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 PrerequisitesRole of Prerequisites

Two or more parties with unsatisfied Two or more parties with unsatisfied needsneeds

Desire of one party to meet needsDesire of one party to meet needs Must have something to exchangeMust have something to exchange

What if you have no insurance or money?What if you have no insurance or money? Means to communicateMeans to communicate

Role of Advertising and PromotionRole of Advertising and Promotion What do you think of Health care ads?What do you think of Health care ads?

Needs, Wants and Benefits

NeedsNeeds

WantsDesire to Satisfy Needs

“I want to seek treatment at a facility of my choice”

BenefitsOutcome 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

Customerswho share a common

need that can be satisfied by a

specific productAND

who are willing, able and have the authority to make the exchange.

Customers

PotentialCustomers

DEMAND

Social Marketing Concept

ConsumersConsumers CompanyCompany

SocietySociety

Orientation that Focuses on Satisfying Consumers Needs While Also Addressing the

Needs of the Larger Society.

(Almost) Anything Can be Marketed

ConsumerGoods

andServices

ConsumerGoods

andServices

Business-to-

BusinessMarketing

Business-to-

BusinessMarketing

Idea,Place,People

Marketing

Idea,Place,People

Marketing

Not-For-Profit

Marketing

Not-For-Profit

Marketing

Marketing’s Tools: The Marketing Mix

ProductGood, Service, Idea, Place, Person

ProductGood, Service, Idea, Place, Person

PriceAssignment of Value

PriceAssignment of Value

PlaceAvailability of Product

PlaceAvailability of Product

PromotionActivities to Inform Consumers

PromotionActivities 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’sRole of Each of 4 P’s

ProductProduct How do I develop the product or service How do I develop the product or service

to meet needs?to meet needs? What is the role of pharmaceutical What is the role of pharmaceutical

companies, insurance companies, companies, insurance companies, doctors?doctors?

PricePrice Healthcare costs continue to riseHealthcare costs continue to rise Accessibility of insuranceAccessibility of insurance Role of employers setting rules for hiring Role of employers setting rules for hiring

Role of Each of 4P’sRole of Each of 4P’s

PlacePlace When, where, how deliver product to When, where, how deliver product to

patientpatient Role of Internet, office hours, home visits, Role of Internet, office hours, home visits,

regional hospitalsregional hospitals

PromotionPromotion How do you know about products and How do you know about products and

services offered by Health Care services offered by Health Care providers?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 ObjectivesOrganization’s Overall Objectives

Opportunities and Threats to theOrganization in the Marketplace

Opportunities and Threats to theOrganization in the Marketplace

When Did Marketing Begin?

Product OrientationProduct Orientation

Selling OrientationSelling Orientation

Customer OrientationCustomer Orientation

•High Quality Health Care Delivery•Seller’s Market

•Satisfies Customers’ Needs and Wants, targeting •Total Quality

New Era OrientationNew 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 Non Marketing Driven PlanningPlanning

Mission and GoalsMission and Goals Strategy FormulationStrategy Formulation ImplementationImplementation MarketMarket

Marketing Driven Marketing Driven PlanningPlanningProcessProcess

Mission and GoalsMission and Goals Assess TM Needs Assess TM Needs Identify Differential Identify Differential

Advantage RequirementsAdvantage Requirements

Strategy FormulationStrategy FormulationPretest Service ConceptPretest Service Concept

ImplementationImplementation MarketMarket

Planning at Different Planning at Different Management Levels Management Levels

Strategic Planning by Strategic Planning by Top ManagementTop Management

Strategic Planning Matches an Organization’s Resources and Capabilities to its Market

Opportunities for Long-Term Growth and Survival..

Business MissionBusiness Mission

SWOT AnalysisSWOT Analysis

Organizational Goals & ObjectivesOrganizational Goals & Objectives

Business PortfolioBusiness Portfolio

Growth StrategiesGrowth Strategies

Strategic Planning:Strategic Planning:Define the Business MissionDefine the Business Mission

What customersshould we serve?

How should wedevelop the firm’s

capabilities?What business

are we in?

What products & benefits can wecreate for ourcustomers?

A Mission

Statement Describes the Organization's

Overall Purpose

Strategic Planning:Strategic Planning:Evaluate the Environment: Evaluate the Environment: SWOT AnalysisSWOT 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.

External Environment Identify Opportunities & Threats to a Firm From

Consumers, Competitors, the Economy, etc.

Internal EnvironmentIdentify Strengths &

Weaknesses in Firm’s Employees, Technologies,Facilities, Finances, etc.

Internal EnvironmentIdentify Strengths &

Weaknesses in Firm’s Employees, Technologies,Facilities, Finances, etc.

Set Organizational Goals and Set Organizational Goals and ObjectivesObjectives

Objectives (Goals) are specific Objectives (Goals) are specific accomplishments or outcomes that an accomplishments or outcomes that an organization hopes to achieve by a organization hopes to achieve by a specific time.specific time.

Direct outgrowth of the mission statement.Direct outgrowth of the mission statement. May relate to:May relate to:

revenue/sales, profitability, ROI, orrevenue/sales, profitability, ROI, or innovation, customer relations, etc.innovation, customer relations, etc.

