Happy August!
We started the week with some assignments and discussion around consumer analysis. Now to me, the sound of it seems quite simple. Know who your customers are, what they value, what price they're willing to pay, and where they are. As it turns out, consumer analysis is far from that simple.
Lehmann and Winer identify 9 Need-to-Knows for consumer analysis ... as you can see I was kind of on the right track:
Who buys and uses the product
What customers buy and how they use it
Where customers buy
When customers buy
How customers choose
Why they prefer a product
How they respond to marketing programs
Will they buy it (again)
What they are worth
They also identify the following buying roles: the initiator, the influencer, the decider, the purchaser, and the user. While it makes sense in this kind of context, I was terribly confused by the title of "Buyers versus Users". Aren't they the same? It depends what kind of view you are looking at. On a macro level, the ultimate buyer is the user. However, at the micro level we see the five different broken down positions of the buyer vs the user.
This section of the chapter made me analyze my own organization (the hospital) to identify these five levels of buyer roles, from the pharmacy department perspective.
The Initiator (who identified the need for the product): senior management/expert specialists (such as cardiologists, respiratory therapists, orthopedic surgeons, etc.). These specialists or senior management members identify the need for a certain drug. It could be a brand new drug recently introduced on the market, it could be an existing drug that is not currently on the formulary, or it could be a justification to keep a drug on the existing formulary.
[Side note: a formulary is a carefully crafted list of drugs that a hospital agrees to use by its physicians and pharmacists. This is ideal from both an inventory standpoint as well as a cost savings standpoint. For example, there are many different types of cholesterol lowering drugs called "statins"; fluvastatin, simvastatin, rosuvastatin, pravastatin, atorvastatin, etc. However, it makes no sense for a hospital to carry all of these different drugs when they relatively do the same thing... one or two is enough. So there is a committee at every hospital called a P&T Committee that evaluates which drugs should be approved to be a part of the formulary and which drugs are not suitable to be on formulary. By becoming familiar with a formulary, it is easy to see why drug representatives work so hard to pitch their drug product to pharmacy management in hopes that their drug will be included (used) in their formulary.]
The Influencer (who have informational or preference input to the decision): drug reps/P&T Committee members. I think its safe to say that drug reps having an informational and preferential input into the buying decision is self explanatory. P&T Committee members stem from all departments of the hospital, not just pharmacy. It consists of nurses, pharmacy managers, physicians, surgeons, nutritionists, etc. All of these members have preferential input into the decision. They have the voting rights of whether or not a drugs gets approved to become a part of/no longer be a part of the formulary.
The Decider (who makes the final decision through budget authorization): senior management/medical executive committee. As one would imply, the higher ups typically are the ones with the final decision (although the information they base their decision off of is the decision made by the P&T Committee since they are so far removed from the very specific details of information used).
The Purchaser (who makes the actual purchase): purchasing/inventory specialist. This individual orders drugs that are on formulary once the inventory gets low. Especially as of late, many drugs are unavailable due to a national shortage/manufactuer backorder and it is the purchaser who is responsible for getting around these obstacles and obtaining the drugs needed. Most hospitals buy their drugs from a wholesaler.
The User: patients. Simply put: patients use the medications to get better!
Although lengthy in this blog post, identifying and analyzing each of these buying roles in my own organization has helped me to better understand the difference between buyers and users. In the grand scheme of consumer analysis, it has also helped me understand who has the most say in what the consumers are receiving.
Going back to the 9 Need-to-Knows identified by Lehmann and Winer, I was puzzled by the last point: what they are worth. What could they possibly mean by this? Aren't all customers worth the same? What I realized is that it comes down to how much they purchase, at what cost, how frequently, and to what extent. As an out-of-pharmacy example, a firm who makes so many purchases from your organization that they make up about 15% of your gross margin each year would be "worth" much more to your company than a firm who's purchases only make up 1% of your gross margin each year. Losing the 15% firm would be a much more devastating loss to the company than losing the 1% firm. From a pharmacy standpoint (as terrible as it may seem) cancer, HIV/AIDS, and other chronic disease patients are probably "worth" the most since these patients often take many medications and these medications are often some of the most expensive medications on the market. Additionally, all of these conditions are conditions these patients will likely live with for the rest of their life (so longevity of business plays a role). As opposed to a child who gets a one time antibiotic treatment.
Phasing into the lecture discussion of this week, the class discussed some of the reports available in PharmaSim regarding consumer analysis. One of the ones highlighted during the discussion was the intended vs actual customer purchases. The class evaluated which brands' actual purchases were higher than what customers intended to purchase and which brands' actual purchases were lower than what customers intended to purchase. So why does this matter? Because it shows that some brands are able to sway customers away from what they intended on purchasing at the point of purchase. Is our company one of them? Are our biggest competitors one of them? What do we need to change in our marketing strategy to sway customers' actual purchases to be OUR brand? What are some of the marketing strategies being used by other brands who are successful at swaying the customer at point of purchase?
All good answers to these questions were brought up in class except for one factor that I was hoping to hear someone on the recording say but never did: PHARMACIST RECOMMENDATIONS!! If someone intends to buy just a cough suppressant but asks the pharmacist for their recommendation and the pharmacist recommends a combo product that has a cough suppressant and a nasal decongestant the brand could change! So maybe increasing relationships with pharmacists is something to look into for more recommendations of our brand.
I know this blog post is painfully long so I will end it with the discussion requirement. I would say that as a hospital, the marketing and advertising department do a pretty good job at not only marketing the special services offered at our hospital but how they affect the patient and why they are important. For example, by marketing certain surgical options like ACL surgery, carpal tunnel surgery, etc. they explain not only what these surgeries do but how they make the patient FEEL after the surgery as well as the benefits these surgeries offer to the patient's quality of life. Another good example of linking products' functional benefits to the emotional benefits of the consumer is drug company commercials (especially psychiatric medication for depression, bipolar disorder, ADHD, etc.).
Have a great weekend!
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