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GfK HealthCare | December 2011 | |
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Medical Device Pricing and Forecasting Require an Artist-Scientist  By Bob Rava, Senior Vice President The value of the strategic, insightful medical device marketing researcher can best be described as an “artist-scientist.” Wikipedia explains the term as “an abstraction of life and the human mind. While never as common as archetypes like the child or the hero, the artist-scientist is immediately recognizable. The artist-scientist is a builder, an inventor, a seeker, a dreamer and a thinker...” Those marketing researchers who are able to develop the creativity of Leonardo da Vinci, combined with the technical genius of Albert Einstein, are appreciated and revered by their business leaders. Sometimes we are handed art supplies and asked to paint a picture of the markets our organizations sell into, and with that picture scientifically build the final report or assessment to be used as a critical source for a financial decision. Sometimes it is the reverse, and we are asked to use all our scientific and technical knowledge about the market to create an artistic picture that will influence the decision about a product or medical device.  For instance, contemplate what you think about when your executive management asks for the critical forecasting analysis or “the pricing study.” You ponder the pricing and forecasting methods, the techniques, the simple and advanced analysis, and the illustrations. You consider the devices or the products and the respective users, caretakers, financial and clinical influencers, external forces and internal dominators. Then you put all the pieces together onto the artistic canvas and paint a picture of the recommended price, a range of forecasting possibilities, a choice model optimum number and many times a few crossing lines of van Westendorp. Most forecasting and pricing studies should be kept as simple as possible, yet it is also necessary to assess and analyze as many complicated factors as possible in the medical device world in order to have all the correct tools to paint the most accurate picture for your client. Perfect Product and Environment ‘Artistically’ Portrayed You may have to approach a project with an artist’s eye, starting with the picture. A good way to get the artistic juices flowing is to imagine the “perfect product.” Then work your way back from this ideal; reverse-engineer your advanced analytical research study and decide what price is unrealistic or what share you will unlikely gain. The end result is a modified, more realistic picture – a true combination of artist-scientist.  For example, what are the factors which would allow you to have an asking price at its highest levels? Imagine a product that satisfies ALL of the value proposition needs, as well as answers ALL of the key questions at the optimum level. Then, as a scientist of marketing research, think through the drivers, barriers, value propositions and influencers of the product’s price. Discuss the factors that influence change among the users. Decide how this product fulfills the needs of the market and provides the intangibles, such as:
Through the plethora of advanced analytical methods, the modeling can be developed to assess the value of product factors, stakeholder influence level, internal and external drivers and barriers, as well as return on investment for sales and marketing. As you begin to think about the influencers that have an effect on product usage, such as those illustrated in the table below, you need to consider these factors along with the attractiveness of the device.  The challenge for the artist-scientist has always been and will continue to be understanding how to balance the various influencers. We all know the surgeon and the hospital administration are influenced by quite different drivers; therefore, given the same perfect product, they will see the value of adoption differently:  As you develop these analyses, you need to keep all the internal departmental experts informed (i.e., marketing, sales, research and development, new product, and contracting). Each department will want to know, “What does your data say about my customer?”  Given the numerous outside forces such as the economic and regulatory environments, competing technologies, reimbursement laws, the individual hospital experiences and the governmental influence, your results need to be illustrated in a way that convinces the internal audience that you have considered the “most likely” future. Of course, the future truly has no likely prediction, but do your best to debate, discuss and decide what the outside environment of the future will include. Final Analysis “builder, an inventor, a seeker, a dreamer, and a thinker…” The ultimate “Catch-22” market research quote by Joseph Heller, U.S. novelist and satirist, states, “People in the Market Research Department... are not expected to change reality but merely to find it, if they can, and suggest ingenious ways of disguising it.”  Now that the advanced “scientific” analysis is created using the most available and relevant data/knowledge, based on the most likely future of the influential outside forces that can be “artistically” developed, you are ready to paint the future of your device or product, including all the possible influencers, tied into one insightful and thoughtful pricing and adoption recommendation. The process-oriented research leader will gather the internal experts, portray the advanced analytics and provide the final story through an artistic view. (And don't forget the storytelling of Dr. Seuss, but that’s next year’s article!) |
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