Drug Marketing & Pharmaceconomics Lecture PDF

Drug Marketing & Pharmaceconomics (NP- 513) Level 5 Chapter 2: Marketing Mix “Principles of Product Research&Development” Mona M. Eltamalawy, PhD. Intended learning outcomes Identify elements of marketing mix. Recognize principles of product research an...

Drug Marketing & Pharmaceconomics (NP- 513) Level 5 Chapter 2: Marketing Mix “Principles of Product Research&Development” Mona M. Eltamalawy, PhD. Intended learning outcomes Identify elements of marketing mix. Recognize principles of product research and development. Understand different product strategies. Give examples on different product strategies. What are the 4 Ps of marketing? The four Ps are the key considerations that must be thoughtfully reviewed and wisely implemented to successfully market a product or service. They are product, price, place, and promotion. The four Ps are often referred to as the marketing mix. They encompass a range of factors that are considered when marketing a product, including what consumers want, how the product or service meets or fails to meet those wants, how the product or service is perceived in the world, how it stands out from the competition, and how the company that produces it interacts with its customers. Since the four Ps were introduced in the 1950s, more Ps have been identified, including people, process, and physical evidence.  Product Creating a marketing campaign starts with an understanding of the product itself. Who needs it, and why? What does it do that no competitor's product can do? The job of the marketer is to define the product and its qualities and introduce it to the consumer. Defining the product also is key to its distribution. Marketers need to understand the life cycle of a product and business executives need to have a plan for dealing with products at every stage of the life cycle. The type of product also dictates in part how much it will cost, where it should be placed, and how it should be promoted. Many of the most successful products have been the first in their category. For example, Apple was the first to create a touchscreen smartphone that could play music, browse the internet, and make phone calls. Price Price is the amount that consumers will be willing to pay for a product. Marketers must link the price to the product's real and perceived value, while also considering supply costs, seasonal discounts, competitors’ prices, and retail markup. Retail markup is the difference between the price of a product and the cost of that product. In some cases, business decision-makers may raise the price of a product to give it the appearance of luxury or exclusivity. Or they may lower the price so more consumers will try it. Marketers also need to determine when and if discounting is appropriate. A discount can draw in more customers, but it can also give the impression that the product is less desirable than it was. Place Place is the consideration of where the product should be available—in stores and online—and how it will be displayed. The term placement also refers to advertising the product in the right media to get the attention of target consumers. Promotion The goal of promotion is to communicate to consumers that they need this product. Promotion encompasses advertising, public relations, and the overall media strategy for introducing a product. Marketers tend to tie together promotion and placement elements to reach their core audiences. For example, In the digital age, the "place" and "promotion" factors are as much online as offline. Specifically, where a product appears on a company's web page or social media, as well as which types of search functions will trigger targeted ads for the product. Principles of Product Research and Development Patients do not want medication-they want relief from pain, a longer life, or better function. Those who prescribe or dispense to those patients want those things as well as their own professional needs to be satisfied. It is the product strategies that eventually come to dominate the overall market strategy of the company. The new product strategy will receive the most attention-as it does in the pharmaceutical industry. Product strategies Product scope strategy Product elimination strategy New product strategy Product repositioning strategy Product positioning strategy Diversification strategy Product scope strategy The product scope strategy deals with the perspectives of the product mix of a company (i.e., the number of product lines and items in each line that the company may offer). The product scope strategy is determined by making a reference to the business mission. Presumably, the mission defines what sort of business it is going to be, which helps in selecting the products and services that are to become a part of the product mix. The product scope strategy must be finalized after a careful review of all facets of the business since it involves a long-term commitment. Additionally, the strategy must he reviewed from time to time to make any changes called for because of shifts in the environment. Product scope strategy alternatives Single market Single product A variety of reasons may lead a company to A business may have just one product in its line concentrate its efforts on a single segment of and try to live on the success of this one product. This strategy has several advantages: the market. For example, a small company, to 1- Concentration on a single product leads to avoid conflict with large competitors. specialization, which helps in scale and productivity gains. 