As a first time "marketer" I can easily admit that in writing and synthesizing our marketing plan for Allround we clearly had some goals that were too high to reach as well as strategy implementations that were simply too strict to follow to a "T" without risking harm to the brand. For example, a situation analysis had revealed that our sales force allocation was inefficient and likely due to increasing sales force by too great of a magnitude each period. Therefore in our marketing strategy plan we said that we would not increase sales force by more than 5 employees per period. We also said that any channel growth would receive an additional employee for every 5% growth that channel experienced. We quickly saw that although these were good strategies to make sales force efficient in theory, they were conflicting and unrealistic. For some periods, every channel grew more than 5%... some even 15%. This resulted in needing to add 9 sales force personnel (which deviated from what we had planned to do in our strategy).
However, no plan is ever implemented perfectly and our group can certainly attest to that. We had to weigh the benefits vs. risks in deviating from the plan. In keeping with the example mentioned above: a benefit of deviating from the plan was that we would be giving growing channels more sales force support despite the rule of only adding 5 vs. risking not supporting those growing channels because we were limited to only 5 per period.
The moral of the story: the marketing plan was the guideline to follow, but exceptions were made and rules were tweaked a bit in order to stay competitive with the constant changes in the market.
Overall, I would say that our team is satisfied with the results of our marketing plan implementation. During the periods before writing the marketing plan, we were not succeeding by any means... our sales were dropping, we were losing market share, our net income was plummeting along with our stock price... it was just overall not pretty. However, by identifying strengths, weaknesses, opportunities, and threats, we were able to make decisions based upon where we stood and where we wanted to go (up!). One of the ways we were able to do so was by introducing a new product to an attractive market and using our company's competitive advantage.
We had one period between periods 3 and 7 that we did not do as well (period 5 I think?). However, we noticed that there was just a negative growth in all sales across all channels in the market, so we're hoping that it wasn't just poor decision making! Either way, we took as much information from the research reports, social media comments, market updates, and special situations that we could in order to prepare ourselves to make the best decision IN CONTEXT. I emphasize this because what may be the best decision one period. could turn out to be a bad decision in another period... everything changes... including markets.
Looking forward a bit onto the revision of the strategy memo, there will definitely be some changes made. Mostly, I think we will keep our overall strategy the same but change some of the minor details we had made at the end of period 2. There will likely be much looser requirements/budget limits to account for situational changes each period. In this way, we will not feel like we "have to stick to the plan" rather than taking a great opportunity available to us.
Friday, August 30, 2013
Sunday, August 25, 2013
Marketing Plan Strategy
This past week was a very busy one, filled with lots of typing, brainstorming, skyping, and stressing. Our team spent most of our week discussing which strategy plans would be best for our company. We identified four major issues:
-poor participation in co-op advertising and point of purchase promotion
-low pharmacist and doctor recommendations
-declining market share
-possibilities to introduce new product lines/reformulate
Our team decided to tackle these issues in a few different ways.
In order to solve the issue of low participation in our advertising and promotion programs, we decided to dedicate more of our budget to these areas. However, at the same time we limited our advertising budget to $15M since research showed that our brand spent the most on advertising of all the competition. Since we are the market leader, we typically don't have to spend as much on advertising as brands who are fighting to become the market leader.
In order to increase recommendations by pharmacists and doctors, we had a pretty simple solution: increase the number of detailers.
Our declining market share was a big concern of ours. We had multiple ideas in order to increase or keep our current market share. One of these strategies was to target our advertising towards demographic groups who Allround is not the most frequent brand purchased. By doing this, groups who do not often purchase our brand will receive more advertising messages about our product and thus be more likely to purchase Allround. We also chose to change our advertising messages to more reminder messages since our brand is a market leader at its mature stage. We drastically decreased our comparison messages to less than 5% since market leaders do not typically compare themselves to the competition. This was a flaw of the marketing team in the past few periods. Another strategy that we hoped would increase or maintain market share was the introduction of a new product in the upcoming periods. One of the options for product introduction is a unique allergy capsule that is non-drowsy due to an ingredient that the company will submit for OTC use to the FDA. This would give Allround a superior advantage over the competition in the allergy market. In addition, our team conducted a market attractiveness analysis and found that the allergy market in all demographics is a very attractive one to enter.
These are some of the strategies that our marketing team chose to pursue in order to address our major key issues. Of course, there are many other modifications that the marketing team may make in the upcoming periods but none of them are addressed specifically to the four identified key issues. We hope that these changes will help to solve these issues and put our brand in a better position to maintain market leader status and profitability.
