Benchmarking Insights Measuring Promotional ROI Benchmarking Insights March 16, 2004 Presented to:Presented by: The Pharmaceutical Marketing Club of Quebec

Measuring Promotional ROI

Benchmarking InsightsBenchmarking InsightsMarch 16, 2004

Presented to: Presented by:

The Pharmaceutical

Marketing Club of Quebec

2©The Mattson Jack Group. All rights reservedCONFIDENTIAL

PromotionalPromotionalBenchmarking & ROIBenchmarking & ROI

Presented by:

Richard C. (Dick) AndersonRichard C. (Dick) AndersonVice President & Managing Director

Mattson Jack ROI9 Campus Drive

2nd Floor EastParsippany, New Jersey 07054


Analyzing the Promotional Campaign

• Why analyze the CAMPAIGN?• Integrated Analysis of Promotion Yields:

Measures of effectiveness regarding the interaction & impact of each promotional element within the campaign and in a market

Impact of the Products Promotional Campaign versus the competitive environment and competitive activity

Optimization of promotional mix:» Levels within & between products» Balanced within product by modality» Timing and timed relations by modality

Analysis of competitive campaigns Promotion and mix insight into future competitive market conditions


Promotional Benchmarking

• MJG Research has shown that:

All forms of promotion CAN WORK if they are done correctly, under the proper environmental conditions and budgeted properly.

The BALANCE, TIMING AND LEVELS, within the promotional MIX are critically important to the effectiveness of your promotional program.


The Role of Promotional Optimization

• First, nothing said today negates or replaces basic marketing or promotional theory. It is simply a means of measuring and quantifying the sequence of events that must occur for promotion to work.

• Create and Convert new prescription and market share Instability (or

volatility) into:

New Prescription

Market Share

• Our extensive research reveals that (on average) 35%* of your results are

directly attributable to your promotional campaign, while the remaining

65% is dependent upon your product’s market and competitive

environment.

Note: **MJG has seen instability accountability ranges of 5% to >60% MJG has seen instability accountability ranges of 5% to >60% attributable to the marketers promotional campaignattributable to the marketers promotional campaign


Promotional Benchmarking Inputs

• 60 months of product level data for all products in competitive set: NRx and TRx’s Audited

» Details – Primary, Secondary, & Tertiary; w & w/o samples» Samples – Samples & Extended Units» Physician Meetings & Events – Dollars & Events» Professional Print – Pages & Inserts» Direct-to-Consumer:

Television – Network, Cable, Syndicated, Spot, etc. Print – Pages, Dollars

Magazines Newspaper

Radio – Network, spot, etc Other client driven data


Promotional Benchmark Input

• Financial Inputs: Average/Marginal Cost of a call – and allocation

across primary, secondary and tertiary position Marginal Cost of a sample Average/Marginal Cost per Pages Average/Marginal Cost of an PME Event Average/Marginal Cost per GRP/TRP

» For Television – by type» For Print – by type» For Radio – by type

Marginal Profit contribution of 1-Rx


IntegratedIntegrated Competitive Environment Competitive Environment

Market EnvironmentMarket Environment

Promotional EnvironmentPromotional Environment

Disease E

nviron

men

tD

isease En

vironm

ent

Prod

uct E

nviron

men

tP

rodu

ct En

vironm

ent

TotalTotalCompetitiveCompetitiveEnvironmentEnvironment

This is the heart & soul of efficient & effective promotional planning


What Constitutes each of these Environment?What Constitutes each of these Environment?

•Market Environment•Size – NRx’s & TRx’s•Dynamics

•Acceleration•Velocity•Momentum

•Econometric Structure•Instability – NRx’s and Market Share•Concentration

•Location•Dominance


Environment - continued

•Promotional Environment•Level of Activity for each modality•Dynamics – of each modality

•Acceleration•Velocity•Momentum

•Econometric Structure – of each modality•Instability – NRx’s and Market Share•Concentration

•Location•Dominance


Environment - continued

•Product Environment Number of competing products Age of each of these products Number of competing therapies Age of each of these therapies Product usages

Indication(s) Acute -vs- Chronic Spectrum


Environment - Environment - continuedcontinued

• Disease Environment• Acute -vs- Chronic • Severity• Type• Treatment Rate• Awareness


Benchmarking Measures & IndicesBenchmarking Measures & Indices

• Leading indicators :

