The Cold and Flu conundrum : Getting it right

February 14, 2018
Vincent Bartkowiak, Global Director - Marketing & Offerings, Consumer Health
Key Highlights

Some multinational OTC companies report that cough and cold products make up more than a third of their annual business.

If product distribution isn’t aligned with illness trends, pharmacies may run out of stock when the product is in highest demand, forcing loyal customers to choose other brands.

Analyzing current illness trends in the content of historic data and tracking these trends from week-to-week using a hierarchical approach will help OTC companies more accurately predict the coming season

The cold and flu season represents one of the biggest revenue generators for the over the counter (OTC) products market. Global consumer spend was $29billion (source: IQVIA OTC Global Analysis) in 2017 and growing demand of these products are expected to continue for the next five years.

It is a huge market, but players also face stiff competition and have a limited window of opportunity to generate these sales. This puts huge pressure on marketing, sales and distribution teams to maximize category management and secure the right “share of shelf,” or risk losing their market potential.

The variability of cold and flu

For many OTC companies, the cough and cold season represents a significant part of their annual revenues. These products, which include cough/cold products, sore throat remedies, and nasal decongestants, makes up 22.5% of the global OTC market and saw 5.3% growth last year, higher than any other sector. Some multinational OTC companies report that cough and cold products make up more than a third of their annual business.

But unlike other products, the cold and flu category has a highly variable season that changes every year. These variations have huge implication for product manufacturers because every product process, sales cycle and marketing plan has to align with the timing of the season for targets to be met. Marketing purchases also need to be adaptable to the illness trends, with the option to exchange brands in pre-purchased TV, billboards and radio spots depending on season dynamic. If companies misjudge these windows and commit to a rigid marketing campaign they can lose sales, waste resources and put customer loyalty at risk.

For example, if an ad campaign for a cold and flu product launches three weeks before people start getting sick – or continues two weeks after the season ends – it is a waste of marketing dollars that will not translate into sales. Conversely, if product distribution isn’t aligned with illness trends, pharmacies may run out of stock when the product is in highest demand, forcing loyal customers to choose other brands. In other words, accurately predicting the timing and severity of these seasons directly determines sales success.

Unfortunately, no two cold and flu seasons are ever the same. While every cold and flu season follows the same general timeline, the specifics are difficult to predict. Illness trends and levels of severity vary from year to year and across countries, which has a significant impact on regional and market-level risks and opportunities. People generally catch a cold via droplet infection and cold viruses are then transmitted by talking, coughing and sneezing or via contaminated objects. Naturally, this happens more often in autumn and winter months. Even with a healthy immune system, adults catch a cold two to four times a year, children even more often.

Influenza is even more difficult to track. Although influenza makes only 6% of the season affected population, it is a relevant driver of season dynamic. Influenza occurrence highly varies in time making it the most difficult illness to forecast.

For example, in France, the 2014-15 season exceeded 350,000 reported cases of flu over a fairly short duration that peaked in February and was over in April; whereas the current (2017/18) season shows a slower moving trend that is stretching from early December with a peak of about 230,000 reported patients predicted for the end of January. Furthermore, it is anticipated that the number of affected population will decrease in the coming weeks.

Predicting the unpredictable with analytics

The high rate of variability makes it extremely important for OTC companies to identify early predictors that allow for early detection of influenza outbreak so they can plan their distribution, sales and marketing campaigns accordingly. They cannot repurpose the prior year’s marketing and inventory strategies and assume it will generate the same results. Every new year requires a new market plan with beginning and end dates, and distribution strategies based on the prediction of how the new season will play out.

These predictions can be found by using real time data and analytics to track leading indicators of the coming season. Relevant data from multiple countries to track include global respiratory illness, which can be a precursor of the time and severity of the flu season, emerging flu strains and even the timing of school holidays. School holidays are proven to have a strong impact on season dynamic since they impact upon movement of populations and the transfer of germs in high traffic environments.

The interdependencies between symptoms are also important dynamics to track, as some symptoms can be leading indicators for emerging illness events. For example, even though flu effects fewer people, it has a direct impact on cough which makes 36% of the affected population. Sore throat also precedes other cough and cold symptoms and can be an indicator of the peaks and size of the related flu season.

Analyzing current illness trends in the context of historic data and tracking these trends from week-to-week using a hierarchical modelling approach will help OTC companies more accurately predict the coming season. These predictions can then be used to define the timing and channels for marketing campaigns, inventory strategies and distribution cycles for the most effective outcomes.

There is no definitive answer to when and where the cold and flu season will hit, but integrating predictive analytics into the planning process allows OTC companies to be more proactive in anticipating product demand so they can refine their promotional plans and media strategies, conduct more targeted professional outreach and improve the efficiency of inventory management. All of this can result in a more successful cold and flu season.

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