Pharma marketing

Pharma Marketing End Term Project

Asheeb Singh Raina MMS B 140 Pharma Marketing

Asheeb Singh Raina MMS 13-15

Project Report On

“Pharma Marketing”

Under the Guidance of Prof. Ralston Rajvaidya

Prepared by: Asheeb Singh Raina MMS-B (2013-15) K.J. Somaiya Institute of Management Studies and Research Mumbai:-400007 April, 2015 i Pharma Marketing


DECLARATION I, Asheeb Singh Raina, hereby declare that this project report is the record of authentic work carried out by me during the final semester and has not been submitted to any other university or institute institu te for the award of any degree/ diploma etc.

Asheeb Singh Raina MMS-B, Roll No 140 (2013-15) K.J. Somaiya Institute of Management Studies and Research, Mumbai April, 2015

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CERTIFI CER TIFICA CATE TE FROM FACUL ACULT TY GUID GUIDE E This is to certify that Mr. Asheeb Singh Raina, a student of the Master of Management Studies - Marketing, has worked under my guidance and supervision. This Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other project, monograph, report or book.

Organizational Guide: Prof. Ralston Rajvaidya Designation: Professor, Marketing Organization: K.J. Somaiya Institute of Management Studies & Research Address: Vidyavihar, Mumbai- 400077 Date: April, 2015

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Acknowledgement

This project consumed huge amount of work, research and dedication. Still, implementation would not have been possible if I did not have a support of many individuals and organizations. Therefore I would like to extend my sincere gratitud e to all of them. First of all I am thankful to Prof. Ralston Rajvaidya for having the brilliant insight of suggesting a project based on the pharma sector. My project on ― PHARMA MARKETING – has helped me gain a valuable insight of the market realities, even before I begin my job. I sincerely thank him for being my project guide through the initial stages of project conceptualization and giving me a free hand during the course of the project. I express my gratitude toward our families and colleagues for their kind cooperation and encouragement which helped me in completion of this project and also to all those who have helped me directly or indirectly in the successful completion of this project.

Thank you Asheeb Singh Raina MMS (Marketing) KJ SIMSR, Mumbai

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Table of Contents Sr no.

1 1.1 1.2 1.3 1.4 1.5 2 3 3.1 3.2 4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 5 5.1 5.2 5.3 6 6.1 6.2 7

Topic

Page Number

Declaration Certificate from faculty guide Acknowledgement Table of Contents Executive Summary Introduction Indian Pharma Sector Market Size Investments Government Initiatives Road Ahead Understanding the Supply Chain Creative challenges for marketing medicines Targeting and the Consumer Complacency or Challenges and the Creative Contribution Effective Marketing for OTC Products Innovation as Market Driver Market Dynamics of Innovation Outperforming the Competition Takeaways on Innovation Levers to pull: Consumer Purchase Dynamics Category Relevance Marketing Effectiveness Takeaways on Marketing Effectiveness Consumer Perspective for OTC Products Attitudes Towards OTC Brands Attitudes to Advertising Targeting Summary and Recommendations Summary Recommendations Bibliography

ii iii iv v 1 2 2 3 4 6 7 10 15 16 17 19 19 19 21 22 23 24 26 31 33 33 36 37 40 40 41 43

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Executive Summary India’s pharmaceutical sector is currently undergoing unprecedented change. Much of this is due to the country’s introduction, on 1st January, 2005, of a system of product patents. Both multinational companies and domestic players are examining the prospects offered by the local market as the government moves forward with initiatives aimed at providing India’s more than one billion inhabitants, for the first time, with access to the life-saving drugs they need. A further huge boost to the local market is emerging from the rise of India’s new affluent consumers, who lead more Western-style lives and are demanding innovative drugs to treat the chronic illnesses that these changing lifestyles may produce. India’s leading drug manufacturers are becoming global players, utilising both organic growth, through the gradual development of their business, and mergers and acquisitions as they seek to boost their presence in existing markets and open up new ones. With these opportunities, however, there are huge challenges that require commitment by both industry and government, and unprecedented levels of partnership between them. This paper is as an attempt to put forth these marketing challenges and suggest the way forward for pharma companies in India.

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Chapter 1 Introduction 1.1. Indian Pharma Sector India is among the top six global pharmaceutical producers in the world. Indian vaccines are exported to 150 countries. India produces 40-70 per cent of the WHO demand for DPT & BCG and 90 per cent of measles vaccine. Approximately 70 per cent of the patients in developing countries receive Indian medicines through NGOs like The Clinton Foundation, Bill & Melinda Gates Foundation, Doctors Without Borders, the UNCTAD etc. Presently there are 10,500 manufacturing units and over 3,000 pharma companies in India, growing at an exceptional rate. India has about 1,400 WHO GMP approved manufacturing units. India has been accredited with approximately 1,105 CEPs, more than 950 TGA approvals and 584 sites approved by the USFDA. Globally more than 90 per cent of formulations approvals for Anti-retroviral (ARVs), Anti-tubercular & Anti-malarial (WHO pre-qualified) have been granted to India. Manufacturing costs in India are approximately 35-40 per cent of those in the US due to low installation and manufacturing costs. India ranks amongst the top global generic formulation exporters in volume terms. India’s pharma exports stood at US$ 15 billion in 2013-14. India exports all forms of pharmaceuticals from APIs to formulations, both in modern medicine and traditional Indian medicines. The country’s pharmaceutical industry accounts for about 1.4 per cent of the global pharmaceutical industry in value terms and 10 per cent in volume terms. The Government of India has announced a host of measures to create a facilitating environment for the Indian pharmaceutical industry. 2 Pharma Marketing


The policies of the Government of India are aimed at building more hospitals, boosting local access to healthcare, improving the quality of pharmaceuticals and improving the quality of medical training. The Government of India is committed to setting up robust healthcare and delivery mechanisms. India’s pharma sales are expected to reach US$ 27 billion by 2016. India is well placed to become one of the major drivers in providing healthcare to all while controlling the ever-increasing healthcare spend of both developed and developing nations. Though this sector is growing rapidly and is getting acknowledged worldwide for its contribution, it is not devoid of certain drawbacks. It is currently marred by 15% to 25% of substandard and counterfeit drugs that now exist within this sector. The Government of India is trying to curb this unfavorable situation with the setup of an expert committee with representation from the industry and industry associations which will recommend measures to deal with the problems of substandard and counterfeit drugs. The growth in related industries like biotechnology, chemistry, IT and other convergent technologies has contributed to the advantageous growth of the Indian pharmaceutical sector. The adoption of globally relevant policies for this sector coupled with the support from the government, institutions and industry players would assure its positive performance on the world’s stage in the years to come.

1.2 Market Size The Indian pharmaceutical industry is estimated to grow at 20 per cent compound annual growth rate (CAGR) over the next five years, as per India Ratings, a Fitch Group company.

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Indian pharmaceutical manufacturing facilities registered with US Food and Drug Administration (FDA) as on March 2014 was the highest at 523 for any country outside the US. Expect the domestic pharma market to grow at 10-12 per cent in FY15 as compared to 9 per cent in FY14, as per a recent report from Centrum Broking. The domestic pharma growth rate was 11.9 per cent in October 2014, highlighted the report. Gujarat clocked the highest growth rate in pharmaceuticals market at 22.4 per cent during November 2014, surpassing the industry growth rate, which grew by 10.9 per cent, as per data from the market research firm AIOCD Pharma softtech AWACS. Also, growing at an average rate of about 20 per cent, India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bioindustry and bioinformatics may reach the US$ 7 billion mark by the end of FY15, according to an industry body. Biopharma is the largest sector contributing about 62 per cent of the total revenue, with revenue generation to the tune of over Rs 12,600 crore (US$ 2.03 billion). The bio-pharma sector comprises vaccines, therapeutics and diagnostics.

