MARCH 2017 OTC INDICATIONS

Transcription

1 MARCH 2017 OTC INDICATIONS CONSUMER HEALTH EXECS SHARE OUTLOOK FOR 2017

2 OTC indications: The view from the top in 2017 In the weeks leading up to the Consumer Health Products Annual Executive Conference, to take place March 19 to 22 in Amelia Island, Fla., Drug Store News assembled a virtual panel of leading consumer healthcare executives to discuss the many opportunities to drive growth, build the market basket and engage the next generation of OTC shoppers, and how their companies are leveraging new consumer insights, emerging technologies and mobile to win in-store and online. Find out why top OTC marketers are so bullish on the business in 2017 and beyond. DRUG STORE NEWS: OTC historically has been a tough category for customers to navigate and select the right product. How can retailers partner with vendors to make OTCs easier to shop? AMERICAS, GSK CONSUMER HEALTH- CARE: We cannot sit still and rely on old standbys to meet the needs of today s consumers. Last year, we opened our Shopper Science Lab, which is designed to be a working lab where we roll up our sleeves and partner with our retailers to better understand our consumers and deliver the products they need. We ve had many of our retail partners into the lab, and in every discussion we have solved a problem, identified a need or brainstormed a new idea. GSK believes that we must meet our consumers where they are, and that changes constantly. DAVE TOMASI, COMMERCIAL DIRECTOR, P&G PERSONAL HEALTH CARE: We are focused on learning how shoppers navigate each category to enable a more customized and tailored shopping experience. Partnerships between retailers and manufacturers are important in designing the in-store experience in a way that enables shoppers to find the appropriate section and then quickly select the product they want, or deselect the products they don t want. We also believe that at-shelf communication and/or education is important to help the shopper make a more informed purchase decision. JEFF VERNIMB, GENERAL MANAGER, MOBERG PHARMA: Vendors and retailers have made progress helping consumers navigate the OTC aisle. Clearly there is more to be done, but aligning assortment by need states, improving shelf signage, adding in-store wellness ambassadors and reducing item proliferation have made shopping easier and more intuitive. Localization is helping get the right product in the right store. We are on the right path but can and should seek to do more together. One immediate opportunity is to better link our in-store and out-of-store communication to give the consumer consistent messaging, education and added value. We can do more to open up the discussion by including retailer and vendor marketing and agency partners in the challenge. Shopability is one of the greatest challenges in the OTC aisle. There are thousands of products, and many with competing labels that make it very confusing for the consumer. There is an opportunity to streamline some of the retail sections to make the shopping experience easier for 1 / March 2017 DRUGSTORENEWS.COM

3 UPFRONT SUPPLIER ROUNDTABLE consumers, and many retailers are establishing these initiatives. Signage and at-shelf literature to help explain product attributes, dedicated shelf sets for consumer healthcare need states for example, diabetes, pain management, etc. to group products together and assist the consumer in their shopping experience. DSN: What role, if any, is technology playing in your organization s product development and/ or customer engagement efforts? DAVE TOMASI, COMMERCIAL DIRECTOR, P&G PERSONAL HEALTH CARE: The power of computing, combined with lower costs for diagnostics and genomics, means that over the coming years both healthcare professionals and consumers will have broad and transparent data to understand the effectiveness of [the] self-care products they are using. As a result, P&G will continue to invest in and prioritize focus on driving products that are proven to have credible and meaningful impacts on consumer health outcomes. AMERICAS, GSK CONSUMER HEALTHCARE: Technology plays a tremendous role for GSK Consumer Healthcare, in both product development and consumer engagement. In 2016, we opened our innovation center in the United States that takes you from the R&D process to the consumer sensory process to the shopper process all under one roof. This suite of labs helps us first identify and design around a consumer s unmet needs and then test it in real time. It is a critical improvement that is allowing us to move more quickly to meet consumer needs. Leveraging technology to activate insights from millions of households helps manufacturers and retailers to better fine-tune their targets, develop white space opportunities, track sales and measure the success of implemented programs. We are on a journey to understand the individual shopper path to purchase. Ultimately, successful companies will leverage these data to ensure that marketing efforts are not a silo approach to consumer and shopper marketing, but rather a holistic program that is based on the consumer you are trying to reach, and how they prefer to receive content. 2 / March 2017 We increasingly are seeking ways to interact one-on-one with consumers via digital and mobile.... We have a responsibility to make sure the information we provide them is accurate and helpful. Colin Mackenzie, region head of the Americas, GSK Consumer Healthcare DSN: What impact is omnichannel having on the OTC business? How can manufacturers and retailers better engage consumers via digital and mobile, and influence purchasing decisions away from the shelf? E-commerce is exploding, and in OTC/health care it creates a distinct occasion for marketers to capitalize on both regimen and replenishment opportunities. The growth of e-commerce will create some associated channel shifting from traditional brick-and-mortar stores. However, I anticipate DRUGSTORENEWS.COM

