Archive for February 5th, 2010

When political deals backfire … not the Cornhusker Kickback, the Pfizer Fiasco.

February 5, 2010

Bottom line: Rather than fight on principle, Pfizer decided to cut ObamaCare deals … and is now left holding the bag.  Talk about getting what you deserve !

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Excerpted from WSJ : Pfizer’s Bad Political Bet, Feb 4, 2010

The sight of ObamaCare on life support has many Democrats disappointed. It could be worse. They could be Pfizer CEO Jeffrey Kindler.

The twin events of an Obama presidency and a financial crisis rattled corporate America.

Public anger put companies on the defensive. A liberal president vowing to punish firms that didn’t aid his agenda got companies scared.Fortune 500 execs could stand up for a free market that benefits consumers and shareholders, or hitch their cart to the new Democratic majority.

Pfizer’s Mr. Kindler is a case study in the hitch-and-hope mentality—a CEO who became the motivating force behind Big Pharma’s $80 billion “deal” on reform, and industry support of ObamaCare.

With that health agenda burning, the choice isn’t looking so grand.

Pfizer was long a company that zealously guarded against government interference.The Pfizer board made Mr. Kindler CEO in 2006—picking a … a Democrat and political junkie.  Mr. Kindler was primed for the Obama ascendancy.

Mr. Kindler heeded congressional threats that companies would do well to have more Democrat-heavy lobby shops. Pfizer also aggressively shifted political giving. According to OpenSecrets.org, in the 2006 campaign cycle it gave 33% of its money to Democrats. In the 2008 cycle, 52%. In the 2010 cycle so far, 61%. In 2009 Pfizer became the fourth largest federal lobbyist, spending nearly $25 million. The year before it hadn’t even made the top 20.

With these gestures, Mr. Kindler surely believed Democrats would treat his industry gently.

The strategy: The industry would pledge $80 billion to reform. In return it would get greater volume and a requirement that people buy brand-name drugs. Democrats would also fight against drug reimportation and forgo price controls.

No one pushed harder than Mr. Kindler. The CEO made no fewer than five trips to the White House last year. He pressed the industry’s $150 million ad campaign promoting ObamaCare, rolled out with liberal activist groups.

Critics warned the legislation would lead to a government takeover and price controls. They warned Democrats would take the money and double-cross them.

None of it phased the industry, right up until ObamaCare imploded.

Having got this far (with Big Pharma’s help), Democrats are more desperate than ever to pass “something.” It won’t include any upside for drug companies. There is talk instead of “popular” stand-alone legislation, including reimportation, Medicare price controls, and slashing the industry’s 12-year patent exclusivity on biologics.

Big Pharma can’t count on former conservative protectors. Republicans were sympathetic to its decision to “sit at the table,” but grew furious when it engaged in active advocacy of the Democratic agenda.

One House Republican staffer predicts the next time drug companies “ask us to stand in front of the train,” the answer will be: “Since you were so happy to work with Democrats, call them. Go on, go: Call Rahm [Emanuel]. Call [Henry] Waxman.”

Public anger over ObamaCare doesn’t help the industry’s reputation. Many Americans now view drug companies in the same light as “crony capitalist” banks or energy firms.

Mr. Kindler might take solace that he’s not alone. Insurers, hospitals, utilities — many chose to accommodate a president whose health-care and climate agendas are now teetering.

There’s a lesson here for corporate America. Try standing up for the free markets and limited government that have always been the foundation of U.S. business. It might work out better.

http://online.wsj.com/article/SB10001424052748704041504575045702997683276.html?mod=djemEditorialPage_h#articleTabs%3Darticle

Posted in Health Care / Medical Insurance, Obama Administration, Pharma - Drug Companies | Leave a Comment »

AdAge reveals seven truths behind successful brand management

February 5, 2010

Takeaway: Even top MBAs need a little help every now and then.

AdAge’s one-pager on the seven universal brand management truths may make for effective cubical flare, though some may want to keep it out of sight in a locked drawer to gain a competitive edge over their peers.
 
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Excerpt from AdvertisingAge, “The 7 Universal Brand Management Truths” by Nitish Gupta, January 5, 2010.
 
Coke has a market capitalization in excess of $100 billion because the perceived value of its brand is significantly higher than the sum total of all the assets of the company. By staying true to seven core principles, a marketer can weather economic highs and lows while building an iconic brand for target consumers.

1. Leverage information via hypothesis-led data analysis. This refers to leveraging information and converting it into a forceful rationale to take the right action for the brand. The key to this is understanding the issue at hand by anchoring the hypothesis and then looking at the data or information to prove the hypothesis right or wrong.

