The Management of Pharmaceutical Marketing
Managing marketing plans and strategies in the pharmaceutical sectors.
Fundamental changes in business environments are rarely achieved without the use of marketing activities. Whilst consumer marketing in the pharmaceutical industry has been proven to create a negative impact and pain, it has also achieved good and has changed perceptions for the better.
The use of marketing provides a competitive edge, penetration into new markets, the acquiring of new customers, and ultimately the achievement of the business objectives.
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To achieve such results, however, requires more than just a marketing plan. It requires the effective management of the plan within the organisation’s environment and competitive position, both of which are continually shifting. This requires a look at the nature and direction of the practical application of the product or service, its distribution via sales and intermediaries, pricing, the brand as well as the marketing communications itself.
PHARMACEUTICAL MARKETING MANAGEMENT
This post provides an overview of the factors that need to be addressed for the effective management of pharmaceutical marketing plans and strategies in relation to classic management principles.
1. MARKETING’S ROLE IN PHARMA
Textbooks will define marketing’s role as the process that starts with identifying and understanding the needs and wants of the customer (demand) and then fulfilling those needs and wants (supply). Broadly speaking, pharmaceutical marketing involves all of the promotional activities carried out by an organisation to make pharmaceutical products and care a reality, and available to customers (patients and other decision makers) from the manufacturer.
Within the pharmaceutical manufacturing sectors - which Orientation Marketing predominantly operate within - marketing will refer to the promotional activities carried out between the organisations that produce the various products and services that complete the supply chain. The patient sits at the top of the chain, who can access pharmaceutical care from HCPs provided by big pharma organisations. Below is the wider manufacturing supply chain which constitutes various suppliers (lab equipment, chemicals etc.), R&D and discovery, production and delivery. Marketing, therefore, exists heavily in both B2C and B2B pharmaceutical environments to inform stakeholders of the options available to them.
2. CHARACTERISTICS OF THE MARKET
The pharmaceutical market consists of a large degree of regulation and administrative oversight, complex payment systems as well as the involvement of multiple decision markers, which limits the nature of the marketing of pharmaceutical products and services. For the pharmaceutical organisations themselves, the importance of innovation cannot be overstated: New drugs provide gains to consumers (patients and payors) in the form of clinical benefits over existing treatments; generic drugs provide gains to consumers (patients and payors) in the form of lower costs. (Tepperman, 2009)
Marketers are required to always be aware of this. All of which leads to the importance of product differentiation - in both B2C and B2B sectors. Therapeutic substitution, prescribing patterns, manufacturing innovations, as well as the competition, intertwine to define this differentiation which marketers strive to achieve to make the product exchange. Every exchange requires that (1) there are two or more parties (2) interested in satisfying their unfulfilled desires, (3) have something of value to offer to each other, and (4) are capable of communication and delivery.
3. KEEPING IN TOUCH WITH THE MARKET
The management of pharmaceutical marketing broadly entails keeping in touch with the changes within the market. This might include the analysis, planning and implementation of new marketing strategies to attract target audiences that invariably achieve organisation-wide objectives, such as marketing share, revenue or sales volume.
Just as patient preferences change, so does the consolidation, outsourcing, acquisitions and partnerships within the supply chain. It is, therefore, key that systems, cultures and marketing messages are integrated in order to capture value and make this known to target audiences. The same principles apply when external factors, such as the Coronavirus pandemic, disrupt the way in which markets - all of the stakeholders involved from the patients, HCPs, manufacturers and governments etc. - operate.
4. PHARMACEUTICAL MARKET RESEARCH
The process of researching a pharmaceutical market or sub-market is a highly complex process. Defining its capacity, need, level of demand (and the ability to supply) and the motivations of the customer segments determine the marketing strategy, as well as budget, of a pharmaceutical product or service.
We’ve previously written a post on market research - A B2B Pharma Market Research Guide that goes into more depth than this management overview and provides guidance related to SWOT analysis, market intelligence, surveys and benchmarking within a methodical process. This process involves (1) problem and research objective definition, (2) research planning, (3) data collection, (4) data analysis, (5) data interpretation and finally, (6) reporting of findings. The basic components of a market mechanism is demand, the price and the offer of goods in the market - this is always a safe avenue to begin your pharmaceutical market research.
5. PRODUCT LIFE CYCLE
Products and services sit centrally within the marketing plan or strategy; when there is no product/services marketing isn’t required. Marketing has the ability to enhance a product or services image but effectively positioning it within a given market and communicating the benefits and satisfaction that follows a purchase. Such pharmaceutical products and services usually go through different stages, each stage being affected by different competitive conditions. These stages require different marketing strategies at different times if sales and profits are to be efficiently realised. Pharmaceutical marketers must identify the life cycle stages which their products and services sit within for effective pharmaceutical marketing management.
Product life cycle stages (Mnushko, 2016)
Introduction is the period, during which the initial market acceptance may be in doubt; it may be a period of slow growth. Profits are often absent because of high marketing and other expenses. The promotional elements during this stage revolves around different combinations of product, price and distribution factors. Survivors of the introduction stage generally enjoy a period of growth. During this period there is substantial profit improvement. The strategy in this stage takes the following shape: (a) product improvement - the addition of new features and models; (b) development of new market segments; (c) selective demand stimulation; and (d) price adjustments. During the next stage, maturity, there is rivalry for a mature market. Battling to retain the company's share, each marketer steps up promotion and perhaps grants price concessions. Finally, there is a decline period, which may be steep. Though sales and profits continue their downward trend, the declining product is not necessarily unprofitable as the competition may have been removed by this stage.
