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