Thursday, November 25, 2010

Successful Multibrand stratergy case in Pharmaceutical company

 or "Sometimes the most unbelievable strategy works the best"'
When company launch a new medicine or new formula, they have patent protection for 15-20 years.  At the time company has their patent protection, they are the only player in the market and it means a very good profit for company. But what to do after the patent date for the product  has been expierd? A lot of other competitors copy this product. In that case there are 2 options. It’s time to develop new formula, because it’s the fastest way to get profit for the company or the second- to fight with competitors and try to get the biggest market share as possible. But, how to get a good market share if there are more than 50 players?
I had a wonderful lesson with Andrea Tomasini which has worked in pharmaceutical industry for a lot of years and he said that the strategy he applied and let him get the biggest market share for his pharmaceutical company, is the multi-brand strategy.  
Multi-brand strategy refers to a marketing strategy when 2 or more similar products of one company are putted under different brand names. It is based on principle that if the first brand has became successful, than the company develop the second brand without a lot of expenses. Also a very good advantage is to get a bigger shelf-share and leave little share for the products of competitors. It also gives possibility to generate different price and quality gaps. Because as we all know, customers are like prostitutes, going from one brand to another one. So this is a good strategy to “fight” with customers who are not always loyal to your brand. The worst scenario of multi-brand strategy  is cannibilization
So, how multi-brand strategy works in Pharmaceutical company?
From my great teacher experience, he launched 2-4 brands which was actually the same product  inside. He made different positioning for each brand, and there was one person of each brand who took responsibility for this brand. Also he never forgot the Pareto principle.
For each brand there was only one responsible person, so that made this person get in love with the brand. Of course the brand managers were "fighting," also inside the company, but the clever strategy influence this ""fight" in a positive way, because they felt a very high responsibility for their brand, so to escape from too big competition inside one company, Tomassini gave the same investments for all managers. And the most important thing he did- he never played with price. Price for all the brands (for the same product) was exactly the same. Tomassini: “The innovation, in my case, consisted in setting up an organizational structure and culture that maximized the opportunities offered by the market at the less relevant cost.”
He gave the same investment for every brand manager to develop the brands and what is more interesting- he gave the freedom them to choose, which would be the best activities and strategy for each brand. So you may think that the Internal Competition could make you lose focus on the market, but in some cases it really works. Also the decision about the price is quite interesting. If we are taking other example like Procter and Gamble, they are also making very successful multi-brand strategy by putting different prices and quality, but this Pharmaceutical company case is different, because there was no price strategy., the price of all the brands was the same. And there was no case in A. Tomassini long year experience, that the multi-brand strategy would cannibalize the first brand. Never. And that is really incredible. And what makes the whole story more appealing, is that with every case launching a new brand for the same product, he always succeeded taking away  a big market share of their competitors, but never from their own brands.
This in my opinion is a very good case to study from and to keep in mind that sometimes also most incredible and even unpopular decisions might work and make you the leader in your market.

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