HC Mktg Pre Week 1 Flashcards
What are the 4 P’s of marketing strategy?
Product
Price
Place
Promotion
Marketing
Execution of the conception, pricing, promotion, and distribution of the goods, ideas and services
The mix of the four p’s, controllable variables that business use to pursue a desired level of sales is referred to as
Marketing mix
Def product
Good, services or ideas are offered by a firm, also healthcare services
Price
Is what consumers are willing to pay for a service
Place
Represents the manner in which goods or services are distributed by a firm for use by consumers
May include location or the hours a medical service can be accessed
Promotion
Way of informing the marketplace that the org has developed a response to meet its needs and that exchange should be consummated
Need
A condition in which there is a deficiency of something, or one requiring relief
Want
Wish or desire for something
Marketing orientation has 5 distinct elements:
- Customer orientation
- Competitor orientation
- Inter functional coordination
- Long term focus
5 profitability
Customer orientation -
Having a sufficient understanding of the target buyers to be able to create superior value for them continuously
Competitor orientation -
recognizing competitors (and potential competitors) strengths, weaknesses, and strategies
Inter functional coordination -
Coordinating and deploying company resources in a manner that focuses on creating value for the customer
Long term focus -
Adopting a perspective that includes a continuos search for ways to add value by making appropriate business investments
Profitability -
Earning revenues sufficient to cover long term expenses and satisfy key constituencies
Differential advantage
Is the incremental benefits of a product relative to competing products that are important to the buyer and perceived by the buyer.
Non market driven approach
Planning i tank to external, members inside organization try to foretell or dictate at the market wants and how the service should be configured to meet those wants
Market driven approach
Follows ext all to internal approach. 1st assessment of what the market wants, then the organizations response.
Market driven planning does not guarantees success but it does minimize the probability of failure
Stakeholders
Any group with which the company has, or wants to develop, a relationship. Can be customers, patients, physicians, referring physicians, social workers, managed care providers, suppliers, laboratory, etc.
Environment
The regulatory, social, technological, economic, and competitive factors to which the organization use be sensitive when developing a strategy.
Regulatory factors
Legal, stark law, physician referral example
Social forces
Demographic, cultural trends that require sensitivity
Technological factors
Advances such as invention of new vaccine to cure disease
Economic factors
Changes in income distribution, fiscal conditions, such as borrowing rates that determine organization investment plans
Competitive forces
Final uncontrollable element in any marketing plan. Strategies and programs must be developed in light of the restraint of competition and should always be considered and recognized as existing in the marketplace.
Society
Represents all individuals, groups, businesses, and other entities that affect, are related to, or derive benefit from the health care organization. All programs and strategies should be developed within societal context.
Organizations that plan for and/or regulate primary and secondary providers
- federally regulating agencies, health system agencies (HSAs), dept of health and human services (DHHS), health care financing agency (HCFA)
- state regulating agencies, public health departments, state planning agency (CON)
- voluntary regulating groups
- joint commission on accreditation of healthcare organizations (JACHO)
- other accrediting agencies
Primary providers (org that provide health services)
- hospitals voluntary (Barnes hospital), governmental (VA Hospitals), investor owned (Humana, AMI, NME)
- state public health departments
- long term care facilities, skilled nursing facilities (Beverly Enterprises)
- intermediate care facilities
- HMOs and IPAs (Care America)
- ambulatory care facilities (nationals rehab services)
- hospices
- physician offices
- home health care institution (Upjohn healthcare services)
Secondary provider organizations
Org that provide resources
- educational institutions, medical schools (John Hopkins), nursing schools, health administration programs
- org that pay for care (3rd party payers), govt (Medicare), ins co (BCBS), social org (Shriners)
- pharmaceutical and medical supply, drug distributors (McKesson), drug & research (Merck), medical products (Johnson & Johnson)
Org that represent primary and secondary providers
AMA, AHA, state medical assoc, indiv professional associations
Individuals and patients (consumers)
Independent physicians, nurses, allied health professionals, technicians, and patients
Target market
Group of customers whom the org wishes to attract
In selecting a target market, the ultimate question is…
Why is one better or more desirable than another.
