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The Weight-Loss Options Analysis Case Study

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  1. Pros and Cons of Print up Forecasting Method
  2. Packaging Size Analysis
  3. Pricing Strategy
  4. Impacts of Pricing Decision

I recommend B2C which is more effective in enhancing product access and consumption. Currently, many different diets, exercise regimens, and prescription and over-the-counter treatments are available for weight loss. Therefore, the producers of these products were forced to pay $25 million by the Federal Trade Commission in 2007 to resolve claims that the results were falsified. The three-month supply of these additional OTC medications costs around $300.00. Additional weight-loss options include exercise regimens, nutritional supplement products like Slim Fast, weight management plans like Weight Watchers, and pre-portioned food delivery programs like Nutrisystem and Jenny Craig.

While pre-portioned food programs like Nutrisystem and Jenny Craig would cost between $1000 and $1600 for three months, Weight Watchers membership costs would be under $120. The pharmaceutical company Cambridge Sciences Pharmaceuticals (CSP) thought there was a market for overweight people seeking alternatives or unsatisfied with their present options. The first prescription medication particularly authorized for obese people with a BMI of 25 to 30 who want to lose 10 to 30 pounds is called Metabical.

Pros and Cons of Print up Forecasting Method

The first strategy involved counting the number of overweight Americans with a BMI of 25 to 30 and then reducing the population to the proportion of people actively attempting to lose weight. 35% of people were actively attempting to reduce weight, according to a CSP poll. 15% of the people in this sample felt at ease utilizing weight-loss medications. Although this strategy is highly organized, it is incredibly wide. There is no specified income, education, or gender range. If the product is released widely, they may miss out on possible target audiences. The calculations are as indicated in table 1 below.

Table 1: 5-Year Demand Forecast

Approach 1 Targeting BMI Between 25 and 30
Available Market78,000,000
35% Actively Trying to Lose Weight27,300,000
15% who are Comfortable Using Diet Pills4,095,000
Year 1Year 2Year 3Year 4Year 5
% of Market10%15%20%25%30%
First Pack409,500614,250819,0001,023,7501,228,500
Second Pack (60%)245,700368,550491,400614,250737,100
Third Pack (20%)49,14073,71098,280122,850147,420
Sales704, 3401,1056,5101.408,6801,760,8502,113,020
Total7,043,400
Approach 2 Targeting BMI Between 25 and 30
Available Market
12% Prescribed by Health Care Provider9,360,0009,360,0009,360,0009,360,0009,360,000
Year 1Year 2Year 3Year 4Year 5
% of the Market10%15%20%25%30%
First Pack936,0001,404,0001,872,0002,340,0002,808,000
Second Pack561,600842,4001,123,2001,404,0001,684,800
Third Pack112,320168,480224,640280,800336,960
Sales1,609,9202,414,8803,219,8404,024,8004,829,760
Total16,099,200
Approach 3 Targeting Educated Females Between Ages 35 to 65 With BMI Between 25 and 30
Available Market
4,300,0004,300,0004,300,0004,300,0004,300,000
Year 1Year 2Year 3Year 4Year 5
% Market30%35%40%45%50%
First Pack1,260,0001,505,0001,720,0001,935,0002,150,000
Second Pack774,000903,0001,032,0001,161,0001,290,000
Third Pack154,800180,600206,400232,200258,000
Sales2,218,8002,588,6002,958,4003,328,2003,698,000
total14,792,000
Us Population Obesity Population78,000,000

Packaging Size Analysis

Some of the considerations include the following:

  • In the FDA studies, people completed their weight loss targets in twelve weeks
  • Due to the low dosage formula, the drug would have to be given at the same time each day. The efficacy would be greatly decreased if consumers missed a day.

Recommendations

I advise using packaging with a 28-day, 4-week supply. The proposed container would be compact enough to allow the user to choose between buying a 12-week supply in one go or a 4-week supply. The four-week package might be beneficial for those who may not be able to buy all 12 weeks at once because insurance companies are not paying for the prescription.

Pricing Strategy

Options, competitive pricing, premium pricing, were all things Printup was investigating and could have utilized.

Option 1 Advantages: Competitive Pricing: A new entrant would have an easier time entering the market if there were competitive pricing, enabling them to compete in a market with much competition.

Option 1 Disadvantages: Competitive Pricing: Once the price is lower, there may be a decrease in sales and profit margins.

