The Challenges of Implementing a Marketing Strategy

Introduction

David Allen founded ADAllen Pharma in 1971. It started as a pharmacy, grew to become a small group of pharmacies and, when the parallel importing (PI) of pharmaceuticals started, pioneered this activity in the UK. Allen excelled at trading and enjoyed the challenge of international business and in 1997, he sold the pharmacy business and established himself as a short line wholesaler serving primarily local pharmacy in Essex and NE London.

In 2001, the company received an order for drugs for use as comparators in a clinical trial (CT). More CT orders followed and his accountant recommended closing down the PI part of the business to focus entirely on CT. David realised the business was growing to a point where he did not have the skills to manage it and wanted another view of the business. After an extensive search for someone with appropriate skills and knowledge, in May 2002 he appointed an interim manager to research the CT market and, if a market opportunity was identified, write a plan to further penetrate the market. This paper describes the market research, the development of a marketing strategy, its implementation, results and lessons learnt. It concludes with some lessons learnt. Some elements of the paper have been changed for reasons of commercial sensitivity.

The Research and Research Report

The process used for this phase is illustrated in Figure 1. The marketing audit phase deployed the ‘usual tools’ including strengths, weaknesses, opportunities and threats (SWOT) and five forces. A political economic social technological (PEST) analysis was also carried out but revealed only one piece of relevant information; the big pharmaceutical wholesalers and the ABPI (The Association of the British Pharmaceutical Industry) wanted to see the end of short-line wholesalers involved in parallel trade, ie ADAllen.

Initial research focussed on trying to size the market, identifying what factors would make a company successful in the CT supplies market and how ADAllen compared against these requirements (Table 1). No budget was available for primary research, so published sources were used extensively along with structured interviews of all staff. Tables 1–3 and Figures 2–3 are taken from the original report presented to David Allen in June 2002. The analysis was then applied to an outline CT management process. This had been mapped, from the ADAllen perspective, in order to clarify how the ADAllen proposition might fit in and contribute to the CT value chain. Figure 2 shows the analysis used for the comparator purchasing element of the process. (In the research phase, each element was fully analysed).

The research highlighted the conservative nature of the pharmaceutical industry and, in CT in particular, a ‘cottage industry’ approach that made personality, personal contact and networking very important. People issues would therefore have a significant impact on the success or otherwise of a marketing strategy. Employees were very loyal to David and to ADAllen, but had little formal skills training. In particular, although they clearly recognised the importance of the customer to the business, their prime focus was getting and processing orders. The review of customer focus produced the results in Table 2.

The report concluded that, without investment, the same level of business as had been achieved before was unlikely to continue, as the business was at risk from bigger suppliers taking back the market share they had lost to ADAllen and the limited number of customers on which the business was relying. Other conclusions are outlined in Table 3.

Figure 1: Strategy Development Model

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Table 1: The SWOT analysis

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Figure 2: Analysis of the Clinical Trial management process

Phase 3 CT Value Chain

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Table 2: Review of customer focus

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Table 3: Report conclusions and issues

conclusions-issues

Marketing Strategy

Given the lack of sophistication in this part of the pharmaceutical market, the general strategic philosophy of the strategy on the Simon Knox view of transactional marketing with intent to move to relationship marketing, where appropriate. It should be remembered that, to date, marketing in ADAllen had been interpreted as ‘promotion’, so the extent of the proposed strategy surprised the owner. Post-modernist marketing academics posit that the concept of the four ‘Ps’ (see below) is an aberration, but at the practical, sharp end of small and medium business, even basic marketing principles are considered innovative (and helpful).

The plan also went on to cover people and technology, as these were critical to the success of the new marketing approach. In particular, the transition of the company from an order processing to a customer relationship management ethos, required an integrated change programme impacting and involving all functions.

A layered marketing communications planning model was developed to enable the integration marketing communications tools to both strategic objectives and target audiences appropriate to ADAllen (Figure 3).

Figure 3: Schematic of proposed marketing communications activity

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Implementation

Although not followed to the letter, Kotter’s 8-stage process and Bridges’s theory of transformation did inform the change programme and, in particular, Bridge’s model (Purpose, Picture, Plan, Part) was used to help develop an appropriate internal messages. To this end, ADAllen implemented a more formal method of communication and management decision making (where none had existed before). The new strategy for the company was revealed to all staff and, from that time, quarterly ‘town hall’ meetings were held to review progress. Initially these were held in the morning but, over time, it was discovered that the introduction of free pizzas at lunchtime created a more interactive and relaxed environment for the meetings. One of the challenges faced at this time was conveying to staff with no corporate experience just what behaviours were required in a medium-sized company and what the company would feel like when it began to achieve its goals. In this regard the importance of conveying a picture of the future and coaching staff towards it, should not be underestimated. To help this ‘picturing’ and also to encapsulate an extensive change management programme, the whole project became known as ‘Systems and Smiles’. In fact, it was a member of staff that came up with this phrase during a briefing session.

