Subjects - Business

Pricing is one of the four major components of marketing. Psychological pricing forms one of the key elements of demand pricing wherein the consumer demand is the main focus. The price and quality relationship that

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

governs the central theme of the consumer market relationship is surrounded by uncertainty and gives the consumer the perception that higher the price, better the quality.

The science of pricing is an art in itse

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

lf. Rounding off the figures may be good for basic math but never in business. The art of setting prices for articles has been an ever challenging task in business. Keeping in mind the changing economy, heavy compe

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ition in the market and consumer affordability, the trick of pricing an article has been more on a psychological evaluation of the consumer. Pricing is usually done by keeping with industry standards. But in order

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

to sell their products after a baseline or whole sale price has been fixed, individual business organizations have most often dealt with pricing in terms of smaller denominations such as cents and pennies.

While q

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

oting the universal example of $9.95 or 9.99 being more attractive to consumers as compared to $10, this psychology seems to hold in business world wide. The main reason for this is that people tend to see the firs

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

t figure in dollars as compared to the cents. $9 is cheaper than $10, and the cents don't figure in the perception. While shopping, consumers tend to overlook small differences in cents but go by the dollar value.

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

nd funnily, the highest single odd digit is the most psychologically favored and 9 is that most fortunate figure of acceptance. However one cannot rule out the fact that the cents are totally ignored by the custome

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

r but the ignorance is at the subconscious level and is partial. Also the use of odd figures has a background in that it was used to curb theft by employees by way of forcing them to give change and enter the amoun

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

in the cash register a practice that was originally put forth way back in 1875 by the publisher of Chicago daily news, Melville E. Stone.

Another most popular way of attracting consumers has been introductory off

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ers. Suppose a new toothpaste is released in market, it often sells better when its accompanied by a free sample, a toothbrush or even 25% extra toothpaste. And more so when the actual price is quoted and struck of

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

f, with a new pricing quoted in a different color alongside to attract the consumer. Often in these cases the consumer has this inherent feeling that he is getting more for a lesser price. Sometimes he also compare

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

another similar priced similar product with the one available on discount to satisfy himself that he is certainly getting more for the price quoted.

When an article comes to shelf with a certain price, consumers

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

most often never question how and why it was priced. If a group of articles is priced at say in the range of $20's, the price is taken for granted and the evaluation and comparison of prices is limited to that rang

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

only even if the product may be of lower or higher value of that price. However, when the price of the same set is increased after a certain period, the consumers do not appreciate it. The tactic of increasing the

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

price by 20% and giving a 10% discount on the same article is perceived better than just an increase in price. "Buy one take one free" is another pricing tactic to attract buyers although the offer maybe for a lim

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

ted period of time. Definitely such articles sell fastest.

By increasing the price of a product by a few cents, a company can earn profit as there seems to be no complaints from the consumer as the price hovers ar

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ound a key threshold point and minor increase is accepted. Consumer sensitivity in pricing can be found when the consumers have no other product to compare with or when the product is exclusive and unique. Even in

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

uch cases, when the product is bundled with a few other accessories, the aspect of consumer emotion is very much aroused and they sell better.

Above all, when a customer is satisfied, both the company and the cust

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

omer are profited. But then the response to the concept of psychology pricing has always been mixed. As long as the customer is not cheated, the concept is of advantage to sellers.

Copyright 2005 Konstantin Goudko

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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