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Marketing and Competitive Strategies and Tactics Chapter Objectives After reading this chapter, you should be able to 1. Describe the nature of marketing. 2. Apply strategic marketing concepts to the healthcare industry. 3. Create tactical activities that support the strategic health marketing program using mar- kets, products, pricing, and promotions. 4. Develop tactical activities that support the strategic health marketing program using alternative methods, image building, and public relations tools. 5 © Age_fotostock/SuperStock Marketing and Competitive Strategies and Tactics Chapter 5 It may seem odd, or even distasteful, to think that healthcare organizations should mar- ket themselves. The reality is, however, that consumers have many choices as they think about healthcare. Consequently, individual physicians, groups of medical specialists, rehabilitation cen - ters, hospitals, public health organizations, pharmaceutical companies, drug stores, elderly care facilities, and others encounter competitive forces that require a response.

“Why do hospitals advertise? There is a noble side to it, and also a realistic side,” said Laura Keller, a spokeswoman for St. Louis University Hospital. Keller continued:

I don’t think it ever hurts to remind someone that there are lots of choices that you have if you’re dealing with a major health issue. We need to educate the patient, and there are good messages there. On the business side, people need to understand that without money we cannot support our mission. (cited in Doyle, 2012) Many critics believe that these advertising practices have little value. According to Dr. Sidney Wolfe, director of the health research group at Public Citizen: “Hospitals seem to be spending money left and right trying to get more patients. Absent significant cost controls, there’s nothing to stop them. . . . It’s siphoning money away from healthcare. Advertising shouldn’t be confused with taking care of patients or improving patient care” (cited in Doyle, 2012).

Samuel Steinberg, a Florida-based hospital finance consultant, also remained skeptical about the bene- fits of advertising: “It’s very difficult to be able to demonstrate that these things are worth the investment. . . .

Hospitals and health systems that put a lot of money into advertising say it is beneficial. But when you ask them to prove it, there’s a real short - age of good research that verifies that it’s worth it.” But the Missouri Hospital Association created the following response: “Marketing and advertising is core to our mission to educate the pub - lic, [including] promoting better public health by reminding patients of the need for preventive screenings such as mammograms” (cited in Doyle, 2012).

In this era of the proliferation of medical advertising for such things as Viagra and Cialis, jokes are made, and complaints are raised. Are pharmaceutical companies and others creating illnesses just to sell medicines for such things as “restless legs syndrome”? Can a line be drawn outlining what is ethical and what is indefensible?

This chapter examines healthcare marketing in terms of strategic and tactical decisions and activities designed to maintain the well-being of a practice or organization. The first section explores the basic nature of marketing, followed by a section on strategic marketing concepts.

Then, specific strategic marketing activities are presented. The chapter concludes with a descrip - tion of the process of matching marketing tactics with marketing strategies. © Julio Cortez/Associated Press ▲ ▲ Should healthcare organizations engage in advertising programs? The Nature of Marketing Chapter 5 5 .1 The Nature of Marketing The American Marketing Association (AMA) serves as the primary professional organization for marketing academics and practitioners. In 2007, the AMA presented the following defini - tion: “ Marketing is 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” (http://www.marketingpower.com). This definition suggests that the goal of marketing should be to develop relationships with an organization’s customers and other publics. This con - cept could also be applied to the nature of healthcare. In the past, however, a more traditional definition (Armstrong & Kotler, 2012) for marketing has been:

1. Discovering consumer needs and wants 2. Creating the goods and services that meet those needs and wants 3. Pricing, promoting, and delivering the goods and services According to this definition, marketing begins with an understanding of consumer needs and wants. Thus, the foundation of any marketing management program consists of identifying groups of consumers that share a common desire for a good or service. Only then can the goods or services be created and sold. Primary Marketing Activities and Components The traditional definition of marketing implies six major topics, as shown in Figure 5.1.

Figure 5.1 Healthcare marketing Markets (patients as consumers) f05.01_HCA340 Distribution Products (goods and services) Pricing Promotion People The Nature of Marketing Chapter 5 Markets consist of people (or businesses) with wants and needs, financial resources, and the will - ingness to spend those resources to satisfy their wants and needs. The most common method for discovering individual markets is to divide them into various consumer and business-to-business segments. In healthcare, however, methods used to identify markets differ from standard for-profit operations. Although most hospitals feature a community or regional focus, many hospitals and smaller healthcare operations also specialize in the treatment of certain illnesses (cancer, heart disease, mental health) or try to reach certain categories of patients (athletes, pregnant women, children, elderly). These groups have wants and needs that can be specified and documented.

Products are the physical goods sold to consumers and other organizations, as well as the services that are offered to individual consumers, other businesses, and the government. Physical goods include both durable goods that last more than one year and nondurable goods with shorter uses. In healthcare, an example of a durable good is the medical equipment a person purchases for long-term care, such as a wheelchair. Nondurable goods include convenience items, shopping goods, and specialty products. Convenience items include frequently purchased products that feature low prices. In healthcare, convenience items would include over-the-counter medicines and other low-cost health aids, such as heating pads. Shopping goods require consumers to make some level of effort in their choices and purchases. For example, going to a pharmacy to purchase prescriptions, or deciding to purchase a hot tub or exercise equipment to improve one’s health.

Orthodontist care would also qualify as a shopping good, due to the increasing availability of options. Specialty products are sold at unique outlets and require a more concerted effort by the individual consumer to find them and purchase them. Few specialty items are associated with healthcare.

Services , the intangible items that are sold to others, constitute the primary form of product that is marketed in healthcare. Examples of health services include ambulance delivery of patients, insurance, and most forms of medical care, including regular physician practices, specialists, nursing home care, dentistry, psychiatric care, and rehabilitation services.

Prices of goods and services are normally based on costs, demand and supply, competition, and profit goals. As mentioned earlier, patients, or consumers, rarely know the actual price of a health - care service. Pricing complications arise from methods of billing, the type of insurance cover - age, government payments, and provider write-offs. In addition, the healthcare provider, such as a hospital, may offer the exact same service at a price that is vastly different from that charged by other similar organizations (James, 2013). When a healthcare facility provides a new good or service, the organization’s leaders can decide whether they want to use a skimming method, in which the price charged is as high as possible, or penetration pricing, in which the price is set as low as the firm can afford. In the unique setting of healthcare, however, neither strategy seems particularly applicable. Instead, costs are allocated across the number of patients served over time by the item or service.

Place , or distribution, involves deciding where, how, and when products will be made available to potential customers. In a standard marketing program, distribution includes a decision about the type of distribution approach that will be used: intensive, selective, or exclusive. Intensive distribution means selling the product in every available location and is often associated with convenience goods. Selective distribution involves placing products in outlets that are believed to be profitable or that project a certain image, and not using other outlets. Exclusive distribution restricts the availability of the product to a highly select group of outlets—normally only one per geographic region. The Nature of Marketing Chapter 5 Some healthcare products that feature intensive distribution are daily or regular-use products, such as aspirin, dental rinse, or a toothbrush. Selective distribution in healthcare occurs when a small number of physicians provides a specific service, such as physical rehabilitation, in a given area. Hospitals tend to operate single locations or a central facility with additional satellite sites.

Many types of healthcare services are distributed exclusively, in that only one provider operates in a geographic area.

