Marketing Biotech When Funds Dry Up

Marketing Biotech When Funds Dry Up - 1st Edition, June 2009. 1

INTRODUCTION

THE economy is in as worse a state than many life-

science executives can remember. The sentiment

amongst management in the industry seems to be of

dubious belief in the effectiveness of advertising and

marketing in the current climate.

With no best-practice policies in place, management

is in limbo trying to preserve what they can whilst

trying to ensure that they stay afloat. Many

executives are choosing to drastically slash their

marketing budgets or cut them completely. Further

organisational pressures to achieve more for less

mean that buyers frequently end up in homogenous

groups, forcing the marketing department to develop

sophisticated and expensive ‘one size fits all’

marketing messages. What often results is the

marketing department wasting time (and funds)

trying to salvage campaigns rather than develop

new, more effective strategies.

The model suggested further on in this report

outlines a new marketing framework for biotech

companies to work from in hard times and best-

practice methods to carry over into the better times.

But first, we must outline both the short-term and

long-term negative effects of cutting advertising

expenditure.

THE MASS MARKETING CYCLE

THE cycle begins with budgets being slashed due to

unsteady cash flow, as seen recently in response to

economic crises. With this, marketing departments

begin cutting back on ad frequency and quality of

marketing collateral.

Still trying to reach the whole target market and

pressured to get the same results with far fewer

resources, ad campaigns end up with inconsistent

messages. The sudden fall in company marketing

During these hard economic times, it is common for companies to slash their marketing budgets

in order to improve their short-term bottom line and operate more efficiently. Australian small to

medium biotech companies are no different. To grow business when funds dry up, it is essential

biotech marketing departments change strategy rather than cut budgets. In this report, we

provide a brief overview of the short-term and long-term negative effects of cutting marketing

budgets and suggest a new marketing model for biotech companies to use in the current climate

and into the future.

Marketing Biotech When Funds Dry Up


activity and quality begins to send alarming

messages to investors, customers and competition

and the years of building brand equity often begins

to falter.

With brand equity slipping, marketing activity

significantly slowing and revenue falling, the

company begins hiring more and more salespeople

in the hope of lifting sales. To improve cash flow, the

sales force is pressured to look for short-term, high

profitability sales rather than cultivate long-term

relationships. Over time, with relationships dwindling,

sales prospects slowing, and brand equity falling

even further, revenue and investment funds begin to

dry up. Marketing budgets are slashed due to lack of

funds and the Mass Marketing Cycle continues on its

merry way.

Does this sound familiar?

The degree to which biotech companies experience

the Cycle can differ substantially, but one thing

becomes clear: whilst building brand equity may take

many years, it can be quickly eroded with long-term

negative impacts.

Small to medium biotech companies need a model

that can allow both effective and efficient marketing

on lower budgets.

THE NEW MODEL OUTLINE

THE marketing department’s role has always been to

communicate the company’s core messages to the

masses through what is known as mass marketing.

Herein lies part of the problem.

In times of short cash flow and limited budgets, why

scattergun homogenous, indirect messages through

traditional channels? Instead, we suggest a new

brand of marketing called Cluster Marketing.

Cluster Marketing focuses on separating target

customers into more similar demographic and

psychographic groups (clusters) and focusing more

unique, individual messages at them. The marketing

department can develop a ‘purple cow’ for each

cluster and develop warmer leads for the sales force.

The new model has a range of benefits. Firstly, it is

less expensive than traditional mainstream mass

marketing. Secondly, it helps build brand equity

more effectively in more markets. Thirdly, it creates

cohesion between the marketing and sales

departments. And finally, it allows for greater control

and measurement of ROI with real-time analysis.

CLUSTER MARKETING MODEL

THE Cluster Marketing Model is straightforward but

requires careful execution. The following steps have

been developed to provide a guide to ‘going

clustering’:

1. Advertise Smarter. As already outlined, instead

of advertising your product range’s many benefits

to a large audience, promote your brand to

smaller, more alike audiences. As Seth Godin

emphasises in his best selling book ‘The Purple

Cow’, “For big results, think small”.

