Launch Misalignment and the Anticipated Mail-Order Pharmacy Market Shift

OCTOBER 20, 2016
Andrew Lyle
A “Timely” Decision 
The internet has enabled consumers to gain an advantage when choosing goods and services. One of those areas of high interest is the ability to obtain prescriptions by mail, ordering either by the phone or the internet. As many marketers have found, the launch timing of their goods and services in a new distribution channel is critical. Timing of the product launch is an important consideration when planning to introduce a new product to any market.

Prescription sales through mail order has endured several starts and setbacks because the timing of the distribution has not matched well with the desirable target audience to receive them. In the case of the internet and mail-order pharmacy original launch, the timing was misaligned with the right target markets, causing lags in this channel’s growth and availability.

Launch timing is essential to the success and failure of a business regardless if the product or service is the greatest the world has ever seen. To this day, internet and mail-order pharmacy services are still not what analysts predicted they would be. This article is designed to discuss the initial launch timing misalignment and the future of internet and mail-order based pharmacy services.

Examples of Misaligned Launch Timing 
Segway is one of the most-recognized failed product launch attempts in history. Segway Inc spent $100 million developing the 2-wheel personal transportation vehicle, and prepared to launch the product in early 2002 with forecasted sales of $1 billion.Unfortunately, between 2001 and 2007, only 30,000 units were sold, which fell short of predictions. Some analysts believe that Segway Inc did not recognize the price point was high for the time, with the product costing $3000 for most models, up to $7000 for higher-end models, which caused launch failure.

While the pricing of Segway is a viable explanation for launch failure, there is reason to believe that launch timing may have been a detrimental factor in this failure. In 2013, the hoverboard was launched and provided an alternative means of utilizing similar technology to the Segway, yet at a more attractive price point. According to Statistic Brain, in 2015 alone, 2.57 million hoverboards were sold in the United States, resulting in $997.6 million in total sales revenue.

While the price point of the hoverboard is much lower (average retail price: $386), price alone cannot explain sales of the hoverboard selling 8500% more units than Segway, when both products share such similar characteristics. One explanation is that Segway was too advanced for the time and the general public was not ready to spend that much money on such a futuristic product.

On the other hand, the hoverboard industry understood their customer base and utilized existing technology to reboot and relaunch the top-selling product of the 2015 holiday season. The example of poor product launch timing can be extrapolated to the mail-order pharmacy model, considering that there is a grave possibility of a consumer demographic mismatch.

The Mail-Order Pharmacy Market Misalignment 
The practice and utilization of internet/online pharmacies only began operating in the late 1990s. A mail-order pharmacy can be defined as websites that market and sell prescription medication over the internet dispensed through mail-order services.3 Drugstore.com was considered to be the first “safe and fully operational” mail-order pharmacy with Verified Internet Pharmacy Practice Site (VIPPS) certification, and began to shape the industry. In some situations, it is an advantage to be first-to-market, but consider the 7 P’s of marketing in regards to the internet/mail-order pharmacy business (specifically, drugstore.com and the first wave of internet pharmacies).
  1. Product. This is a prescription drug service utilizing an internet-based platform to fill prescriptions that will be delivered through the mail.
  2. Price. Internet/mail-order pharmacies offer competitive pricing with brick-and-mortar pharmacies. 
  3. Place. No brick and mortar available for patient walk-in. Corporate office located in Bellevue, WA.
  4. Promotion. Advertising was done through traditional media (TV, newspaper, radio), insurance company co-promotion, and direct mailing.
  5. People. Any patient looking to fill prescriptions without going to the local pharmacy.
  6. Process. Prescription drugs will be called into the pharmacy or faxed, paid by credit card or check, then shipped through the mail.
  7. Physical Evidence. Brand new concept for the pharmacy market; evidence in works.
After considering everything about the service or product offered by drugstore.com and other early movers in the mail-order pharmacy, consider the market surrounding the company’s launch. According to a Pew Internet & American Life Project Survey, only 46% of Americans (age 18+) have adopted using the internet in early 2000.4 Of that population, 57% were aged 30 to 49, 41% were ages 50 to 64, and only 12% were ages 65 years and older.

Furthermore, in 2001, only 21% of the American population made an online purchase, subsequently receiving product through the mail.Within the target population, patients aged 35 to 49 years filled an average of 6 prescriptions per year, while patients aged 50 to 64 years filled an average of 13 prescriptions, and patients aged 65 years and older filled an average of 21 prescriptions per year.

Brand managers should be able to look at the data and understand that the target demographic does not fit the target patient profile. Despite the fact that drugstore.com established a good reputation for themselves, the evolution of the market was not ready or willing to adopt the use of an online/mail-order pharmacy. Patients 35- to 50-years-old may not have any physical, financial, or technological limitations that would inhibit them from going to a local pharmacy, or purchasing products online.

On the other hand, patients aged 51 years may have physical and financial limitations that would deter them from going to the pharmacy, but these patients are also not willing to adopt the use of the internet to purchase any product, including their own prescriptions.



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