Your Slogan May Backfire
Carlton Hoyt
An article in the Journal of Consumer Research, recently discussed in the Harvard Business Review, found that while brands have priming effects slogans often have reverse priming effects. In other words, brands often influence consumers as intended but slogans often cause the opposite effect.
Quoting the HBR article…
[pullquote_left]After participants were exposed to brands associated with luxury (such as Tiffany and Neiman Marcus), they decided to spend 26% more, on average, than after they were exposed to neutral brands (such as Publix and Dillardâs). After they were exposed to brands associated with saving money (such as Dollar Store and Kmart), they decided to spend 37% less than after they were exposed to neutral brands. The brands had the intended âprimingâ effect.[/pullquote_left]
[pullquote_right]But when it came to slogans, the same participants exhibited the opposite of the desired behavior. After reading a slogan meant to incite spending (âLuxury, you deserve itâ), they decided to spend 26% less than after reading a neutral slogan (âTime is what you make of itâ). When a slogan invited them to save (âDress for lessâ), they decided to spendâan additional 29%, on average. The slogans had a âreverse primingâ effect.[/pullquote_right]
The research suggests that this is a result of behavioral resistance to perceived attempts at persuasion. While consumers do not view brands as an attempt to persuade, slogans are viewed as an attempt to persuade and therefore exert the opposite effect. This effect, which was measured in general consumers, is most likely heightened amongst a highly rational and critical scientific audience.
Quick note to our readers: do NOT take this result as an indication that you should use reverse psychology in your slogan. Simply be careful in selecting what your slogan will be and don’t be afraid to get creative.
The Sequester & The Life Sciences
Carlton Hoyt
It’s no longer big news – the U.S. congressional “supercommittee” tasked with finding $1.2 trillion in federal spending cuts in the next 10 years has failed. On November 21st, the committee conceded failure and, barring the miraculous passage of any budget legislation over the next year which would meet those deficit objectives, the sequestration plan goes into effect starting Jan 2, 2013, cutting $1.2 trillion across-the-board. As a life science tools company that sells products in the United States, especially if you make a substantial fair amount of your money in the US and have exposure to academic research institutions, this should rightly scare you.
The sequester would cut 7.8% from the National Institutes of Health, the National Science Foundation, and the Centers for Disease Control. That’s a huge cut that equates to over 2,500 less NIH grants and 1,500 less NSF grants in 2013 compared to 2011. While the sequester isn’t a certainty at this point – details could still be revised and a budget agreement could still be reached – President Obama has stated that he would veto any plan that doesn’t meet the deficit reduction goals, making a deal unlikely.
Consider this – the NIH spends over $31.2 billion on life science and medical research annually. To give this some perspective, PhRMA estimates that in 2009 the ENTIRE PHARMACEUTICAL INDUSTRY spent $65.3 billion on R&D (although reported data from CapIQ would suggest that number is at least 50% higher). As one can surmise from these numbers, the pharmaceutical and biotech industries are highly unlikely to make up for the loss of R&D spending. If the sequester goes through as currently planned, my estimate would be that life science tools companies can expect a 3% to 4% decrease in their US sales, presuming that their current market shares between industry, academia, etc. are proportional to the respective current R&D spending. Obviously companies that sell a disproportionately large amount to academia and other organizations highly dependent on NIH funding will see a greater decrease in sales. Likewise, companies that sell products which make work in the lab more convenient will likely feel the pain somewhat more than essentials.
With governments across the globe having major budget problems, leaner times for life science funding are extremely likely to become a reality. The companies that will be able to succeed in spite of it will be those that understand their exposure to potential reductions in funding and plan accordingly.
What Should We Call Ourselves?
Carlton Hoyt
I’ve heard our “sub-industry” called many things. So many, in fact, that it seems quite obvious that there isn’t a consensus. I think it’s time to end all that.
What should the industry that manufactures and sells products for use in life science research be called?
