Decision Sheet - Propecia

1. When and what types of ads should Tom Casola run after launch? Under
what circumstances you would use each type of ad? Is there a point
where you would consider a switch in Propecias advertising strategy?
Initially, Casola should be concerned about creating the brand awareness for
Propecia. Given the fact that, a competitor Rogaine already exists in the market
and Propecia is considerably superior to Rogaine in terms of achieving results, it
would become easier to attract customers through appropriate value propositions.
Hence, Propocia should be advertised by highlighting its pros and cons. It should
be taken care that right expectations are set else the strategy can backfire. As the
test results show that only 2% of en faced the side effects, it should not act as a
greater hindrance in achieving the desired attention from the customers. The
negative impact of taking broken pills and its impact on women must be
highlighted properly. This would project Propecia as a legitimate product, which
does not overestimate the expectations. Hence, people will be eager to use it and
will not be disappointed by the results.
After gaining enough popularity and capturing the desired market share,
Propecia should take a turn in terms of advertising the product. In this scenario its
advisable not to highlight the impact anymore, as the audience is now well aware
of that. Instead, reminders ads should be shown in order to hold the customers
and let them continue Propecia unless any other superior competitor enters into
the market.
2. Define Propecias potential customer base. What is Propecia competing
against in the consumers mind? What can be learned from Rogaines
experience in the marketplace?
As Casola has mentioned his excitement about the large customer base
Propecia can cater to, its believed to be almost half of the men population in
America. This comes around 30 to 40 million customers. As mentioned, it is
experienced that to some degree 50% of Caucasian men under the age of 50 are
believed to have experienced hair loss.
3. Do you think a first year sales forecast of $60 million would be
conservative or optimistic? How many patients might Merck obtain in its
first year? What does it depend on? What will be the source of future
growth?

From the sales figures of Rogaine it is known that, it was able to generate 40000
customers, which gave rise to a sales of $100 million. Again, over 2.5 million men
and women were believed to be spending $162 million annually on branded and
unbranded minioxidil treatments. This was achieved when Rogaine was sold at a
price of $30. Keeping this in mind, Propecia is expected to capture a high volume
customer base. The difference between the two scenarios is the presence of
competitors in the second case. But, as Rogaine has failed to achieve proper
results and it shows less efficiency, the competition will further favor Propecia.
Again, the customer base is expected to be 30 to 40 million American men which
is further very large compared to what Rogaine had. Another additional factor is
the use of advertisements. In the current scenario, with larger customer base,
better result projection and use of proper advertising channels, $60 million seems
to be a pretty conservative estimate for Propecia. Merek might be able to occupy
at least 50% of the expected audience. The rest may take some time to try the
product but eventually it will be possible to capture the whole market if the results
are in line with the set expectations. As the credibility of Propecia builds up in the
market, consumers will be able to differentiate between the consumer deliverables
provided by Propecia over Rogaine, which will escalate the future growth.