Time to plant a tree

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Time to plant a tree:
marketing and the downturn

The troubled economic climate raises the stakes for marketing as the cutting edge of any medtech company’s business strategy. As marketing experts Baba Awopetu, Timo Fotheringham and Princewill Osaro Omorogiuwa explain, this is a make or break time: those stuck in the mud will lose, but those who can get to grips with the challenges will profit from the tough competition that lies ahead.

The sudden change in the economic climate has impacted on most industries and functions. Slowdown in sales, shift from profits to losses, redundancies and closing down sales are some of the symptoms of the most severe economic challenge for a generation. How does this affect the healthcare environment? Traditionally the healthcare market is insulated from market forces that affect other industries – but it’s important for medical technology companies to take note of these dramatic changes. In truth, there will not be a better opportunity for us to rethink our business model and practices. This article looks at some of the changes that marketers need to consider.

The bright side

First things first: the fundamentals of our business are good, so there are plenty of reasons for optimism. Though times are tough and adjustments will not be easy, there are upsides for those who can adapt. Demographics, lifestyles and expectations all mean that the underlying demand for our services remains strong. That’s the good news.

The bad news, for some, is that inauthentic marketing organisations will come under increasing pressure. The current scenario offers opportunities for genuine marketers, but will make life harder for the imposters. Value delivered to stakeholders will come under increasing scrutiny – so if you are delivering value you will thrive; if not, you are likely to be found out. In short, the lesson of the business environment is that product orientation and hard selling will not suffice!

Marketers, like other functions, are being asked to do more with less. Since it is not possible to do more of the same with fewer resources, it is crucial that we do the right things. This means that marketers need to go back to basics and make sure they get the fundamentals of marketing right. Although the current economic climate makes the life of most marketing professionals more difficult, at the same time it facilitates changes within organisations as senior management becomes aware of the need to evolve. This is an opportunity to make lasting changes and set the course for a successful future.

There are several areas where, in our view, marketers can differentiate themselves from the pack and thrive in this cold climate.

Segment or die

Segmentation in the medical technology arena is a myth: most talk about it, but very few do it. Now is the time to adopt this arguably most fundamental principle of marketing in practice. Marketing is all about ensuring that an organisation effectively identifies and meets the needs of customers profitably. Products and services are designed to meet needs, and the extent to which customer needs vary is the extent to which we need to segment markets.

Half a century or so ago, the rail industry hit a difficult patch as its growth slowed significantly. The reason it stopped growing was not that people did not need transportation any longer, but that their needs were being served better by alternatives such as cars and aeroplanes. In more recent times, the need for portable music on the go has not diminished: it has just moved from the Walkman to the MP3 player and, more recently, to the mobile phone. These examples show that although customer needs have not changed significantly, new technologies have been used to serve them better.

Companies have started to realise that product orientation is doomed to failure in the long term. As current events surrounding the US automotive industry show, producing goods that customers don’t want can be very costly and even threaten a major organisation’s existence. Though customer orientation has proved to be a far more effective approach, it is like trying to push water uphill if it is not accompanied with an authentic approach to segmentation. Without an accurate understanding of the needs we are trying to meet, how can we hope to serve them well?

It is time for us to get back to basics: to understand the needs we are serving, and define and segment our markets properly. You can segment a market without serving it effectively – but you cannot serve a market effectively without segmenting it. The future winners in the healthcare industry will have identified real segments in their market, and will have solutions that satisfy the needs of their target segments.

To brand or not to brand

We are obsessed with branding, rather than the critical art of brand building. However, this subtle difference in terminology has a huge impact on our business. Brands matter, we are told, and they do. Those who have real brands will benefit in the coming months and years, and those who do not will be found out. Nonetheless, the opportunity is there to engage in the difficult but rewarding task of brand building. Branding is about identification, naming, signs and symbols. Brand building is concerned with delivering consistent and deliberate value that is reinforced to the customers through marketing communications.

Too many marketers are heavily into the visibility that branding affords, and too few get stuck into the more rewarding activity of building brands by delivering value. Marketers need to step back from our current obsession with communicating product features, and instead lead the brand building process. Future success will be based on compelling propositions, which can only be made by those who are actively engaged in brand building. In short, we need to spend more time building the house and less time painting it.

An old proverb says: The best time to plant a tree is twenty years ago. The second best time is now. Realising the essential principles of marketing through segmentation, brand building and strategic planning will enable medical technology companies to come out of this crisis stronger than they were before.

Time to innovate

We love innovation, and rightly so – but is it time to rethink innovation? Most of our innovation is product-focused and R&D driven, but there is a need for marketers to play a bigger role in this field. Engineers left to their own (medical) devices will surely innovate; however, the new products risk being stillborn if they are not marketorientated. It is thus vital for marketers, who have a deep understanding of their customers, to be part of the innovation process and guide the new product in the right direction.

The critical point here is that we need to move away from an emphasis on ‘clever’ features and ‘brainwave’ technologies that do not deliver real value to customers – totally differentiated, yet totally irrelevant! The innovations that count are born out of an identified customer problem, and thus are customer-focused. When our marketing processes are working effectively, the whole organisation – including the engineers – belongs to the marketing team. In today’s market, where the voice for value is getting louder and louder, there is no room for innovations that are not customer-focused.

The other opportunity to optimise our innovations is by effectively managing their diffusion. Too often, the level of brainpower that goes into developing the innovation is not applied when it is time to take the innovation to market. All customers are not equal, and identifying and understanding the various adoption categories (as defined by Everett Rogers) is vital to the successful diffusion of innovation. Many viable innovations fail due to a poor understanding of how to diffuse them and create a ‘buzz’ in the market. Many papers have been published on this subject, including empirical research within the healthcare arena. Given the role that new products play in most of our business strategies, getting up to speed in this regard is no longer optional.

The current scenario offers opportunities for genuine marketers, but will make life harder for the imposters. Value delivered to stakeholders will come under increasing scrutiny – so if you are delivering value you will thrive; if not, you are likely to be found out. In short, product orientation and hard selling will not suffice!

I have a plan

We all have a plan… but now, more than ever, our plans are facing a real test. For those who perform yearly rituals mislabelled as planning, the game is up. The idea that planning is about bringing the future into the present, so that we can do something about it, has never been more crucial than now. As the old axiom goes: Only when the tide goes in do we know who is swimming without a swimming costume. The current business environment will expose those who think scenario planning and blue sky thinking are team-building exercises.

Even copycats may appear to be successful when nothing changes. But when the environment changes in major ways, only those who plan and strategise will survive. The questions being asked today require real answers, and will drive a change in orientation for many healthcare marketers. We need to get back to basics, take planning seriously and broaden our scope to allow for all contingencies. Change is inevitable, so we should look for the first signs of it.

As the economy plunges further into recession, it becomes clear that all companies should have made changes two or three years ago in order to be competitive now. Many have missed that opportunity – but the good news is that it is not too late. Another old proverb says: The best time to plant a tree is twenty years ago. The second best time is now. Realising the essential principles of marketing through segmentation, brand building and strategic planning will enable medical technology companies to come out of this crisis stronger than they were before.

Baba Awopetu ( btawopetu@yahoo.co.uk) is a visiting lecturer at the Marketers’ Forum. Timo Fotheringham ( timo.fotheringham@googlemail.com) is an international marketer who specialises in CRM. Princewill Osaro Omorogiuwa ( princewill@yahoo.co.uk) is a visiting lecturer at the London School of Marketing and CEO of the Simon Page Business School.