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? If Bayer is currently making normal profits on most of the products in its product line, but is making pure profits on its new Alka-Seltzer Plus with decongestant, what should Bayer do to increase its profits?