Modeling the Effects of Promotional Efforts on Aggregate Pharmaceutical Demand: What We Know and Challenges for the Future - Innovation and Marketing in the Pharmaceutical Industry - page 583

Diffusion
(§9.3)

Pharmaceutical
promotion
(§9.2)

Product category
level demand
§9.2.1)

(

Information or
persuasion
(§9.2.3)

Brand level
demand
(§9.2.2)

Price
(§9.2.4)

Dynamics
(§9.4)

Fig. 20.1 Flow diagram of the framework of this chapter

pharmaceutical promotion. We discuss the signifi cance and relevance of pharmaceuti-
cal promotional effects, where we distinguish between effects on product category
level demand (Sect. 20.2.1 ) and effects on brand level demand (Sect. 20.2.2 ). We elab-
orate on the implications of the outcomes of this research and review earlier studies
and what they report on informative and/or persuasive effects of pharmaceutical pro-
motion (Sect. 20.2.3 ). As the type of effect of pharmaceutical promotion also affects
the price sensitivity of the demand for drugs, we discuss the role of price in Sect. 20.2.4 .
In subsequent sections we distinguish two specifi c issues regarding promotional
effectiveness that are particularly important in the pharmaceutical market. Given the
importance of innovation in this market and the need for rapid take off (Tellis et al.
2003 ), we elaborate on applications and fi ndings of studies that investigate how mar-
keting efforts affect the diffusion of new pharmaceutical innovations in Sect. 20.3 .
The turbulence in this market, caused by changes in regulation and rapid technologi-
cal developments (Achilladelis and Antonakis 2001 ), induces complex dynamic
effects of pharmaceutical promotions. We give an overview of studies that examine
how these dynamics impact the effectiveness of pharmaceutical promotion in
Sect. 20.4 . Section 20.5 takes a look at future issues and suggests a research agenda.

20.2 Overview of Studies of Pharmaceutical Promotional

Effectiveness

In Table 20.1 we summarize the key studies which examine the effectiveness of
pharmaceutical promotion on aggregate demand. In the second column of Table 20.1
we report the type of model that is used to identify the promotional effect, and the