The second activity associated with distribution is the physical distribution program, which involves choosing methods of transportation, types of warehouses, forms of inventory control, and methods of billing and payment. These processes apply to medical suppliers that provide products to larger health facilities.

Promotion, another major component of marketing, includes creating and supporting advertis - ing programs, consumer and trade promotions programs, personal selling tactics, and public relations efforts. The most recent trend in promotion involves carefully combining all of these elements into an integrated marketing communications plan (Clow & Baack, 2014). Promotional activities have been strongly influenced by the availability of new alternative media outlets.

Traditional advertising and promotional programs have been adapted in response to new tech - nologies and new methods of making contact with customers.

The final, and perhaps most critical, component of effective marketing is people. In a service industry, such as healthcare, the people performing the services play crucial roles. To a manufac - turer of major medical equipment, the people who operate the machines, deliver the products, and design the marketing program are the key. In a nonprofit operation, the people providing the services to the public, along with the volunteers who help, are the ones who make the organiza - tion successful. Without people, an organization cannot continue to survive.

In recent years, customer satisfaction and customer retention have received a great deal of atten - tion. Numerous articles and books focus on what a company or organization should do to achieve customer satisfaction and customer retention. Most of this information can be summarized by these words: product quality and customer service . Without product or service quality, there is no customer satisfaction and no customer retention. Without customer service, the importance of product quality quickly diminishes. Thus, these factors are key components in the healthcare industry (Clow & Baack, 2010).

Strategic Marketing and Healthcare In the area of planning, marketing strategies outline the services to be offered and the tar - get markets for those services. Marketing strategies provide broad sweeping plans based on an organization’s mission and vision statements, as described in Chapter 4. The mission statement expresses the primary reasons for the formation and operation of an organization. The vision statement outlines the organization’s intended future and offers direction about where the orga - nization seeks to go and what executives hope the organization will become and achieve. These two statements outline the most general direction for the marketing department and program.

Together, an organization’s mission statement, vision statement, and marketing strategies outline its key values .

Marketing tactics include all of the midrange or medium-term (one- to three-year) efforts designed to support marketing strategies. Many product design issues are tactical issues. In Strategic Marketing Activities Chapter 5 standard marketing programs, tactics include changing the product’s packaging or label, revising or creating new advertising taglines, and improving the methods used to support promotional efforts. Marketing tactics vary across healthcare organizations, as many organizations seek to strengthen a specific brand and engender high levels of confidence regarding the quality of care they provide. Often, healthcare marketing tactics involve public relations efforts, including vari- ous programs that raise awareness of health concerns and teach preventive care. Although most midlevel marketing managers are not involved in developing marketing strategies, they can be heavily involved in creating and implementing marketing tactics.

Operational plans , or short-term plans, are created to carry out marketing strategies and tactics.

Typical short-term plans include departmental budgets, projects, and programs, such as plans for the marketing department’s day-by-day activities. A marketing budget establishes a financial map outlining the amount of money available for the program and how funds will be spent, such as for advertisements, promotional programs, website development and maintenance, and other more routine activities. Projects, or single-use plans, are short-term plans created for one-time activi - ties. An example of a project is a plan for a one-time health seminar on a specific topic. Once the seminar has been held, the project plan is complete. Another project could be the renovation and upgrading of a specific medical service area, such as an operating room. A program consists of a set of projects that leads to a permanent new course of action. An example of a marketing pro - gram is the entire process surrounding the development of a new medical service. The projects associated with that marketing program include developing the service, potentially choosing a name or a brand for that service, creating an advertising program to inform the community of its existence, and other activities (Ferrell, 2013).

5.2 Strategic Marketing Activities Strategic marketing and strategic management overlap in many areas. Effective healthcare administration requires that the two efforts mesh in order to achieve the organization’s strategic and marketing communication objectives. In Chapter 4, strategic management was described in terms of:

• Analysis and diagnosis—strengths, weaknesses, opportunities, threats (SWOT) analysis • Generating strategic alternatives • Strategy evaluation and choice • Strategy implementation To complement these activities, marketers begin by conducting a supporting program known as a strategic marketing analysis.

Strategic Marketing Analysis A strategic marketing analysis program consists of an environmental analysis; a competitive and industry analysis; a segmentation, targeting, and positioning analysis; and a customer analysis (Clow & Baack, 2010). The program also combines elements of a SWOT analysis in that it assesses the external environment and various internal company operations. However, a strategic mar - keting analysis focuses less on strengths, weaknesses, opportunities, and threats, and more on the discovery of how the organization interacts with its environment, its markets, and specific customers. Executives seek to gauge how organizational leaders can create new relationships with Strategic Marketing Activities Chapter 5 patients and customers while also building on current relationships. Such an analysis can be extremely helpful to marketing managers in a healthcare system.

Environmental Analysis An environmental analysis begins with careful monitoring of all external variables that have an impact on the healthcare industry. Assessments of all political, social, economic, technological, and semicontrollable forces should be made, much in the same format as a SWOT analysis. The information gathered should reflect specific issues that affect healthcare marketing programs, rather than overall strategic implications.

For example, when examining political forces, marketers look to laws that directly apply to vari- ous activities, such as advertising. They must become familiar with what can, and what cannot, be said in a commercial for a hospital. The term puffery, for instance, means that an organization can make untestable claims, such as that a hospital is the “friendliest” or that it offers “the most compassionate care,” as no method can be used to verify or disprove such statements.

Healthcare marketers also consider shifting demographics, cultural trends and changes, and ris- ing educational levels to assess the impact of the marketing on their intended programs. Economic forces include economic conditions and how these might affect consumer choices, such as the decision to have an elective surgery to improve one’s appearance. Healthcare marketers are con - sistently asked to get the word out regarding new services, service improvements, improvements in the delivery of those services, and technological advancements in medical care.

Competitive and Industry Analysis A competitive or industry analysis first identifies the levels of competition, from the closest and most intense competitors to those that are the most distant but that are still viable organizations able to take away customers (patients). Marketers investigate each competitor in order to under - stand both the methods used by competitors and the individuals these competitors seek to reach.

In healthcare, competition takes various forms. Marketers consult with other top managers to understand the impact on an overall organization, such as a hospital, or a specific form of care, such as an addiction treatment program. Competition arises from other hospitals, alternative care facilities, specific illness treatment centers, and, at times, individual physi - cians. Healthcare is unique in that patient “customers” may be anything from entire companies providing wellness programs to the government, through Medicare and Medicaid programs.

Segmentation, Targeting, and Positioning Analysis The segmentation, targeting, and posi - tioning analysis, or STP analysis (Kotler & Armstrong, 2007), helps the marketing team meet the goal of optimizing revenues by reaching the proper audience, both in terms of the services offered and the meth - ods used to contact the individuals who © Jupiterimages/Comstock/Thinkstock ▲ ▲ In healthcare, one target market might be elderly people. Strategic Marketing Activities Chapter 5 might require such services. Segmentation involves identifying all potential customer groups that are viable for the purposes of marketing products and services. Most healthcare organizations cannot create enough services to reach every available type of patient. Thus, a market segment analysis categorizes customers into groups and identifies the characteristics of members of the groups (Myron & Truax, 1996).

