Biomedical Engineering Reference
In-Depth Information
Chapter 19
Marketing Spending Models
Marc Fischer
Abstract
To the surprise of many, pharmaceutical firms belong to the biggest
spenders on marketing. The marketing spend-to-sales ratio may be as high as 30 %.
Expenditures in the USA alone were $10.9 billion in 2009. Hence, there is a strong
interest in understanding how effectively this industry spends its marketing money.
The objective of this chapter is to review and synthesize the literature on market-
ing spending in the pharmaceutical industry. It reviews recent trends in pharmaceu-
tical marketing. It looks at how marketing managers in the pharmaceutical industry
actually arrive at spending decisions. The author further discusses models that
describe how pharmaceutical demand responds to marketing expenditures. He sum-
marizes findings on the responsiveness and profitability (ROI) of various spending
categories.
Another focus of the chapter is on normative applications of marketing spending
models. Normative models help finding the right budget across spending categories,
customer groups, and products. The discussion covers static and dynamic optimiza-
tion approaches. The author identifies fields of promising future research from this
synthesis of the extant literature.
19.1
Introduction
The pharmaceutical industry is one of the largest and most profitable industries
worldwide. Healthcare expenditures represent about 8-15 % of the GDP of most
developed countries (see OECD
2011
). Expenditures on drugs are an important
component of healthcare expenditures. For example, 10 cents of each healthcare
M. Fischer (
*
)
Professor of Marketing and Market Research, University of Cologne
and Associate Professor of Marketing, UTS Business School, Sydney
e-mail: marc.fischer@wiso.uni-koeln.de
Search WWH ::
Custom Search