Chapter 9 Marketing Strategies Chapter 9 slides for Marketing for Pharmacists, 2nd Edition.

Chapter 9Marketing Strategies

Chapter 9Marketing Strategies

Chapter 9 slides for Marketing for Pharmacists, 2nd Edition

Learning ObjectivesLearning Objectives

Describe three generic marketing strategies.Explain product life cycles and their implications

for pharmacy products and pharmacist services.Discuss product portfolio management and how

pharmacists might use it.Compare and contrast convenience strategies

used by pharmacies. Discuss the potential downside of overreliance on convenience strategies.

Define relationship marketing and explain its advantages over transactional marketing.

Suggest ways of identifying innovative products and services.

Generic Marketing Strategies

Generic Marketing Strategies

All other strategies are just

variations.

TIP Be cheaper or different.

TIP Be cheaper or different.

Three generic strategiesThree generic strategies

FocusFocus

CostCostLeadershipLeadership

DifferentiationDifferentiationNumber of

Target Markets(Scope)

Broad

Narrow

CostCost DifferentiationDifferentiation

Forms of Competitive Advantage

Focus

CostLeadership

Differentiation

•Low price•Efficiency•Broad product offering•Broad marketWal-Mart

•Higher price•Unique mix•Broad marketMedicine Shoppe

•Higher price•Unique mix,•Narrow marketIndependents

Choosing an approachChoosing an approach

No strategy is inherently better.Depends on one’s capabilities and

environmentPorter says to choose one.

Others disagree.

What differentiates you from other

pharmacists?

What differentiates you from other

pharmacists?

Product Life-Cycle Strategies

Product Life-Cycle Strategies

Products, like plants

and animals,

have a life.

TIP Don’t let your product die

an early death.

TIP Don’t let your product die

an early death.

Sales

Profits

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

TimeTime

Product Life CycleProduct Life Cycle

Sales

Time

Alternative Product Life CyclesAlternative Product Life Cycles

Lessons for PLCLessons for PLC

Any new idea takes time and effort to bear fruit (e.g., pharmaceutical care).

If successful, time and effort must be expended to keep them successful.

All products and innovations eventually die.

Portfolio StrategiesPortfolio Strategies

A portfolio is all

products and

services offered by a business.

TIP Consider the mix of

yourportfolio.

TIP Consider the mix of

yourportfolio.

StarsStars QuestionQuestionMarksMarks

DogsDogsCashCashCowsCows

HighHigh

High

LowLow

Low

Relative Market ShareRelative Market Share

Product SalesGrowth Rate

StarsQuestion

Marks

DogsCashCows

High

High

Low

Low

Relative Market ShareRelative Market Share

Product SalesGrowth Rate

BasicBasicDispensingDispensing

DiseaseDiseaseManagementManagement

DurableDurableMedical EquipmentMedical Equipment HomeHome

HealthcareHealthcare

OTCOTCMedicinesMedicines

HerbalHerbalMedicinesMedicines

Managing your portfolioManaging your portfolio

1. Identify your primary target markets. 2. Inventory your current service offerings. 3. Identify which of your current services

are viable with your target markets. The goal is to offer different levels of services to the target markets.

4. Identify which services you need to add or subtract to round out your service portfolio.

Convenience StrategiesConvenience Strategies

Pharmacy convenien

ce is an important factor in

pharmacy patronage.

TIP Convenience varies

among people and situations.

TIP Convenience varies

among people and situations.

The downside of convenience

The downside of convenience

Fast will soon be slow.It can be expensive.Affects professional image.

Types of convenienceTypes of convenience

Access - easy to reachSearch - easy to identify and selectPossession - easy to obtainTransaction - easy to purchase and

return

Conduct a convenience auditConduct a convenience audit

Go through a pharmacy with the eyes of customer. How easy is it toGet into and through the pharmacy?Find what you want?Get what you want?Purchase what you want?

