A sharper focus on branding

What is the one thing we can do to improve our competitiveness? This is the most common question I am asked when I discuss my research into the evolution of our industry. The question reveals both increasing competitive intensity in most disease areas and the frustration of marketers needing to do something within their limited sphere of control.

Initially, my response to the question is often cautious: In a market with conservative customers, long development processes and tight regulation, one shouldn't expect there to be quick, easy fixes that provide significant, sustainable competitive advantage. And yet, when one compares the marketing effectiveness of different brand teams and different companies, a common theme emerges from my research. It appears that there is in fact one area where it is possible to grab 'low-hanging fruit' if not quickly and easily then within the resources and timescales of a typical brand leader. To explain this, I'll first need to show you a different perspective on strategy before moving on to what that implies for practical action.

Since strategy is such a misused term it's worth beginning with a definition. Strategy simply means a firm's pattern of resource allocation decisions. Every firm has its goals and a limited amount of money, people and other assets with which to achieve them. There are always more opportunities to spend resources than we have resources to spend. This fact of life forces a decision: firms have to make choices about where and how to compete and those decisions are the essence of strategy. This simple conceptualisation of strategy should be, but isn't, taught to all those executives who confuse strategy with objectives and tactics. It is the perspective of strategy that I'll follow in this article.

If strategy is about resource allocation decisions, we can see that strategy is not one set of decisions but in fact a long, connected chain of such choices. At the beginning of the chain is the corporate strategy link: that pattern of decisions about which industries in which to compete and which part of the value chain with which to compete. Johnson and Johnson, for example, has recently shifted its corporate strategy by choosing no longer to compete in parts of the in vitro diagnostics and devices market and to focus on pharmaceuticals and some higher-value areas within medical devices. It has left unchanged its choice, embedded in its long history, to compete by focusing on innovation, the new product development (NPD) part of the value chain. By contrast, generics companies also compete in pharmaceuticals but by focusing on operational efficiency, the manufacturing and logistics part of the value chain. Others, like Fresenius for example, are merely adequate innovators and manufacturers and instead choose to compete on so-called 'customer intimacy', differentiating with the customer-facing part of their value chain. These big high-level decisions are very important but, for most readers of this article the corporate strategy, this link in the chain is a fait accompli, having been shaped many years ago at the very top of the organisation.

Look at how your brand teams translate fait accompli decisions about disease and label

Market sector strategy
After, and attached to, corporate strategy comes the market sector strategy link, which is that set of decisions about which diseases or conditions to address. Recently, our industry has seen much shuffling at this level. Novo Nordisk, Teva, GlaxoSmithKline, Novartis and others have all pulled resources from areas such as women's health and inflammatory diseases and towards others such as respiratory and oncology. Again, sector strategy is a high-level decision made far above brand teams, who usually only follow rather than shape market sector strategy.

The next link is those decisions about which specific disease states to address within the market sector. At this stage, global brand leaders start to influence decisions but most regional and national brand teams have to work within these decisions rather than control them. Instead, the bulk of a brand team's work is allocating resources about messages, channels and audiences, which is usually called marketing strategy. This strategy chain, from industry to sector to disease to messages and media will be familiar to everyone reading this article. And yet it is this familiarity that hides the differences between the few highly effective brand teams and those whose practice is 'industry standard'. Allow me to elaborate on this.

In industry standard practice, the disease strategy (essentially, the choices about what label claims to make and what disease situation to target) leads to marketing strategy (media, messages, audience choices) in an automatic or at least semi-automatic fashion: label and indication lead to message and audience in the same way as long-married couples choose holidays, based on embedded and long-held habits and assumptions. But in highly-effective brand teams, one can observe the equivalent of a reflective pause between disease strategy and marketing strategy. In effect, they insert an extra link in the strategy chain by crafting the 'marketing strategy' link into two separate but connected decision stages. The process-driven nature of most annual planning cycles often disguises this, making it hard to see the difference between industry-standard and high-effectiveness practice, so I'll try to elucidate this important point.

In industry standard practice, the disease target is translated with little elaboration into the target market segment and the label claims are rendered with little expansion into the value proposition. Together, these two 'givens' channel the marketing strategy decisions very strongly. Implicit in this embedded habit is the assumption that everyone in the same disease target is, effectively, identical and that the label claims are, in effect, the value provided by the product. This is, I agree, a simplified version of what constitutes standard industry practice but it is not an over-simplification, as examination of most brand plans reveals. Further, semi-automatic translation is an ancient artefact of our industry's culture, rooted in the days when each new molecule was differentiated and decisions were made purely on the prescribers' perceptions of the patients' clinical need alone. Like shaking hands to demonstrate that I'm not carrying a sword, it's an artefact that has outlived its usefulness.

Marketing effectiveness is often lost or won as strategy is translated along the chain of command

The highly effective brand team
What we see in highly effective brand teams is subtly but fundamentally different from this anachronistic habit. In such teams, we see the transition from disease to marketing strategy punctuated by three activities that academics refer to as 'high performance work practices'. The first of these is to break with the 'disease target = target market segment' habit. Instead, these exemplar teams use disease description as only one of several dimensions by which to segment the prescribing context. Others include patient behaviour, prescriber attitudes and payer environment. Together, these multiple dimensions allow the disease target to be granulated into many distinct contextual segments. The second high performance practice is to allocate resources differentially, in both quantity and type, to each contextual segment. This ensures that resource allocation is very uneven (that is, highly targeted) within a disease target.

This contrasts with standard practice of spreading resources relatively evenly (that is, inefficiently) across all patients or prescribers within the disease target. Importantly, such targeting of contextual segments is dynamic and managed over time. The third high-performance work practice involves breaking the 'label is the value proposition' habit. Instead, value is identified and created at several levels, from the clinical to the economic to the systemic, both by the active ingredient and 'beyond the pill'. Significantly, this extended value proposition also means that value can be defined and created differently but consistently for each targeted contextual segment.

So highly-effective work practices in exemplary brand teams lead to quite different outcomes from the industry standard practice seen in most companies. The latter results in a target/offer combination that is quite simple and is not very different from the disease/label combination of the disease level strategy. Standard practice also leads to a resource allocation pattern that is quite homogenous within the disease target. The former, effective approach produces a complex, dynamic mix of contextual prescribing contexts, each with an individual, extended value proposition. That pattern elaborates significantly on the disease level strategy. Further, it leads to a resource allocation pattern that is very uneven and targeting within the disease target.

The insertion of this extra link, made from those three high-performance practices, between disease area strategy and marketing strategy, is what separates standard from leading practice. It makes the choices about audiences, messages and media easier, more consistent and, importantly, more open to rational challenge. In fact, such is the importance of the inserted link that, in many companies, it carries the label 'marketing strategy' and the subsequent activity around communications is often renamed, more accurately, as marketing communications strategy. This does not imply priority or hierarchy of course; there is no pecking-order in a chain and all links are equally important.

So, by understanding how strategy functions as a chain and how our industry cultural habits make us prone to omit an important link, we can begin to answer the question with which I began this article. What is the one thing you can do to improve your competitiveness? Look at how your brand teams translate fait accompli decisions about disease and label. Look at their decisions about how to allocate resources between contextual segments within disease targets. And look at their decisions about value propositions that include but are not limited to the label. It is there that there is often a missing link in the strategy chain. It is there where significant but accessible improvements are most often found.