Allergan Puts a New Face in Cosmetic Medicine

Nothing in Allergan’s history could have prepared it for the transformation of one of its oddest products into a profitable sensation. Prior to the Botox Cosmetic phenomenon, Allergan was a small firm selling little-known eye and skin drugs, some surgical devices, and a line of over-the-counter lens cleaners. Then doctors noticed that the form of Botox they were using to treat strabismus (crossed eyes) and other muscle disorders also relaxed the muscles that generate frown lines and wrinkles. With only a few minor injections, patients could reverse some of the visual effects of aging for up to four months at a time. The early buzz and media attention boosted Botox sales in a few major urban areas. But Allergan recognized that selling the general public on Botox would require more than word-of- mouth promotion. The company would have to overcome several negative attributes: The treatment is not permanent, it’s not covered by health insurance, and it does involve injecting a toxic substance into the face (although to be fair, most medicines are toxic in the wrong dosages). On the plus side, Botox is far less expensive and less invasive than cosmetic surgery, and it has proven to be a safe and fairly painless procedure. To get the word out, Allergan decided to promote the entire Botox experience. It began training doctors on how to inject Botox. And the company showed doctors how to design and decorate their offices to appeal to patients who want to be pampered. The timing was perfect. A goodly number of baby boomers aren’t inclined to grow old without a fight and are tuning to Botox and other cosmetic treatments that help in that struggle. Several million people a year now get Botox treatments, spending about a billion dollars on them. With a safe, simple, and fairly inexpensive way to diminish the visible effects of aging, Allergan is ideally positioned to profit as the Baby Boom generation advances in years. Of course, a huge market invites lots of competition. A Scottish company called Pure Logicol is among those bringing Botox alternatives to the market. Consumers can also turn to collagen injections, chemical peels, laser treatments, and a variety of other wrinkle-battling methods. However, Allergan clearly has a head start with its product and the enormous brand equity built up in the Botox name. Not bad for a product that started by accident.

Critical Thingking Questions 1. Was it a good idea for Allergan to include the word Botox in the Botox Cosmetic brand name? Why or why not? 2. Would it be a good idea for Allergan to extend the Botox Cosmetic brand name to medical products outside of the cosmetic market, such as cold and flu medications? 3. A number of patients were recently injured when doctors around the country purchased and administered an unsafe product that its maker claimed was just like Botox Cosmetic. Even though Allergan’s product remain safe and it had nothing to do with the deceptive product, what steps, if any, should it take to protect in the Botox brand new?

Test Your Knowledge Questions for Review 1. What are the four main subgroups of consumer products? 2. Why are most services perishable? 3. What are the functions of packaging?

104 Entrepreneurship – Menjadi Pebisnis Ulung 4. How many books will a publisher have to sell to break even if fixed costs are $100,000, the selling price per book is $60, and the variable costs per book are $40? 5. How does cost-based pricing differ from price-based pricing?

Questions for Analysis 6. Why do businesses continually introduce new products, given the high costs of the introduction stage of the product life cycle? 7. How could a marketer confuse a consumer when developing a product’s positioning strategies? 8. Why are brand names important? 9. Why is it important to review the objectives of a strategic marketing plan before setting a product’s price? 10. Ethical Considerations. If your college neighborhood is typical, many companies in the area adorn themselves in your school colors and otherwise seek to identify their names with your school name and thereby encourage business from students. Some if these firms probably have brand licensing agreements with your collage or are involved in sponsoring various groups on campus. However, chances are some of them are using school colors and other branding elements without having any formal arrangement with the collage. In other words, they may be getting commercial benefit from the association without paying for it. Is this ethical? Why or why not?

Questions for Application 11. In what ways might Mattel modify its pricing strategies during the life cycle of a toy product? 12. How This Affects How This Affects You. Do you consider yourself an early adopter when it comes to trying out new products or new fashions, or do you tend to take a wait-and-see attitude? How does your attitude toward new products and new ideas influence your decision making as a consumer?

105 Entrepreneurship – Menjadi Pebisnis Ulung