Marketing Mix Flashcards
Mention some value propositions in biotech/pharma/healthcare
- Treatment efficacy
- Price
- Lower side-effects
- Ease-of-use/route of administration (oral vs. injection vs. ointments – convenience/less intrusive)
- Sustainability
- The 3R (withing animal laboratory science) could be used in marketing
- More QALY and low ICER
- Design: Customizability of equipment like an insulin pump, size
- Customization: Personalized treatment options (e.g. vaccines or CAR-T cell therapy)
- Storage/transportation needs
- Shelf-life
- Expertise level needed to utilize the equipment/procedure
- Novelty
What is the value proposition? And what is important with this?
- What you offer that a customer is paying for.
- Customers must clearly perceive value propositions
- Possibly more than one value proposition, and value proposition may depend on stakeholders (to be clarified: who are the important stakeholders?)
Mention 8 value propositions/product differentiations in biotech/pharma:
1) Newness (Unserved disease)
2) Usability / convenience (Changes in drug deliverability)
3) Performance (Higher efficacy)
4) Risk reduction (Less side effects)
5) Price
6) Customization (Personalized options)
7) Design (Medical devices mainly)
8) “Getting the job done” (Speeding up diagnosis or simplifying procedures)
The marketing mix consists of what?
1) Product
2) Price
3) Promotion
4) Place
What is the TPP?
Target Product Profile – a planning tool for therapeutics candidates.
Keeping in mind what characteristics the product needs to have to gain regulatory approval, market access and success. Often in a list form defining different characteristics on minimum acceptable results and ideal results.
TPP covers what?
- How will the intended product be differential to competitors’ products?
- Initiating product development with having the “end in mind”
- Facilitating communication (e.g. FDA) since it summarizes the drug development program in terms of intended labeling content and claims
- Record of the drug that is most likely to launch, incorporating the latest data from the clinical program and the evolving pharmacology.
- Summarizing indications and usage, including dosing and administration, contraindications, warnings and precautions, adverse reactions, description, clinical pharmacology, clinical studies, storage and handling
Product positioning is?
Where you are “placed”/decided to be/perceived in the market based on your choices for the product. (Cheap vs. expensive, Generic vs. innovator etc.)
¬¬Why was the Pfizer blood cholesterol drug a success?
1) Much better efficacy (decrease in LPL)
2) Aggressive marketing
3) Low price even though they had the best performance = enormous market penetration.
What are the parameters for product differentiation?
1) Performance quality
2) Form
3) Features
4) Durability
5) Design / Style
6) Usability
7) Customization
What are the parameters for service differentiation?
1) Ease of ordering
2) Delivery
3) Installation
4) Customer training
5) Customer consulting (Data, information and advice)
6) Maintenance & repair
What is the product mix?
The set of all products and items that a particular firm offers for sale.
What four dimension is a product mix made up of?
Width: how many different product lines the company carries
Length: The total number of items in the product mix
Depth: How many product variants are offered of each product in the line
Consistency: How closely related the various lines are in end use, production requirements, and distribution.
Are drugs customized based on geography?
YES! Drug doses and prices are varied around the world.
What are some learnings from the biopure case?
- Markets and market segments may look at first glance better (Hemopure) or worse (Oxyglobin) than they are in reality
- Currently small, seemingly unattractive, market might have rather strong growth potential
- Value proposition can be very different depending on target segment
- For setting the “right” price, several approaches can be considered, such as
o Production costs (plus mark-up)
o Price of current solutions
o Prices of competitors
o Customer’s willingness to pay
Is market sizing easy?
Markets might look better than they are in reality, remember to challenge your assumptions.
What are pricing strategic basic objectives?
- Maximizing current profit: based on demand and cost functions, a price is chosen that maximizes the returns or profitability.
- Maximum market share: higher sales volume will lead to lower unit costs and lead to higher long-run profit, resulting in low price
- Survival: strategy that can be useful if intense competition, overcapacity in production, or changing consumer demands that cannot be immediately addressed
- Product quality leadership: offering high-quality products at premium prices (price suggesting good is of superior quality)
What describes an elastic demands in regards to price?
Elastic demands are sensitive to price increases, increasing price results in a demand/quantity lowering resulting in less income.
What describes an inelastic demand in regards to price?
Inelastic demands react less on price increases. When price increases, quantity sold only falls slightly, resulting in overall more revenue.
What could be some global factors leading to reduced price sensitivity?
