Retooling the Pharma Marketing Model - Pharmaceutical Executive


Retooling the Pharma Marketing Model

Pharmaceutical Executive

Beat the Growth Curve

There are parallels between how a person grows in height and how a brand builds market share. The way a brand is positioned in doctors' minds plays the same role as genetics. It determines how large the brand potentially can be, just as a person's DNA determines how tall they potentially can be. The level and mix of promotion the brand receives have the same effect as nutrition. These determine how much potential is achieved and how large the brand will grow.

More than a decade of rigorous validation has established that a brand's share can be forecasted accurately using a model that accounts for doctors' responses to the brand's positioning, the level and mix of promotions, and the competitive environment. This model assumes that marketers will hammer away year after year at the brand's core positioning, which virtually all of them do.

However, there is a way of promoting a brand over time that is like injecting it with a growth hormone. A brand can actually have a greater share than one would predict, based on its positioning, promotion, and environment. The methodology that produces this superior outcome involves (1) modeling the degree to which different elements of a brand's positioning could potentially leverage future share growth and (2) systematically promoting these elements to doctors.

This new approach does not attempt to reposition the brand, nor does it hammer away at the brand's positioning. It simply exploits elements of the brand's positioning that can do the most to boost share. The approach is simple to implement: Promote the element that will increase share the most; once it has worn out, move to the next element. In addition to building the initial model, the process also involves monthly—or at least quarterly—tracking to measure results.

Make Forecasting a Planning Tool

Profits go up and uncertainty plummets when executives base their decisions on forecasts they can trust. Decisions based on accurate forecasting beat judgment calls every time, and usually by a wide margin. It's like having next year's Wall Street Journal when buying stocks today.

Important productivity advances have taken place in the area of forecasting during recent years. These developments are critically important because:

  • Industry's forecasts for new products are off by a whopping 30 percent nine out of 10 times
  • 40 percent of details are mistakenly allocated to situations that have little chance of paying off, and don't
  • Most sales reps could double their incremental productivity if they knew where the potential really was
  • The heaviest prescribers of many brands are often over-sampled to the point where filled scripts are reduced.

Most strategic and tactical decisions can now be made better than they are through pinpoint forecasting. For example, it is now possible to consistently forecast Rx's for a new brand to within (+/-) six percent for the implemented plan. Since a similarly accurate forecast can be had for any tactical plan, management can use forecasting to select the plan that best meets its financial requirements.

One of the hidden benefits of using accurate forecasting as a planning tool is that decision- makers will come to see how unproductive their judgment-based plans really are. Over the long run, this will be a good thing for any company that wants to diminish the role of unnecessary and risky judgment.

Pharma companies rarely change the way they do business without vigorous prompting from top management. New ideas almost never trickle up from the bottom because someone usually kills them along the way. Fundamental, across-the-board change has to come from the senior level.

Senior executives can't focus on everything, but marketing productivity is worthy of their attention. Improvements in resource allocation alone could potentially produce incremental profits that would be like having an additional No. 2 or No. 3 brand each year. Better yet, these profits would never go off patent or require additional field force time.

Increased marketing and sales productivity is achievable. However, it will likely be just a talking point in most organizations if fundamental changes are not made in the role market research and brand/sales analytics play. Deciding what this role should be and taking necessary steps to ensure that it is carried out will be a critical step toward achieving major productivity payoffs.

S. Kent Stephan is co-founder of Princeton Brand Econometrics, He can be reached at


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