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Bayer AG Marketing Plan

2010




0



Bayer AG Marketing Plan

The Vitamin of the Future






















8/11/2010

Keri Kochenour


Bayer AG Marketing Plan

2010




1


Executive Summary

Bayer AG is a primarily involved with pharmaceutical products and chemicals. Bayer
AG has acknowledged and understands that today’s world is becoming ever more hectic.
Because of today’s fast pace, Bayer AG has created a new vitamin that only has to be tak
en
once every month instead of daily. The pill will not be substantially larger than current
vitamins on the market. Many
varieties
of our current vitamin
line,
One A Day
, will
be
offered in
One A Month

form.



Because the
One A Day

line has been especiall
y popular in North America, the
One A
Month

variety will be launched
there

first. For this new produ
ct, Bayer AG will target
health
-
conscious Americans that are
on the go
. The product will be available
large

discount
department stores including Wal
-
Mart an
d K
-
Mart. This product will be more expensive
than normal vitamins, but because you only need twelve vitamins for an entire year, the
cost will balance out.


Bayer AG



Bayer
AG
is a global enterprise with core competencies in the fields of health care,
nutrition and high
-
tech materials (Bayer

AG
). Bayer has partitioned itself into three main
categories
; HealthCare, MaterialScience, and CropScience (
Bayer AG
).
Many products of the
Bayer company are not household items, but those th
at are used for crop pro
tection and

non
-
agricultural pest control.
The bioscience segment's major products include Nunhems,
Arize, InVigor, and FiberMax (
Datamonitor
).
Another area of Bayer not
familiar with the
average consumer is their research with polyurethanes and
polycarbonates. Its customers
include the automotive and construction industries, the electrical/electronics sector, and
Bayer AG Marketing Plan

2010




2


manufacturers of sports and leisure articles, packaging, and medical equipment
(
Datamonitor
).

Most consumers are familiar with Bayer’s

HealthCare products
that

include Bayer
Aspirin, Aleve, and
One A Day

vitamins. Surprisingly enough, Bayer was established in
1863 by Friedrich Bayer and Johann Friedrich Weskott as a dyeworks group
(
Datamonitor
). The group grew steadily over the next half

century before merging with
BASF, Hoechst, and other German chemical companies, in 1925.

Throughout the 1960s, the
group developed more dyes and plastics and established factories worldwide
(
Datamonitor
). Then, in 1994, Bayer purchased Sterling Winthrop's

over the counter drug
business from SmithKline Beecham, a maker of prescription medicines (
Datamonitor
).

Since, the group has continued to buy companies in order to grow. Primary competitors
include, but are not limited to Bristol
-
Myers Squibb, Johnson &
Johnson and Pfizer (
“Bayer
AG: Full Overview.”
).

The company’s vision and mission statem
ent includes their future focus,

innovation
and growth in the areas of healthcare, nutrition and high
-
tech materials. The slogan “Bayer:
Science For A Better Life,” summarizes the idea of their determination to come up with
innovations to benefit humankind (
Bayer AG
).


I chose this comp
any because

I often use
One A Day

vitamins, along with
their

newer
product
One A Day

Vitacrave Sour Gummies. I believe because of their growth over the
years and commitment to innovation, Bayer AG
will
continue to be a successful company in
the future.





Bayer AG Marketing Plan

2010




3


Bayer AG: Strengths and Weaknesses



Bayer AG recorded an operating profit of $4,192.3
million in fiscal year 2009
(
Datamonitor
).

One

strength of

Bayer
is that it
generates revenues through five business
segments: pharmaceuticals (33.6% of the total
revenues, before reconciliation, in FY2009),
material science (24.1%), consumer health (17.7%), crop protection (17.4%), and
environmental science and bioscience (3.5%) (
Datamonitor
).
Because this company is so
diverse, it has a better chance for profit. B
ayer is also

am
ong the top competitors in the
healthcare

market.


The company has also been expanding in foreign markets such as China. Recently,
the company has released
numerous over
-
the
-
counter drugs

and is working towards a
relationship with Biotin, a Polish insulin company, for sales of insulin in China (
Esmerk
).
The value of the Chinese insulin market is expected to grow 25
-
30% on an annual basis

(
Esmerk
)
.


Another strength of Bayer is its wide geo
graphic spread. Though headquartered out
of Leverkusen, Germany, it operates in Asia Pacific, Europe, North America, Latin America,
Africa, and Middle East (
Datamonitor
). The company employs about 108,400 people
(
Datamonitor
). As previously mentioned, Baye
r has recently been working to expand into
more foreign markets and offer more drugs to those it already has a presence in.


