Reorientation of business model for growth

Business owners often grapple with several questions. A few crucial ones include

• Whether to develop a strategy through regular discussions or by using a systematic, data-driven process.

• Is it necessary to have a multitude of options before selecting a single strategy?

Some time ago, we had the chance to collaborate with a renowned multinational corporation (MNC) in the pharmaceutical industry on a project aimed at developing a strategic roadmap for a recently reconstructed division. This said division encompassed a therapy area that is both highly critical and relatively low in the population's consciousness.

Rx drove the business to some extent, but consumer advertising governed it primarily. With a large part of OTC products (this is precisely what happens when awareness is poor and when consumer ad influence is very high), one significant strength of the business unit was its backing by high company equity. 

In the market, a few large local firms dominated, creating an oligopolistic scenario. They had already established significant brand equity, and a market study showed that they had made significant investments in their field force, both in terms of number and visits, as well as A&P. Some firms even established multiple divisions within the space. Despite being on the market for a few years and building a strong customer base through company equity, the division was unable to establish a significant presence. Managers believed their role as an MNC restricted them from engaging in a broad spectrum of activities compared to their competitors.

Green Bark was asked to answer the following questions:

• To chart out the growth path, with the horizon being immediate and long-haul, without reducing the value of old, giant brands.

• How should one compete with local giants while adhering to an MNC's recommended practice?

• Clearly establish a differentiator that could be leveraged to compete with major local players.

We studied in depth to understand the marketing paradigm and the operational nuances of the company, conducting critical analysis of each brand of the business unit, their strengths and buildup, the evolution of the market, the application of scientific details, their competitive acumen, field force discipline and effectiveness, the revenue and profit structure of the business unit, and more.

We even conducted a study to understand the key areas to focus on, based on current (then) market trends, recent product launches, and the future of the specialty (new practices, treatment options, technology, and behavioral shifts) validated by top KOLs in the specialty.

What emerged were three strategic options tailored to the business' unique strengths. None of the three options proposed any increase in field force or marketing spend. (except inflationary increase); thus, the solution was designed to deliver a more lucrative business outcome through only structural changes.

1. The ‘one product basket’ approach.
   

   • Assuming the company will continue on its current trajectory, managing different products under the same team.
     

   • The growth of this model is assumed to be driven by (1) sales force productivity, (2) higher investment in focus brands, (3) price increases, and (4) very few selected new product launches.
     

2. The ‘enhanced focus’ approach (in Hi-Potential markets)
   

   • Segregation of portfolios based on product potential
     

   • The growth of this model is assumed to be achieved through: (1) increased productivity from targeted high-potential customers; (2) higher investment in focus brands; (3) natural price increases; and (4) segregated portfolio expansion by launching more new products.
     

3. A modified version of ‘enhanced focus’ is applied throughout the country.

   •  A segregated portfolio throughout the country.

   • The growth model is similar to Option 2, applied across the country.

Green Bark projected sales revenue and the required marketing spend for all three options, taking into account productivity, the brand's ramp-up, the coverage frequency model for FF, and so on. Simultaneously, we also forecasted the market for the long haul. This process provided us with the opportunity to compare strategic options and recommend the best course of action for the client, considering the implementation conditions for optimal results.

Key learning : Increasing investment (sales force or marketing) is not the only way to achieve growth. Sometimes, a shift in focus is necessary to unlock new opportunities for growth. For instance, restructuring or optimizing operational and marketing efforts can significantly enhance growth.