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Strategic Planning & Marketing Eric N. Berkowitz, PhD 2
Learning Objectives Develop a differential advantage Understand the perspective of market based planning & the meaning of marketing Recognize need for loyalty and defection management strategies Understand the relationship between the concepts of trust and branding in healthcare Differentiate between the provider and market definition of a health care service Recognize the strategic implications of market segmentation Understand the strategic challenges over the service life cycle 3
Competing in a commodity world Only high value added to the customer can command high margins all products and services become commodities as the market matures services are reaching an equality of quality provider s value extends beyond the clinical service unquantified value is unmarketable value 4
Develop a differential advantage or how is your health care organization different than the competition? 5
Requirements for a differential advantage Important to the buyer Perceived by the buyer Unique from other providers sustainable 6
Initial Marketing Strategy I Questions 1. What is your competitive differential advantage? 2. Who is your target market? 7
Target Market Determination Drives the setting of Marketing Plans & strategy To attract that Target market Want a differential advantage Relative to competing offerings 8
A Differential Advantage & a target market Competitive strategy is about being different, it means deliberately choosing a different set of activities to deliver a unique mix of value. Michael Porter cited in Vincent P Barabba, Meetings of the Minds (Boston: Harvard Business School Press, 1995, p.2) 9
The Target market A target market is the group you want to go after and achieve that may well be different than the client base that you are presently serving. 10
Understand the perspective of market based planning & the meaning of marketing 11
PLANNING THE NON-MARKET BASED APPROACH MISSION AND GOALS STRATEGY IMPLEMENTATION MARKET 12
PLANNING A MARKET BASED APPROACH MISSION/GOALS ASSESS NEED STRATEGY IMPLEMENT IDENTIFY DIFFERENTIAL ADVANTAGE PRE-TEST MARKET 13
THE NON-MARKET BASED APPROACH A MARKET BASED APPROACH MISSION AND GOALS MISSION/GOALS STRATEGY IMPLEMENTATION ASSESS NEED STRATEGY IDENTIFY DIFFERENTIAL ADVANTAGE MARKET IMPLEMENT PRE-TEST MARKET 14
The Essence Of Marketing: The Four Ps A Definition Find out what consumers want (market research) Plan and develop a product or service that will meet those needs Determine the best way to price, promote & distribute (Place) the service 15
The Market Driven Process Outside to inside to outside flow Market research at two points service development & pre-testing Customer driven differential advantage 16
The Drive for Loyalty with patients and referral physicians & Defection Management 17
Relationship Marketing The Paradigm Shift in Marketing The Key To Industrial Selling INTEGRATING THE CUSTOMER INTO THE DESIGN PROCESS TO GUARANTEE A PRODUCT (Service) THAT IS TAILORED NOT ONLY TO THE CUSTOMER S NEEDS BUT TO THE CUSTOMER S STRATEGIES 18
The Goal of Relationship Marketing RAISE THE BARRIER TO EXIT 19
Customer Retention: keeping Patients and referral Relationships A 5% improvement in customer retention can lead to a 25% improvement in profitability Frederick Reichheld and W. Earl Sasser, Zero defects: quality comes to services, Harvard Business Review, September-October 1990, pp. 105-111. Conventional business wisdom contends that it costs 10 times as much to obtain customer as it does to retain an existing customer. J Pricing for Profitability: Activity-Based Pricing for Competitive Advantage ohn L. Daly (2002), p85. Published by John Wiley and Sons. 20
The Profit Gain from a Retained Customer Source: Frederick F. Reichheld and W. Earl Sasser, Jr., Zero Defects: Quality Comes to Services Harvard Business review, September-October 1990, pp. 105-111. : 21
Keys to managing patients and referrals for defection management Find out why defectors are leaving Focus the organization on customer defection Teach employees (clinical and non-clinical staff of lifetime value of a loyal customer) Tie incentives to defection rates 22
How the Competitive Environment Affects the Satisfaction-Loyalty relationship Non Competitive Zone Regulated market or Few Substitutes Dominant Brand Equity High Switching Costs Powerful Loyalty Programs Proprietary Technology Highly Competitive Zone Commoditization or Low difference Consumer Indifference Many Substitutes Low Cost of Switching 23
The WEB Changes Communication Strategies: Promotion Element of the marketing mix 24
Communication between health professional or organization to the Patient was a one way flow of information Historically information (when and if) was sent to the patient Health care organization l M E S S A G E vehicles Yellow pages newspapers magazines television R E F E R E R A L M D P A T I E N T S 25
Communication now is Getting the marketing message into the constellation Web 2.0 26
Implications in this Web 2.0 environment Participate in the conversation with your market social media, Blogs, Pinterest, etc. SEO it is cost effective, track results, target your market, and measure your ROI what more can you ask for! Data mine analyzing large amounts of data to discover trends patterns in the data 27
The Branding Challenge: Its more than A Logo or a Website 28
Branding seal of approval The Ignored Marketing Decision Multiproduct- same brand across entire line Multibrand-different brand for each product in line Reseller-sell product under someone else s name Mixed- some under your name, some under another firm s name Co-Branding- market your name along side someone else s Kevin Keller et al., About your Brand, Harvard Business Review, October 2002 29
Successful brands provide a great advantage: o Gain competitive advantage o Provide opportunity for successful extensions into other products or services o Ability to create barriers to entry o A special role in service industries by enhancing trust o Increases satisfaction and purchase intent, and loyalty 30
