Sunday, November 1, 2009

Marketing effectiveness

When people are happy with the marketing it shows!! But the concept of marketing effectiveness is more complex than it appears. I got the above image from here.

In the imaginary conversation given below, a pharma and business consultant helps solve the pharma marketing effectiveness crisis in a company. Enjoy the conversation (and if you like this blogpost, please scroll down to read all other posts, do click on OLDER POSTS to read all other blogposts, feel free to recommend my blog to your acquaintances, thanks). The Indian pharma industry, as per IDMA Bulletin, 30th July
, 2009,, has a turnover of Rs. 90000 crores (including exports), and is growing at 15.5%, it is estimated to cross Rs. 1 lakh crores annual turnover, in 2010. So competition is gathering steam and more investors are entering this sector. Hence, pharma marketing effectiveness will certainly engage pharma marketers.

Mr. X is a gray haired seasoned pharma marketing and business consultant, and trainer. His office located on the 11th floor not only provided a panoramic view of the city below, it was a lofty crucible for many thought provoking consultancy viewpoints. This nippy November morning, Mr. X, the consultant, was awaiting the arrival of the proprietor of a medium size pharma firm. This proprietor Mr. Y was noted to be impatient and impulsive.

At about 8.45 am Mr. Y stormed in and without much ado and pleasantries, Mr. Y sank in to the deep sofa gulped down some orange juice offered by Mr. X.

Mr. Y looked sharply at Mr. X, the consultant, and gravely announced:"It is galling, Mr. X, my pharma firm's marketing is truly ineffective. How to make it effective?".

Mr. X:"Now, that is truly a solemn organizational challenge, Mr. Y, tell me, did some doctors' say that your marketing activities or team are ineffective?"

Mr. Y (looks confused):"Actually, it is not like that ..."

Mr. X (interrupts):" OK, then it is got to be the chemists, they are unhappy with your company's marketing effectiveness!"

Mr. Y (a little exasperated):" No way, our pharma company offers bonus offers that are highly competitive. Why, some of our products are 1 + 2! That means, if the chemist buys one box he gets 2 boxes free!! Moreover, with every new product launch we pay their trade association PIS (product information services) fees!! So they better not complain about our marketing effectiveness ..."

Mr. X (the shrewd consultant interrupts once again):"OK, I get it, then it is the marketing blokes who find their marketing inputs and programs ineffective, they are looking for salvation and are bothering you ... right?!"

Mr. Y (almost on top of his voice):"No, Mr. X, it is me!! Yes, it is me!!! I find our pharma company marketing ineffective!!"

Mr. X (pauses, and looks at Mr. Y in the eye):"Quick, don't hesitate, tell me fast, with out thinking too much, quickly reply - What is effective marketing according to you? Don't tell me what is ineffective marketing, I emphasize please tell me, what is 'effective marketing'?"

Mr. Y (hesitates and searches for words, a little taken aback with the sudden twist in the conversation):"It ... well, effective marketing should not be frustrating and demanding ... I mean it should not be a drain of marketing monies ... c'mon there is a limit to the amount of services to doctors and other marketing expenses right?!"

Mr. X:"Let us put it this way, Mr. Y, pharma marketing should be very profitable with a very satisfactory ROI (return - on - investment), the marketing operations should also ensure good sales, growth and availability ie., should be available at
most chemist points even in remote areas, Right?!"

"So if you say go to an interior market like say, Mallapur in North Kanara, you want your product available and should be consumed."

Mr. Y:"Yep! You read my mind right..."

Mr. X (adds very fast):"You also want positive feed backs from doctors and chemists. Perchance you meet them in the market or in your social circles, they should appreciate your company products and marketing activities, programs and marketing events, right?!"

Mr. Y (almost delirious with joy):"Yep!! That is marketing! Marketing should give the company a high! It should make me happy!!"

Mr. X:"So you see the point, Mr. Y, pharma marketing effectiveness is a complex subject. It means different things to different constituencies or people."

The gist of the conversation that followed between Mr. X the seasoned consultant and Mr. Y the client is given below:

When pharma marketing operations are dismissed as ineffective, the judgment has only scratched the surface. It is very difficult to diagnose, define and precisely evaluate pharma marketing effectiveness. The marketing functioning is a result of strategic (direction of application of efforts and resources) choices. These choices are at the root of all effectiveness or ineffectiveness.

For instance, it was a strategic choice by Pfizer managers to take up off-label product promotion to doctors and provide "kickbacks" to doctors. After whistleblowers brought this to the attention of lawmakers in USA, Pfizer had to cough up 2.3 billion USD as criminal fine. So the alleged 'ineffectiveness' of the marketing controllers in Pfizer in restraining the whistleblowers is not really operational ineffectiveness, it is a fault of a strategic choice in permitting off-label product promotion and kickbacks to doctors. So, should observers conclude that Pfizer is an ineffective marketer? You see, there is a lot of complexity in assessing pharma marketing effectiveness.

When rofecoxib (Vioxx from Merck) was launched there was great excitement as it was powerfully Cox 2 selective. Apparently, it was safer than diclofenac in terms of gastrointestinal side effects, and more powerful as a pain reliever. However, the cardiovascular adverse events of rofecoxib cast a dark shadow on the market performance of rofecoxib, and it was withdrawn from the market. In turn, this boosted the fortunes of diclofenac - today, Voveran (diclofenac from Novartis) is one of the top three pharma products in the Indian retail pharma market. So should we conclude that the effectiveness of Voveran marketing is very high? Or should we conclude that Vioxx is a classic case of marketing ineffectiveness?