Acceleration

Velocity

Momentum

Level of Activity

You must develop an understanding of You must develop an understanding of

the product & market dynamicsthe product & market dynamics

• Market Responsiveness or Elasticity:

Concentration (uniformity)

Product position

Momentum• Market Instability

• Product Accountability: Effect of promotion product gain &/or

loss month

• Strategic Brand Planning Marginal ROI Analysis

AccelerationAcceleration

VelocityVelocity

MomentumMomentum

NRx ShareNRx Share


Velocity & Acceleration

-8

-4

0

4

8

12

16

Jan

-99

Ap

r-9

9

Ju

l-9

9

Oct-

99

Jan

-00

Ap

r-0

0

Ju

l-0

0

Oct-

00

Jan

-01

Ap

r-0

1

Ju

l-0

1

Oct-

01

Jan

-02

Ap

r-0

2

Ju

l-0

2

Oct-

02

Jan

-03

Ap

r-0

3

Ju

l-0

3

Oct-

03

Sh

are (

%)

-0.40

-0.20

0.00

0.20

0.40

0.60

0.80

Sh

are V

elo

cit

y

-0.60

-0.50

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30

0.40

0.50

Jan

-99

Ap

r-9

9

Ju

l-9

9

Oct-

99

Jan

-00

Ap

r-0

0

Ju

l-0

0

Oct-

00

Jan

-01

Ap

r-0

1

Ju

l-0

1

Oct-

01

Jan

-02

Ap

r-0

2

Ju

l-0

2

Oct-

02

Jan

-03

Ap

r-0

3

Ju

l-0

3

Oct-

03

Sh

are V

elo

cit

y

-0.120

-0.100

-0.080

-0.060

-0.040

-0.020

0.000

0.020

0.040

0.060

0.080

0.100

Sh

are A

ccele

ra

tio

n

Market Share

Market Share Velocity

Market Share Acceleration

Market Share Velocity

The Modeling ProcessThe Modeling Process

Creating the Proper Analytic Variables


Promotion at Work

• Starting questions: Is the impact of promotion on NRxs and Market Share direct or

indirect? Is the impact of promotion independent of product age? Is the impact of a given promotional modality independent of other

promotional modalities? Is the impact of promotion, for a given product, independent of the

competitive products? Is impact of promotion affected by inconsistency and/or Instability? Etc., etc., etc.


ProductPromotion

NRx Accountability

Share Accountability

Share Acceleration

Share Velocity

Share Momentum

Market Share

Pro

du

ctPromotional Impact & Interaction

AggregatedPromotion

(all Products)

Market Impact:NRx InstabilityShare Instability

Market Acceleration:NRx Growth

Market Velocity:NRx Growth

Market Momentum:NRx Growth Market NRx’s

Mar

ke t

Example MarketsBenchmarking Insights


Markets Examples

• ADHD• Antihistamine• Antidepressant • Contraceptives• Antihypertensive – All classes


New Prescriptions

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

ADHD Antidepressant Antihypertensives Contraceptive Antihistamines


Velocity Definition

• Velocity is the rate at which time series data are changing.• Basically, it is the smoothed change of one month over the prior month of

either prescriptions or any form of promotional modality.

15,000

15,500

16,000

16,500

17,000

17,500

18,000

Jan

Feb

Mar

Apr

May Jun

Jul

Aug Se

p

Oct

Nov Dec

New

Pre

scri

pti

on

100125

150175

200

225

250

275

300

325

350


Velocity Measure of Growth

• Definition: The rate at which a variable is growing or declining in: NRx’s/Month Market Share Points/Month Details/Month Pages/Month Etc.

• Benchmarking insight: Positive Market NRx Velocity is indicative of new patient growth Positive Product NRx Share Velocity tends to make your promotion

more effective


New Prescriptions Velocity

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000Ju

l-98

Oct

-98

Jan-

99

Apr

-99

Jul-9

9

Oct

-99

Jan-

00

Apr

-00

Jul-0

0

Oct

-00

Jan-

01

Apr

-01

Jul-0

1

Oct

-01

Jan-

02

Apr

-02

Jul-0

2

Oct

-02

Jan-

03

Apr

-03

Jul-0

3

New

Pre

scri

ptio

ns V

eloc

ity

ADHD Antidepressant Antihypertensives

Contraceptive Antihistamines


Acceleration Definition

• The rate at which Velocity is changing.• As an example, look at the change in NRx’s between March &

February versus the change between February & January.