Option 2 Advantages: Premium Pricing: It would help generate immediate income that may eventually be used to offset the $400 million overall R&D expenses.

Option 2 Disadvantages: Premium Pricing: This cost may drive away customers with lower income levels.

Recommendations

I would advise using a premium pricing structure. The company will be able to swiftly recoup its R&D costs because of the higher sale price. Additionally, this tactic could revitalize their brand. Customers who want to reduce weight and seek a higher-quality product will be drawn to this cost. Customers believe the product is the greatest if the price is high. The product might always be discounted later once it has gained more traction. This consumer will purchase a four-week supply that they will replenish more frequently, increasing sales.

Impacts of Pricing Decision

For every year and every target category, premium pricing provides a profitable return on investment. Notably, the target group of people with a BMI between 25 and 30 had the highest ROI at 184% for the premium pricing as indicated in table 2 below.

Table 2: Quantitative Analysis: Gross Margin Forecast, Cost Estimates, Return on Investment

Approach 1 Targeting BMI Between 25 and 30
Available Market78,000,000
35% Actively Trying to Lose Weight27,300,000
15% who are Comfortable Using Diet Pills4,095,000
Year 1Year 2Year 3Year 4Year 5
% of Market10%15%20%25%30%
First Pack409,500614,250819,0001,023,7501,228,500
Second Pack (60%)245,700368,550491,400614,250737,100
Third Pack (20%)49,14073,71098,280122,850147,420
Sales704, 3401,1056,5101.408,6801,760,8502,113,020
Total7,043,400
Pricing Option 1 $75.00Pricing Option 2 $125.00Pricing Option 2 $150.00
Total Manufacture Price528,255,000Total Manufacture Price880,425,000Total Manufacture Price1,056,510,000
Fixed Cost424,200,000Fixed Cost424,200,000Fixed Cost424,200,000
Variable Cost177,493,680Variable Cost177,493,680Variable Cost177,493,680
Manufacturer Gross Margin174,676,320Manufacturer Gross Margin409,432,842Manufacturer Gross Margin526,846,320
ROI-60%ROI-3%ROI24%
Approach 2 Targeting BMI Between 25 and 30
Available Market
12% Prescribed by Health Care Provider9,360,0009,360,0009,360,0009,360,0009,360,000
Year 1Year 2Year 3Year 4Year 5
% of the Market10%15%20%25%30%
First Pack936,0001,404,0001,872,0002,340,0002,808,000
Second Pack561,600842,4001,123,2001,404,0001,684,800
Third Pack112,320168,480224,640280,800336,960
Sales1,609,9202,414,8803,219,8404,024,8004,829,760
Total16,099,200
Pricing Option 1 $75.00Pricing Option 2 $125.00Pricing Option 2 $150.00
Total Manufacture Price1,207,440,000Total Manufacture Price2,012,400,000Total Manufacture Price2,414,880,000
Fixed Cost424,200,000Fixed Cost424,200,000Fixed Cost424,200,000
Variable Cost405,699,840Variable Cost405,699,840Variable Cost405,699,840
Manufacturer Gross Margin405,699,840Manufacturer Gross Margin935,846,496Manufacturer Gross Margin1,204,220,160
ROI-4%ROI121%ROI184%
Approach 3 Targeting Educated Females Between Ages 35 to 65 With BMI Between 25 and 30
Available Market
4,300,0004,300,0004,300,0004,300,0004,300,000
Year 1Year 2Year 3Year 4Year 5
% Market30%35%40%45%50%
First Pack1,260,0001,505,0001,720,0001,935,0002,150,000
Second Pack774,000903,0001,032,0001,161,0001,290,000
Third Pack154,800180,600206,400232,200258,000
Sales2,218,8002,588,6002,958,4003,328,2003,698,000
total14,792,000
Pricing Option 1 $75.00Pricing Option 2 $125.00Pricing Option 2 $150.00
Total Manufacture Price1,109,400,000Total Manufacture Price1,849,000,000Total Manufacture Price2,218,800,000
Fixed Cost424,200,000Fixed Cost424,200,000Fixed Cost424,200,000
Variable Cost372,758,400Variable Cost372,758,400Variable Cost372,758,400
Manufacturer Gross Margin366,841,600Manufacturer Gross Margin859,858,960Manufacturer Gross Margin1,106,441,600
ROI-14%ROI103%ROI161%
Us Population Obesity Population78,000,000
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