Market Research White Paper[1]

8/2/2019 Market Research White Paper[1]

http://slidepdf.com/reader/full/market-research-white-paper1 1/7

A frequent refrain within pharmaceutical business intelligence/

market research departments these days is, “something’s gotta

give.” The typical market research department is tasked with doing

more with less at a time when market analytics are part of a

company’s “secret sauce” for competitive differentiation.

So what, exactly, can give? Many companies have tried to

offload repetitive, number-crunching projects to outsourcers

offshore as a way to save money and gain some staffing

flexibility. That solution, a form of “cost arbitrage,” does

succeed in cutting costs initially and indeed helps with

staffing for a period of time. However, it frequently offers

diminishing returns and can be fraught with problems with-

out the right oversight and project management. Besides,

the goal for market research departments is not merely to

trim the market research budget, but to add greater value

and contribute more strategically to the organization.

This paper presents a new model for partnering with

external suppliers. By partnering, business intelligence/

market research departments can serve their many internalcustomers better, with more insights, and stronger decision

support. It involves flexible structures of market research

teams over time to support commercial objectives and

working with a partner that has sufficient domain expertise

to free in-house staff to perform analyses, interpret findings,

and prepare recommendations — the higher level work that

organizations want and need to be doing.

THE MARKET RESEARCHER’S PREDICAMENT

A pharmaceutical market research department must serve

many masters: marketing, new product planning, managed

markets, sales, competitive intelligence, business development,

R&D, and medical affairs, roughly in that order of magnitude. (See Fig. 1) Juggling the needs of such an array

of internal clients requires a high degree of flexibility

because while some of the work is regularly scheduled, some

is ad hoc and must be completed at once. When business

development requests an analysis at the same time that a

weekly report is due, someone is bound to be disappointed

in the level of service they receive from the department.

Strategic Market Research: In Search of Greater Value and EfficiencyBy Mike Zubey, director and senior principal, IMS; Gavin Krumenacker, director, product & portfolio

management, IMS; Srinivas Pothukuchi, senior principal, IMS

1

Marketing

Percentage of Companies’ Functions that Provide Budget Contributions

Market Research

New Product Planning

Managed Markets

Sales

Competitive Intelligence

Business Development

R&D

Medical Affairs

0 20 40 60 80 100

86.4

54.5

31.8

18.2

18.2

18.2

13.6

13.6

9.1

FIGURE 1: FUNCTIONS THAT PROVIDE BUDGET

CONTRIBUTIONS TO MARKET RESEARCH

Source: Cutting Edge Information, 2008. Developing Integrated Market Intelligence



• Annual Forecast• Product Launch Support

• Messaging Development• Brand Planning

• Business Development

Time

Old Staffing Models

Market Demand &

Workload Variation

V a r i a b l e W o r k l o a d ( T i m e a n d R e s o u r c e s )

New Market Reality

“Trough Staffing ”

Staff completingrepetitive tasks• Brand Dashboards

• Data Management

• Secondary CI

• Promotion Tracking

Variability of Demand & Cost

It used to be that market research departments staffed for

peak demand and so could more easily cope with competing

requests. Resourcing conflicts were much less common, and

the staff was able to support special projects such as the

annual forecast, product launches, messaging development,

brand planning exercises, and business development research.

(See Fig. 2) Now, however, due to commercial cost pressures,

staffing levels are more likely to be adequate only for the

“trough” in the varying workload. The staff is consumed

with addressing recurring projects such as preparing brand

dashboards, overseeing data management, gathering secondary

competitive intelligence, and tracking promotional effec-

tiveness. Often, anything extra, untoward, or ad hoc that

comes in poses a resourcing challenge.

In a survey conducted among a slice of IMS market research

contacts, we found that over the last 18 months, 86 percent

of the respondents experienced budget reductions and more

than half experienced staff reductions. Meanwhile, they’ve

been asked to sustain the long-term competitive edge that

comes from their expertise and to serve a broader set of

stakeholders. Forty-three percent saw the number of internal

customers expand. One respondent lamented, “We are askedto do more, with fewer people and reduced budgets. The

result is very long days for everyone. I’m worried about

staff burnout.”

Through no fault of their own, then, market researchers are

not always able to deliver the kind of service their internal

customers need and expect. The result is frustration on

both ends.