Overall, the assignment was very stressful and time consuming. I must say that trying to fit four very busy people's schedules into meeting multiple times a week is not easy. We did the best we could to not simply assign sections but rather discuss each section as a team to decide where we wanted to aim our efforts. Although I was not at all a fan of the situation analysis, it truly ended up being a gift when writing the strategy plan. Most of our issues were identified by the situation analysis which made the assignment that much easier.
We will see how our brand does in the upcoming periods when we implement our plan. Here's to wishful thinking!
-poor participation in co-op advertising and point of purchase promotion
-low pharmacist and doctor recommendations
-declining market share
-possibilities to introduce new product lines/reformulate
Our team decided to tackle these issues in a few different ways.
In order to solve the issue of low participation in our advertising and promotion programs, we decided to dedicate more of our budget to these areas. However, at the same time we limited our advertising budget to $15M since research showed that our brand spent the most on advertising of all the competition. Since we are the market leader, we typically don't have to spend as much on advertising as brands who are fighting to become the market leader.
In order to increase recommendations by pharmacists and doctors, we had a pretty simple solution: increase the number of detailers.
Our declining market share was a big concern of ours. We had multiple ideas in order to increase or keep our current market share. One of these strategies was to target our advertising towards demographic groups who Allround is not the most frequent brand purchased. By doing this, groups who do not often purchase our brand will receive more advertising messages about our product and thus be more likely to purchase Allround. We also chose to change our advertising messages to more reminder messages since our brand is a market leader at its mature stage. We drastically decreased our comparison messages to less than 5% since market leaders do not typically compare themselves to the competition. This was a flaw of the marketing team in the past few periods. Another strategy that we hoped would increase or maintain market share was the introduction of a new product in the upcoming periods. One of the options for product introduction is a unique allergy capsule that is non-drowsy due to an ingredient that the company will submit for OTC use to the FDA. This would give Allround a superior advantage over the competition in the allergy market. In addition, our team conducted a market attractiveness analysis and found that the allergy market in all demographics is a very attractive one to enter.
These are some of the strategies that our marketing team chose to pursue in order to address our major key issues. Of course, there are many other modifications that the marketing team may make in the upcoming periods but none of them are addressed specifically to the four identified key issues. We hope that these changes will help to solve these issues and put our brand in a better position to maintain market leader status and profitability.
Overall, the assignment was very stressful and time consuming. I must say that trying to fit four very busy people's schedules into meeting multiple times a week is not easy. We did the best we could to not simply assign sections but rather discuss each section as a team to decide where we wanted to aim our efforts. Although I was not at all a fan of the situation analysis, it truly ended up being a gift when writing the strategy plan. Most of our issues were identified by the situation analysis which made the assignment that much easier.
We will see how our brand does in the upcoming periods when we implement our plan. Here's to wishful thinking!
Friday, August 16, 2013
Short and Sweet!
Ahh.. short and sweet it is! This week's blogpost simply is to choose five metrics that we feel our PharmaSim progress should be evaluated with.
1. Customer Satisfaction
2. Brand Awareness
3. Market Share
4. Gross Margin
5. Units Sold
There it is! Have a great weekend :)
1. Customer Satisfaction
2. Brand Awareness
3. Market Share
4. Gross Margin
5. Units Sold
There it is! Have a great weekend :)
Thursday, August 8, 2013
PharmaSim Team Play Progress
Happy Thursday!
The weekend is near and we are already a week into August. Where did the summer go?!
This week we began our oh-so-anticipated team play in the PharmaSim simulation. It seemed like we had little time to truly discuss as a group what decisions we wanted to make each period before advancing to the next (although we were only allowed to advance 2 periods total). Our team communication seemed to be slow and a little lacking due to everyone's different busy schedules. Nonetheless, we were able to make some decisions and see/evaluate the outcomes.
Disclaimer: I was not the individual making decisions on our team's PharmaSim account, I simply participated in group discussion. That being said, I may not be 100% accurate on reporting the changes and decisions made by our group in the first two periods.
In the first (0) period, I don't believe that we made a whole lot of changes. Our market update said that mass merchandisers were the largest group increasing in growth so as a result, we increased our sales force that was focused on mass merchandisers by a few people. Additionally, we rose our price about ten cents to compensate with the increase in prices and inflation. Our competition also introduced a new cold liquid that was similar to our Allround brand cold liquid. Because of this, we chose to use this product as a comparison product in our advertising. We also introduced trial sizes of our product and purchased all of the research reports. Lastly, we chose to make a Facebook and Twitter account for our brand along with some web advertising.
