Gambling with your Brand? 4 Ways to Ensure you’re a Winner

Dr Andree Bates

Typically, when a brand stalls mid-lifecycle, it is usually because the brand team has failed to adapt to some market reality. These could be market events, such as competitor launches, or simply not considering factors that should be measured in marketing a drug in different stages of its lifecycle.

For example, in the early lifecycle of a drug, prescribing decisions – while always a combination of rational and emotional – tend to be more heavily weighted to rational decisions so that the doctor is examining the clinical data and being swayed by a rational clinical decision. Mid-lifecycle, however, clinicians have more experience with – and trust in – a drug, so they tend to prescribe based on more emotional factors: ‘I know it…I like it…I prescribe it’.

Later in the lifecycle, this switches back to a more rational prescribing pattern wherein the clinical data again becomes important. Although I am not certain of the reason, it is likely to be due to other new drugs on the market competing against the drug and using new clinical data to make their points. It is important that you understand where your prescribers are on this curve if you are to maximize your brand’s growth.

The key to accelerating growth is a thorough understanding of all aspects of the market, your own strategy, and your competitors’. Often companies tend to stick with their strategy no matter what is happening in the market. Do you find your strategic plan and budgeting is not that dissimilar year upon year? Keeping the status quo is fine if your brands are at the top of their areas but if not, doing roughly the same thing year upon year will make it difficult to realize changes, and this can undermine performance results.

Let’s compare two different companies, who shall remain anonymous to protect the guilty. The first one had a range of products and every year they allocated their budget in their strategic plan, making minor changes but roughly following a similar approach. Sound familiar? I hope not. The other company conducted analytics every year, continually analyzing the results of the business units, and changed – or sometimes just tweaked – the budget allocation based on strong analysis of each product’s and unit’s relative market opportunities. Funnily enough, the second company mentioned is still growing significantly more than the first one, who appears to only post profits from cost-cutting exercises. The second company, although having been roughly the same size as the first a few years ago, is now worth close to 65% more than the first company mentioned. This is not surprising at all. Sadly, many Pharma companies fit far more closely to the first, rather than the second, company example.

McKinsey reviewed 1600 US companies and found that for 33% of these, the amount of capital received each year was almost exactly that received the previous year, with a mean correlation of 0.99. What this means is that despite all the strategic planning and budget allocation exercises that surely the majority of these companies do, only small changes in allocation occurred and, in many, they remained exactly as they had been previously.

Given how much better companies who seriously examine the market and the opportunities each year perform compared with those that simply pay these items lip service and rehash what was already done, it is surprising that companies are not doing everything within their power to change this. By the way, McKinsey found that this was happening across all industries, including ours. Another interesting find from this was that companies that made large changes in resourcing annually, with an average of 56% change, earned on average 30% more returns to shareholders. In addition, the companies making significant reallocation were 13% less likely to be involved in a hostile takeover, or go bankrupt. And finally, CEOs who reallocated less in their first 3 years on the job were significantly more likely to be removed in years 4-6.

Given we analyse budget allocations for clients, we have been taking an interest in how Pharma companies make these decisions, looking at what systems they use versus what results they get. As expected, the ones that conduct analytics, and really plan their budgets within and across their portfolios, are growing at a faster rate than those who modify budgets a little up or down year upon year.

Why are companies not conducting analytics on everything? I guess the reasons range from being on autopilot (i.e. just copying what was done before) to being fearful of high costs of switching to no sufficiently practical options available to change to. However, the most common reasons we see are due to either biases or corporate politics. I am sure everyone believes that they do not make these mistakes, but given what we have seen prior to implementing analytics, the chances are… you probably do.

When you think about it, you have two choices: Allocate where you will reap the biggest financial rewards, or risk the market making decisions on your results for you. We are not saying every year you need to completely change everything, but you should really be looking at what you have invested where and whether it still makes sense. Therefore, we would like to suggest a few things to assist overcoming this handicap.

4 Suggestions to Overcome
   1.   Examine the market as it is. Really look at the market, the size, the expansion or contraction, where you sit, what competitor share is vulnerable, etc. Then see what makes sense for a lofty goal to be set for your brand. You need to know where you are going if you are going to get there.  
   2.   Use advanced AI-powered analytics to assist you in knowing what to change in your plan. Use good analytics tools in order to assist with this process. Sometimes, this means reallocating spend to more effective channels. Other times, it involves reworking the messages or changing the target segment focus. There is no single, simple answer. It all depends on what you discover when you conduct your analytics. And guessing is not an option. By using powerful tools, you will know what is possible and what sales / marketing activities and budgets are needed to get there. Weirdly, in Japan I heard someone speaking at a conference about their analytics. They said, “It doesn’t work well, but it is better than nothing”. I disagree. I agree that something is better than nothing but why waste time and money on something that is inaccurate when there are so many options to solve these problems. Be sensible with your choices and review options.  
   3.   Create discipline around budget allocation. You sometimes see the voices that shout the loudest getting the most budget. By ensuring that analytics is used, more objectivity than emotion will be called into play in the allocation process.  
   4.   Create systems to help implement the plan, including accountability for actions with timelines. It is a good idea to assign different parts of the plan to different team members for accountability and schedule in reviews.

Conclusion

There is an epidemic of remaining roughly on par with the previous year’s marketing plan and budget. This may be useful if you are becoming the top brand with this method, but if your results are not radically improving, you need to examine both your strategy and budget allocation carefully. With the strong use of analytics, you will be able to uncover any hidden factors that you need to add to your plan, as well as uncover the optimal budget allocations within a brand across activities as well as across brand portfolios, and see what revenue those allocations will be able to provide you.

You should also look at tools where you can run scenarios using changed allocations to see what those changes would do to your revenue results. These types of tools are so powerful, why companies fail to use them routinely for budget allocation planning eludes me. If you are unaware of the power of these types of analytics, contact us and we will show you all that is achievable.

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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.

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Gambling with your Brand? 4 Ways to Ensure you’re a Winner

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