1.3 Investments The Union Cabinet has given its approval to amend the existing FDI policy in the pharmaceutical sector in order to cover medical devices. The Cabinet has allowed FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to specified conditions. The drugs and pharmaceuticals sector attracted cumulative foreign direct investment (FDI) inflows worth US$ 12,813.02 million between April 2000 and December 2014, according to data released by the Department of Industrial Policy and Promotion (DIPP). 4 Pharma Marketing


Some of the major investments in the Indian pharmaceutical sector are as follows: Stelis Biopharma has announced the ground-breaking for construction of its customised, multi-product, biopharmaceutical manufacturing facility at BioXcell Biotechnology Park in Nusajaya, Johor, Malaysia's park and ecosystem for industrial and healthcare biotechnology at a total project investment amount of US$ 60 million. Pharma major Strides Arcolab has entered into a licensing agreement with US-based Gilead Sciences Inc to manufacture and distribute the latter's lowcost Tenofovir Alafenamide (TAF) product used for HIV treatment in developing countries. The licence to manufacture Gilead's low-cost drug extends to 112 countries. Apollo Hospitals Enterprise (AHEL) plans to add another 2,000 beds over the next two financial years, at a cost of around Rs 1,500 crore (US$ 242.57 million), as per Mr Prathap C Reddy, Founder and Executive Chairman, Apollo Hospitals. CDC, the UK’s development finance institution, has invested US$ 48 million in Narayana Hrudayalaya hospitals, a multi-speciality healthcare provider. With this investment, Narayana Health will expand affordable treatment in eastern, central and western India. Cadila Healthcare Ltd has announced the launch of a biosimilar for Adalimumab - the world’s largest selling drug for rheumatoid arthritis and other auto immune disorders. The drug will be marketed under the brand name Exemptia at one-fifth of the price for the branded version-Humira. Cadila’s biosimilar is the first to be launched by any company in the world and is a finger print match with the original in terms of safety, purity and potency of the product, as per the company.

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Torrent Pharmaceuticals has entered into an exclusive licensing agreement with Reliance Life Sciences for marketing three biosimilars in India — Rituximab, Adalimumab and Cetuximab. Piramal Enterprises Ltd has acquired US-based Coldstream Laboratories for US$ 30.6 million in an all-cash transaction. Indian Immunologicals Ltd (IIL) plans to set up a new vaccine manufacturing facility in Pondicherry with an investment of Rs 300 crore (US$ 48.53 million). SRF Ltd has acquired Global DuPont Dymel, the pharmaceutical propellant business of DuPont, for US$ 20 million.

1.4 Government Initiatives The Addendum 2015 of the Indian Pharmacopoeia (IP) 2014 is published by the Indian Pharmacopoeia Commission (IPC) on behalf of the Ministry of Health & Family Welfare, Government of India. The addendum would play a significant role in improving the quality of medicines which in turn promote public health and accelerate the growth and development of pharma sector. The Government of India has unveiled 'Pharma Vision 2020' aimed at making India a global leader in end-to-end drug manufacture. It has reduced approval time for new facilities to boost investments. Further, the government has also put in place mechanisms such as the Drug Price Control Order and the National Pharmaceutical Pricing Authority to address the issue of affordability and availability of medicines.

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Romania is keen to tie up with the Indian pharmaceutical companies for research and develop new drugs. "Romania will collaborate with India for license acquisition to sale India's drugs in Europe," said Mr Mario Crute, Counselor in Ministry of health in Romania at GCCI. The country will tie up with the Indian pharmaceutical companies for research and develop new drugs. Some of the major initiatives taken by the government to promote the pharmaceutical sector in India are as follows: Indian and global companies have expressed 175 investment intentions worth Rs 1,000 crore (US$ 161.78 million) in the pharmaceutical sector of Gujarat. The memorandums of understanding (MoUs) would be signed during the Vibrant Gujarat Summit. Telangana has proposed to set up India's largest integrated pharmaceutical city spread over 11,000 acres near Hyderabad, complete with effluent treatment plants and a township for employees, in a bid to attract investment of Rs 30,000 crore (US$ 4.85 billion) in phases. Hyderabad, which is known as the bulk drug capital of India, accounts for nearly a fifth of India's exports of drugs, which stood at Rs 90,000 crore (US$ 14.56 billion) in 2013-14.

1.5 Road Ahead The Indian pharma market size is expected to grow to US$ 85 billion by 2020. The growth in Indian domestic market will be on back of increasing consumer spending, rapid urbanisation, raising healthcare insurance and so on. Going forward, better growth in domestic sales will depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers are on the rise. 7 Pharma Marketing


Moreover, the government has been taking several cost effective measures in order to bring down healthcare expenses. Thus, governments are focusing on speedy introduction of generic drugs into the market. This too will benefit Indian pharma companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharma companies. The Indian pharma market is expected to grow between 9 and 11 per cent in the next five years and some of the key components of growth are given below: Population dynamics

Large population base —1.5 billion by 2050. Increasing life expectancy— projected to go up to 69 years by 2020 from the current 65 years. Geriatric population to double over the next 15 years. Increasing capacity to spend

Literacy rate at 65 per cent and estimated to be close to 95 per cent by 2020. GDP growth at 8 per cent and expected to be maintained. Huge middle class with vigorous buying capacity—450 million. Opening up of reimbursement avenues. High disease prevalence

18 per cent of worldwide mortality 20 per cent of worldwide morbidity Low awareness/detection and diagnosis. Interest from global stakeholders

Pharma and Insurance MNCs entering India Medical tourism. 8 Pharma Marketing


Increased healthcare access

Current access at 30 per cent; government committed to take it to 80 per cent in the next 15–20 years. Over 100 million untreated patients in rural India. Multiple stages of evolution of the Indian Pharma market

Initiatives impacting local market: Entry of new MNCs (BMS, MSD, BI, Eisai) Launch of patented products by existing MNCs (Viagra-Pfizer, Prevenar Wyeth). Spurt in In-Licensing activities, both among Indian companies and among MNCs. Increased R&D investment by local companies. Fund raising by local companies through GDR or FCCBs to finance investments. Emergence of organised hospital sector. Initiatives impacting global market: Global acquisitions by local Indian players Focus on exporting APIs and formulations to regulated markets. Increase in R & D and contract manufacturing tie-ups. Increased focus by local companies on developing biogenerics.

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Chapter 2 Understanding The Supply Chain THE OTC medicines market is not just unique and complex - it is arguably deficient. You have an anxious, often clueless consumer, a respected but not necessarily impartial or well-informed pharmacist, and in between them, to bridge that void, is advertising which is handcuffed and neutered. There is nothing more critical to survival than medicine. We can live without most medicines, and we cannot live without food. But, pain and anticipation of pain come way above hunger in Maslow's hierarchy of needs. Forget the aspirational nature of fast cars, designer clothes, compact hi-fi systems and badge beers. Consumers do not need to aspire to pain relief. They need it. Their nervous systems demand it. No other market is driven by such powerful, emotional and physical triggers as pain, fear, discomfort and personal embarrassment. This dependency consumers have on medicine is at the root of the complexity and uniqueness of the OTC medicines market. Such basic and primal emotions demand practical and functional product solutions. What role could a brand play, when all consumers are interested in is whether it will work or not? What role could advertising play, when consumers will listen only to pharmacists, doctors and mothers? Added to this potentially complete disregard by consumers for marketing and differentiating brands are other barriers, perceived by agencies and advertisers, when trying to communicate the benefits of their wares: 

The inability to display products in-store in a way which aids selfselection. In many cases a brand does not even enjoy the status of appearing on the shelf.

