Statement of the Problem

Merck needs to develop a marketing strategy to launch its new hair loss product,
Propecia. The strategy should determine the target segment, product positioning, an
d the most effective marketing mix.
Issues and Analysis
The Food and Drug Administration's restrictions on direct to consumer (DTC) adve
rtising restricts content and type of advertising. The FDA allows only three typ
es 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 c
an 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-seeki
ng" ads allowed for un-branded ads that would encourage men to seek a doctor's a
dvice if they were concerned about hair loss. The right advertising should have
an informational appeal emphasizing problem solving (Propecia 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 decisi
on to purchase a hair loss product. Consumers with MPHL wait too long to seek tr
eatment, 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; ho
wever hair loss is slow and can go undetected for a long time. Patients that wou
ld be helped by Propecia 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 be
cause they are compelled to action only after the hair loss is obvious. Men that
seek aesthetic remedies like mechanical solutions also see fewer benefits becau
se their hair loss reaches a more advanced state before they start looking for a
lternative remedies. Men are also reluctant to admit they have a problem; more t
han 10 million do not think they have a problem and more than 10 million think i
t is a future problem. There are cultural and social factors that prevent consum
ers from seeking the necessary treatment at the right time.
The existence of direct and indirect competitors in the marketplace creates a ch
allenge for Merck. The hair loss market accounts for $1.5 billion in annual sale
s, and consumers have many options regarding hair loss solutions such as hair re
placement surgery, mechanical solutions, and topical interventions such as Rogai
ne. Consumers also do not have to buy hair loss remedies. Over a lifetime, an av
erage consumer could spend $18,000 on hair replacement surgery, $46,312 on mecha
nical solutions, $10,800 on topical solutions, or $18,000 on Propecia (See Exhibit 1
). Merck is challenged to compete with these existing products by differentiatin
g itself by proving Propecia 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 produ
cts are important issues affecting the launch of Propecia. Consumers cannot buy Prop
ecia over-the-counter, so doctors play a key role in reaching Merck's target consume
rs. Propecia 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 potenti
al risks and side effects. These risks and side effects could discourage doctors
from recommending the drug and patients from trying the drug. Merck must determ
ine how to convince doctors and patients that the risks are minimal and the bene
fits of the product are substantial. Detailing is an important factor because se
lling directly to physicians using the company's army of field representatives i
s the most effective way to teach physicians about a drug. The problem with detailing
' is that the sales reps have literally a few minutes or even seconds to pitch d
irectly to the doctor
Recommendation
Merck should target Propecia to all men with hair loss because the potential hai
r loss market is about 50% of all men. Caucasian men should be a primary focus w
hen selecting channels of distribution and advertising media because they make u
p the largest percentage of the market.
Merck's marketing mix should focus on a message to encourage consumers to seek t
reatment 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 Propecia and encourage consu
mers to ask their doctors for a prescription.
Merck needs to differentiate Propecia by positioning it as the hair loss product tha
t 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 m
arket and those customers currently using other hair loss remedies.
Merck should provide primary detailing support for Propecia because physicians need
accurate and detailed information before prescribing a drug. Merck should use in
formative brochures in doctor's offices to communicate to doctors and patients t
hat risk of use is minimal and side effects usually subside and can disappear en
tirely with continued use.
Support
The best way for Merck to position its product is to target all men with MPHL -
consumers who need it the most and would find it most beneficial. Men in the ear
ly stages of MPHL would receive the best results from the use of Propecia and would
encourage others to use it. Patients seeing positive results would encourage doc
tors to prescribe the drug more regularly. Targeting consumers in the early stag
es of MPHL can help Propecia to avoid the pitfalls Rogaine experienced when it disap
pointed customers who did not receive desired results. If Merck can convince con
sumers to start using Propecia early, they should be able to generate loyal, lon
g term customers that would make Propecia a more profitable brand. Caucasian men
should be a primary focus when selecting channels of distribution and advertisi
ng media because they make up the largest percentage of the market and generally
see hair loss earlier in life.
DTC advertising is critical because Merck needs to educate consumers and generat
e demand for Propecia and encourage consumers to ask their doctors for a prescriptio
n. The buying process does not begin until the consumer recognizes a problem or
need; however physicians are the gatekeepers to all Propecia purchases. Merck needs
to develop a pull' system because hair loss is not a medical condition that physician
s feel much urgency about , and only 20% of physicians in the country prescribed
Rogaine the only option approved by the FDA to treat hair loss. The pull' strate
roven effective with Merck's DTC advertising of ZOCOR with 75% - 85% of patients who
asked received prescriptions. The product claim' approach will create strong brand a
wareness and achieve greater success with patients as compared to its competitor
in the market, Rogaine. There are 40 million men in the U.S. that have male pat
tern baldness, but only 2.5 million use Rogaine, leaving a large market to be ad
dressed. Merck's reputation in the industry will have a positive impact on the c
onsumers' decision to approach their doctors for a prescription.
Propecia needs to differentiate itself from any other solution in the market because
it is a revolutionary product - the first pill in the world for hair loss. Posi
tioning Propecia as the easiest and most effective product to use will help Merc
k attract those consumers who are reluctant to try hair loss remedies. Its effec
tiveness is proved by clinical studies. Propecia needs to emphasize its many advanta
ges over its competitors. Rogaine has a tedious and messy application process an
d there are reports of unwanted non-scalp hair growth. Hair transplant surgery i
s painful and many patients required more than one transplant procedure. Mechani
cal solutions require more frequent visits to professional designer and they do
not deal with hair loss but rather disguise the problem. Propecia is a pill that is
taken once a day and does not have the disadvantages of the other products curre
ntly in the marketplace.
Primary detailing support for Propecia is essential to getting product information t
o physicians. Merck is ranked highly among physicians in terms of the quality of
their sales representatives. Merck needs to sell the efficacy of the drug to ph
ysicians. Doctors have to believe that Propecia will stop hair loss or re-grow h
air in the majority of cases. They also have to believe that the potential side
effects are minimal. The sales representative can clearly communicate the study
results that 83% of participants stop losing hair and 66% men experienced visibl
e re-growth. In addition to providing the information legally required by FDA, s
ales reps can inspire confidence by carefully explaining the side effects of the
drug and divulging all available information.
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