15,000

15,500

16,000

16,500

17,000

17,500

18,000

Jan

Feb

Mar

Apr

May Jun

Jul

Aug Se

p

Oct

Nov Dec

New

Pre

scri

pti

on

100125

150175

200

225

250

275

300

325

350

(125-100)=25 (150-125)=25

(175-150)=25 (200-175)=25

(225-200)=25

(250-225)=25

(275-250)=25

(300-275)=25

(325-300)=25


Acceleration Change in Velocity

• Definition: the (current month over prior month) rate at which Velocity (rate of growth or decline) is changing in: NRx’s Market Shares Details & Samples Pages DTC, etc.

• Benchmarking insight: Acceleration is a powerful leading indicator of market dynamics Product share Acceleration is a leading indicator of promotional

impact


New Prescriptions Acceleration

-15,000

-10,000

-5,000

0

5,000

10,000

15,000Ju

l-98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

Acc

eler

atio

n



MomentumCreating Strategic Options

• Momentum is a function of Velocity and mass (level of activity). For example: NRx Velocity and level of NRx Share Velocity and level of share Pages Velocity and level of Pages

• Momentum of a promotional activity considers the timing, levels and balance of the promotional mix.

• Benchmarking insight: Positive market Momentum is created by consistent, balanced & well timed

promotion Positive product Momentum enables the marketer to select between promotional

strategies: continue to maintain or reduce/reallocate levels of promotion


New Prescriptions Momentum

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0Ju

l-98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

ptio

ns M

omen

tum

Ind

ex



Instability OpportunityNew Prescriptions and/or Market Shares

• Instability – An aggregate measure of monthly market & brand variances: Absolute Variances Standard Deviation Mean Absolute Deviation

• Benchmarking insight: Goal of promotion is to create market Instability Instability is a function of promotion and/or market growth Markets with high Instability present opportunity

» Converting market share & NRx’s Markets with low or no Instability may require the marketer to

create the Instability » Cost vs. benefit (ROI)


InstabilityDefinition

• A measure of dispersion.• Mathematically it is the sum of forward changes and/or a sum of absolute

changes.• For example:

• Instability is computed for a host of measures: NRx’s, Market Share, and any form of promotion.

• Instability is plotted over time to examine the growth and/or decline, as well as the patterns and levels, which are used to judge opportunity.

Difference -1,000 500 1,000 100 1,000 1,600

Abs. Difference 1,000 500 1,000 100 1,000 3,600 => NRx Instability

Product 1 Product 2 Product 3 Product 4 Product 5 Total

Aug-03 90,000 20,000 70,000 50,000 6,000 236,000

Sep-03 89,000 20,500 71,000 50,100 7,000 237,600

New Rxs


New Prescriptions Instability

-500,000

0

500,000

1,000,000

1,500,000

2,000,000Ju

l-98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility



Market Share Instability

0

5

10

15

20

25

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

Mar

ket

Sh

are

Inst

abili

ty




ADHD Market

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility

-4

0

4

8

12

16

Ma

rke

t S

ha

re In

sta

bili

ty

NRx

Share



Antidepressant Market

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility

-4

0

4

8

12

16

Ma

rke

t S

ha

re In

sta

bili

ty

NRx

Share



Antihypertensive Market

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility

-4

0

4

8

12

16

Ma

rke

t S

ha

re In

sta

bili

ty

NRx

Share



Contraceptive Market

0

100,000

200,000

300,000

400,000

500,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility

0

2

4

6

8

10

Ma

rke

t S

ha

re In

sta

bili

ty

NRx

Share



Antihistamine Market

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

New

Pre

scri

pti

ons

In

stab

ility

0

2

4

6

8

10

12

14

16

18

20

Ma

rke

t S

ha

re In

sta

bili

ty

NRx

Share


Accountability ScorecardNew Prescriptions & Market Shares

• Accountability – Percent of monthly Instability attributed

by a given product and its promotional program measured in

gain or loss of:

NRx’s

Market Shares

• Benchmarking insight:

Measure of promotional effectiveness

Instability creates opportunity Accountability tallies the results


Accountability Scorecard

• Accountability:

You can both CAUSE and CONVERT

You can CAUSE and NOT CONVERT

You DO NOT CAUSE but CONVERT

You DO NOT CAUSE nor CONVERT


AccountabilityDefinition

• Accountability is a continuation of Instability analysis.

