Consumer Behavior

Importance in Pharmaceutical
Industry

Lesson 1:


Nature, scope and application.

Consumer is the king in today's scenario of marketing.
Gone are the days when manufacturers could have sold
anything to the consumers. Henry Ford once famously
said, "My customers can have a car of any colour as long
as it is black". It Henry Ford had been born in today's
world he would have definitely thought a several times
before giving this statement.
Today its the consumer whose buying preferences
decide what should be manufactured, in what quantity
and what should be the quality of the product.
Hence, a marketer has to take into account various
factors while deciding on marketing a product as
consumers have different preferences and some times
totally diverse preferences. So the task of manufacture
and marketer becomes onerous and therefore it is very
important to understand the consumer behavior.

Understanding consumer behavior is even more difficult
in the field of pharmaceuticals as the target customer is
not the end user but the influencer i.e. the doctor who
generates the prescription.


Application of Consumer
Behavior in Pharma Sector
Unlike direct 'seller to user sales' pharma
selling is a multiple tier process. Here
the consumer / user is not in direct
contact with the salesman. Here the
medical practitioner decides on behalf of
the patient /consumer, which product
needs to be bought, in what quantity,
when to be consumed and how long to
consume. Hence, regular, continuous
study of prescribing behavior of
physicians is very important for
pharmaceutical marketer.

Eye Openers for a Pharma
Marketer
Now, let us consider some of the facts
pertaining to pharma sector and
prescription pattern.
According to University of Arizona, 70%
of all prescriptions are never consumed.
According to consumer health
information, 20% of all the new
prescriptions go unfilled.
WHO reported that half of all the patients
do not adhere to their prescribed
therapy?

What is Consumer Behavior ?
The term consumer behavior is defined as the
behavior that consumers' display in searching
for, purchasing, evaluating and dispensing of
products and services that they expect will
satisfy their needs.
The behavioral sciences that have made
significant contributions to the study of consumer
behavior are economics, sociology, psychology,
and to some degree political science and cultural
anthropology.
The modern day marketing discussion centers
around the need for modern marketing to be
consumer oriented and to be concerned with the
needs and wishes of the consumer and thus,
studying consumer behavior is critical, for
companies, in getting success of the products in
the market.

Consumer Pyramid
The consumer pyramid, is formed on this basis of consumer
behavior. This is a very efficient tool in the hand of the
marketer to study consumer behavior even more closely.
This pyramid has four tiers;
Platinum tier: It includes heavy users/prescribes who are
not price sensitive and who are willing to try new offerings.
Gold tier: They are also heavy users but are more price
sensitive. They ask for more discounts, free samples etc.
and are likely to prescribe several brands.
Iron tier: It consists of customers whose spending volumes,
profitability and prescribing pattern do not merit special
treatment from the company.
Lead tier : It consists of customers who actually cost the
company money because they claim more attention than is
merited by their spending, tie up company resources and
spread negative word of mouth publicity.

Comparison of the four tiers of consumer behaviour
with traditional New Product Adoption Process
The first tier, the platinum tier
can be compared with the
"Innovators" as these customers
are trying to experiment and
accept new offering from the
companies.
The second tier, the gold tier can
be compared with "Early adopters
and Early majority" as these
customers are responsible for
growth phase of a product life
cycle due to substantial use of the
products.
The third tier i.e. the iron tier can
be compared with " Late Majority"
who have adopted the product
very late in the Product Life Cycle
and are very cautious while using
the products and the brands.
And the last tier i.e. Lead tier can
be matched up with the "Laggards"
who would hardly try the product
and actually drain out the
company's resources.


Fig. 2. : New Product Adoption
Process

Lesson 2:
Environmental influences on
consumer behavior
Cultural, social, personal, family and
situation influences,
Opinion leadership and
Life style marketing.
Factors Influencing Consumer
Behavior
Cultural factors
Social factors
Personal factors
Family & Situational
Psychological factors
Psychographic factors
Opinion Leadership
Lifestyle Marketing

Cultural Factors
Culture is the fundamental determinant of a
person's want and behavior. Companies often
design specialized marketing programs to serve
each subculture. This programme is called diversity
marketing.
e,g. The people of Germany pronounce the letter
'V' as 'F' so while pronouncing word VICKS they
call it FIX, rather than VICKS . Now, the marketing
VICKS in Germany its name had to be changed to
suit the German Culture.
Indians are much more oriented towards Ayurvedic
or Herbal medicines. It is in the Indian culture to
use Neem. Tulsi, Haldi etc. So, it's much easier to
position non - allopathic drugs in India because of
its cultural set up.
Social Factors
Reference group
Family
Social status and role

Reference group " A reference group consists of all the
groups that have a direct (face to face) or indirect
influence on the person's attitudes or behavior.
These reference groups have an opinion leader. They are
the persons who offer advice or information about a
specific product or product category and suggest which
brand is best. A marketer should know how to reach and
influence these opinion leaders in order to influence
consumer behavior. e.g. In pharmaceutical field while
marketing a product, it is important to identify certain Key
Opinion Leaders (KOL) who have influence on the
prescription pattern of other doctors in specific areas or
have wider geographical reach. If these KOL's start
prescribing the product, many doctors will also prescribe
the product.