Relationship Marketing Strategies

Relationship Marketing Strategies

The goal is to keep

customers.

TIP Loyal customers are

more profitable.

TIP Loyal customers are

more profitable.

Goal of relationship marketing (RM)

Build and maintain a base of committed, profitable customersAttractRetainEnhance

Attract business throughsales, advertising, promotion

Lose businessthrough poor service

and not meeting needs

Bucket =a companywhose goal isto be filledwith business

Bucket Theory of RMBucket Theory of RM

Benefits of RMBenefits of RM

To your patientsTo your patients Greater value and less

hassleReduces search Special needs of

customer accommodated

Customer knows what to expect

Simplifies and reduces stress of buying process

To your businessTo your business Loyal customers

Purchase moreProvide positive word

of mouth (WOM)Are less price

sensitiveCost lessAre more profitable

The $100,000 customerThe $100,000 customer

(1) $ Spent/yr by avg pt.

(2) Avg # yrs as customer

(3) Customers from WOM

(1) x (2) x (3) = Lifetime value

(1) __________

(2) __________

(3) __________

(4) __________

Do you practice RM?Do you practice RM?

Do you have formal RM strategies?Do you commit enough resources to

RM?Are existing patients given concrete

reasons to stay with you?Do you keep a database of patient

preferences, likes, and dislikes?Do you know the lifetime value of

customers?

Innovation Strategies:Innovate to differentiate.

Innovation Strategies:Innovate to differentiate.

Any change in the 4 P’s offered that customers

perceive as new.

It’s not an innovation unless someone thinks it is.

It’s not an innovation unless someone thinks it is.

Innovations can be used toInnovations can be used toFind new customers for the product (e.g., pets).

Increase usage for existing products (e.g., loyalty card).

Expand a product line (e.g., offer disease management).

Expand distribution intensity (e.g., more pharmacies).

Expand distribution over a wider geographic area.

Penetrate markets of competitors (e.g., develop a service that will draw away a competitor’s target customers).

Innovations can be used toInnovations can be used to

Find new uses for a product (e.g., baking soda).

Disruptive innovationsDisruptive innovationsTechnological innovation, product, or service that

overturns current market leaders. When customers are overserved in the market, they seek

lower cost, lower quality (but good enough) products.Substitute OTC for Rx medicine, midwife for obstetrician, ATM

pharmacy for local pharmacist.

Lower-end disruptive innovations: dominate an existing market by filling a role in a new market that the older technology could not fill (expensive physician practices competing with low-cost store clinics)

holistic medicine, 24-hour services, convenient health care.

New-market disruptive innovation: fulfills new, unmet need

Treating allergiesTreating allergies

Specialists

Family Physicians

Nurse Practitioners/Physician Assistants

Self-Care Providers

Treating allergiesTreating allergies

Specialists

Family Physicians

Nurse Practitioners/Physician Assistants

Self-Care Providers

Rx-to-OTC

Minute Clinics

Office Diagnostics

Identifying innovationsIdentifying innovations

Challenge everything.

Focus on the customer’s viewpoint.

Make things easier, faster, cheaper, better.

Tap into emotions.

New Market: Travel clinicsNew Market: Travel clinics

New Market: Pet MedicineNew Market: Pet MedicineIn the United States, $35.9 billion

was spent on pet-related products in 2005; this is increasing 5% each year.

63% of households have at least one pet.73 million dogs (32% of households)

Average vet bill $187 per year90 million cats (27% of households)

Average vet bill $147 per year

Source: Brandweek.com

Expand service intensity: specialty pharmacy

Expand service intensity: specialty pharmacy

Change the experience: holistic pharmacies

Change the experience: holistic pharmacies

Increase usage for existing products: customer relationship

management (CRM)

Increase usage for existing products: customer relationship

management (CRM)

Loyalty cards

SummarySummary

Pharmacists have traditionally relied on a limited number of marketing strategies in the marketing of their services.

This chapter presents several new strategies.

Questions?Questions?