Download THE PRODUCT IN MARKETING ACTIVITY

THE PRODUCT IN MARKETING
ACTIVITY.
ASSORTMENT OF MEDICAL
PRODUCTS.
THE COMMODITY POLICY OF
PHARMACEUTICAL
ENTERPRISES
Theoretical questions
1. The marketing concept of goods. Consumer properties
of goods.
2. Competitiveness of the pharmaceutical products.
3. The life cycle of goods.
4. The nomenclature of goods. Assortment of the
pharmaceutical enterprises.
5. Commodity policy of the pharmaceutical enterprises.
6. Innovative activity of the pharmaceutical enterprises.
7. Development cycles of medical products.
8. Packaging in the pharmaceutical marketing
Goods are product intended for the
exchange on the market with the help of
sale and purchase, which obligatory
conditions are: convenience of time,
convenience of place, convenience of
procedure of purchasing goods.
In marketing goods are considered as
means, with the help of which it is possible
to satisfy the certain need.
Consumer properties of goods
include:
• quality;
• conformity to functional purpose;
• conformity of the price to quality and the consumer
value;
• the presence of the accompanying documentation;
• quality after sales service;
• a variety of assortment;
• opportunity of choice.
Medical products have special
consumer properties:
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therapeutic efficiency;
conformity of quality to the certain requirements;
safety;
convenience of application;
profitability.
Competitiveness of the pharmaceutical products
Competitiveness is a relative integrated characteristic,
which displays difference of goods from its
competitors and defines its appeal to the consumer.
Competitiveness includes the following components:
• Quality of goods
• Marketing and commercial components
• The Economic component
• The price of consumption
Quality of goods:
• technical and economic
parameters;
• ecological parameters;
• ergonomic parameters
(hygienic,
anthropometrical,
physiological,
psychological and other
requirements);
• aesthetic parameters;
• conformity of production
to the obligatory quality
standards; .
• maintenance of the
patent cleanliness.
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Marketing and commercial
components:
the price of sale;
the price of purchase;
a marketing component
(shows the advantages of
character and quality of the
market research, a degree
of work on promotion of
production);
a commercial component
(testifies to quality of the
commercial work in
comparison with firms competitors).
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The Economic component includes
advantage or unprofitableness of
charges on manufacture or application of
goods.
The price of consumption.
THE NEW DRUG DEVELOPMENT PROCESS
• The new drug development process is an arduous, timeand resource-intensive procedure that takes several
years from initial drug discovery to product
commercialization.
• In general, the identification of unmet therapeutic needs
leads to new drug design, a long clinical trial and
marketing concept testing phase, a regulatory approval
phase, and eventually the product launch and its life
cycle management.
• Ideally, a successful new product development
procedure is focused on three factors: achievement of
internal R&D standards, the satisfaction of external
regulatory standards, and customer satisfaction from a
product designed to satisfy their needs and wants.
Idea Generation
• The idea generation process for new pharmaceutical
products is based on the identification of unmet
therapeutic needs. This is based on the availability of
large amounts of epidemiological and therapeutic area
market data, currently commercially available online or
through CD-based databases, as well as from primary
customer data collected through syndicated market
research or by sales, marketing, and medical affairs
professionals. Armed with this knowledge,
pharmaceutical marketers select a therapeutic area with
an unmet therapeutic need, a significant potential for
sales, and company knowledge. The process of unmet
needs analysis, target profililing, and profile- based
development is called label-driven development.
Idea Screening
• Idea screening is the critical evaluation of
numerous new product ideas based on a
precise corporate strategy.
• New product ideas are exhaustively
screened for their attractiveness based on
various equations and models.
New product feasibility study
• One commonly used new idea screening tool is the product's
feasibility analysis.
Busines Analysis
• Business analysis is the comparison of sales, costs, risks, and profit
forecasts to corporate objectives. A variety of assessment criteria
are used in the process, such as galenic form, tolerability, efficacy,
interactions, economic dossier, or drugs of reference.
Development
• This phase refers to the development of a new therapeutic idea into
a pharmacological entity, and its preclinical and clinical efficacy and
safety testing.
• The clinical testing of experimental drugs is normally performed in
three phases, with each successive phase involving a larger number
of people. Once the FDA has approved an NDA, pharmaceutical
companies conduct postmarketing or late Phase Ill/Phase IV
studies. Overall, the new drug development process may last up to
ten years and cost more than 300 million U.S. dollars to complete.
CONCEPTION AND PRODUCT DEVELOPMENT
• This phase begins with basic research, and then gradually
moves through a series of preclinical and clinical research
phases that lead to a new drug application (NDA). This is a
long and risky period of resource-intensive activities and no
product sales, thus a prolonged negative-profitability period.