BCG MatrixBCG Matrix

Develop Growth Strategies Develop Growth Strategies

Product/ Market Expansion Grid

Consolidation StrategiesConsolidation StrategiesDivestmentDivestment

Sell off a product line Sell off a product line or SBU due to lack of or SBU due to lack of fitfit

i.e., Quaker Oats and i.e., Quaker Oats and SnappleSnapple

PruningPruning

Reduce # of products Reduce # of products and services offeredand services offered

IBM drops typewritersIBM drops typewriters

RetrenchmentRetrenchment

Withdraw Withdraw

Withdraw from certain Withdraw from certain marketsmarkets

HarvestingHarvesting

Gradually withdraw as Gradually withdraw as demand draws downdemand draws down

LAVA soapLAVA soap

Tactical (Marketing) Tactical (Marketing) Planning by Middle Planning by Middle ManagementManagement

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 EnvironmentEvaluate Marketing Environment

Set Marketing ObjectivesSet Marketing Objectives

Develop Marketing StrategiesDevelop Marketing Strategies

Environmental FactorsEnvironmental Factors

Economic ConcernsEconomic Concerns TechnologyTechnology Social/Demographics ChangesSocial/Demographics Changes CompetitionCompetition RegulationRegulation

Economy and TechnologyEconomy and Technology

Inflation and Health Care CostsInflation and Health Care Costs Consumer IncomeConsumer Income

Impact of innovation on smaller and Impact of innovation on smaller and larger competitorslarger competitors

Impact of Internet/MD websitesImpact of Internet/MD websites Information gathering Information gathering

Social and Demographic Social and Demographic FactorsFactors

Population GrowthPopulation Growth Aging PopulationAging Population Shifts in Working Women and MothersShifts in Working Women and Mothers Traditional vs. Nontraditional FamilyTraditional vs. Nontraditional Family

1950’s 1950’s 70% stay at home Mom and working Dad70% stay at home Mom and working Dad

CurrentCurrent 25% have traditional profile; 25% singles; 28% 25% have traditional profile; 25% singles; 28%

couples without childrencouples without children Geographic TrendsGeographic Trends Racial and Ethnic FactorsRacial and Ethnic Factors

Reduction of white majority, rise in Hispanic and Reduction of white majority, rise in Hispanic and African AmericansAfrican Americans

Evaluate Competitive Evaluate Competitive Market - EnvironmentMarket - Environment

Threat of New EntrantsThreat of New Entrants Bargaining Power of SuppliersBargaining Power of Suppliers Bargaining Power of CustomersBargaining Power of Customers Threat of SubstitutesThreat of Substitutes Existing CompetitorsExisting Competitors

Regulation and HIPAARegulation and HIPAA

Health Care CompetitionHealth Care Competition

What is the definition of competition?What is the definition of competition? Thank goodness capitation is not the norm Thank goodness capitation is not the norm

anymoreanymore HospitalsHospitals

# beds and facilities declining# beds and facilities declining Admissions increasing – why? Are we just older?Admissions increasing – why? Are we just older?

Managed Care Providers Managed Care Providers HMO enrollments peaked in 1995HMO enrollments peaked in 1995

Role of International MarketsRole of International Markets i.e., pharmaceuticalsi.e., pharmaceuticals

Creating a Competitive Creating a Competitive AdvantageAdvantage A A competitive advantagecompetitive advantage is the ability of a is the ability of a

firm to outperform the competition, providing firm to outperform the competition, providing customers with a benefit the competition customers with a benefit the competition can’t. How?can’t. How? Step 1. Identify distinctive competency Step 1. Identify distinctive competency

(firm’s capability superior to that of its (firm’s capability superior to that of its direct competition).direct competition).

Step 2. Turn a distinctive competency into Step 2. Turn a distinctive competency into a differential benefit (one that is important a differential benefit (one that is important to customers).to customers).

RegulationRegulation

CompetitionCompetition Anti-Trust IssuesAnti-Trust Issues Sherman Antitrust ActSherman Antitrust Act Pricing StrategiesPricing Strategies

Evaluating the Marketing Evaluating the Marketing Environment and Setting Environment and Setting ObjectivesObjectives

Evaluating the Marketing EnvironmentEvaluating the Marketing Environment

Setting Marketing ObjectivesSetting Marketing Objectives

Sales ObjectivesSales Objectives

Product-Oriented ObjectivesProduct-Oriented Objectives

Market ObjectivesMarket Objectives

Developing Marketing Developing Marketing StrategiesStrategies

Selecting a TargetMarket

Selecting a TargetMarketMarketing

Strategies-Activities to Achieve the MarketingObjectives

Marketing Strategies-Activities to Achieve the MarketingObjectives 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 Developing Marketing Mix ProgramsMix Programs

Product StrategiesProduct Strategies

Pricing StrategiesPricing Strategies

Promotion StrategiesHow Marketers Communicate Product Benefits and Features to Target Market.

Distribution StrategiesOutlines 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.

Decisions about Product Design, Packaging, Branding, Positioning, and Features.

Preparing a Marketing Preparing a Marketing PlanPlan

Situation Analysis

Marketing Problems and Opportunities

Marketing Objectives

Control Plans

Marketing Strategies

Marketing Action Plans

Implementation Plans

Contingency Plans

Implementing the Implementing the Marketing PlanMarketing 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 Controlling the Marketing PlanPlan

Measuring Actual Performance, Comparing it to Planned Performance, and Making

Necessary Changes in Plans and Implementation.

Trend AnalysisTrend AnalysisTrend AnalysisTrend Analysis Marketing ResearchMarketing ResearchMarketing ResearchMarketing Research

Marketing AuditMarketing AuditMarketing AuditMarketing Audit