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The restrictions and limitations on merchandising and discounting of brands within the pharmacy - no personality endorsements, no loyalty schemes, no cross-promotions, no free trial. The price hikes we expect consumers to pay when brands are transferred from prescription to OTC - on average a 200 per cent increase. The number of similar-sounding brand names in many categories which must hamper brand loyalty and exacerbate consumer confusion. Even if the potential customer has seen the advertising, has taken out a motivating message, has the money and has remembered the brand name, the pharmacist could, at that final hurdle, fell an OTC brand by suggesting a higher-yielding alternative. No matter how confusing and unique this category may appear to be, there has never been a market where the role for both a brand and its advertising has been so critical for survival. In every other consumer market, advertising provides just one of many bites at the cherry. It is one of many opportunities to register a branded proposition with the consumer. The armoury of the complete marketing mix is at the disposal of the advertiser and every element tailor-made to optimise and build on the advertising effect. The nature of the OTC market, however, is such that the only direct link with the end-user is advertising. This puts a huge onus on the advertising to work - if it does not, nothing else will bail the brand out. The pressures put upon advertising to perform are even greater when one considers the nature of the pharmacist and the consumer. OTC medicine advertisers can never rely on pharmacists either to recommend or even endorse their brand. In fact, an OTC medicine advertiser cannot even rely on the pharmacist to know enough about his brand to form an educated opinion about its suitability for a particular customer. 

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Being commercially aware is no crime. Pharmacists are shopkeepers after all, particularly in their role as retailer of OTC medicines. The concern arises, however, when you examine the relationship between the consumer and the pharmacist. Many consumers perceive pharmacists as surrogate doctors rather than retailers in disguise. They have no choice but to respect and trust them. This relationship has evolved, largely as a result of the growth in product switching from prescription-only to OTC. In all cases, OTC advertising must compensate for the frailty and inconsistency of the supply chain. Through trade advertising one can bolster and supplement the pharmacist's awareness and knowledge of a brand to minimise false recommendation, presenting up-to-date information on the product and making use of recent studies and clinical trial data. Whatever the message to the trade, it must present and clearly distinguish the relative importance of pharmaceutical versus business needs in the communication. There is, however, a much bigger and more important role for advertising that of weaning consumers off their dependency on pharmacists - a more preventative measure designed to build confidence in the consumer and enable him to self-diagnose and self-select. Confidence must be imbued by combating confusion and allaying anxiety a clear understanding of the problem – combined with a simple and credible demonstration of the solution. No wonder the classic problem/ solution advertising formula is practically a mandate in OTC medicines advertising. The problem helps you self-diagnose, the solution helps you self-select. As a formula it is watertight, but not foolproof. In markets like detergents the problem/solution vehicle is difficult to foul-up. In this market it is easy. The reason behind this is simple - no other mainstream market is characterised by such complex and intimate personal anxieties and insecurities. Removal of stains without boil washing, together with a tabletop demo, has understanding and empathy written all over it - a problem we don't mind being made public and a solution we readily believe. The discomfort and embarrassment of vaginal itch, together with a Heath Robinsonesque solution, are different matters. 12 Pharma Marketing


An empathetic, reassuring tone and a simple but involving execution may go some way to bridge the void created by both human insecurities and the deficiencies in the supply chain. But the most vital tool we have at our disposal, far too often neglected in this sector, is the potential stature and influence of the brand. With all our powers of concentration directed at communicating product efficacy in an empathetic and legal way, we seem to have forgotten the importance of building distinctive brands and maintaining their identity. This seems crazy in a market characterised by consumer confusion and insecurity and driven by pain, fear and embarrassment. In such a market a brand has the power to help compensate for the loss of the friendly, family GP and his prescription, and the gain of the cold, clerical environment of the pharmacist and the shopkeeper in disguise. In such a market, a brand can act as a tangible reassurance and a comforter, when both reassurance and comfort were just what the doctor would have ordered. Establishing a brand overnight is often what is required when medicines are transferred from prescription-only to OTC. This is both the greatest challenge and the greatest opportunity for advertisers and agencies. How do you create a brand which has all the trust and integrity of a household name without the benefit of time and household name budgets? For most advertisers, this question is so daunting, they concentrate superficially and single-mindedly on creating awareness for the brand - something easily accountable and easily correlated. Although brand awareness is critical, it is a misleading indication if the brand's core values are not clearly identified and communicated. Without that substance, a brand remains a word with little influence and little reassurance. It is ironic to think that if a similar amount of effort was devoted to building a brand as much as selling a product's specifications, the inadequacies of the supply chain could now be history. Arguably consumers would be far more confident to self-diagnose and selfselect. There would be less brand name confusion, less reliance on the subjectivity and commercial bias of the pharmacist, or the fickle hope that a product gains visible shelf space of POS display, and less resistance to paying the price hike accompanying product switching out of prescription into OTC. 13 Pharma Marketing


The power of a brand is no compensation for a rational communication of a product efficacy. However, the emotional credibility and reassurance a brand brings to the overall communication puts far less emphasis on the need to rely solely on the persuasiveness of the product demonstration. Strong brands do exist in this market and as a result, have benefited from extremely effective advertising, in creating and nurturing brands and their properties and in combating the complexities and frailties of the supply chain. Although the OTC market is more complex and fragile than many other consumer markets, and although the onus and emphasis on advertising to compensate for this state of affairs is somewhat daunting, the opportunities to exploit it with powerful brand building and an empathy for the consumer, when so few advertisers have grasped the nettle, are still out there and waiting to be taken.

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Chapter 3 Creative Challenge for Marketing Medicine OTC medicines are never simple, and rapid change is complicating this market area. The release for sale to the general public of drugs which were previously available only on prescription, the so-called POM to P switch, has provided an option of powerful medication to the consumer, based upon self-diagnosis of often complicated and sometimes serious conditions. Many OTC medicines are potent drugs in their own right and are indicated for the symptomatic treatment of potentially serious conditions. Neither the medicines nor those conditions should be trivialised. Aspirin and Paracetamol are GSL products with which we are familiar. They were until recently the only effective analgesics for mild to moderate pain. Science is only just beginning to understand how they really work, though their use, abuse and potential for untoward effects have been known for many years. Their use to control a hangover is well established, but they are also used extensively for the treatment of chronic painful conditions, some of them serious. Should they be advertised differently from more modern drugs just because of our familiarity with them, or should they be treated as a serious medicine and in a tone of voice which reflects that status? Those conditions which require medical intervention and those amenable to OTC medicines are ante hoc entirely in the hands of the sufferer, and subject to that highly individual phenomenon, the pain threshold of the individual. The attitude of individual sufferers towards a particular disease or symptom are not uniform, although everybody wants one thing from a medicine: a rapid relief of symptoms and return to normality. OTC medicines generally treat symptoms and not diseases, the diseases themselves being, in the main, self-limiting, acute and not generally lifethreatening. 15 Pharma Marketing


Though the conditions in many cases are 'trivial' within the total disease spectrum (for example coughs and colds), they are often debilitating and a cause of severe distress, which is of real significance to both the generation and reception of advertising, whatever the medium. Pain and distress cannot be characterised as trendy, aspirational or macho, and are rarely funny. As with all medicines, there is no guarantee of success with any product, so that in advertising terms the normal hyperbole is probably always inappropriate. Both convention and legislation preclude its use. All drugs have a specific dosage recommendation attached to their use. Often the dosage is a complicated set of instructions relating to the age and weight of the person to whom the drug is being administered, or to the schedule of dosages or in relation to the stage of the condition itself, or indeed a combination of these. Dosage must be addressed in communication to the potential purchaser either because of the law or just through good practice. It is an unfortunate fact that though OTC products must all have a unique selling proposition there are attendant requirements within their advertising which are entirely similar across the full range of the category. This may help to explain the oft-heard cry that OTC advertising is so similar.