As many other top companies are doing, Bayer has begun to go green and use
energy
-
efficient designs when constructing offices and
laboratories. In May 2010, Bayer
opened a new
green
conference center at its United States headquarters in Robinson,
Pennsylvania

that
included spray foam insulation, energy
-
efficient lighting and window
components, and environmentally
-
friendly

coatings used on the wood deck

(
Gannon
)
.

This
Bayer AG Marketing Plan

2010




4


is just one of the many green facilities they have opened in the last year
.
This adds not only
value to the company

but also increases their social standing. Consumers today want a
company considerate of the e
nvironment and Bayer has made strides to be a socially
responsible company.

The company’s weaknesses come from low profit margins with some of its
industries
. Research and development costs can be high when working with innovative
technologies, especially

if they end up not being as desired.

The largest weakness of the company comes from lawsuits. Bayer can be the target
of lawsuits stemming from medical complications as well as agricultural products. In late
2009, two farmers sued Bayer for $2 million wh
en an experimental breed of rice cross
-
bred
with their crops (
Whittington, and Harris A9)
.

I believe that the company has done a good job thus far to become an innovative
researcher while also thinking of the environment. I understand the company suffers from
some weaknesses, but it is impossible to foresee all side effects that come along with
new
medicines or agricultural products.


Bayer AG: Opportunities, Threats, & Marketing Objectives


The current trend
in

many countries is to be healthier

(Datamonitor)
. This has le
d to
many changes
, not the least of which being an interest in vitamins.
When considering all
the specialty markets within vitamins alone, it is easy to see how Bayer has millions of
products that are appealing to the average consumer.


Bayer has the opportunity to continue to grow through acquisitions

and
partnerships
. The group has shown in the past that it is very interested in expansion and
Bayer AG Marketing Plan

2010




5


owning many different areas of innovative science.
For example, Bayer has recently
announced a medicine
-
development pact with OncoMed, a company that is
developing

target cancer
stem cells. These cells are believed by some scientists to play a role in the
growth of tumors in various parts of the body, including the breasts, head, neck, lung,
prostate and pancreas (
Johnson
).


Bayer AG has also acquired many firms in the recent pas
t. In January 2010, Bayer
CropScience acquired certain assets and technologies relating to biological development
products of AgroGreen in Ashdod, Israel. This move was preceded by the acquisition of
certain assets of AgroGreen products by B
ayer CropScienc
e in March 2009
(
Datamonitor
)
.

This would provide Bayer with growth opportunities in the seed treatment market. In
September 2009, Intendis, a part of Bayer HealthCare, signed an agreement to acquire two
prescription dermatology product lines from SkinMedi
ca, a US
-
based dermatology
company (
Datamonitor
)
.

Bayer continues to not only grow as a company, but to diversify
its interests at the same time.

There are also many healthcare initiatives that can benefit the company as well as
developments in the
crop/
agricultural business
.
In December 2009, Bayer Schering
Pharma entered into a collaboration agreement for a novel approach to cancer therapy
with Microm
et, a biopharmaceutical company

(
Datamonitor
)
.

Bayer develop
ed

a new
treatment for patients with solid tumors and further
ed

advance novel therapeutic op
tions
in its oncology portfolio

(
Datamonitor
)
.

Later, in May 2010, the US entity of Bayer Schering
Pharma received approval from
the US FDA for its new Natazia
pill,
an oral contraceptive
for the prevention of pregnancy (
Datamonitor
).

Bayer AG Marketing Plan

2010




6



One of
the largest threats to Bayer are
competitors. Many of the markets it is
involved with are exceptionally competitive. The pharmaceut
ical market is particularly
cutthroat
. In Janua
ry 2009, the group's closest competitor, Johnson & Johnson (J&J),
acquired Mentor, a supplier of medical products for the global esthetic market, for $1.07
billion

(Datamonitor)
. Further, in July 2009, J&J acquired Cougar Biotechnology, a
development stage

biopharmaceutical company focusing on oncology, for $894 million
(
Datamonitor
)
.

While it’s true Bayer has done a decent job to date keeping up with larger
companies such as Johnson & Johnson and Proctor & Gamble, they will continue to be
pushed by these c
ompanies to acquire more companies and strike more deals.


Regulations are another threat to Bayer, especially Bayer HealthCare. In the United
States, the Food and Drug Administration sets the guidelines that must be followed not only
to get a drug on the

market, but during the research and development period as well.
Any
changes to these regulations can have terrible consequences, including completely
changing the way a company must test its product, costing those companies millions.


