Category- versus Brand-Level Advertising Messages in a Highly Regulated Environment

Abstract

The authors examine the dynamic effects of category- and brand-level advertising for a new pharmaceutical in a market in which regulations require that the content of these two types of advertising be mutually exclusive. Specifically, category, or generic, messages should communicate information only about the disease without promoting any brand, whereas brand-level messages should be void of any therapeutic information. This brings up two questions of great managerial importance: Which type of message is generally more effective (category or brand level), and when is one type more effective than the other? The authors pursue these questions by analyzing the effects of advertising on new and refill prescriptions through the use of an augmented Kalman filter with continuous state and discrete observations. The findings suggest the presence of complex dynamics for both types of regulation-induced advertising messages. In general, brand advertising is more effective, especially after competitive entry. Extensive validation tests confirm the superiority of the modeling approach. The authors discuss implications for managers and regulators.

How DTCA Influences Prescription Pharmaceutical Markets

“…However, as competition enters and the market matures, reminder ads become more effective. Overall, reminder advertising has a slightly higher elasticity than help-seeking advertising but both are low (0.038 vs. 0.053), consistent with most other econometric studies (Kolsarici and Vakratsas 2010). Lee-Wingate and Xie (2010) compare product claim and help-seeking ads in an experimental setting and find that the latter is more effective in terms of generating stronger behavioral intention to seek treatments for the ailments advertised.…”

“…The complaints, however, are only handled by Health Canada. Table 22.1, adapted from Kolsarici and Vakratsas (2010), provides a global taxonomy of DTC advertising with respect to regulations. We use two classification criteria to capture regulatory effects: content, which refers to the information each message type may contain, and context, which refers to the country in which each type of ad is allowed in practice.…”

“…This may be due to the fact that, at least in the USA, most ads are of the product claim variety (e.g., Lee-Wingate and Xie 2010). The study by Kolsarici and Vakratsas (2010) is the only one that addresses this issue from an econometric perspective. Analyzing drug sales and pharmaceutical expenditures for the pioneering drug in a newly established category, they compare the effectiveness of help-seeking and reminder advertising, likening the former to a category message and the latter to a brand-specific message.…”

Patient Empowerment: Consequences for Pharmaceutical Marketing and for the Patient–Physician Relationship

“…11 The academic literature on DTCA is extensive, and my goal here is to complement this literature with an overview of the effects of patient empowerment on DTCA, especially given the regulatory limitations of such communication. I refer the reader to excellent papers providing in-depth summaries of the literature on DTCA, such as Iizuka and Jin (2005), Kolsarici and Vakratsas (2010), Narayanan et al (2004) and Osinga et al (2011). 12 Available at http://www.ema.europa.eu.…”

Pharmaceutical Detailing Elasticities: A Meta-Analysis

“…Based on an analysis of their data, they provide a rough estimate of mean detailing elasticity, uncorrected for methods bias, of 0.245 in the pharma industry compared to a mean of 0.34 for personal selling elasticities from all-industry settings. The AMS ( 2010 ) work, however, was not focused on the pharma industry and does not include several important studies of pharma detailing effectiveness that have appeared since it was completed (e.g., Bhatia and Le 2011 ;Dave and Saffer 2010 ;Fischer et al 2011 ;Gönül and Carter 2010 ;Kolsarici and Vakratsas 2010 ;Nair et al 2010 ;Osinga et al 2010 ). Another meta-analysis paper by Kremer et al ( 2008 ) is focused on the pharma industry but is concerned with several types of pharma promotions including detailing.…”