- The product is more distinctive
- Buyers are less aware of substitutes
- The expenditure is a smaller part of the buyer’s total income
- Part of the cost is borne by another party
- The product is used in conjunction with assets bought previously
- The product is assumed to have more quality, prestige, or exclusiveness
What could be drivers of price sensitivity in drug / health context (disease, patient characteristics)?
- Severity – the more severe, the higher the price -> low price sensitivity
- Alternatives - First-in-class treatment -> low price sensitivity
- Patent landscape – Excludes competition
- Rarity of disease – R&D costs needs to be recovered
- Payer – private customer -> High price sensitivity – Public healthcare (DK) -> lower price sensitivity
- Repeated use
Mention the 3 generic pricing strategies
1) Cost-based and mark-up pricing – basing price on cost of producing units, nr. of units we can sell and price unit accordingly. (Good for generics probably).
2) Market-based pricing (benchmark / reference pricing) – price-setting based on analysis of the market, including customer and competitor information on comparable products.
3) Value-based pricing – Pricing based on perceived value of the product to the customer, rather than cost or other factors. Good when few other alternatives, few other products or products with significant limitations exists
Mention different 6 specific pricing strategies
1) Skimming – Setting premium pricing: low initial demand but maximizes revenue in short-term. Good when we need revenue early on to recover R&D costs and when demand is inelastic so there is a low risk of entry and for communicating superior brand image.
2) Penetration pricing – Opposite skimming – low market price to gain market share. Useful for elastic demand. Good for high fixed cost businesses with low marginal cost so we can distribute the high fix cost over a large quantity of units. Allows for realizing economies of scale
3) Target-return pricing – Sets the selling price to achieve a specific volume, revenue or return. Probably mostly theorethical. Stable revenue streams when demand fluctuates implies price changes.
4) Bundling – Sets of products to exploit complementarities and balance heterogeneous WTP
5) Differential pricing (price discrimination) – Vary prices based on customer group (Like geographical we do so with drugs or product alternatives (think apple)). Exploits different WTP and reduces consumer surplus.
6) Outcome-based pricing – pricing set depending on fulfillment of a particular outcome (could be no cure no pay). Convinces price-conscious payers that money is well spent
Skimmy Penetrated his Target and the Outcome was a Bundle of motor Differentials
What is arbitrage?
Arbitrage er et udtryk, som dækker over et køb, hvis eneste formål er at blive solgt videre med en fortjeneste.
Mention the 5 common pricing schemes for pharmaceuticals
1) Performance-based pricing (“Pay-for performance”): Designed to manage utilization and evidence for drug efficacy: emphasizing clinical outcomes
2) Bundled payment: A global payment for all treatment costs including prescription drugs (e.g. oncology when multiple drugs are needed; or medical devices with product & service contracts)
3) Indication-specific pricing: differential pricing for a product depending on its performance in specific indications (e.g. lung cancer vs. colorectal cancer).
4) Financial-based risk-sharing: Designed to provide budgetary certainty to payer via agreements that link price to utilization. Sales reaches a certain level = reduction in price to not overwhelm the system.
5) Annuity model: payments are spread over time as opposed to an upfront payment (e.g. depending on length of patient life)
Performance Bundled Indicaters gives Financial Anxietiy
Mention a popular diagnostics pricing model
The “razor-blade” model – selling the machine cheap and expensive “blades”/reagents/needed supplies to make the machine work. Think, Nespresso, polaroid cameras
Is there a price discrimination by indication/disease for the same drug?
Yes! Certain indications like certain cancers sometimes have a higher price for the same product/drug.
Why is there as small price drop with 1 generics producer compared to more?
Suspect that it is the same company that has the brand, that produces the generic. They know the patent will end, might as well get ahead of the generics entering the market. Often 1 competitor = 95% of the original drugs price, 2 competitors = 50%, 5 competitors = 30% etc.
What happens to the original drug when biosimilars/generics enter?
Often, they don’t fall much in price.
A QALY is? And hos is it measured?
Quality Adjusted Life Year
Measured through HRQoL questionaires at different stages.
Does payer influence affect pricing?
Yes! The US pays more than many western countries as they often have limits (sometimes clear like UK) and government negotiation programs. Like the one that got cheaper if the vaccination got used a lot.
Does life years gained affect pricing?
Yes! More life years = more expensive.
Marketing activities can be planned by using what?
Marketing activities can be planned and analyzed using the popular 4-P framework, representing product, price, promotion, and place
