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Metabical: Positioning and Communications Strategy for a New Weight Loss Drug (Brief Case) – Case Solution

Cambridge Sciences Pharmaceuticals (CSP) is preparing for the upcoming US launch of its newest prescription drug. Metabical is a weight loss drug that has been proven to be safe and effective for moderately overweight individuals in clinical trials. DA approval is expected for January 2009, which gives the Marketing team and Barbara Printup, Senior Marketing Director for CSP, around a little less than a year to develop an effective positioning strategy for Metabical, as well as a full marketing communications plan to be ready for the launch.

​John A. Quelch and Heather Beckham Harvard Business Review ( 4240-PDF-ENG ) July 22, 2010

Case questions answered:

• What are the key consumer characteristics of Metabical’s target market?
• Which end consumer segment(s) do you suggest the Metabical campaign should focus on as a target market? Why?
• Given the target market selected by you, how would you position Metabical against its competitors?
• Which communication channel strategies (i.e., push and pull approaches) to promote Metabical seem appropriate to you?
• Which communication program do you propose, that is, how would you deploy promotional mix elements to advocate Metabical in the prelaunch, launch, and post-launch phases?

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Metabical: Positioning and Communications Strategy for a New Weight Loss Drug (Brief Case) Case Answers

Positioning and communications strategy for a new weight loss drug – executive summary.

Cambridge Sciences Pharmaceuticals (CSP) is preparing for the upcoming US launch of its newest prescription drug. Metabical is a weight loss drug that has been proven to be safe and effective for moderately overweight individuals in clinical trials.

DA approval is expected for January 2009, which gives the Marketing team and Barbara Printup around a little less than a year to develop an effective positioning strategy for Metabical, as well as a full marketing communications plan to be ready for the launch.

The product will have to amortize extensive R&D costs and secure excess profits to be a success for CSP, all that in a market environment characterized by diverse competition and low consumer trust.

Based on Barbara Printup and her team’s previous experiences and extensive research, the following actuality for the target group, competitive situation, and the product itself is evident.

Target group

Two target groups have been identified to market Metabical to consumers and medical professionals. Due to the nature and limits of its medical effects, Metabical is targeted specifically at overweight individuals (BMI of 25 to 30) as end-users of the drug.

According to research, by the year 2000, 34% of US adults (ca. 71 million) had been considered overweight. While the percentage of overweights increases with age, it prevails an equal phenomenon across all income-, and to a lesser extent, education levels.

To find out more about end consumers as a target group, CSP has commissioned a survey amongst overweight individuals and a study to analyze psychographic segmentation.

According to the survey, 70% of respondents are dissatisfied with their current weight, while only 15% of those actively trying to lose weight are comfortable using drugs. Women are considerably more active in weight loss activities than men, more willing to change behaviors to live healthier, and disproportionately unsatisfied with current weight loss options.

On a similar note, the study about psychographic segmentation found women to be the most distinct segment, while a focus group expressed demand for a proven and safe way to lose weight. However, a decision on the targeted segments, promotional mix, and messaging based on these findings is still pending.

According to interviews conducted, healthcare providers, the second target group that has to be addressed, are enthusiastic about Metabical. Since excess weight is considered a public health crisis in the U.S., the new drug is qualified to prevent direct effects like heart disease or diabetes to a fair extent.

Healthcare providers remain concerned about the likelihood of short longevity of weight loss once the treatment has stopped. Medical professionals will be targeted with a dedicated advertising campaign and CSP’s sales force. Proposals for a messaging strategy have been developed but not yet decided upon.

Competitive situation

The market for weight-loss products and treatments, in an extended sense, is diverse and characterized by a manifold of market participants. Although no prescription drug specifically targeted at the weight-loss segment exists, many over-the-counter (OTC) weight-loss drugs are available.

Most OTC solutions are categorized as “herbal” or “dietary supplements” by the FDA and are therefore unregulated. With the drug Alli, only one OTC drug is FDA-approved but is under investigation for causing hefty side effects as serious as liver damage.