While the basic marketing mix approach is perfectly adequate in isolation, when a whole company effort is required from staff, only complete integration of marketing and business strategy will deliver the required results. This is particularly the case where, as at ADAllen, the only product is service and service is a combination of excellent systems and excellent people.

Systems

The organisational system

All non-core activities were outsourced including regulatory advice, transport, HR support and marketing communications.

Serving a diverse customer base, the company was split into separate business streams wholesale/retail and clinical trials. This dual focus helped to meet different market needs and better understand the different cultures of our customers. The knowledge base has remained fundamentally the same for both sectors, however the skills and approach were adapted to meet differing needs. In addition, the interim manager was offered and accepted a newly created position with the primary tasks of managing the change programme and taking the company to the next level.

The relatively flat structure of the business and the management style of the owner, made decision making a task rather than a process. This had to be changed to empower people to be ready for the expansion of the business and to enforce some management discipline that was lacking in this open access environment. Formal management meetings were adopted which got key employees used to working to set agendas, producing reports and making their own decisions.

Outsourcing

All non-core activities were outsourced including regulatory advice, transport, HR support and marketing communications.

Standard operating procedures (SOPs)

Although the company followed good distribution practice (GDP), only a few processes were documented. Following some feedback from customers that demonstrated that the company was not as accurate as the initial research had indicated, an expert was brought in to audit processes and produce new SOPs. Since this time, accuracy has improved to such an extent that one customer has confirmed that the company is 25 per cent more accurate than its nearest competitor, while another customer has awarded the company with the accolade of ‘Best Clinical Trials Material Supplier in 2003’.

Human Resources

The company introduced job descriptions, a performance appraisal system, personal objectives linked to its corporate objectives, training needs analysis that led to a company development plan, a health and safety policy/manual and revised employment processes, so that they were appropriate to a medium-sized business. These included a non-contributory private health scheme (not the sort of benefit normally provided in a company of 11 employees).

Both the new objective setting process and the performance appraisal systems supported corporate objectives. The objective setting process ensured that each personal objective contributed to improvements in revenue, margin, speed, accuracy or reliability. The performance appraisals assessed performance in areas such as customer focus and teamwork as well as achievement against the five criteria described.

Customer management

Each customer was allocated to a specific sales person so that the sales team developed a better understanding of the nuances in the way that individual customers wanted to interact with ADAllen. Activity was therefore much more focussed to customer segments and frequently to individual customers. For example, the company now sends its customers appropriate greetings on dates that are of significance to particular ethnic or religious groups.

In order to move the competitive game to one where ADAllen felt it would prevail, the company also started asking for quarterly quality reviews with each customer. This helped to set a new agenda in customers’ minds that did not relate to price. To the company’s surprise, it found that most of the customer contacts had no concept of a quality review and did not have any processes for monitoring supplier quality.

IT and telephony systems

A new digital telephone system was installed and linked to a salesforce automation (SFA) tool. This allowed the company to use on-screen dialling and screen popping. Both these technologies reduced errors and contributed to better customer service and the customer is now greeted by name.

Employees were given their own e-mail addresses for the first time and MS Outlook Global Calendar replaced the ubiquitous wall planner.

A vital part of the plan to move the company from an order mentality to a customer mentality was the installation of a SFA tool. The SFA system became a customer relationship management (CRM) system by ensuring that the marketing communications agency used the same application and appeared as a ‘user’ on the company’s system. The allocation of tasks and projects between employees and the agency was therefore facilitated and everyone was able to utilise the same data. The clinical trials team in particular found the system very useful for tracking project updates and it also allowed the sales side to guide marketing communication activity (Figure 4).

Figure 4: Screen print from SFA system showing screen pop banner

SFA-system

Marketing Communications

A new corporate image was created and used on all materials. A new brochure and website, combined with a call/write/call telemarketing campaign enhanced brand image and introduced the company’s services to 1,200 contacts, derived from a bought in list and the company’s own intelligence. All new copy highlighted the four tenets that, over time, the company wanted to make its unique selling proposition: speed, accuracy, reliability and confidentiality (Figure 5).