Take the poll on LinkedIn!
Contact Forms Affect Leads
Carlton Hoyt
Contact forms are increasingly being used by life science companies (and web development companies) as a lead collection tool, but despite this very important function companies often don’t think through the design of contact forms well. For example, I was looking at a life science service company’s website today, and they had an extremely long contact form. There were about 12 fields for contact information – all required. While this is an extreme example, it does highlight the point very well. Contact forms are being misused by life science companies.
You may be thinking “Isn’t this focusing on minutiae? Contact forms aren’t that important.” If so, most people think like you. When designing a contact form they ask what information they would like to collect and that’s about it. That thinking, however, is completely backwards. Why? Contact form submissions, which essentially equate to leads, decrease dramatically the more fields you have. Evidence in a minute.
I’ve heard anecdotally that form submissions decrease between 20% and 50% for each field. That seems a bit exaggerated to me (anecdotes often are), so I looked into it. Thankfully, with creative Googling you can find a study on just about anything. A Chicago-based web dev outfit called Imaginary Landscape did our homework for us. They ran a pilot contact form on their website with 11 fields, then the next month decreased it to 4 fields. The results? They saw a 120% increase in their form submission rate. Conversely, this would mean a 62% decrease in submission rate when increasing from 4 fields to 11, or roughly a 12.5% decrease in submissions per additional field if we actually can apply an exponential mathematical model as the anecdotes would tell us we can.
It stands to reason, however, that as we make it easier to fill out the contact form, that we will lower the quality of the leads. There is almost always a trade-off between lead quality and lead quantity in any given situation in which leads are collected. However, scientists aren’t going to fill out a form and give out their contact info for no reason. We’ll simply get more people contacting us who are “on the fence” – and those are exactly the people that you want your salespeople to get in touch with so that they can sell them on your life science products and / or services.
Because of all these factors, life science companies and life science web designers must be minimalistic in their implementation of contact forms. Do not ask yourself what information you want from your customers, but rather what is the minimum amount of information you need to collect. Let your sales staff get on the phone and collect the rest after you have the lead in hand.
What sells lab products?
Carlton Hoyt
Why do scientists buy any given laboratory products? How do they make their purchasing decisions? That’s the magic question that all of us seek to answer. While there is no one answer, and what answers we can attribute are dynamic, there is something that holds true. To sell life science tools and other lab products, there needs to be value, and this value can come from many places, such as:
- Quality – value that comes from the product itself. The product may be more reliable, easier to use, technically superior to other products, etc. Scientists almost always desire reliable products that work on the first try and product consistent results. Building a great product is a big piece of the value equation.
- Service & Support – value that comes from your company. This is an ongoing effort to make sure your customers have everything they need to successfully use your product. For best results, your support to the customer should not only be reactive, but should include proactive support as well, especially to customers who are using a particular product or product line for the first time. While perhaps not as important as the quality of the product itself, this is another highly important piece of the value equation for laboratory tools. In a study performed by BioBM, over 60% of scientists reported having refused to order a laboratory product because of a previous experience with the manufacturer or distributor selling it.
- Marketing – perceived value created in the minds of scientists. The thing about value is that it either has to be experienced or communicated in order to be effective. Marketing is the communicator of that value, and how well you communicate that value will directly effect the perceived value of your products, especially for customers that have never used your products or dealt with your company before. If you haven’t communicated your product’s value, or if someone else hasn’t communicated it for you, scientists won’t recognize the value and therefore won’t buy your product.
If you fall short in one area of value creation, you can sometimes make up for it in another. For example, an imperfect product may be perfectly acceptable to a scientist so long as it is well-supported. Even if your product and support aren’t top-notch, but you make a compelling value proposition in your marketing and communicate it to a wide audience, your value will be understood and you’ll still get sales. (Note that the previous statements referring to lower value products be interpreted as lower value relative to similar products and not in absolute terms. Truly negative impressions of quality or support are difficult to overcome and you cannot be successful long-term if a high percentage of your customers are not satisfied.) The total perceived value is then weighed against the price and the customer’s price sensitivity when making the final purchasing decision.