2- Management of operations is much more efficient when a single product is the focus. 3- Single-product company may become so specialized in its field that it can withstand virtually any competition. Single product example Fleets Enema is an acceptable example. Despite its obvious advantages, the single-product company has one drawback: if changes in the environment make the product outdated, the single- product company can be in deep trouble. Multimarket Instead of limiting business to one segment and thus putting all its eggs in one basket, a company may decide to serve several distinct segments. To successfully implement the multimarket strategy, it is necessary to choose those segments with which the company feels most comfortable and in which the company is able to avoid confronting companies that serve the entire market. This strategy accepts the premise that it is possible to differentiate between such markets as prescription and OTC, hospital and drugstore, brand name and generic, and so forth. Strategy is then formulated accordingly. Total market A company using the total-market strategy serves the entire spectrum of the market by selling different products directed toward different segments in the market. The strategy evolves over a great number of years of operation. As the market grows and different segments emerge, leading competitors may attempt to compete in all the segments. This may be done by employing different combinations of product, price, promotion, and distribution strategies. These dominant companies may also attempt to enter new segments as they emerge. The total-market strategy is risky. For this reason, only a very small number of companies in an industry may follow this strategy. System of products Offering a system of products rather than a single product is a viable strategy in several ways. It makes the customer fully dependent on the company, which in turn gains monopolistic control over the market. Additionally, the system-of-products strategy blocks the way for the competition to move in. With such benefits, this strategy is extremely useful in seeking growth, profitability, and market share. The successful implementation of this strategy requires a thorough understanding of customer requirements, the processes and functions the consumer must perform when using the product. Effective implementation of this strategy broadens both the company's concept of its product and the market opportunities for it, which in turn helps meet the product and market objectives of growth, profitability, and market share. System of products A product system is a group of diverse but related items that function in a compatible manner. For example, the extensive iPod product system includes headphones, cables docks, armbands, power, car accessories, and speakers. New product strategy New products continue to be the lifeblood of the research-intensive pharmaceutical industry. They may be new in the sense of new chemical entities, new to an individual firm's product line, or a new name for an existing (especially OTC) product. However, new products are usually necessary for sustained profitability and growth. New product strategies can focus on imitation of existing products, modification and improvement of existing products, or truly new products. The latter will receive the most attention here, but all of these are widely employed in the drug industry. New product strategy Examples of small changes resulting in important progress Minor alternations in the chemical structure of a drug can make a vast difference in biologic activity, as illustrated by the following examples: In 1989, the FDA approved a new drug, clozapine, a modification of the dibenzodiazepine class of tricyclic drugs. This new agent promises relief for thousands of schizophrenics who have not responded to prior treatment with available antipsychotic agents. New product strategy Addition of two carbon atoms to morphine resulted in nalorphine, a morphine antagonist used to treat narcotic overdose. A minor modification of nalorphine gave naltrexone, a narcotic antagonist with long duration of action, enabling its use as an oral formulation in the treatment of narcotic addiction. A small change in dehydrocorticosterone, a virtually inactive compound, produced cortisone, which has a great range of biological effects. Other modifications of steroid drugs separate their anti-inflammatory activities from their glucocorticoid and mineralocorticoid activities. Product positioning strategy The term "positioning" refers to placing a brand in that part of the market where it will have a favorable reception compared to competing products. Since the market is heterogeneous, one brand cannot make an impact on the entire market. As a matter of strategy, therefore, the product should be matched with that segment of the market where it is most likely to succeed. The product should he so positioned that it stands apart from competing brands. Positioning tells what the product stands for, what it is, and how the customers should evaluate it.  