3.1 TARGETING AND THE CONSUMERS OTC medicines are most frequently purchased after symptoms appear, though they may remain in the proverbial bathroom cabinet for use in future recurrence. On many occasions the purchaser will not be the eventual user, with mothers being the largest group of purchasers within the family group for a wide range of medicines. In attitude mothers are the most empathetic to patient needs. Reviewers of OTC advertising often endeavour to create the impression that brand building is not an objective. Examination of sales data shows there does appear to be a high degree of brand loyalty, with the majority of customers at the pharmacy counter asking for products by name. This branding has been established by advertising or other forms of promotion. Even though the consumer target audience may be diverse, they are very similar in what they 'need' to know about an OTC product before purchase. 16 Pharma Marketing


This is revealed over and over again in research. 'What's it called…what's it for…what's it do…how's it do it…how quickly.' There is a peculiar desire among sufferers of most conditions, who are consulted in market research discussions that the OTC will work. The resident cynic is rarely present. The general level of knowledge among consumers about common diseases and treatment is universally poor. Even people with advanced medical knowledge appear to lose much of it when they are themselves the patients. Coupled with this lack of knowledge is a high degree of apprehension equating almost to fear. The consumer as sufferer is not the rational being he or she would otherwise be. The implications of this for advertising are that any message must be clear, unambiguous, relatively simple and, within the parameters allowed, must represent a high probability of successfully relieving symptoms. OTC advertising is said to create an impression of being old-fashioned and having a rational hard sell approach. The impression is probably correct. This approach is the way to convey a relatively complex message unambiguously to a select audience who are emotionally in the doctor/patient mode. Sales evidence of branded OTC products would suggest that their advertising achieves breakthrough with the target audiences, obviously creates both a desire and action in the form of purchase, and by definition a clear and reasonable message of efficacy and superiority. Within the OTC market this is achieved usually with very small budgets and through creative use of alternative media. Argument for activity must therefore be tempered by a realisation that what we as advertisers regard as creative may lack credibility with our target audience.

3.2 COMPLACENCY OR CHALLENGE AND THE CREATIVE CONTRIBUTION OTC medicine advertising should continuously seek to improve and become more creative, and OTC advertisers are fully aware of this. Many OTC medicines enjoy strong brand identity which, though built up over many years in some cases, in others has been achieved in a remarkably short period of time. 17 Pharma Marketing


As with other categories, more and more 'brands' must be established if such products are to survive the 'own-brand' phenomenon, and OTC medicines are in a particularly strong position to achieve this. OTC advertisers are aware of these issues, but are their agencies? Some undoubtedly savour the challenge, particularly those agencies dedicated to the healthcare markets. To others the OTC market represents a client and business opportunity, but an intellectual nightmare for planners and creatives alike. Dedicated medical agencies - those who do have a significant understanding of the issues - fight an uphill battle in their quest to gain business from the major OTC companies, or even to be considered in the pitch situation. Some obviously do not have the capability of handling large consumer accounts, preferring to remain in the 'prescription only' arena, but there are several which do. The OTC companies are usually drawn to the major consumer agencies by the bright lights of 'creativity' and impressive case history in other markets. Anecdotal evidence would seem to suggest that the executional creativity displayed in OTC advertising, from either the mainstream or specialist agency within the OTC market, is very similar.

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Chapter 4 Effective Marketing for OTC Products 4.1. INNOVATION AS A MARKET DRIVER The Role of Innovation in Business Strategy Innovation shapes strategy. A company's' mission statement and strategy both clearly point to the critical role innovation plays in their success, and this holds true for companies operating in the Fast Moving Consumer Good (FMCG) industry as well as in the Health Care sector. Some examples of leading FMCG and Health Care companies' mission statements include:  

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l “Working to create value through Innovation and Growth” We want to discover, develop, and successfully market innovative products to prevent and cure diseases, to ease suffering and enhance quality of life”. l “To drive sales growth through focus and constant innovation while optimizing costs to expand margins and profits ... Upto 40% of our net revenues come from products launched in the past three years.” “

4.2 The Market Dynamics of Innovation But what contribution does innovation really deliver to a company? How much revenue is actually generated by new products? How does this differ between FMCG and Over-the-Counter (OTC) categories? And finally, how do companies actually perform when they have a strong innovation push? 19 Pharma Marketing


To answer these questions, retail sales data from a comprehensive set of FMCG and OTC categories, was analysed. So what is the contribution innovation delivers to a business, and how does this differ between FMCG and OTC categories? See below for quantified contribution in terms of the revenue share new products make up of total turnover (see Figure 1).

Figure 1: Weight of innovation Firstly, innovations are, in fact, important revenue contributors. In the FMCG categories for Germany, about 10% – 15% of current annual revenue is generated by new products launched in the past three years.2 Secondly, the role of innovation tends to be less pronounced in OTC when compared to FMCG companies. Worldwide, about 5% of current annual revenue is generated by new products.

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4.3 Outperforming the Competition Innovation is a challenging as well as risky business. Previous research and experience show that a large portion of new product launches fail to reach their business objectives and be sustainable in the market place. But going without innovation isn't an option either. Take a look at how companies have performed in the market place, depending on their level of innovation. First, we grouped the companies are grouped based on the proportion of revenue generated by new products and classified them as high, medium or low innovators. Then there is the value sales growth of each of the three groups within the categories (see Figure 2).

It is clear that manufacturers who undertake a strong innovation push clearly outperform the market place. They can increase value sales by an average of about 5%, per year, while those companies that achieved only a minor innovation push actually lost market share. Thus, successful and frequent innovations can lead to incremental sales and market share gains. In order to achieve this, innovation must be well managed and executed. In our

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experience, four drivers are especially critical to insuring that innovations generate incremental sales (see Figure 3).

4.4. Takeaways on Innovation What should marketers take away from this? Should marketers assume that they can grow and outperform competitors via innovation only? Certainly not. The many examples of successful renovations of existing brands as well as continuous and consequent marketing support of established brands prove that growth without innovation is possible. However, the odds of outperforming the market place are more favorable if marketers play their innovation card well. Secondly, marketers need to care about the levers for incremental sales as much as they care about the levers for a successful new product launch. It is important to be successful in new product launches, but it is also key that a new launch grows the brand or the franchise overall. Next, we looked at how marketing support helps drive successful innovations and, specifically, how marketing effectiveness differs between FMCG and OTC initiatives. However, we must outline the most important differences 22 Pharma Marketing


between consumer behavior to better understand the consumer context within which FMCG and OTC marketing must deliver.

