Consumer Behavior Importance in Pharmaceutical Industry

Lesson 1:

Nature, scope and application.

Consumer is the king in today's scenario of marketing. Gone are the days when manufacturers could have sold

anything to the consumers. Henry Ford once famously said, "My customers can have a car of any colour as long as it is black". It Henry Ford had been born in today's world he would have definitely thought a several times before giving this statement.

Today it’s the consumer whose buying preferences decide what should be manufactured, in what quantity and what should be the quality of the product.

Hence, a marketer has to take into account various factors while deciding on marketing a product as consumers have different preferences and some times totally diverse preferences. So the task of manufacture and marketer becomes onerous and therefore it is very important to understand the consumer behavior.

Understanding consumer behavior is even more difficult in the field of pharmaceuticals as the target customer is not the end user but the influencer i.e. the doctor who generates the prescription.

Application of Consumer Behavior in Pharma Sector

Unlike direct 'seller to user sales' pharma selling is a multiple tier process. Here the consumer / user is not in direct contact with the salesman. Here the medical practitioner decides on behalf of the patient /consumer, which product needs to be bought, in what quantity, when to be consumed and how long to consume. Hence, regular, continuous study of prescribing behavior of physicians is very important for pharmaceutical marketer.

Eye Openers for a Pharma Marketer…

Now, let us consider some of the facts pertaining to pharma sector and prescription pattern.

According to University of Arizona, 70% of all prescriptions are never consumed.

According to consumer health information, 20% of all the new prescriptions go unfilled.

WHO reported that half of all the patients do not adhere to their prescribed therapy?

What is Consumer Behavior ? The term consumer behavior is defined as the

behavior that consumers' display in searching for, purchasing, evaluating and dispensing of products and services that they expect will satisfy their needs.

The behavioral sciences that have made significant contributions to the study of consumer behavior are economics, sociology, psychology, and to some degree political science and cultural anthropology.

The modern day marketing discussion centers around the need for modern marketing to be consumer oriented and to be concerned with the needs and wishes of the consumer and thus, studying consumer behavior is critical, for companies, in getting success of the products in the market.

Consumer PyramidThe consumer pyramid, is formed on this basis of consumer behavior. This is a very efficient tool in the hand of the marketer to study consumer behavior even more closely. This pyramid has four tiers;

Platinum tier: It includes heavy users/prescribes who are not price sensitive and who are willing to try new offerings.

Gold tier: They are also heavy users but are more price sensitive. They ask for more discounts, free samples etc. and are likely to prescribe several brands.

Iron tier: It consists of customers whose spending volumes, profitability and prescribing pattern do not merit special treatment from the company.

Lead tier : It consists of customers who actually cost the company money because they claim more attention than is merited by their spending, tie up company resources and spread negative word of mouth publicity.

Comparison of the four tiers of consumer behaviour with traditional New Product Adoption Process

The first tier, the platinum tier can be compared with the "Innovators" as these customers are trying to experiment and accept new offering from the companies.

The second tier, the gold tier can be compared with "Early adopters and Early majority" as these customers are responsible for growth phase of a product life cycle due to substantial use of the products.

The third tier i.e. the iron tier can be compared with " Late Majority" who have adopted the product very late in the Product Life Cycle and are very cautious while using the products and the brands.

And the last tier i.e. Lead tier can be matched up with the "Laggards" who would hardly try the product and actually drain out the company's resources.

  Fig. 2. : New

Product Adoption Process

Lesson 2: Environmental influences on consumer behavior

Cultural, social, personal, family and situation influences,

Opinion leadership and Life style marketing.

Factors Influencing Consumer Behavior

Cultural factorsSocial factorsPersonal factors Family & SituationalPsychological factorsPsychographic factorsOpinion LeadershipLifestyle Marketing

Cultural FactorsCulture is the fundamental determinant of a

person's want and behavior. Companies often design specialized marketing programs to serve each subculture. This programme is called diversity marketing.

e,g. The people of Germany pronounce the letter 'V' as 'F' so while pronouncing word VICKS they call it FIX, rather than VICKS . Now, the marketing VICKS in Germany its name had to be changed to suit the German Culture.

Indians are much more oriented towards Ayurvedic or Herbal medicines. It is in the Indian culture to use Neem. Tulsi, Haldi etc. So, it's much easier to position non - allopathic drugs in India because of its cultural set up.

Social Factors Reference group Family Social status and role

Reference group " A reference group consists of all the groups that have a direct (face to face) or indirect influence on the person's attitudes or behavior.

