The Botox case illustrates the accidental success of a product developed for an entirely different purpose. Originally, Botox was used in the treatment of crossed-eyes, but ophthalmologists quickly learned that it would also erase wrinkles and frown lines around eyes. It wasn’t long before doctors across the United States were using Botox for treating wrinkles even though Allergan could not officially promote the product for this use.
The case 1) explains what the Botox product is, 2) discusses the advantages (fewer frown lines) as well as the side effects (drooping eyelids and the need to repeat treatments) associated with its use, 3) lists potential target markets, 4) details how the product is sold, i. e. , at “Botox parties” and the use of Botox treatments to attract customers to resorts, and 5) describes Allergan’s marketing of Botox once it was approved for cosmetic purposes and the use of Botox to support the new strategy of Allergan to become a major player in the pharmaceuticals industry.
The case is especially useful for discussing added value and the creation of customer satisfaction. It raises questions about the difference between needs, wants, and demands; what constitutes value; is useful for illustrating the difference between a marketing oriented company (Allergan after Botox) rather than a non-marketing oriented company (Allergan before Botox); the potential benefits of marketing and raises questions about societal marketing (should Botox be promoted for cosmetic purposes? Should it be sold through parties? )
The case can also be used to illustrate relationships in the marketing paradigm—between Allergan and doctors, Allergan and final consumers and doctors, and final consumers. Allergan’s marketing efforts are two-pronged in order to successfully promote to both markets. It is important for students to realize the pivotal role of the doctor in this purchase process in which consumers do not buy the product directly. Question 1 – What are the needs, wants, and demands of consumers for Botox products in its different treatment markets? What value does Botox deliver in each market?
How does value affect the price for Botox? The use of Botox for ocular treatment illustrates a classic need. The consumer has a defect that needs treatment. When used for crossed-eyes patients can see better, but they may also feel much better about themselves as their appearance improves. This can have a strong impact on their social needs. It will show the wants. People with crossed eyes can still read and function. The want here is not that they will expire from lack of the drug, but that they want to look better and feel better about themselves. The value of this is undeniably high.
What probably constitutes the major portion of the value are the social and ego wants. One can live without it, but does one want to? Because the value is high, the price can be high. But in this market, insurance reimbursements may operate to lower the price that consumers are willing to pay. After all, they don’t have to have the product. Although there is need, want is also high. People can all live with wrinkles, but they want to be rid of them. Indeed, the use of cosmetic surgeries for improving one’s looks is not uncommon among Asian consumers, especially among Japanese and Korean consumers.
Want drives the purchase process. Given Asia’s growing obsession with appearance, the value of improving appearance would be very high. Again I think this value would primarily be social (others think I’m younger). As the case indicates the cost of Botox is quite high and unlikely to be covered by insurance companies for cosmetic purposes. The Botox example illustrates want and need are quite different and they affect value. Unfortunately many U. S. consumers place a higher value on ego and social wants than physical needs which accounts for the success of Botox.
Question 2 – When Allergan sold Botox as a specialty drug for ocular problems, what marketing management orientation was it employing? When it sells Botox as a cosmetic treatment, is it employing the same or a different orientation? One could argue that Botox as a specialty drug for ocular problems illustrates the product concept. The focus of the company was on eye and skin treatments. Thus, it developed products within those categories and sold them on a product need basis to doctors (depend on the doctors’ demand).
The success of Botox cosmetic has forced the company to become more marketing oriented. The company is now focusing on target markets and developed promotional efforts aimed at final consumers as well as promotion to doctors. The company has found a new use for an existing product that lies outside their tradition product focus (they need to promote products to increase sales, therefore maximize the profit). Question 3 – When doctors treat patients with Botox in their office, is that an example of a selling concept or marketing concept? When they hold parties for patients in private homes?
When doctors are prescribing Botox for ocular problems, this would seem to be the marketing concept because they are focusing on the needs of the consumer. Parties, however, seem to be different. Here the doctor’s motivation seems to be on selling a greater quantity of the product. That resembles the selling concept. This is not a focus on the needs of individual consumers as treating individual consumers in the office would be. The goal seems to be to increase revenues by cutting costs and attaining profit by serving multiple customers at once.
Question 4 – Apply the concepts of customer lifetime value and customer equity to Botox. How do doctors and Allergan improve the way they manage customer relationships? Because customers need an on-going series of treatments, Botox affords the opportunity to provide lifetime value over and over. The value added will depend on how well Botox continues to work and aging consumers’ desire to appear young. The efficacy of Botox over time is a problem for Allergan. At this point, no one knows how Botox treatments will work over a period of years.
Will their effectiveness decrease? Are there side effects, unknown at this time, to continued use of Botox cosmetic? Eventually, consumers may be more willing to live with their wrinkles and/or tire of paying for Botox. One advantage that Allergan has is that many consumers may only recognize the Botox name with the result that loss of efficacy will not affect sales of other Allergan products. Consumers may be quite willing to buy other Allergan products even if they become dissatisfied with Botox.
If Allergan built a strong corporate brand, it could have more equity with the consumer who buys a variety of Allergan products. Question 5 – How does Allergan connect with its customers (doctors)? How does it connect with final consumers? How does it connect with the world around it? What could it do to improve these connections? Doctors: Allergan has beefed up its sales force to increase promotion to doctors and developed clinics in which doctors are taught the appropriate use of Botox. Final Consumers: It has increased advertising to final consumers.
Global: Allergan has developed websites that target both doctors and consumers. This is especially the case for Botox. Allergen had developed their own website (put the web address here, what information provided in the webpage). To improve its connections, it could develop Web sites for more countries and cross-sell more products. A logical product extension might be skin care products. At present, it is suggesting the use of various types of skin care products, but it would seem that a line of Botox skin products would sell very well.