4.5 LEVERS TO PULL – CONSUMER PURCHASE DYNAMICS The previous section looked at the role innovation plays in FMCG and OTC companies. In this section, we focus on how category purchase dynamics affect key performance indicators of new product launches in these businesses. When thinking about category purchase dynamics, we look at them in two ways. First, we want to know how many households have bought in a specific category in the past year, i.e., its “penetration”. “Penetration” is a good indicator for the overall relevance of a category: the larger the category penetration, the broader the need consumers have for products from this category. The second important metric relates to the rate of consumption; that is, how frequently consumers buy in a category. In categories with high purchase frequency, the time frame between past and current purchases may be about two weeks, whereas in categories with relatively low purchase frequency, the time frame between purchases spans several months rather than a few weeks. Figure 4 illustrates how categories “behave” differently regarding the two metrics of penetration and buying frequency. It ranges from chilled fruit yoghurts, a category where almost all households buy products on a biweekly basis, making it a very short purchase cycle category... to the OTC laxative category, with a penetration of roughly 10%, with overall category purchase frequency of about six purchase acts.

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4.6 Category Relevance Often, the penetration of OTC categories is limited simply by the incidence of certain conditions. Category penetration is obviously restricted for products that treat a condition such as indigestion, for example, from which only about 10% of the European population claims to have recently suffered. Also, suffering from a certain condition does not necessarily mean consumers would instantly make a category purchase. Using home remedies, consulting a doctor or using treatments which are already in home are alternative courses of action. On average, just one-fourth of all consumers, who claimed to have suffered from a specific condition, actually claim to have purchased an OTC product immediately after the condition occurred. OTC categories tend to not only experience lower category penetration, but also they tend to have longer purchase cycles. How frequently consumers buy a certain category can have a profound impact on consumer buying dynamics at a brand level.

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There are 2 key areas: Consumer Key Performance Indicators Fourt and Woodlock developed the well-known concept of decomposing the market volume of brands into trial and repeat volume. By understanding how much volume comes from a consumer trial purchase versus how much is coming from repeat buyers, the trial and repeat dynamics can be used to predict new product sales from early in-market data. Trial volume is equal to the number of consumers who try the product multiplied by the quantity they purchase when making the trial purchase. The repeat portion of the volume decomposition is driven by the number of consumers who repurchase the brand once they have tried it, as well as the depth of repeat buying and the average quantity per repeat purchase act. When we compare these Key Performance Indicators for new product launches in shorter versus longer purchase cycle categories, we see pronounced differences. To start with, the longer the purchase cycle, the lower the trial rates generally. This is partly driven by the fact that the overall need, and therefore size, of the interested consumer universe tends to be smaller for these categories. Overall purchase interest for OTC initiatives are on average about 10% to 20% lower than for Food or Household Care initiatives. But this does not explain all trial rate differences. The second major factor is that there are simply fewer buying opportunities in longer purchase cycle categories. To put it another way, the time-to-trial for a new product is longer in long purchase-cycle categories than it is for short purchase-cycle categories. For example, consider chilled fruit-yoghurt. Assume you bought a fruit yoghurt last week and today you see an advertisement about an appealing new fruit yoghurt. Even though you only recently bought a fruit yoghurt, with a bi-weekly category purchase-cycle, you are already “in the market” again. Even if you do not buy the new fruit yoghurt this week, you are again “inthe-market” just two weeks later. In fact, you will have roughly 30 purchase opportunities in the course of a year to try the new fruit yoghurt.

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Now compare this to the laxative category. Assume again you bought a laxative just a few days ago, and today you see an advertisement about a new laxative. Given a category purchase cycle of two to three months, you have a relatively long time to-trial this new laxative, even though you might be very interested in buying it. If you do not buy this new laxative in the next category purchase act, then it will be a considerable length of time before your next purchase opportunity arises. In fact, throughout the year, you are more likely to have just six purchase opportunities, rather than thirty-odd in the chilled fruit yoghurt category. As already stated, trial rates are generally lower in OTC categories. In addition to this, volume contribution from repeat purchasing is smaller in longer purchase cycle categories, due to lower repeat rates as well as lower depth of repeat. Overall, these dynamics lead to a substantially lower volume potential.

4.7 MARKETING EFFECTIVENESS Marketing support is critical for the success of new product launches. A new product might be highly appealing to consumers. However, unless this product is sufficiently supported by marketing investment, it is unlikely to be successful in the market place. Why? There is a straightforward chain of events underlying new product launches. In the previous section, we highlighted the first link in this chain of events: higher trial rates tend to generate higher sales. The second link is: higher awareness tends to generates higher trial rates. That is not to say that awareness is the sole determinant of new brand trial. Many other factors – such as distribution, consumer and trade promotion, concept appeal and category purchase dynamics – influence new brand trial. Awareness, however, is one of the strongest factors. This makes sense: if you are unaware of a product's existence, you aren't very likely to buy it. Here is where marketing investments come in: strong investments and effective marketing drive awareness.

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The Foundation However, before getting to this, it is important not to lose sight of an important lever for effective marketing spending: a strong concept. One could even argue that an appealing concept that generates high buying interest is in fact the strongest lever marketers can pull to get the highest return on marketing investment. To illustrate this point, we look at the following case. A personal care brand has been launched with € 5MM gross advertising spending. Average awareness in the first year of launch was roughly 35%. Year I trial rate reached 1.8% (~ 0.7 million households). The concept of the new launch did not generate strong consumer appeal. While consumers perceived the new product as new and different from currently available products, the proposition was not especially relevant to consumers, resulting in a less than average purchase interest. To get one household to make the trial purchase, this new product had to invest an average of 7 € in advertising spending (=> € 5MM advertising spending divided by 0.7 million households). However, with a considerably stronger concept appeal, trial rate would increase by roughly 50%, which would reduce the spending per trier from 7 € to about 5 €. Thus, to get most out of marketing investments, marketers should only launch and support initiatives that have strong appeal.

Marketing Investments How much do marketers invest when they launch new OTC products compared to their FMCG counterparts? When we partner with our clients to assess and forecast the market potential of new initiatives, we work with two sources of inputs: consumer feedback for a specific initiative, gathered via primary research, and marketing plans, provided by the clients' marketing team. These marketing plans include detailed information regarding marketing execution. Key elements of these marketing plans are captured and indexed in a database.

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Advertising's Effectiveness in Generating Awareness Let's move on to the primary determinant of new brands' awareness – advertising. There is a strong correlation between new brand awareness and advertising, usually expressed as GRPs. The higher the GRPs for a new launch, the higher the generated awareness tends to be. But an increase in GRPs generally does not lead to a proportional increase in awareness. As advertising increases, awareness increases at a decreasing rate. In short, there are diminishing returns to advertising support. There are different aspects to consider when linking GRPs to awareness. Will 1000 GRP always lead to the same awareness level? Certainly not. Even though two campaigns might have the same quantity of GRPs, their potential in raising awareness might differ due to their quality. For instance, all other things being equal, 1000 GRPs with a 15 second copy tend to generate lower awareness compared to 1000 GRPs with a 30 second copy. The same holds true for the copy memorability: the stronger copy recall is, the higher generally the awareness levels are. The key takeaway is that the same media support in terms of GRP quantity and quality generally results into lower awareness levels for OTC initiatives. Consumers' attention to commercials is linked to interest in particular categories. As pointed out in the previous section on category purchase dynamics, overall relevance of OTC categories tends to be lower than for food categories, which makes it more challenging for OTC new product commercials to raise awareness as effectively as for food initiatives.

