Marketing Principles Chap19

8/2/2019 Marketing Principles Chap19

1/62

Basic Marketing Principles

Author:Mickey Smith, RPh, PhD

Director, Center for PharmaceuticalMarketing and Management

University of Mississippi


2/62

Learning Objectives

Define marketing in official and real worldterms

List at least five viable market segments

Differentiate by example between services andphysical products

Describe the interaction among and between

the four elements of the marketing mix Enumerate the ways positioning combines the

other elements of the marketing mix

Identify possible competition for your ownpharmacy


3/62

Definitions

The process of planning and executing theconception, pricing, and services to createexchanges that satisfy the individual and

organizational (pharmacy objectives) Creation and delivery of a standard of living

Fundamental social process whichevolveswithin a society to facilitate the effective andefficient resolution of societys needs for

exchange of consumption values


4/62

Requisites of Success

Get and keep patients In a way that is cost consistent with

patient evaluation Survive and profit regularly

Define purpose, plan and communicate Develop a system of rewards and

sanctions


5/62

The Marketing Mix

Product Price

Place Promotion


6/62

Target Market Variables

Age Income Education Race

Gender Religion National origin Place of residence

Life style


7/62

Differences Between Servicesand Products

Services are oftenintangible - acts, deeds andcannot be physicallyprocessed. Value lies in

experience and no transferof title

Usually perishable, unusedportions cannot be stored

Quality cannot beseparated from the serviceprovider

Vary in quality over time

and are difficult tostandardize over time

Products are often tangibleobjects or things. Value liesin ownership and use andtransfer of title takes place

Can be stored, and unusedportions can be used later

Quality can be differentiatedfrom the channel members

quality Products can be

standardized and massproduction and quality

control are possible


8/62

Product Mix

The assortment of goods and servicesthat must be maintained in order tomeet patient needs


9/62

Service as a Product

A service is a product at the instant ofdelivery; it can be created in advance or heldin readiness

A service cannot be centrally produced,inspected, stockpiled, or warehoused.Usually delivered to the customer, by peoplebeyond the immediate influence ofmanagement

The product cannot be demonstrated, norcan a sample be sent for approval


10/62


The person receiving the service has nothingtangible, value depends on personalexperience

The experience cannot be sold or passed onto a third party

A service cannot be recalled or repeated Quality assurance must happen before

production rather than after production, as in

the case of products


11/62


Delivery of the service requires humaninteraction; buyer and seller must come incontact in some relatively personal way to

create service Receivers expectations are integral to

his/her satisfaction, and are largely

subjective The more people the customer must

encounter during the delivery of the service,

the less likely it is that he/she will besatisfied with the service


12/62

Results

The final product class is theanticipated results of the goods and

services


13/62

Product

The benefits or positive results(outcomes) that your patients derive

out of dealing with you and using theservices you offer them


14/62

Customers Perceptions ofProducts

Revlon: Cosmetics sell hope

Black and Decker: Drills sell holes


15/62

New Paradigm

Pharmacist as a therapeutic agent


16/62

Customers Perception ofPharmacists

Your pharmacist: helping you take careof yourself


17/62

Pricing Considerations

Nature of the target market(aforementioned)

Nature of the competition

Cost of merchandise (IE, successfulbuying practices by the pharmacy

manager) Familiarity of the customer with price

ranges


18/62

Price

The costs or negative effects thatpatients must bear in order to do

business with you, using your servicesin the way that you offer them


19/62

What Is a Discount Really?


20/62

Pricing

One respects older people andbelieves they should get specialconsideration because of their agealone. That may not be very goodbusiness, but its a fine human gesture


21/62

Pricing

Older people have lower incomes andcant afford health care. Another finegesture, even though imprecise. Manyolder people can well afford theirhealth care. If one offers differential

prices based on ability to pay, age maynot be the best criterion.


22/62

Pricing

One wants the good will of thesecustomers and discounting for seniorcitizens is price willing to be paid forthat. Now that is serious businessreason for setting prices.


23/62

Pricing

It isnt really a discount. Its justadvertising. While many may engagein this practice, the risk of being foundout is rather great. More and morepeople know their medicines and

compare prices.


24/62

Pricing

Older people use more prescriptionsand other health products than doyounger customers; their business is

valuable. Again, a sound businessdecision. Consciously or not thisdiscount is based on expectedbusiness volume. Its not really an age-related discount.


25/62

Pricing

One must do it to meet the competition(all of whom are doing it). Another validbasis for pricing. Of course ifeverybody does the same thing thecompetition does on every competitive

decision, some non-price differentialadvantages may be overlooked.


