Getting Devices to Market

Healthcare expenditures in 2007 were nearly $2.5 trillion and are expected to balloon to $4.2 trillion by 2016. Though much has been written about the increasing presence, influence and impact of the pharmaceutical industry, what has often been overlooked is the fact that the $250 billion medical technology industry is actually larger than the pharmaceutical and biotech industries combined.

Whether for an emerging technology, single product startup or a large, established, multi-divisional medical device company, marketing can be the great equalizer. Though budgets and access to resources may vary dramatically, at the end of the day all device companies share one common goal: Having their products sought after and embraced by their respective customers.

Given the highly competitive environment and the abbreviated window of opportunity to move from product launch to standard of care, marketing has begun to take on an increasingly important role for device manufacturers. With device companies that employ 100 people or less - the vast majority of the 6,000-plus manufacturers in the United States today - competing against the Medtronics, Boston Scientifics and Abbotts of the world, the question is often asked if size matters when it comes to the marketing of medical technology. In a word, sometimes.

Evolution of Device Marketing

Unlike other segments of healthcare, the medical technology industry is driven by the relentless demand for innovation and new product development. To put this into perspective, one of the largest medical device companies in the world - with 2007 sales exceeding $13 billion - proudly stated last year that fully two-thirds of those revenues came from products just introduced within the last two years. This historical focus on "building the better mousetrap" has placed a significant amount of emphasis on functional areas such as research and development and manufacturing, often resulting in organizations that appear to be more "engineering-driven" than "marketing-driven."

Fortunately for marketers, the tide has begun to change - fueled in part by the dramatic increase and visibility of direct-to-consumer marketing in the pharma industry and its corresponding contribution to increased sales; the infusion of consumer packaged goods marketers and their strategies into the device industry; and the sheer number of products vying for the attention of physicians, nurses and administrators. Compared to the pharmaceutical industry with its roughly 1,400 approved prescription drugs, there are approximately 100,000 FDA-approved medical devices on the market today - which have resulted in a significant amount of clutter and competitive pressure.

Equally important is the marketing function, much like manufacturing, regulatory and operations, is now being viewed as a proactive process and not just a set of reactive, tactical deliverables. For big companies and small companies alike, that process often includes:

• Market Segmentation and Customer Research - Used to identify key target audiences and further validate the market needs and receptivity to specific products. Additional research regarding attitudes and perceptions is often conducted to help identify potential gaps between how a company and/or its products are viewed versus how the company would like them to be viewed. This gap analysis can be foundational to establishing both the brand and its unique position within the marketplace.
• Branding, Positioning and Key Message Development - Helps to establish a unique position in the customer's mind and further differentiate the company/product from its competition. This stage often includes developing the company's vision, mission and positioning statements, brand pillars and brand personality.
• Brand Adoption - Bringing the brand to life, both internally and externally, across multiple audiences (customers, investors, employees, strategic partners, etc). For device companies, this often includes the development of advertisements; sales support materials and promotional items; trade show exhibits; direct mail; and online tools and strategies.
• Development of a Fully Integrated Marketing Program - Helps raise awareness, seed the market, stimulate trial, and speed the adoption and acceptance of the product. This may also include the compilation, packaging and promotion of clinical data to demonstrate efficacy, better clinical outcomes and more, as well as the integration of disciplines such as public relations, investor relations and employee communications.

With their typically larger budgets, greater access to resources, broader product portfolios and established market presence, it would be easy to conclude that large companies may have the upper hand from a marketing perspective. Clearly, given the proliferation and success of small- to mid-size device organizations, this is not always the case - although there are also clearly times where size matters.

When Bigger Can be a Benefit

Beyond the obvious benefits associated with size and scale, there are other times when bigger can be a distinct advantage for device marketers. Examples include:

• Having an established corporate brand that already conveys positive perceptions in the minds of the company's constituents can create a halo effect, making the recognition and acceptance of new products much easier. These positive perceptions can also go a long way toward mitigating risk and establishing credibility and trust - two important factors in any purchase decision process.

Obviously the converse of this can also hold true in that negative perceptions toward a company can be transferred to the product regardless of how well it may function or perform. For this reason, it's important for large corporations to recognize the value of reputation management programs and corporate branding campaigns, even though the investment may not appear to immediately translate into increased product sales.

• Similarly, larger corporations are often more willing and able to invest in these types of campaigns without the expectation of having an immediate return on investment (ROI). They may recognize the value-added benefits of developing and maintaining a solid reputation in the marketplace and the impact it can have on customer retention, investor relations, employee recruitment and shareholder value.
• Larger organizations may also have the added luxury of time, since the financial success of the company is not likely tied to an individual product's success. In highly competitive markets it often takes time for a new product to find its place. Larger companies have the ability to not only be more patient but also have the resources to continue to invest in marketing along the way.
• For many medical device products, data drives results. While virtually every customer segment has its share of early adopters, long-term product success is often tied to supporting clinical data. Though all manufacturers rely on some amount of data for FDA approval, the deeper pockets of an established device company may allow for added studies to be performed which can further validate clinical efficacy, clearly demonstrate product superiority, or identify alternative applications for use. Equally important, larger companies may have the benefit of being affiliated with leading key opinion leaders and a broader customer base, allowing them to disseminate the information more quickly and effectively.