Similar health risk issues with weight loss drugs (in one incident, an unregulated “dietary supplement” had been connected to cardiac death) and accusations of deceptive marketing tactics hurt the credibility of the product category.

CSP has monopoly rights secured through a utility patent for its own prescription drug and has a time window of at least 10 years before generics are likely to enter the market.

The product

CSP believes Metabical to be far superior to any weight-loss solution currently on the market. The drug is close to its FDA approval and has other advantages compared to competitive offerings. It combines an appetite-suppressant compound with a fat-blocking and calorie-absorption agent and manages to produce dramatic weight loss results.

In trials, most patients reached their weight loss goals within 12 weeks (losing, on average, between 26 and 15 pounds). Only one pill per day has to be taken for the treatment to work, although it will only show an effect for individuals with a BMI of 25-30 (obese) and not above.

Metabical has fewer negative side effects than current weight loss drugs. Most side effects are associated with the intake of excess fat and calories, which facilitates the adoption of healthier eating habits.

Additional effectiveness and longer-lasting results are expected to be achieved by a complementing support program consisting of various educational content, like reference materials, community forums, meal and exercise plans, as well as several weight-control tools.

The program would amount to $2.2 million in fixed costs in year one (just under 10% of the U.S. marketing budget for Metabical). It is intended to be available to customers for a duration of 24 months.

The drug pricing is, however, not finalized yet. Between $3 and $5 retail price per day (avg. treatment 12 weeks) will most likely have to be paid “out of pocket” by consumers, with only a few description drug plans expected to cover the drugs’ cost.

Depending on the final retail price, the total lifetime value of an average customer will be between $252 and $420. CSP is considering a campaign to persuade healthcare providers to include Metabical in their programs (decision after first 6-month sales review).

Marketing communication strategy

The marketing communication strategy for Metabical is aimed to focus on both end consumers and medical professionals. Roughly 65% percent of the dedicated marketing budget of 23.1 Mio. USD is assigned to direct-to-consumer (DTC) marketing measures. The budget is set based on CSP’s recent drug launch budget but is intended to be fine-tuned after actual campaign data is available.

Direct-to-consumer marketing is a relatively new phenomenon in the industry and will be utilized via TV, online, radio, and print media. Reaching a high product and brand awareness is the number one priority for the launch. Metabical would be marketed via social media, on blogs, and through a contest with viral elements in addition to more traditional channels.

No internal experience exists about the optimal utilization of these measures. The marketing agency had already prepared three initial concepts for the DTC advertisements, which should serve as a basis for further activities.

Furthermore, Printup is considering getting a female celebrity who has struggled with her weight in the past as a prominent spokeswoman for the product. This tactic is not recognized in the current marketing budget, but it has been very effective for similar campaigns.

One best practice suggests a positive effect to counteract customer price sensitivity to some extent. To target healthcare professionals, CSP would rely on proven tactics from its past launch campaigns.

Direct mailings and extensive PR efforts, like press releases, medical education events, and a symposium, would support the launch, as well as a dedicated CSP sales team of 32 agents responsible for the company’s gastrointestinal drugs. Their task would be to visit doctors directly in their offices to discuss the drug and provide samples.

One sales representative is responsible for 100 medical offices. In addition to usual sales materials, they would work with promotional Lunch & Learn seminars that were proven to work well in the past.

The team around Barbara Printup will have to work out its strategy in the coming year to ensure a successful product launch of Metabical. The launch will have to recoup R&D costs, ensure the longevity of the drug, and shape Metabical into a brand and product offering that resonates with the target group.

Key Challenges for Positioning and Communications Strategy

For a successful launch and long-term return, CSP faces multiple challenges that would have to be addressed. Most of the project’s key challenges have already been considered by the marketing team, while some other challenges can be derived from the given facts.

