Introduction:

Pfizer had a great run as a high selling drug company globally during the 90’s.

They had a huge market share and a sales force of 38,000 representatives and sky

high were their ad expenses and remunerations. Gone are the days of their golden

era, as the blockbuster model of mass marketing strategy which worked till now is no

more effective. There is a sense of acceptance of resurgence going within the

organization. The time has come for reworking the strategies, facing challenges and

having a look inside the organization.

Market Segmentation – Its guidance to Pfizer’s huge sales force:

We will first look at the nature of market of Pfizer before defining market

segmentation. The market of Pfizer can be considered partly as a business and

partly as a consumer market. It is consumer market in a sense that they make direct

advertisements to consumers creating a brand image and the drugs which are taken

without prescription are sold by this communication. It is a business market in a

sense that the drugs sold by prescription are to be marketed to medical practitioners

and the business relation is the key to successful selling.

According to Jobber (2004, p210), market segmentation can be termed as a

process of identification of consumers and organisations having similar set of

characteristics which derive significant implications for deciding the marketing

strategy. In simple words of Weinsten (2004, p4) it is a managerial practice of

“partitioning markets into groups of potential customers with similar needs and/or

characteristics who are likely to exhibit similar purchase behaviour.”

Pfizer had a mass market approach and they spent a huge amount in

advertisements, lavish expenses of sales force’s allowances and administrative

expenses. Referring to Doyle (1998, p19) their economic success was mainly

dependent on the market penetration strategy which is the least risk involving

strategy and their business was stuck on existing products and markets and they

aimed to grow through gaining market share. This is implied through the fact that out

of the $52 billion sales in 2004, $24 billion sale was from their top five drugs which is

MKT 4001 : Contemporary Marketing Strategy

Portfolio Individual task based on the article:

“Pfizer’s Funk”.

a hefty ratio. This can be potentially threatening situation as seize in sales of any one

of the huge drug can drastically affect the productivity. One such market incident was

the quarrelsome hearings for painkiller drugs like Celebrex and Bextra by the Food

and Drug Administration, which revealed the linkage of these drugs with

cardiovascular problems. Segmentation gives an opportunity to consider number of

criteria, or levels giving a highly fine tuned market analysis according to LaPlaca

(cited in Palmer R.A. and Millier P., 2004, p 779-785). As informed by McKinnell, the

invention of drugs for complex and untreated segments like anti-smoking and cancer

drugs presents them with opportunity to cater these kind of small but descent

markets. It is recognised that they will require more sophisticated marketing practice

from the sales reps and so the teams will be highly trained and segment targeted in

nature. It leads to the derivation of a conclusion that the future will have less of drugs

selling in $1 billion plus range and the portfolio will have drugs targeting greater

number of small markets. This is in conjunction with the fact that market

segmentation makes an organisation more market oriented and the organization

behaves according to the needs of market. So planning and practicing market

segmentation exploits some areas within the organization and gives guidelines for

the sales force and their efforts will tend to be better target and will reward better

than wavered efforts.

Pfizer’s targeting and positioning strategies:

In a marketing strategy after segmentation of the market the next step is

selection of segments which it aims to target (Doyle, 1998, p 75) and selecting one

or more segments as a focus for the company’s offering or communications is

defined as targeting by Jobber (2004). During the decline year of 2005 McKinnell

gave indication that there are many untreated diseases and they do present

opportunity as futures new markets. The anti smoking drug and cancer drugs are in

development for untreated diseases segment which will be small in size and

complex. Over a dozen new drug applications are in pipeline and will target such

niche markets. They will also be targeting the segment of heart disease patients by

probably introducing a combo pill of their existing huge Lipitor and a compound

named torcetrapib. This is more of a product development strategy and will be

confined to same market and they also need to win the patent challenge with

Ranbaxy to make this strategy a reality in 2008. There are new medical advances in

oncology, ophthalmology and virology which have customised treatments and will

require targeted niche marketing. Viagra and similar tablets of other companies after

the initial hype showed moderate results due to certain factors. But now when the

level of expectation is realistic, Pfizer still aims men as their target through TV ads.

Positioning can be considered as the face of the business strategy. It

specifies how the business aspires to be perceived relative to its competitors and

markets (Aaker and McLoughlin 2006, p225). It is done in selected target segment in

a manner that displays its differential advantages. Pfizer until now had positioned

itself as a mass market capturing company with little emphasis on smaller and

complex segments. It is now moving towards the position of a brand that had a

specific marketing mix for communicating to a targeted niche segment. Pfizer looks

to cut on repetitive pitches presented to doctors and avoid facing resistance from

them. They also want to communicate the realistic image their products showing

possible side effects of drug consumption which was missing until now. There are

certainly some indications in above two paragraphs which highlight the fact that

changes are required and they are actually working on it. Some are being made and

some still need to be made.

Required changes in structure of organisation and their implementations:

The organisational structure of Pfizer is in top-down hierarchy and consists of

a huge sales force of 38,000 representatives at the base who do trip over each other

frequently, which suggests that it tends to be overly marketing oriented organisation.

Their advertisement spends fortify this assumption. It is centralised and the top

management has the major share of decision making power. According to Colombo

and Delmastro (2002) the firms prefer to stay with their structure unless abnormally

poor performance triggers a change. The same has been the case with Pfizer as

realised by McKinnell. There are signs and acceptance of change in the marketing

strategies like segmentation, targeting and positioning. It is interesting to take a note

of various literatures that say that strategies take direct derivations from the structure

and the type of structure affects the selection of strategies (Freidrickson, 1986).

Based on these theories we can say that they now require radical changes and

much of a change in their organisational structure.

It requires bottom-up approach where the power of decision is effectively at

the levels where the problems arise instead of decision coming from a point far away

from the problem. A simpler structure would help eliminate some of the cost and

inertia of the head office bureaucracies (Grant, 2010, p 218). As they want to move

towards becoming a company having a diverse portfolio of products which require

better targeted strategies, decentralization can be very useful. They should start

pushing a structure in which teams are focused on a targeted disease category and

look forward to create a series of smaller and more focused businesses. This can be

effectively done through lay out of a matrix structure which allows teams of specialist

departments having enough strength for achieving a set objective (The Association

of Business Executives, 2007).

References:

Aaker D. and McLoughlin D. (2007). Strategic Market Management. (European

edition). Sussex, UK: John Wiley and Sons Ltd.

Barrett A. (2005). “Pfizer’s Funk”. Business Week. 28 February, p72-82.

Colombo M. and Delmastro M. (2002). “Organizational Change and Structural

Inertia”. Journal of Economics & Management Strategy, Volume 11, Number 4,

p595–635.

Doyle P. (1998). Marketing Management and Strategy. (2nd edition). UK: Prentice

Hall.

Fredrickson J. (1986). “The Strategic Decision Process and Organizational

Structure”. Academy of Management Review., Volume. 11, Number. 2, p280-297.

Grant R. (2010). Contemporary Strategy Analysis. (7th Edition). Sussex, UK: John

Wiley and Sons Ltd.

Jobber D. (2004). Principles and Practice of Marketing. (4th edition). Berkshire, UK:

McGraw-Hill.

Palmer R.A. and Millier P. (2004). “Segmentation : Identification, intuition and

implementation”. Industrial Marketing Management., 33 , p779-82.

Winsten A. (2004). The Handbook of Market Segmentation. (3th edition).

Binghamton, NY: The Haworth Press.

(2007). “Organisational Structure and Design”. in Management Organisational.

London, UK.: The Association of Business Executives, p91-131.