Four market sub-segments were addressed by individual marketing communications plans: corporate clients, clinical trials, pharmacists and dispensing doctors. Within the plans, the company used appropriate mixes of advertising, PR, exhibitions, conferences and direct mail to raise its profile and educate the market about its proposition. A good and very satisfying, example of the success of this planning was winning an order in December 2003 from a contact in a major pharmaceutical company that the company’s telemarketing agency had first called in September 2002. That initial call had been followed up by regular, but infrequent mailings from the marketing agency (about presence at exhibitions, speaking engagements at conferences, sponsorship activity) and calls from the sales team. This customer contact has now recommended ADAllen to other parts of the same company throughout Europe.

Even in the wholesale arena, small changes had a big impact. For example, special offer sheets were faxed to retail pharmacists every fortnight, but no record was maintained of responses to the faxes and the faxes themselves could not be used to order goods. This was changed so that:

The results not only yielded useful data such as to which pharmacies had internet access, it also indicated who read the offer sheets, as no reference to the research/ incentive was made until the last page. Out of 300 fortnightly faxes, the company now have over a 25 per cent response to the question and over 10 per cent now order using this method.

 Figure 5: (a) New brochures

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Figure 5: (b) website

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Corporate Culture

Though this phrase was never used at staff briefings, it was known that the company needed to develop skills and behaviours in order to drive the acquisition of new prospects, retain customers and move beyond the traditional mindset of a small wholesaler. Differing attitudes to responsibility and ownership had to be melded into a common approach appropriate to the size of business the company wanted to be and the customer base to be served. This led to some challenging meetings with full and frank exchanges of views.

One of the hardest concepts to convey was the difference between an individual owning a process and an individual being responsible for tasks within that process. For example, how can a sales person be made responsible for the process of delivering goods to a customer (a horizontal process the company wanted to implement), when the warehouseman owns responsibility for picking and packing the goods? Stressful though it was at times, David Allen and the new COO were determined that individual responsibility for actions and processes would be key to achieving an empowered workforce. This did, from time to time, result in frustrated employees but, some months after this friction, the same employees admitted that they could now see the benefits of ‘management’ taking such a determined position.

Training and development

The training needs analysis identified both knowledge and skills training requirements. The company wanted staff to be both competent and confident in the use of the new technology, to be cognisant of the issues relevant to their customers. For some, voicemail and e-mail were an innovation and training in IT skills had to be rapidly implemented, yet accomplished during working hours, as many employees had family commitments that meant overtime was simply not an option. In addition, it was clear that staff with greater responsibilities needed coaching in management and interpersonal skills. Some of this was achieved through external courses. In both these areas, ADAllen was fortunate in being a small business and the new COO became expert in tracking down sources of funding for IT, management and personal skills training. Self-development also occurred through any interaction about business issues as the approach taken by the ‘management team’ reflected the standards, attitudes and methodologies expected of all staff. As the COO ‘walked the talk’, staff could see what style was becoming the norm and, with coaching and perseverance, behaviours changed to those required. The IIP standard gave us a template against which to judge progress and by the time of the assessment all the staff were very enthusiastic about being recognised for their efforts. Many staff blossomed with increased confidence and competence that resulted from increased investment in their development. The clear link made between stretched targets and improved working practices also contributed to a very positive feeling in the office.

Assessment and reward

All HR policies were reviewed and appraisal and incentive schemes adjusted to support personal development and employee empowerment. The changes with the biggest impact were:

Results

Total revenue was static between 2001 and 2003. The revenue from the wholesale business however, did improve and, as stated earlier, small innovations for that business produced exponential rewards. The lack of CT revenue growth in FY 2002/3 was disappointing but, during this period, the merger mania of the industry had resulted in many trials being put on hold, pending revision of drug development pipelines. Thankfully, the run rate for Q4/2003 was very encouraging and this took ADAllen from a small family business with £8m revenue in 2000 to a medium-sized enterprise with £12m revenue by the end of 2004.

Margin

Gross margin was static but, given competitive pressures, this was not a major concern. In addition, ADAllen had invested some £30,000 in IT and telecoms and a similar amount in marketing communications in one year. Operating expenses were therefore the highest the company had ever had and yet there was still a net profit at the end of FY 2002/3.