4 that overall OTC will grow in the new omnichannel world. Mobile retail will continue to be an increasingly important channel, as it is growing faster than desktop and has increased 10- fold since The world is going digital, and marketers have to capitalize on the digital and mobile environment in order to be successful in this new world. JEFF VERNIMB, GENERAL MANAGER, MO- BERG PHARMA: We have a lot of discussion internally and with our partners as we try to strike the optimal balance between traditional vehicles and web, mobile, social and in store. According to an April 2016 study by Sales- Force, digital is expected to surpass TV as the primary media vehicle at some point in In a Harris poll, 82% of smartphone owners stated they use their phone while making a purchase decision and that was in As retailers and vendors look to engage consumers, we must recognize that shoppers value quality interactions with product endorsers they trust. They want organic, two-way conversations with information easily accessible, [and] search and display in mobile has surpassed desktop. [According to the recently released] Accenture survey, Seeing Beyond the Loyalty Illusion: It s Time You Invest More Wisely, connecting with consumers through their preferred channels of communication and delivering information they value drives loyalty, 51% of respondents indicated greater brand loyalty to brands that communicate with them through their preferred channels of communication and 81% feel loyal to brands that respect their time. As best practices emerge in the OTC segment, I expect we will see more synergy between vendor and retailer efforts. AMERICAS, GSK CONSUMER HEALTH- CARE: While intent-based advertising is still important, we increasingly are seeking ways to interact one-on-one with consumers via digital and mobile. Consumers have more control over the conversation than ever before, yet we also have a responsibility to make sure the information we provide them is accurate and helpful with their healthcare needs. One example is a partnership with IBM Watson to help leverage cognition, which humanizes the use of data and provides a more customized message to meet consumers specific needs.... We must be straightforward with messaging, consistent with pricing, quick to engage when there is feedback and have a plan to gain [millennials ] trust. Jeff Vernimb, general manager, Moberg Pharma DAVE TOMASI, COMMERCIAL DIRECTOR, P&G PERSONAL HEALTH CARE: Omnichannel has an important impact in online shopping and online influencing. Manufacturers and retailers need to have the latest and most accurate information available online for shoppers doing research, and it needs to work seamlessly across all screens. Additionally, both parties can work to use shopper-provided information, such as loyalty card data, to better customize information and offers to suit the shopper s desires. Making online research and the shopping experience easy and intuitive, just like in the store, is key to expanded omnichannel sales. DSN: What is your key area of focus for your brands this year, and how if at all is that different from years past? AMERICAS, GSK CONSUMER HEALTHCARE: We ve seen greater changes in brand marketing in the past five years than in the previous 50. Clearly, brands need to keep a laser focus on digital as it is literally changing by the minute, and while digital has been important to GSK for some time, the energy and investment behind digital this year and in years to come will be significant. JEFF VERNIMB, GENERAL MANAGER, MOBERG PHARMA: We are entering an exciting stage as a company. In the past couple of years, we ve significantly increased the size of the company and have built a strong portfolio in specialty skin care, which for Moberg includes first aid [brands] New Skin, Dermoplast and Domeboro, [and] foot care brands Kerasal and Baby Balmex. We ll look to build on the Kerasal success with the new brands and gain more experience with emerging technologies to enable more precise targeting of priority audiences. DSN: From your perspective, what are some of the best opportunities to grow sales in the OTC category? JEFF VERNIMB, GENERAL MANAGER, MOBERG PHARMA: This past year, we delivered a significant increase in our Kerasal nail brand market share by investing in a broad reach campaign that was supplemented by digital and in-store. As we developed the consumer communication, we worked diligently to identify a breakthrough message. Though we did not get all the way to what would be considered a holistic omnichannel strategy truthfully, we d still be classified as multichannel we did make progress as we achieved a substantial share increase and expanded the segment during the core season. Television provided broad reach. Digital, social and in-store vehicles increased our core shopper impressions. Not all of it worked, but the learning was valuable. So, No. 1, if you have a strong message, invest. And, No. 2, test new programs and concepts to learn what works. As to other growth opportunities, online shopping for OTCs certainly is underdeveloped. We believe expansion will be highly incremental to brands and segments. Personalization remains a hot topic. To reference the Accenture survey again, 41% of U.S. consumers are loyal to brands 3 / March 2017 DRUGSTORENEWS.COM