• It is the percent of monthly Instability attributed to a given product.

• The key driver of Accountability, is the quality, level, and mix of the promotional campaign.

Difference -1,000 500 1,000 100 1,000 1,600

Abs. Difference 1,000 500 1,000 100 1,000 3,600 => NRx Instability

Product 1 Product 2 Product 3 Product 4 Product 5 Total

Aug-03 90,000 20,000 70,000 50,000 6,000 236,000

Sep-03 89,000 20,500 71,000 50,100 7,000 237,600

New Rxs

Product 1 Product 2 Product 3 Product 4 Product 5

Sep-03 -28% 14% 28% 3% 28%

New Rxs Accountabilty


-30

-20

-10

0

10

20

30

40

-50

-40

-30

-20

-10 0 10 20 30 40 50

Market Share Accountability

New

Pre

scri

pti

ons

Acc

oun

tab

ility

1998

1999

2000

2001

2002

2003

Product A - OldAccountability

Jun-2003

May-2003

Jan-2003

Feb-2003Apr-2003

Mar-2003Jul-2003


0

5

10

15

20

25

30

35

40

-50

-40

-30

-20

-10 0 10 20 30 40 50


New

Pre

scri

pti

ons

Acc

oun

tab

ility

2002

2003

Product A - NewAccountability

Jun-2003

May-2003

Jan-2003

Feb-2003

Apr-2003

Mar-2003

Jul-2003

Aug-2002

Sep-2002

Oct-2002

Nov-2002

Dec-2002


-50

-40

-30

-20

-10

0

10

20

30

40

-50

-40

-30

-20

-10 0 10 20 30 40 50


New

Pre

scri

pti

ons

Acc

oun

tab

ility

1998

1999

2000

2001

2002

2003

Product B - OldAccountability

Jun-2003

May-2003

Jan-2003

Feb-2003

Apr-2003

Mar-2003

Jul-2003


-10

-5

0

5

10

15

20

25

30

35

40

-50

-40

-30

-20

-10 0 10

20

30

40

50


New

Pre

scri

pti

ons

Acc

oun

tab

ility

2002

2003

Product B - NewAccountability

Jun-2003May-2003

Jan-2003

Feb-2003

Apr-2003

Mar-2003

Jul-2003


Concentration Measures of Uniformity

• Concentration measures: Location – percent of market accounted for by your product and

all products with smaller market shares

Dominance – your percent of location

Concentration/Location Dynamics – what is happening to your position within the Concentration Curve?

• Benchmarking insight: Highly concentrated markets favors promotion of market

leader(s)


Concentration

• Measure of UniformityNrx’sSharePagesDetailingEtc., etc., etc.

• Roots: Income distribution theoryLorenz Curve


ConcentrationExample

Product ShareProd A 2.5Prod B 12.1Prod C 8.7Prod D 30.7Prod E 11.1Prod F 4.2Prod G 7.8Prod H 6.2Prod I 1.7Prod J 15.0

100.0

Product ShareProd I 1.7Prod A 2.5Prod F 4.2Prod H 6.2Prod G 7.8Prod C 8.7Prod E 11.1Prod B 12.1Prod J 15.0Prod D 30.7

Product Share CumProd I 1.7 1.7Prod A 2.5 4.2Prod F 4.2 8.4Prod H 6.2 14.6Prod G 7.8 22.4Prod C 8.7 31.1Prod E 11.1 42.2Prod B 12.1 54.3Prod J 15.0 69.3Prod D 30.7 100.0

Product Share CumProd I 10.0 10.0Prod A 10.0 20.0Prod F 10.0 30.0Prod H 10.0 40.0Prod G 10.0 50.0Prod C 10.0 60.0Prod E 10.0 70.0Prod B 10.0 80.0Prod J 10.0 90.0Prod D 10.0 100.0

Theoretical

ConcentrationLocationDominance

Product CDominance = 100*(8.7/31.1) = 29.97%


ConcentrationConcentrationMeasure of Uniformity1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

The Lorenz Curve

A

B

Concentration Index = 100A

A+Bx[ ]