Now that I re-read all that I typed I suppose we made more decisions than I originally thought! Surely not as many as our next period though...
So the results were in and our stock price had dropped a bit.. along with sales. We couldn't seem to figure out what we did wrong. The newest market update said that we should check our sales force to see if it was ideal but we only increased the mass merchandising sales force by a couple of people and compared to other companies we seemed to be equal to them. Our Facebook and Twitter accounts were doing well. What could've been the problem?!
In the second (1) period, we made A LOT of decisions... I mean A LOT! Perhaps this was our downfall since the outcomes of this period were also not that hot. We had been over the budget by about 2 million I believe (don't know how it got there!) so we had to make some budget cuts. Since we had purchased the research reports showing advertising and promotion spending for other companies, we were able to see that these budgets were much larger from our company than any other brand... by quite a bit (maybe a few million). So we cut the advertising budget from 20million to 18million which was still higher than most advertising budgets of the competition. Similarly, we cut the promotion budget from 1.4 million to 1.2 million for both co-op and consumer promotion. We increased our co-op to 17% allowance since we found our percent participating to be only 0.9%. We decided to add "relieves allergies" to our advertising messages since previously it had not been included (our product has the maximum allowable amount of antihistamine which is used to treat allergies). We decreased the amount of advertising used in comparison messages and increased the amount of advertising by benefits and primary messages. We also put more budget money towards trial sizes and coupons. Since convenience stores were reported to be the highest in growth by the market update, we increased our sales force by a few people in this area.
There were multiple incidents within these first two periods in which our group had to make tough decisions. For time and length sake, I will speak of two. The first incident was that we had a batch of medicine that was shortly expiring. We had the option to sell it anyways but have to accept returns back and risk our good reputation/relationship with these retailers, dump the batch and lose $100,000, or sell it below price to a special buyer who would not pay full price. We did not feel that it would be a good decision to try and sell it anyways because we did not want to risk our relationship with our customers. We also didn't want to sell that batch for less than it was worth to a semi-sketchy buyer. So we chose to bite the bullet and dump the batch and lose $100,000.
The second incident was that we had the choice to reformulate our product. We had the choice to drop the alcohol or switch from a cough suppressant to an expectorant. We decided not to drop the alcohol because we didn't find it to have much of a benefit. The small amount of alcohol in the product helps the patient to rest, so in some ways this would actually decrease the benefits of our product. We chose not to switch from a cough suppressant to an expectorant. While these two classes of drugs do very different things, the same percent of symptoms were reported (60% reporting cough and 60% reporting chest congestion). So by looking at the reported symptoms, there was no benefit of one or the other. Competition wise, no matter what formulation we chose, we would be one of two brands offering it. If the switch made us the only company to offer a product with a class of drug than we would have chosen this choice. But because we would have had the same number of competitors with the same amounts of reported symptoms, we chose not to reformulate and leave the original formula.
To wrap this up, I know this post was mostly about what I did in PharmaSim but the truth is... that's all that I really focused on this week. The lecture surrounded itself around the module as did much of the discussion. So while this post may not have been about articles or videos or chapters from textbooks, I most certainly am advancing my marketing knowledge by virtually testing the outcomes of my group's various marketing decisions.
The weekend is near and we are already a week into August. Where did the summer go?!
This week we began our oh-so-anticipated team play in the PharmaSim simulation. It seemed like we had little time to truly discuss as a group what decisions we wanted to make each period before advancing to the next (although we were only allowed to advance 2 periods total). Our team communication seemed to be slow and a little lacking due to everyone's different busy schedules. Nonetheless, we were able to make some decisions and see/evaluate the outcomes.
Disclaimer: I was not the individual making decisions on our team's PharmaSim account, I simply participated in group discussion. That being said, I may not be 100% accurate on reporting the changes and decisions made by our group in the first two periods.
In the first (0) period, I don't believe that we made a whole lot of changes. Our market update said that mass merchandisers were the largest group increasing in growth so as a result, we increased our sales force that was focused on mass merchandisers by a few people. Additionally, we rose our price about ten cents to compensate with the increase in prices and inflation. Our competition also introduced a new cold liquid that was similar to our Allround brand cold liquid. Because of this, we chose to use this product as a comparison product in our advertising. We also introduced trial sizes of our product and purchased all of the research reports. Lastly, we chose to make a Facebook and Twitter account for our brand along with some web advertising.
Now that I re-read all that I typed I suppose we made more decisions than I originally thought! Surely not as many as our next period though...
