Transcript Chapter 9 - Marketing Strategies

Chapter 9
Marketing Strategies
Chapter 9 slides for
Marketing
for Pharmacists,
2nd Edition
Learning Objectives
 Describe three generic marketing strategies.
 Explain product life cycles and their implications
for pharmacy products and pharmacist services.
 Discuss product portfolio management and how
pharmacists might use it.
 Compare and contrast convenience strategies
used by pharmacies. Discuss the potential
downside of overreliance on convenience
strategies.
 Define relationship marketing and explain its
advantages over transactional marketing.
 Suggest ways of identifying innovative products
and services.
Generic Marketing
Strategies
All other
strategies
are just
variations.
TIP
Be cheaper
or different.
Three generic strategies
Forms of Competitive Advantage
Broad
Number of
Target Markets
(Scope)
Narrow
Cost
Differentiation
Cost
Leadership
Differentiation
Focus
•Low price
•Efficiency
•Broad product
offering
•Broad market
Wal-Mart
Cost
Leadership
•Higher price
•Unique mix
•Broad market
Medicine Shoppe
Differentiation
Focus
•Higher price
•Unique mix,
•Narrow market
Independents
Choosing an approach
No strategy is inherently better.
Depends on one’s capabilities and
environment
Porter says to choose one.
Others disagree.
What differentiates you
from other
pharmacists?
Product Life-Cycle
Strategies
Products,
like plants
and
animals,
have a life.
TIP
Don’t let your
product die
an early
death.
Product Life Cycle
Sales
Profits
Introduction
Growth
Time
Maturity
Decline
Alternative Product Life Cycles
Sales
Time
Lessons for PLC
Any new idea takes time and effort
to bear fruit (e.g., pharmaceutical
care).
If successful, time and effort must
be expended to keep them
successful.
All products and innovations
eventually die.
Portfolio Strategies
A portfolio
is all
products
and
services
offered by
a business.
TIP
Consider the mix of
your
portfolio.
Relative Market Share
High
Low
High
Stars
Question
Marks
Low
Cash
Cows
Dogs
Product Sales
Growth Rate
Relative Market Share
High
Stars
Low
Herbal
Medicines
High
Basic
Dispensing
Product Sales
Growth Rate
OTC
Medicines
Low
Question
Marks
Disease
Management
Durable
Medical Equipment
Cash
Cows
Home
Healthcare
Dogs
Managing your portfolio
1. Identify your primary target markets.
2. Inventory your current service offerings.
3. Identify which of your current services
are viable with your target markets.
The goal is to offer different levels of
services to the target markets.
4. Identify which services you need to add
or subtract to round out your service
portfolio.
Convenience Strategies
Pharmacy
convenienc
e is an
important
factor in
pharmacy
patronage.
TIP
Convenience varies
among people
and situations.
The downside of
convenience
Fast will soon be slow.
It can be expensive.
Affects professional image.
Types of convenience
Access - easy to reach
Search - easy to identify and select
Possession - easy to obtain
Transaction - easy to purchase and
return
Conduct a convenience audit
Go through a pharmacy with the
eyes of customer. How easy is it to
Get into and through the pharmacy?
Find what you want?
Get what you want?
Purchase what you want?
Relationship Marketing
Strategies
The goal is
to keep
customers
.
TIP
Loyal customers are
more profitable.
Goal of relationship marketing
(RM)
Build and maintain a base of
committed, profitable customers
Attract
Retain
Enhance
Bucket Theory of RM
Attract business through
sales, advertising, promotion
Bucket =
a company
whose goal is
to be filled
with business
Lose business
through poor service
and not meeting needs
Benefits of RM
To your patients
 Greater value and less
hassle
 Reduces search
 Special needs of
customer
accommodated
 Customer knows what
to expect
 Simplifies and reduces
stress of buying
process
To your business
 Loyal customers
 Purchase more
 Provide positive word
of mouth (WOM)
 Are less price
sensitive
 Cost less
 Are more profitable
The $100,000 customer
(1) $ Spent/yr by avg pt.
(1)__________
(2) Avg # yrs as
customer
(2)__________
(3) Customers from WOM
(4)__________
(1) x (2) x (3) = Lifetime
value
(3)__________
Do you practice RM?
Do you have formal RM strategies?
Do you commit enough resources to
RM?
Are existing patients given concrete
reasons to stay with you?
Do you keep a database of patient
preferences, likes, and dislikes?
Do you know the lifetime value of
customers?
Innovation Strategies:
Innovate to differentiate.
Any change in the 4 P’s
offered that customers
perceive as new.
It’s not an innovation unless
someone thinks it is.
Innovations can be used to
 Find new customers for the product (e.g., pets).
 Increase usage for existing products (e.g., loyalty
card).
 Expand a product line (e.g., offer disease
management).
 Expand distribution intensity (e.g., more
pharmacies).
 Expand distribution over a wider geographic area.
 Penetrate markets of competitors (e.g., develop a
service that will draw away a competitor’s target
customers).
Innovations can be used to
Find new uses for a product
(e.g., baking soda).
Disruptive innovations
 Technological innovation, product, or service that
overturns current market leaders.
 When customers are overserved in the market, they seek
lower cost, lower quality (but good enough) products.
 Substitute OTC for Rx medicine, midwife for obstetrician, ATM
pharmacy for local pharmacist.
 Lower-end disruptive innovations: dominate an existing
market by filling a role in a new market that the older
technology could not fill (expensive physician practices
competing with low-cost store clinics)
 holistic medicine, 24-hour services, convenient health care.
 New-market disruptive innovation: fulfills new,
unmet need
Treating allergies
Specialists
Family
Physicians
Nurse Practitioners/
Physician Assistants
Self-Care Providers
Treating allergies
Specialists
Office Diagnostics
Family
Physicians
Minute Clinics
Nurse Practitioners/
Physician Assistants
Self-Care Providers
Rx-to-OTC
Identifying innovations
Challenge everything.
Focus on the customer’s
viewpoint.
Make things easier, faster,
cheaper, better.
Tap into emotions.
New Market: Travel clinics
New Market: Pet Medicine
In the United States, $35.9 billion
was spent on pet-related products in
2005; this is increasing 5% each
year.
63% of households have at least
one pet.
73 million dogs (32% of households)
Average vet bill $187 per year
90 million cats (27% of households)
Average vet bill $147 per year
Source: Brandweek.com
Expand service intensity:
specialty pharmacy
Change the experience:
holistic pharmacies
Increase usage for existing
products: customer relationship
management (CRM)
Loyalty cards
Summary
Pharmacists have traditionally
relied on a limited number of
marketing strategies in the
marketing of their services.
This chapter presents several new
strategies.
Questions?