There are, of cours
e, always risks involved when working with chemicals. There are
many risks with the production, storage and transportation. Doing any of these steps
wrong could lead to injury, property damage, environmental contamination or business
interruptions and liab
ility for compensation payments (
Datamonitor
).


To recap, Bayer AG certainly has grown stronger after their many acquisitions in the
past, but they must continue to be an active buyer and dealmaker in order to make it in
such a highly competitive market.


The action I would like
this

company to take is offering something completely
unique on the market. Many people are too forgetful to take a vitamin every day, but they
Bayer AG Marketing Plan

2010




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want to be healthy. This new product will give them the option to not only be healthy,
but
to make their lives easier.


By producing a completely new kind of vitamin, we can take charge of the vitamin
market and get a leg up on our competitors. Because our competitors are larger than us, we
must think of innovative ways to push their consum
ers to change brands.


Bayer AG wants to better life
for humankind. The way
we can do this is by adding
convenience to a task that can be a daily bother.
I believe that by producing a new monthly
vitamin, this company will move up and take charge of a piece of the market no one has yet
touched.

Bayer AG’s One
-
A
-
Month Target Market



In the United States, there has been a push towards being healthy. Recently,
restaurants have been forced to make nutritional information more available, and will in
fact be forced to list nutritional information on menus in a few years. As this health cra
ve
continues, many Americans are discovering that they do not get the
daily
-
recommended

amount of many vitamins. I, like many other Americans, want to be healthy and try to take
vitamins on a daily basis, but I often forget to do so. With a product that ea
ses this problem,
I
know

we could have vitamin success.


The adult market is booming for vitamins. For Bayer AG, creating a monthly vitamin
instead of one taken each d
ay increases convenience for on
-
t
he
-
go consumers and for those
who find taking vitamins
daily difficult. There are two target markets I
believe would be
good to target,

older adults and career
-
driven adults. I will define each target in more detail
in the following paragraphs.

Bayer AG Marketing Plan

2010




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For my demographics, I’ve chosen two areas, both of them being a
dults. I believe the
best two targets would be adults 60 and older and adults 25 and older. While all of these
people are considered ‘adults’, they will need to be targeted with a vastly different
marketing mix. I will be targeting adults that are middle
to upper class because there would
be a larger upfront cost for the vitamins
since

there will be fewer taken per year.


Psychographics and the behavioral aspects also need to be considered. My target
market of 60 and older could face one of a few dilemmas

when taking vitamins. It could be
that they have a regimen of pills that need to be taken daily and just don’t feel like taking
that one extra pill every day. Or, they could be in great health and just happen to be
forgetful when it comes to taking a vita
min daily. The other target market, the 25 and older
market can also benefit from a monthly vitamin. Many of these people are career
-
driven
and busy. When you are on the run, it’s hard to remember to

take a daily vitamin.
It could
be they are often run lat
e in the morning and skip breakfast completely. Another possibility
i
s that these people are parents,

a group who often barely have time to think about
themselves. Though they want to be healthy, they forget between taking Jimmy to soccer
practice and Emil
y to a dance recital. Both of these groups can
benefit greatly from the One
a
Month vitamin.









Bayer AG Marketing Plan

2010




9


Bayer AG: Competitive Analysis



Focus



Bayer AG


Johnson &
J
ohnson


Pfizer


Target Market:

Who they are



Health
-
conscious,
Adults, Teens



Health
-
conscious,
Adults, Children


Health
-
conscious,

Adults, Seniors


Products:

Products offered,
Branding, Benefits



One A Day Vitamins
(for women, teens,
men), Vitacraves,
Alka
-
Seltzer, YAZ
Birth Control,
Levitra



Pepsid, Mylanta,

Complete
Multivitamins for
kids and adults.



Multivitamins for
senior citizens,
Viagra, Vitamins for
pets (dogs and cats),
Depo Provera
Injection


Price:

Price Level



Competitive Pricing


Competitive Pricing


Competitive Pricing


Selection:

Quality,
Differenti
ation



Nutritional Products


Wide variety of
vitamin lines
available


Nutritional Products


Brand trusted by
Moms


Nutritional Products


Includes extended
market for pets


Promotion:

Advertising Used,
Sales



Facebook, Television
Ads, Couponing


Couponing,
Facebook, Ads


Couponing, Ads


Place:

Locations



Convenience stores,
grocery stores,
discount department
stores, online


Convenience stores,
grocery stores,
discount department
stores, online


Convenience stores,
grocery stores,
discount
department
stores, online




Since Bayer AG is one of the leading vitamin producers with a large
selection;

they
would be perfect to create a monthly vitamin. The market for this type of product would be
huge; I personally know many people who want to be
healthy and take vitamins every day
Bayer AG Marketing Plan

2010




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0


but cannot remember or do not find the time to do so. These vitamins
could be packaged in
three
-
month, six
-
month and
12
-
month

packages with a cheaper price per pill for the larger
packages. This way, people of all econom
ic standings would be able to afford the vitamins.


