Written Analysis of Cases - Zocor and Merck

1. Unilab adopted the price penetration strategy which refers to setting your price lower than your market competitor’s. Vidastat’s price was 50% lower compared to Zocor to penetrate the market and grab market share from Zocor. Doctors preferred to offer Vidastat to their patients because the lower prices could help their patients adhere to their medication regimen.
2. It doubled its frequency of coverage, sampling and detailing to top doctors. Company had focused on its target doctors covering top mostly top hospital specialists and known users of simvastatin. Merck also lowered the price by as much as 50% and offered discount coupons and other promotional supports to gain back the doctors’ support.

If we were the product manager, we would raise the perceived value of Zocor by emphasizing its superior health benefits over generic medicines. We can also emphasize the quality of the product was backed up by the intensive research and development which the company spent a lot on based on the article. We would monitor the market right after and if the strategy is not successful, then we would lower the price  and offer discount coupons to customers.

1. Zocor’s market share continuously declined as more doctors prescribed Vidastat. Since the doctors felt the quality of the medicine is the same, they recommend the much cheaper price. Zocor lowered its price so that they can remain competitive and not lose all of its market share to Vidastat. Patients were also not able to finish the prescribed 3 months because of the high prices.
2. As marketing students, we would respond to this pricing issue with international pricing. Given the worsening economic conditions in Southeast Asia, the prices should be adjusted to the economic standings of the country. The prices will be lower in Southeast Asia because of its economic state. Prices can be lowered by lowering costs on not really important parts of the product like packaging.

Yes, we think Merck implemented the right strategy by lowering its price because they were just practicing market-skimming at first with short-term profit to cover the costs in mind. If Merck did not lower their prices, they would eventually lose all of their market share to Unilab since they offered the same product at half the price.

What key issues are you going to have to address to balance your pricing, social responsibility, and profitability as far as your business is concerned?

• PWD discount
• Socioeconomic classes

• Upper class have luxury of private transpo
• Lower class have to take public transpo which are subpar in terms of PWD-accessibility
• Based on interviews, PWD’s prefer to stay at home due to the fact that the cost of going to their destination turns out to be greater than the cost they’ll incur when in the destination

• Government price regulations

One of the key issues in play for our business is the difference socioeconomic standing of the PWD’s. PWD’s of the more privileged sector can afford their own private vehicles, personal assistants and other necessary support. On the other hand, PWD’s of the less privileged sector don’t have the same luxuries, and must resort to using various forms of public transportation, which all are subpar in terms of accommodating to PWD’s and their needs that arise from their disabilities. Based on this, we have to find a middle ground in terms of our pricing that can be affordable to the less privileged PWD’s, and at the same time would keep our company profitable enough to continue operations, and possibly expand in the future. Another key issue we face are the price regulations enforced by the government on such services.