• Selecting segments to target – Identifying ideal customer segments amongst consumers and/or healthcare professionals can’t be easily achieved with high precision in a target group that is diverse (34% of US Americans).
• Choosing the right messaging – Positioning Metabical appropriately to the segmented target groups will be equally complex and characterized by uncertainty. Additional challenges arise from the need to communicate the drug’s lack of effects on obese patients (BMI 30+) and a certain consumer distrust for weight loss drugs in general.
• Targeting efficiently through the right channels – Selection and fine-tuning of the campaign’s promotional mix will be crucial, especially when using new and untested methods like social media. The underlying problem here is where and how to reach the target audience.
• Timing the different measures – An optimal roll-out schedule depends on multiple factors and assumptions. For instance, the issue of when to start targeting healthcare professionals (before, after, or at the same time as consumers) has to be solved. In contrast, one of the bigger challenges will constitute the timing of social media activity. Moreover, it should be decided when to carry out the research on the support programs’ impact.
• Pricing and marketing budget – The price for Metabical will affect its demand and is a function of the targeted end consumers’ combined utility. Pricing can either render the best marketing campaign ineffective (when too high) or have a negative but lasting effect on the company’s profitability.
• Adjusting the organizational structure – How to utilize the allocated sales team effectively will be vital to success amongst healthcare providers and affect the budget allocatable to DTC measures. In addition, it will the slight shift from pharmaceuticals to service and content demand organizational adjustments.
• External expertise – The lack of internal experience could be a big obstacle on the way to a successful implementation. A cost-benefit analysis for using external agencies to implement a social media strategy might be adequate.

Challenges that do not influence the launch directly (e.g., due to their exclusively long-term relevance) but are still to be considered are decisions about an internationalization strategy and a plan to secure returns of Metabical after its monopoly rights expire.

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Metabical: Pricing, Packaging, and Demand Forecasting for a New Weight-Loss Drug

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Product Description

Publication Date: April 14, 2010

Source: HBS Brief Cases

Available with this Brief Case: a Case Preview, updated Teaching Note, and an English-language audio version. A Case Preview is an optional, customizable resource that provides students with a lens through which to consider the case, including a snapshot of the case situation and key questions to consider. The updated Teaching Note features a new section that provides insights for teaching the case in an undergraduate classroom. Metabical is a new weight loss drug from Cambridge Sciences Pharmaceuticals intended for moderately overweight individuals. In anticipation of final FDA approval, the senior director of marketing, Barbara Printup, prepares for the product launch and must make several critical decisions. First, she must select the optimal packaging size for the drug which typically requires a 12-week course of treatment. Next, she must determine the appropriate pricing. Since most insurance companies do not cover weight-loss medications, price has a direct impact on the sales forecast. To establish the initial demand forecast, Printup considers three approaches based on different assumptions. Her final recommendations must consider long term profitability and meet the company's desired return on investment.The case includes a quantitative assignment for students.

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Metabical: Positioning and Communications Strategy for a New Weight Loss Drug

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John A. Quelch

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Metabical: Positioning and Communications Strategy for a New Weight Loss Drug (Brief Case)

• Metabical: Positioning and Communications Strategy for a New Weight Loss Drug (Brief Case)  By: John A. Quelch and Heather Beckham

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Metabical: Positioning and Communications Strategy Case Study

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Decision Making Process for Metabical

Consumer segmentation, position of metabical in the market place, communication strategies, works cited.

Metabical is a prescription drug for controlling weight loss for overweight individuals, and a product of Cambridge Sciences Pharmaceuticals (CSP). CSP is a healthcare researcher that focuses on developing, manufacturing, and selling drugs that treat health disorders. Its drugs cure health disorders, which include immune deficiencies, metabolic, acute, and chronic disorders.

Researchers found the drug to be effective for overweight persons bearing body mass index (BMI) of 25 to 30. It combined calosera, an appetite supplement compound with meditonan, fat blocking, and calorie absorbing agent. The combination enhanced weight loss for overweight individuals. In addition, the drug had optimal effects when used in low dosages, which have minimal negative effects on the liver as opposed to other drugs.

Additionally, researchers also introduced a different perspective of the drug, which allowed the users to use only a single pill daily. Just like other prescription drugs, metabical has negative side effects that patients felt after the consumption of high-level calories and fats.

