Planning and marketing health services
Helpm31990
9781284094428_SLID_CH02.pptxChapter 2
Marketing Strategy
Chapter 2 Learning Objectives
Understand the scope of strategic marketing planning.
Identify the importance and sources of a competitive differential advantage.
Recognize disruptive innovations as a source of new competitors.
Describe the three alternative perspectives to assist in developing organizational strategies.
Understand the essential components of marketing strategy formulation.
Introduction
Strategic planning: A process that describes the direction an organization will pursue within its chosen environment and guides the allocation of resources and efforts
Learning Objective 1
Four steps of strategic planning process
Define mission.
External assessment of threats and opportunities
Internal assessment of strengths and weaknesses
Establish set of priorities based on organizational objectives.
Then, determine which strategies to pursue.
Learning Objective 1
Step 1: Defining organization mission
Organization’s fundamental purpose for existing
Who the organization is, its values, and the customers it wishes to serve
Blueprint for management in developing business strategies
Must recognize what the business is and what the customer wants.
Avoid marketing myopia.
Learning Objective 1
Organization mission components
Basic product or service, primary market, and technology for delivering product or service
Organizational goals
Growth, profitability, stability, nor survival
Organizational philosophy
Organizational self-concept
Public image
Learning Objective 1
Determine
stakeholder
salience
Research
stakeholder
expectations
Avoiding Myopia
Map stakeholders
Engage with stakeholders
Embed stakeholder orientation
Learning Objective 1
Step 2: Situational assessment
SWOT analysis: Strengths, Weaknesses, Opportunities, Threats
Economic, competitive, regulatory, social, and technological changes in marketplace
Questions
What are the changes and trends?
How will these changes affect the organization?
What opportunities to these changes present?
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Further describe SW—internal OT—external; micro- and macro-environments
FIGURE 2-6 Four-Cell SWOT Matrix for Producing Clinical Guidelines in the National Health Service
Learning Objective 1
Step 2: Situational assessment (cont.)
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
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Examples of barriers to entry? Students discuss…
Give examples of product-based, market-based, and cost-based differential advantages.
Learning Objective 2
Differential advantage
Product, market, cost
Based on core competencies
Criteria
Importance, perceived, uniqueness, sustainable
Sources
Product, market, cost, trust (unique to health care)
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TABLE 2-1 Sources of a Differential Advantage
Learning Objective 2
Trust
A unique source of a differential advantage in health care
Principal/agent relationship
“One individual (the principal, in this case the patient)
gives the agent (the clinician) the authority or power
to make the appropriate decisions on his or her behalf.”
Learning Objective 3
Disruptive innovations
Cheaper
Simpler
Easier to access
FIGURE 2-7 The Visible and Invisible Values
Learning Objective 4
Organizational strategy
Broad strategies are formulated.
Can be either growth market or consolidation strategies
Growth market: Organization attempts to gain more sales from an existing business line or by penetrating new markets.
Consolidation: Pairing either services or markets
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Learning Objective 4
Organizational strategy (cont.)
Growth market strategies
Market penetration
Increase sales of present products/services in present markets.
Market development
Increase sales in new markets.
Product development
Introduce new products/services to present markets.
Diversification
Introduce new products into new markets.
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Students give examples of market penetration, market development, product development, and diversification.
Learning Objective 4
Organizational strategy (cont.)
Product development strategy
Vertical integration
Backward integration: Become own supplier.
Forward integration: Offer new services closer to the customer.
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Students give examples of backward and forward integration.
Learning Objective 4
Organizational strategy (cont.)
Diversification strategy
Strategic alliances
Formal arrangements with other companies to operate in a particular market
Joint ventures
New corporate entities created by strategic alliances
19
Students give examples of strategic alliances, joint venture businesses.
Learning Objective 2
Organizational strategy (cont.)
Consolidation strategies
Divestment
Selling off a business or product line
Pruning
Reducing the number of product or service offerings
Retrenchment
Withdrawing from certain markets
Harvesting
Gradually withdrawing support from a product until market demand is reduced or eliminated
20
Students give examples of divestment, pruning, retrenchment, harvesting.
Learning Objective 3
Alternative models
Boston Consulting Group matrix
Stars, cash cows, problem children, dogs
Based on market growth rate and market share
Can be used to focus on broad considerations
21
Students give examples of stars, cash cows, problem children, dogs. (See p. 53, Figure 2-6)
FIGURE 2-8 BCG Matrix for Selected Pfizer Pharmaceutical Products
Market share
High
Low
Growth potential
Low
High
Dogs
Problem
Children
Stars
Cash
Cows
Student
Lyrica
Zyvox
Embrel
Lipitor
Viagra
Data from: “Extended Quantitative Analysis – Pfizer,” EternalYield (August 24, 2014),
http://eternalyield.com/2014/08/24/extended-qualitative-analysis-pfizer
Learning Objective 4
Competitive market
Must analyze
Existing competition
Potential competition
Factors affecting competitive intensity
Threat of new entrants
Bargaining power of suppliers
Bargaining power or customers
Threat of substitute products or services
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Refer students to page 57, figure 2-7.
Learning Objective 4
Competitive market (cont.)
Existing competition
When product is relatively standardized and the competitors are relatively numerous and similar in size.
When cost of switching providers is relatively low
In industries characterized by overcapacity and among firms still in the market because of a high fixed-asset position
24
Have students give examples of existing competition scenarios.
Learning Objective 4
Competitive market (cont.)
New entrants
Threat of substitution
Bargaining power of suppliers
Bargaining power of customers
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Have students give examples. Refer to pp. 57–60.
Learning Objective 4
Blue ocean strategy
Achieve high performance in uncontested space.
Create demand in “unknown market.”
Most organizations follow red ocean.
Strategy focusing on competition
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Have students give examples. Refer to pp. 57–60.
Learning Objective 5
Marketing plan
After establishing marketing objectives, then formulate market strategies.
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Have students give examples. Refer to pp. 60–63.
Learning Objective 5
Market strategy formulation
Determine target market (mass market, multi-segment, market concentration).
Specify market strategy (market challenger, market follower, market niche).
Develop tactical plans for marketing mix.
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Learning Objective 5
Determine target market.
Whom the organization is trying to attract
Assess organization’s strengths, competitive intensity for target market, cost of capturing market share, and potential financial gain in attracting the targeted group.
Mass marketing (undifferentiated) or segmenting
Multi-segment marketing
Market concentration strategy
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Have students describe mass marketing and different segmenting strategies.
Learning Objective 5
Specify market strategy.
Market leader
Market challenger
Market follower
Market niche
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Have students describe market leader, challenger, follower, niche.
Learning Objective 5
Tactical action plan
Identifies actions to be taken regarding each aspect of the marketing mix
Advertising strategy, pricing strategy, distribution issues, nature of product
Finally, evaluate plan (discussed further in Chapter 14).
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Refer students to Ex. 2-4 Marketing Plan outline, pp. 64–65.
Summary
Marketing plans—along with finance, production, and human resource plans—form the core elements of an organization’s strategic plan.
An organization’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.
Summary (cont.)
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 the value that a customer sees. Typically an organization can only charge for visible value.
An organization can develop a differential advantage that is either product-based, market-based, or price-based.
Summary (cont.)
There are four broad growth strategies that any organization can pursue: market development, market penetration, product development, and diversification.
The BCG matrix and the Five Forces Model can aid an organization in the review of its service portfolio relative to the external market; both models encompass market and competitive considerations.
Summary (cont.)
In any industry, the level of competitive intensity is affected by the threat of new entrants, the bargaining power of 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.
