Marketing excellence: What is it? Do you have it?

Is the pharma industry successfully achieving marketing excellence? After exploring this issue, Andree Bates believes the answer is probably not, especially when a recent study found that coffee shops were better differentiated than pharmaceutical products.

What is it?

The official definition of marketing is “… the management process responsible for identifying, anticipating and satisfying customer requirements profitably“. Therefore, one would expect that marketing excellence is excelling in these areas, resulting in highly differentiated, customer-valued, highly profitable brands.

Peter Drucker once said, “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs”. In a Forbes article, a survey of top executives was cited in which they were asked their priorities in order and the results were: finance, sales, production, management, legal and people. Missing from that list were the two basics that Peter Drucker cited i.e. marketing and innovation. Marketing is critical but it is slipping down the priority list of CEOs. The fault lies not with the CEOs but with the marketers, as many have let their brands become commodities rather than highly differentiated brands due to poor marketing.

Do you have it?

Marketers are tasked with getting as much for their brand as they can, and after the planning process is completed, they usually turn to marketing communications and advertising agencies to help with execution. This in itself is fine, except the agenda for agencies and for the brand teams are not always the same. The agency wants to test well in brand awareness, ad recall scores and ‘feel good’ factors; they want to win awards for their advertising campaigns. They do not make campaigns based on how well this will grow the sales of the brand.

“Marketers are tasked with getting as much for their brand as they can…”

 

Rozerem was spending more annually on ads in the US in 2007 than the drug was generating in revenues. In Q1 2007, Takeda spent $40m+ on Rozerem advertising, while reporting $26m in sales. Rozerem had less than 3% of the U.S. market and was barely making a dent in the $3.6 billion sleep aid market. Ambien had about 77% of the market, and Lunesta about 16% of the market. What went wrong? It had tested well in focus groups as well as market research, and the agency won awards for it. This evidence looked good to the marketers but was not an appropriate or accurate analysis of the data.

Other measures marketers use are also misleading e.g. number of sales calls, length of calls, or measuring how many doctors attended a symposium as a measure of success. None of these are doing more than tracking an activity, none are telling you what the result is in terms of market share or revenue, and surely these should be the measures. The measures of marketing success the pharma industry are using are a major part of the problem.

Unfortunately many marketers have let their brands become commodities, rather than highly differentiated brands, due to poor marketing. A study on various brands, including pharmaceutical ones, examined the extent of brand commoditization. What I mean by ‘brand commoditization’ is wherein the brand (or company services or products) is very similar to their competitors and is almost interchangeable. In the study mentioned, it was alarming to see that pharmaceutical brands included (e.g. Cialis / Viagra, Allegra / Claritin, Nexium / Prevacid, Vytorin / Crestor) were seen as highly commoditized and interchangeable compared with brands like Dunkin’ Donuts / Starbucks, which were seen as very different. The pharmaceutical industry marketers are doing a far worse job at differentiating their brands than coffee shops! This is entirely avoidable with strong marketing.

When brands are highly commoditized, and the perceived product differences no longer exist or are small, then price becomes an important factor. When you understand this, you can see how generics and biosimilars can come straight in and claim a large share of the market. In fact, in pharmaceutical markets that have become highly commoditized, where the product itself has little intrinsic value (e.g. G-CSF and the epoetins), the biosimilars were able to have a highly successful uptake. On the other hand, in other categories where the product value proposition was perceived as higher (e.g. somatropin) and were more highly differentiated, the biosimilars were not able to achieve the same level of success. So with brand differentiation within pharma being worse than that of coffee shops as per the target stakeholders, does this suggest that we, as an industry, are achieving marketing excellence in pharma? Probably not.

“Unfortunately many marketers have let their brands become commodities, rather than highly differentiated brands, due to poor marketing.”

All aspects of marketing must be examined rigorously with data, and real insights identified. Data alone is not enough – it is what you do with the data. Everyone has a lot of data, but are their brands performing spectacularly? The data should be analyzed in such a way that you can pull out important insights which will lead into a successful marketing results. Structure and analyze data in such a way as to allow real insights to make changes that produce better results.

Every time we run analytics, much of the basics of what we find out about the market, and brands, are known to the company already. However, in every case there are always a few pieces of insight generated that are entirely unexpected and previously unseen, and it is these that provide the real key to transforming the results. These extraordinary, surprising gems of information make all the difference and, on occasion, highlight that an assumption upon which all the marketing was based is not accurate.

Conclusion

Marketing excellence should be excellence in marketing throughout the entire process – from defining the market, identifying the market segments, selecting targets, understanding the customers and their needs and drivers, understanding your competitive advantages, developing a compelling brand proposition and positioning to meet the needs profitably, and so on, right through to implementing the strategy, and monitoring and reviewing the value delivered and results obtained. Marketing success, and indeed, marketing excellence, has become a key driver of shareholder value, and is more important than ever – but are you achieving it?

 

 

 

About the author:

For more information on this topic, please contact the author, Dr Andree Bates, at Eularis (http://www.eularis.com).

Do you agree that pharma, as an industry, is not achieving marketing excellence?