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Understanding & Projecting the impact of promotion Understanding & Projecting the impact of promotion

Understanding & Projecting the impact of promotion - PowerPoint Presentation

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Understanding & Projecting the impact of promotion - PPT Presentation

The Economics of Promotion What is my Background Education Associated Arts Degree in PreEngineering Bachelors Degree in Business amp Applied Mathematics Masters Degree in Business amp Applied Statistics ID: 374107

product promotional detailing impact promotional product impact detailing role campaign advertising promotion amp marketing share sampling modality journal instability

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Slide1

Understanding & Projecting the impact of promotion

The Economics of PromotionSlide2

What is my Background

Education

Associated Arts Degree in Pre-Engineering

Bachelors Degree in Business & Applied Mathematics

Masters Degree in Business & Applied Statistics

PhD (ABD) in Business and Applied Economics, with a Statistics Major

Professorial

Professor/Instructor … Statistics, Marketing, Computer Simulation, Marketing Research at California State University (San Luis Obispo, California), University of Montana, New Jersey Institute of Technology, Farleigh Dickinson University,Slide3

What is my Background (continued)

Professional

Researched the value of R&D support given by The National Institutes of Health and The National Science Foundation, and evaluated research findings/reports

Started and sold several research businesses

Strong background in all areas of pharmaceutical

promotionStrong

background in a host of Therapeutic areas

Created & implemented the analytic methodology that permits the analysis and projection of impact of a fully integrated promotional campaign … studied the fully integrated promotional campaigns of over a thousand different pharmaceutical products

Professional career, for the last 35+ years, has focused on understanding the role of promotion, each of the promotional modalities and how they come together to create a campaign workSlide4

What is my Background (continued)

Promotional Research

Studied several hundred Pharmaceutical Mail campaigns

Studied all aspects of Detailing for many Pharmaceutical companies

Reach

Frequency

Multiple Sales Forces

Studied all aspects of Journal Advertising

Single page through multi-page units

Single and Multiple Insertions

Studied many levels of PME /CME

Dinner meetings

Small and Large Groups

Convention/Conference meetings

Etc., etc., etc.Slide5

What is my Background (continued)

Promotional Research (continued)

I have built proprietary promotional models for many different pharmaceutical companies in the US

The basis of the research finds its roots in solid Economic Theory, Various aspects of Physics, Marketing and Promotional Theory, and Finance and Investment Theory(s).

The approach has proven to be highly accurate across 100’s of products and many therapeutic classes

Have completed several hundred integrated promotional studies, covering over a 1,000 products

One has to keep in mind that Marketing Theory and Promotional Theory

DO NOT

change from one therapeutic class to another.

What does change is the competitive Environment.Slide6

Presentation Recipients in Canada

Merck

Directors and entire marketing team

Novartis

VP of Marketing, Analytics, and Senior Members of Brand teams

BMS

VP of Marketing and all members of Brand Teams

Abbott … Directors and Product ManagersPfizer … VP of Marketing, Product Managers from Primary CareSanofi … VP of Marketing, VP of Finance and all Product ManagersBoehringer Ingelheim … VP Marketing and all Product ManagersNovo Nordisk … Director Marketing and all Product ManagersAmgen … Business Unit Managers and Product Managers

Have done projects with most of the above Pharmaceutical Companies in the US and a few in CanadaSlide7

Can you Project promotional impact?

I HAVE … and, normally, will be within ¼ to ½ of 1 percent

Patently Absurd you say, no one can predict the impact of promotion … and you are right if you continued to think in traditional patterns!

Let’s start with one very widely held belief … Promotion

directly

drives sales / market share!

I hope before you leave today, that I have planted some doubt in your mind concerning this idea … because, I DO NOT believe it does!Slide8

Questions to Consider

What drives product growth?

What is the role of promotion?

What is the role of promotional mix?

How do promotional work together … interactions?

Does journal advertising work?

What is the role of journal advertising?

Does detailing work?

What is the role of detailing?

Etc., etc., etc.

How does promotion manifest its impact?Slide9

Traditional thought process

Promotional Campaign

If this is what your client believes, no wonder you can not create an “Optimal” campaign

and project its impact

!

Sorry, but the real world is a lot more complex than the above graph!Slide10

Real role/path of Promotional impact

Promotional Campaign

Market Instability

Product Accountability

Product Acceleration

Product Velocity

Product Momentum

Product NRx’s

And

Share

This thought process lays a strong economic & necessary foundation for understanding the role of the various promotional modalities and the ultimate impact of the campaignSlide11

How do the modalities fit in this model?

What is the role of Detailing?

What is the role of Sampling?

What is the role of CME?

What is the role Mail?

What is the role of Journal Advertising?

What is the role of “E-What ever”?

What is the role of Diffusion Theory?

What does it take to both CREATE and CONVERT Instability?Slide12

Who/What drives what?

Which modality(s) drive

Instability

?

Which modality(s) drive

Accountability

?

Which modality(s) drive

Acceleration

?

Which modality(s) drive

Velocity?Which modality(s) drive Momentum?How do modalities interact? Why is this understanding Important?Slide13

The Path to Success

The first job of promotion is to CREATE Instability

Once this is achieved, the same strategy / message / tactics must CONVERT that Instability to growth for your product

This growth dynamic manifests itself in the concepts of Acceleration and Velocity

Finally, positive Momentum must be achieved and maintained … which, of course, is a function of both the campaign

and the product’s qualitySlide14

Interactions – Traditional View

Detailing

Sampling

CME

AdvertisingSlide15

Interactions – The Real World of impact

Detailing

Sampling

CME

Advertising

It is the Integration and Interactions of all campaign elements/modalities that drive impact!Slide16

Key to success

Understand the sequence of events that take you from Promotional Program Construction to the Ultimate Impact of that campaign

Understand the role of each Promotional Modality, how and where it manifests its impact, and how product Momentum is created and maintained

If a Modality appears not to be working, find out why!