The drug was clinically tested and the results showed that the drug was effective with majority test participants achieving their goals for weight loss by twelve weeks. Tests revealed that persons with BMI of 25 to 30 lost at least twenty-six pounds after taking Metabical. Metabical was also effective in the modification of behavior and healthy eating habits.

Test participants on Metabical dosage had a mean of less than 10 per cent of weight shedding in a period of three years. However, researchers found the drug to be less effective to individuals with BMI of above 30 since they lost low weight, and thus not recommended for that group.

After the approval of its use in over the counter, CSP embarked on pricing models in order to come up with the favorable price for Metabical. However, it estimated to have a retail price of approximately $3 to $5 per pill.

In the United States, the majority in the population have overweight problems, which compelled the medical insurance plans not to cover the health rated problems to overweight risks. Hence, patients bought the drugs without the involvement of reimbursements from the medical insurance cover plans.

There were expectations that few prescriptions would cover the cost of Metabical, but Printup thought of launching a campaign to persuade health care insurance plans to include the cost of Metabical in the drug plans from review of the first six months performance of sales. CSP planned to launch Metabical in January 2009 after successive approval by the Federal Drug Authority (FDA) of the United States.

FDA approved Metabical as the first drug for overweight individuals. The researchers gave time for the development of reliable positioning strategy and associated marketing communication plans for the new drug. The overall marketing duties fell on the hands of Barbara Printup, the head of marketing department at CSP.

CSP made various decisions on the development of Metabical. CSP also had planned to assist individuals who succeed in achieving the desired weight results to adopt healthy eating habits in order to keep the weight in check. CSP expected to carryout development of support program on which it could spend $200,000.

In addition, it expected the cost of producing the program for year 1 to be at least $2 million but the estimated cost of the program was to be lower than 10% of the marketing budget for year 1. The program would include online referencing materials, which included; online weight-control tools, personal support, meal plans, and exercise plans.

There was no trial testing for the decision of the support program before its implementation and therefore, studies had not measured its impact for further decision making.

However, Printup, senior marketing director at CSP, was optimistic that the program would assist the Metabical users to attain and maintain their goals of weight loss. Yet, there was anxiety on how she was going to highlight the program within communications strategy.

By 2000, overweight population formed 34 per cent of the total population in the United States with adults being the most affected, and 4.5 per cent falling into the category of being severely obese. Studies on the vice showed that obesity of adults’ population increased with advancement in age for both men and women.

The studies found highest incidences for each gender disparity to be ages between 65 and 74 for men, and 55 and 64 for women (Dewhirst and Davis 90).

Secondly, studies on the vice also found low-level education to be a great factor that facilitates the increase in the cases of obesity. Population of people with less than the high school level education was greatly affected by the cases of obesity, but excess weight affected all demographic segments.

However, health service providers were opportunistic about the prospect of Metabical, which could aid overweight individuals to shed off their weight and establish exercise habits and healthier eating habits. In addition, they said that it was a hard task of taking a pill everyday, but the support program was an excellent idea that would complement the idea of achieving obese free population (Weinstein 118).

In 2007, Print commissioned a market survey of overweight individuals. Results showed interesting findings from the respondents who were overweight individuals. Nearly, 70 per cent of them indicated that they were not satisfied with their body weights. In addition, 35 per cent of the overweight population indicated that they were actively trying to lose excess body weights.

In addition, 15 per cent of individuals in that segment indicated that they were comfortable using drugs for controlling body weights. Lastly, 12 per cent were desperately in need of an appointment with a health service provider for a prescription.

Printup had the mandate to carryout market segmentation. In carrying out the market segmentation, she considered various factors, which included population age, level of education in a population, and the size of affected proportion in a population. Beginning with the population age, studies found that the majority of the affected individuals are adults of ages between 55 and 74 for both men and women.

Therefore, this insight formed a market segment, which comprises of adults near retirement age and old aged. Secondly, the level of education was a factor that determined the severity of overweight in a population. Hence, it is a crucial factor in the formation of market segment for the Metabical drugs.

The task was to identify the market segments by considering the populations literacy levels. The studies showed that individuals with low-level of education, less than high school education, were the most affected by the severity of overweight cases.