Marketing effectiveness is not just about business results ie., sales, market share and profits. For instance, today, Pfizer is a great marketer in India - it's anticough Corex (which is highly abused by Corex addicts) is the numero uno pharma product in retail Indian pharma market. Internationally, Pfizer is the no. 1 drug maker - its worldwide annual R & D budget in dollar terms is said to be more than the total Indian retail pharma market (ie., more than Rs. 38000 crores) - yet it is a company that has paid 2.3 billion USD as total criminal fine to the Govt. of USA for fraudulent marketing. Novartis on the other hand, in India, has Voveran (diclofenac), which is invariably the no. 2 or no. 3 pharma brand in the Indian retail pharma market. Besides a valid, principle based legal battle on the marketing of Glivec, Novartis has a very clean and professional image in pharma India. It is not the #1 pharma company, yet it is a highly respected and valued pharma company. So whom will you assess as a more effective pharma marketer?, asked Mr. X, the consultant, to Mr. Y, the client. Obviously, Novartis can be rated as a more effective pharma marketer as Novartis has an excellent corporate and brand equity among pharma MNCs in India. So the point is that marketing effectiveness is not a simple assessment in terms of sales, market share and profits. There is much more to marketing effectiveness.

Marketing effectiveness is linked to values, culture, philosophy, processes and outcomes. Marketing effectiveness is linked to three types of variables: causal, intervening and end result.

The causal (cause and effect) variables that influence marketing effectiveness are -

a) Organizational structure - no. of employees, the reporting patterns, the employment assessment systems, training systems, and culture. Pfizer, has highly acclaimed training processes and this has strengthened its messaging activities to doctors.

b) Technology also redefines marketing effectiveness - For eg., a biotech company operating in a less crowded segment, has a marketing edge that adds to the marketing effectiveness.

Another example would be of a company down in South India, which has adopted and pioneered aseptic packaging technology (Tetra Pak technology) and has created a new category of products for prescribers (ie., the electrolyte energy drink category) to improve patient well-being. The Tetra Pak based technology has given a shot in the marketing arm - it has improved marketing effectiveness of this company. Technology certainly redefines marketing effectiveness.

c) Corporate vision, culture, philosophy, and leadership style and practices are all well known to influence marketing activities and hence effectiveness.

There are also intervening variables that influence marketing effectiveness:

These variables are linked to the organizational climate, and the internal state of the organization. The intervening variables of an organization refers to the morale and motivation of employees, the decision making processes, problem solving attitude, skills and competencies, and commitment to objectives. Perhaps it will not be an exaggeration to state that if the intervening variables are weak, then it gives rise to frustration in employees, massive acts of omission and commission, corruption and whistleblowing. Hence, operational working are very vital and they dramatically affect marketing effectiveness.

Lastly, there are end result (output) variables that influence marketing effectiveness:

The output variables are the outputs of the organizational marketing efforts, like perceived quality of the product, sales, profits, market share, costs, conflicts, absenteeism etc.

Thus, we observe, the three sets of variables - causal, intervening, and output all are interconnected and influence marketing outcomes and marketing effectiveness.

Mr. X (the consultant):"So, Mr. Y, in the final analysis, we ought to analyze marketing effectiveness from the point of view of the constituency (ie., the chemist's angle, or doctor's angle, or field personnel's point of view, shareholder's angle or from the viewpoint of the top management). Moreover, effectiveness of pharma marketing is an inclusive subject, it has many dimensions not just ROI (return on investment), sales, market share, or profits. Just think of Pfizer and Novartis. They are very interesting case studies, now tell me, Mr. Y, in the current scenario, which company is more 'marketing effective' Pfizer or Novartis?"

Mr. X (continues):"I think we have had a very long conversation, what I suggest is to see the angle of pharma marketing effectiveness of your company more wholistically, and then let us take our discussion forwards. In our next engagement, we will see where things can be 'tweaked' for the better to ensure that overall marketing effectiveness is better in your pharma company".

Mr. X (thoughtfully adds):"For eg., if I am not mistaken, you have a good product portfolio of chemical based pharma formulations like antibiotics and NSAIDs. However, we are aware, that rDNA technology based products, and wellness based products are the sunrise sectors in healthcare biz. Furthermore, we need to analyze disease and demographic trends, for instance, off hand I can suggest that the onco gyne segment will see more action. Gyn cancers are ever increasing - with women living for 30 to 40 years after menopause, the risk of developing gyn cancer is so much, nearly half of all women are likely to face it. As far as gyn cancers are concerned, anticancer dietary supplements can help, and this is a wellness market opportunity. May be you can have products and services to address this segment?! This in turn, will improve marketing effectiveness.

The concept of marketing effectiveness is not just about market spend on promo inputs and on the field force, there are more issues to it."

Mr. Y: "Thanks a lot for this 'breakfast food for thought' conversation. I am sure I have got some good insights and ideas for improving pharma marketing effectiveness. And here is my consultancy fees payment, hope you don't mind me writing the cheque ... "

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