Problem
Company Case Bayer: Big Data for Customer Insights
Bayer Aktiengesellschaft, or Bayer AG, is a life sciences company and a global leader in healthcare and nutrition. Headquartered in Leverkusen, Germany, Bayer has a strong presence in Europe and more than 150 years of experience. To expand its operations, Bayer carefully examines the size of the market, determines its profitability, and analyzes the entry and exit barriers. Marketing information is vital for decisions on entering new markets and about adapting to existing ones, but Bayer must balance its information gathering against its policy on customers' data privacy as well as alignment with future operational objectives. When it comes to entering new markets, Bayer's analyses are based heavily on customer satisfaction and performance measures.
Reading the Customer's Mind
Bayer bases its various strategies on marketing information. Some of its markets are difficult to operate in; for example, pharmaceuticals involves multiple customers, distribution channels, purchasing arrangements and pricing methodologies, marketing techniques, and cost-control tools or prescription drug reimbursement systems. Gaining useful customer or marketplace insights from these various sources is challenging. Additionally, Bayer conducts research to discover new drugs and tests and validates their effectiveness and safety before introducing them to the market. As such, the company accumulates, analyzes, and stores vast amounts of clinical data from patients as well as healthy volunteers. Marketing information is also collected from laboratories and electronic devices but is automatically anonymized at the point of collection, following the guidelines and regulations created by local drugs administrations. Recently, Bayer deployed a microservices-based architecture for its data platform to enable easier and faster analysis of drug development data for company's researchers. Bayer operates mainly as a business-to-business (B2B) company, but in the pharmaceuticals market, its focus is on researching, developing, and marketing specialty-focused medicines to businesses as well as individual consumers. Its products are distributed to hospitals and general practitioners, who also deliver useful marketplace insights. But Bayer carefully examines all information gathered even before it distributes to these intermediaries. For example, for distribution of the allergy drug Claritin, Bayer uses third-party analytics to analyze global warming data so that it can model the supply based on weather trends and allergy trends. Bayer's customer insights and marketplace data are processed based mainly on how specialized products are received within the pharmaceutical market. Healthcare division insights are communicated between Bayer and the brands to which its products are distributed. Coupled with a large geographical footprint, this results in an enormous store of insights and techniques that can be used in marketing mix decision-making, formulation of marketing strategy, as well as daily business operations. Bayer has market- and customer-specific distribution channels for each segment in which it operates. Through a number of programs, such as its Patient-Focused Transformation of Customer Engagement, the company draws on the experiences and challenges of participants to support business transformation initiatives at the company with the objective of shifting mindsets, implementing new processes, building new skills, or changing target behaviors. This customer engagement model has transformed information gathering into a single customercentric and patient-focused model. The consumer health and pharmaceuticals segments are connected to a global pharmaceutical monitoring system that includes safety management teams and experts across various disciplines. To detect potential safety concerns early on and identify changes in the risk-benefit profile, such teams must evaluate internal benefits, safety data, marketing studies, clinical trials, external databases, and scientific publications. These are all entered into Bayer's pharmacovigilance database, which is used in market research to test the viability of new products and services based on the responses of potential customers. The company is constantly investing in R&D-which generates information-but each product must also comply with the relevant regulatory environment.