Value comes from many places, and overall value is ultimately the driver of purchasing decisions made by life scientists. Understanding how to create and communicate value will make your laboratory research products, and your company, more successful.
Search for Distributors
Carlton Hoyt
I was having a conversation about web design and search engine optimization with a life science tools distributor recently, and he asked me how to target a website to a particular region? This got me thinking about search engine optimization (SEO) and search engine marketing (SEM) for distributors.
One of the limitations of search is that it is difficult to organically target a website to a region, at least in the life sciences. Search engines recognize some searches as inherently local. Search for “pizza” in Google for example and it will read your IP to determine your location and return local results. Search for electrophoresis gel boxes or Ras1 antibodies, however, and that location-specific context isn’t there. Therefore the simple answer to his question: “How do you target a website for a particular region [using SEO]?” – is that you don’t.
The next logical question: is SEO important to distributors? Often, but not always. If you can do a better job of optimizing for relevant terms than your life science supplier(s), then yes, you should optimize for those terms. It would be far better for a potential customer to find you than find a competing manufacturer or distributor. Likewise, if your country or region’s language(s) are different the language that your suppliers’ websites are written in, then SEO may be important as well since your customers may search in your local language (although newer technical and scientific terms are often the same across languages). If you do not have exclusive distribution rights and are effectively competing with other distributors in overlapping regions, then SEO may be very important. However, if your suppliers are well SEO-optimized, if you have exclusive distribution rights, and if your region speaks the same language as your suppliers’ websites are written in, then SEO is not of particularly great importance. In this scenario, which is actually quite common, you should be able to rely on your suppliers to pass along leads to you and in most situations they should have a listing of distributors directly on their website.
Unlike search engine optimization, search engine marketing can very easily be targeted to a particular region. SEM also allows companies to buy a top spot in the search results even if they are not doing so organically. Distributors often ignore SEM, leaving it to their suppliers, but there is no practical reason to do so. Even if you and your supplier are effectively advertising for the same product, having two listings in the paid advertisements only increases the odds that a searching scientist will click on one of them. If your suppliers are not performing SEM, and especially if their search engine rankings are not very high, you should be using SEM to target scientists in your region and get a placement near the top of the search results. So long as SEM campaigns are well-managed, they should be creating a good ROI and be well worth it for distributors.
With about half of life scientists stating that they look for product information on Google before anything else, a strong search presence is not only important to the sales of any life science tools company, but can deliver a great ROI. When deciding on how much resources to devote to search, distributors have different factors to consider than do suppliers. A strong SEO / SEM presence by suppliers can reduce the importance of SEO / SEM for distributors when compared to other marketing channels, but too many scientists use search to find products for it not to be at least a strong consideration in any distributor’s marketing strategy.
Serving the Underserved
Carlton Hoyt
As in most markets, players in the life science tools industry are always looking to get a squeeze a little more revenue out of their product lines. While price increases may erode demand and ultimately prove ineffective in helping the company’s bottom line, there are markets that are often under-served or overlooked by small life science companies. Efforts to expand into these markets often allow opportunities to grow revenues without much additional effort, and so long as your products would be a fit for the needs of the markets it could prove quite lucrative.
Small life science research tools companies often focus on their largest potential markets: pharma / biotech and academia. This focused approach leaves out a large swathe of potential customers as there are many other ancillary markets for life science tools. Forensic labs, food testing labs, environmental labs, and medical labs (at least for unregulated products / procedures) are all markets that may require little effort to expand into and are effectively less crowded due to many companies overlooking them.
