“Why should matrix analysis be combined with CRM?”
Due to population decline and the need to control social security expenses, the domestic pharmaceutical market is shrinking. As a result, the market environment is shifting from a race-type competitive market to a game-type competitive market, increasing the risk of losing existing customers to competing products.
Against this backdrop, CRM has emerged as a method to enhance and maintain engagement with customers.
Rather than traditional mass marketing targeting a large number of people, CRM follows the concept of “One to One Marketing,” which involves conducting marketing based on customer attributes.
One of the data used for customer analysis in CRM is purchase data. Through RFM analysis, which includes purchase timing, frequency, and amount, customers with high levels in all indicators are considered best customers.
The purpose of customer analysis is to maintain and cultivate loyal customers who have a low risk of switching from your products to competing products.
While “best customers” and “top revenue customers” are similar to ”loyal customers”, it is important not to confuse them.
To maintain and cultivate loyal customers, it is necessary to select appropriate loyal customers from among the customer data base. This is because loyal customers are those who never switch to competing products, and the selection process needs to consider factors related to competing products.
By incorporating matrix analysis into CRM, it becomes possible to select the appropriate loyal customers and complete the process of building engagement through customer optimization using CRM.
Let’s check the answers to the question “Can you answer the capture difficulty, priority, and resource allocation of the four customers with different share values?”
Based on observations from MR, it is necessary to have a hypothesis as a starting point to qualitatively understand customers and pivot accordingly.
Without establishing a hypothesis, continuing to grope blindly would either lead to getting lost in a labyrinth or, even if things go well, it would be difficult to reproduce the success.
So let’s try to come up with a hypothesis for answer checking.
Our company’s competitive position with customers A and B is positioned at the target value of “having no influence on the market and being a withdrawal criterion,” and the possibility of a turnaround from here can be considered extremely low.
Therefore, the priority for resource allocation should be given to customers C and D.
Customer C forms a decentralized market, and it is anticipated that the criteria for drug selection by doctors, who are the customers, have not yet been established.
Since there is no overwhelmingly dominant player, there is a chance to rise to the top, but it can be said that the competency of the assigned MR will be tested because customers may be making drug selections based on factors other than drug characteristics.
Concentrating more resources than competing companies is necessary.
For customer D, the share of competitor product ⑥, which holds the top share, is likely to reach a stable level.
Since the narrowing down of drug selection is progressing, the key to success lies in how to switch customers from products ranked 4th or lower to your own product.
Here as well, it will be necessary to concentrate more resources than competing companies, so it is necessary to consider reallocating resources from A and B.
You were able to establish these hypotheses based on the data. However, in order to increase accuracy, you need to consider factors such as the market/product lifecycle phases and the strengths and advantages of competing companies.
However, these situations are difficult for the headquarters to see, so the presence of the assigned MR is indispensable.
If you can standardize qualitative approaches based on the experience and intuition of MR, you should be able to achieve an objective and reproducible activity cycle.
“Can you answer the difficulty, priority, and resource allocation for customers with four different share values objectively and quantitatively?”
With the introduction of digital tools for sales support such as SFA/CRM, MRs now receive an overwhelming amount of customer analysis data from the headquarters, and basic marketing activities are now centrally managed by the headquarters.
The previously self-managed, subjective MR activities based on individual thinking and action management are no longer necessary, and the scope of responsibilities entrusted to MRs has become minimal.
However, there have been reported cases where even with accurate data created by the headquarters, effectiveness is not achieved.
Unlike consumer goods marketing, which involves extracting prospective customers from potential customers, pharmaceutical marketing requires MRs to individually tackle targeted customers who need a physician’s prescription.
Therefore, the market-in approach of understanding the needs and preferences of customers and providing better services and products is not sufficient. Subjective factors such as experience and intuition are essential to unconsciously adapt to customers.
The role of digital tools in pharmaceutical marketing is not to “manage” MRs but to “support sales activities.” This needs to be recognized again. Using market share theory, it is possible to quantitatively understand the customer profile through analysis and support appropriate sales activities of MRs.
“How Ono Pharmaceutical can maximize the gap in competitive edge”
This is a follow-up post to “For MSD to fill the gap in competitive edge”
In terms of the gap n competitive edge between Ono Pharmaceutical and MSD in the oncology field’s number of medical representatives (MRs), Ono Pharmaceutical clearly has a superiority, and MSD needs to accumulate factors other than the number of MRs to gain a comprehensive competitive advantage.
Conversely, this means that Ono Pharmaceutical can occupy the entire market by maintaining or strengthening its current superiority.
I tried to calculate the trend of market share using the Excel Trend function, and it turns out that by 2027, the outcome of the competition between the two will be completely settled (according to market share theory, the target market share is not 100% but 73.9%).
The expiration of the domestic patent for “Opdivo” is announced to be in March 2031, so for the next four years, Ono Pharmaceutical will be the overwhelmingly dominant player (assuming no new competing products are introduced).
