Chapters 1-3 Welcome to the World of Health Care Marketing

What is Marketing?   Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. (AMA definition)   More simply: Marketing is all about satisfying needs. Health Care is no different than other industries

The Marketing Concept   The Marketing Concept is a management orientation that focuses on identifying and satisfying consumer needs to ensure the organization’s long-term profitability objectives. A consumer is the ultimate user of a good or service.

Marketing is an Exchange of Value   An exchange is the process by which some transfer of value occurs between a buyer and a seller.   At least two people or organizations must be willing to make a trade, and   Each must have something the other values.   Most exchanges occur in the form of a monetary transaction.

Role of Prerequisites  Two or more parties with unsatisfied needs  Desire of one party to meet needs  Must have something to exchange  What if you have no insurance or money?  Means to communicate  Role of Advertising and Promotion  What do you think of Health care ads?

Needs, Wants and Benefits Needs Wants Desire to Satisfy Needs “I want to seek treatment at a facility of my choice” Benefits Outcome Sought Motivates Buying Behavior. “I’ve received treatment and am healing” Difference Between a Consumer’s Actual State and Some Ideal or Desired State. I’m Sick!

Markets, Consumers and Demand Market Customers who share a common need that can be satisfied by a specific product AND who are willing, able and have the authority to make the exchange. Customers Potential Customers DEMAND

Social Marketing Concept Consumers Company Society Orientation that Focuses on Satisfying Consumers Needs While Also Addressing the Needs of the Larger Society.

(Almost) Anything Can be Marketed Consumer Goods and Services Consumer Goods and Services Business- to- Business Marketing Business- to- Business Marketing Idea, Place, People Marketing Idea, Place, People Marketing Not-For- Profit Marketing Not-For- Profit Marketing

Marketing’s Tools: The Marketing Mix Product Good, Service, Idea, Place, Person Product Good, Service, Idea, Place, Person Price Assignment of Value Price Assignment of Value Place Availability of Product Place Availability of Product Promotion Activities to Inform Consumers Promotion Activities to Inform Consumers Tools that Are Used Together to Create a Desired Response Among a Set of Defined Customers Tools that Are Used Together to Create a Desired Response Among a Set of Defined Customers

Role of Each of 4 P’s  Product  How do I develop the product or service to meet needs?  What is the role of pharmaceutical companies, insurance companies, doctors?  Price  Healthcare costs continue to rise  Accessibility of insurance  Role of employers setting rules for hiring

Role of Each of 4P’s  Place  When, where, how deliver product to patient  Role of Internet, office hours, home visits, regional hospitals  Promotion  How do you know about products and services offered by Health Care providers?

Marketing is a Process   “Marketing is a process of planning and executing...”   The concept of Relationship Marketing sees marketing as a process of building long-term relationships with customers to keep them satisfied and to keep them coming back.

How is Marketing Done? Marketers Develop and Implement a Marketing Plan Based on the Following Information: Organization’s Strengths and Weaknesses Organization’s Strengths and Weaknesses Organization’s Overall Objectives Opportunities and Threats to the Organization in the Marketplace Opportunities and Threats to the Organization in the Marketplace

When Did Marketing Begin? Product Orientation Selling Orientation Customer Orientation High Quality Health Care Delivery Seller’s Market Satisfies Customers’ Needs and Wants, targeting Total Quality New Era Orientation Benefits to Customers, Plus Firm’s Employees, Shareholders, and Communities. Marketing as a Sales Function Get as many patients & drs as possible Buyer’s Market

Why is Marketing Important?   Marketing Creates Utility   Form Utility   Place Utility   Time Utility   Possession Utility   Marketing’s Role in the Firm   A firm’s marketing-related decisions must affect and be affected by its other operations such as accounting and manufacturing.

Non Marketing Driven Planning  Mission and Goals  Strategy Formulation  Implementation  Market

Marketing Driven Planning Process  Mission and Goals  Assess TM Needs Identify Differential Advantage Requirements Identify Differential Advantage Requirements  Strategy Formulation Pretest Service Concept  Implementation  Market

Planning at Different Management Levels

Strategic Planning by Top Management. Strategic Planning Matches an Organization’s Resources and Capabilities to its Market Opportunities for Long-Term Growth and Survival. Business Mission SWOT Analysis Organizational Goals & Objectives Business Portfolio Growth Strategies

Strategic Planning: Define the Business Mission What customers should we serve? How should we develop the firm’s capabilities? What business are we in? What products & benefits can we create for our customers? A Mission Statement Describes the Organization's Overall Purpose

Strategic Planning: Evaluate the Environment: SWOT Analysis SWOT Analysis Assessment of Organization’s Internal & External Environments SWOT Analysis Assessment of Organization’s Internal & External Environments External Environment Identify Opportunities & Threats to a Firm From Consumers, Competitors, the Economy, etc. Internal Environment Identify Strengths & Weaknesses in Firm’s Employees, Technologies, Facilities, Finances, etc. Internal Environment Identify Strengths & Weaknesses in Firm’s Employees, Technologies, Facilities, Finances, etc.

