Case 8

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Recommended: Chapter 1 Developing Marketing Strategies and Plans

Introduction
The multinational pharmaceutical firm, Wellcome PLC, brought a product to the market to help treat the symptoms of AIDS and HIV. Wellcome PLC owns an American subsidiary known as the Burroughs Wellcome Company. In 1987, Burroughs Wellcome Company received FDA approval to sale Retrovir, which interferes with the ability of HIV infected cells to produce new virus. Burroughs Wellcome Company finds itself under siege in September 1989 by AIDS activists and various segments of the U.S. government. Despite two reductions in price in the last two years, Burroughs Wellcome Company’s executive management is under unrelenting pressure to decrease the price of Retrovir so that many more people can afford the prescription.
Definition of the problem
Burroughs Wellcome’s marketing manager or marketing executive must erect a marketing mix which pricing strategy takes into consideration the firm’s profitably, the company’s reputation, as well as government and activist pressures.
Alternatives and Uncertainties
The firm has two major alternatives that will affect the marketing manger’s pricing discretion.
1. To focus on maximizing shareholder’s wealth thus maintaining the pricing strategy
2. To focus on the needs of the general public by reducing the pricing strategy
If the firm decides to pursue alternative two, Burroughs and Wellcome must construct a new pricing strategy. Some of the firm’s uncertainties consist of the public perception of the company, the implication of the current pricing strategy to revenues, the effect to the bottom line because of the reduction in price, the impact of an introduction of a new product from other competitors in the future, and the unclear outcome on profits due to regulatory constraints.
Evaluat...

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...c Relations
The firm must initiate more public relations with the media revealing its programs and projects that bring aide to the general public. If the company had continues with the public, there would have been a less resistance toward pricing initiatives.
This plan alleviates many of the firm’s current uncertainties. With the price reduction and more public relations, there may be an improvement in the public perception of the company. The implemented plan supports continual profits and reduces the possible increase in regulatory constraints.
Conclusion
In summary, Burroughs Wellcome Company found itself under relentless pressure from government and activists to decrease the price of Retrovir. The firm had to decide whether to choose between increasing profit margin or changing the price for the ethical and social well-being of potential HIV and AIDS patients.

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