5 that enable them to personalize products. This is an area where we can work collaboratively with retailers. I also see potential in independent and local pharmacy. Millennials in particular should be drawn to the customer service, assortment and convenience. The wholesaler banner pharmacies are doing some great work in expanding front-end. Finally, I continue to believe there is more we can do to position OTCs as concomitant therapy with prescriptions. The pharmacist can really drive this with the support of the vendor community. WIDE: I believe e-commerce will expand overall OTC and nutritional usage. Automatic replenishment for [such] categories [as] vitamins where regimen is such a big challenge will grow categories through incremental compliance. It will also foster a personalization/one-on-one relationship by directly marketing to their individual needs, which will allow for cross-category purchase. In addition, devices will help to enable the convergence of fitness, diet, health care and OTC. SCOTT EMERSON, CHAIRMAN, PRESIDENT AND CEO, EMERSON GROUP: I think there is a much bigger discussion issue. There is a gap between the haves and the have nots. Ten manufacturers do half of the sales in OTC; 1,000 do the other half. We are at a time where OTCs are declining 1%. If it weren t for three RX-to- OTC switches, the category actually would be down 3%. The large companies are disengaging from the retailer; the retailer is disengaging as well. Partnering doesn t exist generally. The bottom 1,000 [companies] are fighting just to survive. SKU reductions are drastic, [yet at the same time] we are honestly over SKU d. DSN: There is a lot of focus among brand marketers to capture the millennial shopper. How can OTC brands and retailers do a better job converting these younger consumers and winning their loyalty? JEFF VERNIMB, GENERAL MANAGER, MO- BERG PHARMA: Millennials think, act and make buying decisions differently. They don t experience advertising as their parents do, and they want to connect with brands and product communication needs to fit their lifestyle. They have a cut to the chase mentality and, importantly, put more stock in the product reviews and referrals of friends and actual users who have posted than in the messaging from brand owners. To do a better job with conversion, we must be straightforward with messaging, consistent with pricing, quick to engage when there is feedback and have a plan to gain their trust. [To cite the] Accenture [survey again], U.S. consumers are loyal to brands that actively engage them to help design or co-create products or services, or that present them with new experiences, products or services. They are loyal to brands that engage them in multi-sensory experiences, using new technologies such as virtual reality or augmented reality. While much of this may be outside the scope of what OTC has historically been associated with, we need to challenge ourselves to get outside of the traditional box. WIDE: To reach millennial shoppers, marketers are going to have to show nimbleness and flexibility, as the millennial shopper is much more mobile than consumers of past generations. They are consistently shopping price, and they rely more heavily on reviews and social media to make purchase decisions. [There is] a growing trend toward capitalizing on self-care and personalization.... [along with] an increased focus on digital and social.... Robert Sanders, EVP practice leader healthcare and home, IRI Worldwide DSN: The President and the Republican-controlled Congress have vowed to repeal and replace the Affordable Care Act. From a macro/ noncategory-specific perspective, how do you think this will impact the OTC business? While repeal of the ACA will have implications for many consumers healthcare needs, from a 4 / March 2017 DRUGSTORENEWS.COM

