Markiting environment final

Health Service management master program

Class AssignmentThe Environment of Marketing Strategy

chapter 3 Essentials of Health Care Marketing

2nd Ed.By : Eric BerkowitzAssignment prepared by:

Kayed Bani-SalamehStudent #: 2014162030

Course name : Marketing in health service organization Teaching Professor :

Dr. Ghazi Al-Weshah

Essentials of Health Care Marketing 2nd Ed.

Eric Berkowitz

Chapter 3

The Environment of Marketing Strategy

Kayed Bani-Salmeh05/01/23

Learning Objectives1. Understand the impact of the five environmental forces

on organizational strategy

2. Explain how social and economic forces affect marketing strategy

3. Describe the impact of technology on health care organizations’ survival and competitive environment

4. Know the major regulatory requirements that must be followed when formulating health care marketing strategy.


Marketing : Definition up to online Business Dictionary.com:

The management process through which goods and services move from concept to the customer. It includes the coordination of four elements called the 4 P's of marketing:

(1) identification, selection and development of a product,(2) determination of its price,(3) selection of a distribution channel to reach the customer's place, and(4) development and implementation of a promotional strategy.

Read more: http://www.businessdictionary.com/definition/marketing.html#ixzz3o51AYITo


http://www.businessdictionary.com/definition/management.html

http://www.businessdictionary.com/definition/process.html

http://www.businessdictionary.com/definition/goods-and-services.html

http://www.businessdictionary.com/definition/concept.html

http://www.businessdictionary.com/definition/coordination.html

http://www.businessdictionary.com/definition/element.html

http://www.businessdictionary.com/definition/call.html

http://www.businessdictionary.com/definition/four-P-s-of-marketing.html

http://www.businessdictionary.com/definition/selection.html

Marketing: The following definitions were approved by the American Marketing Association (AMA) Board of Directors (July 2013):

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Read more:https://www.ama.org/AboutAMA/Pages/Definition-of-Marketing.aspx


What do we mean by Marketing Environment?What do we mean by Marketing Environment?

• Marketing EnvironmentMarketing Environment: consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers.

• Includes:– MicroenvironmentMicroenvironment - forces close to the company

that affect its ability to serve its customers.– MacroenvironmentMacroenvironment - larger societal forces that

affect the whole microenvironment.


• Environmental scanning (External Audit) is conducted to assess trends in each of the five major environmental forces (economic, technological. Social, competitive, and regulatory) for their potential impact on the organization’s target market. Then, the health care organization can appropriately adjust its marketing mix strategy.


Environmental scanning (External Audit)

– Focuses on identifying and evaluating trends and events beyond the control of a single firm

– Reveals key opportunities and threats confronting an organization so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of threats

05/01/23 Kayed Bani-Salmeh

The Nature of an Environmental scanning

• The Environmental scanning is aimed at identifying key variables that offer actionable responses

• Firms should be able to respond either offensively or defensively to the factors by formulating strategies that take advantage of external opportunities or that minimize the impact of potential threats.


Competitive intelligence (CI)

– A systematic and ethical process for gathering and analyzing information about the competition’s activities and general business trends to further a business’s own goals

: ) التنافسي ) االستخبارات االستعالمأنشطة عن المعلومات وتحليل لجمع وأخالقية منهجية عملية

أهداف لتعزيز األعمال لقطاع العامة واالتجاهات المسابقةالخاصة األعمال


There are three basic objectives of a CI program :

1. To provide a general understanding of an industry and its competitors

2. To identify areas in which competitors are vulnerable and to assess the impact strategic actions would have on competitors

3. To identify potential moves that a competitor might make that would endanger a firm’s position in the market


• 5 Major Environmental Forces• Describe the environmental forces that affect the company’s

ability to serve its customers.