These reference groups have an opinion leader. They are the persons who offer advice or information about a specific product or product category and suggest which brand is best. A marketer should know how to reach and influence these opinion leaders in order to influence consumer behavior. e.g. In pharmaceutical field while marketing a product, it is important to identify certain Key Opinion Leaders (KOL) who have influence on the prescription pattern of other doctors in specific areas or have wider geographical reach. If these KOL's start prescribing the product, many doctors will also prescribe the product.

Family: Family is an important determinant of social factor. If there is a physician whose father is also a physician it is natural that he will have a liking for the same drug that his father used to have.

Social status and role: The person's position is defined in terms of role and status. People choose products that communicate their role and status. A physician depending on its specialty, experience and social status will go for the drug that will match his social status. A well known renowned physician will surely go for the branded drugs rather than generic drugs. Further prescribing pattern will also have influence depending on the types of patient a doctor treats. For rich patients a doctor may prescribe costly products while for a poor patient he may not do so.

Personal Factors Age and stage in the life cycle Occupation and economic circumstances Life Style Personality and self concept

Age and stage in life cycle : The choice of product and brand differs with age. With the increase in age and experience of physicians, their prescribing behavior changes. Younger physicians can easily go for new drugs or brands. Whereas the experienced doctors mostly go for renowned, well established or well known drugs or brands. It may be easier to convince a younger doctor to try a new product or a brand as compared to an experienced doctor.

 

Occupation and economic circumstances: It depends upon the specialty of the physicians. The determinant factor is the place of work i.e. whether he works in a government hospital, general hospital, and private hospital or in a private clinic.

  Personality and self concept: Personality is the

individual characteristic that makes a person unique as well as consistent in adjustments to the changing environment. It is an integrated system that holds attitude, motivation and perception together. Further a doctor that has learnt in his early stages, for e.g. during study or internship, is likely to be loyal to a particular brand rather than switching to other brand and companies should focus on developing a self concept among doctors about a company's products.

Psychological FactorsMotivationPerceptionLearningBeliefsAttitudes

Motivation: A motive is an internal emerging force that orients a person's activities towards satisfying a need or achieving a goal.

The motives may be rational or non rational. e.g. rational motives for a doctor are price, efficacy, patient compliance and economy of a medicine while prescribing. Non - rational are prestige, comfort and pleasure. Convenience is the factor which is both rational and non rational at the same time. Motives often operate at subconscious level, hence are difficult to measure.

Let us discuss an example to understand it better. Nutriment is a product marketed by Bristol - Meyers Squibb to be used as an additional energy supply after exercise and play etc. as a fitness drink. But it was found that this product was heavily used by drug addicts, as they were not able to digest a regular meal. So, the motivation to purchase nutriment was completely different from the thinking of the company.

Perception: It is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture of the world. It varies from individual to individual.One doctor might perceive a fast talking medical representative as aggressive and insincere, another as intelligent and helpful. While prescribing a product one doctor may not feel so.

Learning: Learning involves changes in an individual's behavior arising from experience. Learning reflects and individual's capability to comprehend new things based on experience.

It is important that doctors learn about new products and new treatment therapy. Pharmaceutical companies have to make a doctor learn about new therapy and treatment options by providing relevant literature and apprising doctors about advances in pharmaceutical sciences. e.g. Biogen used multi paged advertorials to launch and position their product called Amevine for treatment of psoriasis. They used the learning psychology of physicians to position their product. e- detailing is a broad and continually evolving term describing the use of electronic, inter active media to facilitate sales presentations to physicians.

Some of the pharmaceutical companies are using this method to communicate key marketing messages to physicians.

But how many physicians want to use e-marketing as a learning tool also attributes the success of a pharmaceutical company in adopting new methodologies of product promotion. If doctors are not willing to adapt to evolving techniques and so the efforts spent by a pharmaceutical company would go waste and thus understanding the learning curve of customers is also important.

Belief and Attitude: A belief is a descriptive thought that a person holds about something. People's belief about a product or brand influences their buying and prescribing decisions.

If a physician has belief in the product of one company, he will prescribe it in spite of equivalent products available from competitors. Customers begin service experiences with some level of trust, but the quality of the delivered service determines whether the trust level rises or falls.

The customer's confidence in the service is especially important in healthcare. " If a customer is unhappy with the service offered by the sales officer of one company, he is likely to have a negative view about the company.

Psychographic Factor It is much more important to know what sort of

patient has a disease than what sort of disease a person has. This is the kind of thinking a marketer needs to have while dealing with psychographic behavior of the consumer.

Psychography is the science of using psychology and demographics to better understand consumer behavior. Here marketers believe that positioning occurs not in the market place, but in the customer's mind. Psychographic studies are mainly based on VALS (Value, Attitudes and life Style survey). This VALS consists of eight segments.

