Bayer Ag: Childrens Assignment

Bayer AG:

Children's ASPIRIN*Assignment Questions

In the mid-1980s, Bayer AG faced a crisis when aspirin was associated with Reyes Syndrome, a rare but serious illness in children. Bayer decided not to remove Chilren's ASPIRIN from the market, but they pulled all promotion for the brand and complied with government regulations regarding product warnings on packaging. Shortly thereafter, new discoveries revealed the effectiveness of aspirin in the prevention of heart attacks and strokes in adults. Children's ASPIRIN - due to its lower cost and lower dosage - was an ideal product for the prevention market. Over the years, sales of Children's ASPIRIN had increased, but Bayer AG had never analyzed the percent of sales due to the children's v. prevention markets. Now the company must make a decision about what to do with the product. Should they retract Children's ASPIRIN altogether in order to increase sales of Bayer's higher-margin prevention brands or reintroduce it as a prevention product under another brand name? Implications for company growth and profitability are examined.

1. How important is aspirin to Bayer AG? How does it fit into the company's product lineup?

Bayer is a research-based, growth-oriented global enterprise. It is primarily into pharmaceutical and chemical company headquartered in Leverkusen with about 20 different business units that research, develop and manufacture products in life sciences, polymers and specialty chemical areas. It employs around 120,000 people worldwide. It has operations in almost every country. The jewel at the very center of Bayer crown is the brand aspirin. It is without any doubt the most successful over the counter drug in history. It is available in the market for more than a century. It has gone through many transitions and has become a winning drug. From a pain remedy tablet to a children's tablet and now as a prevention tablet it has continuously extended its product life cycle. It is an important brand in the product line up as it is the number one brand in many countries.

2. Which type of strategy for competing in foreign markets is Bayer using with its aspirin products? What are the key elements of Bayer's strategy in aspirin?

The contemporary business era has seen the emergence of global companies like Bayer. It has operations in multiple countries across the world. It is imperative from the case that for Bayer to compete in the foreign market it is using the 4P strategies. They are

 International Product/Service strategy

 International Place/Entry strategy

 International Price strategy

 International Promotion strategy

Bayer when targeting foreign buyers similar to or different from the German market focuses on the exact culture in that country. It looks into what the values of the people in the country are. It had noticed that in some countries the RS syndrome did not have an impact and accordingly it promoted the children's aspirin than the preventive brand. This also depends as to what the elder generation looks at. Bayer also looks into what changes in aspirin need to be made to meet the foreign customers' needs. It also looks as to what indicate change in the market, whether the market the market accept new ideas. Bayer also looks to make sure that its other products are not cross competing and setting trends.

Bayer always does heavy market research to see how the firm can increase market share. How to increase its customers based on how much disposable income do consumers have. Bayer uses the same brand aspirin with sub brands and markets the same product everywhere. It might change the packaging to adapt the product for foreign markets but never develops a specific product or develop a totally new product for a specific country.

In developing product strategy, international managers of Bayer are concerned with the look and performance of ASPRINI and have all the past and future information with regards to the brand.

3. Identify the two major markets for aspirin. How do the dominant economic characteristics of each of these markets differ? Which appears to be more attractive?

Two major markets for Aspirin are USA and Germany in Europe. The US pharmaceutical market is the world's largest, with one of the world's highest levels of per capita expenditure. The USA is home to some of the most important global manufacturers, such as Pfizer, Merck & Co, or Bristol-Myers Squibb. The market, while lucrative, is highly litigious, with the major battle lines drawn between manufacturers of branded and generic drugs. A good example is where Bayer lost its case with generics. The generic drug sector looks set for rapid growth over the next few years, as a number of major products come off patent. The generic industry is not without its problems, however; several companies have been under investigation for excessive price rises and collusion with branded manufacturers.

Germany is the third largest pharmaceutical market in the world and the largest in Europe. Although the domestic consumption of pharmaceuticals is being constrained by government policy, the export market continues to expand. Germany also has the largest generic market in Europe. The German pharmaceutical market is well regulated, with strict drug approval processes. Intellectual property regulations are harmonized with EU procedures, with patents having a life span of 20 years. The principal distribution channels are public (retail) and hospital pharmacies. OTC products are available at health food stores, supermarkets and other retail stores. The majority of public pharmacies are supplied by pharmaceutical wholesalers. The five largest wholesalers account for around 85% of the wholesaler market. Pharmaceutical production in Germany accounts for around 10% of the world pharmaceutical output and is the second largest pharmaceutical exporter behind the USA. Germany remains a strong base for R&D activities, with 16.2% of sales being reinvested into R&D.

The USA market is more attractive in one aspect when we look at the volumes of business and the potential. However the German market has its own advantages where aspirin brand is patented. aspirin has gone from strength to strength. It has not suffered proscription, as happened to its near contemporary, heroin. Nor has it been overtaken by more modern substances. Paracetamol and ibuprofen may have nibbled at its share of the over-the-counter (OTC) painkiller