Marketing magic

A significant challenge in healthcare marketing is understanding the environment from the customer’s perspective. Let’s say we are talking about pharmaceutical companies and looking at direct-to-consumer (DTCA) advertising, right now the industry is spending a lot of money on DTCA in the US, for example last year Lunesta, the sleep aids brand, spent on par with Coke and Pepsi on DTCA.

However, if you look at the effectiveness of that advertising, it’s hard to really gauge whether or not the companies are getting the same bang for the buck because of the regulations that are there in the industry. Any time that you mention what the drug is for, you have all of the fair balance issues that must be part of the advertising. Customers end up getting confused, and they don’t necessarily take away the messages that we’re hoping that they would.

The number two challenge is maintaining differentiation from the competition, because now the competitive gaps - how long you have a unique product in the market - have closed. Traditionally healthcare companies would have several years before a competitor would come in with the same type of product, but now they’re coming in six or 12 months later. In marketing, although we do a really fantastic job of launching new products and figuring out where the advantages are for us in the beginning, we don’t do as good adjusting to what the competition is doing and making sure that we’re always maintaining differentiation from the competition.

The main difference with healthcare marketing is that it is related to regulations that affect the industry. You can’t market a pharmaceutical in the same way that you can market a shampoo or a toothpaste, there are multiple stakeholders including doctors, prescription pharmacies, consumers and regulators. It’s much more complicated in terms of what you can and cannot do. If you consider that the regulatory environment is the main constraint that affects healthcare marketing, that’s what leads to both the challenges and the shortcomings of marketing in the industry.

Crucial steps

The first step in the marketing process is to understand who the customer is, and how your product fits into their overall lifestyle. For example, this is where most marketers fail, not just in the healthcare marketing side but also in the consumer marketing side. We take such a narrow perspective about what’s good and bad about our product that we don’t think about what’s good or bad about our product from the customer’s perspective. In particular, we often do not consider how much separation we have from the competition. You always want to make sure that you completely understand the customer’s perspective.

The second part of this process is to clearly articulate the value proposition. Often a product in the healthcare space will have some positives and some negatives, and we try to wrap up too many positives into one message and deemphasize the negatives in the same message, and that’s what leads, often, to confusion on the part of the customers. Focusing the message on the one or two most important positive aspects is important in terms of building a value proposition.

Branding

Branding is so important to consumers. You can look at it in two ways. From a consumer’s perspective, branding is critical, because that’s the way that the consumer is going to process information about the product. Unfortunately, many of the names that we use in pharmaceutical marketing in particular are so hard to pronounce, because they’re based on scientific compounds that are related to the drug. These scientific compounds, while relevant to doctors, don’t stick in a customer’s memory very easily. It’s much harder for us to remember them as customers when we go in and see the doctor and we start asking for a drug. For that reason, it’s important to simplify it for consumers so that they can understand or remember what the product is. On the other hand, from a doctor’s perspective, the corporate brand becomes more important especially early in the sales cycle. A doctor may not know the product brand yet, but still prescribe the new product because they trust the corporate brand.

A great example of this is with Nexium and the purple pill. Consumers may not remember Nexium, because that’s a scientific sounding name, but the purple pill is easy for everybody to remember. Doctors may be indifferent between Nexium and other similar drugs, but all else equal, they can trust Astra Zeneca as a company and therefore prescribe Nexium if a consumer raises the issue.

Social, legal and political trends

Pharma, and healthcare in general, are currently among the bad guys in the marketplace. Collectively as an industry, they need to turn their image into a more positive one, as opposed to the negative way that most people in the US are thinking about them.

The pharmaceutical and healthcare industry does amazing things, and invents amazing drugs, and has had a decade worth of breakthroughs, but yet in the common parlance and the consumers environment, the industry is thought as being too greedy and really too rich. They need to better match up the value that they do deliver in the customer’s mind, or they’re going to be regulated much more heavily in the future.

They should be able to change and I believe that they are starting to. If you look at what Pfizer has done with their advertising, they have started to become more self-regulating as opposed to waiting for the regulators to make complaints about their advertising. They are starting to be more cautious, but there’s so much pressure in the DTC world to try and make a breakthrough with consumers that you see marketers trying to push the edge, and every time that they push the edge, they get slapped on the hand by the regulators. In order to change consumer perceptions of the industry, each company should consider similar corporate advertising and branding campaigns.

Future

The industry is changing so much, but I believe that what you’re going to see is a shift away from too much direct-to-consumer spending on television. It’s so expensive, and there isn’t really a good model right now that tells managers what the ROI is on DTCA. As the pressure increases on the bottom line, DTCA budgets will get squeezed.

You will also see the more corporate type advertising to get the image changed in the industry, so more advertising about Pfizer, and more advertising about Merck, and what they do as companies, and hopefully the combination of what the industry does collectively will keep them from getting overregulated.

BIO

Sanjay Sood specializes in research into marketing management, brand management, advertising and consumer behavior. Some of his most recent topics of study include: the effects of branding strategies and product experience on brand evaluations, competitive anticipation in marketing decision-making, and sensitivity to losses and negative changes.

Prior to joining the faculty at UCLA Anderson in 2001, Dr. Sood was an assistant professor at Jones Graduate School of Management at Rice University. Along with his Ph.D., he also earned a minor in psychology from Stanford University