Distribution-Based Awareness As already stated, consumers need to be aware of a new product in order to buy it. But once aware, consumers need to find the new product in the stores in which they usually shop, in order to buy it. Distribution has to insure a product's availability to consumers. Yet distribution is not just about availability. Distribution is, as already stated, also a source of how consumers become aware of a new brand.

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Several factors drive the ability of a new product launch to gain distribution based awareness. Strong presence on the shelf via facings and optimal shelf location, as well as strong store presence e.g. dual placements, increase a new products' potential to gain distribution-based awareness. Also, strong packaging design (e.g. form, size, color) is critical in succeeding to break through the shelf clutter and maximize distribution-based awareness. Generally, new products in the OTC business have a more limited potential in raising distribution-based awareness. Consumers tend to shop less frequently in pharmacies, drug stores or OTC shelves compared to traditional packaged goods, and therefore, have fewer opportunities to become aware of a new launch by seeing it on the shelf. In markets where OTC distribution is restricted to pharmacies and/or available behind-the-counter only, differences can be even more pronounced. This is, of course, not to say that for each and every OTC launch, distributionbased awareness is lower than for FMCG launches. Strong marketing execution (shelf presence, strong packaging break through, etc.) can certainly offset some of the category-specific disadvantages. But due to different category purchase dynamics (frequent vs. less frequent shopping trips) the ability for new OTC launches to raise distribution-based awareness is clearly more limited.

The Influence and Importance of Buzz Is it possible to influence the level of Buzz for a new product? Yes! To generate Buzz, you need to invest in traditional media! “Traditional” media spending is strongly correlated to the level of Buzz. This might appear somewhat surprising, but at the same time, is encouraging. It means marketers still have some power over Buzz and Consumer Generated Media. Traditional media matters but it cannot explain all the differences we observe in level of Buzz. They are also categories that generate Buzz more easily or spontaneously than others. OTC is a category that has the best Buzz/sales index among FMCG, but OTC products don't benefit from stronger media investments than other FMCG products. It means that

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consumers' involvement in a category is also linked to the level of Buzz one can generate. Health is one of the most common searched topics on the Internet among females and a lot of forum and blogs are about health and medical issues. With a high amount of discussion about health issues or conditions, the amount of discussion about the solution can be considerable and OTC obviously gets a fair share of it.

The Professional's Influence Leveraging healthcare professionals' recommendation, noticeably physicians and pharmacists, is certainly a marketing opportunity which clearly differentiates new OTC from FMCG products. However, the influence professionals can have varies across OTC categories and depends on several factors. Generally speaking, healthcare professionals' influence tends to be high in cases when: marketing support is substantially directed towards healthcare professionals; consumer directed marketing spending is relatively low; OTC products are distributed behind-the-counter, so that there is limited visibility and no reach; the condition for which consumers looking to treat with OTC product is more severe; Consumers are not that comfortable regarding self medication (due to side effects, dosing etc) and need professional advise on usage; regularity requirements restrict easy access for consumers. This list needs to be extended by one additional important factor: the mode of interaction between healthcare professionals and consumers. Here, the following aspects are important to note: The first aspect relates to the frequency of interaction. This aspect basically covers how often consumers and physicians “talk” with each other about a specific condition. The less frequent the consumer interactions with physicians, the lower the potential of professionaldirected marketing to translate into professional-driven sales. 

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The second aspect relates to professionals' endorsement power; that is how far professionals can increase consumer purchase intent for a new OTC product. In fact, there are two types of settings in which professionals' endorsement power is constricted: (a) Consumers have very limited interest in buying the new OTC product and even professional endorsement will not substantially change this attitude; and (b) Consumers' interest in a new OTC initiative is very strong, such that consumers would buy the OTC product in any case, regardless of professional endorsement. In this setting, professional-directed marketing works more as a source of awareness, rather than having an additional positive effect on increasing consumers' buying intent.

4.8 Takeaways on Marketing Effectiveness Specificities of the OTC category dynamic tend to reduce marketing effectiveness of advertising and distribution. Does it mean OTC brands should avoid spending in media? – Certainly not. Even if the longer purchase cycles for OTC categories, OTC products still need to develop awareness. Also the purpose of advertising is not only to trigger immediate sales but also to build a brand's equity. On the other hand, OTC brands have incredible and specific assets over FMCG. Given consumers interest in health, blogs, forum and all internet communities can help creating awareness and equity. Finally, OTC brands also have strong ambassadors with pharmacists and doctors. They might hardly change consumers' mind if they are already decided but they have a really strong power over consumers suffering from a condition they are not used to or that are not decided yet over one brand or another. 1. Implication for In n o v a t i o n M a n a g e m e n t :

To fully leverage the potential of innovation to drive growth, processmanagement capabilities become a competitive advantage. Those companies most likely to outperform the market, and which will get most out of the innovation pipeline, are those supporting the innovation management with a well-structured and consumer-centric process, which enables a unified language and clear-cut action standards, but which is still easy to understand for decision makers.

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2. Implications for Business Planning Business objectives for new product launches should not focus only on volume target for the new product launch. To assure total franchise growth, business objectives should also be set for the incremental volume that the new launch delivers to the overall business. Trial rate targets should be included into the business objectives for new product launches, as standard. Due to differences in overall category relevance, purchase cycles and longer time-to-trial, OTC marketing and distribution tend to result into lower awareness levels and lower conversion-to-trial than FMCG marketing. Business targets on awareness and trial rates need to account for category dynamics. All this must be taken carefully into consideration, when preparing the P&L of innovation. 3. Implication for Marketing Research methods. “Purchase Intent” or “Preference Shares” are essential metrics for evaluating the market potential of new initiatives; but not sufficient. In fact, initiatives with same purchase intent can have different trial rates. Marketing research needs to add important consumption metrics like time-to-trial and purchasecycle to capture the total market potential of a new product. 4. Implications for Marketing of Innovations: Pursue opportunities to broaden the “relevance” of OTC launches. With a “treating” positioning, OTC products tend to be limited to sufferer populations. Pursuing opportunities, which move from a “treating” positioning to a “preventing” positioning, can increase overall relevance and market potential of new OTC launches. The best “investment” in terms of getting the most out of marketing spending is a strong proposition. The cost of getting one trier is inversely linked to the appeal of the initiative: the stronger the appeal, the lower the required investment to gain one trier. Marketing teams with the strongest discipline to execute and launch strongest possible propositions will get highest return on their marketing investment. To get most out of their marketing, OTC marketers need to fully leverage the opportunities that Buzz and Professional endorsement can offer to OTC launches; and OTC Marketers need to optimize all stages of the consumer adoption process of new products. 32 Pharma Marketing


Chapter 5 Consumer Perspective for OTC Products THE PURCHASE decision process in any market represents a complex number of factors, some logical and readily rationalised, others more emotively based and some just flippant. The complexity of a market is not necessarily reflected in the computations of the purchase decision process. Technologicallydriven markets such as computers or software often cause consumers to regress and transfer priorities on to facets of the product or brand they can appreciate. Simply, they buy in a state of secure ignorance, opting for a brand with a reputation or image that they, their peers and opinion formers trust. OTC medicines also are bought into on the basis of trust and/or experience. Consequently, it is emotive appeal enhanced by recommendation that currently drives brands within this sector because of a lack of consumer understanding - and possibly apathy. The OTC medicine market will retain its current structure and status quo until consumers become more responsible and enlightened. An OTC medicine market catering for informed consumers would have a very different structure from today's market. Structural changes are, however, driving a change, causing a consumer evaluation which will ultimately impact on the framework of this market, like other sophisticated and technological markets which have had to adapt to an evolving consumer. Advertising can act as an interface between the brand and consumer, adapting established brands and introducing new products into a more elevated OTC medicine arena.