Prod W Prod X Prod A Prod K Prod F Prod V Prod Y Prod M Prod S Prod U

Theoretica

l – if equal s

hares

Actual

V

Y

M

S

U

Loc

atio

n P

rod

uct

S


NRx Share Concentration

30

40

50

60

70

80

90

100

Jul-

98

Oct

-98

Jan-

99

Apr

-99

Jul-

99

Oct

-99

Jan-

00

Apr

-00

Jul-

00

Oct

-00

Jan-

01

Apr

-01

Jul-

01

Oct

-01

Jan-

02

Apr

-02

Jul-

02

Oct

-02

Jan-

03

Apr

-03

Jul-

03

Con

cen

trat

ion

(%

)



Base Promotional Activity and Measures

PagesSamplingPrintPMEDTC TV

DTC MagazineDTC Radio

DTC NewspaperDTC Other

Primary % Secondary % Tertiary %

Samples Extended Units Days of Therapy

Pages Inserts Dollars

Events Dollars

Tot GRP Network GRP Cable GRP Syndicated GRP Spot GRP

Network $ Cable $ Syndicated $ Spot $

Pages Dollars

Total GRP Network GRP Spot GRP Syndicated GRP

Network $ Spot $ Syndicated $

Units GRPs Dollars

Units GRPs Dollars

And, And, StructureStructure and and Share-of-VoiceShare-of-Voice measures for each modality measures for each modality


Base Promotional Environmental Measures

Pages ………….Sampling ………Print …………..PME …………..DTC TV ………

DTC Magazine ..DTC Radio …….

DTC Newspaper .DTC Other ……..

Instability Accountability Acceleration MomentumInstability Accountability Acceleration MomentumInstability Accountability Acceleration MomentumInstability Accountability Acceleration MomentumInstability Accountability Acceleration Momentum

Instability Accountability Acceleration MomentumInstability Accountability Acceleration Momentum

Instability Accountability Acceleration MomentumInstability Accountability Acceleration Momentum


Base Variables & MeasuresInteractions

Question: What is the impact of 60 Pages-per-month of Professional Print?What do you need to know to answer this question?

• Product age?• Pages SOV?• Unit size – pages -vs- inserts?• Number of competing products?• Concentration of Professional Print across competing products?• Dynamics of class? Growth Acceleration, Velocity & Momentum?• Market Concentration?• Level of Print Instability and your products contribution to that Instability• Level of Share Instability in the market• Etc., etc., etc.


Base Variables & MeasuresInteractions - continued

Question: What is the impact of 60 Pages-per-month?

How does Professional Print impact and how is it impacted by:

• Sampling?

• History of Pages?

• Detailing?

• PME?

• DTC GRPs?

ExampleCase Study


Case Study:Established Product

• Crowded set (40+ products)• Mature product (7+ years old)• New claim – 18 months earlier• Promoted new claim through DTC print – 18 months• Professional target: FPs, GPs, IMs, & one Specialty• Consumer target: Specified Subgroup• Considering an Multi-Million dollar television campaign• History: Sales force reduction 3-years earlier• History: NO faith in professional print


Case Study:Client’s Questions

• Should we implement this DTC television campaign?• Planned start is July 1998 – is this justifiable?• What is our promotional ROI likely to be?• How do we insure success?• How should out professional campaign be structured?• Do we need to alter our current professional promotional

mix?• Justify all projections and predictions!

Recommendations


Delay start of DTC Television for six months. Get professional up to speed!

Add 2xx++ Sales people before DTC. Increase professional advertising by

$1,400,000. Keep sampling in step with detailing. Increase Primary Care activity.

Case Study: Case Study: Established Product

Recommendations

Projections&Results


150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

550,000

600,000

t-12

t-10 t-8

t-6

t-4

t-2 t

t+2

t+4

t+6

t+8

t+10

t+12

t+14

t+16

t+18

t+20

t+22

t+24

t+26

t+28

t+30

t+32

New

Pre

scri

ptio

ns

Forecast - Base

Forecast - Campaign

Actual

Case Study 1: New Prescriptions/ROI Forecast

ProjectFinishedProjectFinished

New Campaign StartsNew Campaign StartsNew Campaign StartsNew Campaign Starts

90% ConfidenceForecast Line90% ConfidenceForecast Line

Note:Note:ROI = 836%ROI = 836%Note:Note:ROI = 836%ROI = 836%

Hire Sales RepsProf Print Start

Launch Velocity Model

Based on 63 Product Launches


Function ExampleProduct Launch Velocity Model

VelocityVelocity = 1.99 = 1.99

R2 = 96.5%F(22,57) = 69.68; Prob>F=0.0001

Notes:1. All coefficients are significant beyond the 95% level.2. All but 2 coefficients are significant beyond the 99% level