This type of brand-focused marketing will fulfill a

number of objectives. Firstly, it will appear as a

new marketing campaign and make your

company appear innovative and energised. And

secondly, it will position your company more

effectively within your most important markets.

2. Marketing <-> Sales Collaboration. An

important part of the Cluster Marketing Model is

ensuring complete collaboration between the

marketing and sales departments. In order to first

develop the clusters, it is a good idea to hold

meetings with sales people to create short lists of

qualified target audiences. These meetings can

help better outline the target audience’s

psychographics, allowing for far more targeted

marketing messages.


These meetings should be made common

practice through the duration of the marketing

campaign, allowing real-time feedback of

marketing’s messages. Introducing sales activity

between marketing ‘attacks’ can help refine

messages and improve the marketing campaign

‘on the run’.

Another benefit of these regular meetings, the

marketing department can develop a better

understanding of the sales cycle and produce

inexpensive tools to help smooth the process.

These tools can include sales presentation

materials individually customised for the individual

clusters.

3. Develop Your Purple Cows. As Godin (The

Purple Cow, 2003) explains, “Being safe is risky.

Boring always leads to failure. Very good is an

everyday occurrence and hardly worth

mentioning. To be a Purple Cow is to be

remarkable.”

Now that you have done away with the limitations

of mass marketing, you can significantly increase

brand awareness and generate positive brand

attitudes amongst each cluster by creating unique

messages or purple cows for each. Using this

method, every piece of marketing collateral can

be personalised and customised and go a long

way in making the sales force’s job much easier.

4. Improve Your PR Program. A solid PR program

is a necessary part of any Cluster Marketing

campaign. When correctly implemented it can

strengthen the overall marketing mix, generate

warm leads for the sales force and make the

company appear active and energetic for a

fraction of the cost of mass marketing. Also, as

part of the Cluster Marketing campaign, your PR

program can be customised to each individual

cluster.

Collaborating with an experienced PR Firm who

has existing relationships in the necessary media

channels will all but ensure success.

5. Measure, Measure and Measure some more.

As your target market has now been separated

into smaller more manageable clusters, measuring

your campaign’s success will be simpler.

Sales tracking tools should be built into the sales

cycle and coupled with regular feedback between

the marketing and sales departments. With each

piece of marketing collateral able to be measured

through the Cluster Marketing Model, refining

messages and improving communications for

further campaigns becomes much easier.

CONCLUSION

THE Cluster Marketing Model provides a far more

efficient and effective framework than current mass

marketing models. With complete adoption of the

new model, small to medium biotech companies can

avoid The Mass Marketing Cycle.

Whilst providing a firm foundation for marketing

departments to work from in tough economic times,

the Model also provides a set of best practice

methods for carryover into better times.

With new cohesion between the marketing and sales

departments, a better understanding of the

company’s target market and more trackable

campaigns, adherence to the model will allow

protection of brand equity and business growth long

into the future.

‘Marketing Biotech When Funds Dry Up’ is the first

edition of The Biobranding Report. The Biobranding

Report is a monthly investigation into important

issues facing the Australasian biotechnology

industry.

The next report, ‘Exploring Cluster Marketing for

Biotechs’, will be available in July, 2009. To

subscribe to the reports, email

[email protected]. For more information

see over.


Proud Member of:

About the Author:

David Ball is Managing Director of The Biobranding Group, a Brisbane-based brand strategy and identity

creation firm focused on the life-science industry. David has tertiary qualifications in biotechnology and

marketing experience through launching and running his own web businesses.

About the Company:

The Biobranding Group was founded to provide a unique offering to the Australasian biotechnology sector.

With real world science and high-tech expertise in-house, the company understands your needs because

they understand your technology.

The company is committed to improving scientific communications throughout the Australia-Pacific region

and help the biotechnology industry reach its potential. For more information please visit the company’s

website at www.biobranding.com.au or email [email protected].

About the Report:

The Biobranding Report is a monthly investigation into important matters affecting the life-science industry.

The content is based on research, literature and experience and is written from an independent perspective.

To subscribe to the report, please email [email protected].

© 2009 Zebras International Pty Ltd. All rights reserved. No part of this document may be reproduced or transmitted without obtaining written permission from the author.

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Marketing Biotech When Funds Dry Up