- An analysis of the benefits and advantages various branding strategies can offer.
- The mechanisms and models that can be employed to create a strong brand for the medical device industry.
- Case studies reviewing branding experiences of companies within the medical device and diagnostic sectors.
- Strategies for building and leveraging brand value.
The report is an invaluable resource illustrating - as it does with regularity throughout - how not only the major medical device manufacturers but also middle-tier and smaller players manage their brand strategy to garner positive competitive advantage.
Strategy review, "Medical Device Branding - Building Identity and Equity", will be of particular value to business development, marketing and top-line corporate personnel as well as to all involved in brand development and management.
In the late 19th and early 20th Centuries a brand was frequently little more than the name that was attached to a product. The brand would normally consist of the name of the company and a descriptive name for the device. Such an example was the Rorstrand Inhaler introduced in 1874. This device was a ceramic vessel (made by Rorstrand) that could be filled with water and aromatic herbs and inhaled by people with chest disorders.
Since this time the majority of medical device manufacturers have done little to take on board the lessons learnt from other consumer markets and many still label and brand their products with as little thought to the procedure as occurred over a hundred years previously.
In the 20th and 21st Centuries the idea of what a brand is has changed, and today the following statement is generally considered to be true:
The brand is the company, it is the product, it is the company’s reputation, it is the company’s philosophy, it is the company’s weapon and shield and it is the distinguishing feature of the company and its products.
In other markets the rewards of effective branding have been obvious for many years, with examples like the Coca Cola company whose value of $14 billion is almost entirely due to shrewd branding strategies leading the way.
However, within the medical device industry the principal reason for not placing significant resources into branding campaigns has been that it was considered that the customers for medical devices were physicians and physicians were not thought to be affected by branding messages in the same way as other consumers were. In every way this view is now being challenged.
Firstly, the idea of who the customer is has been changing and those companies with foresight realise that, with regards to purchasing, physicians, technicians, nurses, budget holders and patients can all influence the purchasing decision. In turn, branding can influence all of these people.
Secondly, the view that the effect of branding messages on physicians differs from that placed on other consumers has been proven to be false.
A more accurate assessment is that there are a number of other considerations that a physician has to bear in mind when making a purchase and as long as these are also fulfilled by the brand then the likelihood of making the sale is increased.
Some medical device companies are therefore beginning to change their attitude towards branding as they realise that it can offer a number of rewards, not the least of which are:
- Decreased administration costs.
- Increased customer, investor and employee belief in the company.
- Increased sales.
- Increased company value.
Constructing, defining and communicating a company's brand message is not one simple procedure that can be applied across all situations. Instead the task comprises a number or set of related procedures.
BRAND EQUITY AND BUILDING BRAND ARCHITECTURE
Brand equity is a relatively new concept and involves assigning a monetary value to a brand which helps determine the actual value of a business.
Many elements can be considered in valuing a brand. Those listed below define the assets most used to establish brand equity.
- Brand Loyalty - This asset combines characteristics associated with image and
impact (customer value and price premium).
- Name Awareness - This is the spectrum of awareness, recognition and preference and also measures relative confidence and commitment on the part of market segments. Brand personality and differentiators, as they are communicated along with the name, also play a part in establishing a brand’s equity.
- Perceived Quality - Here, brand personality, differentiators and positioning have a strong place in the mix, for they are the attributes customers use to make judgments about products. Price and loyalty play a role as well.
- Brand Associations - Though often difficult to quantify, associations with which the brand is consciously linked - say with a sports event, a charity, a celebrity, a joint venture - can enhance a brand’s perceived image.
- Other Proprietary Assets - These will vary depending upon product, market and situation. Examples include trademarks and patents, strong distribution relationships, corporate integrity.
Brand equity is vitally important to a company.
For example, the brand equity of Johnson and Johnson has been valued at $28.3 billion, which is almost 18% of its market capitalisation. The reason for this is that so many people believe in the J &J brand such that it adds value to almost any product the name is put upon.
Brand equity can also act as a buffer to market conditions. A name creates a reputation which can be beneficial to the company that owns it.
Consider the example of walking frames. It is difficult for the majority of the population of the Western World to think about walking frames without the name Zimmer coming to mind. The name has sunk into the public consciousness and become familiar and familiarity often breeds feelings of security and confidence. As a result of this confidence in the Zimmer name the company dominated not only the walking frame market but also the artificial hip market for many years. After Bristol-Myers Squibb bought Zimmer the company failed to give proper support to Zimmer in its joint replacement business during the critical period of the 1980’s when new companies with innovative devices were entering the market. However, due to the strength of the Zimmer brand equity it managed to maintain its market position until the 1990’s.