This is done basically to break the market into meaningful places. internally homogenous but externally heterogeneous.

e.g. Johnson and Johnson has used psychographics to position its OTC analgesics, Mortin (for aggressive dedicators) and Tylenol (for cautious ones)

Ideals Achievements Self expression

Innovation

High Thinkers Achievers Expressions InnovatorsLow Believers Strivers Makers Survivors

Buying Preferences of Indian consumers

A promo survey conducted by Brand Equity has revealed the consumer buying behavior of the Indian consumer. It is observed in the survey that majority of Indian consumers do shopping not because of the product but the purchase of a specific product offers them a chance to win great gifts. This survey was particularly carried out to find out the demand of particular brands, analyzing buying behavior, reasons that drive brand loyalty, preferences for promotion tools, participation mode and prizes.

Although this kind of survey may be hard to find in Indian context for the doctors while prescribing a product, it can be fairly assumed that while prescribing a particular brand doctors are likely to prefer those brands that offers them tangible and intangible benefits attached to the brand. Tangible benefits are gifts, samples, participation in CME (Continuing Medical Education) or conferences etc. where as intangible benefits include patient compliance, duration of therapy (generally duration of therapy should be short) effectiveness of the product, company image etc. A specific survey of this kind would throw the light on the prescription of doctor in India.

Brand or Generic?This is the biggest doubt a physician has in his mind when he has to prescribe a medicine. The choice between a brand and a generic is always a difficult one. Generally marketers believe that there are two factors which motivate the doctor to prescribe brand or generic drug:

Physicians evaluate the relative efficacy of brand name drugs and their generic substitutes and prescribe the brand name drugs when they are associated with therapeutic gains and outweigh their relatively higher cost to patient.

Physicians tend to prescribe brand name drugs, even without evidence of their therapeutic superiority, because neither they nor their insured patients bear these drugs increased cost with respect to generic substitutes. If this hypothesis is true, moral hazard is evident in physicians prescribing behavior because they have little or no incentive to internalize the drug costs.

Opinion Leadership? Opinion Leadership is the process by which the opinion leader

informally influences the actions or attitudes of others, who may be opinion seekers or merely opinion recipients. Opinion receivers perceive the opinion leader as a highly credible, objective source of product information who can help reduce their search and analysis time and perceived risk.

Opinion leaders are motivated to give information or advice to others, in part doing so enhances their own status and self image and because such advice tends to reduce any post purchase dissonance that they may have. Other motives include product involvement, message involvement or any other involvement.

Market researchers identify opinion leaders by such methods as self designation, key informants, the socio-metric method and the objective method.

Studies of opinion leadership indicate that this phenomenon tends to be product category specific, generally one of their interest. An opinion leader of one product range can be an opinion receiver for another product category.

Lifestyle Marketing Lifestyle is a common word to explain complicated

consumer behaviors. Lifestyle is a way to segment people into groups based on three things: opinions, attitudes and activities. Lifestyle means the ways groups of consumers spend time and money. Lifestyle can include things like bowling, cooking, car racing, attending charity events, having pets, interest in politics, watching sporting events and so on

Everyone has two lifestyles-the one they are currently in and the one they want to be in, which is always better than the current one. Marketers exploit this desire to move into a better lifestyle by showcasing people who are better off than the intended target market in their ads. For example most ads targeting children show children that are almost too old for the product, this appeals to younger children who desire to be like them.

If you could take a substance that would improve your mood, help you stay alert, make you feel more relaxed, would you? That, of course, is a rhetorical question. Millions use legal substances – caffeine, nicotine, alcohol -- for those very purposes.

Many people have also added so-called lifestyle drugs or “cognitive enhancers” to their daily regimen to improve memory and concentration, beat anxiety, curb impulses, promote sleep, gain energy, reduce the signs of ageing (wrinkles) and combat baldness.

What lifestyle and cosmetic drugs have in common is that they are not medically necessary – unlike treatments for cancer,

infections and heart disease. They're not life-saving drugs but people may feel they need them to improve their performance, appearance or sense of worth.

The lifestyle drug market is a growing segment of the pharmaceutical industry due to shifting regional conditions that affect a population both culturally and economically. We can attribute the rise in demand for lifestyle drugs to different factors, depending on the market: an aging, yet affluent, population; increased access to healthcare in emerging markets; a greater emphasis on illness and aging prevention; and increased marketing and branding efforts. In the United States, the prevalence of pharmaceuticals in everyday life has become so commonplace that many now look to prescription drugs as a “magic bullet” for a variety of causes from the mundane to life-threatening diseases.