Ex- ⬇intense competition, ⬆attractiveness. Most growth potential, environmental changes, favorable reimbursement. Must be a match between the organizations mission and the resources required to meet the target market requirements.
Product oriented org structure
The responsibility, authority, and accountability rest with the product line manager. Nursing, Rx, lab, other dept coord svcs across and in support of the product lines.
In true product-oriented org each distinct product or related set of. Products has its own marketing org.
Strategic business units
Businesses operated as separate profit centers within a large org
Product line mgmt has 2 major advantages in HC org
1 someone responsible for all aspects of the product line helps to refine the service area and meet needs more easily
2 packaging related svcs into product lines helps contribute to continuous, rather than sporadic planning.
Disadvantage of product mgmt
Is that the product mgr has no direct control over many operational details, must negotiate for sales force time or marketing research resources etc. in many HC org the product mgr acts as the salesperson for the program
The most common:
Market-oriented org
In which each distinct major market has its own marketing org. Am HC org might design mktg around its major consumer groups (referral phys, corp, mgd care buyers, and other referral sources).
4 prerequisites of successful marketing
1 - pressure to be market-oriented 2 - capacity to be market-oriented 3 - a clear shared vision of the market 4 - actionable first steps = ability to be more market driven
Market oriented
Goal is to focus on solving customer problems rather than on products and services
Clinical Microsystems approach
Developed by Nelson, Batalden and Godfrey.
Patient is the center of the process used to deliver or structure the care, in mktg, the core is mtg the needs of the customer.
Traditional industry structure
Is physician centered, satisfaction driven
5 largest MCOs
WellPoint, the blues, Cigna, Aetna and united.
Health savings accounts
These plans are designed to force people to make economic trade offs between consuming more health care services with the opportunity to accumulate tax free dollars that are unspent i. An account designated for HC. ⬆ Smart shoppers.
Accountable care system (ACS) or accountable care org (ACO)
An entity that can implement organized processes for improving quality and controlling the costs if care and can also then be held accountable for these care results and the resultant costs associated with the outcomes.
Inpt, outpt, rehab, ltc, palliative care are all resp of ACS.
Mktg is a process that involves planning and execution of the four mktg mix variables…
- Product
- Price
- Place and
- Promotion
Effective mktg for HC org involves
The recognition of multiple consumers or markets that often have a diverse array of needs and wants
A non-market based approach to planning is one in which the conception of the service begins
Internally within the organization. Mktg based planning is external-to-internal process.
The strategic mktg process must consider the
Broad macro enviro consisting of stakeholders, enviro factors, and society at large.
HC mktg planning requires
Identification of the target mkt, which may differ from the org’s present customer base
In a product-oriented org services are
Managed as separate profit centers, or strategic business units.
In a market-oriented org structure
Major markets or customer groups are the focus
Marketing success has four pre-requisites:
- Pressure
- Capacity
- vision and
- Actionable steps
The mktg paradigm is shifting from a transactional focus to
A customer-retention strategy
The structure if the health care industry is evolving. There are three main customers…
- Corporations 2. MCOs and with the new health insurance options like health savings accounts, the 3. Accountable health systems.
Strategic planning
Process that describes the direction an org will pursue within its chose environment and guides the allocation of resources and efforts
To develop strategic plan you must first
- Define your mission
- Conduct situational assessment of threats and opportunities to which the org can respond in light of its mission
- Assess its own distinctive competencies
- Establish a set of priorities based on org objectives that align with the mission.
Organizational mission
Refers to the org fundamental purpose for existing, defining who the org is, its values, and the customers it wishes to serve.
Mission statements
Set the tone and Provide the mgmt broad set of directions for how it should develop further business strategies.
Effective mission statement should contain
- Basic product, service, primary market, and technology to be used in delivering the product or service
- Org goals, such as growth, profitability, stability, or survival, stated in a strategic sense.
- Org philosophy - the code of behavior that guides the org’s operation.
- Org self-concept - a self-evaluation based on a realistic determination of its strengths and weaknesses.
- Public image - how those outside the org view the particular entity,
Situational assessment
Analysis of org environment and the org itself. Aka SWOT analysis strengths, weaknesses, opportunities and threats.
In reviewing the environment org must ask
- What are the changes and trends?
- How will these changes affect the org’s business?