Thirdly, clinical tests found Metabical to be most effective for overweight individuals with BMI of between 25 and 30. Therefore, Printup could choose individuals with BMI of between 25 and 30 to be an effective market segment. In addition, this segment formed the only market for the Metabical and thus of crucial importance to CSP.

Lastly, market segment can be determined by putting into consideration all the above factors, and their effects on the entire population. Low level of education in a population contributes to overweight due to ignorance on the effects of unhealthy eating habits.

In addition, most people are unemployed and stand high chances of spending a lot of time eating due of idleness. Shockingly, unemployed population does not afford the cost of buying organic foods and thus consume a lot of fast food, which is unhealthy.

Cambridge Sciences Pharmaceuticals (CSP) can easily identify the differential advantages of Metabical in the marketplace. It was the first overweight drug that the Federal Drugs Authority of the United States approved for use in the health sector, which was after successful clinical tests in which respondents responded positively by losing their weight.

In addition, the majority of people in the entire overweight population were desperately in need of consulting health service providers for prescription.

Therefore, metabical stood a high chance of selling well in the market by being a monopoly. In addition, Alli and other preexisting drugs failed to eliminate the overweight problems without harmful effects to patients and as a result, FDA eliminated them from the market (Dewhirst and Davis 90).

In addition, Metabical has a chance of getting into the health assurance plan due to its effectiveness in reducing the risks of overweight to a victim. Successful incorporation of Metabical into the medical plans would help the researchers to get a large market share for there are no close substitutes in the market.

Moreover, medics praised the drug for being a major breakthrough to a health disorder that has affected many people with no cure, which shows that metabical will find its way into health facilities as a recognized prescription unlike its predecessors.

The drug in question required an effective communication that would include every player in his or her making of decisions. The effective plan ought to focus on two parties for the drug, viz. the end of application use, who is the patient and the health care officer offering the prescription.

In addition, the health care providers ought to be the one who supplement the metabical prescription with the recommendation of the right support program depending on the nature of the patient’s case (Carlton and Blaise 77). The drug was a major breakthrough for the CSP because it gave an opportunity for researchers to dominate in the overweight drug market.

Therefore, the launching budget for the drug ought to be higher than the ones of the previous launches that the researchers have had in the past. However, there was going to be a close relationship between the budget for the Metabical and the most recent launched drug.

Hence, the current budget was going to be a fine tune of the previously used budget with the major differences being in the costs of things that have changed due to inflation in the economy (Carlton and Blaise 82). In addition, in the generation of a market timeline, I planned to perform a comprehensive test of advertising and product promotion campaigns in the first year of the drug launch.

The test would involve respondents who are conversant with marketing medical drugs for specific market segment. Their feedback would be a great milestone in the making of a comprehensive market budgeting plan for metabical and the support program for patients who are under the medication program.

Advertising is the most important marketing strategy for a new product in the business. Medical drugs require a specific advertising strategy depending on the target customers. Metabical targets both the patient and the health care provider and thus direct-customer advertising strategy could be the best method of advertising for it would reach the targeted customers effectively.

However, FDA had allowed the drug producers to use media and other channels for advertising drugs and thus television, online, and print media could be the best choice of advertising methods for the case of metabical. Over the first year of launch, the drug needed to have heavy advertising in order to achieve a comprehensive market sensitization within a short time frame.

Therefore, I would recommend for the utilization of more than two-thirds of the first year’s total marketing budget on direct–customer forms of advertising. This assertion holds because the main objective is to create awareness of the existence of metabical in the drug market and more so to the target market segments that CSP had identified earlier before the launching.

The most effective form of direct-consumer form of adverting for metabical ought to have three most important initial concepts, which include sensitizing patients that weight loss is tough and thus it cannot be done by oneself. This move could help to win the willingness of patients to purchase the drug as assistance in achieving their weight loss goals (Quelch and Beckham 89).

Secondly, the concept of encouraging patients to build desire for building physique that is attractive. This aspect could boost the persuasiveness of advertisements for the desire of many humans is to have attractive physique in their lifetime, and thus many patients would choose to buy the drug with physique attractiveness as their ultimate goal.

