Business consultant and author, Peter Drucker, whose thinking greatly contributed to the shape of the modern business organisation, wrote: 'The aim of marketing is to know and understand the customer so well, the product or service fits him and sells itself'. On that basis my perspective would be that the pharmaceutical industry is not a customer centric business, which uses deep customer understanding to drive innovation at a molecule, brand or commercialisation level. A controversial statement perhaps but let us use it as a hypothesis which we can explore.
What has driven pharma industry success?
The reality is that much of the pharmaceutical industry's success has been driven by three core areas:
Can this really be the case as your organisation spends millions on market research to support marketing and innovation? But is it investing in research that truly enables customer driven innovation and brand development? We have been involved in remodelling the insight and strategy processes with a number of global pharma companies, and the evidence of those exercises is that much of what companies deliver is quantitative testing of concepts and campaigns, where the customer is not really hugely involved in the product and brand development process.
If we are honest, how much of our success as an industry has been truly driven by a customer centric innovation process, as opposed to the fine work of smart scientists, lawyers and salespeople?
Accepting that this might be the case and with each of the three areas described above under increasing pressure, could moving to a new customer centric model be a solution to some of the issues we face. In our last article in this publication 'A helping hand with innovation' we focused on the potential for a new more open model to aid innovation. Let us now look at a more customer centric product and brand development model.
What can we learn from the world of FMCG?
In the fast-moving consumer goods (FMCG) world, the customer is everything and everything is centred on the customer. It investigates how customers live, feel and think. It looks to understand their needs, worries, motivations and latent emotions to purchase and use products, rather than their functional value. The focus is on discovering the unspoken drivers of behaviours.
Consider the work of Clayton Christensen, which inspired the processes developed by Procter & Gamble (P&G) through the first decade of the 21st century, and his perspective of uncovering the 'Jobs-to-be-Done' principle; what we hire a product to do. The underlying observation is that 'Jobs-to-be-Done' has three core elements, the functional, the emotional and the social. Two of those three are more aligned to brand than to the features of a product.
This insight is used to fundamentally drive product and brand development. In FMCG, brands are created early in the development process, and marketing teams work very early with their counterparts in R&D at the beginning of the development of new product ideas. Together they identify opportunities, develop and test prototypes and brand concepts.
Brand development also follows a much more thorough and systematic approach. Brands are viewed as a set of tangible and intangible benefits in the mind of customers. The development of these benefits is based on a comprehensive analysis of the market, the customer, the competition and other environmental factors. This analysis enables identification of the right target group and to develop a unique brand identity and positioning. This identity will differentiate the brand versus competitors, in order to achieve a competitive advantage in the market.
Of course, FMCG and healthcare markets are vastly different and I am not advocating that pharma copies everything from the FMCG world. However there is learning to take in terms of mind set, focus and process, which are highly relevant.
It is also fair at this stage to state my bias. Our approach to building joined-up strategies, which we describe as Strategic Fusion, is unashamedly marketing and customer centric in much the same way as Peter Drucker describes. Ideally it involves the entire organisation, not just those with marketing or commercial in their title. We believe in marketing-driven innovation, where the product is not the sole responsibility of R&D and the customer is not the sole responsibility of marketing.
What is the value of brand building in pharma?
After all I have heard it said that in the increasingly tough market access environment we all face, brands do not matter. Pharma products must be grounded and driven by science and supported by a strong platform of evidence.
Again, I agree that these elements are vital for a successful pharma business, however, customer-focused innovation will enable scientists to focus on the areas of opportunity, and clinical teams to build the evidence base that will meet customer needs and provide the opportunities to deliver market access and differentiation.
It is clear that the competitive environment is becoming harsher in healthcare and the necessity for health systems to adopt cheaper product options, primarily generics, will only accelerate the decline of branded sales post patent expiration, unless the industry manages itself differently. This is why we consider that real brand value can represent a new competitive advantage.
The creation of brands built on customer innovation would enable companies to differentiate their products versus its competition using both tangible and intangible benefits. In view of the increased number of competitors and the relatively lower number of really distinctive products, it is even more important to provide brands that can inform the behaviour and attitudes of patients and doctors.
Again looking outside of our own industry for inspiration, few companies have gained such customer devotion as Apple. In the world of technology where product features and capabilities are so important, it is easy to see that it is the products that sustain Apple's competitive advantage. However, it is also a world where 'me-too' products can be fast tracked to market, and so it is really the set of values across everything Apple does that enables such strong connections to their brand.