In traditional marketing programs, a segmentation analysis includes demographic characteris - tics, psychographic variables, behavioral actions, and geographic location. In healthcare, other categories, such as illness type and patient characteristics (some of which are demographic, such as seniors, children, and women), are more useful. The segments can be examined for potential to increase revenues based on the match of the service to the local community, the size of the seg - ment, growth potential, reachability, consumer responsiveness, retention potential, and levels of competition. For example, a local hospital could decide to provide a mobile magnetic resonance imaging (MRI) unit to travel around a county or specified geographic region. A market segment analysis would reveal whether sufficient need exists to justify such a purchase and the employ - ment of specialists to operate the equipment.

After segmentation, the targeting component of the STP approach can proceed. Targeting includes selecting the market segments (e.g., diseases or groups of patients) that the organization intends to target or reach. For example, a mobile MRI unit would target various injuries, includ - ing those related to sports, accidents, and the aging process.

Positioning involves creating perceptions in the minds of consumers about the nature of the orga - nization, its brand, and its products and services. Positioning must match the characteristics of the selected target markets. Continuing the example, a mobile MRI operation would be positioned as a high-quality method of diagnosing injuries that would ensure the best possible care. Marketing programs would note that MRI imaging is superior to X-rays and computed tomography (CT) scans, thus granting the physician greater precision in diagnosing and treating an injury.

A positioning analysis discovers the place of an organization and its services in the minds of consumers and relative to the competition. Four components to be considered during this part of the STP analysis include the target audience, the organization itself or the service being offered, the frame of reference or category, and points of differentiation or uniqueness. Once completed, positioning strategies may be put in place.

A perceptual map may assist in identifying the position of a healthcare organization in com - parison to the competition. A perceptual map typically employs two axes representing the key variables that affect perceptions of a service. In traditional marketing, price and quality serve as the two axes. Figure 5.2 provides a perceptual map containing various providers of the same service—psychiatric care—using two common healthcare factors: affordability and accessibility.

Affordability measures the degree to which a patient believes he or she can reasonably pay for healthcare services. Accessibility measures perceptions that a patient could obtain the needed service from a specific healthcare provider. These two concepts can be combined as surrogates for price and then be compared with perceptions of quality to provide a useful analysis.

As shown, an individual psychiatrist is perceived as being the least affordable and accessible (the highest price), even though the psychiatrist might be perceived as providing the highest level of care. An individual psychologist costs less and would be more accessible; however, the quality of care might also be viewed as being somewhat lower. (Remember, however, that a patient would be able to examine insurance coverage to see if this changes the costs of each.) A support group Strategic Marketing Activities Chapter 5 in a hospital probably would be reasonably affordable and accessible (moderately priced) and would only hold an advantage over an unlicensed counselor if perceptions were that the quality of care was better. The unlicensed counselor would be perceived as being the most affordable and accessible (lowest price) but may be perceived as providing the least effective quality of care. More precise perceptual maps would incorporate the names of specific psychiatrists and psychologists.

A quality STP analysis allows an organization to avoid brand parity, or the perception that ser - vices provided by other institutions or physicians are basically the same. Healthcare organiza - tions are best served when marketers are able to build brand equity, or the perception that a given provider is different and better (Schultz, 2009). Any dentist or physician holding such an advantage probably has a highly successful practice, as would any practice group or hospital.

Customer Analysis A quality customer analysis provides marketers with an in-depth understanding of an organiza - tion’s customers, or patients in the healthcare system. The “W’s” and “H’s” of a customer analysis include understanding the who, what, when, and where of patients seeking medical services, as well as how those services are obtained. In other words, marketers should ask, “Who are our patients? What services do they seek? When do they seek them (e.g., emergency vs. routine visit)?

Where are they located? How are the services obtained?” The answers to these questions help a marketing manager in healthcare establish a target audience to reach.

An effective marketing program necessitates careful study of the consumer buying decision- making process for purchasing a service (Clow & Baack, 2014, pp. 53–81). Each step offers the potential to reach and attract customers. Figure 5.3 details the steps of a purchasing process, as modified to fit healthcare circumstances.

Figure 5.2 A perceptual map for psychiatric care f05.02_HCA340 Affordability and Accessibility (Price) High Quality LowLow High Unlicensed counselorIndividual psychiatrist Individual psychologist Hospital-guided support group Strategic Marketing Activities Chapter 5 Consider a person who experiences blurred vision. The individual recognizes that her eyesight has deteriorated. She considers the services of an individual optometrist, an individual ophthal- mologist, or a company such as Pearle Vision Center, which offers both an eye exam and subse - quent fulfillment of an eyeglass prescription. Next, she reviews her healthcare coverage to find out whether eye exams and glasses are included, which would affect her subsequent choice. If she is poor or unemployed or if her policy does not cover eye care, she may consider a public health facility that offers eye exams for free.

When the patient evaluates alternatives, she considers the cost of each option, along with the level of care. If she worries that a new problem has emerged, such as glaucoma, she may wish to see a more advanced medical professional, depending on the type of insurance she has. If she believes it is simply a matter of obtaining a new prescription, other options become viable. A person with no or low income will also think about the amount of time she would wait in a public health facil - ity and whether she might have to take time off from work to take advantage of the free service.

After she makes her choice and resolves the problem, she will review her experience. If she spent a long time in a waiting room and encountered a terse, distant eye care professional, she may tell others not to go to such a place. If her vision does not improve or is not corrected, postpurchase dissatisfaction will be high. She might decide to post her story on social media and websites that evaluate various eye care providers to tell friends and family about the episode.

Figure 5.3 The consumer purchasing decision process: Applications to healthcare f05.03_HCA340 Step 1: Problem recognition Recognize a health Issue Step 2: Information search Examine potential healthcare providers and options that could resolve the health issue Step 3: Evaluation of alternatives Consider the advantages and disadvantages of each type of healthcare provider Step 4: Purchase decisionSeek medical care Step 5: Postpurchase evaluation Consider recovery, degree of wellness, satisfaction with provider Strategic Marketing Activities Chapter 5 In recent times, many healthcare organizations take into consideration the steps of the buying process in some form, with particular atten- tion paid to postpurchase evaluation. A variety of techniques may be used to ascertain levels of patient satisfaction with the services and service providers.

Additional Factors When considering customers and patients, healthcare administrators can benefit from meth - ods that help them understand market potential and market demand. Market potential consists of the total number of patients that might require a medical service. Market demand is the total cur - rent existing demand for the service. Company or brand demand expresses the demand for a particular company’s brand and is often referred to as market share. For instance, an organization that provides CT scan services can determine how many patients from a geographic area would need scans in the coming year. Then the organiza - tion’s marketers could identify the percentage of patients that use a specific facility as compared with all other facilities.

In addition, the concepts of share of mind (awareness and recall) and share of heart (loyalty and affection) provide helpful ideas about how customers view a healthcare organization and its services. In a manner similar to a perceptual map, these two indicators can serve as axes used to evaluate an operation. Figure 5.4 provides an analysis of share of mind and share of heart (Goodall, 2011) for four hospitals in a large metropolitan area. © FogStock/Thinkstock ▲ ▲ A woman needing new eyeglasses would undergo the purchasing decision-making process. Figure 5.4 A share of mind/share of heart analysis of healthcare facilities f05.04_HCA340 Share of Heart High Share of Mind Low Low High St. Mary’s Community Mercy Regional Freeman Elsevier Source: Adapted from Goodall, 2011. Strategic Marketing Activities Chapter 5 In Figure 5.4, Mercy Regional is well known in the area but suffers from a poor reputation. People do not express warm feelings about the hospital. If the hospital marketing team wanted to instill more positive reactions, it would have to move to a much more favorable position. Freeman is less well-known, but those who do know if it have fairly favorable responses to its care. Therefore, Freeman’s marketing team should work to raise awareness while maintaining positive reactions.