BECAUSE ALL PROMOTIONAL FORMS DO WORK THOUGHOUT THE PRODUCT’S LIFE!Slide17

False / Misleading Questions & statements

Is my campaign increasing sales?

Wrong question. Should be … is my campaign increasing sales profitably and/or optimally?

Does Journal Advertising work?

This question/statement never ceases to amaze me. Of course Journal Advertising works! That is, if you do it properly … good ad, budgeted properly and balanced with the rest of the campaign. Balance referring to many different concepts revolving around the creation and conversion of Instability

What about other modalities?

Same profitability concepts apply and same interactive relationships applySlide18

Role of each promotional modality

Detailing …

Sampling …

CME / PME …

Mail …

Journal Advertising …

DTC / DTP …

Do you remember?Slide19

Role of each promotional modality

Create Instability

Convert Instability

None

None

Strong

Strong

Detailing

New Product

Journal Advertising

New Product

Sampling

New Product

CME/PME

New ProductSlide20

Research Findings

concerning promotional impact

After 1,000+ Promotional StudiesSlide21

21

Impact of Promotional Change

Timing to 90% Manifestation

I M P A C T

Number of Months

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

-3 -2 -1 0

PME

DETAILING

PAGES

90%Slide22

22

The Real World of Promotion

Impact of Detailing vs. Sampling

Impact of most promotional modalities diminish

as

product ages

Sampling is the only modality impacted minimally by age or time

Question:

At what point in the product life cycle does the sample become the driver of Detailing and Sampling Impact?

time

Impact

Samples

Details

tSlide23

23

The Real World of Promotion

Actual versus Audited Data

Audited

details are projected from a physician sample

Actual

details (calls) are recorded and reported by the sales representatives

Physician recall of a sales call declines as the product ages

Question:

If two products each show 20,000 details/month, are they spending the same on Detailing?

time

Level

Call

Report Data

Audits

Typical History

100*(Audit/Actual) = % Pick-up

65-70%

20-35%

Launch

18-24 MonthsSlide24

24

The Real World of Promotion

Actual versus Audited Data

Audited

journal Ads

are

usually a function of a census

Actual

units are

recorded and reported by visually checking all journalsPhysician recall is not neededQuestion: If two products each show 30 pages of advertising per month, are they spending the same on Journal Advertising?

time

Level

Audited/Census Pages-per-month

Actual Pages

Typical History

100*(Audit/Actual) = % Pick-up

Launch

18-24 Months

But, this does not mean that the value is the same over time.Slide25

25

The Real World of Promotion

Mathematical Relationships

What is the functional relationship between audited promotion data and market share?

Market Share increasing over time

Detailing and other audited promotion declining over time

Market Share

Audited

Detailing

+

-Slide26

26

The impact of product ageing

Mathematical Relationships

What is the functional relationship between

Promotional Impact and Product age?

Time

Product Age

Relative Impact

Detailing

Advertising

CME/PME

DTC

Sampling

What are the implications of this on one’s ability to model promotional impact

Census vs. recall vs. age on impact

Recall vs. impactSlide27

Example

Case StudySlide28

Case Study

Established Product

Crowded set (

40+ products

)

Mature product (

7+ years old

)

New claim –

18 months earlier

Promoted new claim through DTC print –

18 monthsProfessional target: FPs, GPs, IMs, & one SpecialtyConsumer target: Specified Sub-GroupConsidering a Multi-Million dollar television campaign

History:

Sales force reduction 3-years earlier

History:

NO

faith in professional printSlide29

Case Study

Client’s Questions

Should we implement this DTC television campaign?

Planned start is July 1998 – is this justifiable?

What is our promotional ROI likely to be?

How do we

insure

success?

How should our professional campaign be structured?

Do we need to alter our current professional promotional mix?

Justify all projections and predictions!Slide30

Delay start of DTC Television for six months.

Get professional up to speed first!

Add

2xx++

Salespeople before DTC start.

Increase professional advertising by

$1,400,000

.

Keep sampling in step with detailing.

Increase Primary Care activity.

Case Study

Established Product

RecommendationsSlide31

Case Study:

New Prescriptions/ROI Forecast

Projections

New Campaign StartsSlide32

Understanding & Employing the Concepts discussed today

Concepts discussed today require learning and working with a set of new measures

While the real power of this approach rests in developing the full system of simultaneous equations, a good starting point is in the development and use of all appropriate measures

This can be accomplished with an Excel Worksheet that sequentially develops each of the measuresSlide33

Excel Worksheet

Prod1

Prod2

Prod3

Base

NRxs

Share

NRx

Instab

Share

Instab

NRx Acct

Share Acct

Concentration

Velocity

Acceleration

Momentum

Summary

NRxs

&

Share

NRxs

&

Share

NRxs

&

ShareSlide34

Promotional

EnvironmentSlide35

The Simple World of Promotion

New

Prescriptions

Market

Share

Detailing

Sampling

Advertising

DTC

Mail

Dinner Meetings

Etc., etc., etc.Slide36

The Real World of Promotion

Marketing Environment

Promotional Environment

Product

Environment

Disease

Environment

Instability

Velocity

Acceleration

A

C

C

O

U

N

T

A

B

I

L

I

T

Y

DTC

Detailing

Sampling

Mail

Advertising

NRx’s

&

ShareSlide37

Thank

You!

The best way to predict the

future,

is to create it”

“Models are meant to be used

, NOT

BELIEVED”