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Helping Make Hair Loss History

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Statement of the Problem

Merck needs to develop a marketing strategy to launch its new hair loss product, PropeciaÐ'®. The strategy should determine the target segment, product positioning, and the most effective marketing mix.

Issues and Analysis

The Food and Drug Administration's restrictions on direct to consumer (DTC) advertising restricts content and type of advertising. The FDA allows only three types of advertising for prescription drugs: brand name, indication or both. A key decision for Merck is which type of advertisement to use. A "product claim" ad can mention both the brand name of the drug and the problem it will correct, but it will also have to include a list of major side effects. "Reminder" ads could mention the brand of the drug, but not mention what the drug is for. "Help-seeking" ads allowed for un-branded ads that would encourage men to seek a doctor's advice if they were concerned about hair loss. The right advertising should have an informational appeal emphasizing problem solving (PropeciaÐ'® stops hair loss). The requirement to include side effects in product claim ads, a less than 2 percent possibility of sexual dysfunction, is difficult to address in a 30 or 60 second advertisement.

Consumer behavior regarding Male Pattern Hair Loss (MPHL) will impact the decision to purchase a hair loss product. Consumers with MPHL wait too long to seek treatment, seek prescription remedies as a last resort, and are reluctant to admit they have a hair loss problem. MPHL occurs in 30 to 40 million American men; however hair loss is slow and can go undetected for a long time. Patients that would be helped by PropeciaÐ'® are men in the beginning stages of hair loss; however this group is unlikely to realize they have a problem and would see fewer benefits because they are compelled to action only after the hair loss is obvious. Men that seek aesthetic remedies like mechanical solutions also see fewer benefits because their hair loss reaches a more advanced state before they start looking for alternative remedies. Men are also reluctant to admit they have a problem; more than 10 million do not think they have a problem and more than 10 million think it is a future problem. There are cultural and social factors that prevent consumers from seeking the necessary treatment at the right time.

The existence of direct and indirect competitors in the marketplace creates a challenge for Merck. The hair loss market accounts for $1.5 billion in annual sales, and consumers have many options regarding hair loss solutions such as hair replacement surgery, mechanical solutions, and topical interventions such as Rogaine. Consumers also do not have to buy hair loss remedies. Over a lifetime, an average consumer could spend $18,000 on hair replacement surgery, $46,312 on mechanical solutions, $10,800 on topical solutions, or $18,000 on PropeciaÐ'® (See Exhibit 1). Merck is challenged to compete with these existing products by differentiating itself by proving PropeciaÐ'® to be a better product and gaining customers who don't currently choose to buy hair loss products.

Limited prescription access and doctors' reluctance to recommend hair loss products are important issues affecting the launch of PropeciaÐ'®. Consumers cannot buy PropeciaÐ'® over-the-counter, so doctors play a key role in reaching Merck's target consumers. PropeciaÐ'® is an innovative product for treating hair loss and Merck needs doctors to be supporters of their drug; however primary care physicians may be unlikely to recommend products that are for cosmetic use only. Propecia also has potential risks and side effects. These risks and side effects could discourage doctors from recommending the drug and patients from trying the drug. Merck must determine how to convince doctors and patients that the risks are minimal and the benefits of the product are substantial. Detailing is an important factor because selling directly to physicians using the company's army of field representatives is the most effective way to teach physicians about a drug. The problem with Ð''detailing' is that the sales reps have literally a few minutes or even seconds to pitch directly to the doctor


Merck should target Propecia to all men with hair loss because the potential hair loss market is about 50% of all men. Caucasian men should be a primary focus when selecting channels of distribution and advertising media because they make up the largest percentage of the market.

Merck's marketing mix should focus on a message to encourage consumers to seek treatment early because the product shows the best results and is most useful to consumers in the early stages of MPHL.

Merck needs to employ DTC advertising with Product claim advertisements because Merck needs to create awareness and generate demand for PropeciaÐ'® and encourage consumers to ask their doctors for a prescription.

Merck needs to differentiate PropeciaÐ'® by positioning it as the hair loss product that is easier to use and more effective than other hair loss products. Emphasizing its ease-of-use and effectiveness will attract new consumers to the hair loss market and those customers currently using other hair loss remedies.

Merck should provide primary detailing support for PropeciaÐ'® because physicians need accurate and detailed information before prescribing a drug. Merck should use informative brochures in doctor's offices to communicate to doctors and patients that risk of use is minimal and side effects usually subside and can disappear entirely with continued use.





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