Printers, Razor Blades and Pharmaceuticals

By December 5, 2007Uncategorized

In 2006, Hewlett-Packard had revenues of around $90 billion, give or take a few billion. Of that, around one-fourth came from their printing and imaging division. You know, laserprinters. There’s a lesson in HP’s strategy for pharmaceutical marketers. In a sentence, HP doesn’t want to sell you a printer. HP wants you to use it.

Keep reading.

In a post today in Pharmalot, it was revealed that pharma DTC spending declined by around 7% in the third quarter of this year, after a long run of steady increases. Television was hit especially hard. What do we learn from this? Well, television is a great, albeit expensive, medium for launching a drug. But it takes something more to keep the momentum going.

What does this have to do with Hewlett-Packard? Everything.

Sitting right next to my desk are two printers. They’re both from HP. One is an oldish black-and-white laser printer, that’s the office workhorse. The other is a color injet printer that I use when I, you know, need to print something in color. Both were impossibly cheap to purchase. I don’t remember the exact amounts, but I recall being pleasantly surprised at how little they cost.

And unpleasantly surprised at how fast they seem to chew through ink cartridges. The color printer has six different cartirdges, they cost the earth, and they seem to be in need of replacement about every ten days.

This is not an accident. Some genius at HP figured out a long time ago that the real money is not in selling printers. The real money is in selling replacement cartridges. The revenue stream goes on for years, the profit margin is higher, and once someone’s purchased your printer, they’re also going to buy your cartridges for a long, long time. Razors work the same way. Gillette makes money on the blades, not on the razors.

Razor_blade
In some verticals, the same is true for pharma. DTC, particularly television, is great for launching a new drug. You can get an enormous amount of awareness very quickly using television, and get a new drug off to a great start.

But particularly with patients with chronic conditions — diabetes, arthritis, respiratory problems, depression — the key is to keep them on the regimen. And television isn’t the answer. Part of the answer, yes. But once a patient begins taking a drug, they develop a whole new perspective on it. They are interested in understanding how the drug, and the condition it treats, fit into their daily lives. They want to know what it means to them.

A television commercial is not going to do that. By definition, television is a mass medium. A sixty-second spot cannot have the information content necessary to help a patient who’s on a drug understand why she should stay on it.

As pharma marketing moves forward and evolves, more and more marketers are coming to realize that one size does not necessarily fit all. We have a large, and ever-increasing set of tools, and television is only one of them. To quote Alanis Morisette, for pharma companies seeking to develop long-term, profitable relationships, DTC television really is ten thousand spoons when what you need it a knife. And it looks like a lot of people are beginning to figure that out.

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