Effects of promotion on pharmaceutical demand

John I. Mackowiak and Jean Paul Gagnon

Social Science & Medicine, 1985, vol. 20, issue 11, 1191-1197

Abstract: The research question addressed in this study was, "Do changes in promotional expenditure cause changes in the size of the market (primary demand) or market share (selective demand)?" Two types of promotion were evaluated; sales calls to physicians and medical journal advertising. The sales elasticities of each of these promotional techniques were estimated through the use of ARIMA modeling. The market expansive effects and the market share effects were measured for each of 7 drugs in two therapeutic categories, the benzodiazepines and diuretics. The results of the analysis showed that there was no correlation between changes in detailing or journal advertising expenditures and primary or selective demand. Thus, it was assumed that the primary and selective demand elasticities for pharmaceutical advertising may be equal to zero. Drug manufacturers should evaluate the effects of reductions in their promotional expenditures, changes in promotional content, as well as seek alternative methods of advertising which may have a higher sales elasticity and effectiveness.

Date: 1985
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