strategy | BioBM

Shift From a Product Focus

Carlton Hoyt 4:13 pm , August 14, 2014

Most life science companies still have a product focus, and many can get away with it because our industry, along with many other B2B industries, is a bit behind the marketing curve. Many companies place a very high priority on operational efficiency and building better products. Those things are undeniably important, but in many circumstances they’re not sufficient for winning markets anymore. There are plenty of products which were incremental improvements, or even significant improvements, and were offered at equal or lower products than their mainstream competitors but still failed. While there are many ways to fail in marketing a product, one of the largest is marketing a product. (Yes, you read that correctly.)

If You’re Only Marketing Products, You’re Doing It Wrong

Lets think about scientists for a minute. What are their goals? Maybe they’re trying to discover the next big drug. Maybe they’re trying to understand some burning scientific question. Whatever their goals are we can be reasonably certain that they are not to purchase “X” type of product. The need for a product is a low-order need. The experiment that the product will be used in is even a subordinate need to the ultimate goal. The point is that your product is relatively far from the thing that the scientist really cares about. Yet life science companies are trying to create competitive advantage in a manner which is almost entirely product-centric. That doesn’t make any sense.

We’ve seen symptoms of this shift from product to customer for a while. Personalization, for instance, tries to provide value by making the customer’s decision easier. Content marketing, when done well, tries to arm customers with knowledge. Companies are, whether conscious of it or not, being pulled into a more customer-centric viewpoint. But being pulled behind your competitors doesn’t create sustainable competitive advantage.

For a long time, companies looking to innovate would ask themselves “What else can we make and sell?” The question that you need to shift yourself to asking is “How can we provide value to our customers?”

Making the Shift

The most central facet of a customer-centric shift, especially since we are still talking about marketing products, is framing the product according to the needs of the customer. By that, I don’t just mean focusing broadly on customer needs, but rather focusing on specific customer segments’ purchase criteria and your products’ position relative to them. You don’t need to have a better, faster, or smarter product than your competitors. You need to have a product which more closely aligns with the needs of a specific customer. A Tesla is not claiming to be better than a Cadillac. They are simply meant for different audiences, and each segment is loyal to their brand in part because the brand focuses on their particular needs and desires (even if these desires are situational and therefore subject to change).

Think about how you can leverage network effects to your advantage. Most people think about customer data in the light of providing personalized promotions, knowing what company-created content to send to whom, or understanding a users’ purchase history. Get past that. Think about what information your customers have to share with each other and how you can help spread that information. This can be as complex as community-building or as simple as curating customers’ questions. Whatever the implementation, this information creates advantage over those who cannot provide such value. Network effects build on themselves and can be difficult to replicate.

On a non-product level, don’t forget to consider the brand advantages which drive scientists to your products in the long-term. Creating superior experiences for your customers imparts brand advantage for your company that manifest in improved customer acquisition and loyalty.

Innovation doesn’t necessarily mean product innovation, and customers are no longer making purchasing decisions solely based on the features of the product. Product-based advantages are becoming ever more tenuous, and competing effectively and creating sustainable advantage requires shifting focus to the customers. Provide superior value to them based on an understanding of their needs, and you’ll win their business.

"Looking for more effective ways to earn the business of your target scientists? There are plenty of opportunities waiting to be seized. Contact BioBM and we’ll uncover those opportunities and help you execute strategies to capitalize on them, grow your market share, and create sustainable advantage for your life science company. Tell us your challenges."

Find Positioning Opportunities

Carlton Hoyt 10:18 am , April 19, 2013

Attribute analysis can be used to help identify positioning opportunities Your life science company could have a stellar new product or a unique new service. It could be wonderfully differentiated and offer your customers a unique value. If you fail to effectively communicate that differentiation and value, however, than your marketing is still going to flop.

