PPDE2 4-1 Marketing PDF

MARKETING Pharmacy Practice Evaluation and Development II (PPRAD 1632) Ana C. Quiñones-Boex, PhD, FAPhA Professor of Pharmacy Administration Midwestern University References Bentley, JP, Rosenthal, M; Chapter 24: Marketing Fundamentals. In; Desselle, Zgarrick, Moczygemba, Alston, Pharmacy Ma...

MARKETING Pharmacy Practice Evaluation and Development II (PPRAD 1632) Ana C. Quiñones-Boex, PhD, FAPhA Professor of Pharmacy Administration Midwestern University References Bentley, JP, Rosenthal, M; Chapter 24: Marketing Fundamentals. In; Desselle, Zgarrick, Moczygemba, Alston, Pharmacy Management. 5th ed. The McGraw-Hill Companies, 2020 Teeter, BS, Painter, JT; Chapter 25: Marketing Applications. In; Desselle, Zgarrick, Moczygemba, Alston, Pharmacy Management. 5th ed. The McGraw-Hill Companies, 2020 Dr. Kliethermes’ old notes! ☺ CHAPTER 24: MARKETING FUNDAMENTALS Objectives Define marketing, its societal Describe the Ps of marketing contributions, and purpose management. within a business. Describe different types of Define the concept of exchange product offerings and define the and state its importance to distinguishing characteristics of marketing. a service. Differentiate among the Define other marketing concepts concepts of needs, wants, and and their role in purchase demands. behavior and the profitability of Identify orientations toward the organizations. marketplace that organizations Explain the concept of might take when conducting relationship marketing and apply marketing activities. it to pharmacy management. Scenario Jim Smyth and Sue Davidson co-own and manage West Side Pharmacy. While looking over the books for the last year, both pharmacists begin to recognize that their pharmacy is struggling to meet its financial objectives. Jim and Sue decide to ask the staff pharmacist and the technicians to help brainstorm ideas for improving the pharmacy’s financial performance. During the after-hours impromptu staff meeting, the following questions were asked: “What other services can we provide that people in our community need or want?” “What types of services can we develop given our resources?” “Should we provide the services in our pharmacy or at some other location?” “How will our services be different from Corner Pharmacy on the other side of town?” “What will be the impact of new competitors, such as PillPack Pharmacy, now owned by Amazon, with its incredible size and understanding of consumer markets?” “How should we respond to such new market entrants?” “What should we charge for our services?” “How do we let people know that we are offering these services?” “Are there any health-related goods that we should add to the line of products we sell?” “How will we know if our patients value the goods and services we provide?” “What kinds of relationships do we need to establish with our patients to be successful?” “Should we start a customer loyalty program?” These are all marketing-related questions. This chapter will describe and discuss some of the basic building blocks of marketing that are essential for developing and implementing a successful marketing plan. Chapter 25 will provide practical tools for marketing pharmacy goods and services. Source: https://www.montsepenarroya.com/wp-content/uploads/2009/03/philip-kotler.png  Marketing Prior to 1960s, marketing was recognized as a set of business activities that existed to consummate market transactions between producers of goods and services and consumers “process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” (AMA, 1985) “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (AMA, 2007)  Marketing - Kotler and Keller (2016) “Marketing is a societal process (emphasis added) by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.” Managerial definition: “the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.”  Exchange The core concept of marketing is exchange (Kotler, 2003) Exchange - process of obtaining a desired product from someone by offering something in return Transaction - trade of values between two or more parties items of value are often $ and a tangible good Transfer - one party gives an item of value to another party while receiving nothing tangible in return Source: https://www.differencebetween.com/wp-content/uploads/2017/06/Difference-Between-Transaction-and-Exchange-2.jpg Source: https://www.marketing360.in/wp-content/uploads/2017/12/Needs-wants-and-demandsconcept-shubhi-sharma-19th-nov-2017-Pranay-Behira.jpg  Needs, Wants, and Demands “Marketers must attempt to understand the needs, wants, and demands of their target markets.” Need - state of felt deprivation. Needs are basic human requirements: physical (e.g., food, clothing, and shelter) social (e.g., need for affection, need to belong) individual (e.g., need for self-expression) Want - desire for a specific satisfier of a need. Needs become wants, and these wants are shaped by culture and individual personality Demand - a want that is backed by an ability to pay. Source: https://upload.wikimedia.org/wikipedia/commons/thumb/3/33/MaslowsHierarchyOfNeeds.svg/1200px-MaslowsHierarchyOfNeeds.svg.png  Needs, Wants, and Demands Health economics literature: need is “the amount of medical care that medical experts believe a person should have to remain or become as healthy as possible, based on current medical knowledge” (Feldstein, 1999, p. 83). demand for care can be > than the need demand for care can be < than the need Negative demand (Kotler & Keller, 2016) and negative goods (Smith & Kolassa, 2001). Negative demand occurs when a major part of the market dislikes the service or product, and may even pay a price to avoid it.  