Family: Family is an important determinant of
social factor. If there is a physician whose father is
also a physician it is natural that he will have a
liking for the same drug that his father used to
have.

Social status and role: The person's position is
defined in terms of role and status. People choose
products that communicate their role and status. A
physician depending on its specialty, experience
and social status will go for the drug that will match
his social status. A well known renowned physician
will surely go for the branded drugs rather than
generic drugs. Further prescribing pattern will also
have influence depending on the types of patient a
doctor treats. For rich patients a doctor may
prescribe costly products while for a poor patient
he may not do so.


Personal Factors
Age and stage in the life cycle
Occupation and economic circumstances
Life Style
Personality and self concept

Age and stage in life cycle : The choice of product
and brand differs with age. With the increase in age
and experience of physicians, their prescribing
behavior changes. Younger physicians can easily go
for new drugs or brands. Whereas the experienced
doctors mostly go for renowned, well established or
well known drugs or brands. It may be easier to
convince a younger doctor to try a new product or a
brand as compared to an experienced doctor.


Occupation and economic circumstances: It
depends upon the specialty of the physicians.
The determinant factor is the place of work i.e.
whether he works in a government hospital,
general hospital, and private hospital or in a
private clinic.

Personality and self concept: Personality is
the individual characteristic that makes a person
unique as well as consistent in adjustments to
the changing environment. It is an integrated
system that holds attitude, motivation and
perception together. Further a doctor that has
learnt in his early stages, for e.g. during study or
internship, is likely to be loyal to a particular
brand rather than switching to other brand and
companies should focus on developing a self
concept among doctors about a company's
products.

Psychological Factors
Motivation
Perception
Learning
Beliefs
Attitudes

Motivation: A motive is an internal emerging force
that orients a person's activities towards satisfying a
need or achieving a goal.

The motives may be rational or non rational. e.g.
rational motives for a doctor are price, efficacy,
patient compliance and economy of a medicine
while prescribing. Non - rational are prestige,
comfort and pleasure. Convenience is the factor
which is both rational and non rational at the same
time. Motives often operate at subconscious level,
hence are difficult to measure.

Let us discuss an example to understand it better.
Nutriment is a product marketed by Bristol - Meyers
Squibb to be used as an additional energy supply
after exercise and play etc. as a fitness drink. But it
was found that this product was heavily used by
drug addicts, as they were not able to digest a
regular meal. So, the motivation to purchase
nutriment was completely different from the thinking
of the company.

Perception: It is the process by which
an individual selects, organizes and
interprets information inputs to create a
meaningful picture of the world. It
varies from individual to individual.
One doctor might perceive a fast
talking medical representative as
aggressive and insincere, another as
intelligent and helpful. While
prescribing a product one doctor may
not feel so.
Learning: Learning involves changes in an
individual's behavior arising from experience.
Learning reflects and individual's capability to
comprehend new things based on experience.
It is important that doctors learn about new
products and new treatment therapy.
Pharmaceutical companies have to make a
doctor learn about new therapy and treatment
options by providing relevant literature and
apprising doctors about advances in
pharmaceutical sciences. e.g. Biogen used
multi paged advertorials to launch and position
their product called Amevine for treatment of
psoriasis. They used the learning psychology
of physicians to position their product. e-
detailing is a broad and continually evolving
term describing the use of electronic, inter
active media to facilitate sales presentations to
physicians.
Some of the pharmaceutical companies
are using this method to communicate
key marketing messages to physicians.
But how many physicians want to use e-
marketing as a learning tool also
attributes the success of a
pharmaceutical company in adopting
new methodologies of product
promotion. If doctors are not willing to
adapt to evolving techniques and so the
efforts spent by a pharmaceutical
company would go waste and thus
understanding the learning curve of
customers is also important.

Belief and Attitude: A belief is a descriptive
thought that a person holds about something.
People's belief about a product or brand
influences their buying and prescribing
decisions.

If a physician has belief in the product of one
company, he will prescribe it in spite of
equivalent products available from competitors.
Customers begin service experiences with some
level of trust, but the quality of the delivered
service determines whether the trust level rises
or falls.

The customer's confidence in the service is
especially important in healthcare. " If a
customer is unhappy with the service offered by
the sales officer of one company, he is likely to
have a negative view about the company.

Psychographic Factor
It is much more important to know what sort of
patient has a disease than what sort of disease a
person has. This is the kind of thinking a
marketer needs to have while dealing with
psychographic behavior of the consumer.