26/62

The Pricing Process

The pricing process involves 5 steps: Setting price objectives

Setting a broad price policy

Developing a price strategy

Implementing the strategy

Making necessary adjustments (finetuning)


27/62

Competitive Objectives

Meet the competition Be the price leader

Offer the lowest price

Increase sales volumes

Prevent competition

Neutralize price through non-pricemeans


28/62

Financial Objectives

Maximize short-run profits Maximize long-run sales

Stabilize income Move high-margin items

Move slow turnover items Sustain a certain gross profit level


29/62

Market Objectives

Build market share Build traffic

Emphasize low price image

Desensitize customers to price

Create attention and interest

Achieve future growth

Maintain current market share


30/62

Price Policy Options

One-price policy Variable price policy


31/62

Reasons to Vary Prices forIdentical Goods

Different acquisition cost Increased record keeping cost

Cost of credit to the customer or a thirdparty

Delivery costs

Pilferage risks

Frequency of customer buying


32/62

Pricing Strategies

Cost-based Demand-based

Competitive-based


33/62

Cost Considerations inDetermining Prices

Advertising and other forms of promotion All kinds of customer discounts

Returns Delivery

Credit and other costs of money

Administrative costs Selling expenses

Pilferage and shoplifting

Security costs


34/62

Pricing Strategies

Demand-based pricing is related tothe patients willingness to pay


35/62

Price Elasticity and Inelasticity

Elastic pricePrice = $1.00, 100 units sold = $100.00

Price = $0.50, 300 units sold = $150.00

Price = $1.50, 50 units sold = $ 75.00 Inelastic price

Price = $1.00, 100 units sold = $100.00

Price = $0.50, 125 units sold = $62.50

Price = $1.50, 75 units sold = $112.50


36/62

Place

The hours location and physicalcharacteristics that make it possible,easy or difficult for patients to use yourproducts and services


37/62

Ways to Manipulate Place

Delivery Parking

Drive-in windows Interior design and atmospherics

Exterior appearance Telephone


38/62

The Telephone as an Asset

Calls to increase patient compliance Calls to patients to assess patient

progress and satisfaction

Calls to newcomers to the communityto alert them to your services

Calls to old customers whose accountshave become inactive to determine thereasons


39/62

Promotion

The most important of the Ps


40/62

Advertising

According to the American MarketingAssociation:

Mass, paid communication, thepurpose of which is to impartinformation, develop attitudes, and

induce favorable action for theadvertiser.


41/62

Why Advertise?

Attract attention Induce interest

Develop the desire to buy and Activate the sale


42/62

Advertising Appropriation

and Budget

Establish the objectives for advertising

Determine the type and amounts of

advertising necessary to accomplish theseobjectives

Determine the overall cost of the

advertisement Schedule the advertisement day by day


43/62

Types of Ads

Institutional - focus on the pharmacysservices

Merchandising - emphasize productsand services


44/62

Selecting the AppropriateAdvertising Media

Newspapers Radio

Television


45/62

Newspapers

Local newspapers - widely read Account for 30 percent of all

advertising dollars

Disadvantage - circulation sometimesmuch larger than pharmacy trade area


46/62

Radio

Can be more persuasive than print High degree of geographic and

audience selectivity

Local radio-need repetition, brevity

Lacks visual reinforcement


47/62

Television

Most conspicuous advertising medium Products or services must have mass

appeal


48/62

Advertising Considerations

Consider clearly defined marketinggoals

Is advertising best medium toaccomplish your purpose? Or, wouldpublicity be a better option?

Do you deliver what you promise?


49/62

Positioning

Position - sum total of its product,price, place, and promotional activities


50/62

Positioning

Do you match your position (assumingyou have found one)?

Perception becomes reality


51/62

Service Strategy

Distinctive formula for deliveringservice

Vision plays an important role

Judgment, creativity and the ability tothink on a global level - necessary to

see the forest for the trees


52/62

Service Strategy

Organizing principle allowing people inservice enterprises to channel theirefforts toward benefit oriented services

that make a difference in the eyes ofthe customer

Concept that describes the value to beoffered


53/62

Service Strategy

Being called back when promised Receiving an explanation of how a

problem happened

Providing me with information so Iknow what number(s) to call

Being contacted promptly when aproblem is resolved

Being allowed to talk to someone inauthority


54/62

Service Strategy

Being told how long it will take to solvea problem

Being given useful alternatives if it cant

Being treated like a person, not anumber

Being told how to prevent future aproblem

Being given progress reports if aproblem cant be solved immediately

S i R li bilit


55/62

Service Reliability

Recovery Link

The problem reinforces a recurringpattern of previous shortcomings

The recovery effort fails to satisfy thecustomer

Influencers of


56/62

Influencers of

Quality Assessment

Reliability Tangibles

Responsiveness Assurance

Empathy


57/62

Complaints

Customer complaints:The least expensive consulting you can

get


58/62

Complaints

The average business never hearsfrom 96 percent of its unhappycustomers

Complainers are more likely thannon-complainers to do business again

with the company that upset them


59/62

Complaints

Of the customers who register acomplaint, between 54 and 70 % willdo business again with the

organization if their complaint isresolved

The average customer who has had aproblem with an organization tells 9-10 people about it


60/62

Market Audit

A methodical analysis of theoperations, tactics, and strategiesused in marketing

A self-examination


61/62

Market Research

The most effective way to forpharmacists to find out the needs andattitudes of patients and thus

effectively market their services Self test (Figure 2): What you know

and dont know about marketing

Patient Survey Form (Figure 3): Vital

information for the people you serve or

want to serve


62/62

Conclusion

Marketing pharmacy services andproducts - achieving patient satisfactionand yoursatisfaction!

Marketing Principles Chap19

Documents

Transcript of Marketing Principles Chap19