The Wilder Shores of Pharmaceutical Marketing

Confronting today’s disintegrating communications environment, the biggest consumer marketers – American Express, DaimlerChrysler, Coca-Cola, Procter & Gamble – are fundamentally re-tooling their approach to brand management and how they work with advertising agency networks. They are making these moves to have greater productivity from their marketing operations. However, the larger issue is overcoming what consumer research company Yankelovich has previously described as the “socialization of marketing resistance”: more consumers are opting out by ignoring commercial radio and television and hiding behind technologies that exempt them from the onslaught of promotion.

Pharmaceutical marketing has reached its inflection point. In 2002, about 4% of consumers surveyed by the US FDA said they visited a doctor specifically to get an advertised drug. Some 18% of consumers in the same survey said an ad drove them to ask their doctor about a new medical condition. In 1999, the number was 27 %. Less than half of all detailing by the drug industry’s 80,000 sales representatives resulted in face time with a prescriber, an interaction that averages 90 seconds. Only about 5% of patient education materials developed by drug companies were ever distributed to patients. Despite considerable investments in “branding” to form an “emotional bond” with customers, there is little evidence to show this has practical value for drugs.

In its first earnings report after the Claritin patent expired, Schering-Plough profit plunged more than 70% in one quarter, one of the steepest drops ever for a major drug company. Prozac gave up 80% of its market share six months after losing patent protection. Non-compliance rates in many therapeutic categories run as high as 90% within a year. One of the great mistakes being made in the pharmaceutical industry is assuming that classic consumer marketing techniques are transferable to medicine, and that continued high levels of spending in them are warranted. Ironically, the drug companies’ embrace of mass-market consumer advertising is coming at a time when the major consumer marketers are abandoning theirs.

Diminishing returns from conventional marketing practice are setting in for all industries. With more creative options, promotion options, and media options, there is more brand confusion than clarity. The level of marketplace clutter keeps increasing, raising hard, new questions about marketing strategy, organizational structure (on both the client and agency side), and tactical mix investments. For pharmaceutical companies, though, probably have the most pressing need to find different ways of marketing their products – the ritualistic quality to drug promotion campaigns has hit a wall. Squeezed pipelines are producing fewer blockbusters, and there is a shorter time frame during which new clinical information stays relevant and can be acted upon to create useful promotion content.

Most of the disease awareness campaigns created by drug companies are redundant to what exists in the marketplace due to promotional activities of local hospitals and health plans. There is great and growing pressure on physicians from third-party payers to hold down drug costs, increasingly aggressive tactics by generic companies, including their discovery of DTC advertising, as well as cost-shifting to patients through higher co-pays.

Integrated Marketing

In view of these trends, “integrated marketing” has become a fashionable concept. The challenge is having a clear vision of what integrated marketing really means, what it can deliver, and how it should be implemented to overcome the complexities of marketing and media fragmentation. No discipline of integrated marketing exists in the academic or practitioner worlds. Most teachings on marketing strategy predicated an old, fragmented view of what it means to “market”. It can be an overwhelming idea to understand. No one has it really figured out.

One of the reasons why is that a major challenge to integrating marketing lays in realigning the business processes, functional groups, and coordinating mechanisms that have characterized business operations for nearly a century. While connectivity can be a powerful competitive advantage, another major obstacle to realizing significant, high-leverage benefit from marketing integration is that it requires different kinds of ideas by drug companies and the creative services they use to communicate. We highlight a few of these:

 Do not confuse repetition with integration. Many assume integrated marketing as taking the same thing (primarily the “branding”) and sticking it in a different media. Instead of repetition, consider tactical cohesion, market space alignment, and variations on a theme.

 Integrated marketing serves the whole business. The operating policies, values, decision-making, and practices of advertising and promotion, medical education, public relations, the sales force, and information technology should be aligned within an ecosystem of interaction. Communications programs should blend media into cocktails that enrich the selling environment for the field force, combine marketing components into efficient tactical systems, and marry customer segmentation technologies with advances in genetic testing and personalized medicine.

 Plan for the common consciousness. Women and primary care physicians are core target audiences for nearly all drugs. It is a standard practice for drug companies, and their agency account teams, to design communications strategies for these segments as if their marketing plans will be unique, individual, fresh, compartmentalized experiences for their brands alone. On the contrary, communication to customers does not have the divisions liken to those for marketing professionals.

 Achieving “share of voice” is a dead communications objective. Marketing tactics need to be connected in time and space to have impact – think ‘message interactions’ instead of ‘message’. This impact needs to be measured with performance metrics based on actual behavior change in the marketplace. People are inundated, their attention spans are short. Awareness and promotional messages are not “accumulated” in the brain to be retrieved at some later date. It defies logic to see “one billion media impressions” from a publicity campaign offered as a meaningful indicator of success, as one public relations agency recently did in its news release announcing an industry award (the population of the world is about 6 billion).

 New definitions of “branding” are needed. Considerable human, intellectual, emotional, and creative energy is invested in national television advertising as the centerpiece of branding strategy. This strategy, and the financial investments in it, should be redirected toward ‘branding information’ and leveraging medical education content in new ways. Public relations can enable public-private partnerships between drug companies and budget-strapped states, and opportunity to embed branded ‘health learning systems’ in the marketplace. This holds considerable promise as a new kind of marketing tactic, particularly if managed by an agency network as part of an outsourcing, brand steward partnership with clients.

 Use systems thinking to align marketing and sales. Accelerating technological, social, and environmental changes are transforming the world of pharmaceutical marketing, challenging managers to think and act in fundamentally new ways. As the dynamic complexity of brand communications and customer relationships multiplies, marketers will need to develop an ability to see their world holistically, as a marketing ecosystem in which everything is connected to everything else. Rather than taking a sequential, linear approach to marketing management, marketing should be managed as it interacts with feedback from its external and internal environment.

 Agency networks must catalyze change. The leadership at advertising-holding companies should proactively evolve the business model of marketing communications, away from autonomous business units and growth based on selling branding volume, toward integrated suites of marketing services and revenue based on client success in the marketplace. Everyone should have incentives to break down power centers and overcome artificial barriers between marketing disciplines.

Proven practice is attractive. However, the quest for proven practice should not overlook the need for change. Innovation always needs a beginner. Marketers are driven by the ideas and beliefs that they adopt, many of which are now dysfunctional. These include ideas that are so much a part of the way marketers operate, that it is hard to even notice that they are there.

Integrated marketing should not only overturn some well-established assumptions, it should constitute a fresh vision. Strategic skills required to integrate marketing and control the customer revolve around modular brand management, the ability to simplify the customer’s decision-making process, and aligning a system of activities and actors around shared market space.