Marketing Strategy Plan Marketing Plan
- Length: 6 pages
- Sources: 6
- Subject: Business
- Type: Marketing Plan
- Paper: #75115746
Excerpt from Marketing Plan :
CIC is a cardiac imaging center that has just opened, trying to win business from the established competitors in town with better equipment and service. The focus in terms of building market share is to oriented the marketing reps to build strong relationships with the physicians and the payers, both of whom are key drivers of business. This will help CIC to take advantage of the favorable social conditions of an aging population to build revenue and become profitable.
The challenge is to successfully market Cardiac Imaging Center. This is a new business, so there needs to be an emphasis on gaining exposure and gaining referrals in order to build the business. Key goals will be associated with revenue, market share, number of patients, number of partner physicians and profit.
Cardiac Imaging Center (CIC) is a new business that has just been completed. The service is a small imaging center with the most technologically -- advanced equipment. The business currently has very few customers, but it has costs, and so it needs to build its business up quickly. The new business has a technological competitive advantage, as the other cardiac imaging centers in the area are using older technology that is nowhere near as good. However, CIC charges a premium price. In this business, there is a reliance of physicians to refer patients to the imaging center, so one of the key critical success factors for this business is to build partnerships with local physicians to increase referrals. The first objective is to gain 50 area physicians for referrals, and from there to take 40% market share within the first year, of the local market.
The strength of the center lies with its modern technology, which is superior to the technology of any other clinic within a 50-mile radius. This technology is the primary source of competitive advantage. A secondary source of advantage is in the service dimension. This is important because customer service is a determinant of satisfaction. Two key characteristics of a high level of customer service is time and quality -- the equipment provides the quality and efficiency, longer hours will reflect on the time (Roslow, Nicholls & Tsalikis, 2011). Another strength is that the company is well-capitalized, as it started with a sufficient amount of capital to build the business.
The main weakness of the company is that it is relatively new. This brings with it a number of challenges. The first of these is that there are no established physician or clinic relationships. These relationships are critical to the business, because most customers come via referral. The referrals currently go to established cardiac imaging centers in the area. The other key weakness that comes from being new is that the staff has not worked together much. One of the keys to success is to deliver a high quality of service, but to some extent that comes with experience.
The business at present has negligible market share, which can also be seen as a weakness.
The health care business has a unique customer structure, in that there are the end beneficiaries (the patients), but they seldom drive the business. The payers and the clinicians tend to drive the business, so both of them need to be sold to. The typical payer mix in the United States is Medicare (47%), private insurance (29%), Medicaid (16%), uninsured (4%), and other (Garber, 2013). If, for example, the clinic cannot win Medicare business for whatever reason, that is nearly half of all customers ruled out -- and more if Medicaid is simultaneously ruled out. Thus, it is important that the clinic is able to work with all payer types. The customers tend to be cardiac patients, who present as an older demographic (hence the importance of Medicare) and people with poor fitness or genetic factors. The current market supports two cardiac imaging centers that work close to full capacity. Both use older equipment and do not compete on price. It is believed that CIC can deliver services using new equipment at only a slight premium.
The two competitors are old-established cardiac imaging centers, both having been around for decades. They tend to use equipment that is between 10-20 years old, so fairly old equipment. The market being an duopoly, but with low pricing power on the part of these companies, prices tend to be fixed at a moderate rate, at a point not much beyond the breakeven point. It is expected that CIC will disrupt the competitive balance. The two clinics are on opposite sides of town and have roughly split the market 50/50 between them. The new clinic has a central location, roughly between the two existing clinics, so is expected to syphon business from both of them. Indeed, almost all of the business for CIC will be won from its two main competitors.
As noted, there are referrers and there are payers. Thus, the decision process is complex. Most payers, either the government or private insurance companies, are price-setters with high bargaining power. They like to deliver adequate service at the lowest possible cost, something that challenges anybody offering a premium service. However, here are cost benefits to using more sophisticated equipment, and part of the marketing job is to convey information about these benefits. Prior experience and reliability are also part of the buying decisions. Physicians can be loyal to existing relationships, so the competitive advantage in technology will need to be leveraged. Government payers work with physicians in order to find the right centers for referral, and the center therefore needs to market to both.
A PEST analysis is outlines the different factors in the external environment (Mantkelow, 2014). The political environment might be the most important, given that the Affordable Care Act has restructured the health care industry. Insurance companies have more bargaining power, and that is something that will drive down prices for CIC. Again, CIC will have to be cost-competitive while offering superior service in order to overcome this. The economic environment is also a factor, because any private payer is going to see his or her spending power affected by the health of the economy.
The social environment is another major factor, and in this case instead of being ambiguous the social factor is positive. The need for cardiac care increases with age (Stern & Gottlieb, 2003). With an aging population and the baby boomers entering their senior years, it is expected that the social environment will only become increasingly favorable over time. The technological environment is also favorable. New equipment is costly, and many times older clinics do not replace their equipment unless the market forces compel them to. At worst, our competitors will need to make investments in new equipment, but for the time being we have the competitive advantage with our equipment. The pace of innovation is moderate in cardiac imaging.
The following chart highlights the key elements of the SWOT analysis.
No experience working together
No customer/payer relationships
Porter's 5 Forces
The bargaining power of payers is high, both for private insurers and government programs. The bargaining power of suppliers is relatively high, since there are only a few of them -- often with patent protection -- and a single clinic is not a compelling revenue stream. The threat of substitutes is low -- cardiac imagining is hard to replace. The threat of new entrants is high, since startup costs are not that much -- a few million only. The intensity of rivalry is high, since there are only a couple of existing competitors and at this point the industry might well have some overcapacity. Overall, the industry is only moderately attractive given these conditions.
IV Market Segmentation
Since marketing is typically directed either at the payer or the physician, this how the marketing effort should be segmented. The industry usually segments by payer first and foremost, but by physician is also valuable because that can help to direct market efforts. The market is not usually segmented using patient data, though the center will collect and utilize patient data. The reason for this is that while the clinic will market towards individuals, they are not usually the buyer and with cardiac imaging it is almost always a combination of physician and payer that determines which imaging clinic is used. By and large payers have moderate price sensitivity, but this is increasing. After years of rapidly escalating health care prices, price growth is starting to fall, indicating that payers are becoming more price sensitive (Cassidy, 2013).
V. Alternative Marketing Strategies
Personal marketing, advertising, public relations -- all are viable.
VI. Selected Marketing Strategies
The product is cardiac imaging. It is a premium product. Pricing strategy is slightly above the competitors but not much. This is because payers have bargaining power. There will not be bundling, payment…