Smarter Pricing: How to capture more value in your market

4. Price discrimination – segmenting by price sensitivity

case study 4.1: How Glaxo turned price sensitivity into benefit promise When pharmaceutical company Glaxo launched their anti-ulcer treatment, ‘Zantac’, in 1983, they had to price against an established incumbent brand sold by SmithKline. This brand was ‘Tagamet’, then the world’s biggest selling drug. The obvious options were to enter with a parallel price or to undercut the dominant brand. The obvious options were wrong. At the same or lower price the market would see Zantac as a me-too equivalent with no reason to change. Glaxo knew that Zantac required only twice daily dosage instead of Tagamet’s four times per day regime. It also offered fewer side effects. Understanding the price ...