marketing strategies that help pharmacists compete
TRANSCRIPT
MARKETINGSTRATEGIES
David Holdford, RPh, MS, PhDProfessor, School of PharmacyVirginia Commonwealth University
Generic & Specific Ways to Compete
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Slides to Accompany Chapter 5 of “Marketing for Pharmacists”
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Learning ObjectivesContrast price from differentiation strategies
Identify how pharmacist service strategies might vary at different stages of the product life cycle
Discuss the principle of product portfolio management and how it might be used by pharmacists
Compare the benefits and potential downsides of convenience strategies used by pharmacies
Define the term shopper marketing and how it seeks to influence the customer's shopping experience
Suggest questions pharmacists can use to assess the ethics of their strategies
GENERICMARKETINGSTRATEGIES
All other strategies are just variations on these two
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Be cheaper
Be different
Two Basic Strategies
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TYPICAL COMMUNITY PHARMACY STRATEGIES
Competitive pricing
Convenience
one-stop-shopping
omni-channel access
access to managed care plan networks
broad merchandise selection
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COST-BASED STRATEGIESBe perceived as the low cost leader or cost competitive in a market
Perspective is important in framing cost arguments
Costs to whom? Patient or insurer?
What type of costs? Drug costs? Overall healthcare costs? Short or long term costs?
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Cost Strategy
The total costs in any health care market are a function of three variables in the following equation:
P = Price of a service or productV = Volume or amount of services or products provided (number of products or units of service)I = Intensity of service (level of service e.g., nurse practitioner versus physician specialist)
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FRAMING PHARMACY COSTS
Increasing intensity of pharmacist services may increase drug cost but can lower healthcare costs
Drugs are the most cost effective healthcare intervention
DIFFERENTIATION STRATEGIESOffer a distinctive mix of products and services that is better, faster, and/or uniquely desirable
Differentiation emphasizes value over price
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NICHE STRATEGIESTarget narrow market segments (or niches) that have been ignored, overlooked, or taken for granted by competitors
Focus on a limited number of profitable customers who can be served better competitors
PRODUCT LIFECYCLE STRATEGIES
Products, like plants and animals have a life
Don’t let your product die an early death
SalesProfits
Introduction Growth Maturity Decline
Time
Product Life Cycle18
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LIFECYCLE STRATEGY LESSONS
Any new idea, such as MTM, goes through a lifecycle
Know a product’s stage in the lifecycle to guide marketing strategies
PORTFOLIO STRATEGIES
A portfolio is all of the products and services offered by a businessConsider the portfolio mix when making decisions
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PORTFOLIO STRATEGYHelps define the mix of products and services that a business offers
All community pharmacies practice some form of portfolio strategy
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PORTFOLIO MATRIXHelps identify which products and services to keep or delete
• “Cash cows” are profitable, generating excess cash for a business, but not growing in sales or likely to grow in the future
• “Stars” are profitable, growing in sales, and likely to offer potential for even greater future growth
• “Question marks” are not profitable and their potential to increase sales is not clear
• “Dogs” are products that provide little value to the business and can be a drain on resources
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Stars
High
High
Low
Low
Profitability of thisProduct or Service
Sales for thisProduct or Service
Are Increasing
?QuestionMarks
CashCows
Dogs
PORTFOLIO MATRIX
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PORTFOLIO STRATEGY LESSONS
1. Identify your primary target markets
2. Inventory your current portfolio of products & services
3. Identify which of your current services need to be added or subtracted to your portfolio to serve your target markets
CONVENIENCESTRATEGIES
Pharmacy convenience is an important factor in pharmacy patronage
Convenience varies depending on people and situations
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Most community pharmacies have made convenience an important part of their overall marketing strategy
Research has consistently found location and convenience to be important (often determinant) factors in consumer patronage of pharmacies
Convenience means different things to different people:• parents with small children
• housebound disabled person
• young, healthy shopper
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Potential Downside of Convenience
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Potential Downside of Competing on Convenience
Demand never ends for greater convenience
Takes commitment and continuous work to stay ahead of competitors
Can be expensive
Can have a negative impact on the professional image of pharmacists
SHOPPER MARKETING
It seeks to understand how consumers shop, the ways they shop (e.g., online, in-store), & use this information to better compete for their business
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SHOPPER MARKETINGMoves from simple transactions at the checkout counter to an overall experience
Retailer interacts with the shopper at numerous touchpoints -- smart phone, newspaper circular, store signage, and face-to-face communications
More than just economic & functional value propositions – emotional & symbolic too
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Retail Customer Value Propositions
1. Economic– Marginal utility compared to the costs and sacrifices paid
2. Functional - finding the right products with as little time and as little physical and cognitive effort as possible
3. Emotional –arousal of feelings associated with the act of shopping itself, e.g., enjoying shopping with others, the hunt-for-a-bargain, relaxation
4. Symbolic - positive consumption meanings associated with shopping e.g., shopping local, shopping that supports environment
Objective…
……
……
…..Subjective
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Shopper Marketing & Pharmacists
Pharmacies are heavily engaged in influencing shoppers in multiple ways
Requires understanding things from the shopper’s point-of-view
It needs to offer solutions in multiple channels & communicate with shoppers in numerous ways
Pharmacists can contribute positively to the shopping experience by coordinating with other shopping initiatives & communication strategies
ETHICS AND MARKETING
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Ethics and MarketingPharmacists face ethical dilemmas
By necessity, they must make choices of whom they will serve and how. Some are ethically indefensible• denying access to needy populations who cannot pay,
• providing poor service to the underserved and unprofitable
• emphasizing profits over care
Other choices are not as clear
• Targeting patients who can pay versus those who cannot
Pharmacists need an ethical framework to guide their decisions
Use the following questions to assess the ethics of their strategies
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Assessing Ethics of Strategies1. Would I be embarrassed to describe my actions to friends, family
members, or professional colleagues?2. How would I feel if a marketer acted in a similar manner toward
me?3. How would an objective jury of my peers judge my actions?4. Does the strategy benefit my customers less than, as much as, or
more than it benefits me?5. Is the strategy consistent with our firm’s mission and ethics
code?6. Am I taking advantage of a population that is vulnerable
because of age, education, income, language, or other factor?7. Do consumers have sufficient knowledge and ability to make a
good decision?8. Are consumers free to choose another provider if I do not serve
them well?
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SummaryPharmacists have traditionally relied on a
limited number of marketing strategies in the marketing of their services.
This chapter presents several new strategies.
SEE ‘MARKETING FOR
PHARMACISTS FOR
MORE DETAILS
D HOLDFORD