By concentrating resources on facilities/customers classified in the Ab, Bb matrix frames and thoroughly suppressing MSD, it will be possible to reach a resolution even earlier.
The ideal data to use is indication-specific data, not facility/customer order data.
The greatest advantage of analysis using order data is that it allows you to analyze not only your company but also your competitors at the same time.
A strategic plan based on matrix analysis is a method that thoroughly attacks the weaknesses of competitors.
Many pharmaceutical companies have order data, but by combining it with matrix analysis, they should be able to take the initiative against competing companies and achieve victory before being counterattacked.
The four strategies MSD chooses are non-differentiation strategy, differentiation strategy, concentration strategy and niche strategy.
With limited management resources, we must select the optimal strategy for each field.
It would be ideal if we could analyze the PATDAY data for each indication.
The matrix analysis method can derive the optimal strategy by quantifying/visualizing the market size, competitive position, and competitive advantage.
Sequel “For MSD to fill the gap in competitive edge”
From the previous post, there may have been some who felt that the estimation of MSD needing a fourfold competitive advantage to surpass Ono Pharmaceutical was too high. I myself had some skepticism, so I decided to reexamine the situation.
Please understand that I am merely approaching this from a theoretical standpoint, as I have no knowledge of the specific circumstances, formulation characteristics, or strategies of both companies.
To eliminate the influence of drug prices and their reassessment, I compared the market shares of Keytruda and Opdivo, assuming a competition between the two.
Looking at the trends from 2019 to 2022, there is an apparent trend between the two companies.
Within the scope of my imagination, it seems that the expansion of indications by both companies has led to an increase in overlapping markets, making the competitive environment even more challenging.
As the strategies for exploring new markets through indication expansion reach their limits, the competitive environment becomes a game-like competition market.
This implies that in the future, strategies that increasingly consider competition will be required.
It doesn’t seem to be wrong to say that MSD’s competitive advantage needs to be quadrupled.
The first priority is to flatten the trend, but what strategy will MSD choose?
I found a list of the number of medical representatives (MR) in the oncology field for each company in 2022 through an online article, so I tried calculating the competitive edge.
AZ ranks first, followed by Chugai and Lilly.
Since each company has different numbers of products and indications, it is not possible to make a direct comparison. However, it can be observed that they are focusing on the oncology field as the proportion of MRs is high.
In a one-on-one competition, the competitive edge required to establish a significant advantage over competitors is said to be 1:3.
The difference in competitive edge between Ono Pharmaceutical and MSD is approximately threefold.
In terms of competitive edge based solely on the number of MRs, MSD is at a significant disadvantage in the competitive environment.
The only way for MSD to close the numerical gap is to increase the numerical value with competitive advantage as a variable.
Competitive advantage includes factors such as product strength, quality of MRs, brand power, and the amount of management resources. Additionally, accurate targeting, resource allocation, and selecting the right strategies are also crucial.
By quadrupling this number, MSD can surpass Ono’s strength.
By utilizing matrix analysis, it is possible to quantitatively and visually plan and digitalize strategies.
“How do you use the simulation of market growth phases and changes in share types?”
I introduced the trial calculation of the title in the previous post, but I received a question about how it will be operated, so I will answer it here.
In the trial calculation, the market is classified into three phases, the growth phase, the stagnation phase, and the decline phase, depending on the increase/decrease in market value and its growth rate, and the estimated sales and market share in each phase are simulated.
Based on the trial calculation results, the following two important strategic planning will be carried out.
(1) Consistently rank in the top two formulations
(2) Make a market share difference of at least √3 times that of products that are one rank lower than our own products.
Competitors base their strategies on these two key metrics, and if you don’t have them, you won’t know why or when you lost the competition.
The amount of strength that Bayer has lost is immeasurable.
I have estimated the amount of strength lost due to early retirement at Bayer.
The number of employees targeted for early retirement is 480, assuming a pre-retirement workforce of 1,000.
While the workforce reduction is ▲48%, according to the market share theory, the loss in strength amounts to 73%.
In the modern business environment with advancing digital transformation (DX), there are changes even in the “theory of numbers,” but this represents a significant loss.
Reducing labor costs may increase profits, but profits cannot exceed sales revenue, so the decrease in sales due to reduced strength will lead to further personnel reductions.
A shortage of personnel makes it difficult to capture a significant market share, and as a result, pharmaceutical companies may increasingly focus on rare diseases in the future.
Pharmaceutical companies are an important industry for resolving social issues by contributing to solving problems in the medical and health fields and providing support to medical professionals, and all private companies should operate on the premise of free competition and bearing all self-responsibility for management.
While pharmaceutical companies belong to a competitive market and easily abandon their strength, they are medical products requiring physician prescriptions. So why do they advocate patient-centricity, start an inefficient B2C business model, invest a large amount of management resources, and ultimately suffer from declining performance and resort to personnel reductions through repeated restructuring?