Lastly is the creation of awareness of the most weight loss that a patient can achieve after taking the drugs. This stage is the most important part of the advertising that tends to create awareness of the targeted patients in the population.

The message could read something like those extra twenty pounds could kill you . This statement implies that patients with more than twenty extra pounds depending on their BMIs would eliminate themselves from the market segment (Weinstein 67).

In addition, it was crucial for the advertising strategy to target the medics. Therefore, a professional advertising method was necessary in order to reach the medics in health care centers and training institutions. The most effective form of advertising for the above goal was advertising in the academic and professional print media such as in the medical journals and reports.

In addition, online advertisements were also crucial and could be effective when done on the websites of CSP, hospitals, health institutions of learning, and other health organizations. These forms of advertising could help in effectiveness of the aligned timeframe of advertising.

One year is a short period for advertising and creating comprehensive awareness for a new drug in the market. Hence, it is necessary to carry out frequent evaluations of the effectiveness of the advertising strategies that were in use.

I would recommend for the adjustments of the advertisement strategy intended for health care providers by touching on three important elements (Quelch and Beckham 89). They include sensitizing the medics, which is done by informing them that Metabical drug is effective and safe weight loss drug for patients, and hence an alternative to the previous prescriptions that were in use.

Second, is emphasizing on the harmful effects of obesity and overweight disorders to the patients. The advertisement should touch on the effects such as diabetes, heart diseases, and others that are fatal for the human life. Thirdly, informing them that the FDA has approved Metabical as the only effective and safe weight-loss-drug in the drug industry of the United States.

In addition, it is crucial to inform them of the findings of the clinical tests whereby the drug was found to be most effective for patients with BMI of between 25 and 30. That information is essential for sensitizing them about the right patient for the prescription. The advertisements ought to inform them of the importance of the support program to the victims who were under the medication (Carlton and Blaise 114).

Lastly, product promotions are very crucial for the promotions of new market products in the business. Therefore, metabical needed product promotion campaigns in order to boost its sales in the market.

Product promotion is more effective than advertisements for the seller gets immediate feedback from the buyers. In addition, the seller is capable of reaching the target customers and directly informs them on crucial information about the product.

However, product promotion does not have a wide coverage of the market when compared with other forms of advertisements, but it has more influence in the market than the other forms of marketing. It is also expensive and time consuming though it has significant long-term advantages for the product sales.

I would recommend that product promotion and public relations for the metabical follow the launch, as they would help to emphasize information about the drug to the public. Within the first year of launch, the marketing department should keep on evaluating the effectiveness of the marketing strategies that the researchers are using.

This move would help to ensure that the cost of marketing strategies does not exceed the estimated marketing budget without significant returns from the market. In addition, evaluation helps in early detection of problems, which otherwise would deter the achievement of the marketing goals and identification of their correction measures before it is too late.

Hence, Printup, the researchers marketing director, ought to have a schedule of regular meetings with the executive of CSP within the first one year of the product launch. In those meetings, she would brief the executive about the sales performance with regard to the successively reached market segments, and tell the plans that are already in place for the unreached market segments.

In addition, she would also give an assurance of whether the marketing budget will be enough to cater for all costs of her marketing strategy. Lastly, she would assure the executive that the aligned period is enough for the planned marketing strategies.

Carlton, Maria, and David Blaise. The power of promotional products: how to motivate prospects, reward performance and create targeted promotions with residual value , New York: Maruki Books, 2007. Print

Dewhirst, Timothy, and Brad Davis. “Brand Strategy and Integrated Marketing Communication (IMC): A Case Study of Player’s Cigarette Brand Marketing.” Journal of Advertising 34.4 (2005): 81-92. Print

Quelch, John, and Heather Beckham. Metabical: positioning and communications strategy for a new weight loss drug, New York: Harvard Business Publishing, 2009. Print.

Weinstein, Art. Handbook of Market Segmentation: Strategic Targeting for Business and Technology Firms, Washington D.C: Haworth Press, 2004. Print

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