As my markets are both made of adults, it should be easy to have them understand
the pros of this innovative product. Though initially it may be hard to sell adults on a more
expensive pill, when told ab
out all the advantages of said pill it will become clear it is the
best option available.

Bayer AG’s New Product


The new product I would like to introduce is a vitamin that would only need to be
taken monthly instead of daily. This would be a completely
unique product in a very
popular healthcare market. In recent years, Americans have become more interested in
being in good health and this product could be one way to make that happen.


The product will be part of a new product line that will serve as a
sister to the
already popular One A Day vitamins. This can include many of the same varieties that are
already available in the One A Day line such as One A Day Teen Advantage, One A Day
Menopause Formula, or One A Day Men’s 50+ Health Advantage (Bayer AG)
. Because these
brands have already found success in the vitamin market, by creating a One A Month line,
they can connect the two and understand they are from the same company.


The packaging for the One A Month line will be very similar to that of the O
ne A Day.
The packaging will likely be much smaller, as there are only 12 pills to take for an entire
year. The pro
duct will also be sold in six month and three

month packages. I believe these
should be sold in small, clear packages like you can find in the checkout aisles that contain
Bayer AG Marketing Plan

2010




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1


3 pills of allergy treatments. I would like these packages to be shaped as a pill bottle, even
though they will be very thin, so
that the consumer can recognize the branding.


While this product will continue to compete with other vitamin options, none of the
other vitamin companies have a standout product such as this. While the price could be a
factor for some, consumers will be
able to see the benefits for such a product. For now, our
product will be seen as a shopping product, found only in large discount department stores
such as Wal
-
Mart. After testing the field and understanding the level of customer interest,
the product wou
ld be moved to drug stores like Rite Aid and CVS as well as health stores
such as GNC.


This product will be entering the market to the introductory stage. Because this is a
completely new product, even those who are already familiar with One A Day and Ba
yer
will still contemplate the purchase. If the product does not sell because of price or
disinterest in customers, the product will be phased out.


During the introductory stage, the product will be found only at large discount
department stores.
While
t
he One A Day and One A Month lines do tailor special needs such
as those of older Americans, teenagers and children, the vitamin is n
ot specially tailored for
super
-
healthy people. People who go to the gym often may find other vitamins and
supplements more

appealing because of specific benefits to muscle growth or strength.
Once the general population accepts the product, it would be possible to research tailoring
the product towards these markets. After the initial stages, the product will be available at
drug stores such as Rite
-
Aid and CVS. This would be a huge step as many people go to these
stores for prescriptions and small necessities already. Adding a vitamin to the mix would fit
perfectly.

Bayer AG Marketing Plan

2010




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2



Advertising for the new product will be available in Sunda
y coupon sections as well
as magazines targeted at our chosen audience. The product could also be advertised by the
televisions inside Wal
-
Mart near the pharmacy to bring attention to the product while
consumers are already in the shopping state of mind.

Bayer AG’s Distribution




Bayer AG’s new product, One A Month vitamins, will be sold indirectly to consumers
through stores like Wal
-
Mart and Rite
-
Aid. Wal
-
Mart will be the only store to sell the
product during its initial testing period because of its e
ase, convenience and the
demographics of people who often shop there. Another great feature of Wal
-
Mart is that
most are open 24 hours a day, 7 days a week. This means that those who work day shift
often shop at Wal
-
Mart because most
grocery stores
are not

open
during

late
-
night

times.
The product will be advertised on the Bayer website, a new website created just for One A
Month vitamins, as well as on Wal
-
Mart’s website and in store. By placing One A Day near
the existing popular One A Day line, consumers

will be able to see the connection between
the two. The new item will also be featured in coupons and magazines that target our
market.


For a Point of Purchase Display, there will be a display at Wal
-
Mart in the center
aisle near the healthcare section.

There will also be a video running on Wal
-
Mart’s
televisions in the store featuring the new item.

Bayer AG’s Promotional Mix



For this product, Bayer AG wants to show customers how much their lives can be
simplified. Added convenience will be a heavy t
heme for the One A Month campaign.
Bayer AG Marketing Plan

2010




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3


Because so many people are living life on the run these days, every second matters. Taking
time out of every day to take a vitamin is much less appealing than only doing it once every
30 or so days.