The Marketing Logic o Barrier to entry from competitors o Increase in the health care institution s ability to respond to competitive threats o Greater potential for revenue gain o Customer base less sensitive to the pull of marketing efforts of competitors Essential to this is creating Brand trust 31
What is a brand and brand management? o First, brand management is really value management o And, thus brands are a representation of values This is a key issue for service business 32
Products vs. Services o For a product brand the values are deliberately selected and embodied within the brand s packaging and advertising o For services the values are of a more emergent nature dependent on the employees (professional) and (non-professional) and the processes 33
Even Product-based companies are realizing values & culture are important 34
A service brand is essentially a promise about the nature of a future experience with an organization or a service provider 35
The Challenges for Branding & Loyalty in Healthcare o Consumers are more skeptical due to access to data & information o People can talk back and provide feedback and go viral o Strong brands help build trust --In the U.S. health care has lost more trust in the public view than any other institution polled at the time 41 percent versus 22 percent, according to Harris polls taken between 1966 and 2004. (O Melia, 2010) 36
Trust : A Key Concept in Brands an essential element in healthcare In health care trust is a key concept based on the concept of the principal/agent notion: In health care and public health, a key element is the principal-agent relationship. In such a relationship, one person (the principal/public) gives another person (the agent/ public health system) authority to make decisions on his or her behalf. Trust is of paramount importance because the general public likely cannot assess the rightness of a public health recommendation. 37
The Value of Brand Trust If people trust a brand.. o83% will recommend it to other people o82% will use its products and services frequently o78% will look to it first for the things that they want o78% will give its new products & services a chance o50% will pay more for its products & services o47% believe it will inform them of products & services that they The Key is Trust will like Source: Concerto Marketing & Research Now surey of 1000 North Americans from research Now on line panel (http://www.slideshare.net/nickblack/brand-trust-the-six-drivers-of-trust-2193957) 38
A key challenge for the brand is the promise and aligning all the human resource capital: clinical professionals and non-clinical assets The challenge is to work for brand supporting behavior And in multi-site organization to develop a consistent brand 39
Brand is a promise. Consumers trust that the promise will be fulfilled. 40
The requirements for a consistent brand a consistent set of shared values A consistent set of operational processes that are recognized and experienced by the external key customers (and are valued by those customers) a consistent message about what is valued and what the organization delivers on its brand promise that is efficiently communicated to all stakeholders both internally and externally to the organization Values Processes Message 41
Differentiate between the provider and market definition of a health care service 42
Buying a Car from the Buyer s Perspective Generic Product status performance Primary Product safety reliability 43
Health Care from the Buyer s Perspective spatial aspects Generic product facility ambiance Primary Product technology & ----------- patient procedures interpersonal relations 44
The Referral Physician Market Generic Component --------- ----------- Primary product technology & --------- --------- --------------- 45
Recognize the strategic implications of market segmentation 46
Market Segmentation Definition: identification of subgroups in the population with similar wants and needs. Tailor the marketing mix to meet those subgroups needs. Methods: Sociodemographic Usage 47
The Law of the Heavy Half Consumer 80/20 rule a small percentage of consumers tend to account for a disproportionate share of a product s sales 48
The Heavy Half Consumer Colas H=22% H=39% H=39% B=0% B=10% B=90% Beers H=67% H=16% H=17% B=0% B=12% B=88% Canned Hash H=68% H=16% H=16% B=0% B=14% B=86% 49
Loyal customers have an important asset They provide a zone of tolerance for service delivery failures based on multiple data points 50
Development of Program/ Service Strategy is the Product Life Cycle Strategy changes over the course of the PLC Role of the Four P s shift over the life cycle Organizational challenges and issues shift through each stage of the PLC 51
The Generalized Product Life Cycle Sales/ revenue introduction growth maturity decline time 52
Externalities Affect Your Life Cycle & Strategy 53
Before the Life Cycle begins You must get the adoption of first buyers! 54
First or second entrant? Are you with an aggressive or conservative health care organization? 55
The Four P Challenge: Controlling the channel push vs. pull Defining the channel In traditional industries-- the path a product takes as it moves from producer to end user. In health care--the path a patient takes as he or she moves to the appropriate level of care. 56
The traditional channel Manufacturer The Healthcare channel patient managed care Wholesaler primary MD specialist MD Retailer acute care hospital Consumer tertiary center 57
Managing Patient Flow With a push strategy you work through the channel intermediaries. With a pull strategy, you bypass the intermediaries and appeal to the end user 58
The Product Life Cycle Stages Stage Objective Marketing Mix Variables Introduction Awareness Promotion & Price Growth Channel Control Distribution Maturity Maintain Product Decline Select Judgment 59
Presented by Eric N. Berkowitz, PhD The University of Massachusetts at Amherst enb@isenberg.umass.edu 60
Thank You. 61