So the results were in and our stock price had dropped a bit.. along with sales. We couldn't seem to figure out what we did wrong. The newest market update said that we should check our sales force to see if it was ideal but we only increased the mass merchandising sales force by a couple of people and compared to other companies we seemed to be equal to them. Our Facebook and Twitter accounts were doing well. What could've been the problem?!
In the second (1) period, we made A LOT of decisions... I mean A LOT! Perhaps this was our downfall since the outcomes of this period were also not that hot. We had been over the budget by about 2 million I believe (don't know how it got there!) so we had to make some budget cuts. Since we had purchased the research reports showing advertising and promotion spending for other companies, we were able to see that these budgets were much larger from our company than any other brand... by quite a bit (maybe a few million). So we cut the advertising budget from 20million to 18million which was still higher than most advertising budgets of the competition. Similarly, we cut the promotion budget from 1.4 million to 1.2 million for both co-op and consumer promotion. We increased our co-op to 17% allowance since we found our percent participating to be only 0.9%. We decided to add "relieves allergies" to our advertising messages since previously it had not been included (our product has the maximum allowable amount of antihistamine which is used to treat allergies). We decreased the amount of advertising used in comparison messages and increased the amount of advertising by benefits and primary messages. We also put more budget money towards trial sizes and coupons. Since convenience stores were reported to be the highest in growth by the market update, we increased our sales force by a few people in this area.
There were multiple incidents within these first two periods in which our group had to make tough decisions. For time and length sake, I will speak of two. The first incident was that we had a batch of medicine that was shortly expiring. We had the option to sell it anyways but have to accept returns back and risk our good reputation/relationship with these retailers, dump the batch and lose $100,000, or sell it below price to a special buyer who would not pay full price. We did not feel that it would be a good decision to try and sell it anyways because we did not want to risk our relationship with our customers. We also didn't want to sell that batch for less than it was worth to a semi-sketchy buyer. So we chose to bite the bullet and dump the batch and lose $100,000.
The second incident was that we had the choice to reformulate our product. We had the choice to drop the alcohol or switch from a cough suppressant to an expectorant. We decided not to drop the alcohol because we didn't find it to have much of a benefit. The small amount of alcohol in the product helps the patient to rest, so in some ways this would actually decrease the benefits of our product. We chose not to switch from a cough suppressant to an expectorant. While these two classes of drugs do very different things, the same percent of symptoms were reported (60% reporting cough and 60% reporting chest congestion). So by looking at the reported symptoms, there was no benefit of one or the other. Competition wise, no matter what formulation we chose, we would be one of two brands offering it. If the switch made us the only company to offer a product with a class of drug than we would have chosen this choice. But because we would have had the same number of competitors with the same amounts of reported symptoms, we chose not to reformulate and leave the original formula.
To wrap this up, I know this post was mostly about what I did in PharmaSim but the truth is... that's all that I really focused on this week. The lecture surrounded itself around the module as did much of the discussion. So while this post may not have been about articles or videos or chapters from textbooks, I most certainly am advancing my marketing knowledge by virtually testing the outcomes of my group's various marketing decisions.
Thursday, August 1, 2013
Consumer Analysis: Know Your Customer!
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!
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!
Wednesday, July 24, 2013
Competitor Analysis and Miscellaneous Discussion
Let me start with this: I was NOT the one who said I swore by using the Neti Pot. I have never used a Neti Pot and although I know the counseling information that a pharmacist would be required to give to a patient, I don't think I will EVER use one... pouring water up my nose just isn't my thing!
This week was yet another week with a lot of material to take in. The main topic? Competitor analysis.
We started by learning what competitor analysis was... what to look for, who to identify, what to identify, what this data all means, and how it pertains to marketing decisions for OUR organization. Of course, there's no need to go through all of the steps (as its in plenty of the chalk board talks, lecture material, articles, chapter readings, etc.). But I'd like to extend a question; a question I didn't necessarily have until listening to this week's recorded lecture, and I would've asked the class/professor had I been able to connect synchronously this week (night shift is never a convenient shift!).