1. Economical• Inflation and Health care , Customer income

2. Technological• Quality , Coast , Behavior , Transparency

3. Social• Demographic , Culture

4. Competitive• Health Care Competition

5. Regulatory • Competition , Pricing , Distribution , Promotion


• Why are these forces important?•

– method to continually scan environment

– conducted to asses trends over a period of years

– to know what needs to be done to adjust appropriately to the marketing mix strategy


… you’ve got to peel away a few layers to get to the good stuff!

But, the Business World is like an Orange...

Peeling the “Orange”

TargetConsumers

Product

Place Price

Promotion

Purchasing

R&D

Production

Marketing

Competitors

IntermediariesPublics

Supp

liers

DemographicEconomic

TechnologicalNatural

PoliticalLegal

SocialCultural

Engineering

Logistics

Finance

Acco

untin

g© Bruce C. Bailey 1998

The Marketing Environment

Company

Demographic

Economic

Natural

Technological

Political

Cultural Company

Customers

Intermediaries

Suppliers

Competitors

Publics

The Microenvironment

Company

Customers

Publics Suppliers

Competitors Intermediaries

Forces Affecting a Company’s Ability to

Serve ItsCustomers

1.1. Company’s Internal EnvironmentCompany’s Internal Environment- functional areas such as top management, finance, and manufacturing, etc.

The Company’s Microenvironment

2.2. Suppliers Suppliers - provide the resources needed to produce goods and services and are an important link in the “value delivery system”.


3.3. Marketing Intermediaries Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.


4.4. CustomersCustomers - five types of markets that purchase a company’s goods and services.

5.5. CompetitorsCompetitors - those who serve a target market with similar products and services against whom a company must gain strategic advantage.


6.6. PublicsPublics - any group that perceives itself having an interest in a company’s ability to achieve its objectives.


The Macroenvironment

Demographic

Technological

Cultural Economic

Political Natural

Forces that ShapeOpportunities

and Pose Threatsto a Company

The Company’s Macroenvironment

• DemographicDemographic - studies populations in terms of age, gender, race, occupation, location and other statistics.

• EconomicEconomic - factors that affect consumer purchasing power and spending patterns.

• NaturaNatural - natural resources needed as inputs by marketers or that are affected by marketing activities.

Worldwide Population Growth

Population Age Mix

Ethnic Markets

Household Patterns

Educational Groups

Geographical Shifts in Population

Shift from Mass to Micro markets

Demographic Environment

Economic Forces – Inflation

• decline in the buying power when price levels rise further than income

– Consumer income• Gross income- total amt. $ earned by one

person or family in 1 yr.

• Gisposable income - $ left over after taxes to spend on basic needs

• Giscretionary income-$ left over after taxes and basic needs for recreation or entertainment


Inflation

• Prices rise with no wage increasePurchasing Power decreases

• Increase profit margins by increasing efficiency

• Consumers reaction:– Search for lowest prices– Rely on coupons and sales

Recession

• Income, production and employment fall

• Reduced demand for goods and services

Natural Environment

Shortages of Raw Materials

Increased Pollution

GovernmentalIntervention

Factors Affectingthe

NaturalEnvironment

The Company’sMacroenvironment• TechnologicalTechnological - forces that create new

technologies, creating new product and market opportunities.

• PoliticalPolitical - laws, agencies and groups that influence and limit organizations and individuals in a given society.

• CulturalCultural - institutions and other forces that affect a society’s basic values, perceptions, preferences, and behaviors.

Technological EnvironmentRapid Pace of

ChangeUnlimited

Opportunities

IncreasedRegulation

Practical, AffordableProducts

Issues in the TechnologicalEnvironment

Technological & Resource Factors• New technology helps firm cope

with other environmental factors

• New technology helps firm carrying out and easy apply of research

• Information technology helps economic growth

Technological forces: The Internet has changed the very nature of opportunities and threats by:

–Altering the life cycles of products, –Increasing the speed of distribution, –Creating new products and services, –Erasing limitations of traditional geographic markets,–Changing the historical trade-off between production standardization and flexibility.