Elsevier is the least well-known and is also not very well-liked. The marketing team will have the greatest challenge of trying to build both factors at the same time. St. Mary’s enjoys the highest levels of both. Therefore, its marketing team should endeavor to maintain awareness and favor- able responses over time in order to maintain this position.

In summary, all of the assessments made assist a healthcare marketing team in understanding the nature of the environment, the competition, and how people view the organization relative to oth - ers. Marketing strategies can be developed to respond to the institution’s unique circumstances. WEB FIELD TRIP Go to http://www.pwc .com to watch a video in which consumers discuss some of their experiences with various healthcare organizations.

Under “Research & Insights,” select “Health Research Institute.” In the “Watch Our Videos on Key Healthcare Issues” box in the lower right corner, select video number four, “PwC Man on the Street V i d e o .” • What do the consumers list as their most satisfying experiences with healthcare organizations?

• What types of experiences leave them feeling most dissatisfied?

• Are there any common threads in the consumers’ opinions? If so, what are they?

• How might a marketing professional use these interviews in a customer analysis? Developing Marketing Strategies As is the case in any management or marketing activity, objectives or goals serve as targets to achieve. As a result, they guide the activities and choices of managers. Table 5.1 lists standard marketing communication objectives and their applications to healthcare.

The market strategies that would arise from these goals include strategic efforts to build the image of a practice, create an effective positioning outcome, and increase the number of patients served or the market share held by a facility. The strategic marketing efforts designed to achieve these outcomes follow the variables discussed in the previous section.

The strategic analysis should incorporate the selection of markets to be served. Specific target market characteristics need to match the other components of a strategic marketing program.

The analysis would also note those markets that the healthcare organization cannot, or chooses not to, seek.

One key choice in terms of markets is a concentration versus a multisegment strategic approach.

A healthcare concentration strategy targets a single market and seeks to dominate or achieve a large share in that market. A hearing specialist or specialist group that focuses on delivering low- cost hearing aids to a variety of patients uses a concentration strategy. A multisegment strategy in healthcare takes the approach of serving several types of patients with differentiated needs.

A hearing specialist or group that expands to provide treatment for ear infections, tinnitus, and other hearing maladies employs a multisegment strategy. Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 Table 5.1 Marketing communication objectives: Applications to healthcare ObjectiveApplication to healthcare Brand awareness Increase awareness of a medical practice Change customer beliefs and attitudes Alter attitudes toward physicians and staff Enhance purchase actions Encourage decisions to seek medical services Encourage repeat purchases Encourage decisions to return when new health issues arise Build customer traffic Increase the number of patients Enhance firm image Alter attitudes about the overall organization Increase market share Increase the percentage of patients that use a health facility Increase sales Increase revenues Reinforce purchase decisions Support positive postcare and treatment sentiments Source: Clow, Kenneth E. and Baack, Donald E. Integrated advertising, promotion, and marketing communications , 6th, © 2014. Printed and electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, NJ.

The product component includes the services that the organization offers, such as the addition of new services, deletion of services no longer needed, and the improvement of current services. The product strategy reflects either a concentration or a multisegment approach.

The price component only applies to certain types of organizations. For example, dental care facilities may advertise prices for various services, such as braces. Pharmacies may seek to com - pete against one another based in part on price. Some eyeglass companies compete based on price. Marketing managers must carefully consider whether price can be applied to create a stra - tegic advantage for their organizations.

Place , or distribution, includes the number of locations in which a practice operates. Hospitals and other practices may find it strategically advantageous to create smaller satellite operations, especially when such operations funnel patients to the main hospital. Again, these decisions reflect the choice of a concentration versus multisegment strategy.

Promotions constitute a substantial part of a strategic marketing program. These efforts seek the strategic goals of reaching the right target markets, establishing an image, and achieving the desired positioning in the medical community. In the upcoming section, various forms of promo - tional tactics are described in greater detail.

5.3 Marketing Tactics: Markets, Products, Prices, and Promotions Marketing teams develop tactics designed to support the strategic marketing approach that the organization takes. Marketing efforts align with the overall strategies, mission, vision, and val - ues established by the organization. Consequently, tactics are developed in the areas of markets, products (services), pricing, distribution (place), and promotion. Management then implements and oversees the tactics chosen. Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 Markets As has been noted, medical practices and other medical services identify markets to target. At the tactical level, marketers investigate the additional characteristics of members of these target markets in order to better care for them. For example, elderly patients may prefer office visits ear- lier in the day. Women seeking specific healthcare may find it helpful to have access to day care or child care while undergoing diagnosis and treatment. Someone recovering from a heart attack would be best helped by matching medical care, such as follow-up visits to a specialist with heart rehabilitation services.

Products (Services) The products, or services, provided by healthcare organizations should be tailored to target mar - ket characteristics. A Veterans Administration (VA) hospital will structure services to meet the needs of former service members. For example, a psychiatric care program would be designed to help those in need of special support. As another example, many Vietnam veterans were exposed to Agent Orange, and the VA responded with programs designed to assist those affected by the toxin.

As another example, dentists often alter services to meet specific patient needs. One dentist might specialize in relaxation dentistry, relying on various techniques designed to reduce patient anxiety. An oral surgeon might conduct a different kind of practice to meet the needs of patients involved. A product-diversification strategy takes place when a medical care facility or physician offers a new service, such as an orthodontist who previously only administered braces to patients now expands his practice to provide reconstructive dental care for those injured in accidents in conjunction with a local hospital.

Pricing Programs For the most part, tactical efforts in the area of pricing are not practical or even advisable in healthcare. The complex nature of charging patients, offering write-offs, receiving insurance pay - ments, and dealing with the uninsured makes pricing an unrealistic area for creating tactics in most marketing programs. There are, however, a few minor exceptions, such as eyeglass providers offering package deals on eye exams and prescriptions; denture providers; or for-profit companies that make and sell hearing aids.

Promotional Tactics: Advertising Promotional tactics include advertising, personal selling, and sales promotions. These areas offer the greatest number of opportunities to develop tactics that support the overall marketing pro - gram for a healthcare facility. Consequently they receive the greatest amount of attention in this section.

Some forms of medical advertising are relatively recent developments in the field of healthcare.

Today, many forms of practices advertise their services. Developing effective advertising tactics represents the key to an effective marketing program in the area of promotions. Advertising management is the process of developing and overseeing an organization’s advertising program (Clow & Baack, 2014, pp. 116–138). The tasks involved in advertising marketing include:

• Setting advertising objectives • Generating an advertising budget Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 • Choosing an advertising agency • Overseeing the advertising program • Assessing advertising effectiveness These activities take place in an environment that changes radically and dramatically each year.

