Rethinking the pharmaceutical marketing model

Should pharmaceutical companies re-evaluate their consumer marketing strategies?

I’m beginning to think direct-to-consumer ads are part of the problem. The comment from Pfizer’s chief executive, made in an interview published in the first week of the year, is the kind of observation from an industry leader that deserves special notice.

To be sure, most prescription drug advertising mass-marketed to consumers is creatively awkward – it’s not an easy thing to communicate functional benefits and safety messages simultaneously for a drug.

The body of this consumer marketing work is notable for another reason: an undifferentiated, unbroken picture of happy, healthy people or cute branding icons promoted through identical patterns of media buying, saturating the commercial breaks between the network news, where one prescription drug ad follows the other in a $3bn river of positive brand imagery. All the while the same news programs will be reporting on investigations into drug marketing practices, safety issues, and the latest price increases for prescription medicines. That ROI has never really been there for most DTC advertising campaigns seems almost secondary.

Pfizer’s CEO is right to re-evaluate his company’s approach to consumer marketing strategy. Not because the fallout from consumer advertising is suddenly a new problem for drug companies to isolate and fix as a distinct component of their business, but because the pharmaceutical experience reflects the broader struggle with marketing creativity, productivity, and competitiveness issues that all industries are trying to overcome.

The explosion of customer segments, product and service options, media vehicles, supply chain innovations, technological change, and distribution channels has made marketing more complex, more costly, and less effective.

Shifts in the broad mass of consumer behaviours and attitudes toward advertising are forcing a fundamental redesign of traditional marketing organisations and business dynamics. Nearly everyone is looking to restructure their marketing models in a major way to solve this Rubik’s Cube of segments, products, and channels.

Companies want to lower their marketing, sales, and customer interaction costs. Late last year, bellwether Procter & Gamble announced a torrent of new initiatives to reinvent the way it markets to consumers and to begin testing alternatives to traditional mass-market models.

As whole industries find themselves moving toward price, performance and tactical parity between products, consumers are demanding new types of benefits that go beyond functional attributes, which are increasingly less differentiated.

At the same time, new technologies are providing marketers with more powerful interactive capabilities than ever before, allowing deeper data capture, more precise targeting capabilities, and enhanced consumer responsiveness. This raises the promise of consumer marketers providing process benefits (e.g. ease of access to product information and simplified decision-making) and relationship benefits (e.g. information sharing that creates value exchange) bundled with product offerings. But pharmaceutical marketing operates in a completely unique dimension.

While American Express can leverage relationship benefits in the credit card business using deep access to consumer data, it’s unlikely consumers will ever trust pharmaceutical marketers enough to volunteer detailed and confidential personal health data for meaningful relationship-building strategies.

Science and medicine will be an enduring element to communication strategy, raising the question of whether pharmaceutical branding architecture can be defined in terms of product or personality; that most drugs give up 90% of their market share within six months of losing patent protection speaks to the futility of investing in emotional bonding as a branding strategy. Pfizer Cardiology has the potential to be a brand. Lipitor is a drug whose promotional content is branded. The difference strategically and tactically is quite large.

The complexity of pharmaceutical marketing and sales management grows when you account for the many stakeholders involved in recommending, writing, approving, dispensing and paying for prescriptions, closer regulatory scrutiny and longer approval times, aggressive patent challenges by generic companies, extremely intense competition, transparency in clinical trial disclosure, the commoditization and ease-of-access to health information and comparative data on the internet, and the inherent tension profiting from disease. Responding to these trends demands a radical rethink and different imperatives by drug marketers.

For the pharmaceutical industry, theirs is not an image issue, but one of changing patterns of behaviour on many levels. So how do pharmaceutical business managers push themselves to realign their marketing organizations to an environment of such dynamic complexity? Part of the answer lies in using systems thinking to design new kinds of marketing models.

Systems Marketing

Systems thinking – the ability to see the world as a complex system, in which everything is connected to everything else - is a quietly growing field that managers are turning to for ideas. With roots in disciplines as varied as biology, sociology, physics, engineering and philosophy, systems thinking uses a set of integrative concepts to create and work with wholes.

It’s an innovative frame of reference to manage complexity and tie together multidisciplinary capabilities. The systems dynamics group at Massachusetts Institute of Technology is a leader in the field. General systems theory is currently being used to study environmental change, anthropology, economics, and artificial intelligence.

Marketing is a new application for systems thinking. It can be applied at the tactical or strategic level and serve all functional groups – vision and leadership, product research, manufacturing, business intelligence, information technology, customer relationship management - within an organisation. Using the concept of tactical systems as a metaphor for a new pharmaceutical marketing model, a tactical system connects a set of marketing components - brand communications, sales force automation, advertising and promotion, health learning, and CRM technology – in a way that actively generates synergy among all its dimensions.

It addresses the semantic problem, the technical problem, and the effectiveness problem of multiple stages of marketing activity and multiple decision-makers within one framework. It synchronises marketing and sales. As part of the process to designing a tactical system, assumptions about business strategy, creative and message strategy, marketing resource management and the criteria for measuring value are surfaced, tested, and evolved to support the whole.

Designing a tactical system is an iterative process that consists of three distinct, but inter-related platforms: (i) structure (defining the boundary of the system, the components to integrate and their relationships); (ii) function (defining the business objectives of the system and its outputs); and (iii) process (defining the specific sequence of activities and know-how required to produce the outcomes). The vision is to produce an order-of-magnitude improvement in the throughput of the system compared to an ad-hoc ROI collected from separate pieces.

Tactical systems take a holistic perspective: they back away from the reductionist tradition of buying and studying the value of individual pieces toward designing whole systems and looking at system effects - coordinating connections and interactions between components, and the input to and output from the system, are the primary concerns. Tactical systems will create novel behaviours from the interaction of their constituent elements, emergent properties that weren’t there previously in any of its parts alone. A behaviour-based CRM strategy becomes the system of measurement that complements territory management and sales force automation technologies.

A New Path to Alignment

Contrary to popular belief, using a multidisciplinary approach to marketing and generating information from different perspectives is not the same thing as the ability to synthesise findings into a coherent whole. The rules of the marketing game have changed radically, creating an entirely new set of practical problems on many levels. What’s needed is a new way of looking and thinking about marketing. Taking a systems thinking perspective – a system of values, of ideas, of planning coordinated changes in motivation, knowledge, and understanding - can offer a new path for the pharmaceutical industry to align itself with the marketplace.