- What opportunities do these changes present?
Barriers to entry
Conditions that a company must overcome in order to pursue a business opportunity.
Barriers to exit
Costs of leaving a particular business line
In order for SWOT to be successful a org must be willing and able to
1 turn the focus of the SWOT analysis away from the org products and toward its business processes that meet customer needs
2 capitalize on its strengths by delivering better value to customers than the competition
3 turn any weakness into strength by investing strategically in key areas
Criteria for good differential advantage, hallmarks of a good advantage
1 importance - differential to buyer
2 perceived - by buyer
3 uniqueness - from other providers
4 sustainable - for some period of time
Sources of differential advantage
1 product
2 market
3 cost
4 trust
Principal-agent relationship
1 individual, the principle - patient gives the agent (clinician) the authority or power to make the appropriate decisions on his or her behalf. Trust is critical and essential in HC.
Invisible value
The clue that the producer builds its product or service
Visible value
Value that is seen by the customer, org’s can typically charge for visible value
Evidence management
Is an organized and explicit approach to presenting the org capabilities to the customer
Organizational objectives
Long term performance targets the company hopes to achieve
Product development
Providing new products to existing markets
Vertical integration
Incorporating related services or products previously developed or offered by others to the marketplace
Backward integration
Becoming its own supplier, ex physician enterprise, PHOs
Forward integration
Company offers new services or products closer to the customer than existing services.
Diversification
Developing new products or services for new markets
Strategic alliances
Or formal arrangements with other companies to operate in a particular market
Joint venture businesses
New corporate entities in which both partners hold an equity position.
Consolidation
Focusing business on a smaller set of markets, products, or services
Divestment
Selling off a business or product line
Pruning
Reduces # of products or services it offers to the market
Retrenchment
Company decides to withdraw from certain markets
Harvesting
Gradually withdrawing support from a product line until there is little or no market demand
The BCG Matrix - Boston Consulting Group
Compares market share and growth rate by high and low values
Look at grid
The undying assumption is cash flow and profitability are closely related to sales volumes. Products or strategic business units are then placed within this matrix according to their position on two dimensions.
Market growth rate = rate of sales growth in market
Relative market share = ratio product share of business within the market compared to that of its largest competitor.
Cash cows
Products with high market share but a low growth rate
Problem children
Low relative market share, but high growth rate
Dogs
Products with low share and low growth
BCG matrix
Market share ⬆ Market share ⬇
Growth ⬆
GE Matrix
Multidisciplinary models for focusing corporate strategy in org with multiple product lines based on the dimensions of market attractiveness and business strength
Market attractiveness
- Overall market size
- Annual market growth rate
- Historical profit margin
- Competitive intensity
- Technological requirements
- Inflationary vulnerability
- Energy requirements
- Environmental impact
- Social/political/legal issues
Business strength
- Market share
- Share growth
- Product quality
- Brand reputation
- Distribution network
- Promotional effectiveness
- Production capacity
- Production efficiency
- Unit costs
- Supply costs
- Research & development performance
- Management talent
Five forces model of industry structure
Four major forces
- The threat of new entrants
- Bargaining power of suppliers
- Bargaining power of customers
- The threat of substitute products or services
Threat of substitution
Threat of one product class being substituted for another. Ex technological change
Determining the target market
Specifying whom the org is trying to attract. Selection of the target market involves accessing the org own strengths, the competitive intensity for the target market, the cost of capturing market share, and the potential financial gain in attracting the targeted group.
Mass marketing
Treating the entire market as one target market and appealing to the broadest group. A distinct market strategy maybe developed for each group.
Multisegment marketing
Targeting all possible Segments or a number of different segment.
Market concentration strategy
Targeting only one segment of the market. An org must be able to defend its choice in the face if competition.
Market leader
The firm with the largest market share and dominates the competitors in a given market.
Market challenger
The firm that attempts to confront the market leader.
Market follower
Is a business that competes in the marketplace by following he market leader rather than by attacking it directly.
Market niche
Strategy of targeting a narrow segment of or segments in a large market with specialized products or services.
Marketing plans along with
Finance, productions, and human resource plans - form the core elements of an org’s strategic plan.
An org’s strategic plan is guided by the mission that defines its purpose for existing.