5.1 ATTITUDES TOWARDS OTC BRANDS Overall, consumers do not regard the OTC medicines market as accommodating to them. The structure of the market is seen as complex and consequently confusing, with brands often being beyond their reach. 33 Pharma Marketing


Thus, consumers do not actively integrate with brands within this market as they would, by contrast, with fmcg brands. The OTC medicine market prompts a different consumer brand relationship with the consumers' role being subjugated as they abrogate their responsibility as critical, rational consumers to the brand or a third party, such as the pharmacist. As they lack specialist or even superficial knowledge, consumers defer to a higher authority. Attempts to appraise a brand objectively are suspended; instead reliance is placed on more emotional evaluations and associations: 'Anadin always worked for me', or 'Lemsip makes you feel better.' In the OTC medicine market, brands are less likely to exist as distinct entities that can be bought into freely. More often the consumer requires some form of introduction to the brand, either professionally via the pharmacist, dentist or doctor, or personally via family and friends. This situation has arisen because consumers lack the necessary knowledge to decode and decipher the various product claims or ingredients to appraise product performance. OTC medical brands seem deliberately to adopt a non-accessible, even hostile, personality in order to promote their medical credentials. Consumers do feel intimidated and excluded by such overt disregard for their emotional needs. Many brands perpetuate this illusion of medical mystique using powerful semiotic devices in their advertising, packaging and promotions to convey efficacy and potency (eg targets, arrows, shotguns), often accompanied by more overt statements of superiority such as 'Extra' or 'Plus'. Allied to this are the quasi-military terms used (combat, fight, control, attack). This aloof and authoritative brand attitude, which is common to many OTC medicines, is deemed conventional and consequently acceptable from the consumers' point of view, with the brands commanding respect and demanding medical dignity and decorum. Intuitively, if not intentionally, brands attempt to borrow the persona of the professionals who instil implicit trust and faith while suppressing fears and concerns about symptoms and their treatment. Doctors have mastered this role by their personal approach, empathising with the patient while retaining medical respect. 34 Pharma Marketing


OTC medical brands, while striving for respect, often fail to generate the necessary empathy and thus fail to create the same holistic solution. Consumers within the OTC medicine market are undergoing a change, driven not so much by desire, but through necessity. Most consumers now feel the need to be equipped with basic knowledge within this market in order to cope with various situations. Typically, many consumers feel vulnerable and isolated from their doctors. While a decade ago their intuitive response to illness may have been to visit the surgery, this once reactive instinct is more commonly found as a last resort. Thus consumers are weaning themselves off doctor dependency for minor problems and are more likely to have their own regimes for coping initially with less severe or more frequently encountered ailments, such as coughs and colds. These consumers represent a new breed, a second generation evolving out of the dark ages of the suck it and see syndrome. Such consumers want evidence of efficacy, either through ingredient familiarity or being impressed by the active components. Whereas, previously, OTC medical brands were passively accepted, they now tend to be more actively interrogated. However, it is not merely greater efficacy that drives this brand or product appraisal. Along with greater consumer insight and sensitivity to ingredients is a more cautious and concerned approach. Amplifying this are two factors: first, consumers consider themselves more distant from their doctors and the security of using 'drugs' under supervision, and, secondly, they perceive the market as evolving in terms of potency and efficacy with more products being deregulated, moving from POM to P designation. Consumers are changing from submissive and passive patients to be administered to, to more active and involved consumers to be advised. However, these changes have not been paralleled by advertising.

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5.2ATTITUDES TO ADVERTISING Overall, consumers have relatively low expectations of OTC medicine advertising due to exposure to past executions. Generally, consumers believe that advertising within this sector adheres to a clichéd and conformist model, often being regarded as didactic and dependent on demonstrations. Advertising within the OTC medicine market tends commonly to exploit the problem/solution advertising model. While suggesting efficacy and speed, this advertising genre lacks genuine empathy. The voyeuristic 'slice of life' approach often favoured suggests that viewers should have sympathy for the sufferer and circumstances, but this tends to distract from the more potent point of connection, namely recognition of the symptoms. Consumers can readily construct a pastiche of such advertising, drawn from exposure and past experience. An example of this advertising clich is the dominant advertising model for analgesics. This comprises a woman in her mid-20s looking tired and rundown, possibly with bags under her eyes and children in tow, the aim being for the viewer to identify with the sufferer, typically deemed as a housewife. The action is also predictable, with the mood changing from depression to relief, or from pain to instant recovery. In response consumers adopt a cynical attitude, using the term 'miraculous cure'. This 'transformation model' is also accompanied by a few 'pharmospeak' phrases, elaborated on with models of skulls and men in white coats, or possibly medical-looking scanners emphasising this transmutation from pain to relief, or chaos to calm. Consumers are familiar with this transformation model of advertising as a framework for OTC medicines. Such advertising purports that the product offers instant relief and possibly even a cure for the specific ailment. This style of advertising, when adopted in the OTC medicine market, arouses consumer scepticism and tends to be appraised cynically. Contributing to this reception is not so much the message but the clichd approach adopted. Moreover, the adherence to this executional style does not help consumers differentiate between brands, and consequently messages and advertising attribution becomes vague, causing 'brand blur'. 36 Pharma Marketing


Consumers are relatively ignorant and apathetic over the specifications of products, their interests being centred on the promised relief and the process of achieving it. As a consequence of this, OTC medicine ads also focus on this relief, both in the physical and psychological sense. It is here that there is an advertising paradox in that consumers want to believe in brands and their promises. However, purporting to be a cure does promote consumer cynicism. Overt demonstrations of the promise of an instant cure tend to be resisted. Adopting the same demonstration strategy as floor cleaners and washing powders contributes to this advertising resilience. Whereas consumers can evaluate such mundane cleaning products for themselves, OTC medicine advertising needs to instil faith and inspire belief in the brand. More subtle suggestions using metaphors are often better received than more overt clichéd communications. Consumers want to trust favoured or selected brands, with this contributing to the healing process. The placebo effect is powerful, with advertising contributing to 'faith healing'. Advertising within the OTC medicine market has evolved from first generation 'prove it' ads to more subtle appeals, using semiotics and symbolism in order to convey the message. However, adherence to the transformation model has left advertisers struggling for different metaphors to represent the specific ailments or symptoms and convey the relief offered. Increasingly, the creative task is focused on expressing the problem via similes or metaphors in order to create identification, empathy and interest. Thus, ownership of the most appropriate device becomes a competitive advertising advantage.

