Please login to the form below

Not currently logged in

Value proposition

Market research is vital to define customer segment characteristics and needs
Value proposition

There is often uncertainty when trying to define what a value proposition is, how it is constructed and what it drives, yet it is a key determinant of success, increasingly.

R&D costs are soaring as pipelines continue to fail to bring innovative step-change therapies to market, while patents are being successfully challenged by generic manufacturers. Simultaneously, companies are looking to maximise their profits on any new products that make it to market, leading to an immediate conflict with almost every healthcare system's need to control costs.

Consequently, demonstrating value to stakeholders is probably the most important aspect of pharma marketing today. It is the responsibility of the entire cross-functional team to ensure that a genuine value is created and that customers see value at every interaction they have with the brand.

Every buying decision in every market is dictated by a simple premise, that of value. If the perceived or derived functional and emotional benefits of a brand do not outweigh price then value is not delivered and if value is not demonstrated, then the basis of choice for the prescriber, patient and payer decision will default to cost.

Figure 1. The components of the value proposition
(click to enlarge)

The components of the value proposition

The industry's preoccupation with developing blockbuster drugs led to an undifferentiated, one-size-fits-all approach to marketing products, in part because the drugs in question were better than their predecessors and clearly represented value. While this mass approach may have been sufficient historically, as competitive differentiation decreases and the number of customers and diverse stakeholders increases, pharma needs to become more refined and differentiated in its approach and communication.

The marketing model must engage a broader set of stakeholders, understand and meet specific needs and place the delivery of value at the centre of the marketing equation. Value perception, though, is individual and it must be remembered that individuals derive value in different ways and at different levels from the same product or service.

Thus when there are different stakeholders who will interact with the brand and service, it is essential to ensure there is an understanding that each has different needs and, as such, will be seeking different benefits and thus derive different values.

To achieve this, companies must adopt a market research driven segmentation that crystallises the understanding of customer segment characteristics, drivers, motivations and needs which can be met by their product and service offering, as well as their brand.

Figure 2. Supporting pillars of argument for target patient segment
(click to enlarge) 

 Pillars of argument - small
Build a proposition for the
right patient segment
where strengths are most valued

Using good segmentation can demonstrate concentrated value in appropriate segments; it will almost certainly prove a more effective strategy to gain reimbursement at a good price in distinct segments rather than starting with an approach that attempts to deliver a standard one-size-fits-all value to every segment. Once value is demonstrated in one segment, other segments can be developed over time, linking clinical development, customer experience and patient outcomes.

Payers and influencers have different types of needs to clinicians and patients and, in creating a brand value proposition, this group must receive close and specific attention.

By researching the different needs of payers and influencers within different patient segments, marketing effort can be focused on the areas where the benefits of the brand are most valued.

Once insights into the needs and values of stakeholders have been found, the challenge moves from relying on functional product attributes to drive value to looking at the functional treatment-related consequences and genuine emotional benefits which stakeholders value.

Obviously this will incorporate some proven approaches, such as:

  • Real world outcomes data

  • New and innovative price structures

  • Partnering and joint working with non-clinical stakeholders

  • Delivering services and support.

However, the real benefits and the value that they deliver can become much clearer by laddering how the brand attributes deliver value against the stakeholder needs.

Full understanding of each of the stakeholder needs will allow the laddering from product attributes – clinical data supported by health economics outcomes research and patient reported outcome measures data – to the functional benefits, which are defined as the overarching common ground goals among stakeholders and which, in turn, drive a demonstration of how the brand delivers against the emotional drivers, beliefs, attitudes, frustrations and common needs. This laddering allows the formation of an overarching brand value proposition.

Development of the Value Proposition

This is not a stand-alone process; it is part of an integrated and collaborative effort with other marketing principles and must be an integral part of brand development:

• The brand positioning and value proposition should not be developed in isolation; rather, they should support and shape each other.As such, the brand value proposition must represent:
1. An overarching proposition that defines what makes the brand distinct in meeting the shared needs of all the stakeholder segments, at a minimum level encompassing prescribers, patients and payers. Each must be built on truths with relevant differentiation.
2. Within the framework of this established brand value proposition, the specific needs of each segment must be defined, within which to win and drive volume, using:

• A specific value proposition for prescribers in the target segments – a clear communication of the brand in the context of the functional and emotional needs and drivers related to therapeutic clinical and patient outcomes; the things that they value

• Followed by a value proposition for patients and for payers that clearly recognises the differing needs of each (impact on the patient's life and impact on healthcare delivery to the population, respectively), communicates the benefits of the brand or service that meets these needs and so demonstrates value.

This can then be flexed and orientated to the specific needs of each of the target segments within the stakeholder groups.

This approach will engage a broader set of stakeholders in an integrated manner, addressing their particular requirements and placing value delivery at the centre of the marketing equation. Every activity, from positioning products in the market to building marketing programmes and communicating with physicians, must be squarely aligned with those principles.

Three key marketing principles form the foundation:

1. Incorporate value creation early in the product development cycle.
Although pharmaceutical companies have improved collaboration among commercial and R&D teams to define long-term target product profiles, these often remain focused on the relative clinical safety and efficacy of products. Instead, they need to be grounded in a thorough understanding of both the disease burden, based on real-world data, and of how care is managed and delivered, orientated towards creating targeted value for all stakeholders along the way. The value proposition is composed of a common understanding of patient flow to identify where value is being lost, where new value can be created and how the company can best capture that value. This understanding needs to be established early in the product's development, optimally during phase II.

2. Create value for all stakeholders by understanding needs.
Rather than focusing primarily on detailing to physicians, pharma companies need an integrated marketing plan that targets key value creation opportunities across all stakeholders. Specific opportunities vary by product, product type and product life-cycle stage, but value drivers can be found in treatment patterns, efficacy, dosage regimes, length of therapy, active side effect management, compliance and adherence, comprehensive patient education and services, convenience aspects of care, access and affordability.

3. Centre marketing on value creation.
Pharmaceutical executives must embrace the notion that profitable growth of products will come from flawlessly executing integrated marketing campaigns and 'doing right' by the system overall. It will require deep understanding of segmentation, how products fit into the patient journey, where they can add value by addressing barriers and how they can create value in the whole system.

Chris Marks

The Author

Chris Marks is partner and brand services principal at the MSI Consultancy






30th August 2011


Subscribe to our email news alerts


Add my company

AMICULUM® is an independent global healthcare communications, consulting and learning business with a global team of >300 healthcare communications professionals,...

Latest intelligence

The speed of science and the pace of comms
Pharma red tape slows comms but there is a solution, Paul Hutchings, founder of fox&cat, writes....
Improving cardiovascular disease care and awareness
Scott Curley talks to PME about the risks of CVD and the importance of getting the right treatment at the right time...
Virtual Patient Engagement Program: A Customer Story
Our client wanted to better understand the needs, preferences, and treatment gaps among adult patients with a rare genetic disease......