The pain-relief medicine brand Aleve had been struggling with single-digit market share. The team anchored two hypotheses: Consumers were not aware of the brand Aleve, and consumers were aware but didn’t want to try the brand. Through data mining, they found that 35% of heavy pain-relief medicine users had tried Aleve in the past year but had been using other brands as well. Thus the issue was clear that the brand had the awareness and trial but needed to drive loyalty. Then, based on the top attributes that drove preference for the brand (control over pain, and freedom to do things you want), they developed the “Dramatic Difference” campaign, resulting in an almost 10% to 20% increase in sales and shares hitting an all-time high.

2. Understand the competition and maintain your point of difference. Having a broader category-competitive understanding is important because that sets the context under which consumers will be viewing your brand. It’s critical to maintain the point of difference for your brand and play to its strengths.

When Coke managed to get sponsorship rights for the 1996 Cricket World Cup in India, Pepsi gauged the competitive threat and stuck to its point of difference (youthful rebellion brand positioning). It launched the “nothing official about it” campaign during the Cricket World Cup, which actually helped Pepsi strengthen its leadership position in India.

3. Be consistent with your positioning over time and across platforms. For any brand, it’s imperative to create a distinctive and meaningful position in the mind of consumers for the offering. So no matter what brand extension or innovation you are planning for your brand, ensure that it builds on and strengthens that distinctive positioning.

The Dove brand has extended across categories from skin care to hair care to others like deodorants by positioning itself on the soft/smooth platform and the fact that it contains moisturizing milk. Dove deodorants are positioned as leaving the underarms feeling soft and smooth. The brand has extended itself only in those categories where these soft/smooth and “contains moisturizing milk” equities are relevant, thus staying true to the positioning over time and across platforms, thus strengthening the brand.

4. Know what your target consumer wants. Evaluating all the marketing choices from the vantage point of the consumer will help you to connect with the consumer and genuinely make a positive difference in his or her life. It’s important to understand both the stated and unstated needs — the insights into your target consumers’ lives.

Louis Vuitton was launched in the late 1800s by supplying LV-branded suitcases to travelers. Travel then was a luxury afforded to only the wealthiest. Thus the brand became a symbol of status — it helped consumers showcase their differences from others. By leveraging this core human insight, LV was able to extend to shoes, apparel and bags. It has became one of the most extended brands but has suffered almost no diminishing returns. The brand was positioned not just on a functional need (like storage), but instead it tapped into deeper insights to connect with consumers.

5. Manage budgets with a “scarcity” mentality. Working with a scarcity mentality will help you maximize returns for every dollar spent by answering the question, “Is this the best way to spend dollars on marketing my brand, or is this money better spent elsewhere to generate greater returns?”

Starbucks, instead of spending money on TV advertising, clusters an area with its stores, increasing total revenue and market share. This was contrary to what established retailing houses did, which was to avoid placing stores near each other so as not to cannibalize sales at existing outlets. For Starbucks, doing so resulted in reduced supply costs and made management of the stores cheaper, which more than made up for sales lost to cannibalization. Thus, funding for expansion from internal cash flow was a judicious use of money. Until recently, Starbucks spent just 1% of its revenues on marketing and advertising (compared to more than 10% for companies of the same size).

6. Get the right pricing that offers value in the eyes of consumers. Pricing determines the value that your consumers get for your offering: Perceived consumer value equals perceived brand benefit/price. Thus it’s critical to decide the pricing strategy for your brand so that there is a net positive value for your consumers.

Gillette’s pricing strategy for its flagship men’s razors and blades brand focuses on regularly upgrading them, and hence pricing up on their newest offerings. The innovations are consumer significant, so that they are ready to pay a premium to upgrade to the latest offering. Right from their twin blade to triple-blade Mach3 to Mach3 Turbo (with vibrating motor) to Gillette Fusion (with an additional trimming blade), their upgrades have been significant, and as a result they’ve been able to charge a more than 10% premium with them.

7. Motivate the team via thought leadership. Building a successful brand requires dedicated support, not just from the leader but from the whole multifunctional team — sales, research, R&D, finance. To do the same, the brand leader needs to have a clear vision for the brand and enlist the team toward the same.

When it launched, Cosmopolitan had been positioned on a broad “for the family” platform. However by the mid-1950s it was suffering from declining readership. In the 1960s Helen Gurley Brown took charge. She sharply defined the target audience (progressive, career-oriented and open-minded women) and then rallied the team to deliver a product that would appeal to the target. They came up with innovations like a glossy format, inspirational articles and writings, and talking frankly and honestly about various issues and needs of women. The first print run of about 350,000 was sold out by the end of publication day, and the Cosmopolitan of today was born.
Edit by BHC
 
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Full Article:
http://adage.com/cmostrategy/article?article_id=141298

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Posted in Mktg - Brand Management | Leave a Comment »