
high, resulting in high margins for the seller. Buyers are those that are willing to pay the price because of the product’s prestige and/or uniqueness. In the case of a scarce but necessary product, customers pay the price because they have no choice. Often, price skimming is a short-term strategy as competitor
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
s enter with their own products, bringing prices down. In the case of scarce products, either the need passes (salt during an ice storm, for example) or the shortage is temporary. Before considering this technique, be aware that if your customers feel you have taken advantage of them, you could be building “bad
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
will” for your business.
Penetration pricing. This is the opposite of price skimming. Prices are set low in an effort to gain large market share. Because the penetration price does not cover costs, this is also a temporary strategy. For this strategy to be profitable, customers must be willing to pay y
Penetration pricing. This is the opposite of price skimming. Prices are set low in an effort to gain large market share. Because the penetration price does not cover costs, this is also a temporary strategy. For this strategy to be profitable, customers must be willing to pay y
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
our normal, higher price.
Loss leader. Here, you price one or more products below cost to attract customers. You hope that those customers will purchase other profitable products from you. This strategy is often implemented as part of a short-term promotion.
Close out. This is a tactical move to
Loss leader. Here, you price one or more products below cost to attract customers. You hope that those customers will purchase other profitable products from you. This strategy is often implemented as part of a short-term promotion.
Close out. This is a tactical move to
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
clear slow-moving or excess products out of inventory. You sell the inventory at a steep discount to avoid storing or discarding the product. End-of season merchandise, perishables that are about to expire, and prior software versions or book printings are examples of eligible closeout items.
Multiple unit
Multiple unit
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
pricing. Also called quantity discount. The customer gets a price break for purchasing multiple units or large quantities.
Membership or trade discounting. Here, some customers (those that you know are heavy or frequent purchasers) are given an elite status, which gives them the privilege of a pric
Membership or trade discounting. Here, some customers (those that you know are heavy or frequent purchasers) are given an elite status, which gives them the privilege of a pric
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
e discount on their purchases. This elite status can be based on occupation, membership in an organization, subscription status, or some other criteria.
Variable pricing. With a variable pricing strategy, different customers pay different prices. Often, this strategy is used for project work. Each proje
Variable pricing. With a variable pricing strategy, different customers pay different prices. Often, this strategy is used for project work. Each proje
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ct has unique characteristics so is priced by the job. In other cases, the price is negotiated with each customer (cars are an example).
Versioning. This is offering the same product with different levels of functionality. Each level is priced differently and includes a different bundle of attributes.
Versioning. This is offering the same product with different levels of functionality. Each level is priced differently and includes a different bundle of attributes.
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
Software and Web hosting companies often use this pricing strategy. A trial or very basic version may be offered at low or no cost. Upgraded versions are available at higher costs.
Bundling. Here, several items are sold together at a price less than if they were purchased alone. By bundling a popular it
Bundling. Here, several items are sold together at a price less than if they were purchased alone. By bundling a popular it
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
em with lesser-known products, you can increase your sales. Additionally, in the case of inventoried items, you may be able to avoid a closeout.
Impact of Internet on Pricing Strategies
Aside from making some pricing strategies more prevalent, the Web has also affected the importance of choosing correc
Impact of Internet on Pricing Strategies
Aside from making some pricing strategies more prevalent, the Web has also affected the importance of choosing correc
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
t pricing strategies, by allowing customers to be better informed and more vocal. In the case of consumer products, the purchaser can go to www.MySimon.com or another price comparison service and in seconds look at a side-by-side price comparison from several online retailers.
There are also numerous forums an
There are also numerous forums an
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
d discussion boards where members discuss their experience with providers. For example, your customer in Paris can complain or spread praise about you to a potential customer in St. Louis. This means the customer can not only make a better decision before purchasing, but can also better spread the word (both pr
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
aise and complaints) after the purchase. For these reasons, the Web has made it more important that you remain competitively priced with your competition and maintain sensible pricing practices.
Combined, smart use of both the Internet and available pricing strategies can help boost your company’s bottom line.
Combined, smart use of both the Internet and available pricing strategies can help boost your company’s bottom line.
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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