A new approach to pharmaceutical sales and marketing: Sustainable competitive advantage through psychographic segmentation
*THE CHALLENGE*
By on Jan 4, 2006THE CHALLENGE
The challenges facing brand name Pharma companies today are immense. Given the current environment in which competition for customer loyalty is fiercer than ever and customers themselves are increasingly skeptical and difficult to impress, what is the best way to introduce customer relationship management (CRM)? How does an organization, in actuality, move from being product-focused to being more customer-focused? More specifically, how does a company improve the effectiveness of its communications and interactions with customers (physicians, patients, and others) so that sales and marketing objectives are met and better health outcomes are assured?
Gaining a competitive advantage today is a race against time! The urgency is there for all, but it is intensified in those markets where brand name companies have only a narrow window in which to market their products before genericization comes into play. The secret lies in a company's ability to become more customer-centric, but how is a company to develop the sort of customer intimacy that will become the fundamental building block for CRM initiatives?
For a company to attract and retain loyal customers, it cannot treat its customers as one homogenous group. Rather it must treat customers as much as possible as individuals. But, since it would be impossible to design marketing and sales strategies for as many targets as there are individual customers, the practical approach is to group individuals into a manageable number of segments.
If a company wants to truly connect with its customers on a segment by segment basis, the next big issue is to determine the basis upon which customers should be grouped together. Does one look at them according to their demographic profiles, or maybe their behavioural characteristics, or are there other, more salient criteria that need to be considered? Although it is useful to examine groups of customers according to demographics or behaviours, they need to be primarily grouped or segmented according to their social values and motivations.
The evidence is irrefutable: the best way to build sustainable competitive advantage in today's marketplace is for companies to forge trusting relationships with customers and to do this they must learn how to connect intimately with these people. Intimacy as such is made possible when a company commits to two major undertakings: first, it digs beneath the outward signs and signals and discovers the fundamental mindsets or world views that drive its customers to think and act the way they do; and then it devises value propositions and marketing and sales strategies that can be implemented to resonate deeply with the needs and aspirations of its targeted customers.
Segmentation models are built upon the results of surveys that explore respondents's deepest motivations and values. These social values, along with a number of complementary, customized dimensions, are the building blocks of the psychographic segmentation solutions. This intelligence is then translated into action plans for sales and marketing strategies. In the case of physicians, the actual segment membership of individual physicians can be delivered by name, thus allowing the company to tailor and target its messages for the greatest impact. The same can be done with other customer groups, such as patients, where the various segments can be located right down to the neighbourhood level. This has the potential to increase the effectiveness of targeted direct mail initiatives, amongst others.
So why is it imperative that Pharma companies understand the deep social values and motivations that drive human behaviour? Because doctors and everyone else with whom a Pharma company might wish to interact are people first, and people are complex beings whose attitudes and behaviours are rooted in value constructs that define their overall world views or mindsets.
VALUES: WHAT ARE THEY AND WHAT DO THEY TELL US?
There are several kinds of values to monitor. There are values that have to do with what customers value in terms of their relationship with a company, or for that matter, with any provider of a product or service. It is important to distinguish between those factors that customers say are important to them and those that really are important to them. This sort of information, taken in the context of how well a company is seen to be delivering in those areas, translates directly into a prescription for how a company should invest its resources.
There are values that define patients's orientation to the concept of personal control over health and wellness vs. a dependence on the traditional delivery of health care services by health care professionals such as physicians and pharmacists. These values influence, not only their use of the health care system, but also what they expect of all the players/stakeholders who operate within that system, and their perceptions of how well those players are performing vis--vis the delivery of health care services.
There are values that define a person's orientation to a profession or job. In the case of physicians, for example, some of these values have to do with factors such as whether a physician is more oriented to a preventative or curative approach to medicine.
In addition, there are values that relate to those things that matter to customers as people, that is, what they find to be important in their lives more generally. Within this definition, there are two kinds of values: those that are somewhat obvious and those that are much less so.
Social values are first and foremost a statement of cherished beliefs about the goals one should set in life (the ends of living) and how one should attempt to conduct oneself on the way to achieving these goals (the means of living). These are values that people are conscious of and able to articulate to others. They include such notions as the importance of family, the ideal of duty over pleasure, the concept of respect for others and so on. It is relatively easy to assess the presence of these values in a person because people, for the most part, are conscious of loving their family or choosing duty over pleasure, and they can state their beliefs in these concepts.
In addition to these sorts of articulated values, which are fairly readily observable, are those values that have been learned so early in life they are often held unconsciously, or in the subconscious. It can be difficult to ascertain their presence in an individual. These important tendencies of thought and feeling, which include a whole host of mental, emotional, and motivational postures, define the ways in which people conduct their transactions with others and inform the ways in which they will behave in the future.
