Interestingly, as far back as the 80’s, a Senior Vice President in marketing at Merck in the United States, when Merck had achieved the standing of ‘The most admired company’ for 5 or 6 years running in the Fortune Magazine annual survey of public companies, was asked what this meant for the company. His response was that when Merck launched a new product, it was guaranteed immediate distribution and universal trial.
What’s missing From These actions for A Pharma Company Measuring Reputation and Impact on Brand Revenue?
Although attitudinal shifts are useful and interesting ways to measure corporate activity and reputation, they leave little that actually helps a company understand what they need to do (and how much effort is required where) to improve their financial results in order to have an associated impact on their bottom line for their brands.
We all know in simple terms that overall confidence in a company is reflected in its brand sales, with the view being that if you rate well overall in reputation, you will be better off overall in your brand market share. This is true as we saw it happen with both Diovan’s sales in Japan and GSK sales in China. However, each company has its own personality – a unique blend of strengths and vulnerabilities – and neither the market share nor the reputational quotient, or some such figure, reflects the individual elements that make up this blend. But does this matter? It does if a company is unaware of some of its reputation vulnerabilities that are not endemic to the market but specific to the company itself. Also, if some of these vulnerabilities could be having an impact on the brand sales, then it definitely matters.
How Can We Measure This?
Eularis Corporate Analytics addresses this by obtaining a measure of the strengths and vulnerabilities of Pharmaceutical companies on confidence and reputational indices obtained from interviews with multiple constituent groups (Physicians, Payers, Investor Analysts) and feeds these into analyses against company market share / P-E Ratio figures. There is a direct relationship between these areas as evidenced by the high correlations found.
For this reason, market share / P-E Ratios are used as market constants against which company performance on reputational variables is measured, and this provides a strong base from which to illuminate the reputational strengths and weaknesses in relation to the size of the company, its market share / P-E Ratio, and what needs to be done to rectify these. The first thing we need to identify is which reputational factors are correlating with the company market share / P-E Ratio; these are, therefore, ones of extreme importance and need to be flawless.
Those of you aware of the predictive analytics we use with a specific drug brand will know that they are highly accurate in determining the likely degree of decline or growth of a brand from specific marketing and other actions taken. However, this high level of accuracy is patently not possible with a reputation. We cannot predict that ‘x’ action to improve reputational confidence will have an exact ‘y’ impact on the company market share / P-E Ratio the way we can with individual brands. The company may take all measures necessary and have a great reputation as a company, but be lumbered with drug brands that are old and simply do not work. In this type of scenario, all the reputational work in the world will not make the company a star performer. Economic outcomes that create tangible value for the companies themselves are subject to variables beyond the corporate communications initiatives being implemented.
Nevertheless, this does not mean that using this type of correlation is not valuable and predictive of company market share / P-E Ratio. It can be very beneficial and was used impressively with one client to move the company’s position from 36 to position 5 with various strategic changes (including acquisitions, which our system recommended).
Given that we do consistently find high correlations with reputation risk indices and company overall market share / P-E Ratio, it provides a very strong basis to highlight the reputational strengths and weaknesses and show what needs to be done. From this, the company will be able to see whether the market perceptions and the company’s market share / P-E Ratio realities match (and in which reputational areas) and where they do not. In areas that do not support the current company market share / P-E Ratio, the company should first check whether it is important (i.e. correlates with market share / P-E Ratio) and if it is, then it can choose whether or not to improve the highlighted area and take the appropriate steps to rectify this.
Conclusion
In measuring the value of corporate reputation and communications investments, most companies fall short in developing a strong business case for their CEOs and CFOs. The Eularis Corporate Analytics approach overcomes this hurdle. By using this kind of approach, based on what is known about the environment today and likely to be true at this point in time – which is the point the decision needs to be made – far more meaningful decisions that correlate with economic impact (i.e. market share / P-E Ratio) can be made with confidence.
Given that this kind of analysis is done regularly i.e. twice a year, it also captures changes in the dynamics of the market and decisions can be made regularly to ensure that it is not based on a historical point in time that does not have meaning today.
The impact of not approaching reputational and corporate communications investments with analytics is that companies fall back to solely the less predictive measurements of simple attitudinal shift measurements, which not only make investments less predictable in their outcome but also fail to meet the real business needs regarding guidance on how and where to invest to meet brand revenue impact as well as company and shareholder value.
For information on corporate analytics, please contact the author for more information at any of the Eularis offices.
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To learn more about how Eularis can help you find the best solutions to the challenges faced by healthcare teams, please drop us a note or email the author at abates@eularis.com.