The very first question to ask in a competitor analysis is WHO. Who are our competitors? Now as Professor Spotts mentioned in the lecture, this depends on how broad or narrow of a spectrum you view your competition. This got me thinking about my own organization, the hospital. We have a major advantage over other "area" hospitals. My organization owns three different hospitals in the area, each within 15 miles of one another. There is one other hospital in the area which is relatively smaller in size than our hospitals. Other than our three hospitals and the one of the competitor, patients would have to travel to either the Boston or Providence area to seek care and each is about a 45 minute drive; not ideal for the type of health service they are seeking if it is an emergency. However, this doesn't mean patients won't make the drive. Is it common? Probably not, but it most certainly does happen. So are Boston and Providence hospitals within the realm of competitors? It gets you thinking... is radius a factor in analyzing competitors? Certainly for big name companies with plants and distributors all over the country or world radius is not a factor. But for a hospital organization that only typically serves a concrete area/community I think that you could argue that it does play a role. We really have no need to view Beth Israel Deaconess Hospital or Mass General as a competitor because they are so far away and it is unlikely that patients will seek care there instead of our hospital. However, the competitor's hospital located just a few miles from one of our sites is certainly a target!
Going off of that, it depends on the service they are seeking. For example, it is unlikely that someone suffering a sudden heart attack or stroke is going to be taken an hour away to Boston to be treated. It is an emergency, and time is critical. However, for cancer patients who schedule their chemotherapy treatment sessions months in advance, time is on their side. They are able to schedule appointments with big well known cancer care centers such as Dana Farber in Boston. Or take someone who is scheduling same day surgery that doesn't require admittance. They too have time on their side to decide where they would like to go. And they base this decision off of what they have heard about different hospitals, how well they know the "brand" of the hospital, and their judgement on the quality of care provided.
For these reasons, my organization developed two local oncology centers in the area to provide chemotherapy treatment close to home. Access was one major issue cancer patients in the area were having. My organization saw this need and developed a marketing plan to make this need satisfied by our company. No other competitor has that going for them. It has been hugely successful in the two years it has been in operation. Then again, perhaps its success is attributed to the fact that it is the only location in the area that these patients can get their treatment. Who's to say that if our competitor also builds an oncology center in the area that we won't lose our customers to them? This is why keeping an eye on the competitors is essential to keep the advantage over them and to ensure that any growth opportunity in the market is seized.
I also found a particular slide used in the lecture to be very intriguing. It's titled "Behaviors exhibited by a competitor under pressure to improve profits/cash flow". Many of these characteristics are present in my own organization. For example, "not recruiting new people as employees retire; shrinking work force." THIS IS THE EXACT SAME ISSUE MY DEPARTMENT/ORGANIZATION IS FACING! When we have pharmacy students who graduate, they can no longer be interns; they either are hired as pharmacists or they leave and find work elsewhere. Over the past three years that I have been there, 4 students have graduated and only 2 new students were hired to replace them. Additionally, we have lost at least 5 per diems over the last two years and we have only gained 3 back. Our department is shrinking and shrinking, and its certainly not because there is no one to fill the positions.... its because they never repost and hire for the positions lost. This leaves us working short, nearly everyday. I have been working 48+ hours a week and am currently on my 10th day working in a row out of a 12 day stretch. Prior to this I did a 9 day stretch and starting next Monday I will also be on another 9 day stretch. It is absolutely absurd. I keep asking "Why are we always so short people? Why arn't they hiring anyone to fill that vacant position?" The answer: that position was never approved to be refilled. So when I saw this slide, it fit like a puzzle piece.
PharmaSim update: Well, I have finally found some time to play around with the simulation. I did great my first period, increasing my net income and my stock price rose $10. However, I have played four periods since and down down down I have gone. I'm still not sure what I'm doing wrong. I suppose I have to pay closer attention to the reports given to me before I make my decisions. Additionally, last week I had commented in my blog about a classmate who was having difficulty with capacity. Unfortunately, I am having the same issue and don't know how to avoid being over capacity. Is there a way to tell?
That about wraps this week's blog post up! I apologize for the length and detail about my organization regarding competitors and being under pressure. Its just that I find it extremely satisfying and rewarding when you apply concepts from a book or a lecture powerpoint to something you are activity involved in and trying to improve. Until next week!
Jennie
This week was yet another week with a lot of material to take in. The main topic? Competitor analysis.
We started by learning what competitor analysis was... what to look for, who to identify, what to identify, what this data all means, and how it pertains to marketing decisions for OUR organization. Of course, there's no need to go through all of the steps (as its in plenty of the chalk board talks, lecture material, articles, chapter readings, etc.). But I'd like to extend a question; a question I didn't necessarily have until listening to this week's recorded lecture, and I would've asked the class/professor had I been able to connect synchronously this week (night shift is never a convenient shift!).