• One of the most important aspects of a product's life cycle
management is maximizing product revenue during the very
limited period of remaining patent exclusivity at the time of
launch. A typical product introductory period will take several
months, or even years, to reach its growth levels, provided that
the product's promotional effort starts at launch.
• Pharmaceutical marketers can use a very significant business
tool called premarketing to raise consumers' awareness before
the product becomes available. The introductory phase
becomes shorter and revenue is maximized.
• Premarketing should be initiated at least two years
prelaunch, or at the beginning of Phase III of clinical
research. The activities needed for premarketing require
significant human and financial resources. Early
commitment to the potential new pharmaceutical product
from the company's management is essential.
• Some organizations assign the design of premarketing
strategy to the product managers who will eventually
take responsibility of the marketed product. However,
this often takes time and energy away from other product
priorities.
• Alternatively, premarketing activities are directed by
specialized marketing managers, often called new
product development or new market development
managers. These managers either transfer the
responsibility of the product to the brand manager or
continue with it as a full-time responsibility.
The product's life cycle
• Related to the status of a product in the
company portfolio is that product's place in the
"product life cycle."
• Products tend to go through different stages,
each stage being affected by different
competitive conditions. These stages require
different marketing strategies at different times if
sales and profits are to be efficiently realized.
The length of a product's life cycle is in no way a
fixed period of time. It can last from weeks to
years depending on the type of product.
Most discussions of this cycle divide it into
four stages known as introduction, growth,
maturity and decline
• Introduction is the period, during which the
initial market acceptance may be in doubt; thus,
it may be a period of a slow growth.
• Profits are often non - existent because of high
marketing and other expenses. The marketing
strategy during this stage is based on different
combinations of product, price, promotion and
distribution variables.
• The market for the product during this phase will
be comprised of a small percentage of the
medical population that is normally the first to try
new drugs, and who are quite influential with
their colleagues. If the product is as effective
and safe as this core group wishes, word can be
expected to filter down to the rest of the medical
community.
• In the introductory stage a direct competition
may not be a problem although, if the product
merely does a job in a new or better way, there
may be difficulty in convincing the physician of
the value of the change.
• Production cost, marketing costs, and prices are
traditionally high during the introduction stage.
Unless the product can be produced efficiently
using the existing equipment and in the face of
unpredictable sales, the economy of the mass
production will be hard to realize. Marketing
costs will reflect the special nature of promotion
to stimulate the primary demand.
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Survivors of the introduction stage enjoy a period of growth.
During this period there is the substantial profit improvement.
The strategy in this stage takes the following shape:
(a) product improvement—addition of new features and
models;
• (b) development of new market segments;
• (c) selective demand stimulation;
• (d) price adjustments.
• During the growth stage there is the widespread approval of
the product concept. The number of competitors will begin to
increase. Either modifications of the original product or
completely different products for the same purpose will
appear. By this time production methods will have been
established, with a frequent lowering of costs.
• Prices will tend to go down for two main reasons:
– Increased sales will make some economies of scale
possible.
– The increase in the number of competing firms leads to
both a theoretical and an actual tendency toward lower
prices.
• The growth stage sees promotional activities devoted to the
stimulation primarily of selective demand.
• During the next stage, maturity, there is the
intense rivalry for a mature market. This leads to
a proliferation of sizes, dose forms, and other
product variants.
• Battling to retain the company's share, each
marketer steps up promotion, and perhaps
grants price concessions. Unless new
competitors are obstructed by patents or other
barriers, entry is easy. Thus, maturity is a period
when sales growth slows and profits peak and
then start to decline.
• During the maturity stage competition reaches
its peak. By this point all of the firms that have
any hope of receiving a share of the market will
be pursuing it. By virtue of the numbers involved
some of these companies will be marginal from
either a financial or technological standpoint.
The total sales of the product class, which have
been rising through the early stages, continue to
increase, but at a decreasing rate. The net effect
is the price competition for this business.
• Strategy in the maturity stage comprises the
following steps;
• (a) search for new markets and new and varied
uses for the product;
• (b) improvement of product quality through
changes; and
• (c) new marketing-mix perspectives.
• During this phase all the product variations may
be expected to appear.
• It is now seemingly desirable to have tablets,
capsules, and liquid. A dermatologic form may
be prepared, or a long-acting form, or a
combination.
• The promotion may now attempt to add some
vitality through efforts to segment the market by
using special messages to separate physician
specialties
• Finally, there is the decline period, which may be precipitous.
Though sales and profits continue their downward trend, the
declining product is not necessarily unprofitable. Some of the
competition may have been removed by this stage.
