Archive for November, 2015

DOCTORS WANT BAN ON DRUG ADS

The American Medical Association (AMA) has changed its policy and this week voted to ask for an end to Direct-To-Consumer prescription drug advertising on television. It’s a category that Advertising Age says spent $4.8 billion in measured media last year.

A rule change from the Food and Drug Administration in 1997 allowed pharmaceutical companies to use TV advertising for the first time, but doctors were not happy about it at that time, and never fully warmed up to the idea. An AMA spokesperson said this week’s vote “reflects concerns among physicians about the negative impact of commercially driven promotions and the role that marketing costs play in fueling escalating drug prices.” Previously the AMA’s policy had been that as long as the commercials were accurate and educational it had no objection to the use of the medium.

Part of the problem could be that some of the most heavily-advertised drugs are also the most expensive. A recent AARP publication notes that Humira, for example, has a monthly co-pay among Medicare Part D plans available in New York that ranges from $799.97 to $1163.30, so advertising can ignite a consumer demand for a drug that will be not affordable to many people.

Trade group Pharmaceutical Research and Manufacturers of America (PhRMA) of course has a different outlook on the question, saying the ads inform viewers about diseases and treatment options. A spokeswoman for PhRMA said “Providing scientifically accurate information to patients so that they are better informed about their health care and treatment options is the goal of Direct-To-Consumer advertising. Research shows that accurate information about disease and treatment options makes patients and doctors better partners.”

Putting television advertising for DTC drugs in perspective, the Washington Post has reported that television took 61.6% of the dollars pharma companies spent in all media last year (up from 52.6% three years ago). But the dollars spent on measured media still are just a fraction of drugmakers’ total marketing. In 2012, when the companies spent $3.5 billion in DTC advertising, they also spent $24 billion directly promoting drugs to doctors.

ADVERTISER NEWS

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General Motors will be the first U.S. manufacturer to import a Chinese-made vehicle, the Buick Envision SUV that will go on sale early next year. The Wall Street Journal says GM and the UAW discussed the idea in their recent contract negotiations and “appear to have come to an understanding.” In a different note about GM and the union, Automotive News reports the two have re-started contract negotiations to work out new details that will satisfy skilledtrade workers, who voted down the proposed new contract, so the old contract has been extended again to November 20……Jeep will introduce the Jeep Wave program for some of its higherprofit models, including amenities such as free routine maintenance, complimentary loaners, discounts on accessories and road trip interruption insurance coverage…… Sears will give members of its Shop Your Way program a Members Private Night on 11/22 with access to Black Friday doorbusters……Even the high end of the department store business is looking a little lethargic: Nordstrom quarterly same-store sales were up just 0.9%, although it’s still projecting a 2.5-3.0% comp gain for the holiday season. It opened just two new domestic full-line stores during the quarter, but 16 new Nordstrom Rack units……The auto aftermarket had been doing very well, but Advance Auto Parts’ same store sales were up just 0.5% for the quarter that ended on 10/10. Advance plans to close about 30 stores before the end of the year, but that will still leave them with more than 5,200 in operation……Conn’s has had some tough profit reports because to prior credit policies that proved to be too lenient, but it still has a very aggressive outlook about expansion. Currently opening its 100th store, it’s opening 17-18 this fiscal year, 20-25 for the following two years and even more afterwards, with an eventual goal of 500 locations……KFC will test home delivery, starting in the L.A. and San Francisco markets, using DoorDash (the same service being sued by In-NOut Burger for unauthorized delivery). A delivery fee of $5- $7 will be added depending on the customer’s location…… El Pollo Loco franchisees reported a 1.1% same-store sales increase for the latest quarter, but company-owned locations were flat due to an almost 2% drop in total traffic, causing an 81.9% decline in corporate profit……We noted last week that On The Move had targeted Florida for heavy c-store expansion, but it looks like there will be plenty of competition. 7-Eleven has just purchased 101 stations from Biscayne Petroleum and sibling Everglades Petroleum and Wawa Inc. now plans to add 120 stores there by 2022. Wawa notes many people in Florida are transplants from its Northeast territory who are familiar with its brand.

READY TO SPEND ON ‘THINGS THAT MATTER’

Millennials make up nearly a quarter of the population and already spend about $220 billion per year in the U.S. Nielsen says they fascinate marketers and retailers—but that capturing Millennial dollars has proven challenging. In the U.S., this generation has different interests than their predecessors, and marketers and retailers must pay attention to the unique shopping habits of this young generation.

Millennials are young and optimistic about their financial futures. According to the Q2 Nielsen Consumer Confidence report, roughly 70% of Millennials indicate their personal finances will be either good or excellent in the next year. However, having gone through the Great Recession at a young age, they are caution about finances and 55% still feel like the U.S. is in an economic recession.

With limited money to spend, Millennials are savvy shoppers by necessity. Avid researchers, 42% of them check at least four sources when trying to decide on a purchase, according to Edelman Digital. About a third make purchases only when they have a coupon or promotional code. And roughly 40% buy previously used items online to save money.

While economic struggles are a reality for many Millennials, one subset is thriving. Roughly 27% of this generation qualifies as upscale Millennials, earning more than $75,000 per year. The median liquid wealth value (income producing assets; IPA) for upscale Millennials is $157,500, more than 11 times the median IPA of their generation as a whole. Despite having more money to spend, upscale Millennials are deal-lovers as well. Roughly 43% use coupons at least once month.

Despite their love of a deal, Nielsen says all Millennials are willing to spend on things that matter to them. As a generation defined by their use of technology, the majority of Millennials aren’t willing to delay upgrading their PCs or mobile devices to save money. And while Millennials are spending less on clothes to save money, 35% still make apparel purchases with their extra cash.

About 92% of Millennials own a smartphone, compared with 76% of Baby Boomers. Because technology is an integral part of their lives, it’s a key component of their shopping experience. Roughly 19% of Millennials and 31% of upscale Millennials spent over $1,000 online in the past year. The majority (66%) use the Internet to purchase hard-to-find items. Roughly 70% of upscale Millennials scour the Internet for hard-to-find items.