Transcript Pharmacy and Pharmaceutical Marketing

The First P: Product
Strategy for Old and New Drugs
What is a Product?
 A good, service or idea consisting of a bundle of tangible
and intangible attributes that satisfies consumers and is
received in exchange for money or some other unit of
value.
 Tangibility----------------Intangibility
a capsule of Xanax
MTM
Product variation in pharmaceuticals
 Product item - single like Tylenol
 Product line – closely related - OTC pain killers -
Tylenol, Tylenol PM, Tylenol Flu
 Product mix – all product lines offered

Antibiotics, analgesics, beta blockers, etc.
Types of Medications Sold
 Differ in terms of:
 Effort used to purchase - doctor visit?, OTC
 Attributes used to purchase
 Frequency of purchase
 4 types:
 PRODUCT TYPE
 Convenience goods
 Covered
 Non-formulary brand
DECISION TYPE
Routinized - aspirin
Formulary/Generic
Complex
The Product Life Cycle
Stages a product goes through from its inception to its
disappearance from the market:
 Introduction: Gain awareness
 Growth: Stress Differentiation
 Maturity: Maintain Brand Loyalty
 Decline: Harvesting, Deletion
The PLC
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline Stage
Total
Market
Sales
Time
Product Life Cycle
 Length: varies
 Shape

High learning – long intro

Low learning – quick intro

Fashion – quick, recurring

Fad – very short

Market size
Rate of Adoption
Innovators
Early Adopters
Early
Majority
Late
Majority
"The Chasm"
Technology Adoption Process
Laggards
Strategies for the PLC
Lengthen life by:
 Modifying product
 Modifying market








Finding new users
Increasing use
Creating new use situations
Repositioning the product
Reacting to competitor’s position
Reaching a new market
Catching a rising trend
Changing the value offered
Introductory Stage Strategy
Sales
Costs
Profits
Customers
Competition
Low sales
High cost per customer
Negative
Innovators
Few if any
Introductory Stage Strategy
Strategies
Product
Price
Distribution
Advertising
Sales Promotion
Create awareness and trial
Basic
Charge cost plus
Build select dist.
Awareness among early adopters,
dealers
Heavy to entire trial of FPCGs
Growth Stage Strategy
Sales
Costs
Profits
Customers
Competition
Rapidly rising sales
Avg. cost/customer
Beginning and rising
Early adopters
Growing numbers
Growth Stage Strategy
Strategies
Product
Price
Distribution
Advertising
Sales
Maximize mkt. share
Revise, extend, add services,
warranties
Price to penetrate mkt.
Intensive distribution
Mass mkt. Awareness, interests
Promotion reduce
Maturity Stage Strategy
Sales
Costs
Profits
Customers
Competition
Peak Sales
Low costs/ customer
High profits
Middle majority
Stable- beginning to decline
Maturity Stage Strategy
Strategies
Product
Price
Distribution
Advertising
Sales Promotion
Maximize profit and defend
market share
Diversify brands, items
Match best competitors
Intensive
Stress brand differences
Increass to encorage brand
switching
Decline Stage Strategy
Sales
Costs
Profits
Customers
Competition
Declining sales
Low cost/ customer
Declining
Laggards
Declining number
Decline Stage Strategy
Strategies
Product
Price
Distribution
Advertising
Sales Promotion
Minimal
Reduce expenses, milk
Phase out weak models
Cut/ raise price
Go selective; phase out outlets
that are not profitable
Reduce to level to maintain loyal
customers
Branding strategies
 Manufacturer brands

Multi-product branding

Multi-branding
 Private branding

Single

Multiple
 Generic
Brand Equity Drivers
 Patents
 Initial choices for brand elements: names, URLs, logos,
symbols, characters, spokespeople, slogans, jingles,
packaging and signage.
 Product + services + all marketing activities and
supporting programs
 Other associations transferred indirectly by liking to
other persons, places or things
Direct to Consumer Advertising
Legal in only 2 countries
 USA
 New Zealand
Controversial !!!!!!
Other forms of promoting drugs
 Advertising in medical journals
 Placement and promotion of favorable studies in medical
journals
 Visits of sales representatives to doctors
 Provision of free samples of drugs for doctors to give to
their patients
 Gifts for doctors and subsidized 'educational' events and
conferences.
DTC Facts
 Encourages consumer to see doctor to take care of
conditions early, avoiding later hospitalization
 One study of 64 drugs found a median increase in sales of
$2.20 for every $1 spent on DTC advertising
 In 2005, the top 20 DTC advertised drugs accounted for
more than 50 percent of all spending on DTC advertising.
Not many drugs are advertised.
 Most drug ads aimed at chronic conditions like high blood
pressure, high cholesterol, allergies and asthma
How much is spent on DTC?
 A November 2006 report by the U.S. Government Accountability
Office report stated that drug companies spent $4.2 billion in
2005 on DTCA.
 In comparison the drug industry spent $7.2 billion in 2005
promoting drugs to physicians and $31.4 billion on research and
development.
 However, the GAO found that the amount spent on DTCA
"increased twice as fast from 1997 through 2005 as spending on
promotion to physicians or on research and development." [1]
 It estimated that spending on DTCA was growing at
approximately 20% per year.
FDA Requirements for DTC
 To be accurate and not misleading;
 To make claims only when supported by substantial
evidence;
 To reflect balance between risks and benefit
 To be consistent with the FDA-approved labeling.
PHRMA’s Assertions about DTC
 Increases awareness about diseases
 Educates patients about treatment options
 Motivates patients to contact their physicians and
engage in a dialogue about health concerns
 Increases the likelihood that patients will receive
appropriate care for conditions that are frequently
under-diagnosed and under-treated
 Encourages compliance with prescription drug
treatment regimens.
What do you think?
 How should doctors be informed about new drugs?
 Does the consumer have a right to know what the
potential treatments for their condition(s) are - without
waiting for a doctor to tell them/
 What is the pharmacist’s obligation to the patient
regarding treatment - knowing the condition a patient
has, should the PharmD talk to the doctor, the patient
or both?
 What is the FDA’s responsibility?
Class Exercise: Groups
1.
2.
3.
4.
5.
Drug company
Patients
Physicians
Pharmacists
FDA