Over the last decade, the pharmaceutical industry has seen significant change. There are many views on the role of branding. We have heard champions of ‘customer centric’ sales models pronounce the death of branding. Is that simply another expression of the antagonism between sales and marketing or does big pharma need to rethink its approach to managing brands?
In his book “On BR@ND”, Wally Ollins identifies the selling of patent or proprietary medicines in post-Civil War America as the origin of modern branding. Coca-Cola was created by a failed chemist and included health claims in its original advertising and Kellogg’s was originally promoted as a cure for indegestion.1 Whilst patent medicine people were the early pioneers, it was the makers of household goods such as soap, washing powder, shoe polish, tea, chocolate and cigarettes who refined the approach by combining consistent product quality with standardised pricing and advertising in cheap daily newspapers in the late 1900s. FMCG powerhouses like Cadbury, Unilever, Nestlé, Heinz, Kellogg’s and Procter & Gamble were born and they were built on ‘brands’. Companies like Cadbury, Heinz and Kellogg’s used their corporate name on the product, but most FMCG companies created a ‘House of Brands’ – in some cases hundreds of brands – and the corporation behind the brand was rarely if ever seen by the consumer.
Traditionally pharmaceutical companies have followed the Unilever and P&G model – investing in building product brands within a ‘house of brands’ structure, with the corporate brand hidden in the background. This model assumes that it is the product brand alone that delivers value.
THE PRODUCT/CUSTOMER VALUE MODEL
Of course this is a little simplistic and assumes that all consumers (or customers) are the same. In practice markets are targeted by segments – a practice that again was created by consumer goods companies.
VALUE IN A SEGMENTED MARKET
THE LIMITS OF PRODUCT BRANDING FOR PHARMA
Government bodes rightly regulate the pharmaceutical industry in terms of how they promote products. In Australia, this largely restricts brand managers to tangible brand promises and attributes – to claims that can be supported by clinical evidence e.g. indications, mode of action, dosage, tablet load, efficacy, safety profile etc. Anything beyond that creates a ‘red flag’ with reg affairs.
The challenge is that powerful brands typically live at the intangible end of the spectrum. It is where a unique brand promise can be created and defended. Corporate brands have no such restrictions, allowing brand managers to create emotional connections between the brand and stakeholders.
LEVERAGING THE STRENGTH OF THE CORPORATE BRAND
The ‘House of Brands’ focus on the product brand has its weaknesses. The rise of consumer activism, coupled with the world wide web and later social media created an environment where it became impossible for the brand owner to remain in the shadows. Brand owners began to realise that investing in the corporate brand was an important activity in ‘building equity’ to mitigate against reputational damage. The consumer of the 21st century however is far more savvy than the 1950s.Today authenticity is an imperative.
Increasingly pharma companies are also recognising the role of their corporate brand in delivering value to stakeholders. This is certainly the case for investors, government bodies, partners, media, insurance companies and hospital pharmacy but what about individual prescribers?
THE CORPORATE/PRODUCT/CUSTOMER VALUE MODEL
VALUE IN A SEGMENTED MARKET
If we apply segmentation to this mix, we will quickly see that for some customer groups, product delivers very little value, but the corporate brand creates engagement. For example, it is not uncommon for some key opinion leaders to be non-prescribers. The product may be a vehicle through which research can be undertaken, but it is the relationship with the corporate brand that is the primary value driver.
Furthermore many pharma companies develop expertise and a strong product pipeline in particular areas e.g. oncology. Clearly the corporate brand has a key role in not only delivering value but also in creating marketing efficiencies across the product portfolio.
SUMMARY
At Leo Creative, we believe big pharma can no longer rely on product branding alone in creating value for prescribers. The corporate brand must be incorporated into the value offering. This becomes even clearer when we look at the role of the corporate brand in highly specialised markets.
1. Ollins, Wally. ON BR@ND (pp. 48-69). London: Thames & Hudson, 2003