The very first question to ask in a competitor analysis is WHO. Who are our competitors? Now as Professor Spotts mentioned in the lecture, this depends on how broad or narrow of a spectrum you view your competition. This got me thinking about my own organization, the hospital. We have a major advantage over other "area" hospitals. My organization owns three different hospitals in the area, each within 15 miles of one another. There is one other hospital in the area which is relatively smaller in size than our hospitals. Other than our three hospitals and the one of the competitor, patients would have to travel to either the Boston or Providence area to seek care and each is about a 45 minute drive; not ideal for the type of health service they are seeking if it is an emergency. However, this doesn't mean patients won't make the drive. Is it common? Probably not, but it most certainly does happen. So are Boston and Providence hospitals within the realm of competitors? It gets you thinking... is radius a factor in analyzing competitors? Certainly for big name companies with plants and distributors all over the country or world radius is not a factor. But for a hospital organization that only typically serves a concrete area/community I think that you could argue that it does play a role. We really have no need to view Beth Israel Deaconess Hospital or Mass General as a competitor because they are so far away and it is unlikely that patients will seek care there instead of our hospital. However, the competitor's hospital located just a few miles from one of our sites is certainly a target!
Going off of that, it depends on the service they are seeking. For example, it is unlikely that someone suffering a sudden heart attack or stroke is going to be taken an hour away to Boston to be treated. It is an emergency, and time is critical. However, for cancer patients who schedule their chemotherapy treatment sessions months in advance, time is on their side. They are able to schedule appointments with big well known cancer care centers such as Dana Farber in Boston. Or take someone who is scheduling same day surgery that doesn't require admittance. They too have time on their side to decide where they would like to go. And they base this decision off of what they have heard about different hospitals, how well they know the "brand" of the hospital, and their judgement on the quality of care provided.
For these reasons, my organization developed two local oncology centers in the area to provide chemotherapy treatment close to home. Access was one major issue cancer patients in the area were having. My organization saw this need and developed a marketing plan to make this need satisfied by our company. No other competitor has that going for them. It has been hugely successful in the two years it has been in operation. Then again, perhaps its success is attributed to the fact that it is the only location in the area that these patients can get their treatment. Who's to say that if our competitor also builds an oncology center in the area that we won't lose our customers to them? This is why keeping an eye on the competitors is essential to keep the advantage over them and to ensure that any growth opportunity in the market is seized.
I also found a particular slide used in the lecture to be very intriguing. It's titled "Behaviors exhibited by a competitor under pressure to improve profits/cash flow". Many of these characteristics are present in my own organization. For example, "not recruiting new people as employees retire; shrinking work force." THIS IS THE EXACT SAME ISSUE MY DEPARTMENT/ORGANIZATION IS FACING! When we have pharmacy students who graduate, they can no longer be interns; they either are hired as pharmacists or they leave and find work elsewhere. Over the past three years that I have been there, 4 students have graduated and only 2 new students were hired to replace them. Additionally, we have lost at least 5 per diems over the last two years and we have only gained 3 back. Our department is shrinking and shrinking, and its certainly not because there is no one to fill the positions.... its because they never repost and hire for the positions lost. This leaves us working short, nearly everyday. I have been working 48+ hours a week and am currently on my 10th day working in a row out of a 12 day stretch. Prior to this I did a 9 day stretch and starting next Monday I will also be on another 9 day stretch. It is absolutely absurd. I keep asking "Why are we always so short people? Why arn't they hiring anyone to fill that vacant position?" The answer: that position was never approved to be refilled. So when I saw this slide, it fit like a puzzle piece.
PharmaSim update: Well, I have finally found some time to play around with the simulation. I did great my first period, increasing my net income and my stock price rose $10. However, I have played four periods since and down down down I have gone. I'm still not sure what I'm doing wrong. I suppose I have to pay closer attention to the reports given to me before I make my decisions. Additionally, last week I had commented in my blog about a classmate who was having difficulty with capacity. Unfortunately, I am having the same issue and don't know how to avoid being over capacity. Is there a way to tell?
That about wraps this week's blog post up! I apologize for the length and detail about my organization regarding competitors and being under pressure. Its just that I find it extremely satisfying and rewarding when you apply concepts from a book or a lecture powerpoint to something you are activity involved in and trying to improve. Until next week!
Jennie
Friday, July 19, 2013
Blowing the Budget for a Shot at Success
This week's topics revolved around market research and analysis. Through the class discussion, assigned readings, chalk board talks, and education portal videos, we were able to absorb A LOT of information regarding the ins and outs of conducting market research and what it all means. Prior to this week I really didn't comprehend the importance behind market research. I always presumed it was done just to gather information and use it to back up ideas people might have. After this week, I know the vitality of market research and the role it plays in a marketing department's decision making. Not only the conducting of the research, but also its skillful analysis of what it all means and how to apply it to decisions for your company.
