Standing out

It's an exciting time to be a pharmaceutical marketer: new communication channels continue to emerge; increased stakeholder diversity requires more adaptation of the value proposition and there is greater emphasis on medical, clinical and other "non-promotional" channels. Yet these opportunities come at a time of change. The industry is also experiencing declining R&D productivity, decreasing effectiveness of traditional salesforce channels, increasing payer pressures and lower public image, to name a few. The situation has led to lower marketing budgets and, consequently, a need to be smarter when designing the mix of investments across promotional and non-promotional tactics (the "investment mix") as companies seek often to "do more with less".

Optimising the investment mix has many benefits: affiliate marketing teams and their management increase the top and bottom line; global brand leaders improve overall brand performance by sharing successful tactics across markets, and regional marketing and sales-effectiveness leaders enhance capabilities through best-practice approaches. In fact, our studies show that as much as half of a company's marketing budget can be redirected to more effective activities, with revenue gains of up to 15 per cent.

Yet many organisations continue to struggle to consistently improve the investment mix. Common approaches – often focused on historical return on investment (RoI) analysis – have numerous pitfalls and seldom lead to lasting change. We offer a pragmatic approach that focuses on future investments, not on past performance, applicable across the entire investment mix and not just on "promotional" tactics.

Why is it so difficult?
The increasingly-diverse customer landscape creates two types of challenges that impede an effective solution: organisational and analytical.

Organisational accountability and inertia can represent a significant impediment to improvement. The array of external stakeholders is addressed through activities that span different parts of the organisation, ie sales, marketing, medical and market access; each with its own objectives and definitions of success. There's often limited cross-functional visibility or co-ordination, creating an accountability challenge in designing the investment mix, analysing its potential impact and implementing improvements.

Old "rules of thumb" such as sales ratios or share of voice are no longer defensible in the changing environment and so more sophisticated techniques have emerged. This creates the second challenge as these methodologies can be analytically complex and generate results that are unintuitive or, at times, downright misleading. Complex statistical models that attempt to tease apart the RoI of interacting tactics and customers can be abstract and often are based on limited data about what was done to whom and what happened afterwards. The resulting "black-box" does not provide sufficient granularity and may result in misleading conclusions. Furthermore, none of these RoI approaches are appropriate for investments in "non-promotional" tactics, an ever-increasing element within the mix.

Even in situations where historical RoI analysis is feasible, interpreting the outcomes can be non-trivial. Consider a promotional tactic that returned a negative RoI. When judged on its financial return this tactic would appear to have failed. However, this may have been due to poor execution rather than the tactic itself being flawed, as the following example illustrates:

A regional manager receives instructions to hold a series of local speaker meetings as an integral part of this year's investment mix. Strict criteria for targeting and total attendees are supplied, along with a 'no-frills' budget. Initial invitations to all target customers are sent, but the response rate is low. Feeling under pressure and slightly embarrassed, more invitations are sent out to a broader range of customers to avoid half-empty event venues. Some meetings are cancelled or rearranged to ensure better attendance, incurring additional costs. Post-event analysis shows a low return, but was the meeting programme really a bad idea?

Further considerations are: even if a tactic has delivered a good return in the past, what does that tell us about the level of spending in the future? Can the impact be reproduced next year? Is the tactic scalable, ie can its coverage be increased without a detrimental effect on impact?

What are we trying to achieve?
Achieving lasting change in approaches to the investment mix design requires being:
• Strategically driven: Each tactic and the overall mix must follow a consistent rationale that intrinsically links it to the near and mid-term strategic imperatives of the brand. Integrating strategic and tactical planning, rather than separating them, is critical, and for each tactic a clear, measurable behavioural or attitudinal change objective must be set.
• Implementation focused: From the outset it is essential to consider the tactic's execution. Which and how many customers will be invited? What messages will be communicated? What are likely implementation issues? Many potentially-effective marketing initiatives fail to achieve their objectives because these questions were not addressed.
• Judiciously controlled: Even the best planned investment mixes fail to deliver because of insufficient adherence to the plan. Execution tracking is essential. It's now common-place to include in the performance measurement of sales representatives and managers whether call activity was delivered to the right targets. So why is it still rare to include in the performance measurement of brand managers whether their programmes were actually implemented and attended by the customers who they had planned should attend?