Psychography is the science of using
psychology and demographics to better
understand consumer behavior. Here marketers
believe that positioning occurs not in the market
place, but in the customer's mind. Psychographic
studies are mainly based on VALS (Value,
Attitudes and life Style survey). This VALS
consists of eight segments.





This is done basically to break the
market into meaningful places.
internally homogenous but externally
heterogeneous.
e.g. Johnson and Johnson has used
psychographics to position its OTC
analgesics, Mortin (for aggressive
dedicators) and Tylenol (for cautious
ones)

Ideals Achievements Self
expression
Innovation
High Thinkers Achievers Expressions Innovators
Low Believers Strivers Makers Survivors
Buying Preferences of Indian
consumers
A promo survey conducted by Brand Equity has revealed the
consumer buying behavior of the Indian consumer. It is observed
in the survey that majority of Indian consumers do shopping not
because of the product but the purchase of a specific product
offers them a chance to win great gifts. This survey was
particularly carried out to find out the demand of particular brands,
analyzing buying behavior, reasons that drive brand loyalty,
preferences for promotion tools, participation mode and prizes.

Although this kind of survey may be hard to find in Indian context
for the doctors while prescribing a product, it can be fairly
assumed that while prescribing a particular brand doctors are
likely to prefer those brands that offers them tangible and
intangible benefits attached to the brand. Tangible benefits are
gifts, samples, participation in CME (Continuing Medical
Education) or conferences etc. where as intangible benefits
include patient compliance, duration of therapy (generally duration
of therapy should be short) effectiveness of the product, company
image etc. A specific survey of this kind would throw the light on
the prescription of doctor in India.
Brand or Generic?
This is the biggest doubt a physician has in his mind when
he has to prescribe a medicine. The choice between a
brand and a generic is always a difficult one. Generally
marketers believe that there are two factors which motivate
the doctor to prescribe brand or generic drug:
Physicians evaluate the relative efficacy of brand name
drugs and their generic substitutes and prescribe the brand
name drugs when they are associated with therapeutic
gains and outweigh their relatively higher cost to patient.
Physicians tend to prescribe brand name drugs, even
without evidence of their therapeutic superiority, because
neither they nor their insured patients bear these drugs
increased cost with respect to generic substitutes. If this
hypothesis is true, moral hazard is evident in physicians
prescribing behavior because they have little or no incentive
to internalize the drug costs.

Opinion Leadership?

Opinion Leadership is the process by which the opinion
leader informally influences the actions or attitudes of
others, who may be opinion seekers or merely opinion
recipients. Opinion receivers perceive the opinion leader
as a highly credible, objective source of product
information who can help reduce their search and
analysis time and perceived risk.
Opinion leaders are motivated to give information or
advice to others, in part doing so enhances their own
status and self image and because such advice tends to
reduce any post purchase dissonance that they may
have. Other motives include product involvement,
message involvement or any other involvement.
Market researchers identify opinion leaders by such
methods as self designation, key informants, the socio-
metric method and the objective method.
Studies of opinion leadership indicate that this
phenomenon tends to be product category specific,
generally one of their interest. An opinion leader of one
product range can be an opinion receiver for another
product category.

Lifestyle Marketing
Lifestyle is a common word to explain complicated
consumer behaviors. Lifestyle is a way to segment
people into groups based on three things: opinions,
attitudes and activities. Lifestyle means the ways
groups of consumers spend time and money.
Lifestyle can include things like bowling, cooking, car
racing, attending charity events, having pets, interest
in politics, watching sporting events and so on
Everyone has two lifestyles-the one they are currently
in and the one they want to be in, which is always
better than the current one. Marketers exploit this
desire to move into a better lifestyle by showcasing
people who are better off than the intended target
market in their ads. For example most ads targeting
children show children that are almost too old for the
product, this appeals to younger children who desire
to be like them.


If you could take a substance that would improve your mood, help
you stay alert, make you feel more relaxed, would you? That, of
course, is a rhetorical question. Millions use legal substances
caffeine, nicotine, alcohol -- for those very purposes.
Many people have also added so-called lifestyle drugs or cognitive
enhancers to their daily regimen to improve memory and
concentration, beat anxiety, curb impulses, promote sleep, gain
energy, reduce the signs of ageing (wrinkles) and combat baldness.
What lifestyle and cosmetic drugs have in common is that
they are not medically necessary unlike treatments for cancer,
infections and heart disease. They're not life-saving drugs but
people may feel they need them to improve their performance,
appearance or sense of worth.
The lifestyle drug market is a growing segment of the
pharmaceutical industry due to shifting regional conditions that affect
a population both culturally and economically. We can attribute the
rise in demand for lifestyle drugs to different factors, depending on
the market: an aging, yet affluent, population; increased access to
healthcare in emerging markets; a greater emphasis on illness and
aging prevention; and increased marketing and branding efforts. In
the United States, the prevalence of pharmaceuticals in everyday life
has become so commonplace that many now look to prescription
drugs as a magic bullet for a variety of causes from the mundane
to life-threatening diseases.