To generate brand equity companies need to build brands so that they form part of the corporate structure.
Companies need therefore to address the fluid concept of brand architecture which places emphasis on a company’s evaluation of the impact of changing brand dynamics with the overall corporate strategy.
For example, the hypothetical company Alpha which produces vascular stents opts for the brand name of its first product to be named after the company itself. However, as the company’s product range expands and diversifies its branding architecture needs to change in order to retain coherence in the eyes of the customer.
The company is developing a stent that it intends to be approved for use in the iliac arteries and it needs to create a name for it. One choice would be to call it the ‘Alpha Stent’. This has the double impact of making it sound like a premium product through the connotations with the word ‘alpha’ and also reinforces the company name. Alternatively, the company considers naming it the ‘Iliac Stent’, but realises it would be unable to register it under this name because of generic legalities. As it is a stent that will be used in the peripheral arteries, it opts to call it the ‘Alpha peripheral’, which both reinforces the company name and states where the stent is used. Later, Alpha acquires the products of a company called ‘Beta’ whose product is called the ‘Matrix’ stent. This stent is also approved for use in the iliac arteries and also in the femoral arteries, which makes it more of a universal peripheral stent than their own. Alpha therefore has a dilemma. It could re-brand the Matrix to become the “Alpha femoral” stent which would emphasise the extended indication and reinforce the company name or, as the Matrix is a well established and respected name, let it remain as it is. Electing to keep with the second option the company retains the brand loyalty but also creates brand confusion.
The problem with the word architecture is that it makes it sound as though the structure is set in stone, but in order for it to work it should be adaptable and be able to change to the environment and external pressures, whether the pressures are from new consumer insights or from competitive pressures.
As depicted with the example of the company Alpha there are various approaches that real companies can take with regards to how they brand their products. All
have their advantages and some are much more evident in the medical devices sector than others Any one or a combination of the following strategies may be used by the same company in creating brand architecture:
- Product branding – This is where a brand name and exclusive position are allocated to one product. Companies that adopt this approach allow and encourage brands to stand and fall on their own merits.
- Line branding - Line brands offer one basic product under one name, but also offers complementary products. The brand can be extended and complementary line extensions reinforce the brand image with marketing costs shared across the portfolio.
- Range branding - Range brands have a unique brand positioning with many products under their brand name This allows for focus on one brand name giving synergy of communications across all products.
- Umbrella branding - Umbrella branding occurs when one single brand name, often the company name, covers all products, as with Canon cameras, fax machines and printers. The products don't have names, but tend to have other descriptors, either functional (Lexmark Z31 printer) or just alpha-numeric (BMW 745). Every product is contributing to the overall brand
awareness, equity and value and there are economies of scale.
- Shared branding - The shared branding strategy is similar to that of umbrella branding, except that the products are named, an example
being Microsoft Windows. The product and parent brand share the spotlight.
- Endorsed branding - An endorser brand is an established brand that provides credibility and substance to another brand. The endorser brands usually represents an organisations rather than a product brand but it depends on
the brand strength.
- Corporate branding - Corporate branding can encompass both umbrella branding and shared branding, whilst it can also be a form of
- Sub-brands - No one brand can cover every market, nor even every sector of a market and as a result sub brands are developed to enter these markets. The products in the sub-brands are often functionally and structurally very similar to one another but adjusted to fit the needs of the target market.
There are three important aspects of branding architecture that a company should be aware of. The first is that the company should know what its own
branding architecture is. That is, how best does categorisation of its products fall into the implementation of one or other of the strategies outlined above. The second consideration is that the brand architecture
should be reviewed regularly, as part of its yearly planning activities, so that it can be used as a blueprint for making branding and marketing decisions. Thirdly, the architecture should be cohesive and not confusing to
the customer. It is all very well to use branding to introduce the same product into different markets or different products into the same market, but very similar products into the same market can cause major
MEDICAL DEVICE BRANDING AND MARKETING STRATEGIES
The three interdependent brand management fundamentals, positioning, perception, and performance, apply not only to consumer products but also to medical devices.
One of the business strategists interviewed for the report who focuses on the medical device sector states that, as a part of overall marketing strategies, “Branding is a tactical issue. It flows from strategy.
Branding in itself is not a strategy; it is part of a strategy. A strategy is all about segmentation, targeting and positioning and branding will only really work in certain segments.”