6 macro/noncategory-specific perspective, I anticipate this will only nominally affect the OTC business. In the research we conducted on consumer purchasing post the implementation of the ACA, we saw that it had little impact on the purchase of OTC products. These products are often chosen as first-line therapy, and we do not see that changing very much when or if ACA is repealed. DSN: Has your company uncovered any new consumer insights that retailers need to be aware of? There is a gap between the haves and the have nots.... Ten manufacturers do half the sales in OTC,... [and] partnering doesn t exist.... Scott Emerson, chairman, president and CEO, Emerson Group WIDE: Self-care will play an increasingly greater role in consumer purchase decisions in OTC. Personalization and the movement to 1:1 consumer marketing is a growing trend to reach consumer targets. AMERICAS, GSK CONSUMER HEALTHCARE: Self-care has become more and more important as consumers are increasingly diagnosing and treating themselves. As an OTC manufacturer, we have a responsibility to ensure our product information is accurate, helpful and easy-tofind to treat a consumer s needs. Consumers are also diagnosing from anywhere and expecting ubiquitous health care. To serve those needs, we need to deliver the right products and services in a hyper-convenient way in the right format, at the right price, delivered at the right time. WIDE: A growing trend toward capitalizing on self-care and personalization, both concepts that have been evolving over the past several years. Additionally, an increased focus on digital and social, which seems to be growing each year in importance. DSN: Looking ahead, what is your outlook for the OTC business in 2017 and beyond? Are you an optimist or a pessimist? Why? COLIN MACKENZIE, REGION HEAD OF THE AMERICAS, GSK CONSUMER HEALTHCARE: I am optimistic about the fu- ture of the OTC business. GSK Consumer Healthcare North America has enjoyed marketleading growth over the past five years. We ve undergone leadership changes that include combining North America and Latin America in my newly created Americas Regional role. The strategy is that we can bring best practices, key talent and consumer insights more broadly across the Americas. From an insights perspective, I think the continued momentum behind self-care is a great opportunity for consumer health care overall. It s our collective responsibility to anticipate consumers evolving wants and needs, and then deliver the right product. The switch of Flonase Allergy Relief and our newest innovation Flonase Sensimist Allergy Relief are great examples of anticipating that consumers were increasingly self-diagnosing an allergy and wanting to find the right product to meet their needs on their own. We made sure we had a continuous respiratory pipeline available to meet the changing needs of the consumer. SCOTT EMERSON, CHAIRMAN, PRESIDENT AND CEO, EMERSON GROUP: The winners will be the best fighters and adapters. The bigs will figure how to engage the consumer personally, [but] most won t. Private label will grow big time and it should. Innovation is the most over-used word we don t have it. DAVE TOMASI, COMMERCIAL DIRECTOR, P&G PERSONAL HEALTH CARE: I am optimistic about the future for OTC. We see that people are taking more control of their health and wellness by proactively seeking information on products and services that improve their quality of life. This [trend toward] self-care, along with the proper utilization of clinically proven OTCs, [is an] important component to total health and wellness, which is a trend I expect to see increase in the future. JEFF VERNIMB, GENERAL MANAGER, MOBERG PHARMA: Definitely an optimist. We are long-standing clients of The Emerson Group spend 20 minutes with Scott and his team and you can t help but feel energized about OTCs and working with retailers. [Last year] was a game changer for Moberg. We are into the new year with an expanded portfolio, great partners and a high level of optimism. Completely optimistic. There is so much upside potential in the OTC space with: Rx-to-OTC switch Several new blockbuster categories are possible; The convergence of health care, OTC and fitness; The growth of devices both in market and those still yet to be launched; The growth of e-commerce; and Increased focus on 1:1 marketing, digital marketing and mobile retail. 5 / March 2017 DRUGSTORENEWS.COM