Biopure – Marketing Case

Marketing Management – Assignment No. 2 Topic – Product Pricing (Biopure Case) CASE ANALYSIS for Biopure with respect to Pricing of Oxyglobin Our group analyzed the case and concluded that price of oxyglobin should be determined on perceived value approach. We calculated perceived value from case data and arrived at a price of $181. We are planning to launch it at a price of $175 to Vet so that there is some customer incentive to purchase and at same time, there is minimum ‘money left on table’. Below is the explanation for calculation of price and its corresponding reasoning. Perceived Value calculation for Oxyglobin: |Per Unit price of animal |Average price of per unit animal blood | | |blood | | |Primary care |$80 – $100 |Average $100 | |Emergency care |$130 – $170 |Average $150 | |Average charges |$125 |Average of primary and emergency care | | | | | | | | | | |Reference price |$125 |Average price of per unit animal blood from donor Animal | | | |Benefit and feature offered by Oxyglobin |Value Charged |Reason | | Guarantee of 2 year |12. 50 |Charged @ 10 % against shelf life of 2 years | |No Blood Type Casting |12. 50 |Charged @ 10 % against no requirement of Blood type | | | |casting and cross matching | |Peak Oxygen Transportation |12. 50 |Charged @ 10 % against 100% efficiency at transporting | | | |oxygen | |Infection free agents |6. 5 |Charged @ 5 % against free of infectious agents and | | | |contamination | |Reduction in storage & admin. cost |12. 50 |Charged @ 10 % against avoidance of storage and | | | |administration cost related to donor animal | |Consumer Perceived value |$181. 25 | | |Consumer Incentive to buy |6. 5 | | |Product price |$175 | | | | | | | | | | |Production Capacity |300,000 |  | |Heads |Cost per unit |Remarks | |Fixed Cost |$50 |$ 15 Million distributed | |Variable Cost of production |1. 0 |  | |Physical Distribution cost |$12. 50 |Distribution Model: Manufacturer direct . | | | |An Average of $10 and $15 per unit distribution | |Amortization per year |$33. 33 |$ 200 million distributed over 20 years | |Total Cost per Unit |$97. 33 | |Product price |$175 | |Profit per Unit |$77. 67 | |Total profit |$23,301,000. 00 |