Positioning defines the product's core values or consumer benefits. Such benefits differentiate the product from the competition, triggering performance
cues in the consumer's mind. Those cues, in turn, evoke a unique brand personality.
Perception, or brand identity, is the foundation for getting consumers to try the product. Once trials have been initiated, the offering must live up to its image. The goal is to persuade the consumer to continue purchasing the brand and therefore to create brand loyalty.
Segmentation is essential to positioning and is the real issue in all marketing and branding strategies, being perhaps more important in the medical device field than in any other.
Using classical market strategy analytical tools such as the Ansoff Matrix and Boston Consulting Matrix, in conjunction with the directional policy matrix (DCP – a strategy model used by multifunctional companies with product segmentation and resource planning) companies can identify the types of branding architecture they should consider to promote their products.
The DCP matrix is constructed within two axes: the horizontal axis represents industry attractiveness, or the prospects for profitable operation in the sector concerned; the vertical axis indicates the company’s existing competitive position in relation to other companies in the industry.
From the Ansoff Matrix it can be seen that for medical devices, branding is most likely to be successful in market extension and product development exercises.
Taking the example of Guidant’s Multi-Link stent system in the US the name of Guidant was well known amongst US cardiologists who used the company’s other products, and the Multi-Link brand had been cited in articles on its performance in Europe. As a result when the Multi-Link stent received clearance in the US it was rapidly accepted.
This option of market extension demands more marketing resources than increasing market penetration due to the product being unknown in the new market. However, the stronger the brand name the fewer resources will be required.
With respect to product development activities, branding can play an important role here too as, particularly if the new product is part of a brand line in which other members of the line are already present, it can decrease on marketing costs and increase product acceptance.
After conducting retrospective segment analyses on their respective heart stabilisation devices (used in heart surgery as suction tools causing less tissue trauma than conventional clamping devices), Medtronic and Guidant found that their respective products fell into the area of product development within the Ansoff Matrix, as Star products within the Boston Matrix and in the same region as Product 4 (new product in an emerging high yield market) of the Directional Policy Matrix.
As a result of this strategic exercise both companies decided to brand their products as stand-alone or brand line leaders. Significant resources were invested in the branding and promotion of Medtronic’s Octopus and Guidant’s Heartstring device.
Brand inheritance and cultural impacts
As the global economy shows signs of emerging from a recessionary period there are indications that the medical device sector will follow the line of biotechnology and pharmaceutical companies looking to increase M&A activity and thus consolidation.
Such activity, from the branding perspective, brings with it a need to deftly deal with brand inheritance and the assessment of acquirer/acquiree brand equity.
In the conduct of this report’s primary research process, Ethicon, a Johnson and Johnson company and a world leader in the wound management sector stated each branding decision is decided on an individual basis and is dependent on the equity of the company being acquired.
The international nature of the medical devices business means that the chances are very high that problems can arise when an acquired company has a strong presence and reputation in a few select markets, but not in other markets where the purchaser’s brand is strong.
Cultural influences can have an impact on branding and marketing strategy.
The German medical devices market is the largest in Europe and companies need to be careful about the portrayal of the brand. For example, Germany is very open to the use of the English language and whilst there has been some concerns over producing the wrong brand message with phrases such as “It’s a gift”, where “gift” means “poison” or “poisonous” in German the Germans tend to learn English as a second language and such faux pas are generally overlooked. So much so that the German manufacturer Boehringer Ingelheim even produces a nebuliser device called the “Respimat Soft Mist” and “mist” in German means “manure”.
The impact of brand on pricing is also an important factor. Brand loyalty does not exist at any price, but a strong brand can foster resilience to price pressures. However this is more likely to work in some sectors and for some product types better than others and this is all to do with the length of the product life cycle.
EXECUTING BRAND STRATEGY TO MAXIMISE ROI
There is no point in investing in a branding strategy if it doesn’t provide any advantages, fortunately if performed well a good branding strategy can provide both monetary profits and other benefits.
It takes a number of processes to calculate how much a product’s sales are attributable to the promotion of a brand and according to the various companies, branding and marketing agencies interviewed this is something that is never completely carried out within the medical device industry but should be.
In order to achieve this companies need to have detailed financial figures of their product sales and those of a competitor. As it is not easy to gain such financial figures from another company the figures from a similar product within a different brand range could be used for comparison, but this is not so useful as both products will be tarred with the same brush of the corporate brand.