It is also worth noting that Apple has brand value in itself, it is not purely the iPhone, iPad etc, the Apple brand underpins everything. How many pharma companies have built value into their corporate brand with customers? Steve Jobs recognised that a brand is so much more than a logo. He knew that Apple customers need to feel a certain way in their interactions across the Apple organisation, and he built such a strong brand that it changed the way consumers think of technology and competitors are still trying to catch up. At the last count the Apple brand alone is estimated to be worth $87bn.
There are two types of organisations each with distinctive approaches to product and brand development process
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How can we build emotional connections to our brands?
In a healthcare world where both healthcare professionals (HCPs) and patients are often overwhelmed with information and data, the role a brand plays will become all the more important to ensuring success. How can we achieve this? Surely healthcare is a much more rational decision-making process?
We believe that the rational mind is always immersed in the emotional unconscious mind. The size of the rational element may vary and it is always within the emotional sphere, even though we may not be conscious of it. Successful healthcare brands need to be built from a foundation of both rational and emotional elements.
To explore this point let us look at two key customer groups: patients and HCPs. The emotional response they experience will vary depending on therapy area and patient group. These emotions may range from empathy, sympathy, frustration or confusion to professional pride, peace of mind and ease of working. Our emotional reflex responds faster than our rational mind. As we mature, our rational mind gets better at catching up and we learn to stop outwardly responding to the emotional response.
Good market research must aim to uncover both rational and emotional drivers of payer and prescriber decision-making. It is as important to explore the emotional elements such as their hopes (and fears) for a patient, their personal aspirations and what they wish a treatment to achieve, as it is to explore the rational elements, such as the role protocols and guidelines play in driving prescription choice and their interpretation of evidence. Projective and creative techniques are used to elicit the often less obvious but more emotional drivers, in potentially quite rational groups of physicians.
Recently I worked on a project, and I am sure you have similar experiences, where significant evidence and data existed and physicians spoke at length about their clinical rationale, but for the vast majority of physicians their preferences and decisions were made purely on a strong and opposed emotional response. Tapping into both elements is hugely important to developing brand loyalty where, just like the example of Apple, emotions can create deep connections with customers.
What about the patient? In healthcare, patients are often thought of as the passive recipients of what is manufactured by pharma companies, prescribed by their HCP and paid for by the insurance company or state funded system: not as decision-makers. But patients make critical healthcare decisions every day. Should I stop smoking? Do I attend my nurse appointment and implement their advice? Which treatment option will I choose? Do I take my medication?
We know a huge amount about behavioural psychology, but do we make the most of this? As proven by many studies, the way the drug works is not totally removed from the way the patient thinks. We also know a lot about visual codes and even the colour of a pill or its packaging has an impact on perceived performance. In an age of increasing requirements for real world evidence and where compliance rates are still a major issue, this is just one area where developing a deeper understanding of the patient mind-set, and using this to drive brand development can have a positive impact. After all, if you have an effective active agent linked with a strong brand connection this is likely to have a stronger influence on the behaviour, attitudes and efficacy perception of both patients and doctors.
How are brands built over time?
At the heart of this question is how you build a successful brand over time in today's healthcare environment and the model by which you aim to achieve this.
Successful brands are like large oaks; particularly in today's increasingly payer dominated, price sensitive environment, they start from the small acorns of the single new patient for whom a HCP decides to prescribe. Be clear on the profile of the patient, or patients, for whom you believe your brand is the best treatment choice, and understanding the needs and motivations of both patient and prescriber. This is an absolutely critical foundation that R&D, marketing and sales teams need to have to give a prescriber the confidence to write that first script, build ongoing brand confidence and change long-term prescribing behaviours. As with the FMCG approach described earlier, this can only be uncovered by a deep understanding of the market and customers: how they live, feel, think and 'buy'.
After reading this article you may still believe that pharma is a customer centric industry. If so, I hope this article has stimulated your thinking none the less, but I will leave you with a worrying trend we have observed. In the current round of pharma company restructuring, we are aware of a number of organisations at global, regional and country levels which have slashed their market research teams and budgets to the bare minimum. Steve Jobs once said that Apple's DNA was as a consumer company. Can an industry which sees primary market research as a cost item rather than an investment in the future success of its brands truly say the same?