Taking advantage of these often under-served markets may be as simple as creating new marketing communications directed at these markets and advertising through avenues that are higher-visibility within those markets. Product positioning can also be a major help. For example, developing protocols that are specific to the needs of those markets may differentiate your product from others who focus on more “mainstream” life science applications. You may be able to find distributors who specialize in certain markets and leverage their unique reach. Any of these things can be relatively low-cost, low-effort ways to expand your potential market size, and there are certainly other efficient ways to do so as well.
Chances are, there may be potential markets for your life science products that your company is not currently exploiting. Through marketing, distribution, and other means, you can take advantage of under-served markets and get more revenues out of your product lines.
Attorneys vs. Business
Carlton Hoyt
Last week my father, who is a real estate broker and an attorney, was telling me about a real estate deal that he was working on. The buyer and seller had initially been in relatively good agreement but the seller’s attorney continuously advised his client to take an increasingly risk-averse position, thereby making the deal more one-sided and threatening it entirely. This reminded me of another conversation that some of us on the Life Science Distributors group on LinkedIn were discussing: how many large manufacturers (and this applies to large distributors as well) often have heavily one-sided distribution agreements that minimize their risk but fail to consider their partners. It was mentioned that such agreements are often drafted by attorneys.
My father made a very astute statement: “Attorneys seem to have forgotten the realities of business in favor of minimizing risk for their clients”. While there are exceptions, and there are also certain situations in which extreme caution may be justified, the idea of the statement is too-often true. When attorneys get involved they often do not have a complete understanding of the business environment and / or the situation relevant to a particular business deal. This applies across almost all industries and markets, and life science research tools are no exception.
Whether the issue at hand is distribution agreements, licencing deals, partnerships, service agreements, or just about any other contractual and / or negotiated agreement, remember to take your lawyers advice seriously, but don’t let them overrule the basic rules of business. Almost any deal requires a little bit of give and take, and focusing too strictly on risk reduction can ultimately scuttle what would otherwise be a highly lucrative deal. When your life science company deals with its attorneys, value their advice, but don’t forget the rules of business in doing so.
Rules of the Game: What every Engineer, Scientist, and Inventor should know about the Patent Reform Bill
On Friday, September 16th, 2011 President Obama signed into law the America Invents Act (hereafter AIA, full text here: pdf of AIA).
The AIA has had no shortage of both backers and detractors that have each said that it would be either the panacea or poison for American innovation. Regardless of where your own opinion falls as to the AIA, the bill and its changes are now set to become a very real part of the technology development landscape in America.
This article will be published in four weekly installments. In each installment, I will examine how the AIA changes four key areas of the patent process for engineers, scientists, and inventors.
⢠Part 1: Patent Filing Dates and Deadlines
⢠Part 2: What content needs to be included in a Patent Application, New Mechanisms for Challenging Patents
⢠Part 3: How products protected by patents should be marked, New mechanisms for Enforcing Patents
⢠Part 4: Changes to Patent Fees
First To File Explained
This is one of the most talked-about and misunderstood provisions of the new law. In order to understand what it means for inventors and companies, we need to first compare the current US patent system to those in other parts of the world.
Before the AIA, standard advice to American inventors was to keep accurate, signed, and dated records of their innovations before patents were filed. The purpose of these records and notebooks was to establish, as clearly as possible, the dates on which inventions and aspects of inventions were conceived. This was because the patent laws of the United States protected the first person to invent a given technology. Further, because of this focus on inventorship, inventors in the United States were given one year from first sale, public use, or printed disclosure of an invention to file for patent protection.
Other parts of the world, notably Europe and Asia, have strict âFirst to Fileâ systems whose focus is on the act of submitting a patent application to a given patent office. There, any public use, sale, or pubic disclosure of an invention before its submission as a patent applicaiton prevents anyone, including the inventor, from pursuing patent rights.
With the coming of the AIA, the US has shifted from a First to Invent system to a First Inventor to File system. In broad terms, this means that priority of invention is given to the first inventor to file a patent application. While this sounds similar to the pure âFirst to Fileâ systems in place in other parts of the world, there are several key differences that American inventors, engineers and scientists should be aware of.