People today are not constrained in the demographic straightjackets they once might have been. Just as there are Generation Y customers with highly conservative views and values once thought more characteristic of people in the Pre-Boomer cohort, research also reveals a segment of very open-minded, flexible, adaptive, and experimental older individuals, who exhibit characteristics that have usually been associated mainly with youthful exuberance and experience-seeking. In today's world of rapid change, Internet communities, and infinite possibilities for personal exploration and reinvention, demography is no longer destiny.
Similarly, it is not enough to simply look at customers's behavioural profiles. Modern data mining technology reveals much about which behaviours are associated with one another in a company's warehouse of customer interaction records. Yet often, these associations, while predictively quite useful, are lacking in terms of explanatory appeal. The insights they provide are of only limited utility to a marketing manager charged with getting inside the heads of his/her customers in order to better understand them and thus formulate value propositions that will have deep customer resonance and an enduring ability to persuade.
In other words, although there is merit in knowing whether certain customers, such as physicians, tend to adopt new products early as opposed to late, or whether some have specialized practices that result in them prescribing a limited range of products, and others have more general practices that necessitate the prescription of a wide range of products, this sort of information is not a firm foundation on which to build customer relationships.
It may also be useful to know that other customers, such as patients, have clear preferences for medication regimes that allow them to decide the daily dosage of a medication, and that other patients prefer a regime that is strictly prescribed by their physicians. But, it is only by understanding the values and mindsets that lead to these attitudes, beliefs, and behaviours that Pharma companies can truly understand and eventually communicate with customers within the context of their holistic complexity.
TIME IS OF THE ESSENCE
It is imperative to get to know customers as deeply and holistically as possible, because without this sort of knowledge, much time can be wasted in formulating and delivering communications messages and value propositions that may fall on deaf ears because they just do not resonate with the values and motivations of the targeted group. And when time is of the essence, wasted time can mean not just squandered resources but, all too often, lost chances.
Even though most countries allow several years of patent protection for Pharma companies developing new drugs, the length of time required to bring the product to market can leave the company with a relatively slim window of opportunity (maybe five years or so) in which to grow the brand and make a profit before genericization forces it, in effect, to hand the product over to generic companies.
Further complicating the challenge for Pharma companies is the often uncomfortable fit between the companies's need to promote their products and physicians's needs to get product information in a way that does not compromise the integrity of either the physician-patient relationship or the physician-pharma company relationship. No doubt physicians and Pharma companies in many countries can relate to Canadian Medical Association president, Dr. Ruth Collins-Nakai, who has compared the relationship between the Pharma industry and the medical profession to dancing with a porcupine.
What it all comes down to is that physicians across North America and around the globe are increasingly uncomfortable with any kind of Pharma promotion (such as paying for travel or restaurant meals) that might be construed as undue influence on their script-writing behaviour. The Pharma companies, for their part, feel they'sre walking on egg shells when promoting to physicians. Given this environment of distrust and suspicion (by physicians) and fear of accusation and recrimination (by the industry), it is clear that Pharma companies need to find new ways to talk to their primary customer base.
As Lisa Roner pointed out in her August 17, 2005 article in eyeforpharma, physicians are tough to influence, quick to perturb, suspicious and difficult to impress and the pharma industry needs to find new ways to communicate with them. Physicians are working with an increasingly complex health care system, where resources can be stretched to the limit and patients are more and more demanding. Pharma sales reps will not be able to connect with physicians unless they can understand them on a deeper level and for that, they need a more sophisticated research tool than conventional polling or segmentation data. The approach of exploring and segmenting physicians according to their values and motivations can be used to help Pharma companies discover the best ways to connect with physicians so that customer intimacy can be achieved and the success of customer relationship management ensured.
THE NEXT STEPS
The next step begins with a reiteration of the importance of Pharma companies taking a holistic and nuanced approach to understanding the values and motivations the underlying mindsets and world views of their customers, whether physicians or patients. The approach is based on the premise that, in order to successfully move from being product-focused to being more customer-focused, a company must develop the kind of customer intimacy that is possible only with a sophisticated, values-based psychographic segmentation.
Environics Research Group is one of Canada's largest and most respected public research companies. It has a dedicated health and pharma practice, with tracking data going back to the 1970s.
Drawing upon the worlds of sociology, cognitive science, and social psychology, Environics has, through advanced statistical analysis, developed a proprietary tool that identifies in society the presence of numerous immutable values and motivations that drive human behaviour. Each of these values or motivations, which number over 100 in North America and about 50 in other parts of the world, are named and monitored over time through both quantitative and qualitative methodologies.
For more information on this article or on any of the health or pharma services provided by Environics, please contact:
Jane Armstrong, Group Vice President, Health and Pharma
Email jane.armstrong@environics.ca
Rod McIsaac, Vice President Business Development, Pharma
Email rod.mcisaac@environics.ca
33 Bloor St. East, Suite 900, Toronto, Ontario, Canada M4W 3H1
Tel: (416) 920-9010
Fax: (416) 920-3209