As we’ve discussed before, life science marketers often resort to facile claims to describe their products, and in most cases that not only leads to messages that are devoid of real meaning but also leads to messages that are not unique or differentiated. Even when meaningful claims are made, competing products / services tend to describe themselves in the same ways, using similar attributes. Your product may be differentiated, but if your messages are largely the same then how can scientists tell that your product is better than the competition? They can’t, which is why it is so important to not only differentiate your product, but convey a unique positioning in your marketing message as well.

One of the best and easiest ways to make sure that your positioning and value claims are unique is to perform an attribute analysis. An attribute analysis is a market research technique that determines how competing products / services are outwardly positioned* by looking at their marketing communications and seeing how they are defined.

To perform an attribute analysis, first list all the competing products or services and collect references which you will use for the attribute analysis. Webpages and pdf brochures are generally the best options in terms of content and accessibility, however product manuals and other more technical documentation may be used, as may marketing materials that are generally less accessible such as webinars or email blasts. Have at least two references for each product whenever possible, although more is better. Secondly, collect all the attributes that are used for each product. Note that attributes should be counted – you want to know how many times each attribute is used rather than simply if it is used. Attributes can include descriptive terms, features and specifications. The list of attributes can easily become larger than is valuable, so basketing similar terms is recommended (for a basic example, “fast” “rapid” and “quickly” could all be basketed under one attribute, and you could assign ranges for specifications such as “read lengths between 200 and 300 base pairs”) as is ignoring unimportant specifications or features (example: for many products, few people may care about weight). Once attributes are counted, you can group them into categories as well. You then have laid out in front of you a numeric map (or a visual map, if you plot the attributes) of the positioning of competing products and services. The data can be analyzed in various ways.

Having performed the attribute analysis, you will be able to see what claims are commonly used and which are uncommonly used. You can combined this with market knowledge of scientist needs to find positioning opportunities; positions that align with customer needs but which are not used by competitors.

*I use the term “outwardly positioned” because many companies do not have their positioning formalized or do not effectively translate their positioning into effective marketing messages. This erroneously leads to different outward and inward positions, where the company believes the product has a certain positioning but the positioning communicated through its marketing is different. You could also call these externally-facing and internally-facing positions.

"Ever felt like you’re having difficulty communicating the true value of your products to your target market? An ineffective positioning could be the root cause. Combining our demonstrated market research expertise and deep industry knowledge with marketing skill and communications acumen, BioBM can help you define a position and communicate value to your audiences in a way that transforms your demand generation. Contact BioBM, ask us any questions you may have, and set yourself on a path to more successful marketing."

Strategy Before Action

Carlton Hoyt 7:58 am , June 28, 2012

At BioBM, we interact with a lot of start-ups. Most often these start-ups consist of a team of scientists and / or engineers, sometimes with little to no start-up experience on the team. Marketing experience is often lacking entirely. Because of this, we run into the same problem over and over – young, ambitious companies who, knowingly or not, wager their success by putting action before strategy.

Having a great product or service is the #1 factor in a young company’s success. You’ll never catch me saying otherwise. However, a great product alone isn’t sufficient to be successful. By rushing to market without thinking strategically about anything other than product development and prior to having strategy-backed plans in place for marketing, sales / distribution, support, and a multitude of other factors is, plain and simple, a bad idea. You are very unlikely to hit your target if you’re shooting blind, regardless of how big your gun is.

Furthermore, there is often an assumption among scientists that their experience in the field makes them sufficiently knowledgeable about the needs of the marketplace that little to no outside information is necessary. While experience being a member of a market certainly conveys some knowledge about the broader marketplace, and if you were to ask one person to explain a market in great detail it would naturally be someone within that market, it should never be assumed that this knowledge is sufficiently accurate. Start-ups should never rely solely on their own opinions and views for the same reason that you would never want to do a market research study with only a small handful of individuals. Opinions and perceptions vary. Just like anyone else, scientists are perfectly capable of being biased by their own opinions. As the saying goes, the plural of anecdote is not data.