Diving Deeper for Insights
At Bayer, internal data is information about customers-current and potential-collected primarily from four major sources: sales, finance, human resources, and marketing. However, gaining trade insights from each segment can be challenging due to legal requirements, especially from sources such as patients. For example, to collect customer satisfaction data, the company must follow different standards for prescription medicines and for non-prescription medicines. Bayer's marketing activities focus on the local needs of its customers, but these needs can vary significantly. The company's customer-focused marketing activities take this into account. For instance, working together with Kansas City-based Consumer Orbit, Bayer combines the data it generates with the firm's databases, resulting in a total of 63 trillion pieces of data that enable Bayer to build a model of its customer base and deliver tailored messages to its customers through their preferred communications platform. However, customer needs may differ merely because each country or state has its own set of rules and laws. The company must adhere to laws and regulations dealing with marketing practices; global, regional, and local industry codes; customer privacy and protection of consumer information and data; and recommendation and promotion only of lawful uses (for instance, there should be no off-label promotion for medicinal products). Ongoing dialogues with customers enable the company to take such local and country-specific regulatory frameworks into account and deploy optimization measures. Bayer analyzes customer satisfaction reports and customer complaints to compare the company's performance in the individual segments, optimize its measures, and safeguard its long-term business strategy. Various marketing research techniques ensure accurate directions for shaping and redefining its marketing strategy. For instance, by using AI-driven diagnostic and treatment support for individual customers in the pharmaceuticals segment, the company accelerates the discovery of new drugs while combining processing power with the large data sets and advanced analytics available for marketing information. This allows Bayer to offer a personalized testing and treatment as well as personalized online medical consulting that examines customers' lifestyles, health, and diet directly through a website. On June 7, 2018 Bayer acquired 100 percent of the outstanding shares of Monsanto Company. Bayer's strong position within the market is often contested by, for example, the fusion of Dow Chemical and Dupont, the two largest U.S. chemical groups. In crop science, Monsanto's position is more secure, so Bayer benefits from already present marketplace information and can outperform competitors. The acquisition strengthens Bayer's position as market leader in crop science, with the leading digital agriculture platform-Bayer now has better access to farmers than anybody else. The growing importance of data analysis and digital farming tools not only facilitates agronomic advice but also sales of seeds and pesticides. Before taking any crucial decision, Bayer must determine in advance how the product works and what the market's regulatory environment is. For this purpose, the company collects external data to find out which market to enter and when is the best time to make an investment. This is where the big data from the Monsanto merger comes into play. Big data often opens new windows of opportunities; for instance, Bayer can now process terabytes of data into relevant information that helps farmers unleash their crops' full potential and achieve efficient yields that improve their financial results. Big data is transforming agriculture to an almost overwhelming degree. Tractors and other farming devices equipped with sensors, mobile connectivity, and GPS; drones with infrared cameras and GPS patrolling the air and reporting on field conditions; satellites and phone apps monitoring soil and climate conditions-these are just a few sources of information. Recognizing the growing market for digital-based agricultural services, Bayer is increasingly employing data science methods in all R&D activities, bolstering its scientists' expertise with targeted data science learning programs. Bayer maintains a global network of R&D locations and employs about 17,300 researchers. In 2018, R&D investments increased by a nominal 16.5 percent to €5.2 billion. In addition, the company recently adopted data aggregation and direct partnerships with key vendors to further improve efficiencies.
Safeguarding Privacy Bayer encapsulates its corporate values in what it calls the LIFE standard: Leadership, Integrity, Flexibility and Efficiency. It is followed in the marketing of their products and services as well. For instance, its standards of Integrity are reflected in the care with which the company handles privacy when it comes to customer data. Bayer ensures that specialized service contractors who handle customers' personal data work closely with the company to process the data strictly within its regulations and directives and follow respective data processor agreements; the company also monitors these contractors regularly. The company's corporate compliance policy on responsible marketing and sales details multiple measures that are taken to prevent any ethical issues. Bayer's lobbyists are required to act according to certain standards, such as national laws and the respective jurisdiction in which the country carries out all lobbying activities. Bayer recognizes that it is part of a global community and has stated that only a joint effort will provide the technologies and services required to feed the global population in 2050. Making the most of available farmland, increasing production on a longterm basis, and making breakthroughs in healthcare requires vast amounts of data. Through its use of big data, gathered from its collaborations with research institutes, leading scientists, international organizations, and government bodies across all the segments it operates in, Bayer is well poised to fulfill that need.
Task
A. How are the steps of the marketing research process followed at Bayer?
B. How does Bayer safeguard customer privacy in its marketing research?