User, chooser, payer and profiteer

Dinnertime talk last week revolved around potential majors that our soon-to-be-college-firstyear daughter might want to pursue. She's a gifted artist and consummate people person who's done well for herself in her burgeoning retail career, so marketing might be a good fit. As a marketer myself, I'm not trying to steer her into the family business, but I'm not going to push her away just yet, at least until I can share a couple of hard-earned nuggets with her.

The conversation veered to what basics she should know about marketing. I wanted to try and think of some universals beyond the 4Ps of marketing that I'm sure she'll encounter in some of her classes. I also wanted to get ahead of the PESO model of communications that seems to be popular in the marcom circles so she's at least heard of that. And that's when I remembered a bit of economic theory around incentives.

Fifteen or sixteen years ago now, two economists, Richard Thaler and Cass Sunstein, wrote an amusing book called Nudge. Yes, it's economics, but it's it's written in a way to help people think about solving big problems by looking at how organizations and governments can help people help themselves by studying their own self interests.

Anyway, there's a section in the book about incentives, and the authors present four questions that, if you can clearly answer them, you can see the choice architecture of the incentives being used. Full disclosure, I am not a student of economics, and I may very well be butchering this particular area of economic theory, so my apologies. The point is, those four questions are actually the basis for any good marketing effort, as I went on to share with my daughter.

WHO USES?

Any marketing plan worth its salt starts with the intended audience, so defining who will use the service or product is a necessary first step. Teams can build their market research and usability plans around this information, so defining this clearly is critical to any marketing outreach.

WHO CHOOSES?

In the consumer marketing world, these groups are often one and the same. My son wishes to buy a pair of sneakers so he does a little research, saves up his money, logs into eBay and buys a pair of sneakers. He's the user and chooser. This is not the case in the B2B world or in the healthcare space, which is why answering this question fully is so important. In healthcare, your mother may have the ailment, but it's her physician who will actually choose her medication (in worse cases, it's the insurance company who chooses, but let's keep things simple for argument's sake). User and chooser are different, so market research and product development paths must also take these differences into account as the overarching marketing plan comes together.

WHO PAYS?

Again, in the consumer space, this is fairly cut and dry. In the example where my son wanted to get a new pair of sneakers, he did the research, he saved his money, he chose not only the sneaker itself, but the retail channel and conducted the transaction on his own. He's the user, chooser and payer. This just is not the case in the B2B or healthcare spaces. If you think about the cluttered healthcare space in the US, the user (your mother), the chooser (the physician) and the payer (insurance company) are all different. And in economic theory, are all incentivized differently (but that's a discussion for another day). From a marketing standpoint, this means your plans need to address these additional layers of complexity.

WHO PROFITS?

Answering this question in the consumer space is the more complicated of the other questions since the supply chains for different products and services are increasingly more complex. For sneakers, the original company might be profiting from this most recent transaction, but probably not as much as the retailer, or in the case of eBay, the seller. There may have been a wholesaler involved as well and possibly even a creative agency and media buying agency, so the question of who profits requires some level of research to really understand who's involved.

This question is exponentially more complicated in B2B and healthcare settings as you can imagine. For healthcare, it's not as simple as a pharmaceutical company making money from a transaction that a physician initiated on behalf of a patient that an insurance company paid for. No, that'd be too easy.

In looking at who profits in healthcare, there's the pharma manufacturer, who might be different than the pharma seller, who is usually different than the pharma distributor. And all of those folks still need to make it through a PBM, a pharmacy benefits manager, which is supposed to be a third party organization that helps price pharmaceuticals for the healthcare industry. The issue is that the major PBMs in the US are owned by large conglomerates who also own healthcare insurance companies. Again, there's an issue with incentive alignment in the healthcare space (and that's a topic of discussion for another day, too).

By this time at dinner, my daughter had already tuned me out, so my intent is not to bore anyone else with economic theory, but rather share four simple questions, that when answered thoroughly, can provide a solid basis for any type of marketing or communications effort your team or organization builds. Best of luck!

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