1Ganesh Iyer

Product Team CialisSummary

Week 2,

EWMBA 206

2Ganesh Iyer

Part 1: Product PositioningExecution Toolkit

Product Manager’s Positioning Strategy Toolkit

1: For whom am I? Identify the Target Consumer Segment.For _____________, (Target Market)

2: Who am I? (value proposition, usp)our product/service is ______________________________________________ (Most Important Claim/Unique Selling Proposition)

3: Why buy me? (support)because ___________________

(Single Most Important Support)

4: And not the competition? (competitive set)among all ___________________

(Competitive Set)

3Ganesh Iyer

The Four Positioning Questions

1. For whom am I? (Target customer segment)

2. Who am I? (Value proposition, USP)

3. Why buy me? (Support)

4. And not the competition? (Competitive Advantage)

4Ganesh Iyer

Positioning a New Product in a Market with an Incumbent

Where will demand come from? » increase primary category demand (new customers) » steal from competitors (existing customers of rival) » re-capture dissatisfied customers (not happy with existing brand/solution)

Which of the above segments are able to perceive as relevant a given way of positioning benefit/improvement? (Learning, Self-selection)

With whom can we leverage dimensions that are objectively measurable?

With whom can we leverage dimensions that are not objectively measurable?

Evolution of Positioning: » In what phase to target each segment? (Build category vs. build brand vs.

protect brand)

5Ganesh Iyer

Erectile Dysfunction Drugs– Vertical Positioning

Levitra (Bayer/GSK)

4h ~4h

36h

Viagra(Pfizer)

A benefit associated with a performance or quality

Attribute, typically objective, for which consumers differ in valuation.

Examples in Automobiles, PC, Retail Markets

Cialis(Lilly/Icos)

6Ganesh Iyer

Erectile Dysfunction Drugs– Horizontal Positioning

Attitude towards sexual relationship

RomanticNaughty/Mischievous

A benefit that is a matter of “taste” or “attitude” often associated with psychographics, lifestyle, or underlying attitude

7Ganesh Iyer

Competition & Vertical vs. Horizontal Positioning of New Products

- Well defined objective benefit where more of is better

-Consumers know how much improvement is worth to them

-Difference in willingness to pay for improvement

-Segmentation based on tradeoff between particular benefit(s) and willingness to pay

One firm at low end

One firm at high end

- Price sensitivity not a primary issue

- More is not necessarily better for everyone

-Heterogeneity in tastes, attitudes

One firm offersbenefit BOne firm offers

benefit A

8Ganesh Iyer

Leverage Unquantifiable Dimensions- Vertical

Reliability/Consistency/Count on it

9Ganesh Iyer

Target Market Selection and the Incumbent Firm

Presence of Incumbent firm creates a new layer of segmentation

(users, drop outs, never tried but aware, never tried not aware)

= Behavior- based segmentation.

Does dis-satisfaction with existing = high willingness to try something new?

User of incumbent brand = hard to switch = last resort?

Who has advantage with those that never tried?

How do other relevant parties/influencers factor in?

10Ganesh Iyer

Evolving Positioning

CourageSympathyFight condition

MachoWinningSuccess

ExcitementWildNaughty

Building Category Building Brand Protecting Brand

11Ganesh Iyer

Importance of Positioning

Becoming more important in pharmaceuticals:

78% of drugs that entered the market in past six years were classified by FDA: » “not likely to be improvements over drugs already sold to treat the

same condition”.

» Prevalence of lifestyle/Quality of life drugs

Positioning is not what you do to the product but what you do to the mind of the consumer!

12Ganesh Iyer

Positioning Strategies

Product Quality: (Ford: Quality is job 1)

Class of Users: (Pepsi generation).

Owning the category (Coke: The Real thing)

Against a Competitor (Avis) » Repositioning Hertz

13Ganesh Iyer

Positioning Strategies

Away from Competition (7-Up the Uncola)

14Ganesh Iyer

ATTRIBUTE 7Up Coke Pepsi Good for snacks 39 62 61 Good with meals 32 47 44 For active people 38 60 66 For mixing 66 18 4 Good for indigestion 60 17 8 Thirst quenching 60 30 28 Good tasting 58 62 59

Customer Analysis: Market Research Study

15Ganesh Iyer

Tell consumers 7Up possesses soft drink attributes» point of parity (see also K&K p. 312-314).

