Global Marketing and Research and Development

University of Texas at ArlingtonNovember 17th, 2010

Agenda

The Need for Global Marketing Evolution of Alcon Global Marketing

– How has it changed– Why has it changed

Current Role of Alcon Regional Marketing Current Role of Alcon Global Marketing Alcon Global Advertising Push vs. Pull Strategy Alcon Integration of Marketing, R&D and Manufacturing

45.1%

54.9%

The Need for Global Marketing Alcon Geographic Sales Breakdown

47.8%

52.2%

2000 2010*

United States International

* YTD - Q3, 2010

• 5 Research Centers• 14 Manufacturing Plants• 75+Operating Companies• 72 Countries with Physician Training Centers• 14,500 Employees

Alcon Headquarter Office

Alcon Research Facility

Alcon Manufacturing Plant

Alcon Operating Company

Global Reach

Old Global Marketing Function

Research & Development

Global, Regional and

Affiliate Marketing

Product DevelopmentBrand Development &

Promotion

Old Global Marketing Structure

U.S.Product Manager

International Product Manager

U.S. Japan EURMEA LACAR CAFE

Affiliate Product Managers

Old Global Marketing Structure

U.S.Product Manager

U.S. Japan EURMEA LACAR CAFE

International Product Manager

Affiliate Product Managers

Global Marketing Director

New Global Marketing Structure - Strategic Brand Building

Global MarketingGroup

U.S. JAPAN EURMEA LACAR CAFE

• Strategic Brand Planning• Market Research• Commercial Contact for Product Development• Commercial Contact for Medical Affairs• Global Position & Campaign Creation• Global Communication Platform • Global KOLs

75+ Legal Entities / Affiliates Brand Managers• Region execution of Global Strategy

• Regional KOLs

• Regional Phase IV

• Affiliate oversight

• Local Execution of Global Plan

• In country share development

GMC

Current Global Marketing Function

Global Marketing

Regional Marketing

Research & Development

Medical Affairs

R&D Alliances

Legal

Finance

Manufacturing

Business Development

Role of 2010 Regional Marketing Teams

Regional Marketing Plans– Global Messaging Compliance– Objective– Strategy– Critical Success Factors– Targeting– Demand Model– Market Research– Tactics

Resource Allocation Compliance / Regulatory

Role of 2010 Regional Marketing Teams

Speaker Development Meetings KOL Management Promotional Meetings Educational Meetings Promotional Articles Advertisement Placement Sales Meeting Execution Field Visitations Message Management Share of Voice Management

Role of 2010 Regional Marketing Teams

Forecasting– Regional development opportunities– Finance– Manufacturing

Provides regional input on acquisitions and portfolio planning Pricing (within Global Guidelines) Oversees affiliate activities and pricing Regional training needs and capabilities

Role of Global MarketingPortfolio Management

Increasing eNPV

Internal Development

Projects

Acquisition Targets

Licensing opportunities

Role of Global Marketing

Managing Portfolio Strategy Strategic Planning Process Global Reimbursement Strategy Global Advisory Boards Global Market Intelligence Requirements Global Phase IV Plan Global Meeting Execution Global Field Visits & Market Support Brand Resource Binders

Alcon Corporate Governance

Project Review Meeting

Portfolio Management Committee

Global Marketing Committee

Global Advertising?

Standardization of Advertising

For:– Economic Advantage – Economies of Scale– Creative Talent / Execution Concern– Global Brand Names

Against:– Cultural Diversity– Regulatory Concerns

Barriers to International Communication

Cultural barriers– Pepsi (SE Asia)

• Changed the color of vending machines from royal blue to light blue• Light blue is associated with death and mourning in SE Asia

Source and Country of Origin Effects– Quality Perception (e.g. Japan)– Nationalism

International Marketing Mistakes

Parker Pens (Mexico)– “It won’t leak in your pocket and embarrass you”– Used embarazer (to impregnate) for emabarass– Translation:

Coors (Spain)– “Turn it loose”– Translation:

Pepsi (China)– “Pepsi brings you back to life”– Translation:

Suffer from diarrhea

It won’t leak in your pocket and make you pregnant

Pepsi brings your ancestors back from the grave

AZARGA Case Study

VALIDATE 1 2 VALIDATE 3 4 5 VALIDATE 6 7

Background Research

(Obtain background

research from R&D, GMI, etc)

Identify Product Benefits

Develop Positioning Statement Options

Global Positioning Research

Create Brand

Positioning Document

Develop Creative Brief

Generate Core

Campaign Ideas

Global Concept

Devt. Research

Develop Message Platform

(addtl message testing as needed)

Adapt Global

Binder for Regional

Execution

Background Phase

Positioning Phase Concepting Phase Execution Phase

GMC approval of positioning

options to be tested

GMC approval of recommended

concept

Creative Brief

Approval

Meeting

GMC approval of final positioning

and FOC

Alcon Branding Process (ABP)

Incl. feedback from Regions & approval from

VP, Mktg

Incl. approval from Director,

GMI on Market Selection

Incl. approval from Director,

GMI on Market Selection

Incl. feedback from Regions & approval from

VP, Mktg

~40 weeks

Local Flexibility

Examples of Regional Support / Flexibility

Products KYNEX® – Korea VIGADEXA® – Latin America CIPRODEX® Otic & PATANASE® – U.S.

Local Execution Regulatory Claims Targeting Packaging Needs

Push vs. Pull Strategies

Pull Strategy

Mass Media

Advertising

Push Strategy

Personal Selling

Factors to Consider:Consumer SophisticationAbility to Reach Audience

Channel lengthMedia Availability

Push vs. Pull

Push– Industrial or Complex

products– Distribution Channels are

short– Limited Advertising Media

Pull– Consumer products– Distribution Channels are

long– Sufficient Advertising Media

Integration of Marketing, R&D and Manufacturing

Research & Development

Cross-functional Integration of Project Teams Helps Insure:– Project development projects are driven by customer

needs– New products are designed with manufacturing in mind– Development costs are kept in check– Time to market is minimized

Project Code 22-XXXX

SpecialtyPharmaceutics

Anti-Inflammatory

Aspiration for value proposition at launch:

Base Case: Upside Case/Aspirational Case:

Indication and Usage:

Patient Profile/Target Population:

Dosage and Administration:

Target Project Profile

High Performing Cross Functional Teams

“Heavyweight” Project Manager– high status within the organization – power and authority required to get financial and human

resources the team needs to succeed. Should be composed of at least one member from each key

function The team members should be located in one location if

possible Should have a clear plan and clear goals

– Developmental milestones and budgets