Setting Advertising Objectives Advertising objectives are based on the nature of the product, the target audience, and the activi - ties of the competition, among other factors. The primary advertising objectives were noted in Table 5.1. In order to succeed, medical organizations must make persuasive advertising arguments.

Generating an Advertising Budget An advertising budget should be created to help achieve the various marketing communication objectives. The four primary methods for creating advertising budgets are:

• Percentage of revenues • Meet the competition • Arbitrary allocation • Objective and task The percentage of revenues method allocates funds to advertising and promotion based on either a percentage of the previous year’s revenues or a projection of the amount for the next year. A larger healthcare facility might choose such an approach.

The meet the competition method, in which a company matches the advertising expenditures of competing organizations, is unlikely in healthcare. A major organization, such as a hospital, might select this approach if it dealt with one or a few key competitive rivals. In that unusual circumstance, hospital marketing managers would need to identify how much rivals spend and then match that amount.

Arbitrary allocation occurs when company leaders set the budget at a level they think should be spent or that they believe the organization can afford. This method is sometimes called “what we can afford” and is common in many organizations, including healthcare facility marketing programs.

The objective and task approach uses the organization’s marketing objectives as the basis of the budget estimate of dollars needed to achieve the organization’s objectives. In healthcare, the objec - tive and task approach would be effective when launching a new service or treatment program.

Choosing an Advertising Agency When choosing an advertising agency, the first decision in many for-profit companies is choos - ing between an in-house advertising program and an outside advertising agency. It would be extremely rare for a healthcare organization to create its own advertising program. Instead, the organization may choose to work with local television stations, which often provide advertising design services, as do local newspapers, radio stations, and magazines.

When a healthcare organization retains an outside agency, selection criteria play a key role. The criteria of agency size, relevant experience, creative ability, and services offered are reviewed, along with any existing or potential conflicts of interest. The advertising company’s creative repu - tation and capabilities merit careful consideration. When agencies are asked to make formal pre - sentations (known as the creative pitch or shootout stage), the marketing team gains face-to-face Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 insights about each firm and its proposed approach. Finally the agency that is chosen begins work, and others are notified that they did not win the contract.

Overseeing the Advertising Program Overseeing the advertising program is another key role of the marketing manager in advertising healthcare. This step includes selecting the final advertisement(s) and approving the selection of media. An advertising agency or local media outlet prepares potential commercials or advertise- ments. The marketing manager, in conjunction with others in the department, normally makes the final choice.

Media selection combines the choice of a primary medium with all secondary media to be used.

The traditional list of advertising media comprises television, radio, magazines, newspapers, out - door/billboards, direct mail, and the telephone books. In most instances, these would be local choices, such as the city’s newspaper or local billboards. A few larger health organizations adver - tise regionally or nationally, often in places such as magazines offered by various airlines and in national newspapers, such as USA Today.

Traditional media is often combined with nontraditional or alternative media to complete a fully integrated advertising and marketing program. Nontraditional media includes websites, social media forums, and placements on Internet search engines.

Assessing Advertising Effectiveness To fully assess advertising success requires deployment of several tools, not the least of which is reasoned judgment by the marketing team. Assessments of all of the campaigns center on attitu - dinal effects and behavioral effects on consumers or patients.

Attitudinal effects are measured using surveys and interviews via various media. Focus groups assist in evaluating messages before and after being released. Attitudes to be evaluated include recall of the ad, recognition of the brand, attitudes or feelings, brand positioning, perceptions of loyalty, and brand equity or parity. These variables are aligned with strategic goals, such as improved share of mind or share of heart.

Behavioral effects provide identifiable and immediate results from a marketing effort. Some of the standard behavioral measures include increases or decreases in store traffic; telephone, mail, and Internet inquiries; website visits; direct marketing responses; redemption rates of consumer and sales promotions; and sales by units or total volume. In healthcare, behavioral measures include inquiries about health services, increases in patients for specific treatments, and website visits. Healthcare marketers should be aware that a direct relationship between an advertising campaign and subsequent patient visits probably will not take place, as a person does not utilize a healthcare service until the need arises. For that reason, share of mind (con - sumer recall of the organization) becomes an important marketing goal for healthcare provid - ers (Hall, 2004).

A typical advertising campaign lasts between four weeks and three months. Those campaigns with continuous formats run advertising uniformly throughout the year. Campaigns with pul - sating formats feature advertisements throughout the year, with a spurt of additional advertising during major seasons, such as Christmas. A discontinuous format includes periods in which there are no advertisements and other periods when advertising is heavily used. For example, diet and exercise programs tend to focus on the New Year and the start of summer. Most hospital and healthcare services use continuous formats, which best matches the objective of creating and maintaining share of mind and building levels of share of heart. Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 Promotional Tactics: Personal Selling and Sales Promotions In standard marketing programs, personal selling and sales promotions hold nearly equal stature with advertising, as each component contributes to the success of the others. Circumstances in the medical field, however, become more complicated. The same tactics that are used to sell appliances would be less valuable in many aspects of healthcare. Although personal selling and sales promotions play a role in healthcare, the methods differ from standard marketing practice.

Personal Selling Two forms of personal selling include business-to-customer (B2C) and business-to-business (B2B). In healthcare, personal selling becomes a valuable tool in some circumstances but would not help at all in others.

Most of the time, the personal selling approach needed in healthcare is B2B, as companies selling items require a personal touch combined with a professional explanation of the product’s value. For example pharmaceutical companies rely heavily on individual sales representa- tives visiting physician practices, medical groups, and hospitals. The sales representatives often provide free samples of products to indi - vidual healthcare providers and larger organizations. Dentist offices also receive sales calls from a variety of vendors. Likewise, medical equipment manufacturers and medical supply providers also depend on salespeople to market products to groups and organizations.

Yet very few physicians find themselves making a sales pitch to patients on an individual basis (B2C). Some, such as mental health profession - als, might suggest how their services would assist a patient; however, an outright sales pitch would seem nearly unethical. A dentist might sell certain procedures, such as tooth whitening systems, to patients during a visit, but these circumstances would be highly limited. In general, personal selling and the delivery of healthcare services are rarely compatible.

Sales Promotions Sales promotions constitute all of the methods used to move items through the marketing channel. Manufacturers offer trade promotions to push items through wholesalers to retailers.

Retailers then offer consumer promotions to entice customers to make purchases.

Trade promotions include the many forms of discounts offered by manufacturers. In the health - care field, medical equipment and medical supply companies sometimes offer quantity discounts for larger purchases. Any commodity or physical item sold by a manufacturer to a medical prac - tice could include discounts for volume purchases or shipping costs, as well as reductions in interest charges on credit accounts. The most common form of trade promotion for many med - ical providers is a t rade show. Many national and international trade shows bring merchants together to meet with physicians, managers of medical practices, and others in the health field.

With sampling programs, another form of trade promotion, samples are delivered by sales repre - sentatives and at trade shows.

