Best Practices, LLC REPORT SUMMARY

Market Research Vendor Management Excellence: Evaluating the Use of Exclusive Vendor Partnerships

Table of ContentsTable of ContentsPROJECT BACKGROUND

Project Overview

Benchmark Class Profile

Key Findings

STUDY FINDINGS

Vendor Partnership Benchmarks

Outsourcing Levels

Number of Vendors Used

Common Contracting Models

Exclusive Vendor Partnerships

Usage Patterns & Mapping

Levels Contracted

Study types Contracted

Future Use

Continued

Table of Contents, 2Table of Contents, 2

Evaluating Exclusive Vendor Partnerships

Goals & Benefits

Drawbacks

ROI & Measurement

Managing Exclusive Vendor Partnerships

Resources & Account Management

Collaboration with Marketing Teams

Penalty & Incentive Systems

Training

Employee Engagement

Perspectives from Companies Not Contracting Exclusive Vendors

Appendix: Insights from Executive Interviews

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Key Topic Areas Probed:

Study Objective & Research Methodology

Research Objectives:

• To uncover current field data on a series of key vendor management benchmarks, including outsourcing levels, number of vendors used, and critical factors driving various vendor contracting models

• To gather innovative approaches and executive insights into the evolving role of the bio-pharma market research function from both a tactical and strategic perspective

• To adapt lessons that will enable market research leaders to plan and implement strategies for controlling costs, avoiding common mistakes, and improving quality on primary market research through vendor management excellence

This benchmarking research, conducted

through a field survey instrument and a

series of interviews with selected

participants, delivers performance metrics,

insights, and lessons learned on:

•Vendor management models for primary

market research

•Vendor contracting strategies

•Streamlining the market research function

•Maintaining high levels of research quality

•The benefits and drawbacks of exclusive

vendor partnerships in the current

economic and industry landscape

This benchmarking research study examines vendor management strategies to help bio-pharma market research groups provide support and value that aligns with broader organizational goals and commercial objectives. In particular, this research explores trends and efficiencies in the use of exclusive vendor partnerships.

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Participating Companies:

Research participants included 37 market research executives and managers from 26 leading pharmaceutical, biotech and medical device companies. All study participants contributed data through a field survey. Representatives from ten benchmark organizations provided additional insights through deep-dive interviews.

Universe of Learning: Companies Participating in Study

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Research Participant Job Titles Include:

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Most Participants Serve at Director Level or AboveResearch data and insights were contributed by a seasoned class of respondents, from vice presidents to managers. The vast majority of respondents serve at the director level or higher.

• Vice President, Oncology

• Executive Director, Market Research

• Executive Director, Business Analysis

• Senior Director, Market Research (4)

• Director, Market Research (11)

• Director, Marketing Research

• Director, Market Analytics

• Director, Business Analysis

• Director, Business Intelligence

• Director, Managed Markets

• Director, Marketing

• Director, Sourcing & Supply Management

• Director, Commercial Effectiveness

• Associate Director, Market Research &

Analysis

• Deputy Director, Market Intelligence

• Senior Manager, Market Research

• Manager, Market Insights

• Manager, Market Research (6)

• Manager, Marketing Science

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• Account management frequently occurs at the market research Director level: Exclusive Vendors are most often managed at the account level by a market research director,

while a market research manager most often serves as a primary point of contact. EVs also tend

to work remotely and only rarely ever interact directly with marketing or brand teams.

• Companies not using Exclusive Vendors express several different reservations:

Respondents cited a wide variety of rationale for not using an EV for market research, including:

• The need to maintain competitive bidding on projects, particularly ones with large spends

• The belief that EV contracts undermine vendor innovation

• The view that no one vendor excels across multiple types of studies

• The need for flexibility and the ability to change suppliers as needed

• The difficulty in implementing an EV partnership model

The following key findings and insights emerged from this study.