Emphasize fresh, clean taste (and no caffeine)» point of difference

Options

16Ganesh Iyer

7Up: “The Uncola”

17Ganesh Iyer

Positioning Traps (1)

Positioning on unimportant/irrelevant attributes

1992

18Ganesh Iyer

Positioning Traps (2)

Positioning with the wrong attributes

Diet Beer Gablinger’s Introduced in 1967 as a “low calorie” diet beer

Lite beer by Miller Less filling…means you can drink more!

» Everything you wanted in a beer

» (like getting drunk)…and less.

» 1/3 calories means you can drink 2 extra and call it even!

19Ganesh Iyer

Positioning Traps (3)

Positioning on someone else’s benefits…positioning is sticky

Burger King unable to claim “fast.” Already taken by McDonalds.

Mercedes Benz and General Motors unable to claim “safety.” Already taken by Volvo.

20Ganesh Iyer

Part 2: ED Market Updates: Global Performance

8%51%41%FebruaryAustralia

7%62%31%NovemberCanada

12%65%23%NovemberUSA

22%42%36%AugustMexico

17%45%38%MayBrazil

23%48%29%MarchSpain

15%37%48%FebruaryFrance

17%47%36%MarchItaly

19%46%35%FebruaryGermany

8%66%26%FebruaryU.K.

Viagra®

Cialis®

Share of PDE5 Market – Dec 2005

Cialis®

Launch Date 2003

Country

Levitra®

• Is Cialis better off with or without DTC in the launch phase?

21Ganesh Iyer

Cialis and ED Market- An Update

In the US 2004 ($1.03Billion)Viagra 65% ($672 million)

Cialis 20% ($206.6million)Levitra 11% ($112 million)

In the US 2005 ($1.1Billion) Viagra 61% ($665 million)Cialis 25% ($273million)

Levitra 14% ($140 million)

Worldwide 2004 Viagra $1.7Billion Cialis $552million

Levitra $265 million

Cialis in 2005 $746.6million

22Ganesh Iyer

ED Market Competitive Reactions

Advertising in the US first 11 months of 2004: » Viagra $98million» Cialis $151million» Levitra $147million

The “Cialis Promise” – Lilly gives men three free tablets of Cialis. If not satisfied Lilly will pay for three free tablets of Levitra or Viagra. If satisfied another round of Cialis. A Comparative Trial (92% ask for Cialis again)

Viagra “loyalty program” for every six prescriptions- get seventh free

23Ganesh Iyer

ED Market Further Updates:

Medical Experts: Men with ED problems = 30 million in US. Men who are interested in being treated probably half of that.

Worldwide (a modest 5-10% increase in 2004, likewise in 2005)

Number of new prescriptions is going down in US: 10% fewer in October 05’ compared to October 04’

GlaxoSmithKline sold marketing rights outside the US back to Bayer– “The ED market hadn’t grown as fast as the company had hoped…tough to sell the drugs without the help of consumer ads” (in most of Europe direct-to-consumer advertising is prohibited)

Sexual performance drugs likely to be covered by Medicare’s new prescription benefit beginning next year (limited quantities, only when medically necessary).

Lilly sets deal to acquire ICOS for $ 2.1 Bn.

24Ganesh Iyer

Competitive Advantages

First-Mover Advantages

» Lock customers in.

» Association with category

» Network effects (among influencers, consumers)

» Economies of scale

Second-Mover Advantages» Free-ride on first-mover’s

costs of educating the market

» Learn from leader’s mistakes» Learn the market size

Parallel Entry

» Market may pay more attention when two companies are entering together.

– Benefit from increased category awareness

25Ganesh Iyer

Learning

Positioning is not what you do to the product but what you do to the mind of the consumer!

Good Positioning is an integrated answer to 4 questions 1. For whom am I? (Target customer segment)

2. Who am I? (value proposition, usp).

3. Why buy me? (support)

4. And not the competition? (competitive advantage)