Consumer promotions include coupons, premiums, contests or sweepstakes, refunds, rebates, free samples, price-off programs, and bonus packs. Common users of this type of promotion are over-the-counter medical and dental product companies—for example, aspirin, toothpaste, cold medicine, allergy drugs, and many others can be discounted with a coupon distributed in print © Stockbyte/Thinkstock ▲ ▲ A person does not use a health- care service until the need arises, which makes share of mind an important marketing goal. Marketing Tactics: Markets, Products, Prices, and Promotions Chapter 5 media or online. A premium offers the consumer a small prize for making a purchase. Contests and sweepstakes help build consumer interest in and awareness of a product by providing the chance to win prizes. Refunds and rebates can be given for various purchases, such as by sending in a product’s label to receive a rebate, normally on a higher-priced item. Free samples are offered for a variety of medical products, whether by mail, in stores, or as tie-ins with other products. The sample for one product is often attached to the purchase of another. Bonus packs offer an extra amount of a product for the same price as the usual amount.

Some medical providers also offer versions of consumer promotions. The most common is a free sample, such as a free first visit. Dermatologists hold free cancer screening events in order to enlist patients with potential skin problems. Larger hospitals offer coupons for sets of medical tests, such as a combination of blood pressure, blood sugar, cholesterol, and other diagnostics.

The goal is to help ensure patient wellness while also identifying individuals with immediate medical needs. In return, the hospital gains brand awareness and possibly some advantage in terms of share of heart. CASE Radiance Reconstructive Surgery Melissa Patterson serves as the director of marketing for Radiance, an organization that provides facial reconstructive surgery. Her activities include two primary functions. First, she is responsible for overseeing the organization’s advertising and marketing efforts. Her duties consist of overseeing strategic marketing decision making, advertising, and promotions. Melissa employs one individual, who assists in these efforts.

The second function involves supervision of public relations. Two publicists report to Melissa. One of the two oversees all image-building public relations activities. The other manages other public relations functions, including preparation of press releases, scheduling interviews or appearances by physicians in the organization, and responding to any unfavorable press or Internet chatter. The two publicists work together to publish a monthly newsletter that is sent to patients, other health providers, and the local media. The newsletter appears in both paper and an electronic version that can be attached to an email.

Radiance opened in 2002, when a group of three plastic surgeons agreed they would have greater freedom by offering their services independently from any specific hospital. The three physicians maintain practicing privileges at the area’s four major community hospitals. Radiance has its own examination equipment and surgical rooms. The organization employs five nurses, as well as four support staff members who take care of insurance forms, billing, scheduling, and other office duties.

Three types of individuals seek reconstructive surgery. First, victims of accidents who have facial injuries often require immediate attention and follow-up care. After an initial visit to the emergency room of a hospital, an injured person may return to Radiance on numerous occasions to achieve the best results over time.

Second, facelifts and other facial beauty improvements (Botox injections, nose realignment), which are elective surgeries, tend to be available to people who have larger amounts of disposable income. These procedures command a premium price, and quality remains the overwhelming crite- rion. Referrals and word-of-mouth often bring these types of patients to Radiance.

Third, some individuals are born with facial defects, such as a cleft palate. Many times these indi - viduals do not have health insurance coverage. The three surgeons have agreed that it is advisable (continued) Marketing Tactics: Alternative Methods, Image Building, and Public Relations Chapter 5 5.4 Marketing Tactics: Alternative Methods, Image Building, and Public Relations To fully support the marketing strategies that a healthcare organization intends to pursue, pro- grams beyond traditional approaches have become available. These programs are compatible with the shifting nature of the social environment, as well as the goals of healthcare marketing programs. This section examines alternative marketing methods, image-building programs, and public relations activities that assist in achieving key strategic outcomes.

Alternative Marketing Programs Healthcare officials should be aware that advertising programs cannot accomplish all strategic marketing goals. However, advertising can be accompanied by alternative marketing programs that reach customers in new ways. The most common alternative approaches include lifestyle marketing, buzz or word-of-mouth marketing, and guerrilla marketing.

Lifestyle Marketing Lifestyle marketing involves tapping into a target audience’s core lifestyle, music, culture, or fashion venues. The approach features engaging with customers at places where they relax and enjoy leisure activities. Farmer’s markets, bluegrass festivals, citywide garage sales, flea markets, craft shows, stock car races, fashion shows, and 4H events present potential lifestyle marketing opportunities.

In healthcare, an example of lifestyle marketing occurs when a set of medical providers offers a health fair in a given venue. Lifestyle marketing can target employees of a single company or organization or be oriented to a more general audience in an auditorium or meeting center. Such to treat some of these patients on a pro bono (no charge) basis. Others with limited incomes receive drastic discounts for their treatments.

Over the past five years, the number of facelifts and beauty-enhancement procedures had begun to dwindle. One explanation for this turn of events is the major recession, which has cut down on the number of individuals willing to pay for cosmetic procedures. It is believed that when the economy improves, that part of the practice will again prosper. A second explanation is that Radiance experi - enced negative publicity when one unhappy (and relatively famous) client went public with her frus - tration. The physicians believe that her complaints were totally without foundation, but they worry that public perceptions of the organization have diminished as a result.

Melissa was asked to diagnose the cause of the negative publicity and to offer potential solutions.

She knew it would take all of her professional skill to put Radiance back on the right path.

In answering the following questions, it may be helpful to review Sections 5.2, 5.3, and 5.4.

1. Conduct a strategic marketing analysis that Melissa would prepare for Radiance. 2. What marketing strategies should Radiance pursue in the next five years? Explain why the strate - gies best fit the organization. 3. Should Radiance engage in lifestyle, sponsorship, or event marketing? Why or why not? Which venues would best match Radiance should the organization choose to move forward? 4. What damage control techniques should Melissa employ? Would she be better off to let some time pass before responding? Defend your answer. Marketing Tactics: Alternative Methods, Image Building, and Public Relations Chapter 5 events allow prospective patients to interact with members of the healthcare organization in more comfortable settings.

Healthcare marketers can employ lifestyle marketing at a variety of events. For example, a booth can be set up as part of a county or state fair promoting an organization, such as a hospital or spe- cialized form of practice. Marketers from a hospital or health organization might decide to attend an event related to a race or culture, such as a Hispanic heritage festival. Medical problems that are common for that group can then be targeted at a display or booth. Chamber of commerce and other community events often feature various types of organizations at larger gatherings, and hospitals and other health organizations can take advantage of these opportunities to create positive, image-building events.

Word-of-Mouth Marketing Buzz marketing, or word-of-mouth marketing, involves consumers passing along information about a product. In healthcare, word-of-mouth marketing can make or break an individual physi - cian’s practice. Marketers in larger organizations look for ways to monitor what has been said, in both medical and nonmedical terms, about how the healthcare provider treated patients. For example, anyone who has experienced a nightmare relationship with a hospital’s billing depart - ment gladly relays this information to a wide audience. Many healthcare facilities now follow up patient visits with surveys designed to discover how the person felt after the treatment was over.

Guerrilla Marketing Guerrilla marketing seeks to obtain instant results with limited resources using tactics that rely on creativity, quality relationships with customers, and the willingness to try unusual approaches.

Guerrilla marketing emphasizes quality rather than quantity. Reaching a carefully selected target audience becomes the goal of the planning process, and effective timing is a key factor in the success of a program. The message must reach the target market at the right time to gain maximum impact.

Guerilla marketing tactics are not useful for the majority of physician offices, joint practices, or hospitals. However, such tactics can be used in conjunction with more specialized practices, such as by a hearing aid company showing people the advantages of a quality hearing aid in some unique way. To attract people to the demonstration, the company’s marketers might build a gigantic ear, which would capture the attention of people passing by a display in a public venue, such as a state fair or a sports event.

