Medical Device Link.

Originally Published MX July/August 2002

ADVERTISING, DISTRIBUTION, & SALES

Refining the Marketing Mix

Medtech marketers can gain a competitive advantage by incorporating patients and consumers into their marketing approaches.

When it comes to the marketing of medical technologies, nothing is automatic. There's no little-pill solution that can be taken off the shelf and used for every product, and no magic recipe that will ensure success. And to make matters even more complex, the past decade has witnessed major shifts in the nature of the healthcare marketplace that have had a profound impact on medical marketing.

One such shift has been the gradual emergence of direct-to-consumer (DTC) approaches, which have proven to be extraordinarily profitable for pharmaceutical companies. But applying such a DTC approach to the more technology-rich and diverse product areas of the medical device sector turns out to be fraught with its own set of challenges.

To find out more about how device companies are making use of this potentially profitable marketing tool, MX spoke with three experts in the field of medical marketing (see sidebar).

Also presented here is a sampling of this year's award-winning entries in the Medical Marketing Association's International Awards of Excellence (In-Awe) competition. A complete list of the winning firms can be found in the Commercial Resources directory that begins on page 37.

MX: What is meant by direct-to-consumer (DTC) marketing of medical products? Are there specific characteristics that distinguish DTC as it is typically used for marketing pharmaceutical products from the approaches that medical product companies have traditionally used?

Joseph Doyle: There are several important distinctions between DTC marketing for pharmaceutical products and DTC in the medical device area. In the pharmaceutical arena, for instance, we're typically going after patients with chronic diseases—allergies, high blood pressure, hypertension, and so on—rather than those with disorders that may be immediately life threatening. Another distinction is that DTC pharma marketing is able to make use of mass-media vehicles—such as advertising in magazines like Time and Newsweek—that are beyond the economic reach of medical device marketers.

With DTC for medical devices, the challenges are very different. Medical device brands typically have much, much shorter life cycles than pharmaceutical products, and they are often associated with much smaller margins. Also, medical device brands are often known simply by a series of numbers—meaning, in a DTC context, that they're not well-known brands.

In the past, medical device corporations have tended to take a 30,000-foot view of marketing. But to really take a DTC approach, they'd have to think very differently. There are real differences in the challenges they would face.

Susan K. Hempstead: I agree, but I think we need to further differentiate medical devices used by healthcare professionals from those that are more consumer oriented. For the latter group, the recommendations of healthcare professionals play an important part in generating consumer sales.

We're working in both areas. But there's certainly a lot more DTC marketing going on for consumer-oriented medical products that make use of professional recommendations.

Bruce Lehman: I think that we're all pretty much in sync here. In pharma, there are long-life brands that are usually for very large consumer audiences, so pharma companies can afford to put a lot of money against their marketing, which tends to look a lot like packaged-goods marketing. Devices are very short-lived brands—if they're brands at all. For hard-core devices, marketing plays a supporting role for product identification in the event that therapeutic intervention is needed.

But you could make a case that DTC marketing has been taking place in the device industry far longer than in the pharmaceutical industry. The blood glucose monitoring business grew up around DTC marketing years before pharmaceutical companies even thought about it. Our firm was doing DTC work in diabetes in the late 1980s and early 1990s, and that work was intended to influence healthcare professionals to consider specifying particular brands of products.

What have been the traditional obstacles to greater use of a DTC approach with medical products?

Hempstead: Margins. Margins and budget.

Doyle: That's absolutely the case. Margins and budget are certainly obstacles on the client or manufacturer side.

There are also obstacles on the buyer side. Some people argue that going direct to consumer will drive up the cost of whatever is being advertised, or will interfere with the physician-patient relationship. But almost every survey I've seen—and again, they are mostly on the pharma side—indicates that is simply not the case.

Hempstead: A recent Advertising Age article about DTC marketing offered some statistics about how helpful both consumers and physicians found DTC information. On the whole, they found it to be very credible and useful.

Doyle: In a similar vein, the April 29 edition of the Pink Sheet printed the results of an annual FDA survey on drug marketing. Those results indicated that DTC appeals are still driving people to talk to their doctors about conditions that they would not previously have talked about. And that's a good thing.

