Q1 The issue of over pricing AZT is a burning issue for Burroughs Wellcome Company thus causing negative publicity and the fears in my opinion are well founded as far as BW's future AIDS drugs and drugs for other diseases (Zovirax and Sudafed) are concerned.
Within the current AZT market, the central consumers are AIDS and HIV patients in need of treatment. AZT's role to the patients is paramount; results show AZT extends patients life expectancy, increase their sense of wellness, boost their immune system, and help with weight gain. Clearly the benefits of AZT have a direct impact on the patients' quality of life; as a result patients' desire for the treatment is high. And that's the reason why the negative publicity won't impact the current sales of AZT in the absence of any substitutes (at present AZT is the only treatment available for HIV).
However, when it comes to other 2 products (Zovirax and Sudafed) and any potential AIDS drug that BW might invent / discover in the future the situation is quite different.
The backlash would affect the customer's emotional response . This would affect how a consumer thinks about a company and talk to others about it. The negative publicity would diminish BW's reputation with its customers, paving the way for the sale of substitute products by competitors. The customers would also change their role from being apostles to detractors thus telling others how bad the company is and why they should not buy BW's products. Thus this could be devastating to the BW's business affecting its brand image.
Based on our five forces analysis, the industry is moderately attractive with the significant threats coming from possible substitute products and rivalry from direct competitors. Assuming that there are effective substitutes (which are either priced equally...