Image-Building Programs In traditional marketing, managers often take advantage of programs that combine the efforts of the sales force, public relations personnel, advertising specialists, and others from the company.

Four such programs are sponsorships, event marketing, cause-related marketing, and green mar - keting. Healthcare marketers can take advantage of many aspects of these programs.

Sponsorship marketing involves the company paying money to sponsor someone, some group, or something that is part of an activity. Sponsorships range from Little League Baseball and soccer teams to national music tours. Some healthcare organizations, such as hospitals or specialized practices, can become involved in sponsorship programs by sponsoring items such as closed- captioning of local news programs on television.

Event marketing is similar to sponsorship marketing, but instead the company supports a specific event, such as an arts festival, a local rodeo, or a concert in the park. Although sporting events Marketing Tactics: Alternative Methods, Image Building, and Public Relations Chapter 5 attract the largest sponsorship and event marketing dollars, hospital marketers might be more inclined to establish a presence at a cul- tural event, such as a classical music program, a theater production, or a special Christmas gathering.

Both sponsorships and event marketing programs require similar steps and activities. The marketing team first determines the objec - tives of the program. The audience profile for both programs must match the target market. The event is then promoted. The sponsor - ing healthcare provider or brand will appear prominently in promo - tions for the event, and the sponsor tracks results to make certain the program achieves its goals.

Cause-related marketing programs link a charity with another orga - nization in order to generate goodwill. Many hospitals and healthcare services benefit from cause-related events, such as a golf tournament sponsored by a local company or university with part of the proceeds being donated to the hospital. This type of marketing would be more likely to take place when the hospital is a not-for-profit organization (Chiagouris & Ray, 2007).

In the current environment, companies carefully choose chari - ties, making sure the beneficiary matches the company’s image and theme. If a charity seems unrelated to the company, the program may experience consumer backlash based on the perception that no true altruistic intentions are present; instead, the public may believe that the firm seeks to capitalize on the charity’s activities. A hospital provides a wide variety of services, which makes it a logical candidate for many cause-related programs.

Green marketing is the development and promotion of products that are environmentally safe. A green marketing strategy should align with the wishes of the firm’s target audience. Rarely would such a program fit with a healthcare organization.

Public Relations Many times, public relations are at the top of the agenda for a healthcare organization. Public relations include all nonadvertising-based communications with organizational publics and stakeholders. To maintain quality relationships with patients, providers, and the larger public, quality public relations departments and programs are essential. Note that although advertising programs often involve purchasing services from outside organizations, most healthcare provid - ers would conduct public relations activities in-house. The three primary areas covered by public relations departments are publicizing image-enhancing events, monitoring messages, and per - forming damage-control activities.

Publicizing Image-Enhancing Events The public relations (PR) department is responsible for informing the public about all of the organization’s positive activities. For example, PR releases are developed to highlight any life - style marketing, sponsorship, event marketing, or cause-related marketing programs. The PR department notifies patients, nonpatients, and other members of the local community about these events. © iStockphoto/Thinkstock ▲ ▲ Hospital marketers might be inclined to establish a presence at a cultural event, such as a classical music program. Marketing Tactics: Alternative Methods, Image Building, and Public Relations Chapter 5 Press releases, press conferences, letters to constituents, and postings on the company’s website all assist PR officials in sending out positive stories. An entitling takes place when the organiza - tion makes sure it has been given credit for a favorable event, such as a note in the program for a local music event that says the healthcare provider served as a sponsor. An enhancement involves increasing the value of a favorable outcome, such as when a health provider notes that its free screening program assisted a number of people in discovering and resolving medical problems (Clow & Baack, 2014, pp. 354–377).

Monitoring Messages The PR department also monitors contacts between the company and noncustomer publics, such as interest groups with specific agendas, including the American Heart Association, the American Cancer Society, and Alcoholics Anonymous. The PR department can become the key listening post for all communications that take place. Gathering this type of information, includ - ing reactions to new treatment programs, provides the organization’s management team with valuable insights regarding public perceptions of the firm and helps the organization take proac - tive steps to build or maintain a positive image.

Damage Control Negative publicity occurs when a health provider faces a story either based in fact or due to some unusual circumstance. At times, the provider creates these problems, such as through medical malpractice, discrimination, or unfair pricing or bill-collection techniques. At other times, the negative publicity is beyond the provider’s control, such as any false charges regarding the quality of care delivered by a physician or the overall organization. Dealing with negative publicity can include an apology, defending the organization’s innocence, or providing justifications through Internet interventions or other explanations (Baack, Harris, & Baack, 2013).

An apology begins with the acknowledgment that the provider did something wrong, whether by choice or by accident. It continues with a statement of regret and the promise not to engage in the inappropriate behavior again. Then the organization offers to compensate the injured party.

However, rarely do medical providers make open apologies, due to the preponderance of lawsuits these organizations encounter. In addition, the negative publicity associated with a public settle - ment of a lawsuit by an admission of guilt would create additional public relations damage.

Defending the organization’s innocence relies on evidence and proof that the company was not at fault. Many healthcare organizations vigorously defend against charges of malpractice or poor- quality care. Hospital leaders make public statements, prepare op-ed pieces for local newspapers, and respond in other media when the organization or one of its members has been falsely accused of a misdeed.

Providing justifications includes creating reasons for the inappropriate behavior that lessen the negative impact. For example, a provider affected by a strike may note that it is less able to provide the quality of care that patients normally receive.

Internet interventions involve monitoring information that circulates online, including discus - sions in chat rooms or on social media sites such as Twitter. The organization then works to set the record straight when false information is being passed through such outlets. However, most healthcare organizations do not have enough employees on staff to heavily engage in such activi - ties (Needleman, 2009). Marketing Tactics: Alternative Methods, Image Building, and Public Relations Chapter 5 Other explanations are those that suggest that a negative event was a single-time occurrence, such as one due to the actions of a disgruntled employee or an act of God, and that they will not happen again. In some rare instances, healthcare managers offer such explanations when an unusual image-damaging event occurs. CASE Adonis Sports Medicine Kensington Hospital operates in an affluent neighborhood in Philadelphia, Pennsylvania. The orga - nization, which specializes in heart care and cancer treatment, provides traditional healthcare to patients. The facility includes an emergency room, standard diagnostics, operating rooms, and patient beds. It also has a limited psychiatric care unit, mainly leaving that specialty to other hospi - tals in the city.

Recently, Kensington’s chief operating officer decided to launch a new venture, with the approval of the hospital’s board of directors. The unit, tentatively named Adonis Sports Medicine, was to tar - get athletes of all ages. The new unit would house testing for all student-athletes needing medical clearance to participate in high school and college sports, treatment of sports injuries, and a reha - bilitation service.

Although the unit would largely serve those active in sports at younger ages, the board wanted the new director to emphasize that physicians would treat other injuries, such as rotator cuff tears, that arise from circumstances other than playing a sport, as this would widen the number of potential patients to any person with an injury that routinely occurs in a sporting event.

To implement this new strategy, Kensington placed an advertisement for a marketing director who would work specifically for the Adonis center. The individual should have a strong background in marketing, with solid knowledge of marketing strategies, advertising programs, and public relations tactics. Any candidate who possessed these skills along with some knowledge of medical practice and sports would have an advantage in the selection process.

