Free «Eli Lily and Co.: Innovation in Diabetes Care Case» Essay Sample

Consumers are extremely picky beings who strive to maximize utility within their budget constraints at all times. In the case of Eli Lily and Co, the management realized that it was losing its popularity fast. Thus, they started by introducing innovations that were aimed at drawing consumers back to them and maintaining their loyalty. The company’s greatest problem was that they introduced a new commodity in the market with no regard to the target market. The laws of demand and supply stipulate that in order for a market to clear (be at equilibrium), the quantity demanded must be equal to the quantity supplied. Lilly altogether disregarded this law, hence their dilemma (Abrams, 2003). Lilly was worried about the rising competition in the market. Thus, they rushed to copy a product that was already in the market to try and compensate. However, they failed to realize that, although insulin pens were a smashing success to Novo Nordisk, it did not necessarily mean they would be a success for them.

Thus, the first mistake was that they assumed that all markets are the same, thus would respond in the same way towards a commodity. Another mistake they made was to invest heavily in the production of a commodity that they had not introduced initially. This means, at the time of their production, the demand for insulin pens was far less than the quantity they supplied; hence the disequilibrium. Disequilibrium means the market does not clear, and in this case, the supply exceeded the demand, hence there was a surplus. This was a significant risk since consumer behavior is extremely unpredictable (Paton & Mc Calman, 2000). The companies also failed to market effectively and promote the Humulin to its target market. They spent so much on its production that they forgot the importance of creating awareness to their consumers. Thus, by the time they introduced it to the market, consumers were weary. Lastly, they failed to study effectively the market and the timing of their product was not strategic at all. This is because, had they invested in studying their target consumers and their needs and behavior, they would have averted loses (Katz, 2010).

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Some of the lessons they ought to have learnt are that, although change is beneficial, it is not always necessary. This is because, they rushed to introduce insulin pens to a society that was comfortable and content with their routines. Another great lesson all companies should learn is that commodities are intended to satisfy consumer needs; thus, they must first understand these needs before they attempt to satisfy them. This was the chief undoing of Lilly Co. (Katz, 2010). Also, the Humulin was being sold at exorbitant prices, an aspect that turned off many potential consumers. It is a common knowledge that in order to popularize a new product, a company has to give all consumers a chance to experiment with it. This can be achieved by offering free samples and making them affordable so that everyone can get the opportunity to test it. By selling the Humulin at a high price, they limited the number of consumers who could access it as well as discouraged potential consumers. This is a lesson they ought to have learnt and applied, considering they were an already established company that understood market trends and consumer behavior.

The best measure to take regarding the Humulin is, at first, to stop any further production of the Humulin. After this, the company should embark on a campaign to popularize it. The outcome of the campaign will, thus, determine the final decision of the company (Paton & Mc Calman, 2000). In a bid to popularize Humulin, the company should focus on familiarizing consumers with the commodity. However, health care providers should play a key role in promoting commodities since patients are more likely to trust their physicians. Thus, it is ok for the company to use health care givers to promote their commodity, but they should also create programs and avenues that would allow them to interact directly with the immediate consumers (Abrams, 2003).

The lesson from the story is the importance of making wise and informed choices. Lily made many mistakes and assumptions when they launched the Humulin pens; however, if they had taken time to understand their target market, this would have been averted. Thus, the whole story revolves around the need for companies to interact and understand their target consumers’ needs. Thus, in the debate of what is more important between consumer need and technological advancement, it is safe to say that consumer needs give rise to technological advancement. This means, the demand for something triggers its development and not the other way around, as Lilly assumed.


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