Crj 101 - Drug Companies

Drug companies spend enormous amounts of money on advertising their products. From TV commercials to print ads to bulk mail advertisements, they cover the entire spectrum of marketing techniques. However, change is afoot and most drug companies are reevaluating their advertising strategies and how they spend their money.

According to a recent Business Week article ("Drugmakers are Changing Channels", http:www.businessweek.com/print/magazine/content/05_33/b3947055_mz011.htm), the companies have done considerable market research and as a result of the findings they have made significant changes to their marketing strategies.

Ad campaigns that blanketed the airwaves aimed at the end consumer are no longer as effective as they once were. Citing the strategy of Sepracor in marketing their new insomnia drug, they noted that they spent nearly $70M on the initial campaign. However, a rival maker was committing no money to TV ads. Their market research had determined that the market wasn't growing and the money would be better spent targeting the doctors who prescribe the drugs. While a pitch to the individual may result in a request at the doctor's office for a particular drug, the doctor has final say in the process, so this new strategy on the surface appears to make sense. Only time will tell if it is effective.

Another major factor in the realignment of advertising dollars is the absence of a major new drug offering that targets a major segment of the population like Lipitor or Viagra. Spending massive amounts of money for a shotgun-style advertising campaign doesn't provide as much bang for the buck with the oversaturated market that exists. Another concern is the negative feedback from the recent revelations that some highly popular drugs that were the subject of a huge advertising campaign - Vioxx and Celebrex Ð'- had some significant risk factors that were not well advertised.

Since market research has shown the broad campaigns of the past are no longer effective, companies are now focusing their campaigns at specific market segments with targeted ad buys. The article cites the example of a company trying to reach the female market segment by buying ad time on channels such as Lifetime and OxygenÐ'...channels specifically focused on airing programming that appeals to women. Targeted ad campaigns are more effective and cheaper, providing a greater return on investment. A major untapped medium that most companies are now starting to exploit is the Internet. There is some concern about this venue due to the recent history of unscrupulous businesses, however companies are trying new methods of attracting market share. Pharmaceutical companies