SAMPLE: Key Findings and Insights

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Vendors Most Often Hired on a “Project-by-Project” Basis

(n=23)

Q. What percentage of your primary market research projects are governed by the following vendor contracting models?

Most benchmark organizations adhere primarily to one of two main vendor contracting models, wherein they hire external vendors either: 1) on a project-by-project basis or 2) from a list of preferred vendors. For the benchmark class on the whole, Exclusive Vendors conduct only a small percentage of a company’s market research.

3%

42%55%

“Project-by-Project” Contracting Model “Preferred Vendor”

Contracting Model

“Exclusive Vendor” Contracting Model

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Drawbacks Include Lack of Innovation, Resource Efficiencies

Q. Which of the following problems, if any, did your company experience as a result of moving to an Exclusive Vendor for market research? (Check all that apply)

(n=6)

Lack of vendor innovation

Lack of resource/FTE efficiencies

Inability of vendor to deal withdifferent aspects of the business

Minimal/No cost savings

Implementation/Operationaldifficulties

Vendor complacency

Inability of vendor to adequatelysupport internal clients

50%

50%

33%

17%

0%

17%

17%

Despite gains in cost efficiency, the Exclusive Vendor contracting model does not appear to be a panacea for all market research challenges. Half of respondents deemed “lack of innovation” and “lack of FTE efficiencies” to be among the difficulties resulting from using an Exclusive Vendor.

Voices from the Field:

“We've vetted them [EVs]. Through historical experience we know the people, we know the quality of the work. We know they are not ridiculously expensive and even if they are we hope that we are contracting to get slightly better pricing from them. And so the rest of the [EV] process is just quality control.

You know the level of experience and amongst the brand teams or whoever is the end user…they know too or at least have heard of the vendor repeatedly and that gives a level of confidence…But we focus on impact, rather than a hard ROI measure. The question we ask is: ‘Is the market research work 'moving the needle?’ Is it actionable and insightful or will it just sit on the shelf.’”

-Director, Insights & Innovation

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Training Approaches are Geared toward the Pragmatic

Q. What types of training does your company employ when onboarding an Exclusive Vendor? (Check all the approaches your company uses)

(n=6)

Overall Company Orientation:

On-site company orientation: 33%

Virtual company orientation: (phone-based, technology-based, downloads) 67%

Training Areas:

Company and business profile: 0%

Internal Market Research process orientation: 50%

Therapeutic area: 33%

Brand strategy: 33%

Required proficiency with internal processes based on company-vendor relationship: (e.g., Purchase Order generation) 83%

Compliance (e.g., adverse events) 33%

Since Exclusive Vendors are frequently contracted to perform what some participants called “lower level” market research activities, it is not surprising that their training tends to be more pragmatic than strategic in nature. As a result, vendors are often trained remotely, with more emphasis on proficiency with internal processes (83%) than on areas like brand strategy or therapeutic area knowledge (33%).

Voices from the Field:

“When you've got a vendor coming on board there're certain protocols to know, from purchase orders to contracting to the invoicing process. So all that kind of training for the vendor is handled by a supplier management group to a certain extent. We supplement that by reinforcing and helping communicate. And then there're very specific protocols in terms of how we need to conduct research with formal training and refresher courses for the vendors.”

-Manager, Market Research

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Respondents Predict Sustained, Expanded Use of EVs

Q. How do you anticipate your company’s use of Exclusive Vendors for market research changing in the next 12 - 36 months? (Choose one)

(n=6)

Expanded use of EVs for primary market research: 33%

Same use as now: 50%

Decreased use of EVs in favor of preferred vendor use: 17%

Decreased use of EVs in favor of project-by-project vendor use: 0%

Most respondents anticipate a similar or even greater degree of Exclusive Vendor use in the next few years. Half of participants predict the same level of use in the next 12 – 36 months, while 33% foresee expanded usage in the future, where the pressure to reduce costs (in this case via consolidated contracting) figures to remain a chief concern for pharma market research groups.

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About Best Practices, LLCBest Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics, and winning strategies of world-class companies.

Link for Report: Evaluate the Use of Exclusive Vendor Partnerships