While I certainly am in no such position to be doing this at MY organization, I must admit that it was semi thrilling to be the one calling the shots on Pharmasim. I haven't had much time to play around with the simulation but I did get the chance to complete one period. However, I'm now starting to think I may have made too many decisions in one period. I was having a tough time trying to start off. As one of my classmates mentioned in class, there's so many decisions you can make... where do you begin? Well, I began by looking at the market update tab and I think that this was tremendously helpful. It gives you all of the news that is coming out about the market to help you aim your decisions where the trends are going. For example, I saw in the market update that a competitor came out with a new cold medicine that was similar to Allround's current cold medicine. So I adapted my advertising to be much higher in benefits and reminder messages and changed the brand of comparison messages to compare it to Dryup. The market update also said that mass merchandisers were increasing exceptionally. I increased the sales force all across the board but especially mass merchandiser since they were the category with the most growth. I also dropped the price by $0.10 in hopes that since it was cheaper than other products customers would be more willing to buy them. I also increased my coupon offerings from $0.50 off to $1.00 off. This was also in the hopes that having a whole dollar off would get more people to try and purchase Allround medicine.
The net result was pretty good when I advanced the simulation. The stock price increased by about $10 and there was a 16.2% increase in revenue with a 21.9% increase in net income. I was pretty pleased with this... especially for my first period!
One catch... I nearly spent my entire budget on sales force. Now luckily for me, I didn't know that you necessarily got more in the budget when you advanced the simulation. So I was worried that I had 0.1 million left in the budget with no promise of more, and more decisions to make in future periods. I am happy to say that when I want to make decisions in the second period I now have $3.2 million to spend.
So what did I learn from all of this? Tons! I'll admit that when I was first looking at the simulation I began making my decisions off of nothing more than what I wanted to do. I wanted to drop the price so I did... I wanted to offer a bigger coupon discount so I did... There was no reasoning behind my decisions. However as I mentioned above, when I found the market update tab all of my decisions started to be carefully thought out and planned; they began to have a meaning. I didn't just increase mass merchandiser sales force because I felt like doing so, but rather because the market research showed that this particular segment was growing and I wanted to prepare the business for this growth by providing them more sales support. The same can go for why I chose to advertise and compare against Dryup... because they were the biggest competition! The pieces started coming together.
So in period #1, the total cost of the surveys cost $458,920. That's a ton of money! The budget for that period is $3.2 million. So I suppose in the grand scheme of things, it really isn't too expensive to purchase SOME of these reports. Professor Spotts recommended that we purchase some research in order to be best prepared to make decisions when we start our group play. But it is pretty clear that buying ALL of them would take a huge chunk out of the budget and some reports may not give very useful information (compared to how much they are costing you!). I hope to make some more decisions and advance the simulation further to see the results of my decision making and whether or not they were the right decisions to make based upon the market research available to me and the analysis I conducted.
Neil's blog this week was helpful for me to read. He discusses his problems about reaching/exceeding capacity. Since I have only completed one period, I'm not quite sure what problem he is dealing with. However, I was glad to have read his section about capacity because it now gives me insights into a problem that may occur and how to avoid it! He also mentions offering a brand new product and all of the costs added to this process. This too is something that I have not yet reached in the simulation but I will be sure to really think about starting a new product before I make that decision!
Another classmates blog that I found interesting and helpful was Greg's. Although he posted it today, I will certainly be using his blog as a guide for my next Pharmasim decisions. He posted an excellent photo of his own simulation statistics where he shows the budget allocation into each area: promotion, advertising, sales force, and research. This screen shows the budget allocation in both monetary amounts as well as percent of the overall budget. I honestly don't think I would have found this screen and I can't thank Greg enough for posting that photo! Thank you, thank you, thank you! I will definitely be referencing that tool in my future decisions!
Finally, we were asked to identify a classmate's question that we found interesting this week. I think that of all the questions, Adam Wopschall's question was the most intriguing:
"When we look at SLEPT, do some influences carry more weight than others or is this dependent on the organization and industry marketers work in?"
By SLEPT he is referring to the social, legal, economical, political, and technical factors that influence a company's decision making. We discussed this at large in the online class meeting/discussion. It seemed as though each classmate's organization differed in the weights that played the biggest role. For some, economic factors played the largest role and for others it was legal factors. So to answer Adam's question, I would say that yes, it depends on the organization and industry of the marketers!