Customer Growth

The first sign of improvement in retention and acquisition came from the wholesale business. In one segment, the customer base grew by 400 per cent and in another segment, new to ADAllen, 30 customers were gained in 6 months. On the CT side, the customer base increased by 500 per cent. This included three more major pharmaceutical companies and a global CRO. Forecast activity from these new customers could enable the company to double the current CT turnover.

Overall status of the company

In terms of systems, management approach, capability and personality, the company is very different compared with three years previously. Though the company had been successful before, it is now in a state that will allow it to move forward and take full advantage of market opportunities. Most importantly, the brand image reflects the company as it is now, or — put another way, all the employees now walk the talk of the marketing strategy. The number of referral enquiries that are received is a measure of the improvement in brand image and, though the company has a long way to go, it feels that its image and reputation are now positively impacting on sales.

Lessons Learnt

In reality, none of the project phases went as well as the paper may suggest. Perhaps of some surprise to marketing educators who spend 90 per cent of a course getting to the perfect plan, none of the big issues was about the plan. People were the big challenge and as a consequence, the plan had to be adapted to the unpredictability of the human resources. To some degree this was anticipated as no (military) plan survives first contact with the enemy.

When designing a change programme in a corporate environment, it is likely that the majority of people involved will have had some management training so that there is some mutual understanding of terms like: quality, ownership, process, task, report, meeting. This shared understanding did not exist at ADAllen and, given the backgrounds of the staff, this was understandable. The degree to which the company uses corporate language and assumes a mutual understanding should be considered carefully when operating in a small to medium business environment.

In a big corporate, if 10 per cent of the workforce are disruptive it may choose to remove some and neutralise others. In ADAllen during the first year of change, the disruptive 10 per cent was one person who represented 50 per cent of the staff with prime responsibility for growing the CT market and had line responsibility for the warehouse. In a business operating from an industrial estate in Essex, where recruiting the right staff was a challenge, the company decided to work with this one member of staff in the belief that, with tight management, capabilities would outweigh recalcitrance. Unfortunately, this was the triumph of hope over experience. Only after this person voluntarily left did the company realise just how much time was spent walking on eggshells and clearing up the problems created by this person.

Even with the benefit of hindsight, it is still difficult to see any other options in this case. The learning point is that, in a small company, one person can have an inordinate impact on the rest of the workforce, for good or bad.

The interim manager came from the telecoms/IT industry where change is a constant, and new ideas are assimilated quickly to take advantage of a window of opportunity. The pharmaceutical industry proved to be very conservative both in its willingness to listen to a sound proposition and in the way it treats suppliers. One prospect (a procurement manager in a top 10 pharma company) refuses to return any calls from suppliers simply because they are suppliers. The company has to trust to luck to get him rather than his voicemail!

Another customer (Director level) was offered a draft loyalty scheme (a very common retention tool in telecoms) but refused to negotiate with the company, as he had not come across this kind of deal before. As a result, he lost his company many thousands of pounds in future discounts.

Many pharmaceutical companies and CROs are also using internal security policies as a means of hiding from suppliers, some of whom could actually save the company money, time or human resource.

In terms of the business plan, the company is probably running about 610 months behind where it wanted to be because of the reluctance of the industry to countenance change.

Despite outsourcing the IT maintenance, there were times when the COO and CEO were spending over 50 per cent of their time either resolving IT problems or coaching staff in the correct use of the systems. The lack of customer service from the application providers was shocking and, without our loyal IT outsource company, the IT would have totally collapsed. The lesson learned from this was to find a local IT provider willing to help work through unusual problems. Unfortunately, this is harder than might at first appear.

Because the COO had a telecoms/IT background, the degree of knowledge assumed to be present in the staff was false. Coming from an environment where IT skills are actually very advanced compared with the average, the COO had no concept of working with people who had very limited IT skills. This delayed the acceptance and proper use of the new systems and was the cause of much frustration and bad feeling in the company.

Although in revenue terms the plan is behind where the company wanted to be, it achieved better than planned in terms of customer numbers. The reasons for success are:

The areas open for improvement were:

The company has only one recommendation and that is for marketing people to ensure that their colleagues in other functions are able and willing to support the marketing plan. Unless a whole company change programme accompanies the implementation of a marketing plan, the desired results will never be achieved and the company will not move forward.

Marketing is not an island; it is fundamentally linked and integrated with every function within a business, from sales right through to IT, accounts and stock control. To change one element, impacts on the rest. This paper has sought to demonstrate that marketing can be a catalyst for change. Its success however, is critically linked to the whole of the business changing and developing consistently together to deliver bottom line results and a sense of value for its people.