Needs, Wants, and Demands The job of a marketer is not only to understand and respond to people’s expressed needs but also to help customers learn more about what they need and want (latent needs). responsive market orientation VS proactive market orientation (Narver et al., 2004) Marketers do not create needs, but they do help consumers to understand their latent needs and to translate needs into wants.  Company Orientations toward the Market Place Kotler (2003) has defined 6 competing concepts that organizations use as guides in the conduct of marketing activities: Production Product Selling Marketing Societal Customer Marketing  Company Orientations toward the Market Place Production concept - emphasis is efficiency in the production and distribution of goods and services Product/service availability and low prices Product concept - emphasis is on making good products, often as defined in the eyes of the producer, and improving them over time Well-made products/services Selling concept - emphasizes actions directed at stimulating consumers’ interest through aggressive sales and promotion efforts Hard selling, aggressive campaigning  Company Orientations toward the Market Place Marketing concept - needs of the buyer are paramount creating customer value Customer concept - direct separate offers, services, and messages to individual customers focus on individual customer needs Societal marketing concept - deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and the society’s wellbeing company profits, satisfaction of consumers’ wants and needs, and the public interest (each often having conflicting endpoints) must be balanced  Company Orientations toward the Market Place Holistic concept (Kotler and Keller, 2016) Combines many of the features of the marketing, customer, and societal marketing concepts (and even some elements of the production, product, and selling concepts) This term conveys the importance of taking both a broad and integrated view of marketing Marketing Plan Slide courtesy of Dr. Kliethermes  4 Ps of Marketing & More Product Performance Price (McCarthy, 1960) Programs Place (Kotler and Keller, 2016) Processes Promotion People Positioning  4 Ps of Marketing 1. Product - refers to an organization’s offering Kotler and Keller (2016) described offerings as: Pure tangible good Tangible good with accompanying services Hybrid - equal parts of goods and services Major service with accompanying minor goods & services Pure service Christensen et al. (1993) differentiated types of services associated with patient care provided by RPhs: Dispensing services Dispensing-related value-added pharmaceutical services Nondispensing-related value-added pharmaceutical services  4 Ps of Marketing 1. Product Services vs. Physical Goods (Lovelock & Wright, 2002): Customers do not obtain ownership Intangible performances. Greater involvement of customers in the production process People may form part of the product, including other patrons Greater variability in operational inputs and outputs, making it more difficult to standardize and control Many are difficult for customers to evaluate Absence of inventories Time factor is relatively more important Delivery systems may involve both electronic and physical channels  4 Ps of Marketing 2. Price Considers costs, competitors’ prices, and the demand for the product Objective price VS Perceived price (actual price) (what is encoded by the consumer, e.g., “expensive” or “cheap”) To a consumer, price is what is given up or sacrificed to obtain a product (Zeithaml, 1988). $ Nonmonetary outlays (time, effort, and discomfort related to the processes of searching for, purchasing, and using the product)  4 Ps of Marketing 3. Place (Distribution) Having the product available when and where targeted customers want to buy it. Physical location Virtual location 4. Promotion Activities that seek to inform, remind, and persuade the target market about an organization and its offerings Advertising Sales promotion Public relations (including publicity) Direct marketing Personal selling  More Marketing Ps 5. Positioning “The act of designing the company’s offering and image to occupy a distinctive place in the minds of the target market” (Kotler & Keller, 2016, p. 275). Positioning is about what a marketer