6. PRODUCT POSITIONING
As previously mentioned, differentiation is required to position a pharmaceutical marketing product, service or brand within the market, with the aim of receiving a favourable reception compared to the products of competitors. Effective market research will also indicate the segment of the market which the product and its positioning statement will likely succeed. Positioning indicates what the product stands for, what it is, and how the customers should evaluate it and the process can be determined in relation to a competitor, segment, category, quality or price.
7. PRICING FACTORS
So far, much of the factors in this post may not seem to relate to the day-to-day pharmaceutical marketer focused on preparing press releases, coordinating media plans with agencies as well as managing digital events. But strategic marketers will realise that each organisation, product/service and marketing plan does not operate within isolation, and, therefore, factors such as competitive pricing in relation to a marketing message is essential. Both internal and external factors will influence factors, such as marketing orientation, strategy, costs and product life cycle as well as competitive pricing factors - some of these factors are listed in the diagram below.
Pricing factors - Economicsdiscussion.net
Although related to the practice of marketing management, pricing policy and strategy is set out at an organisation-wide level. The price policy is the complex of measures including determining of the price, extra charges and discounts, conditions of payment for the goods and services, management of the prices taking into account preferences and possibilities of consumers the maintenance of profit of the enterprise-manufacturer or the seller. Working out of a marketing price policy is preceded by the analysis of external and internal factors of its formation, in turn, as a part of the price policy research of consequences of changes of the price depending on a situation in the market (reaction of buyers and competitors, enterprise actions in reply to changes of the prices by competitors, etc.) should be provided.
8. SALES AND MARKETING ALIGNMENT
Pharmaceutical marketing will never exist in isolation and will mostly work hand-in-hand with sales departments, representatives of the products or HCPs. This is the case as the producer of pharmaceutical products rarely sells its products directly to the consumer - the product goes via the pharmacy, hospital, wholesalers, retailers or other intermediaries to get into the patient. Similarly, sales representatives of supply chain manufacturers are required for those organisations to buy and sell from each other. The very nature of the industry dictates that multiple decision markers are involved, meaning that marketing strategies must consider the use of sales (and other middle-men) to be successful.
Effective pharmaceutical marketing management requires marketing and sales (or any other intermediary) to be fully aligned and working towards the same commercial goals. See recent post on Closed-Loop Marketing in Pharma for more.
9. MARKETING COMMUNICATIONS
Along with the tasks of market research, pricing, positioning and marketing policy aforementioned, marketing involves the actions of pharmaceutical marketers to create a demand for goods and sales promotion via its marketing communications plan. The 7Ps Marketing Mix is the combination of elements used by a business to enable it to meet the needs and expectations of its customers. They combine to form the elements a marketing department need to review to promote the organisation successfully.
This would entail all of the customer-facing pharmaceutical marketing tactics that take this product to market and includes advertising, PR, branding, trade channels and other customer-facing experiences. The management of the marketing plan alone within the pharmaceutical sectors often involves an entire team of marketing-specific roles and specialities. Through various activities to generate demand and, above all, commercial marketing and advertising in the minds of potential customers created a positive image of the products and services and plays a major role in deciding on a purchase.
10. DATA ANALYTICS
The business and management textbooks of old will not have prepared the traditional pharmaceutical marketing manager to what would follow in the turn of the 21st century. Pharmaceutical marketing departments will have access to masses of data from marketing campaigns, from continually monitoring the market as well as the data gathered by other departments such as sales or customer service. All of which provides valuable insight into future marketing campaigns. The majority of this process will look at your own marketing metrics - such as website visitors, conversions and number of leads/sales generated but to be able to fully understand the the data you have you will need to analyse it in a number of ways. Data and analytics will play an important factor in the management of your marketing plan.
11. CONTROL AND MANAGEMENT
The fundamental aspect of successful marketing management is the control of the marketing plan. Control refers to the analytical work carried out on a day-to-day and month-by-month basis, where as a result, the marketing executives can determine new methods of marketing tactics, tools and management as the organisation optimises and adapts to its environment. Generally speaking, it provides an overview of what has not worked (so that those marketing initiatives can be discontinued) and what has worked (so that those marketing initiatives can be expanded).
Control of marketing includes the evaluation of the implementation of marketing strategies and implementing corrective actions to achieve their goals. The basic parameters of control are volume sales, profit margins and costs, consumer response on new products and services, compliance with the planned and actual results of industrial and commercial activities. Marketing control allows the company to determine the effectiveness of marketing opportunities, and as a management principle, it is hugely important for the success of the commercial activities of the pharmaceutical organisation.
OVERVIEW
We have provided a brief overview of the practice of pharmaceutical marketing management. Each section itself is worthy of a number of posts to discuss in detail the implications for marketers and commercial executives operating in the B2C and B2B pharmaceuticals. The reader is advised to review each factor in this post and conduct his or her own investigation into each.
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