Digg It - Business

Deciding whether a particular marketing program is profitable to your business is often more subjective than the accountants would have you believe. You should not only consider the direct revenue and costs associated with a marketing

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

program, but you should also think about the long term impact on your business.

The full benefits gained from a marketing program are not directly and immediately measurable. Many benefits happen over time. Advertising; brand buildi

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ng and awareness; Web site improvements; and other types of programs may be profitable in the long run but costly in the short term. Often, the best approach for these programs is to first set aside a budget, then spend your budget on

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

the program(s) with the most potential for long term success.

Investments in improvements -- such as a redesign of your Web site -- may seem unprofitable at first, but are nonetheless the right thing to do. Many of these programs ar

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

beneficial because they keep you from losing business to your competitors over time. For these types of projects, the correct question to ask is "What happens if I do this versus if I do not?" Know how much your business must grow ov

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

er time to make the improvement worthwhile and compare this to your potential business growth. If the cost is not reasonable compared to the potential, then look for other solutions.

Another reason the benefits of a marketing program

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

may not be directly measurable is because new customers gained as a result of the program may, over time, buy from you more than once (i.e. have a lifetime value that is greater than the profit from a single purchase). Also, happy cu

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

stomers tend to refer additional customers by spreading the word about your goods and services. Both of these factors indirectly increase a marketing program's overall profit.

Making Assumptions

Predicting profitability can b

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

a series of "best guesses" based on assumptions. In fact, you could probably manipulate your assumptions to make a program as profitable (or unprofitable) as you wish. A more successful approach, however, is to try to legitimately fo

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

recast profit. Be as reasonable as you can with assumptions, and then decrease your expected revenue by 20% - 25%. Often, results (either costs or revenue) come in worse than reasonably expected for a variety of unforeseen reasons.

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ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

b>Figuring Break Even Point

For promotional programs, you can decide how much to spend on the program by figuring out your break even point. One way to do this - while also taking into account longer term profits - is by basing t

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

he break even analysis on the amount of profit you expect to earn from new customers gained through the promotion, both now and in the future. To figure the break even point in this way, you should know:

1) the program’s expected re

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ponse rate,
2) the program’s expected conversion rate, and
3) the lifetime value of a new customer.

Here, the response rate is defined as the percentage of those exposed to your program that you expect will take y

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ou up on your call to action.

For the formulas in Part 2 of this article, express the response rate as a decimal (Examples: 1%=.01. One-half percent=.005)

Conversion rate definition is the percentage of responders you expect

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

to become customers. For the formulas in Part 2, express the conversion rate in decimal form (Examples: 10%=.1. 1%=.01. One-half percent=.005).

The lifetime value of a new customer is the amount of dollar profit you will make

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

from the customer over a certain time period. It is common to define lifetime as anywhere from 18 months to two years.

Response and conversion rates can vary widely, depending upon how targeted your prospects are, how well your offer

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

is written, and how involved the purchase decision is for your product. The type of program also has an impact on your response and conversion rates. To estimate these rates for your program, you can look to your past experience and/o

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

r ask the program vendor. You can also search on general marketing and research Web sites to find rules of thumb for your type of program. In all cases, document your assumptions. You will need them later to analyze program results.

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

In Part 2 -- http://www.websitemarketingplan.com/online/breakeven.htm -- I will look at three ways to approach break even analysis, depending on how the marketing program is structured.

Publication Guidelines:

When publishing this a

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

rticle on the Internet, please make at least one URL in the "About the Author" resource box clickable. Also, please notify Bobette Kyle of publication (articles @ websitemarketingplan.com).

Copyright Bobette Kyle. All rights reserved

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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