Set Organizational Goals and Objectives  Objectives (Goals) are specific accomplishments or outcomes that an organization hopes to achieve by a specific time.  Direct outgrowth of the mission statement.  May relate to:  revenue/sales, profitability, ROI, or  innovation, customer relations, etc.

BCG Matrix

Develop Growth Strategies Product/ Market Expansion Grid

Consolidation Strategies Divestment Sell off a product line or SBU due to lack of fit i.e., Quaker Oats and Snapple Pruning Reduce # of products and services offered IBM drops typewriters RetrenchmentWithdraw Withdraw from certain markets Harvesting Gradually withdraw as demand draws down LAVA soap

Tactical (Marketing) Planning by Middle Management Tactical Planning Concentrates on Developing Detailed Plans for Strategies and Tactics for the Short Term that Support an Organization’s Long-Term Strategic Plan. Evaluate Marketing Environment Set Marketing Objectives Develop Marketing Strategies

Environmental Factors  Economic Concerns  Technology  Social/Demographics Changes  Competition  Regulation

Economy and Technology  Inflation and Health Care Costs  Consumer Income  Impact of innovation on smaller and larger competitors  Impact of Internet/MD websites  Information gathering

Social and Demographic Factors  Population Growth  Aging Population  Shifts in Working Women and Mothers  Traditional vs. Nontraditional Family  1950’s  70% stay at home Mom and working Dad  Current  25% have traditional profile; 25% singles; 28% couples without children  Geographic Trends  Racial and Ethnic Factors  Reduction of white majority, rise in Hispanic and African Americans

Evaluate Competitive Market - Environment  Threat of New Entrants  Bargaining Power of Suppliers  Bargaining Power of Customers  Threat of Substitutes  Existing Competitors  Regulation and HIPAA

Health Care Competition  What is the definition of competition?  Thank goodness capitation is not the norm anymore  Hospitals  # beds and facilities declining  Admissions increasing – why? Are we just older?  Managed Care Providers  HMO enrollments peaked in 1995  Role of International Markets  i.e., pharmaceuticals

Creating a Competitive Advantage  A competitive advantage is the ability of a firm to outperform the competition, providing customers with a benefit the competition can’t. How?  Step 1. Identify distinctive competency (firm’s capability superior to that of its direct competition).  Step 2. Turn a distinctive competency into a differential benefit (one that is important to customers).

Regulation  Competition  Anti-Trust Issues  Sherman Antitrust Act  Pricing Strategies

Evaluating the Marketing Environment and Setting Objectives Evaluating the Marketing Environment Setting Marketing Objectives Sales Objectives Product-Oriented Objectives Market Objectives

Developing Marketing Strategies Selecting a Target Market Selecting a Target Market Marketing Strategies- Activities to Achieve the Marketing Objectives Marketing Strategies- Activities to Achieve the Marketing Objectives Developing the Marketing Mix

Finding and Reaching a Target Market   Step 1. Segmenting the Market   Divide the overall market into segments, in which consumers have similar characteristics.   Step 2. Selecting a Target Market   Evaluate the segments identified in the segmentation process; select target market(s).   Step 3. Positioning the Product   Marketer plans the product’s market position, which is how the target market perceives the product in comparison to competitors’ brands.

Developing Marketing Mix Programs Product Strategies Pricing Strategies Promotion Strategies How Marketers Communicate Product Benefits and Features to Target Market. Distribution Strategies Outlines How, When, and Where the Firm Makes the Product Available to Customers. Determines What Specific Price a Firm Charges for a Product. Decisions about Product Design, Packaging, Branding, Positioning, and Features.

Preparing a Marketing Plan Situation Analysis Marketing Problems and Opportunities Marketing Objectives Control Plans Marketing Strategies Marketing Action Plans Implementation Plans Contingency Plans

Implementing the Marketing Plan Organizing the Marketing Function Organizing the Marketing Function Marketing Budgets Total amount of money spent on marketing, and Allocation of money for each activity under the marketer’s control, such as for: – product development – promotional activities Marketing Budgets Total amount of money spent on marketing, and Allocation of money for each activity under the marketer’s control, such as for: – product development – promotional activities Strategies are Put Into Action on a Day-to-Day Basis Through: Strategies are Put Into Action on a Day-to-Day Basis Through: Functional Structure Geographic Structure Product Structure

Controlling the Marketing Plan Measuring Actual Performance, Comparing it to Planned Performance, and Making Necessary Changes in Plans and Implementation. Trend Analysis Marketing Research Marketing Audit