can do to the mind of the target consumer; it is not about what marketers do to the product attributes per se. E.g., Volvo’s core positioning is safety and durability  Modern Marketing Ps 6. People Costumer service Employee training 7. Processes Method and sequence in which a service is created, produced, and delivered 8. Programs Company’s activities directed to consumers 9. Performance Wide range of outcome measures, both financial and nonfinancial  Other Marketing Concepts Expectations - internal standards used by customers when evaluating a product or service desired service level zone of tolerance adequate service level predicted service level Satisfaction - “a person’s feelings of pleasure or disappointment that result from comparing a product or service’s perceived performance (or outcome) to expectations.” (Kotler and Keller, 2016)  Other Marketing Concepts Quality - superiority or excellence Service quality: “customers’ long-term cognitive evaluation of a firm’s service delivery” (Lovelock & Wright, 2002) One measure of service quality: SERVQUAL scale (Parasuraman et al., 1988), identifies 5 dimensions: Tangibles - the appearance of a firm’s physical facilities, equipment, personnel, and communication materials Reliability - the ability of the firm to perform the promised service dependably and accurately Responsiveness - the willingness of the firm to help customers and provide prompt service Assurance - the knowledge and courtesy of employees and their ability to convey trust and confidence Empathy - the caring, individualized attention the firm provides to its customers  Other Marketing Concepts Value - either the ratio (Kotler, 2003) or the difference (Lovelock & Wright, 2002) between the perceived benefits and the perceived costs (i.e., perceived sacrifice).  Other Marketing Concepts Loyalty – disagreement with respect to how loyalty should be conceptualized and subsequently measured: Historically considered a behavioral outcome - repurchase or switching intentions and behaviors (Oliver, 1999). Others have argued that loyalty has psychological meaning - firm adoration, identification with the firm, and willingness to assist the service provider and other customers are thought to be part of the loyalty construct (Jones & Taylor, 2007; Oliver, 1999). Satisfaction as an antecedent of loyalty.  Other Marketing Concepts Collecting Customer Data “To create, deliver, and communicate superior customer value requires that a company understands its target market’s expectations as well as its customers’ assessments of satisfaction, quality, and value.” Post-transaction surveys Overall evaluation surveys Mystery shopping Noncustomer, new customer, and declining/former customer surveys Focus groups Employee data Slide courtesy of Dr. Kliethermes  Relationship Marketing “Activities aimed at developing long-term, cost-effective links between an organization and its customers for the mutual benefit of both parties.” (Lovelock & Wright, 2002) Palmatier et al. (2006): relationship marketing is more effective when relationships are more important to customers, such as in the context of service offerings Sheth (2002) has argued that the future of relationship marketing includes … transactional marketing efforts depending on the characteristics of the customer segment. Slide courtesy of Dr. Kliethermes  Relationship Marketing Gummesson (2002) outlines four fundamental values of relationship marketing: Marketing management should be broadened into marketing- oriented company management Long-term collaborations and win-win All parties should be active and take responsibility Relationship and service values instead of bureaucratic-legal values Bitner (1995) outlined three essential activities to attracting, building, and maintaining service relationships: Make realistic promises in the first place. Enable employees and systems to deliver on promises. Keep promises to customers when delivering services.  Consequences of Relationship Marketing Benefits to the organization Customer loyalty 65% of the average company’s business comes from its present satisfied customers (Schoell & Guiltinan, 1990) Focusing on customer retention rather than customer acquisition should be less expensive -> increases in marketing efficiency Referrals Profitability More effective in meeting customer needs/wants Societal benefits CHAPTER 25: MARKETING APPLICATIONS Objectives Describe the role of marketing Analyze a target market. and its importance in the Apply the marketing-mix practice of pharmacy. components to various Describe the essential steps scenarios. when preparing to market goods Describe the increasing or services in a pharmacy. importance of having a positive Distinguish between the micro- online presence. and macroenvironment of an Describe the importance of organization. marketing control. Conduct a situation analysis for a given organization. Differentiate between mass marketing and market segmentation. Scenario Murray