**AdvsovAdvsov(1.20-0.001*NRx Instability-0.08*Share Instability)(1.20-0.001*NRx Instability-0.08*Share Instability)

**ProddtlProddtl(1.42+0.0003*NRx Instability+0.10*Share Instabilty-0.002*Age)(1.42+0.0003*NRx Instability+0.10*Share Instabilty-0.002*Age)

**DtlsovDtlsov(0.75+0.0003*NRx Instability)(0.75+0.0003*NRx Instability)

**SmpsovSmpsov(0.91-0.0002*Class Sampling)(0.91-0.0002*Class Sampling)

**TC AccelTC Accel(0.38)(0.38)

**NRx InstabilityNRx Instability(0.22)(0.22)

**Share InstabilityShare Instability(0.20)(0.20)

**ConcentrationConcentration(0.0008*Class Velocity)(0.0008*Class Velocity)

**AdvAdv(1.46-0.001*TCAdv-0.10*Share Instab-0.05*Age+0.001*TC Acc)(1.46-0.001*TCAdv-0.10*Share Instab-0.05*Age+0.001*TC Acc)

Env

iron

men

tal

Env

iron

men

tal

Scenario Analysis

Change in DTC Program


ScenarioReallocated DTC across 2004ScenarioReallocated DTC across 2004

DTC Print

0%

2%

4%

6%

8%

10%

12%

14%

16%

Jan-

04

Feb-

04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-

04

Aug

-04

Sep-

04

Oct

-04

Nov

-04

Dec

-04

Print Prior Plan

Print Scenario

DTC TV

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Jan-

04

Feb-

04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-

04

Aug

-04

Sep-

04

Oct

-04

Nov

-04

Dec

-04

TV Prior Plan

TV Scenario


Scenario:Scenario: Reallocated DTC across 2004 Reallocated DTC across 2004Implications of ScenarioImplications of Scenario

-0.70

-0.60

-0.50

-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

0.30Ja

n-04

Feb

-04

Mar

-04

Apr

-04

May

-04

Jun-

04

Jul-

04

Aug

-04

Sep

-04

Oct

-04

Nov

-04

Dec

-04

NR

x Sh

are

Cha

nge

(%)

-70,000

-60,000

-50,000

-40,000

-30,000

-20,000

-10,000

0

10,000

20,000

30,000

NR

x C

hang

e

Share Change

NRx Change

Decrease in net sales of $68 MM

Loss of 432,000 NRxs

Loss of 865,000 TRxs


Summary


The Simple World of Promotion

NewNewPrescriptionsPrescriptions

MarketMarket

ShareShare

DetailingDetailing

SamplingSampling

AdvertisingAdvertising

DTCDTC

MailMail

Dinner MeetingsDinner Meetings

Etc., etc., etc.Etc., etc., etc.

C C A A MMP P A A I I G G NN


The Structure of Promotional ImpactProfessional Print, Detailing, Sampling, and Mail

DetailingDetailing

SamplingSampling

MailMailMailMail

AdvertisingAdvertisingAdvertisingAdvertising

XXXX

XX

XXOOOOOOOOOOOOOO

OOOOOOOO

DTC/DTPDTC/DTPPrint & TelevisionPrint & Television


The Real World of Promotion

InstabilityInstability

VelocityVelocity

AccelerationAcceleration

NRx’sNRx’s&&

ShareShare

AACCCCOOUUNNTTAABBIILLIITTYY

Marketing EnvironmentMarketing Environment

Promotional EnvironmentPromotional Environment

ProductProductEnvironmentEnvironment

DiseaseDiseaseEnvironmentEnvironment

DTCDTC

DetailingDetailingSamplingSampling

Mai

lM

ail

Adv

erti

sing

Adv

erti

sing


Summary

• Promotional modalities are not independent of one another

• Promotional modalities are not independent of competitive promotion

• Promotional modalities are not independent of the four principle environment

• Promotional modalities are not independent of product age

• Promotional modalities are more efficient at maintaining momentum, rather than building momentum

• Loss of Momentum in 4th Quarter, do to budget cuts, is considerably more costly than most people realize!!!

Thank You

““The best way to predict the future is to create it”The best way to predict the future is to create it”

Documents

Benchmarking Insights Measuring Promotional ROI Benchmarking Insights March 16, 2004 Presented to:Presented by: The Pharmaceutical Marketing Club of Quebec