• There can be a number of reasons for the decline of a product
class— most are related to the effectiveness of the product as
compared to other means of therapy. If the decline is caused by
a new product development, the decline may be rapid, with
only those, who are slow to change in any direction continuing
to prescribe the product.
• Promotion during this stage may again be aimed at stimulation
of the primary demand. The effort may be half-hearted, and
may be aimed at only a core of physician-users. Some firms
may now drop from the competition leaving a potential
marketing opportunity for those remaining. The profits may be
slim, however, with many of the economies gone.
The nomenclature of goods is set of all groups of
the goods offered to buyers by the seller.
• Formation of the production assortment of the pharmaceutical
enterprise represents the selection process of different groups
of goods and their subgroups for realization to organizations or
the end user.
• While making up the commodity assortment such criteria as
width, depth and comparability are allocated, they actually
characterize a level of maintenance of the consumer's demand.
• The width is a quantity of therapeutic groups, which are
inscribed into the general list.
• The depth of assortment is a number of positions of medical
products in each group.
• The important characteristic is comparability that is
interchangeable positions in the therapeutic group.
Problems of assortment policies are:
• Satisfaction of the consumer's needs;
• The optimum use of technologies and
experience of the enterprise;
• Optimization of the firm's financial results
(formation of assortment is based on expectation
of the certain level of profitability and profit);
• Attraction of new buyers by expansion of the
offer;
• Support of the flexibility principle at the expense
of diversification fields.
Innovative activity of the
pharmaceutical enterprises
• New products continue to be the life blood
of the research-intensive pharmaceutical
industry.
• They may be new in the sense of new
chemical entities, new to an individual
firm's product line, or a new name for an
existing (exspecially OTC) product.
• However, new products are usually
necessary for sustained profitability and
growth.
Top management can effect the implementation of
the new-product strategy:
• firstly, by establishing policies and broad
strategic directions for the kinds of new products
the company should seek;
• secondly, by providing the kind of leadership that
will create the environmental climate needed to
stimulate innovative drive in the organization;
• and thirdly, by instituting review and monitoring
procedures so that the manager is involved at
the right decision points and can know whether
or not work schedules are being met in ways
that are consistent with the broad policy
direction.
New product strategies can focus on imitation of existing
products, modification and improvement of existing
products, or truly new products. The latter will receive
the most attention here, but all of these are widely
employed in the drug industry.
Kinds of innovations
• Technical (new products, technologies, the energy,
new materials, the equipment);
• Organizational (new methods and forms of the
organization of all kinds of activity, voluntary
association of the companies);
• Economic (methods of managing - forecasting and
planning, financing, pricing, motivation and payment);
• Social (various forms of activization of the human
factor);
• Legal (acts and laws).
• The feature of market medical product is shown
available original and generic (reproduced)
medical product.
• The original medical product is a preparation,
which is a sole property of the company, which
have developed it, or the property of the
company - owner of the first license for its sale is
exclusive.
• The active substance of a new medical
product holds a patent received when due
hereunder. Before expiry of the term of
action of the patent any other pharmaceutical
company has no right to synthesize and use
this active substance.
• The potential of the further growth of sales of
any pharmaceutical firm always contacts
introduction on the market of new medical
products.
• Generic (reproduced) medical product is a
preparation, validity of patent protection on
which active substance has ended.
• Generic (reproduced) medical product contains
the active substance identical to the active
substance of a new medical product. However
auxiliary substances and production can be
distinguished.
• The word brand is a comprehensive term, and
it includes other, narrower terms.
• A brand is a name, term, symbol, special
design, or the same combination of these
elements, that is intended to identify the goods
or services of one seller or a group of sellers.
• A brand name consists of words, letters, and/or
numbers. A brand mark is the part of the brand
that appears in the form of a symbol, design, or
distinctive coloring or lettering.
Packaging in the pharmaceutical marketing
• Packaging may be defined as all activities involved in
designing and producing the container or wrapper for a
product. There are three reasons for packaging:
• Packaging serves several safety and utilitarian purposes.
It protects a product on its route from the producer to the
final customer, and in some cases even while it is being
used by the customer;
• Packaging may perform a company's marketing
program. Packaging helps to identify a product and,
thus, may prevent substitution of competitive products.
Also, a package may be also the only significant way, in
which a firm can differentiate its product;
• Management may package its product in such a way to
increase profit possibilities. A package may be so
attractive that customers will pay more just to get the
special package — even though the increase in price
exceeds the additional costs of the package.
• Packing for the pharmaceutical goods and
medical products should correspond to
some features connected with a physical
and chemical condition, color, the relation
to physical, chemical, and temperature
influence.
• Therefore, the packing material should
provide the certain mode, humidity of air,
protection against direct solar beams, etc.