⢠The AIA maintains the US system’s focus on inventorship. Therefore, in order to receive a patent one must have still have been the actual inventor.
⢠The AIA shifts the date of priority for US patent rights to the date on which the inventor first filed a Patent Application.
⢠Under the AIA, American inventors no longer have a one year grace period during which to file a patent application after public use or sale of inventions, bringing US laws largely into line with the rest of the world.
⢠The AIA creates a one year grace period after publication of the invention by the inventor within which he can file for patent protection.
To illustrate the different patent systems and how they would play out in Europe compared to America before and after the AIA, let’s use a fictional example under the following timetable:
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June: David invents a novel device for time travel.
July: David publishes an article describing the device in the Annuls of Time Travel.
August: Another inventor, Rob, working independently from David, also invents a similar device for time travel and immediately files for a patent.
September: David files for patent protection.
So what would happen under the different systems?
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Pure First to File (Europe, Asia, Canada): Both David and Rob are precluded from getting a patent because David published his article before either filing.
First to Invent (United States before the AIA): Rob’s patent is barred by David’s invention in June.
First Inventor to File (United States under the AIA): Rob’s patent is barred by David’s publication in July.
So what has changed about how inventors publish, sell, and patent their innovations?
1. When to File
Even before the AIA, American inventors interested in securing rights in Europe, Asia, and South America had to be weary of publishing or selling their inventions before making filings with a respective patent office. This is double true now that America has aligned itself with the rest of the world by barring applications on inventions that were sold, publicly used, or disclosed before an invention’s filing date.
In order to help alleviate the added cost of these filings, the AIA includes new fee guidelines which will be discussed in the fourth installment of this article.
2. When to Publish
As shown in the example above, an inventor’s own publication of the invention gives him one year within which to file for patent protection. While this may seem like a cheaper, quicker way to prevent others from filing patent applications, several considerable caveats apply:
a. Publishing about a Invention before filing an application bars an inventor from pursuing rights in countries with pure first-to-file systems.
b. Publications prepared by non-attorneys often contain enough information to render an invention obvious and therefor bar patentability without having enough detail to secure patent rights. As before the AIA, your best bet is to have an attorney review a publication before it goes out.
c. If you’ve gone so far as to have you publication checked and edited by an attorney, you should be filing a provisional application as it will not preclude rights in the rest of the world.
3. When to Sell or Publicly Use
In the past, many inventors have delayed the patent process in favor of first generating revenue or buzz around a product. Once the AIA comes into effect in 2013, such actions would preclude patent rights.
Even before the AIA comes into effect however, inventors are cautioned that a delay in submitting a patent application will often result in precluding patent rights in Europe, Asia, and Canada.
4. Lab Notebooks and Invention Records
While many have understood the above changes to mean that the days of lab notebooks and invention disclosures are gone, the answer as to how the AIA will affect innovation record-keeping in America is much more nuanced.
While the AIA has largely obviated the question of âwhenâ an invention was conceived for the purposes of patenting, âwhoâ invented, in what order, and under what circumstances remain important inquiries for the patent system, many universities, tort liability, and regulatory bodies like the FDA. Consequently, inventors are strongly advised to continue, as taught, to maintain accurate records of their labors.
While some of the changes covered in later installments take effect immediately, the AIA sections described in this article will take effect in March of 2013.
Next week: What content needs to be included in a Patent Application, New mechanisms for challenging patent validity.
Slowing Global Economy
Carlton Hoyt
You see it on the television, you read it in the newspapers – the global economy is slowing. The IMF has cut GDP estimates for the world as a whole to 4.0%, highlights the threat of renewed recession in the US and EU, has curbed estimates on China slightly, and projects a sharp drop-off in India’s economic growth compared to last year. Other economies are projected to show sharply weaker growth as well. Huge public debts also threaten austerity in major economies. All in all, the global economy is in a very precarious position … but what does that mean for you, the manufacturers and distributors of life science research tools?