Rockefeller earned his PharmD degree 7 years ago. Upon graduation, he was presented with the opportunity to become a junior partner of Community Care Pharmacy in Weagle, AL. This pharmacy fills prescriptions, provides compounding services, offers a full line of durable medical equipment, and prepares unit dose blister packages of medications for residents of a local nursing home. For the first 5 years of Dr. Rockefeller’s employment, he worked closely with the senior partner and learned about running a pharmacy business. Working side-by-side with the senior partner ensured the smooth transition of the pharmacy ownership when Dr. Rockefeller became the sole owner of Community Care Pharmacy 2 years ago. Since Dr. Rockefeller assumed ownership of the pharmacy, he has reflected that much of his effort has been focused on maintaining existing services provided by the pharmacy rather than planning for goods and services they might offer in the future.  Discussion related to the case here! Scenario During the past year, Dr. Rockefeller has realized a significant increase in competition from community pharmacies in the area, as well as lower profit margins from dispensing prescriptions. He has also noticed that consumers are eschewing “brick and mortar” stores in communities like Weagle and are making more purchases from on-line competitors like Amazon.com and Wal-Mart.com, even for health items that they would often purchase in pharmacies. He knows that he must investigate options to seek additional revenue sources for his pharmacy and integrate appropriate marketing channels into his business strategy. A few of the options he is considering include offering new goods and services that are in demand by his patients. He also knows that before launching any new good or service, he must do extensive planning and evaluate marketing options to ensure success. Introduction “…The reduction in profitability from dispensing, increased competition from other pharmacies and types of businesses, as well as increases in costs of drugs, salaries, and other operating expenses have forced pharmacies to seek alternative revenue sources. Pharmacies have generated additional revenues in a variety of ways, including selling different lines of goods and establishing patient care services such as immunizations, health and wellness screenings, medication reconciliation, point-of-care testing, and medication therapy management (MTM) services. Marketing is a necessary and essential function in a highly competitive and resource-constrained environment. To successfully launch any new good or service, a thorough understanding of the organization, environment, and market is crucial.”  Marketing Steps Steps in marketing a pharmacy good or service Citation: MARKETING APPLICATIONS, Desselle SP, Zgarrick DP, Moczygemba LR, Alston G. Pharmacy Management: Essentials for All Practice Settings, 5e; 2019. Available at: https://accesspharmacy.mhmedical.com/content.aspx?bookid=2714&sectionid=230770261 Accessed: March 30, 2020 Copyright © 2020 McGraw-Hill Education. All rights reserved  What to do before 1st Revisiting the marketing step? Scenario Dr. Rockefeller During the past year, has realized a significant increase in competition from community pharmacies in the area, as well as lower profit margins from dispensing prescriptions. Noticed that consumers are eschewing “brick and mortar” stores in communities like Weagle and are making more purchases from on-line competitors like Amazon.com and Wal- Mart.com, even for health items that they would often purchase in pharmacies. Investigate options to seek additional revenue sources for his pharmacy and integrate appropriate marketing channels into his business strategy. He is considering include offering new goods and services that are in demand by his patients. He also knows… he must do extensive planning and evaluate marketing options to ensure success. 1. Analyzing the market environment Situational Analysis (“Environmental Scan”) Market environment - two areas: Microenvironment internal environment - organizational structure, culture, personnel, and resources external environment - organization’s suppliers, customers, and competitors Macroenvironment - demographic, economic, natural, technological, political, or cultural forces SWOT analysis  The micro- and macroenvironment Internal External Citation: MARKETING APPLICATIONS, Desselle SP, Zgarrick DP, Moczygemba LR, Alston G. Pharmacy Management: Essentials for All Practice Settings, 5e; 2019. Available at: https://accesspharmacy.mhmedical.com/content.aspx?bookid=2714&sectionid=230770261 Accessed: March 30, 2020 Copyright © 2020 McGraw-Hill Education. All rights reserved  Revisiting the Scenario 1. Analyzing the market environment: “Environmental Scan”  Which SWOT Revisiting the area helps guide ideas? Scenario 1. Analyzing the market environment: SWOT 2. Goals and objectives formulation “Results of the SWOT analysis should be used to inform the organization in the development of new goods and services.” Create a business plan with: Goals SMART Objectives 3. Determining the target market Two steps (Kotler & Clarke, 1986): 1. Market segmentation is a process in which a market is divided into distinct and meaningful groups of consumers based on their profiles. Demographic variables Buying behavior 2. Target marketing Revisiting the Scenario Product? 