Seeking competitive advantage in launching a pharmaceutical product

By Michael Latta | June 1, 2008

Reading time: 9 minutes

Abstract

Launching a new pharmaceutical product requires a coordinated process and must involve marketing research, the author argues. Using AstraZeneca's launch of its Faslodex product, the author explains how a team approach can work well.

Research Topics:: Health Care (Healthcare) Research | The Business of Research
Industry/Market Focus:: Pharmaceutical Products
Content Type: Research Methodology

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It’s not your strategy, it’s your marketing research

Editor’s note: Michael Latta is executive director of YTMBA, a Wilmington, Del., research and consulting firm, and assistant professor of marketing at Coastal Carolina University, Conway, S.C.

In today’s hypercompetitive business climate, the only viable strategies come from primary marketing research. The use of primary marketing research across the product life cycle is necessary to find competitive advantage, which will be defined below as the intersection of market focus, company flexibility and willingness to sacrifice parts of the market to husband resources.

This article will explore the successful development and launch of Faslodex by AstraZeneca - which was supported by primary marketing research throughout product development and at launch - as an excellent example of how to use marketing research in crafting and executing strategic marketing plans.

Elements of strategy

Using a war analogy, Prussian soldier and intellectual Carl von Clausewitz, in what is one of the most important books ever written on strategy, presented the elements of strategy that still apply in marketing warfare and business contexts today (Clausewitz, 1982). His writings emphasized the development and use of strategic judgment, fine-tuned to deal with an ever-changing environment.

Though written during the 1800s, his approach is profoundly relevant today in that it describes the complex and uncertain manner in which real-world events unfold, taking into account both human nature and its attendant lapses of judgment and the complexity of the physical and psychological business world where marketing warfare is conducted. Clausewitz knew that knowledge of the battlefield and one’s opponent was crucial and that abstract ideas and education must always be accompanied by practical experience and information in order to craft and execute effective strategy.

For Clausewitz, actual experience always took precedence over the kind of abstract “truth” that can be transmitted by mathematics, thinking or writing. Thus, marketing strategy must never conflict with reality and must be essentially descriptive of marketing warfare to support judgments about tactics to be employed. Strategic thinking and judgment requires knowledge of the enemy and battlefield.

In updating and adapting Clausewitz’s approach for the American market, Ries and Trout (1986) recognized and adopted Clausewitz’s principle of “going down to the front to see what is going on.” The aim of information-gathering at the front is to devise tactics to handle the unexpected consequences of the current competitive struggle, making the process dynamic. Indeed, there is no cookbook for strategy or an approach that can succeed without direct knowledge of what is going on at the front, where competitive advantage is demonstrated in reality, not as ideas dreamed up in a corporate boardroom.

It is contended here that knowing what is in the mind of the customer is the first step in crafting a strategy that will survive competitive intensity. The reality of the current situation, as defined by customer perceptions, is brought to the strategic planning process in corporations by customer-focused primary marketing research, providing essential information about how the marketing war is being fought and how it can be won through competitive advantage.

Special appeal

In the definition of strategy used here, competitive advantage comes from the intersection of focus, flexibility and sacrifice. Focus means finding the hole in the market or the target market where the product or service has special appeal and advantage relative to competition and concentrating on winning the marketing battle to get trial. Flexibility means we selectively modify the product or service we deliver to match the changing needs or requirements of a particular customer as far as possible to build loyalty. Finally, sacrifice means we realize we cannot be all things to all people in the hypercompetitive global market and avoid expending resources where they are unlikely to provide a return on their investment.

Beginning at the product or service design phase with a customer-focused development process supported by primary marketing research, we can seek competitive advantage early and often. Primary marketing research supplies the information needed to reduce the unpredictability of marketing warfare caused by emotion, chance, rational choices and competitors.

Companies that seek competitive advantage, therefore, need to develop a customer-focused marketing strategy utilizing primary marketing research.

