Sunday, May 27, 2012

From me-too to a competitive edge

MICHAEL PORTER

Indian pharma industry has gone through interesting phases: there was a time when production made the difference, one had to have a production unit, this provided the best means to be in pharma business!  Pharma India was characterized by a me-too approach - if someone launches diclofenac, so will I, if entering into neuro is the trend, then I will go along with this trend.  However, today it is the era of competitive advantage, which comes through different techniques, use of marketing-CRM technique is a competitive edge (Mankind, Eris etc), providing low cost pharma products by companies such as Unison and the multitude of PCD (propaganda come distribution) ... this too is another competitive edge.

The best competitive edge comes from PRODUCT INNOVATION - doing something new or novel, which adds new value and endears to customers.  This approach provides an enduring competitive edge.  Sitagliptin a new molecule is scorching the pharma anti-diabetic market.  New packaging innovation based products such as TETRA PAK RANGE BASED ELECTROLYTE ENERGY DRINKS for management of debility due to fevers, sweating, heat stress, dehydration and exertion are also creating a new high in the prescription based market.

Today, in the fast growing pharma market with challenging marketing clutter, the advantage lies with offering differentiated products or services with a competitive edge.   Michael Porter, the management guru, has always emphasized offering the competitive edge

In the current context of intense competition, the very purpose of a business enterprise is to have a relevant perceived competitive edge.  Those firms on the path of fine tuning and constantly developing a competitive edge rather than working on a me-too path is the new paradigm.

The media too has played a role in addressing issues and pollinating information across society.  Pharma marketing practices of customer relationship management (gifting, wining, dining and sponsoring freebies, including vacations) are all over the media.  The distinction between branded generics and generic-generics is news and media trend, today's (27.5.2012) Satya  Meva Jayate was a fantastic episode mirroring the goings-on in the medical sector.  The overall wave of encouraging tranparency will inevitably lead to increased emphasis of ethics in medical practice and pharmaceutical marketing.  It will not happen overnight, it will slowly get traction.

With pharma marketing competition getting more and more fierce, ethical - well then, working on a platform of creating an authentic and smart competitive edge is inevitable.  Michael Porter is becoming relevant.

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Sunday, May 20, 2012

Communicating value and Value Engineering



It is images and benefits that are bought by the customer - not the product per se!   The image that Thums Up (the cola drink) creates: is of a refreshing, "feel-good" and energising drink - the benefit is the sweet & activating taste of a heavy carbonated drink ... This is the IMAGE + BENEFIT combo which impels purchasers to go for Thums Up!

The process of marketing is value delivery, based on image building and benefit transfer, Thus, in today's context, even though the Govt. may like to have plain unbranded generics in the market, messaging value is of paramount importance.  Given the price control regime for pharmaceuticals and the simultaneous importance of value delivery in the market, today, value engineering is becoming significant in corporate planning and activities. 

VE or value engineeering involves crossfunctional teams that analyse the product offerings and the process (raw material to shopfloor to market) thoroughly, in a continuous manner, to constantly cut costs and at the same time improve the value offerings (a simple thing would be to promote high margin products or have same size bottles for various liquid products to help lower inventory or going in for PET bottles for reducing breakages, decreasing freight weight and at the same time improving product appeal to the patient (the bottle will not break if it accidentally falls down in the patient's house ...)).

Value offered by a product includes:

a) Use value: the functional value eg., paracetamol is an analgesic and antipyretic.  This can also include aesthetic aspects, for example a good flavour for a paediatric liquid formulation will improve, use value of the brand.

b) Esteem value: prescribers are motivated to be associated with the brand persona, for instance, Calpol is the No. 1 paracetamol brand, due to its quality image and its consistent promotion in the prescription market.  On the other hand, Crocin has become an OTC (over-the-counter) brand and lacks the prescription support - so vital for pharmaceuticals, hence, Crocin does not have as much esteem value for a prescriber as Calpol, since Calpol is a prescriber's brand and Crocin is an OTC brand.  In fact, every prescription for products like Calpol and Dart are important: each prescription has the potential to create a new OTC customer

Another example: there are doctors who would like to be associated with MNCs and Indian companies with a superior image.  It is the esteem value of corporate brand image that drives this interest among doctors.

c) Cost value: refers to the cost of all entities that are required to make the product available for consumption.  This includes labour, electricity, packaging, product promotion, distribution etc.  A thorough analysis of cost helps control cost parameters and add to the profit margin.  The cost value can also be the cost of the product as perceived by the customer.

d) Exchange value: refers to the attributes of the product which helps exchange the product to something else of value, desired by the person.  Thus, if a doctor desires the value of patient confidence in him/her,  then he/she will prescribe a product which will provide this exchange value!

PMT (Product Management and Training) personnel are always on the hunt for communicating or messaging  a novel and exciting value of their product (s) to their prospects or customers.  Messaging the value of product offerings is a challenging task.

The message should attract attention (A), create interest (I), promote desire (D) in prescribers to prescribe and ensure the action, ie., the doctor should prescribe (A is for action).  This is the AIDA value of the message, which is an important stimulus for demand creation (through prescriptions or retail purchase or purchases by patients).

The UECE value framework (ie., Use value, Esteem value, Cost value and Exchange value) of a product can help PMT personnel to fashion suitable messages and promote market demand.  One can analyse the product from the above value framework and create attractive messages that ensure brand registration, brand recall and brand prescribing/purchase habit.

For instance here is a cursory analysis of Dart:

Use value of Dart: analgesic antipyretic tablets, relieves pain and fever, improves performance (through caffeine, reduces morbidity).

Esteem value of Dart: The brand trusted for decades, by generations, prescribed by a wide circle of doctors (of all specialties including ophthos, ENT, and OBG segment besides GPs), sells one tablet every second ...

Cost value of Dart: Offers the power of three drugs, synergistic activity at a low rate, another approach would be: cross-functional teams can also analyse if costs can be cut and value improved through value engineering efforts (this is also in the ambit of cost value).

Exchange value of Dart: The power brand that creates patient satisfaction and patient loyalty ...

We live in an age of message overload ... doctors are bombarded by pharma messages: 'please prescribe me' yells every other brand in the pharma brand sphere.  The value analyis method will help create logical messages that appeal to the target segment (doctors, retailers, and end consumers) to improve the PERCEIVED VALUE of product/brand.  Ultimately it is images and benefits that build bonds and trust relationships in the market - and this makes the sale!

Today, NGOs, Govt. bodies and the society as a whole, are all striving to decrease MRP of pharma brands, retailers are lobbying for unbranded generics (which will serve their agenda), which the retailers hope will also reduce MRP of pharma brands - all these happenings will finally cause strain on manufacturers.  Hence, this situation is giving rise to the importance of value engineering across the pharma firmament and marketers will also have to resort to creative messaging of brand values to prospects and customers.

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