Technological advancements can: –Create new markets,–Result in a proliferation of new and improved products,–Change the relative competitive cost positions in an industry.–Render existing products and services obsolete.


Technological forces:

Political Environment

Increasing Legislation designed

to protect Groups

Changing GovernmentAgency

Enforcement

Increasing Emphasis on Ethics and

Socially ResponsibleActions

Some Trends in the Political Environment Include:

Cultural Environment

OfOrganizations

OfNature

OfOneself

OfSociety

Ofthe Universe

OfOthers

Cultural Valuesof a

Society

3. Social Factors 1. Demographics : Explain how changes in the

demographic and economic environments affect marketing decisions.A. Population: U.S. facts:• Aging population is growing• Less white• Widening gap between rich & poor• 2025 = 18.5% population > 65 years• 2075 = no ethnic or racial majority

B. Baby boomerspeople born during the demographic post–World War II approximately

between the years 1946 and 1964.– need a way to support their aging relatives


World facts:World population 7 billionWorld population = 8 billion by 2028World population = 9 billion by 2054

3. Social Factors C. geographic shifts

• people are moving west while people in the east are remaining about the same

D. racial and ethnic distinctions• most noticeable in increase in metropolitan areas


3. Social Factors – Culture

• roles of men and women– more women are working outside the home and being

head of household

– Changing providers• more females are prominent in healthcare

positions such as physicians, and physician assistants

• A practice wants to attract female employees


3. Social Factors – Changing attitudes

• “I work to live”• Wellness• Complementary or alternative medicine• More proactive consumers


4. Competitive Factors

• An important part of an environmental scanning (external audit) is identifying rival firms and determining their strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies


– Technology drives the industry.• New advances affect institutions and providers• Determines how care is delivered• Diagnostic and surgical procedures are shifting to

outpatient centers• Tele-medical• Increased efficiency = Decreased cost


4. Competitive Factors

• Competition – Antitrust Legislation against monopolies

– Clarifications of the FTC “Safety Zones”

– Product Legislation – Trademark protection

*FTC: Federal Trade Commission االتحادية التجارة لجنةhttps://www.ftc.gov/sites/default/files/documents/public_events/joint-venture-

hearings-antitrust-guidelines-collaboration-among-competitors/ftcdojguidelines-2.pdf


5. Regulatory Factors

–Competition–Pricing–Distribution–Promotion–Self-Regulation


Summary• Marketing Strategy must be developed in

response to and in concert with the broader macroenvironment. Economic, technological, social, competitive, and regulatory forces can all determine the effectiveness of any organization’s marketing program.

• In recent years, the rise in the cost of medical care has dramatically outstripped the rise in cost of consumer goods. This increase has caused employers and other health care buyers to take more aggressive actions to control their health care expenses.


Summary continued• Health care is a technologically driven industry. New

technological advances dramatically affect the institutions and providers who deliver health care and determine how that care is delivered. The Internet and wireless will dramatically affect how patients interact with their health care providers.

• The changing demographics of the US population represent significant opportunities for health care providers. The fast-growing segment of older consumers are major utilizers of health care services and products. Baby boomers are often attracted to alternative medical approaches.


Summary continued

• Changing marketplace demographics related to gender, ethnicity, and race require health care providers to be more responsive to the needs and concerns of diverse consumers.

• The competitive market can be defined as either a pure competition, a monopolistic competition, and oligopoly, or a monopoly. The differences represent the number of sellers in the marketplace.


Summary continued• The prior movement to managed care is now

returning to a fee-for-service market. Inpatient admissions are rising and outpatient surgeries continue to grow.

• A wide variety of federal and state regulations exist that affect each aspect of the marketing mix. Mergers and acquisitions have been of great concern for regulators.

• The issue of provider referrals is also highly regulated.

• HIPAA regulations also impact the marketing activities and communications that can be conducted without a patient’s consent.