THE MARKET RESEARCHER’S ROLE IS INTENSIFYING

Ironically, even though market research departments have

experienced budget and staffing cuts, the work they performis more important to a company’s success than ever. In

Competing on Analytics, Davenport and Harris assert:

“At a time when companies in many industries offer

similar products and use similar technology, distinctive

business processes count among the last remaining

points of differentiation. Many previous bases for

competition — such as geographical advantage or

protective regulation — have been eroded by

2

globalization. Proprietary technologies are rapidly

copied, and breakthrough innovations in products or

services are increasingly difficult to achieve.

That leaves three things as the basis for competition:

efficient and effective execution, smart decision

making, and the ability to wring every last drop of

value from business processes — all of which can be

gained through sophisticated use of analytics.”1

As a result of the pressures on the pharmaceutical industry

today, many market research and business analytics executives

are caught, with less than adequate staffing levels, trying to

manage a very difficult balance. The competing objectives

are, on one hand, to manage a team and its research efforts

optimally through reducing or “variabilizing” operating costs

and, on the other, to adding strategic value and perspective to

the organization.

Achieving differentiation and competitive advantage requires

a flexible operating model complemented by technology.

Differentiation and competitive advantage can also be

achieved through relationships with variable-cost partners

that can add value to both the market research teams and

their stakeholders. The way forward is less about cutting costs

than about a combined effort to increasing value and

improving efficiency.

FIGURE 2: THE CHANGED OPERATING MODEL

1Davenport, Thomas H., and Jeanne G. Harr is, Competing on Analytics: The New Science o f Winning

Boston, MA: Harvard Business School Press, 2007.



3

FIGURE 3:

STAFFING MODELS AND APPROACHES TO OUTSOURCING

How a company’s Market Research/Business Intelligence

and Marketing Support functions are set up affects how it

might best approach outsourcing. In this paper, we’ll discuss

two illustrative organizational models, which represent two

polar opposites (See Fig. 3). There are many possible

variations in between these two models.

In a pure Vertical Brand Support Model , each brand in effect

“owns” the resources that support it: brand analytics, fore-

casting, brand reporting, primary research, and secondary data

management. Whether or not companies have retained thismodel typically depends on the size of the organization,

the size and breadth of the product portfolio, and lifecycle.

Even in large organizations, this model is often employed

for leading brands.

The Vertical Brand Support Model lends itself most easily

to project-based outsourcing with subject matter experts

who support individual areas of the organization. Great

innovation can occur but often remains contained in pockets,

and broad-based resource optimization is hindered. While

individual instances of outsourcing from this model can — and do — work well, the approach becomes inefficient when

scalability is required.

In a fully Shared Services Model , the marketing and analytics

resources are pooled, with users tapping into various services

as needed. Not necessarily the more sophisticated of the

two, this model can, however, drive more efficiencies and

offer more leverage and flexibility. It also lends itself to pure

offshore outsourcing of repetitive tasks, reporting, and ad-

hoc analytics in a way that allows the company to capture

economies of scale. (However, as we will explain, outsourcing

in this fashion must be handled properly, or it will yield no

more than just the initial cost removal without adding further

value. In some cases, it can disrupt business flow and insightsdelivered to stakeholders.)

In reality, most companies implement a hybrid, combining

some of the features of each of these models to balance

franchise or therapy skills supporting the commercial teams,

and generalist analytics skills pooled to support greater

efficiency and productivity. Such hybrid models tend to be

dynamic in nature and “flex” with the changing needs of

the organization. Over time, this flexibility — given changes

in the product portfolio, competitive profiles, partner status

and many other factors — is absolutely critical to ensure

that market research/business intelligence teams deliver strategic value to their stakeholders and the organization.

Brand A

Brand Analytics

Forecasting

Brand Reporting

Primary Research

Secondary Data Mgmt

Brand B

Brand Analytics

Forecasting

Brand Reporting

Primary Research

Secondary Data Mgmt

Brand C

Brand Analytics

Forecasting

Brand Reporting

Primary Research

Secondary Data Mgmt

• Brand Analytics

• Competitive Intelligence

• Forecasting

• Brand Reporting

• Primary Research

• Secondary Data Management

Franchise Alignment

Therapy Area 1

Brand A Brand B

Therapy Area 2

Brand C Brand D

Marketing Shared Services

VERTICAL BRAND SUPPORT MODEL SHARED SERVICES MODEL



4

Which internal support structure — and hence which type

of outsourcing approach — will serve a company best

depends on a number of factors:

• The diversity of the company’s portfolio

• The number and size of products in each therapy area

• The stage that products are in their lifecycle

• The company’s growth prospects

Settling on the right organizational structure is the first

challenge that Market Research/Business Intelligence leaders

face in determining how they can serve their many internal

customers and gain the latitude to function as stronger

strategic advisors to the business.