5.3 TARGETING As planners, our generalist background also affords us the opportunity to compare advertising targeting across different markets. The current vogue with many fmcg products is to adopt a refined and defined approach when considering the target audience. Here we have seen greater brand exclusivity, not only in terms of defining the catchment the advertising is aimed at appealing to, but also in identifying the competitive products and the consequential consumer response as a result of exposure to the advertising. 37 Pharma Marketing


While this task may be more complicated in the OTC medicine market because consumers tend to adopt portfolios of products, specifically targeting the advertising is not just an academic exercise. Consumers require pointers as to how a brand is positioned: is it for instance a reactive product to be taken at the first sign or symptom of an illness, or is it to be reserved and used as a last resort? Previous brand targeting within the OTC medicine market would appear to be inclusive with the appeal trying to encompass anybody sharing those specific symptoms. This is particularly true for analgesic or cold and 'flu remedy products. The working hypothesis here seems to be that by loading the advert with recognised symptoms you will broaden the appeal of the product. Against this theory is an emerging consumer response in this market. Consumers are beginning to distrust products that purport to be panaceas. Greater credibility and competitivity can be achieved by focusing on specific symptoms or problems. Consumers are more accepting of products that have a specific and dedicated role, suggesting specialisation. The theory of selective perception suggests that consumers tend to pay more attention to advertising when it directly relates to them. Thus by identifying a recurring problem or a current symptom, consumers are more likely to take notice. Most marketers are able to define their consumer, both demographically and psychographically. There are many models of consumer typologies attempting to describe and categorise consumer behaviour from 'mainliners' to 'martyrs' or from 'pill poppers' to 'phobics'. While such psychographic models exist to describe consumers, it is rare that these are fully exploited when undertaking advertising (often due to the inability to buy media against such highly defined sectors). While such models of consumer behaviour recognise and categorise differences between consumers, they are often left behind in the development of advertising, due to the brand's desires to trawl the broadest catchment possible.

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Evaluation of the relative ego states of the viewer or sufferer is of more pertinence when considering targeting. Within most markets, consumers will evaluate products against a number of different criteria, which often represent conflicting mindsets. In the OTC medicine market, three such mindsets exist which are pertinent to branding and advertising. First, there is the consumer in his or her role as a patient. In this mindset the consumer is likely to respond positively to an empathetic or sympathetic message, and will also react to advertising that shares his or her common symptoms. Secondly, there is the role of the mother. This mindset exercises a cautionary approach with concern over 'drug' potency being prominent. The mother mindset is concerned with caring for the patient (whether herself or her family's). Thirdly, there is the role of the nurse. In this capacity, consumers want to know more about the active ingredients and the effects of the product. They are taking on active responsibility for looking after their or their families' health and consequently want to be equipped in order to make competitive decisions. Arguably, much of the first generation OTC medicine advertising involved appealing to the patient and mother mode, placating concern by promoting friendly and familiar brands and forging a connection through a sympathetic tone (the tried and trusted appeal). With the advent of a marginal advancement in consumer understanding and comprehension within this market, advertising appeals need also to evolve on to a higher plane and communicate to the nurse mindset as well, in order to ensure a holistic advertising message that appeals to the various consumer ego states.

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Chapter 6 Summary and Recommendations 6.1 Summary In terms of its execution, advertising within the OTC medicine sector is evolving. However, its framework has remained relatively basic compared with advertising appeals in other markets. Branded sophistication within the OTC market is predicted to increase due to the complexity of the products and added competition within the specific sectors. As a consequence of this, advertising needs also to evolve and exploit the latitude that consumers are prepared to give OTC medicine advertising. The creative challenge is to produce advertisements which can overcome consumers' innate cynicism of supposed miracle cures (particularly in relation to the cold and 'flu market), while reflecting a degree of empathy with the sufferer. Formulae advertising that adheres to the proven transformation model will always be an acceptable option for marketers within this sector. However, the potential for brands to capitalise on consumer frustration is evident. There is scope within this market for brands to be more radical in terms of their advertising approach, and adopt more pioneering advertising that breaks away from the OTC medicine advertising clich and delivers, within a creative framework, a pertinent and easily assimilated consumer-orientated benefit. While many of the established brands within the OTC medicine market are based on tradition, echoing the maternalistic medicine chest, the market is undergoing a transformation. Consumers now respond to more intelligent and specifically targeted treatments. Greater accessibility to such products as they become de-restricted will need to be handled with subtlety and sensitivity.

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Consumers are becoming more aware of medical matters, driven by necessity and, to a degree, curiosity. Ultimately, this will lead to consumers interrogating brands more closely in terms of their performance promise and contents. While consumers are dismissive of miracle cures or panaceas they do expect medical technology to have advanced and while exercising caution, they will want brands that treat symptoms effectively, intelligently and safely. The prophecy for OTC medicine advertising will be protecting the effectiveness and potency of traditional and established medical brands and launching new or previously restricted brands into the consumer market. Thus the future of OTC medicine advertising will be marked by both defensive and aggressive strategies. This should act as a catalyst for new advertising approaches, breaking away from the clichéd and first generation advertising appeals.

6.2. Recommendations Despite the regulatory issues and unique purchase occasions applicable to most brands, the over-the-counter (OTC) pharmaceutical sector is not as different from other consumer-facing industries as is frequently assumed. What is important, whatever the product and market, is devising and executing a coherent plan. Similarly, the advent of targeted products is growing more common in the pharma category, as is the case for FMCG and household goods. That's something that we see in vitamins - vitamins for the elderly, vitamins for kids, vitamins for the midthirties. It is equally true for pain relief lines with stronger ingredients to help specific conditions, like GlaxoSmithKline's Panadol Osteo for managing osteoarthritis, and Panadol with added caffeine to enhance its analgesic effect. In keeping with this notion, the path to purchase for OTC brands has not been immune to the rise of digital media. This channel has transformed the trading environment for companies in areas from travel and electronics to publishing, and is also gradually staking a claim in a wider assortment of sectors.

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Here are four recommendations that every Pharma company should follow for the Asian market as told by Dr Sebastien Boisseau, regional strategic planning director, Asia Pacific at Ogilvy Health, the agency, delivered to attendees at the OTC Pharma Asia 2013 Conference: Tip 1: Decode the decision-making journey of the target audience

Finding the "sweet spot" - or the point of convergence between logical, leftbrain thinking and creative, right-brain thinking - is the key to achieving such a goal. Besides conducting market research and converting the findings into insights that can be linked to business objectives, brands should understand the decision journey of patients, pharmacists and healthcare professionals, and the motivations behind their every choice, from seeking information to picking a product and, finally, becoming loyal to a particular brand. It's about building an effective campaign, making sure whatever we do in terms of investment would be clearly defined and have clear objectives to change the perception of your brand. Tip 2: Appeal to emotions

Emotive ads tend to drive sales more effectively than those focusing on rational appeals. As expertise about different conditions and brands is often spread across various corporate functions, marketing teams could also benefit from crowdsourcing such ideas in-house. By working with all the different stakeholders in a company, you can identify some nice ideas. Tip 3: Use the digital space to engage customers

The transformation of information gathering and the emergence of the engaged patient has demonstrated the increased importance of social media in the broader healthcare context. For the healthcare industry, it is becoming increasingly important to be able to react quickly and decisively to events on social media. Tip 4: Secure expert recommendations

OTC brands can look at enhancing their credibility by strategically aligning themselves with experts. One of the ways to build communication is either to build credibility with doctors about OTC brands, or to use a structure, an organisation [or] a medical association that can be used to endorse the OTC brand. 42 Pharma Marketing


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