Companies would be far better served by doing their homework. The time and resources required to properly strategize and plan should be incorporated into the estimates of start-up costs (not to mention the costs of initial marketing campaigns, which are again frequently underestimated or overlooked by individuals with little or no functional expertise in marketing) and resourced appropriately. The product(s) may be the heart of your company, but a heart alone doesn’t sustain life. If you want to ensure that you’ll be successful, make sure you have all the other pieces in place before you rush to market.

"Are you a young company developing a life science tool or service? Maximize your chances of success by working with the right experts from the beginning. Call BioBM Consulting before you have a market-ready product. Our life science strategy experts will ensure that when your product is market-ready, so are the rest of your capabilities. You develop great products, now let BioBM develop you a great company."

Blog / Marketing Strategy 7:58 am , June 28, 2012

The Sequester & The Life Sciences

Carlton Hoyt 9:28 am , December 6, 2011

Life science tools companies face financial challenges because of government budget problems. 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.

"Is your strategy in order to account for decreases in research spending? How will you remain profitable if things indeed take a turn for the worse? Stop worrying and start planning. BioBM can help you define strategies and create plans that will help ensure your business survives and thrives even in the bad times. Get in touch – we’re looking forward to helping you out."

Blog / Marketing Strategy 9:28 am , December 6, 2011

Can Distribution be Optimized?

Carlton Hoyt 9:53 am , December 27, 2010

A key to the success of many small bioscience products companies is the creation and maintenance of an effective global network of distributors (or dealers / resellers). Ensuring that you get the most out of your distribution network, however, is not a simple task. There is no formula to follow. It must take into consideration the changing competitive landscape, both among distributors and among competing products. It involves active relationship management. It needs to take into account marketing strategies and product positioning. It requires diligent contract negotiation to establish mutually favorable terms and provide a framework for a win-win outcome. It requires planning, preparation, and needs to be frequently revisited to ensure that goals are being met and proper analysis when they are not to determine the causes. Establishing and maintaining a distribution network can indeed be a daunting task, but the rewards are great when done properly. In this post, I’ll go over the most common issue that comes up when determining distribution strategy – coverage. Is it better to have one distributor in any given territory or as many as possible, such that life science researchers can get your products just about anywhere? This question alone has a highly multi-faceted answer.

Exclusivity vs. Availability

There is an opposing force of sorts when it comes to distribution. You want your distributors to put forth a good marketing and sales effort. At the same time, you want your product to be readily available to end users. This is a conflicting position, as maximizing the availability of your product means maximizing the number of sales channels that offer your product. On the other hand, if everyone offers your product, distributors will be hesitant to market your product since their marketing dollars are not guaranteed to have a return if customers can purchase your product anywhere. Balancing these two needs requires strategic planning, however the nature of the product can guide your decision-making somewhat.

Generally, more coverage is good for a product that may be somewhat universal, has a market leadership position or strong brand recognition, has an extremely short sales cycle, and does not require much effort to sell. If customers are more often than not going to be seeking out your product, you want to make it very easily available to them. Let us take a quick look at a company and product line that has such a strategy – Scientific Industries and their Vortex Genies. The Vortex Genies are a very popular line of vortexers, and the line is highly recognized among life science researchers. Distributors know that their products are going to sell reasonably well, and many distributors are willing to compete for a share of the large volume of sales. As is common with a simple and low-cost product, they know that the product will take little or no sales effort – they simply need to let the lab managers or other purchasers know that they carry the line. Scientific Industries is therefore better served by having a lot of overlap in their distribution network.