Regardless of company size, how the information is packaged, disseminated and leveraged are also important. Working with a marketing firm that can strike the right balance between content generation and the creative presentation of that content can go a long way toward helping break through the seemingly endless clutter of information most clinicians face today.

• With respect to developing a fully integrated marketing program, larger companies often have the benefit of both experience and added resources at their disposal. Lessons learned from prior product launches can clearly have a positive impact on future product launches. In addition, the larger company will oftentimes have specialists (versus the one-man operations or lean marketing departments of many startups), skilled in important disciplines such a corporate communications, public relations, investor relations, employee communications, clinical/regulatory, etc. - allowing for the development of a truly integrated and multifaceted approach to marketing.

It should be noted, however, that at its core, marketing works best through consistency and repetition, with singular messages being disseminated through multiple media channels. While the size of the company and its budget may help extend the reach and frequency of those messages, it is not immune from the rigor and discipline it takes to craft the right messages nor the challenges associated with making sure the left hand knows what the right hand is doing.

When Less Can Mean More

While larger, more substantial device companies may benefit from deeper pockets, breadth of experience and depth of resources, they can also be encumbered by a stifling bureaucracy, overly structured and misaligned functional groups, complacency and an extended approval process. Undoubtedly, there are times when being nimble and lean can work in favor of a device manufacturer. Examples could include:

• Streamlined approval process. Between the unpredictable timing of FDA approvals and the dynamics of an ever-changing competitive landscape, medical device marketers often need to develop or modify campaigns quickly to seize upon opportunities. Not having to go through 12 layers of approvals or an overly assertive legal department allows smaller companies to react more quickly in getting their messages and materials into the hands of potential customers.
• Small- to mid-size companies can actually benefit from the success or marketing resources of larger competitors who have paved the way by establishing both a need and product demand. In a very real sense, marketing dollars can be extended by piggy-backing on the campaigns of larger entities - especially if a unique point of differentiation is established such as lower price or better outcomes.
• Smaller companies may also have the luxury of taking greater risks in the marketing of their products, developing programs or campaigns that are outside the box and/or utilizing creative that is truly unique and distinct - unencumbered by the need to operate within the guidelines and constraints of a corporate brand or prior marketing efforts.
• Through focus and not trying to be all things to all people. Having a narrow or niched product offering can actually be a benefit and allow smaller companies to be positioned as specialists.
• Benefiting from the David versus Goliath effect. In categories dominated by large corporations, customers often perceive startups as being more responsive to their needs or more focused on innovation and technological advancements. Though still required to demonstrate company stability and product performance, many a startup has succeeded by leveraging its underdog status.

Marketing Considerations

While there are certainly marketing situations where size can be a factor, what matters most is the effectiveness of the effort - not the size of the organization behind it. Toward that goal, here are a few tips for orchestrating a successful marketing program.

Just as aligning a company with the right engineering team or contract manufacturer can greatly impact how a product looks and works, finding the right strategic marketing partner can play a key role in clearly defining and articulating why potential customers should care. Take the time to find a firm that knows the industry - no need spending those precious and limited marketing dollars educating an agency on the business.

Similarly, it's important to find a marketing partner that truly understands the regulatory environment. Navigating through the FDA's list of dos and don'ts shouldn't be done through trial and error. Recognize that the timely sharing of clinical data - as in the results of clinical trials - can help "seed" the market, influence perceptions and generate awareness in advance of FDA approval. How that information is packaged and disseminated can also have a positive impact on product marketing efforts as can the use of independent third parties to help tell a story, since they add credibility to one's message and are not bound by the same regulations as the manufacturer.

Next, while the tendency may be to immediately get tactical - as in "we need a brochure" or "we need a new tradeshow booth" - spend the time and appropriate resources on the branding and positioning sides of marketing. Creating and defining unique messages and points of differentiation will pay dividends later and also establish a solid platform for future marketing efforts.

Last but certainly not least, plan the work and work the plan. While unforseen circumstances and opportunities may arise, spending marketing dollars effectively is better accomplished if there is a roadmap in place.

About the Author: Mike Ritchey has over 20 years of agency and client-side experience in branding, marketing, public relations and corporate communications and currently runs the healthcare practice of RiechesBaird, a strategic branding and marketing firm. With a diverse background that cuts across virtually every segment of healthcare, including medical devices and diagnostics; health services; health information technology; and biotech, Ritchey has a unique understanding of the dynamics and challenges facing healthcare companies today. He can be reached at 949-586-1200 or mritchey@riechesbaird.com