The mission must recognize who the customer is and what the customer wants to buy.
In developing strategic plans a SWOT analysis provides
A review of internal and external factors that can affect strategic outcomes
A differential advantage is essential i. The development of an effective plan for a program or service.
A differential advantage can be derived from the product or service, cost, or market. Health care organizations also need to recognize trust as a key source of a differential advantage.
In developing strategic plans, an organization must be able to
recognize the barriers to entry and exit for any new service venture
Invisible value is the value a producer builds into its product or service, visible value is a value that the customer sees.
Typically a company can only charge for visible value. Managing these values has been referred to as evidence management, which involves presenting the customer with the organization’s visible and invisible capabilities.
The four broad growth strategies that any organization can pursue are:
- Market development
- Market penetration
- Product development
- Diversification
The BCG matrix and GE matrix are conceptualizations that can aid an organization in the review of its service portfolio.
Both models encompass market and competitive considerations
In any industry the level of competitive intensity is affected by the threat of new entrants, the bargaining power of both both
Suppliers and customers, and the threat of substitute products and services
In developing a marketing plan, organizations can pursue
a mass marketing or a market concentration strategy
Environmental scanning
Acquisition and use of information about events, trends, and relationships in an organizations external environment, the knowledge of which would assist in the planning the org’s future course of actions.
Inflation
Decline in buying power when price levels rise faster than income.
Gross income
Total amount of $ earned by a person or family in one year
Disposable income
Amount of $ a consumer has left for food, clothing, and shelter after paying taxes
Discretionary income
Amount of income left after paying for taxes and necessities.
Technology
Innovations or inventions from applied science and research
Demographics
Statistics that describe members of a population in terms of who they are, where they live,and the types of jobs they have
Baby boomers
Born between 1946-1964 will be 20% of US population
Blended families
Households joined through remarriage or living together in the same household, continues to increase.
To help analyze geographic markets, the federal govt has created a three-tiered description if communities that reflect their pulsation density.
Data are gathered and reported according to the following classifications:
- Metropolitan Statistical Areas - cities w/pop 50k +, or an urbanized area w/a total metro pop of at least 100k.
- Primary Metropolitan Statistical Area (PMSA) - 2nd largest, total pop of 1M+, must include counties w/at least 10k, at least 60%urban, fewer than 50% residents communities outside the county for employment.
- Consolidated Metropolitan Statistical Area - largest geographical category, composed of PMSAs that total at least 1M people.
Pure competition
When every company has the same product
Monopolistic competition
Many sellers compete and have substitutable products.
Oligopoly
Few companies control a majority of the industry sales
DOJ formula Herfindahl-Hirschman Index of competition
Measure of overall competitiveness of the market. Largest value index can have is 10k, which be a single insurer in the market. If. 4 firms w/equal share 25%
Accountable health plan
Entity that delivers or arranges to deliver a continuum of services to a defined population.
Accountable care organizations
Based on model of Cleveland Clinic, Mayo Clinic, quality system basis metrics are agreed upon protocols and followed by the physicians to manage the defined patient population
Regulations
Rules or restrictions placed on companies by federal or state governments
Sherman Antitrust Act 1890
Forbids any contracts , combinations, or conspiracies in the restraint of trade. Actual monopolies or attempts to monopolize any part or trade or commerce are also forbidden
The Clayton Act
Supplemented the Sherman act by forbidding certain actions that were likely to lessen competition, even if no actual damages had occurred.
In 1950 Clayton Act was amended with the Antimerger Act
Broadened the power of the fed govt to prevent and intercorporate acquisitions that wild substantially reduce competition.
Robinson-Patman Act 1935
Made it illegal to discriminate in prices between different buyers of the same product, where the effect may be to lessen competition and create a monopoly.
Lanham Act
Provided registration of company trademarks, aka brand name.
1988 Trademark Law Revision Act
Guaranteed a company trademark protection prior to the actual first use
Exclusive dealing
Buyer is required to purchase all or part of its needs for a product from one seller for a defined period of time
Requirement contracts
A buyer is required to purchase all or part of its needs for a product from one seller for a defined period of time.
Tying arrangements
When the seller of a product requires that the purchaser also buy another item