The results also suggested that the people with the greatest health needs are usually the elderly or others who report themselves to be in fair to poor health. And those people are much more likely to talk to their doctors about something when they have seen advertising about it. So those are all very, very good things.

Hempstead: I agree. The goal of providing better health information is to stimulate more-constructive patient dialogues that ultimately result in better healthcare for those patients.

Lehman: Except for those of us who develop marketing strategies for a living, most people who talk about DTC marketing are imagining something like the 'little purple pill' advertising on television. But on the device side of the business there are products, or even families of products, whose ultimate market potential pales by comparison with any major pharmaceutical brand. As a result, it's extremely difficult to build a case for driving demand from the consumer in a traditional DTC manner.

Even so, all of us work with our clients every day to invest their dollars in consumer-related materials. The fact of the matter is that even doctors have come around to agreeing that an educated patient is of value to them. But oftentimes the delivery mechanism—the conduit for that material—is, in fact, the healthcare professional's venue.

Doyle: Exactly.

Lehman: And actually, that's an approach that makes an awful lot of sense. It's within the budgets of the clients, so it makes fiscal sense. And it also makes clinical and educational sense to the parties involved.

Hempstead: Just to give a specific example, last year Merck spent $135 million on consumer promotion of Vioxx. But that was just 5% of Vioxx sales for the year.

By contrast, many devices would be lucky to achieve $135 million in annual sales revenues. So on the device side, we don't see percentage-of-sales figures or marketing budgets that are anywhere near that large.

The Appeal of DTC

Has there been a fundamental shift in the nature of the market for medical products that makes DTC marketing a more useful strategy now than ever before?

Lehman: Two trends are increasing the likelihood that we're going to see more DTC marketing for medical devices. One is the demographics. Markets that weren't previously very large are now becoming so. A good example is the market for total joint replacement, which is continuing to grow. But until now, none of the orthopedics manufacturers would have given the slightest thought about marketing to the consumer.

The other trend is that it is becoming less expensive to reach the consumer. The Internet is doing a lot to drive that trend.

So the confluence of these two trends is definitely going to result in medical device companies spending more money against the consumer.

Hempstead: Another trend that's contributing to this confluence is that more and more medical device manufacturers are finding parity among their products, and the opportunities to differentiate products on the basis of their technologies are becoming more and more difficult. So DTC efforts to brand products can be a very powerful differentiator and give those brands a competitive edge.

Doyle: In addition to the demographics of the population, one also has to consider the psychographics of the population. In the United States and other developed countries especially, there is a growing number of people who are better educated than ever before, and who don't necessarily believe that MDs are the gods that their parents believed they were.

That group of people is very demanding. They're better educated, and they have a greater need to understand the diseases that affect them and their loved ones. I don't see that trend turning around anytime soon.

Lehman: It's also worth considering that advancing technology is generating products all by itself, and some of these, consumers will ultimately find attractive. In many cases, these are discretionary products; they aren't necessarily must-have devices.

The area of diagnostics offers a good example. Advancing technologies are creating new diagnostics today that may eventually become the standard of care. But smart consumers are going to want to avail themselves of these products right away. They're not going to wait for tomorrow.

The Corporate Image Approach

How does that sort of market-creation approach relate to the corporate-image advertising that some of the larger companies do? The most recent campaign that comes to mind is Johnson & Johnson's TV ads suggesting that the viewer should 'become a nurse.' Those ads don't mention any J&J products.

Hempstead: Those ads don't mention products, but they build J&J's franchise with that community—and that can lead to increased product sales and market share.

Doyle: J&J is in a unique situation because of its multiplicity of divisions and interests in so many areas. But that sort of advertising is consistent with the company's well-known credo of protecting patients.

I dare say most pharma companies wouldn't do that sort of advertising—or might do it only for a short time when they undergo a name change.

Corporate advertising for medical devices really needs to be restricted to areas where the corporation has the lion's share of the marketplace.

So that's not the kind of advertising you would expect midsize or startup companies to take on?