The new marketing director’s primary responsibility would be to help launch the Adonis Sports Medicine unit. The individual would be expected to carry out all aspects of the marketing program for the center.

1. Conduct an STP analysis for the Adonis Sports Medicine unit. 2. Identify marketing tactics in the areas of advertising and sales promotion that would benefit the Adonis unit. Explain how to implement those tactics. 3. Identify image-building and public relations tactics that would be best suited to the Adonis Sports Medicine clinic. Explain how to implement those tactics. 4. Is the name Adonis Sports Medicine the most ideal for this type of operation? Defend your a n s w e r. Chapter Summary Chapter 5 Chapter Summary Marketing is the activity, set of institutions, and processes for creating, communicating, deliver- ing, and exchanging offerings that have value for customers, clients, partners, and society at large.

It includes discovering consumer needs and wants; creating the goods and services that meet those needs and wants; and pricing, promoting, and delivering the goods and services. The key components of marketing programs are markets, products or services, prices, delivery systems, promotions, and people. In healthcare, these elements require an emphasis on service quality and patient satisfaction.

Marketing strategies outline the services to be offered as well as the target markets for those ser - vices. They provide sweeping plans that are based on an organization’s mission and vision state - ments. Marketing tactics include all of the midrange or medium-term (one- to three-year) efforts designed to support the strategies. Operational or short-term plans for the marketing department include directions for the day-by-day activities through the use of departmental budgets, projects, and marketing programs.

A strategic marketing analysis program consists of an environmental analysis, a competitive or industry analysis, an STP (segmentation, targeting, and positioning) analysis, and a customer analysis. Perceptual maps and maps of share of mind and share of heart assist in evaluating the healthcare provider’s strategic and tactical situation.

Based on the strategic marketing analysis, various strategies can be prepared. A healthcare con - centration strategy targets a single market and seeks to dominate or achieve a large share in that market. A multisegment strategy in healthcare takes the approach of serving several types of patients with differentiated needs. Additional marketing strategies may be generated in the areas of products, prices, distribution systems, and promotion.

Tactics are also developed in the areas of markets, products (services), pricing, distribution (place), and promotion. Marketers investigate the characteristics of members of these target mar - kets in order to better care for them. The services (products) provided by healthcare organiza - tions should be tailored to target market characteristics. In some instances, pricing tactics may be used. Advertising management is the process of developing and overseeing an organization’s advertising program. The tasks include setting advertising objectives, generating an advertising budget, choosing an advertising agency, overseeing the advertising program, and assessing adver - tising effectiveness.

In healthcare, personal selling becomes a valuable tool in some circumstances but would not help at all in others. Sales promotions comprise all of the methods used to move items through the marketing channel, including trade and consumer promotions aimed at members of the market - ing channel and end-user consumers (patients).

Marketers also engage in alternative marketing methods, image-building programs, and public relations activities that assist in achieving key strategic outcomes. Alternative marketing pro - grams that reach customers in new ways include lifestyle marketing, buzz or word-of-mouth marketing, and guerrilla marketing. Four image-building programs are sponsorships, event mar - keting, cause-related marketing, and green marketing. Public relations includes all nonadver - tising-based communications with organizational publics and stakeholders. The three primary areas covered by public relations departments are publicizing image-enhancing events, monitor - ing messages, and performing damage-control activities. Critical Thinking Chapter 5 Ke y Te r m s accessibility a measure of perceptions that a person could obtain the needed service from a specific healthcare provider advertising management the process of developing and overseeing an organization’s advertis - ing program affordability a measure of the degree to which a patient believes he or she can reasonably pay for healthcare services concentration strategy a healthcare strategy that targets a single market and seeks to domi - nate or achieve a large share in that market marketing (a) 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; (b) discovering consumer needs and wants; creating the goods and services that meet the needs and wants; and then pricing, promoting, and delivering those goods and services marketing strategy a plan that outlines the services to be offered and the target markets for those services marketing tactics the midrange or medium-term (one- to three-year) efforts designed to sup - port marketing strategies multisegment strategy a healthcare strategy that takes the approach of serving several types of patients with differentiated needs operational plan a short-term plan that is created to carry out marketing strategies and tactics public relations all nonadvertising-based communications with organizational publics and stakeholders service an intangible item that is sold to others and that constitutes the primary form of “prod - uct” marketed in healthcare STP analysis an analysis of segmentation, targeting, and positioning Additional Resources American Marketing Association h t t p : // w w w.marketingpower.com Society for Healthcare Strategy and Market Development http://w w w.shsmd.org/ Critical Thinking Review Questions 1. Define marketing from both the American Marketing Association’s approach and the more traditional definition. 2. What six key components make up healthcare marketing programs? 3. Describe marketing strategies, tactics, operational plans, and marketing programs. 4. What steps are involved in a strategic marketing analysis? Critical Thinking Chapter 5 5. Describe the STP approach. 6. What is a perceptual map? 7. What are the steps of the consumer buying decision-making process? 8. Describe the natures of a concentration marketing strategy and a multisegment marketing s t r at e g y. 9. Define advertising management and name the steps involved. 10. What four methods can be used to establish advertising budgets? 11. What two effects or outcomes are assessed as part of healthcare advertising programs? 12. Describe two types of consumer promotions programs. 13. Define guerrilla marketing . 14 . Define lifestyle marketing . 15. What three areas are covered by public relations programs? 16 . What forms of damage control can be used by medical practices when unfortunate public - ity arises? Analytical Exercises 1. Using the definition provided by the American Marketing Association and the more tra - ditional definition of marketing, outline what you believe are the key differences between marketing consumer goods and marketing healthcare organizations. 2. In marketing, the product life cycle concept suggests that products are born, they grow, they reach a peak point, they decline, and eventually they die. How does this concept apply to healthcare products and services? 3. The four P’s of marketing are known as product, price, place, and promotion. Explain how these would be applied to the following:

• Medical convenience goods, such as cough syrup and antiallergy pills • Major medical equipment, such as an X-ray or CT scan machine • Less-regulated medical products, including herbs and vitamins • Coronary bypass surgery 4. What factors would be included in a strategic marketing analysis for the following:

• Psychiatric care for drug addiction recovery (individual practitioner) • Surgical dental implants to improve a patient’s smile • A walk-in clinic for minor injuries and illnesses • A podiatrist clinic with three physicians 5. What are the linkages between a perceptual map and a map depicting share of heart and share of mind? How are they similar? How are they different? 6. Explain how an individual would go through the consumer buying decision-making process in the following circumstances:

• Parent with a sick child (flu) • Elderly person needing a hip replacement Critical Thinking Chapter 5 • Daughter placing her mother in an Alzheimer’s care unit • Professional athlete requiring knee surgery 7. Of the four methods used to generate advertising budgets, indicate which you think best suits each of the following:

• A hospital • A vision center offering both an eye exam and prescription glasses • A hospice service for those who wish to die at home • Tylenol products 8. You are the manager of a major cancer treatment center that operates independently from other healthcare services. Your organization does not have an emergency room; instead, it concentrates on various forms of diagnosis and treatment. Explain how your organization might engage in the following programs:

• Lifestyle marketing • Sponsorship programs • Event marketing • Cause-related marketing