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
Download Presentation The PPT/PDF document "Understanding & Projecting the impac..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
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”