The future of DTC?
Pharma Blog
People buy experiences not brands
Feb/07/2007 07:11 Permalink
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Why is it that Starbucks, after continually failing taste tests, can command a premium price for a cup of coffee? Why do Starwood hotels have the highest ROI per square foot of rooms compared to Marriott? The answer is that these two companies provide their customers with a superior customer experience. People today don't buy brands..they purchase experiences and if your not charting the touch-points with your customers then you are wasting time and money.


From the fist time your customers see one of your DTC commercials to when they go to your product website your customers are engaging in the brand experience. If it's not a positive interaction for them what do you think is going to happen? Marketers don't focus on this today because they are too busy doing other things but if you chart the customer experience with the brand it can identify potential customer dropouts and help you develop interventions to ensure that these dropouts are minimal. It costs too much money to get customers to interact with your brand for marketers to ignore the touch points yet in my conversations with other DTC marketers that is exactly what is happening.

Starbucks knows that people come into a Starbucks for the brand experience..it's rewarding and something that they do for themselves. It's also cool to walk around with a Starbucks coffee cup. Starwood hotels continually promote the "heavenly shower and bed" which entices business travelers who want to escape the daily hassles of travel today. Because of this superior brand experience they are able to command premium prices and own a position in consumers minds. Pharma companies have not adopted a model like this often because they have to deal with a matrix department to chart the customers experience with the brand.

There are those who believe that customers are not emotional about pharma brands and to them I say simply "untrue". All brand choices are emotional. Let's take the statin category for example; there are a range of products that are all competing for a share of this market from market leader Lipitor to Vytorin. Yet type Lipitor into Google and you will see a host of consumer generated media sites that tell people of their horrible experience with Lipitor. Rather than reach out to these people Pfizer continues to ignore them and a risk that their voices could become louder and sway people to competitors.

The best way to ensure that marketers understand their customers is to simply chart each interaction with the brand. What do we want to have happen and what is happening now? How can we ensure that we execute flawlessly to ensure that each touch point with our customers is a positive one? The market is getting just too competitive today for marketers to ignore the brand experience. It's time to think like consumers instead of marketers..
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Will DTC Spending overtake DTP promotional spending?
Dec/19/2006 05:24 Permalink

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According to IMS Health DTC spending in 2005 was $4.2 billion while DTP spending was $7.2 billion. Although a majority of dollars are still being allocated to DTP spending DTC has been growing by leaps and bounds. Although my colleague John Mack in his Pharma Marketing Blog thinks that DTC advertising will overtake DTC I don't think that will happen
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I believe that some drugs may launch with huge DTC budgets of $100 million or more but that will be an exception rather than a standard. There is just too much inefficiency in mass media to justify those types of budgets. TV costs are increasing at a time when marketers are questioning its effectiveness in driving brand objectives. Just look what happened in the ED wars. There was a time when Cialis, Levitra and Viagra commercials were all over TV, now they are far and few between. Other brands like Enbrel, and their horrible DTC spot with lethal side effects, don't have the dollars to sustain a heavy DTC media plan.


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Why is this happening? Because in the phrama matrix business environment every dollar that you want has to be justified with an ROI model. It's getting tougher for marketers to justify huge budgets when share stays flat or only rises a couple of points. In addition there is ongoing research that shows that patients still rely on their physicians recommendations for medications. I think that we will also see a shift in media spending to more efficient channels like the Internet. The Web can reach more people at a better cost effective model and it's easy to measure the impact of the dollars spent.


DTP spending growth will level out in the near future for several reasons. First, pharmaceutical companies are reducing the size of their sales force. They have come to realize that they can't have 3 reps calling on the same doctor. Physicians are also too busy to see sales reps these days. The average time with a pharmaceutical sales rep continues to decline and more and more physicians are using eCME or eDetailing to get information on new pharmaceutical products. Finally the pharma industry is going to have to think about the reps that they recruit. Most are right out of college and go through training that teaches them the best way to "pitch" the product. If a HCP wants to talk to someone in depth about the compound he or she usually has to find a medical liaison person who more often than not does not have the information the HCP wants.


DTC advertising will continue to play an important role in the brand mix but marketers are going to have to learn to do more with less. Today's time pressed consumers just don't have the time to sit through your message anymore and it's going to get harder to cut through the clutter with relevant messages. Still there are some marketers that will continue to think in "old school" marketing and request a huge media budget to launch new products but when the numbers roll in share had better be tied to the dollars that were spent.

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