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 605

brand-related metrics, affect total category sales. Does the complex dynamic system
of manufacturer support for their own brands (and possible reaction to competitor
activities) translate into higher category sales or do the competitive effects cancel
each other out?
In this section we answer the above questions by providing an overview of stud-
ies into the dynamics of pharmaceutical marketing effectiveness. We fi rst describe
how marketing effectiveness is related to the category life cycle. Next, we focus on
the effectiveness of different marketing instruments over the brand's life cycle. We
then discuss how dynamics in brand level marketing affect category sales. We con-
clude this section by indicating how these dynamics can be modeled.

20.4.2 Pharmaceutical Marketing Effectiveness

Over the Category Life Cycle

Conceptually, pioneering brands may enjoy advantages over later followers but in
some situations they may also face serious disadvantages (Lieberman and
Montgomery 1988 ). Based on an empirical analysis Urban et al. ( 1986 ) show an
inverse relationship between order of entry and market share and Kalyanaram et al.
( 1995 , p. G215) conclude that “for consumer packaged goods and prescription anti-
ulcer drugs, the entrant's forecasted market share divided by the fi rst entrant's mar-
ket share roughly equals one divided by the square root of order of market entry.”
Fischer et al. ( 2010 ), who analyze the categories of calcium channel blockers and
ACE inhibitors in four countries, fi nd that early entrants achieve peak sales later,
indicating that these brands enjoy a longer period of growth, and eventually obtain
higher peak sales and also higher cumulative brand sales.
Bowman and Gatignon ( 1996 ) show that early entrants command higher market-
ing effectiveness then later entrants, furthermore they fi nd the main effects of order
of entry to be minimal in size indicating that later entrants do not necessarily end up
with lower market shares but that with later entry it becomes increasingly expensive
to obtain market share.
Shankar et al. ( 1999 ) analyze 29 brands from six categories and investigate the
effect of the stage of the category life cycle at which a brand is launched on its mar-
keting effectiveness. Here it must be noted that the concept of entry point according
to the stage of the category life cycle is different from the concept of order of entry:
the second brand may enter when the category is still growing or it may be launched
when the category has already reached maturity. Even after controlling for order of
entry effects, Shankar et al. ( 1999 ) fi nd that pioneers enjoy higher marketing effec-
tiveness than growth-stage and mature-stage entrants. Any advantage for growth-
stage entrants derives from the higher response to perceived product quality and
faster growth as compared to pioneers and mature-stage entrants. These fi ndings
can be explained by the pioneering brand(s) paving the way for the fast followers.
The limited advantage for pioneering brands is confi rmed by Berndt et al. ( 2003b )
who fi nd that in the antiulcer drug category, Zantac achieved high market share