Cheers to the weekend! And to more Pharmasim decisions on the way!
While I certainly am in no such position to be doing this at MY organization, I must admit that it was semi thrilling to be the one calling the shots on Pharmasim. I haven't had much time to play around with the simulation but I did get the chance to complete one period. However, I'm now starting to think I may have made too many decisions in one period. I was having a tough time trying to start off. As one of my classmates mentioned in class, there's so many decisions you can make... where do you begin? Well, I began by looking at the market update tab and I think that this was tremendously helpful. It gives you all of the news that is coming out about the market to help you aim your decisions where the trends are going. For example, I saw in the market update that a competitor came out with a new cold medicine that was similar to Allround's current cold medicine. So I adapted my advertising to be much higher in benefits and reminder messages and changed the brand of comparison messages to compare it to Dryup. The market update also said that mass merchandisers were increasing exceptionally. I increased the sales force all across the board but especially mass merchandiser since they were the category with the most growth. I also dropped the price by $0.10 in hopes that since it was cheaper than other products customers would be more willing to buy them. I also increased my coupon offerings from $0.50 off to $1.00 off. This was also in the hopes that having a whole dollar off would get more people to try and purchase Allround medicine.
The net result was pretty good when I advanced the simulation. The stock price increased by about $10 and there was a 16.2% increase in revenue with a 21.9% increase in net income. I was pretty pleased with this... especially for my first period!
One catch... I nearly spent my entire budget on sales force. Now luckily for me, I didn't know that you necessarily got more in the budget when you advanced the simulation. So I was worried that I had 0.1 million left in the budget with no promise of more, and more decisions to make in future periods. I am happy to say that when I want to make decisions in the second period I now have $3.2 million to spend.
So what did I learn from all of this? Tons! I'll admit that when I was first looking at the simulation I began making my decisions off of nothing more than what I wanted to do. I wanted to drop the price so I did... I wanted to offer a bigger coupon discount so I did... There was no reasoning behind my decisions. However as I mentioned above, when I found the market update tab all of my decisions started to be carefully thought out and planned; they began to have a meaning. I didn't just increase mass merchandiser sales force because I felt like doing so, but rather because the market research showed that this particular segment was growing and I wanted to prepare the business for this growth by providing them more sales support. The same can go for why I chose to advertise and compare against Dryup... because they were the biggest competition! The pieces started coming together.
So in period #1, the total cost of the surveys cost $458,920. That's a ton of money! The budget for that period is $3.2 million. So I suppose in the grand scheme of things, it really isn't too expensive to purchase SOME of these reports. Professor Spotts recommended that we purchase some research in order to be best prepared to make decisions when we start our group play. But it is pretty clear that buying ALL of them would take a huge chunk out of the budget and some reports may not give very useful information (compared to how much they are costing you!). I hope to make some more decisions and advance the simulation further to see the results of my decision making and whether or not they were the right decisions to make based upon the market research available to me and the analysis I conducted.
Neil's blog this week was helpful for me to read. He discusses his problems about reaching/exceeding capacity. Since I have only completed one period, I'm not quite sure what problem he is dealing with. However, I was glad to have read his section about capacity because it now gives me insights into a problem that may occur and how to avoid it! He also mentions offering a brand new product and all of the costs added to this process. This too is something that I have not yet reached in the simulation but I will be sure to really think about starting a new product before I make that decision!
Another classmates blog that I found interesting and helpful was Greg's. Although he posted it today, I will certainly be using his blog as a guide for my next Pharmasim decisions. He posted an excellent photo of his own simulation statistics where he shows the budget allocation into each area: promotion, advertising, sales force, and research. This screen shows the budget allocation in both monetary amounts as well as percent of the overall budget. I honestly don't think I would have found this screen and I can't thank Greg enough for posting that photo! Thank you, thank you, thank you! I will definitely be referencing that tool in my future decisions!
Finally, we were asked to identify a classmate's question that we found interesting this week. I think that of all the questions, Adam Wopschall's question was the most intriguing:
"When we look at SLEPT, do some influences carry more weight than others or is this dependent on the organization and industry marketers work in?"
By SLEPT he is referring to the social, legal, economical, political, and technical factors that influence a company's decision making. We discussed this at large in the online class meeting/discussion. It seemed as though each classmate's organization differed in the weights that played the biggest role. For some, economic factors played the largest role and for others it was legal factors. So to answer Adam's question, I would say that yes, it depends on the organization and industry of the marketers!
Cheers to the weekend! And to more Pharmasim decisions on the way!
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