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Session #1 5 : Agenda for of MM2– MARKETING STRATEGY. Brief Review The Zantac Case: Market Leadership. Review of Class Session 13: Major Points of the ODI Case. Successfully introducing really new products is very difficult and most likely to fail (for variety of reasons)

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Session 1 5 agenda for of mm2 marketing strategy l.jpg
Session #15:Agenda for of MM2– MARKETING STRATEGY

  • Brief Review

  • The Zantac Case: Market Leadership

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Review ofClass Session 13: Major Points of the ODI Case

  • Successfully introducing really new products is very difficult and most likely to fail (for variety of reasons)

    • ‘Simple implementation problems’ can kill an otherwise good product

  • Important to anticipate & confront consumer objections to product adoption

    • Various types of risks

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Attributes of Innovations that Improve/Detract from their Chances of Adoption by Consumers

  • The Relative advantage of the innovation over the products/procedures it is designed to supersede.

  • Its perceived complexity.

  • Its compatibility in use with present behavior patterns and complementary products.

  • The ease with which its features (especially its benefits) can be observed and communicated.

  • The degree of risk (physical, financial & social) attached to adoption of the innovation in preference to existing products or procedures.

  • The extent to which the innovation can be tried on a limited basis before being adopted on a large scale, permanent basis.

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Extent of Zantac’s Success (time of case) Chances of Adoption by Consumers

  • Zantac is #1 pharmaceutical product worldwide

    • 1.8% share  whole of #10 firm (Sandoz; 2.1% share)

  • Glaxo rose from minor pharmaceutical firm to #3 worldwide on strength of Zantac

  • In 1981 Glaxo’s US sales were small; By 1989

    • held 53% of US market

    • US accounted for 41% of Glaxo’s sales

  • Between 81-89 Glaxo was the most profitable large company in the world in any sector

    • ROI increased from 16.5% (1981) to 30% (1989).

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Tagament vs. Zantac Chances of Adoption by Consumers

Customer Needs (by order of

Ideal Performance




no difference indicated in

Pain Relief



after several days (p. 5)


Healing Speed*



after 6 weeks

after 4 weeks

Healing Efficacy



80% of patients

80% of patients

breast swelling in males

Side Effects**



reversible liver damage

none known

mental confusion





none known


Once a day or






2/day approved

Recurrence (after

same as Tagamet (see



66% within a year


Ex. 10)

Recurrence (during




unknown in 1981

unknown in 1981


*actual healing is difficult to judge for patients and doctors without a test after treatment (p. 3)

**Perception: Tagamet is very safe

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Zantac is a me-too product Chances of Adoption by Consumers

Pioneers enjoy a lasting advantage

Tagamet’s side effects not an issue

Tagamet’s safety record will be more important than Zantac’s zero side effects

Tagamet’s economies of scale make low-price policy unattractive

Weak Glaxo presence in US


Only if they stay awake

True, but are they known

Who says?

Net profit margin of 28% on Tagamet leaves room


Zantac Sales Potential

Conventional logicObservation

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Obstacles vs. Glaxo Actions Chances of Adoption by Consumers

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Zantac: What Next? Chances of Adoption by Consumers

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Zantac: Key Points Chances of Adoption by Consumers

  • A minor product advantage can be leveraged into a competitive advantage by creating the right customer perceptions.

    • Good & consistent positioning

      • Zantac: fast, simple, specific

    • Align all Ps to create this positioning

      • Price: understand customers’ interpretation (quality) understand economic incentives

      • Sales effort/communication: high share-of-voice

      • Focused & clear advertising messages

    • Having ineffective competitors helps..

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Attacking Market Leader Chances of Adoption by Consumers

  • To overcome disadvantage (poor fit): size & resources

    • Strategic partnerships (Glaxo-Menarini, Glaxo-Roche, …)

    • Focus (Glaxo concentrated on Zantac, while SK diluted its resources)

  • Overcome disadvantage: Dominant incumbent

    • Attack under-defended markets (European markets first before attacking SK in U.S. market)

    • Attack competitor’s “blind spots” (safety and convenience)

  • Anticipate competitive reactions

    • Understand history and competitor’s past behavior (Glaxo understands SK’s mistakes; Glaxo is a very aggressive competitor)

    • Analyze competitor’s motivation to react (Zantac is Glaxo’s life)

    • Prepare contingency plans (Need to think several steps ahead)

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Defending Leadership Chances of Adoption by Consumers

  • Despite patent protection, product advantages are not sustainable for long; for optimal leverage of such advantages, continuous innovation & speed are essential. Markets are speeding up:

    • During product development: time-to-market

    • During roll-out: time to global coverage

    • During market penetration: time to market share peak

  • To sustain a differentiated position, market leaders ought to

    • Understand the gaps between customer needs and existing product offerings, and close them faster than competitors

    • Develop new market segments

    • Maintain high levels of marketing investments

    • Understand competitors’ weaknesses and utilize them appropriately

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Threats to Sustainability (S.I.S.) Chances of Adoption by Consumers

  • Slack

    • complacency, inefficiency

  • Imitation

    • copy-cats

      • Zantac to Tagamet

  • Substitutes

    • satisfy same customer needs in a different way

      • Tagamet to stomach surgery