Once clients have addressed the structure issue, thay are in

a position to address optimization through outsourcing.

COMMON PITFALLS OF OUTSOURCING

Project-based outsourcing, which has been employed for

many years, has remained partner-oriented and typically

aligned to specific decisions of a given brand team. An

example includes primary research partners that engage with

brand teams to deliver therapeutic or methodology expertise

in a particular geography. Unfortunately, the organization is

often not able to exert buying power across brands, especially

when individual internal teams — all competing to be

cutting-edge — are working with multiple vendors on

multiple initiatives. While this form of outsourcing has the

potential to add value, special care must be taken to ensure

that the organization is managing costs and realizing gains in

the aggregate. A piecemeal approach leads to inefficiencies

over time.

At the other extreme, for those tapping blended resources

in the Shared Sevices Resources Model, the beginning

attempts at outsourcing have been handled almost exclusively

from a cost-cutting perspective. Unfortunately, many

companies have failed to realize this goal because ongoing

commitment, communication, and project management are

required for the targeted savings to be achieved. Many

outsourcing solutions have gone sour because:

• Partners who lack the necessary domain expertise require a

great deal of upfront training as well as ongoing develop-

ment. Often, those employees who had been the ideal

mentors are now gone.

• Large-scale outsourcing projects require a surprising

amount of project management. Companies often

underestimate the amount of oversight time required.

• Communication difficulties due to language barriers and

time zone differences.

• If the offshore provider does not specialize in thepharmaceutical industry, market changes can leave it

“behind the curve.” As new approaches are developed or

new assets become available, the ability of the outsourcing

partner tends to rapidly decline and then rebuild more

slowly. (See Fig. 4)

All of these difficulties fall into the category of relationship

management, an area that has often been mismanaged,

downplayed, or even forgotten in the process of outsourcing,

particularly when offshore models are pursued. In Key

Lessons Learned in Offshore Outsourcing , Tandy Gold explains:

“This area is one in which even experienced large

firms often trip and fall in offshore outsourcing.

Structurally, management of vendor selection often

focuses on procurement, with the inevitable

spreadsheets of checked-off success criteria, or

through an offshore consultant specialist, who runs

interference in a similar manner, perhaps with a bit

more specialized offshore focus. Neither really gets at

the heart of the offshore vendor relationship, because

Time

P a r t n e r V a l u e

A d d

As new approaches are developed

or new assets become available,

partner ability tends to rapidly

decline then build more slowly

Ongoing Project Management

Partner Domain Expertise

APLD

Specialty

Therapy Area

FIGURE 4: TRADITIONAL OUTSOURCING PARTNER

VALUE ADD OVER TIME



in simple fact, most consulting relationships are much

less strategic in footprint. As a volume play, and with

the cost of knowledge transfer, a short-term offshore

contract doesn’t make much sense on either side —

customer or vendor. So, it is really not so much a

purchase as it is a merger, and the overriding criteria

are not so much based upon finely dissected objective

criteria, but on relationship management and similar

factors. This does not mean that the objective due

diligence does not need to be exercised — of course

it does — but that this is not the seat of decision-

making, [it’s] just the beginning.” 2

Even with an initially successful outsourcing venture, it

eventually becomes more difficult to sustain value in the

long term. IMS estimates that by focusing only on ways

to cut costs through outsourcing, companies miss out on

70-80 percent of the value to be gained from the right

arrangement with the right partner.

Indeed, many of the organizations that have tried offshore

outsourcing as a way to reduce costs are now backtracking

as models for optimal execution are still developing. They

are looking to create efficiencies and incremental bandwidththrough variable external staffing and support. Existing staff

will then be able to move away from redundant tasks toward

adding valued for a range of stakeholders. Existing market

knowledge and a long-term competitive edge should not

be lost in the transition.

THE IDEAL SOLUTION

To fully realize the benefits of outsourcing, companies need

partners that understand their markets and business models.

Outsourcing is not just about cost cutting via offshoring: It

is about extending the organization’s business edge while

gaining resource efficiency and operational capacity.

Increasingly, an overarching requirement of the ideal strategic

market research partner is that the company be able to blend

capabilities to deliver cost savings while enabling the internal

departments or teams to do more themselves. The cost savings

of business process outsourcing have been documented in

functions such as Finance, Human Resources, and IT.

Infrastructure support companies have also proven value

in process improvement and data management. The most

significant value-added benefits, however, will ultimately

come from content experts: those able to lead organizations

toward improved capabilities through commercial transfor-

mations, greater insights, faster business responsiveness, and

competitive differentiation.

