Perception is Reality

Posted by Scott Provost, Percepta

We have all been so busy as the year (and the decade) draws to a close at Percepta that I have been pulled from these blog posts for the better part of two months.  But that is a welcome sign that the biotools industry is alive and relatively healthy.

Considering all that we encounter in the industry as a marketing consultancy we probably have a somewhat unique perspective on the wants, needs, and desires of the collective biotools segment (companies and customers alike).  The list can essentially be summed up in three main wants, needs, and desires. 

The Wants: The number one thing researchers want from the products they use is that they perform as promised.  Researchers are most tolerant if they try some product for an off label application and it fails, but they rightfully expect it to deliver results as advertised.  Assuming most biotools companies have learned and understand this well, it is still too common to see some products rushed to market before they are really ready for prime time.  A bad first impression for a product (or worse yet - a company) is a hard burden to overcome.  Avoid this like the kiss of death.

The Needs: This need is so obvious but so important that we couldn’t leave it out.  Here goes – biotools companies need to honestly recognize that if the product isn’t obviously and distinctively different from other products then it is perceived by researchers as a commodity and that perception is the reality. That’s it.  How you define the “obvious and distinctive difference” will vary greatly depending on your skills as a marketer and on your product and/or company but it better actually mean something to your target audience or it is sure to just lie there disappointingly.   When that happens, companies have only one effective lever to pull – price - which is just fine. Winning on price is perfectly respectable, just ask Walmart.  But don’t kid yourself into thinking about premium pricing if you are not truly differentiated in some meaningful way.  The emphasis is on meaningful.  Marketing and pricing managers need to remember this important reality.

The Desires: Researchers desire that suppliers treat them with respect.  Seems obvious but companies sometimes fail to realize that poor or non-existent technical support, or unknowledgeable field representatives, or even poorly designed automated phone systems  leave researchers feeling like they are not important.  Ask yourself honestly the next time you are navigating an automated telephone systems for three or four minutes only to be told the offices are now closed.  The problem isn’t that the offices are closed – it’s that they wasted your time.  Why?  Because you must not be very important – or so it seems.

Let’s agree that 2010 is going to be the year that biotools companies shine like never before because they are getting much more in touch with their customers and really understand their needs, wants, and desires.  Happy New Year!

Slice of American Stimulus

Posted by Scott Provost, Percepta

As a marketing consultancy that serves the research biotools industry, Percepta’s business is more or less directly linked to the market dynamics of life science research in general.   These market dynamics can be – well … dynamic.   For example, as noted in earlier posts, research funding is the engine that drives the research biotools industry and to a large degree as funding goes – so goes the biotools industry.  Recent years have presented a difficult funding environment for US researchers and, as a consequence, many biotools suppliers. That’s why we believe things are about to get a whole lot better for biotools suppliers that serve the American life science research markets.

Here’s why - Percepta sponsored a research study in June/July to assess the ‘optimism’ of life science researchers in light of the American Recovery and Reinvestment Act of 2009.  There was a lot of good information that came out of that research study but a couple of facts stood out to us.  Altogether, the NIH budget for extramural grants is enjoying a 55% increase over last year.  Of the $9 billion dollars slated for new NIH grants to be funded in 2009-2010 there is still a little over $7.4 billion that has yet to be distributed to researchers.  Better yet, the vast majority is expected to hit the coffers of research labs by March 2010!

It is not exactly a secret that a significant portion of that funding will be spent on consumables like reagents, kits and enzymes as well as new research equipment though out American universities, colleges, research institutes, and potentially any lab funded by the NIH.   We should soon be hearing a great big ‘cha-ching’ for the biotools industry. 

Which companies will benefit the most?  Well that depends on many things but one thing is certain – companies that understand their customers well, because they have profiled them and use that information to serve them better, will be in the best position to capture a healthy slice of the stimulus pie.   Biotools suppliers that don’t really understand their customer and rely on one-size-fits-all, shotgun marketing may well be left licking the knife.

If licking the knife seems like a dangerous proposition, think about letting Percepta help you understand your customers and your markets better.  Also, download the free report Life Science Research Funding Optimism In The United States: A Researcher’s Perspective compliments of Percepta. 

Let us know what you think.  Your comments are welcome.

Posted by Scott Provost

Last October our little consultancy looked around and noticed things had begun to slow down a bit.  New business wasn’t banging at the door and we had to face an unpleasant truth – we were not as immune to the economic downturn as we had hoped.

Percepta is a San Diego area marketing consultancy serving biological research tools suppliers.  You know the ones I mean - big companies that buy up small ones; small ones that want to get bought, and everything in between.  Having worked for many of them over the past 20-some years we all had been through economic slumps before.  Back in the late eighties during one of the first resessions the adolescent bio-tools industry faced, we could feel somewhat secure because smart venture groups kept courting the short list of bio-tools companies that existed then telling them that biological research was almost completely funded by the federal government and the government would be sure that “research must go on”.  The suppliers, they said, were “recession proof”.

So what happened?  Why did business slow down so dramatically in October 2008?  What happened to the old mantra “research must go on”?  Well the answer is a little complex.

First there was the psyche of the tools companies.  I spoke with a bunch of friends I’ve worked with over the years at many tools companies last October when the economy was in freefall and things were a bit scary.   The VP of Marketing at one of the divisions of one of the leading suppliers to the pharmaceutical, healthcare and life science industries told me that business was slow and “management wants to keeps its powder dry” – translation: we are not going to spend any money on marketing in case we need it later.  A marketing manager at a large well known molecular biology and chemicals company told me basically the same thing – “budgets are tight until January 09 at the earliest”.  The management at these and other companies was nervous. Who wasn’t?

Second there was the exodus of investors.  Small, medium and large companies couldn’t raise money no matter how urgently it was needed.   Nascent startups were withering on the vine and even giants like Invitrogen, which at the time was trying to raise capital to complete the acquisition of Applied Biosystems, had to patch together commitments from over 300 separate banks and raid its own stock and cash coffers to close the deal.  And anyone that has tried lately knows that venture capital has all but vanished in biotech circles.  Even if it seems counterintuitive, when money is tight marketing budgets are often among the first to suffer.

Finally there is the research funding hangover resulting from the decade long paltry growth in federal funding during the Bush administration.   In the end we are all dependent on researchers buying research products.  Sure there are pharmaceutical and diagnostic companies that don’t rely on federal money but they are only half of the market and they are cutting budgets too.  Bench scientists have had to scrape by with fewer research dollars and the dollars they have don’t buy as much as they used to.

But wait a minute – didn’t we hear something about a new $800 billion stimulus package?  Didn’t that include an unprecedented $10 billion for the NIH to spend in two years as part of the American Recovery and Reinvestment Act of 2009 (ARRA), and isn’t $9 billion of that earmarked for extramural grants to pay for the advancement of scientific research?  Shouldn’t tools company’s collective mouths be watering in anticipation of the influx of fresh research money?

Yep.  So where is the money? We decided to find out.  Percepta sponsored a study to take the temperature of research funding optimism in America as a result of the ARRA stimulus.  We are analyzing the results now and in coming posts we will share some of the more interesting findings.  We’ll also post the final report on Percepta’s website so keep an eye out.     

October 2008 was a sobering month for a small business like Percepta.  2009 is much more like normal, albeit a new normal, and business is back to predictable levels because “research must go on”.   But the world is changing and bio-tools companies in the new normal will be changing too.  We can’t wait to see what happens.  

Your comments and thoughts are welcome.