Lehman: I don't think it's the kind of advertising we would see even most big-cap device companies get into.

J&J is unique. It's a brand that has constituencies in the investment, consumer, patient, and healthcare professional communities. And the company's business units cut across all delivery mechanisms, therapeutic venues, and so forth.

But it would be a stretch for any of the other major device companies—such as Guidant, Boston Scientific, or Medtronic—to mount a consumer-directed corporate image campaign that was for something more than investment or corporate relations purposes.

Hempstead: Well, I may be wrong, but I think both Medtronic and Guidant have already put their toes in that water. They've already done some outdoor and newspaper advertising in specific markets.

Were those efforts corporate identity advertising, or were they product specific?

Hempstead: They were product-category specific.

Lehman: Of course, one of the means of communicating to the consumer is maintaining a very active public relations effort. When Dick Cheney had his defibrillator implanted, for instance, I heard the name Medtronic many, many times during the discussions of his surgery.

The channels by which we get to the consumer are broadening and becoming less expensive, and public relations is certainly one of those less-expensive channels.

Channel Surfing

Does that mean that the channels for DTC marketing of medical devices are somehow different from the channels used by pharma companies?

Lehman: Our entire practice is devoted to the medical device community, and I can't think of a single client that has not invested marketing dollars to speak to the consumer in some form.

At some point in the acquisition cycle related to the use of a medical device product, the consumer, the patient or family members, the caregivers, and the healthcare professionals cut across one another, and there is a communication that takes place. And part of that communication has been funded by our clients. The form of the communication could be a printed piece, an Internet piece, or an ad. But whatever it is, it is playing an increasing role in influencing, educating, or informing the patient—and therefore in the adoption and use of medical devices.

Are we going to see billions of dollars spent for DTC marketing of medical devices in the way we have seen it over the last few years for pharmaceuticals? In the near term, no.

But is DTC, on a relative basis, increasing in importance and spend in the overall marketing budgets of the medical device community? Absolutely. In our experience with clients, there's no question about it.

Doyle: I totally agree. One of our device clients spent a lot of time, effort, and money to build relationships with advocacy groups that represent patients and their loved ones and caregivers. That company did an outstanding job communicating with those groups, explaining what it's doing in the field, and providing real solid product information when appropriate.

What is the role of the Internet in this context? Is the number of people checking out medical options on-line continuing to increase?

Hempstead: According to a current Harris Interactive study, 110 million people in the United States search the Web for healthcare information at least three times a month. That's up significantly from 97 million last year and 69 million the year before, so that number is definitely increasing. Someone has coined the term cyberchondriacs to refer to such people.

Doyle: Some of the people who are on the Web looking for health information are looking not only for themselves but also for family members—particularly older parents who are undergoing surgeries or various types of therapy.

Parting Shots

What advice would you give your clients if they're thinking about the launch or the support of a product to incorporate the patient or the consumer into the marketing mix?

Lehman: Companies that don't consider the patient and the consumer as part of their target audience are probably thinking unrealistically. They may be missing an opportunity to develop a competitive advantage. And they may also miss an opportunity to leverage that audience in order to accelerate adoption.

But companies also have to recognize the expenses involved. Many companies that want to add consumer into the mix generally feel that they can reach a lot more people than they really can for the money they have.

Having said that, I'm very encouraged by the fact that more companies are interested in finding a way to add the patient into the equation, and in sorting out how to arrive at the right formula to drive adoption of the product.

Doyle: When companies think of reaching patients and their caregivers, they should not be turned off by imagining that direct-to-consumer marketing needs to be accomplished through mass channels.

If companies adopt the attitude that they simply want to reach the patient or caregiver more directly—by whatever means necessary and wherever they are concentrated—I think they'll find that adding the patient and caregiver into their traditional marketing mix will give them a lot of benefit.

Hempstead: I would stress that, in the marketing mix, it's still of paramount importance not to bypass the physician. Doctors are still the primary gatekeepers for medical products and devices, and if they feel they are being sidestepped, they won't support the product or recommend it to their patients. In short, the DTC component is most effective when combined with powerful campaigns to professionals.

Copyright ©2002 MX