Such a strategy is based on market information and knowledge related to:

knowledge of customer decision algorithms and decision criteria associated with use of products and services;
awareness of customer attitudes, perceptions and beliefs about price, product/service features and benefits, and what the competition is offering;
knowledge of customers’ unaided, aided and proven awareness of all the in-kind and functional competitive products/services;
information about customer activities such as trade shows attended, receptivity to selling efforts, professional or trade journals read, company profile; and
information about customer segments related to their size, profile, media preferences, influence hooks and product/service usage patterns.

Primary marketing research functions to deliver information that:

assists in establishing goals and objectives;
provides measurement of company performance in meeting goals and objectives;
reduces uncertainty in forecasting future demand;
provides timely information to assist in marketing problem-solving;
assists in setting optimal prices;
assists in competitive positioning analysis; and
assists in identifying attractive new market segments or acquisitions.

Power centers

In spite of attempts to eliminate functional silos in corporations, there are still power centers that function relatively independently. In the pharmaceutical industry, there are many power centers that wield great influence over the strategic direction of the company and individual brands and portfolios of brands. Marketing in many cases is less powerful than sales, finance, legal or research and development, making those employees who are most adept at crafting marketing strategy less influential.

To encourage communication of important departments within the corporation with marketing personnel, many pharmaceutical companies have moved toward a less structured, more open system of brand and portfolio teams. These teams include various representatives from the internal functional silos and in some cases external floating members from ad agencies and marketing research firms that have worked on individual brands or portfolios of brands for some years (Latta, 2000).

These internal-external relationships of marketing research suppliers and brand and portfolio team members produce the best marketing information (Latta and Schwartz, 2004). Sometimes the institutional memory of these external floating members of the team exceeds the internal institutional memory of the internal team members due to frequent job changes both within and between pharmaceutical companies by internal team members.

Range of decisions

Regarding strategy issues, the brand or portfolio team must consider a wide range of decisions that are either determinative of strategy or affect the success or failure of an adopted strategy. Each issue must be dealt with in the strategic and marketing plans.

These strategic decisions include, but are not limited to, the following:

What sales message should be communicated about our brand?
Who will use our brand and why?
Who will not use our brand and why?
What position should our brand occupy?
What will competition say about our brand?

Answers to these questions determine the initial success of the execution of our adopted strategy. It is important that all members of the business are in agreement concerning the “best” answers to these questions. Customer-focused primary marketing research is the mechanism for providing objective and accurate information for answering these strategic questions, as illustrated by the Faslodex example.

Begin very early

Some pharmaceutical companies are starting to use primary marketing research very early in the product development process. One success story occurred at AstraZeneca with Faslodex, which is used to treat breast cancer. AstraZeneca used the brand-team approach for Faslodex, with 17 cross-functional members comprising the breast cancer portfolio team. At Faslodex launch, the composition of this team was:

the breast cancer portfolio team positions;
group director, breast cancer portfolio;
brand promotions leader, breast cancer portfolio;
product manager, Nolvadex;
product manager, Faslodex;
brand director, Arimidex;
senior professional relations manager, Faslodex;
two promotions managers, Faslodex;
global brand director, Arimidex;
senior promotions manager, Arimidex;
promotions manager, Arimidex;
professional relations manager, Arimidex;
director, regulatory affairs;
senior medical director, oncology/clinical research, U.S. drug development;
development program director;
senior e-promotions manager, breast cancer portfolio; and
manager, oncology public relations.

The breast cancer portfolio team at AstraZeneca was responsible for marketing three of the top breast cancer drugs worldwide including Nolvadex (tamoxifen), Arimidex (anastrozole) and the new product Faslodex (fulvestrant). The marketing challenge involved managing drugs that are in product life cycle stages ranging from early market development (Faslodex) to growth (Arimidex) to decline (Nolvadex). The goal was to introduce and maximize the impact of the newest product at launch while not cannibalizing the “gold standard” of therapy (Nolvadex) which had been on the market since 1978, and continuing growth of Arimidex. Thus, the breast cancer portfolio team was charged with maximizing awareness and use of Faslodex at launch and growing sales of Arimidex while not killing Nolvadex.