Characteristics of A Good Product positioning Relevancy: The positioning of a product should be relevant to the target audience. It should address their needs and wants. Clarity: The positioning of a product should be clear and concise. It should be easy for customers to understand. Differentiation: The positioning of a product should be different from that of its competitors. Otherwise, it will be difficult for customers to see its value. Consistency: The positioning of a product should be consistent across all channels. This includes advertising, packaging, and even word-of-mouth. Believability: The positioning of a product should be believable. Otherwise, customers will not trust the brand or the product. Red Bull’s Energy Drinks Red Bull markets its energy drinks by boasting about the benefits they provide. The drinks were positioned to give customers an extra boost of energy (wings), which made them appealing to people who needed an energy boost. The positioning of Red Bull’s energy drinks has been so successful that the company is now the world’s leading energy drink manufacturer. Product repositioning strategy Often a product may require repositioning. This can happen if: 1. A competitive entry has been positioned next to the brand with an adverse effect on its share of the market. 2. Preferences have undergone a change. 3. A mistake has been made in the original positioning. Product repositioning strategy Costs and risks of repositioning are high. The technique of perceptual mapping is one that may be gainfully used to reduce substantially those risks. Perceptual mapping (product positioning map) helps in examining the position of a product relative to competing products. It helps in understanding how competing products or services are perceived by various groups in terms of strengths and weaknesses, understanding the similarities and dissimilarities between competing products and services. Starbucks Starbucks is a shining example of how to reposition while selling a product you already sell in a new way. As difficult as it is to imagine now, going to a restaurant just for coffee, a date, or a business meeting over coffee wasn’t always an attractive idea. Starbucks launched in the 1970s selling coffee beans and coffee equipment, but no coffee or food products. Howard Schultz saw an opportunity, bought the Seattle chain of stores, and turned them into coffeehouses. They started marketing themselves as a “home away from home”, romanticizing the idea of reading, working, and socializing in coffee shops. They are now a global brand that sells quality coffee, tea, specialty beverages, food. Spotify Spotify is an example of COVID related repositioning. They were doing well as a free music streaming service that allowed advertisers to play ads in-between songs. Kind of like a radio, but users curated their playlists and selected the music they want to hear. Users could access ad-free streaming with a monthly subscription, starting at $9.99 per month. Subscribers also had access to offline streaming and on- demand playback. Things were going well until COVID hit, and Spotify started losing both subscribers and advertisers. They continued offering music streaming but repositioned themselves as a music and podcast platform. This created new revenue streams by attracting a new listening demographic and charging a subscription to podcasters for uploading their podcasts. They also created curated playlists and Spotify® Originals to attract new listeners. Product elimination strategy It is believed that a business unit's various products represent a portfolio and that each of these products has a unique role to play in making the portfolio viable. If a product's role diminishes or if it does not fit into the portfolio, it ceases to be important. When a product reaches the stage at which continued support can no longer be justified because its performance falls short of expectations, it is desirable to pull the product out of the market. Product elimination strategy Poor performance may be characterized by any of the following: 1. Low profitability. 2. Stagnant or declining sales volume or market share that would be too costly to build up. 3. Risk of technological obsolescence. 4. Entry into a mature or declining phase of the product life cycle. 5. Poor fit with the business unit's strengths or declared mission. Planned obsolescence Coca-Cola The decision of Coca-Cola to delete their product Coca- Cola Vanilla short after the latter was introduced in the market. One can suppose that the company realized that the customers’ demand for the drink was significantly lower than they had expected; therefore, the delete of this item seemed to be the only way out. The managers’ unwillingness to make the elimination decision would have led to considerable financial losses for the firm. Diversification strategy Diversification refers to seeking unfamiliar products , markets, in pursuing growth. Every company is best at certain products; diversification requires substantially different knowledge, thinking, skills, and processes. Thus, diversification is at best a risky strategy, and a company should choose this path only when current product or market orientation does not seem to provide better opportunities for growth. The term "diversification" must be distinguished from integration and merger Integration Merge Accumulation of additional business in Merger implies a combination of a field through participation in more of corporate entities, which may or may the stages between raw materials and not result in integration. ultimate market, or through more intensive coverage of a single stage. Diversification strategy Example: To combat the decline in soda popularity, Coca-Cola has diversified its product portfolio into other categories such as sparkling soft drinks, sports drinks and ready- to-drink coffee and tea beverages, which helped it avoid the worst of the pain.