Now let’s look at a company and product that is in a much different position – Zellwerk and the Z RP tissue culture bioreactor. The Z RP bioreactor is a highly technologically complex and very expensive product that serves a niche market. It presumably takes a considerable amount of effort to sell and probably has a very long sales cycle. With this kind of a product, it is important that distributors know that their efforts in sales and marketing will be rewarded. No distributor will want to put forth the marketing expenditures, hours upon hours of customer interaction, and other necessary time and costs if they know that the customer can just turn around and buy the product from someone else who offered to undercut them on price. The way to reassure your distributors that they will indeed be rewarded for their efforts is with exclusivity in their territory (note that exclusivity need not necessarily be contractual, however this will not be discussed here since it’s a bit off-topic). Zellwerk should be working with one or few select organizations in any given territory, and these organizations should have a strong competency in tissue culture.

OEM / Private-Label

Products that are sold under OEM or private-label agreements are another potential challenge. These agreements can be very lucrative, however they can also take away control of the distribution of the product from both the manufacturer and the private labeler, as they will likely each have their own distribution networks for the product. While in many instances an OEM or private-label agreement is lucrative enough to be worth it regardless of the distribution issues it creates, the benefit should ideally be assured via favorable contract terms and frank discussion between both companies.

Direct Sales & Other Considerations

Another important issue when thinking about distribution is whether your company offers direct sales. Direct sales are a great high-margin revenue source, and a company can often achieve greater sales and a greater market share in it’s home market when marketing and inside sales are performed in-house. This, however, creates another conflict since distributors will not want to have competition from the manufacturer. Dealing with this issue can be complex, and solutions are not necessarily simple, but it is an issue that can be dealt with to mutual benefit.

There are a host of other, less common issues that can effect distribution coverage strategy that undoubtedly arise due to each company’s unique situation. Recognizing and dealing with these issues is key to maximizing global sales and achieving beneficial, long-term distributor relationships.

"Does your small life science company want to improve it’s distribution network? Are you experiencing problems with under-performing distributors or manufacturer’s representatives? Do you want to hone your distribution strategy to ensure the establishment and maintenance of a lucrative network of resellers? BioBM has deep expertise in business development and both domestic and international distribution. Talk to us to see how we can help you meet your distribution and global sales goals."

Disclaimer

As of the time of posting, BioBM Consulting has no relationship with any company mentioned in this post.

Don’t Get Left Behind

Carlton Hoyt 5:37 pm , October 14, 2010

Taking a pragmatic view on the state of the economy, it’s fairly easy to see that the road to recovery will very likely be a long one. Governments are in huge amounts of debt, and the “great recession” has been especially hard on small businesses, yet we see the stock markets going back up; the Dow is almost to 11,100 as I write this. Why do things feel so bad but look so good for big businesses? A lot of it isn’t due to revenue growth – global demand is still anemic. A lot of it is due to cost cutting to improve bottom lines which have left many large companies with very positive balance sheets. Now, having likely seen the worst of the recession and being in a strong financial position, large companies are starting to reinvest in anticipation of future demand growth.

How does this effect you?

Well, if you are a small or start-up company, chances are you’re still hurting. You probably couldn’t easily cut personnel and costs as the large companies have. You also may not have the stockpile of cash to resume hiring in preparation for renewed demand or may not want to hire because of uncertainties about future revenues. Therein lies a problem. How will your company compete when the large companies are getting a head-start?

The answer: by not letting them. Easier said than done? Maybe not.

For a start-up or small company, even hiring one person can be a huge investment and a very significant increase in overhead, yet you will need the additional capabilities to ramp up your marketing, business development, and other efforts to position yourself for increasing future demand. This can be done by “virtually” increasing your human resources and capabilities through strategic outsourcing. By partnering with a skilled service provider, you can execute projects faster and / or sooner, prevent schedule overruns, and effectively increase your available competencies. It also often allows you to increase or decrease your effective workforce size at will.

"If you would like to explore how BioBM Consulting can help your organization respond to marketing, business, or web needs through strategic outsourcing, please feel free to look at some of our available services or contact us to talk about how BioBM can help you prepare for increasing demand and effectively compete with your larger competitors."

Blog / Marketing Strategy 5:37 pm , October 14, 2010