A prospective mindset
We believe a logical four-step process can assist brand teams address these questions. The approach uses the familiar "customer decision process" framework to identify intervention points, aligns the investment mix to these points, and justifies investments by building robust, prospective business cases.

Step one (see figure 1): Effective investment planning must be firmly rooted in the customer decision process; a common element of many brand plans. The map must reflect a thorough understanding of the therapy area and customer landscape and it must be future-focused, reflecting anticipated changes during the plan period. Using the customer decision process as the starting point for tactical planning allows the brand team to explicitly connect the intervention points and behavioural objectives of the tactics in the investment mix. 

Figure 1 – step 1: good tactical planning must be routed in where the business opportunities are found 

1 - Drive disease awareness and patient presentations
2 - Establish treatment guidelines and adherence
3 - Drive category switches and utilisation
4 - Drive brand switches and utilisation
 5 - Improve access and provide patient assistance
6 - Provide patient education and disease monitoring

Step two (see figure 2): From understanding the objectives for each stakeholder at each intervention point, the next step is to decide which channel is best suited to drive the desired behavioural changes. For example, if the changes required are beliefs about clinical best practice, then peer-to-peer events are likely to be more effective than other channels. Starting qualitatively at first, tactics should be aligned to the intervention points and ranked according to perceived importance and opportunity in order to eliminate obvious poor choices.

Many planning processes have this step in some, but few develop a robust business case for each major tactic or group of tactics. We believe the discipline of developing such business cases, covering elements such as the tactic's objectives, message and content, execution design, costs, and impact tracking metrics, is fundamental to improving productivity, revealing unrealistic assumptions or highlighting areas of overlapping investment that may be unproductive. 

Figure 2 – step 2: rigorously associating tactics to drive change at decision points is fundamental to improving productivity

Step three (see figure 3): Only after tactics are aligned to intervention points and prioritised, should companies consider the impact of their spending decisions. Rather than becoming embroiled in historical analysis, we believe the emphasis should be on prospective thinking, combining experience, judgement and data: what impact will a tactic have, for what amount of investment and, hence, what might be its prospective RoI? In essence, we need to move from asking: "What happened?" to "What do we do next time, given what we learnt?" 

Figure 3 – step 3: by decomposing the activity into successive steps, prospective productivity can estimated 

 One common concern with prospective approaches is with the accuracy of future assumptions. In our view, determining the precise future RoI is not the key issue. The company just needs to know whether the tactic is reasonably likely to generate a positive return. If the anticipated RoI is ambiguous, it is important to examine the tactic, its costs, or the assumptions for execution. If the tactic is unlikely to make a positive return, it should seriously be reconsidered. Simple sensitivity plots, as shown below, are often sufficient to support decision making (see figure 4). 

Figure 4 – step 3: sensitivity analysis is obviously needed around key assumptions 

RoI-based approaches cannot be used to inform investment planning for non-promotional tactics such as CME or KOL activities. The prospective approach we advocate does not have to focus on RoI, so it can be equally applied to these tactics by redefining the success metric, for example, changing beliefs about treatment approaches, perceptions of a product's clinical strengths, increases in patient presentations, etc.

Although establishing objective measures for the success of non-promotional tactics seems like common sense, in our experience few companies are diligent in this area.

Step four (see figure 5): The last step is to simulate different investment mixes for the future and identify the optimal investment mix under different conditions, as illustrated below:

Figure 5 – step 4: case study: primary / specialist brand – savings of €18.5M per annum with virtually no impact on sales

In the end
The prospective approach outlined above has several key benefits that other conventional approaches may not have, namely:
1. It improves the mix decision simply, avoiding unnecessary and often unhelpful RoI analysis
2. It aligns the organisation through a transparent and simple problem-solving process
3. It makes a persuasive business case for the spend, aligning to the customer decision process and brand strategy
4. It improves tactical effectiveness by identifying execution problems to fix and increases flexibility by enabling contingency planning.

Achieving real results from investment mix planning requires focusing on why, where and how we invest in the future, and not on what happened in the past, nor only on how much to spend.

The Authors
Brian Lefebvre and Dean Summerfield are principals at ZS Associates

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