Overall, the global life sciences research market will likely contract, and we are already seeing supporting evidence of such. The proposed 2012 NIH budget is trimmed by a modest 0.6%. I expect European and Japanese life science R&D spending to be trimmed by a similar amount. While many developed economies are struggling with debt, investments in research don’t seem to be high-priority chopping block items. What about the massive $100bn+ pharmaceutical and biotech research and development budgets? Well, while one may reasonably postulate that people in developed economies are losing their health care along with their jobs and this would lead to falling revenues, that does not seem to be the case. In fact, the largest threat to pharma / biotech seems to be generics, but even then global sales growth is still projected to be positive, albeit diminished. That being the case, don’t expect private-sector R&D to grow, but it shouldn’t shrink either. Overall, we will likely see only a very modest contraction in overall life science R&D spending. That’s good news.
The bad news is that this cuts the “growth” out of the market, although this is worse news if you’re a large company or an established player in your market segment. These companies rely more on growth in the market in order to grow themselves (at least organically), and companies with a high market share or those that have seen their market share plateau are more likely to see a sales contraction from a contraction in global life science R&D funding. Smaller companies that have plateaued will need to assess their technology and competencies in order to develop plans for value-added innovation in current markets and / or expansion into new markets in order to sustain growth, or else they will simply contract with the market. Larger companies with more cash will likely use M&A to achieve growth. Look for them to acquire early-stage companies with very promising high-impact technologies as well as established small-to-mid size companies that have high-quality product lines that are complimentary to their own.
Contrary to general consumer behavior, we are unlikely to see a move to lower-cost products within the research tools market. Less research funding generally means less labs or smaller labs, not across-the-board cuts in funding to all labs. In other words, the dollars spent per researcher will likely be roughly the same, but the overall number of researchers will decrease, spreading the contractile pressure fairly evenly across all laboratory products instead of driving researchers to lower-cost products. Practically speaking, this means that manufacturers and distributors who sell products that compete on price will feel the squeeze just as bad, if not worse since many of these “generic” or “commodity” type manufacturers do not have the technology and R&D capability to expand into new markets. As these companies have thin margins and already focus on efficiency, thereby not leaving much more room to squeeze out additional efficiency, they will feel the pain of any contraction quite acutely if they haven’t been saving cash.
On the other hand, small and mid-size companies that rely more heavily on technology adoption for growth will likely still have strong performance, as companies will still want to put their research dollars into tools that make research faster, better, and easier. These companies don’t rely so much on market growth since they are, in effect, building sub-markets and carving out new space. While their effective “ceiling” may be decreased, this will likely affect them only minimally since they are still in the growth phase and have not come close to reaching their maximum potential. One exception to this could be those companies that manufacture high-value capital equipment that is most often purchased to upgrade from an older instrument and / or technology. Look for sales in these products to decline somewhat as organizations look to decrease their R&D overhead by decreasing funding to core facilities and putting off large, non-critical purchases. With few exceptions, however, scientists will continue to adopt new technologies.
Another way a contraction will affect the life science research tools market is by decreasing marketing ROI. With an overall decrease in spending, there will be more marketing dollars chasing fewer customers, so marketing ROI will likely decrease by a few percentage points, especially since new players in the market will likely continue to enter given its size and comparative stability, and also to seize opportunities created by new technologies. While sales forces can shrink to demand, the channels through which marketers need to reach customers do not shrink, and this puts a fairly strict limit on how much a marketing budget can contract without negatively affecting sales.
A contracting global economy certainly will not effect the research products markets as much as it will the consumer markets, and this is very good news for those in the space and for the future of biomedical research a a whole. Nevertheless, any slowing or contraction presents risks. By understanding the situation and the likelihood of future possibilities and preparing for what may lie ahead, life science companies can plan for and mitigate those risks to help ensure continued success.