The advertisements w
ill be available on multiple websites, including Bayer’s
www.Bayer.com

as well as Wal
-
Mart’s website,
www.walmart.com
. Once the vitamins have
sold well at Wal
-
Mart, we will move on to other retailers and their websites. Ads will also
be found in the weekly Wal
-
Mart circulars as well as women’s and men’s specialty
magazines, depending on the version of One A Month being a
dvertised. Magazines like
Motherhood and Parenting can reach our demographic of adult women and the
psychographic of being busy and
on the go
.


For sales promotions, coupons for Wal
-
Mart stores will be included in the earlier
mentioned circulars. These co
upons will be for $3, $2 and $1 off, going by the number of
pills in the package. For example, the largest package will have the most savings available.
Other coupons will be found on the Bayer website. They will also be sent to doctors’ offices
for patien
ts to use.


In the area of public relations, a press release will be released by the CEO of Bayer
AG, alerting the public to their groundbreaking vitamin. In this press release, it is very
important to highlight how these vitamins can make a hectic life a

little easier.


During the initial release, Wal
-
Mart will be one of the main dependents for sales of
One A Month. Because Wal
-
Mart has such as large customer base, it will not be a problem
getting customers to the location. The tough part will be catchin
g a consumer’s attention in
a store that already has many other varieties of vitamins and health products. We believe
Bayer AG Marketing Plan

2010




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4


by having a display at the end of an aisle, we will be able to capture our audience and tell
them why this product is so revolutionary.


Our promotion objective is to inform customers of our new product and explain how
it will make their lives easier. Americans will often pay a premium price for convenience,
and our vitamin would certainly be considered as such. After releasing the differen
t
versions of the vitamin, such as menopause and for teens, we will be able to learn which of
our two competing brands, One A Day and One A Month, needs more advertising to be
successful.


For our campaign message, our them
e is: Your life is busy enough;
vitamins should
make it better, not more stressful. This theme informs the public that taking this vitamin
can make their life simpler while keeping them healthy.


In order to have our product known, we will need to use a few types of media. The
internet

will be among the largest, using our Bayer website as well as the Wal
-
Mart website
to inform customers of our new product. We will also be printing ads in magazines that
match our demographics and psychographics. These will include those previously
mentio
ned such as Motherhood and Parenting.

Bayer AG’s Pricing Objectives


In the early stages of sales, the only varieties of One A Month vitamins that will be
available will be One A Month Men and One A Month Women. These are the broadest two
products in the

One A Day line and also some of the most popular. The usual One A Day
version of these two products run anywhere from $12
-

$15 for a 200 count. Because there
will only be 12 pills needed throughout the year and because of research and development
costs a
ssociated with such a breakthrough product, the men and women’s lines will cost
Bayer AG Marketing Plan

2010




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5


roughly $30 for a year’s supply of 12 pills, $19.50 for a six pack and $12.75 for a 3 month
supply.

These prices will drop after it proves to be a strong product on the market
. The
price will also be forced to drop because it will not take long for competitors to jump on the
monthly bandwagon. In order to stay competitive, the One A Month line will drop prices by
about $5 on each of the varieties.

Once the product shows it has

staying power and interest, Bayer AG will begin to
produce other varieties of the vitamins including the popular 50
+

lines for both men and
women. These pills have traditionally been more expensive than the basic varieties and will
be priced accordingly.



Work Cited


Bayer AG.

2010. 25 June 2010.
http://www.bayer.com/


“Bayer AG: Full Overview.” Hoovers Online. Harrisburg Area Community College Library,
Harrisburg, PA. 25 June 2010. <http://www.hoovers.com>


Datamonitor. “Bayer AG: Company Profile.” 3 June 2010. MarketLine Business Information Centre.
Harrisburg Area Community College Library, Harrisburg, PA. 25 Jul 2010 <www.datamonitor.com>


Esmerk. “China: Insulin partnership possible between Bayer and Biot
on.”
Gazeta Wyborcza

24 Mar. 2009, Online.


Gannon, Joyce. “Eco
-
Friendly Designs.”
Pittsburgh Post
-
Gazette

27 May 2010,
<
http://www.post
-
gazette.com/pg/10147/1061055
-
28.stm
>


Johnson,
Steve. “OncoMed, Bayer announce medicine
-
development deal.”
San Jose Mercury
News (California)

17 June 2010: Technology. Print.


Whittington, Joe, and Andrew Harris. “$2 million jury verdict against Bayer CropScience: 2
Missouri farmers sued after experim
ental rice variety being tested cross
-
bred with their
crops.”
St. Louis Post
-
Dispatch (Missouri)

05 Dec. 2009, First: A9. Print.