With these relationships, the ideal set-up is one in which

the information and analytics partner can handle variable

demand (as is common in IT and computing). Ultimately,

the partnering organization will be able to help shift theeffort toward decision making and implementation. (See

Fig. 5) The client can spend less time collecting and piecing

together information while moving toward providing

analysis and insight.

RECOMMENDATIONS

How do you want to serve your organization? What do

you want to be? A new approach to optimizing marketing

research requires a shared vision as well as a thorough

understanding of the current state of affairs. When deter-

mining how the market research function can efficiently

and effectively deliver value to the organization, severalgoals are recommended:

1. Working with your stakeholders, create an 18- to-36-

month strategic plan for Market Research and related

functions, ensuring that what you envision will fit their

needs. (Be sure to keep in mind any known events or

possible changes or evolutions of the business that would

impact the structure.)

5

2Gold, Tandy, Key Lessons Learned in Offshore Outsourcing, Piscataway, NJ: IEEE Computer Society

Press, 4, 2010.

20%

Decision making &

pull through

30%

Analysis

50%

Collection & piecing

the information

50%

Decision making &

pull through

30%

Analysis & insight

20%

Collection & piecing

the information O p e r a t i n g

E f f e c t i v e n e s s

Standardization

Centralization

Optimization

FIGURE 5: THE SHIFT FROM COLLECTINGINFORMATION TO DECISION MAKING



2. Evaluate a strategic support model that offers the best

blend of brand-specific capability and organizational

leverage

3. Engage partners that know the industry and can deliver

value through domain expertise while also offering

scalability and the means to dr ive larger cost savings

4. Outsource to complement and extend capabilities —

not replace them

5. Manage market research functions with an integrated

services approach6. Share success and learning across the organization

A partner with industry expertise locally and globally will

eliminate the need to start at square one when anything

new hits — for instance, an issue requiring longitudinal or

specialty data or knowledge of an additional therapeutic area.

A partner with the ability to tap into resources offshore to do

repetitive work while serving as an information and analytics

consultant on-site could serve the broader strategic needs of

an organization.

RESULTS: WHAT A STRATEGIC MARKET RESEARCH

MODEL OFFERS

Through a strategic approach to market research outsourcing,

organizations can operate in a way never before possible.

The improved processes vary by company, by market, and

by the specific challenges met head on. But the new

approach could very well result in a world where:

• The department has reduced overall costs of non-core

services

• The team has delivered brand insights far beyond what

was previously achieved (for example, using patientlongitudinal analysis to drive competitive advantage)

• On an ongoing basis, you provide in-depth understanding

of emerging market dynamics plus the ability to tap

competitive briefs on target companies or therapy areas

• You’ve delivered greater consistency in information

governance, delivery, and interpretation

• The department has documented higher end-user

satisfaction

• Dashboards are run offshore so that on a Monday

morning, your local team is already at work interpreting

rather than crunching numbers — serving as true

consultants to internal stakeholders

• Your analytics team is now spending more time on

forecast commentary rather than building reports• The department has migrated to a variable cost structure

supported by offshore development and production

• Your company has met goals for significant supply chain

savings and improved KPIs

• You’ve achieved strong organizational buy-in and

satisfaction with the process and results

• Your department is known for providing strategic value

to the organization

CONCLUSIONIn a highly dynamic marketplace where the need for

differentiation grows daily, pharmaceutical companies face

pressures to optimize resources while offering increased

insight. Outsourcing routine functions has been gaining

adoption as models for optimal execution are still developing.

As you move beyond cost-cutting and straight offshoring,

taking a strategic approach to implementing a support

model that enables key internal stakeholder success and

optimizing the execution to strategic partners with strong

domain expertise will go along way to ensuring your organization’s competitive edge.l

6



10119-A

ABOUT IMS

Operating in more than 100 countries, IMS Health is the world’s

leading provider of market intelligence to the pharmaceutical and

healthcare industries. With $2.2 billion in 2009 revenue and more

than 50 years of industry experience, IMS offers leading-edge market

intelligence products and services that are integral to clients’ day-to-day

operations, including product and portfolio management capabilities;

commercial effectiveness innovations; managed care and consumer

health offerings; and consulting and services solutions that improve

productivity and the delivery of quality healthcare worldwide.

IMS HEALTH®

Plymouth Meeting Executive Campus

660 West Germantown Pike

Plymouth Meeting, PA 19462-0905

Tel: 1.610.834.5000

www.imshealth.com

©2010 IMS Health Incorporated or its affiliates. All Rights Reserved.

Documents

Market Research White Paper[1]