STRATEGY
as groups whose behaviour is homogenous, since it is shaped by the same motivations. For example, if you target a disease category, say “uncontrolled severe asthma”, then the huge variety of patient behaviours, prescriber preferences and payer constraints within that category makes it very heterogenous. Any single value proposition you make to that category may appeal to some of it but can never appeal to all of it. By contrast, if you target a segment defined as “adherent, motivated but uncontrolled severe asthma patients under innovative, engaged prescribers working in a permissive, value-oriented payer environment” then it is much more likely that the whole segment will behave and respond in the same way. Your marketing strategy will then have a much higher return on investment. In short, the reason many pharma marketing strategies fail is that their target is not a homogenous segment but rather a heterogenous category.
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lesson here is that marketing strategies fail when they compete head-on with larger rivals.
The lesson of marketing strategy failure is that strategies must anticipate market change and cannot hope to react to it.
change is laborious, such as modifying existing care pathways. This embedded market inertia is a powerful force and many marketing strategies in life science markets fail because they simply do not offer enough value to overcome it.
Failure Factor 2: Market inertia
Failure Factor 3: Competitive strength
The second theme to emerge from my interviews was “They liked what we offered, just not enough to change”. This exposed the simple fact that customers always have choice and compare your value proposition to their alternatives, including their current practice. And since, in medical settings, switching almost always has costs and risks, they will only adopt your offer if it is demonstrably better than that alternative. Successful strategies, therefore, offer a value proposition whose aggregate costs and benefits, be they clinical, economic or other, are clearly greater than the aggregate of the alternative. This may sound obvious, but recently published research shows that most pharma strategies make value propositions that are inferior or only marginally superior to the incumbent alternative. Offering little or no reason to change and faced with the sometimes-significant costs and risks of changing, it is unsurprising that many prescribers, payers or patients display apathy towards new products. This is even more true when
After market heterogeneity and inertia, the third failure factor to emerge from my research was competitive intensity, otherwise known as the David and Goliath factor. In the words of one executive “The market leader was just too big. They overwhelmed us”. This comment reveals the issue of competitive intensity, when your competitor enjoys an insuperable resource superiority over you. My research revealed that, whilst this was a common cause of strategy failure, some “David” companies do find a way to kill their opposing “Goliath” in the same way as the biblical hero, by avoiding direct competition. By choosing to compete in a different segment and to compete with a different value proposition from their opponent, they largely nullify their opponent’s strength. These successful Davids focus on achieving a very high share of their target segment rather than a small share of their overall market. Almost always, this leads to a better return on investment than a lessfocussed, whole-market strategy. The
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Failure Factor 4: Competitive Intensity
The fourth failure factor described in my research interviews was when competitors had a particular strength that could not be overcome, such as brand loyalty, low cost or some clinical efficacy factor. “We couldn’t get past their argument” was a typical cry of executives in this case. Again, there was an interesting contrast with those companies that had overcome their competitors’ “unbeatable” strength. Using the market heterogeneity mentioned in failure factor 1, these successful companies focus their resources into a market segment where their own strengths – for example, ease of use or low side effect profile – are important and where their own weaknesses – for example, their cost or their brand reputation – are less relevant. At the same time, they withdraw resources from market segments where their strengths are not appreciated and their weaknesses are important to patients, payers or professionals. By aligning their marketing strategy (remember: choice of target and value proposition!) so as to leverage their strengths and mitigate their weaknesses, these companies chose to fight the battles they were most likely to win. By contrast, firms that did not seriously consider their own relative strengths and weaknesses inevitably found themselves fighting a battle in which they were at a disadvantage. Failure factor 4 therefore reveals that marketing strategies fail when they neglect to fully consider internal strengths and weaknesses. Failure Factor 5: Market Movement
The fifth finding of my research was perhaps the saddest. Some executives told me “We did everything right, but the market moved”. This of course reveals the obvious truth that pharma and medtech companies operate in a world of rapid social and technological
