Week 5
Discussion
DQ 1 Good Will in Price Bidding. Sometimes, a bidder on a
work contract may bid lower than what would maximize his/her profit from the
contract and the reason for that is to create goodwill (to increase expected
future business from the buyer). How would you value the goodwill that is
obtained in this way?
DQ 2 New Product Introduction. Bayer Schering Pharma AG,
Germany owns the Alka-Seltzer, which was launched in 1931 and was meant for
relief of minor aches, pains, inflammation, fever, headache, heartburn, sour
stomach, indigestion, and hangovers. The Alka-Seltzer Plus was a spin-off of
the original medicine, meant to relieve colds and flu.
The company has recently introduced a new and improved
Alka-Seltzer Plus, as described in the TV ad: “The Cold Truth”, (please, watch
the ad listed in the Required Readings)
The ad shows that Alka-Seltzer Plus fights cough, body
aches, runny nose, sneezing and fever, just like Vicks NyQuil does, but it also
now can fight congestion, unlike NyQuil.
Explain how the new Alka-Seltzer Plus has been quality- and
price-positioned in an existing market. In your opinion, has Bayer positioned
their product appropriately in the market for cold and flu symptoms relief
products? Would you advise Bayer to use a skimming or a penetration pricing
strategy? Explain your reasoning.
How do you think Proctor and Gamble, the company who
produces Vicks NyQuil,would respond to the ad?
