Modeling the effects of pharmaceutical marketing

Peter S.H. Leeflang, Jaap E. Wieringa

Research output: Contribution to journalArticle

Abstract

Successful innovation of prescription drugs requires a substantial amount of marketing support. There is, however, much concern about the effects of marketing expenditures on the demand of pharmaceutical products (Manchanda et al., Market Lett 16(3/4):293–308, 2005). For example, excessive marketing could stimulate demand for products in the absence of a fundamental need. It also has been suggested that increased marketing expenditures may reduce the price elasticity of demand and allow firms to charge higher prices (Windmeijer et al., Health Econ 15(1):5–18, 2005). In this paper, we present the outcomes of an empirical study in which we determine the effects of pharmaceutical marketing expenditures using a number of frequently used “standardized” models. We determine which models perform best in terms of predictive validity and adequate descriptions of reality. We demonstrate, among others, that the effects of promotional efforts are brand specific and that most standardized models do not provide adequate descriptions of reality. We find that marketing expenditures have no or moderate effects on demand for pharmaceutical products in The Netherlands.
Original languageEnglish
Pages (from-to)121-133
Number of pages13
JournalMarketing Letters
Volume21
Issue number2
DOIs
Publication statusPublished - Jun 2010

Bibliographical note

Creative Common License - Attribution

Keywords

  • effects of pharmaceutical marketing
  • drug price elasticity
  • marketing model building

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