Using Market Development Strategies to Pave the Way for Innovation

By Mike Kuczkowski

How do organizations create a market for something that doesn’t exist yet? That’s a fundamental challenge most commercial and marketing leaders face when they prepare to launch a new, innovative product. An important pre-launch activity to prime markets for growth is a market development strategy.

Defining market development

What is market development? It’s a collection of strategies aimed at optimizing a market environment for the benefits and attributes of a product. Think of it as the yin to the yang of product marketing.

To use a simplistic analogy, a market development strategy around a new beverage might:

• Seek to establish a category for that kind of beverage
• Set standards for what can be labeled as that kind of beverage, such as where the raw materials come from/include and how it is manufactured
• Establish a trade body to certify products meet the set standards

A product marketing strategy, on the other hand, would encourage potential customers to, “Have a glass of champagne!”

There’s theory behind successful market development strategies: An appreciation that economic markets are complex adaptive systems characterized by independent agents, or “stakeholders,” acting in their own self-interest and constantly adapting to an evolving environment.

This theory of complex adaptive systems has broad implications for economics and companies. This means markets are defined by three things that are regularly evolving:

• Stakeholders
• Issues
• Stakeholders’ positions on issues

This provides a kind of structure for market development strategies. In particular, it shows how valuable it can be to help stakeholders see how it is in their interest to adapt and evolve to embrace innovation.

It helps to think about a market as an ecosystem of stakeholder interests and behaviors, some of which are codified into regulations and practices. Understanding that ecosystem, and developing approaches to evolve that ecosystem toward conditions that favor innovation is what market development is all about.

Setting new market rules through market development strategy

In general, market development strategies seek to create new rules or establish new dynamics for stakeholder behavior.

Market development may focus on inspiring potential customers to ask new questions, with the aim of having those questions be answered by the benefits and attributes of a new product. Or it can focus on structural changes in the market relating to policies, regulations and standards. Or it can be a combination of stakeholder-focused and market (issues)-focused activities.

In healthcare, for example, if accurate diagnosis is a barrier to finding the right patients for a new treatment, a market development strategy could focus on promoting a new, more accurate diagnostic tool or approach. By doing so, a manufacturer can both establish the merits of this new diagnostic tool and educate clinicians about how to use that tool to select optimal candidates for the new therapy from among their patient population.

Market development for the pharmaceutical industry

Market development strategies are common in the pharmaceutical industry, where the stakes for product launches are high, stakeholder interests are fragmented and the infrastructure of regulations, clinical practices and payer (insurance) requirements is complex. Companies can invest hundreds of millions of dollars in clinical trial development programs to prove their asset is both safe and efficacious. Yet while safety and efficacy are essential for a drug to be approved by the FDA, they don’t guarantee a successful product launch. The Institutes of Medicine reported that it takes 17 years for a new innovation to be adopted into clinical practice. Market development strategies aim to accelerate that adoption, yielding benefits for pharmacuetical companies, health systems, clinicians and patients.

For pharmaceutical companies, market development strategies help bring awareness to the market of a new approach and its implications for clinical workflows, patient care, outcomes and value. This means that once a new therapy is approved, clinicians, payers and patients will be waiting to try it, insofar as it may meet their needs better than existing treatments.

The principles of pharmaceutical market development are broadly applicable, however, and can be adapted and applied to any industry sector in which driving change in the external environment is a key parameter of success.

The two dimensions of a successful market development strategy

When it comes to creating market development strategies, we think of two key dimensions – who are the stakeholders and what issues do they care about?

The stakeholder perspective is vital, particularly in healthcare, because so many groups influence patient care either directly or indirectly. Each stakeholder has its own incentives, ranging from financial to altruistic, that guide their perspectives and engagement on the issues that shape the healthcare ecosystem. Yet these interests, in isolation, can often create misaligned incentives and unintended consequences that lead to suboptimal patient care.

Understanding what a stakeholder’s goals are, and how those goals may or may not be shared with other stakeholders, provides a strong basis for constructing and articulating a vision for a future marketplace. That vision can help stakeholders see how

The seven lenses of pharmaceutical market development strategies

Creating a market development strategy requires a system thinking approach that incorporates stakeholders, their issues and interests, and the existing “rules” that govern stakeholder behavior. Here are seven key “lenses” through which to view how a market works when creating a market development strategy for a new pharmaceutical asset:

• Regulatory: What regulations exist that might impede the uptake of a new innovation? Do these regulations still make sense in the face of innovation? For example, if a new type of technology could make it impossible to divert or tamper with opioids, is that the sort of thing that might be more favorable than existing solutions from a regulatory standpoint? Are there ways to evaluate new outcomes that are favorable to patients into new product labeling, so as to highlight important patient benefits?
  Evidence base: Is there a gap in the natural history of disease or in the theoretical basis of a disease that could inform new treatment paradigms? Think about Alzheimer’s disease, for example. In the past few decades, most clinical research has been based on the amyloid hypothesis. This hypothesis is supported by significant research, but it has yet to lead to effective therapies. What if another hypothesis produces an efficacious treatment? There will need to be substantial work to demonstrate what that hypothesis is, which patients it applies to and how to treat them, in order for clinicians to feel comfortable prescribing it.
• Diagnostics: As noted above, are there new diagnostic techniques or criteria or other ways to stratify patient populations based on a new therapy that would be beneficial for physicians?
• Treatment paradigm: Is there a new clinical pathway – ranging from the identification of patient types through to how to treat them – suggested by the studies supporting a new therapy?
• Outcomes/measurement: Are there certain benchmarks or quality metrics that are now achievable based on the therapy?
• Public policy: Are there policies that can help raise awareness, promote access or otherwise help create a conducive environment for access?
• Payment: Will payers implement administrative requirements that will prove challenging for healthcare professionals and their staffs to navigate? If so, what can be done to address that barrier?
• Public awareness: Are people living with conditions or their caregivers as aware as they should be about symptoms, diagnostic criteria or benefits of a new therapy?

As important as these lenses are, it’s vital to have a focal point: patients. The journey of a person living with a condition, from symptom onset through to treatment and, where relevant, recovery, should be the focal point of all this stakeholder activity. Keeping the patient at the center can help to identify areas where changes in care delivery can have the most meaningful impact, and then map out what changes individual stakeholder groups can make to bring that to fruition.

For individual stakeholders, a given healthcare issue can be like the parable of the blind men and the elephant: stakeholders often only experience or play a role in one piece of the picture. When the whole picture comes together, the stakeholders realize what the patient journey looks like – just as the blind men realize the things they can feel together form an elephant. When that patient journey and its consequences become clear, stakeholders may be willing to change their practices to help support better outcomes. Without that, they are more likely to resist change.

Envisioning an ideal future state

Once the integrated picture of the current state of the market is clear, we envision an ideal future state. To do so, we think about each stakeholder groups’ ideal future position on the issues related to our innovation. What changes can result in more efficient and effective healthcare interventions?

Envisioning an idealized future state helps us determine how we can get “from here to there” – e.g., what changes are needed, and which stakeholder groups need to drive which change. The ideal future state may never be achievable, but serves as a north star to the kinds of market conditions that would be ideal in the future.

Keep in mind that a fairly significant change from each stakeholder’s current beliefs, attitudes and behaviors is often required. Because of this, viewing the change as an evolutionary process can be valuable. Consider the steps, timing and sequencing to achieve the desired changes, and try to be realistic about how much can be achieved in a given timeframe.

For example, if a manufacturer is developing a new smoking cessation therapy, it might see that there is a gap around behavioral support resources to help smokers quit smoking. The manufacturer may have consumer research that provides insights on the kind of approach that would help increase the odds of successful quit attempts.

Instinctively, marketing leaders will want to keep these proprietary insights as a source of competitive advantage and construct a branded behavioral support program to aid in these efforts. This is a fine strategy, but there is also merit to thinking about how these insights could catalyze a broader movement toward a stronger behavioral support approach among multiple groups, including policymakers and patient advocates. These stakeholders may have their own ways of similarly supporting quit attempts, such as certifying the components of a best-practice model or increasing the share of voice about how to quit smoking. This ultimately would benefit all therapies – particularly a new, innovative one with a promising profile.

From strategy to execution

Once a market development strategy has been developed it needs to be translated into action. If we accept that markets are evolving based on stakeholder behavior, then market development strategies should leverage that evolutionary pattern by experimenting with a variety of approaches, selecting ones that appear to be most effective based on feedback, and amplifying those successful strategies across markets.

• Experiment: There isn’t one way to develop a market, there are several potential ways, so it makes sense to support a diverse portfolio of strategies. In some cases, public affairs may lead. In others, marketing may lead. In still others, a payer strategy will be the most important.
• Evaluate: Gain real-time feedback on each experiment, to understand the impact these experiments or pilots are having on the market. Measure changes based on outputs (successful activities), outcomes (program-level metrics) and impacts (changes in attitudes, behaviors or practices).
• Select: Choose the most successful experiments, with a clear playbook on critical success factors and key outcomes.
• Amplify: Put significant resources behind the broad deployment of successful strategies into new markets to drive change.

Staying the course

It’s rarely too late to start a market development effort. Change often is a long-term proposition, and market development planning should typically start three to five years before product approval. That said, the most effective market development efforts would make sense to continue even after a product has been approved. If, for example, an unbranded disease awareness campaign were to highlight key symptoms or markers of disease progression, this awareness-raising effort would be highly relevant after the product is approved.

It’s also important to realize that all of this is dynamic. We can safely assume that stakeholders will continue to adapt and evolve their strategies based on their self-interest. New entrants will emerge, along with new issues. Markets will continue to evolve in ways that may be favorable or unfavorable to a product’s lifecycle. Continuing to examine the structure of the market and the interests and needs of stakeholders can produce new and different market development strategies that can continue to evolve markets favorably toward your innovation efforts.