Prior to launching Faslodex in first quarter 2002, AstraZeneca used primary marketing research in the spirit of continuous improvement from 1996 on to prepare for launch in the U.S. market, including:

informing annual reviews and SWOT analysis (strengths-weaknesses-opportunities-threats);
determining what key attributes of Faslodex should be emphasized;
identifying potential barriers to use that would need to be overcome;
identifying unmet needs that Faslodex might address;
crafting and executing a strategy for Faslodex; and
creating a forecast for Faslodex adoption and use.

Faslodex primary marketing research began in early 1996. Using those early research results, AstraZeneca set benchmarks for unaided (44 percent) and total (52 percent) awareness as well as product penetration in terms of trial by U.S. medical oncologists (8 percent).

Starting in the first quarter of 2001, AstraZeneca tracked awareness quarterly and use of Faslodex among U.S. medical oncologists. The pre-launch market development efforts of AstraZeneca were highly successful and grew unaided and total awareness of Faslodex to 100 percent at launch in March of 2002. Trial had reached 4 percent, a little short of the benchmark, while growth in Arimidex was greater than 37 percent in moving annual total prescriptions, and Nolvadex was stable in its gradual decline as a mature product (Product Management Today, 2000).

The Faslodex story illustrates the major components of primary marketing research as strategy implemented in a customer-focused marketing strategy following Clausewitz’s approach. The core concept of strategy identified by Clausewitz and implemented by AstraZeneca includes the competitive moves and business practices utilized by AstraZeneca to attract medical oncologists to:

gain unaided awareness and get trial;
compete successfully in a hyper-competitive market;
grow the existing Arimidex business;
avoid cannibalizing the existing Nolvadex business;
execute operations efficiently; and
achieve goals and objectives based upon information gathered from the market through primary marketing research.

Faslodex went on to become an important and successful product in AstraZeneca’s breast cancer portfolio.

Most effective weapon

In today’s hypercompetitive business climate, the only viable brand and portfolio marketing strategies emerge from primary marketing research. Using customer-focused primary marketing research early in development and across the product life cycle is necessary to find competitive advantage defined as the intersection of market focus, company flexibility and willingness to sacrifice parts of the market to husband resources.

Many pharmaceutical brand managers are either too busy or unable to write their own strategic marketing plans. Consequently, these important documents are written by either advertising agencies or consulting firms. Experience both inside pharmaceutical companies and as an outside supplier of strategic research services to pharmaceutical companies suggests the need for primary marketing research to inform strategic marketing plans as part of an ongoing process.

Key to success

The process of continuously developing an effective strategy is not finished before the war is fought but evolves with new information in real time. No matter how rational and complete an initial analysis of strategic contingencies may be prior to engaging the enemy, ongoing processing of primary information from the front is the key to success. In the battle for competitive advantage, primary marketing research is the pharmaceutical brand and portfolio manager’s most effective weapon and the best way to craft and execute effective marketing strategies (Thompson, Strickland and Gamble, 2005).

References

Clausewitz, C. (1982), On War, first published 1832, translated by Colonel J.J. Graham 1908, edited and abridged by A. Rapoport, reissued 1982, Penguin Books, New York.

Editor (October 2000), The Breast Cancer Portfolio Team AstraZeneca Pharmaceuticals, Product Management Today, pp. 19-20.

Latta, M. (November, 2000), Managing Research Relationships Through Transactional Leadership, Presentation at the Marketing Research Association Fall Education Conference, Ft. Lauderdale, Fla.

Latta, M. and Schwartz, B. (2004), Creating Satisfied Clients, Marketing Research, 16, no. 2, pp. 26-31.

Ries, A. and Trout, J. (1986), Marketing Warfare, New York: McGraw-Hill.

Thompson, Jr., A., Strickland, III, A., and Gamble, J. (2005), Crafting and Executing Strategy, 14th ed., pp. 3-4, New York: McGraw-Hill/Irwin ed.