3. Determining the target market Table 25-4 Target Markets Identified by Community Care Pharmacy This target market consists of elderly people (65 years or older). They have multiple chronic conditions and take multiple medications. Medicare enrollees Because they are likely to be at risk for preventable infectious diseases, they are candidates to receive influenza, pneumococcal, and zoster vaccines. This target market is made up of people who are young and relatively healthy. They are employed, well educated, and have income above Young population average. Even though they may have insurance coverage, they are who are cash-based payers willing to pay out of pocket for certain services. They are interested in prevention services such as immunization services. 4. Formulating and designing the marketing mix Marketing mix - the set of controllable variables that an organization can manipulate and use to reach its goals and objectives (Berkowitz, 2017). Four Ps: 1. Product 2. Price 3. Place 4. Promotion 4. Formulating and designing the marketing mix Product = Product - goods, services, or ideas Five Is - components of services that differentiate them from goods (Berkowitz, 2017) Intangible Inconsistency Inseparability Inventoried Interaction 4. Formulating and designing the marketing mix Offering = Product - goods, services, or ideas What type? 4. Formulating and designing the marketing mix Price – consider: costs of providing the good or service overall consumer demand for the good or service competition from other organizations offering similar goods or services use of pricing strategies that appeal to consumers odd pricing or psychological pricing bundled pricing functional discount seasonal discount 4. Formulating and designing the marketing mix Distribution? Place Intensive distribution VS Exclusive distribution good or service is available from: large number of locations small number of locations Selective distribution is the strategy used when a product or service is offered in multiple locations, but fewer locations than an intensive distribution approach. Scenario: vaccinations are available at Community Care Pharmacy, their primary care physician’s office, public health departments, or the local hospital. Strategies? 4. Formulating and designing the marketing mix Promotion – four methods: advertising, personal selling, publicity, and sales promotion (Berkowitz, 2017). Advertising – any directly paid form of nonpersonal presentation of goods, services, and ideas (Kotler & Armstrong, 2018) Three primary outlets: Broadcast media – 35 % of advertising $ Print media Internet 4. Formulating and designing the marketing mix Promotion Personal selling - direct, personal form of communication Sales rep. Publicity - communication of goods, services, and ideas that is not paid for directly by the organization (Berkowitz, 2017) Sales promotion - temporary efforts to encourage consumers to purchase a good or utilize a service Coupons, sweepstakes, rebates, or samples  Revisiting the Scenario 4. Formulating … the marketing mix Print advertisement for vaccination services offered by Community Care Pharmacy. (Photo credit: James Gathany, Centers for Disease Control and Prevention; accessible at Public Health Image Library, www.cdc.gov. PHIL ID#9420.) Citation: MARKETING APPLICATIONS, Desselle SP, Zgarrick DP, Moczygemba LR, Alston G. Pharmacy Management: Essentials for All Practice Settings, 5e; 2019. Available at: https://accesspharmacy.mhmedical.com/content.aspx?bookid=2714&sectionid=230770261 Accessed: March 30, 2020 Copyright © 2020 McGraw-Hill Education. All rights reserved 5. Designing a marketing control process “Process of measuring and evaluating the outcomes of marketing strategies and, if necessary, taking action to correct the four Ps to ensure that marketing objectives are met (Kotler & Keller, 2016).” It is necessary that the regular collection of marketing performance data (e.g., website hits, patient questionnaires) be a part of normal pharmacy operations.  Revisiting the Scenario 5. Designing a marketing control process Patient satisfaction questionnaire. Citation: MARKETING APPLICATIONS, Desselle SP, Zgarrick DP, Moczygemba LR, Alston G. Pharmacy Management: Essentials for All Practice Settings, 5e; 2019. Available at: https://accesspharmacy.mhmedical.com/content.aspx?bookid=2714&sectionid=230770261 Accessed: March 30, 2020 Copyright © 2020 McGraw-Hill Education. All rights reserved Practice Question Which of the following is NOT one of the original “4 Ps of marketing”? A. Product B. Price C. Place D. People