The process, tailored for the medical device industry, consists of a number of steps:
- Compare sales of product against a competitor’s product
- Eliminate price as a factor by comparing price dynamics of product against a competitor’s
- Eliminate sales network as a factor by sales representatives against products sold
- Establish importance of promotional campaigns by comparison against geographic sales
- Eliminate the technical aspects of the product and assess brand equity by creating a comparative product attribute graph and using a tool such as the expectancy-value model.
Examples are provided within the report as to how ROI can be calculated with discussion of the positive impact that strong branding strategy has had on sales for pharmaceutical and medical device companies.
The physician, nursing staff and purchasing managers within the secondary and tertiary healthcare systems are key targets for product appraisal and marketing activities.
Hence brand, and the evolution and management of it is a key component in promoting medical device product sales.
In addition, if the patient is increasingly seen as the consumer then it follows that any movement toward an increased role for medical device direct-to-consumer activity in Europe will result in the need for brand awareness to become a major factor in marketing efforts.
This current strategy review, “Medical Device Branding - Building Identity and Equity”, will be of particular value to business development, marketing and top-line corporate personnel in the medical device industry.
The analysis of branding and its role in moulding corporate strategy places particular emphasis on the views of specialists in branding within the major companies themselves and assesses the views and expertise expressed by branding consultants.
The report is an invaluable resource illustrating as it does with regularity throughout how not only the major medical device manufacturers but also middle-tier and smaller players manage their brand strategy to garner positive competitive advantage.
1.1.1 Medical device branding and marketing strategies 9
1.2 Issues affecting the success of a global brand 11
1.3 Executing brand strategy to maximise ROI 12
2. INTRODUCTION 14
2.1 What are the origins of branding? 14
2.2 Branding history of the medical device sector 14
2.2.1 The continued evolution of branding and its components 14
2.3 The target audience 15
3. WHAT’S IN A NAME? 16
3.1 Market differentiation 16
3.1.1 Corporate differentiation – making your company stand out from the crowd 16
3.1.2 Product differentiation 19
3.1.3 Differentiation conclusions 21
3.2 Customer awareness 22
3.2.1 Creating customer awareness 23
3.2.1 Brand equity 25
3.3 Corporate motivation 26
3.4 Product and corporate protection 27
3.5 Competition awareness (partnerships and alliances) 28
4. BRANDING ARCHITECTURE 30
4.1 What is branding architecture? 30
4.2 Branding architecture approaches 32
4.2.1 Product branding 32
4.2.3 Range branding 35
4.2.5 Shared branding 37
4.2.6 Endorsed branding 38
4.2.7 Corporate branding 38
4.2.8 Sub-brands 39
4.2.9 Brand architecture construction 39
5. MEDICAL DEVICE BRANDING AND MARKETING STRATEGIES 41
5.1 The Ansoff matrix 43
5.2 The Boston matrix 44
5.3 Directional policy matrix 47
6. ISSUES AFFECTING THE SUCCESS OF A GLOBAL BRAND 50
6.1.1 The brand logo 51
6.1.2 Brand inheritance 54
6.2 Promotion of a brand name 56
6.2.1 Brand promotion through clinical trials 56
6.2.2 Direct to patient promotion 58
6.3 Customer pressure and loyalty 60
6.3.1 Customer pressure 60
6.3.2 Customer loyalty 61
6.5 Pricing 68
7 POTENTIAL RETURNS OF BRANDING 70
7.1 Returns on investment 70
7.2 Impact of global branding on shareholder value 76
8. COMPANY EXAMPLES 82
8.1 Ethicon 82
8.1.1 Background 82
8.1.2 Finances 82
8.1.3 Branding structure. 84
8.1.4 Branding opinion 87
8.2 GE Medical Systems 89
8.2.1 Background 89
8.2.2 Finances 89
8.2.3 Branding structure. 90
8.2.4 Branding opinion 92
8.3 Guidant 92
8.3.1 Background 92
8.3.2 Finances 93
8.3.3 Branding structure. 94
8.3.4 Branding opinion 95
8.4 Medtronic 97
8.4.1 Background 97
8.4.2 Finances 97
8.4.3 Branding structure. 99
8.4.4 Branding opinion 101
8.5 Micro Medical 102
8.5.1 Background 102
8.5.2 Finances 102
8.5.3 Branding structure. 103
8.5.4 Branding opinion 103
8.6 Mallinckrodt imaging 105
8.6.1 Background 105
8.6.2 Finances 105
8.6.3 Branding structure. 107
8.6.4 Branding opinion 108
8.7 Roche Diagnostics 110
8.7.1 Background 110
8.7.2 Finances 110
8.7.3 Branding structure. 111
8.7.4 Branding opinion 113