Chapter 2Important Marketing

Concepts

Chapter 2Important Marketing

Concepts

TIP TIP Know the terms to knowKnow the terms to know

the concepts. the concepts.

TIP TIP Know the terms to knowKnow the terms to know

the concepts. the concepts.

Chapter 2 slides for Marketing forPharmacists, 2nd Edition

Chapter 2 slides for Marketing forPharmacists, 2nd Edition

Learning ObjectivesLearning Objectives

• Define the following marketing terms: product; core, expected, and augmented product; marketing myopia; potential, target, and actual markets; the marketing mix; the 4 P’s; positioning.

• Describe two major categories of competitors.• Differentiate internal from external customers.• Explain the difference between the “products”

of pharmaceutical care and of dispensing activities mandated by OBRA ’90 legislation.

• Identify and differentiate the various marketing tasks, the type of demand they regulate, and suggested strategies.

Defining the Product Provided by Pharmacists

Defining the Product Provided by Pharmacists

Defining a “product” as a tangible object

Defining a “product” as a tangible object

Typically defined by nonmarketers as physical objects of value, such as a pill. For marketers, the tangible product is only a

means of packaging a benefit.Many benefits come in intangible packages

(e.g., pure services such as drug information).

People do not buy drugs. They buy the benefits that drugs can provide.

How marketers define “product”

How marketers define “product”

Anything satisfying a need or want

Can be an object, service, activity, person, place, organization, or idea

This broad definition discourages focusing only on tangible objects (e.g., drugs)

Changes focus from tangible object to benefits received

Total product conceptTotal product concept

Defines productsDefines products

on several levelson several levels

Defines productsDefines products

on several levelson several levels

CoreProduct

Core productCore product

Definition -- benefits resulting from the overall product package

It is what the customer is really buying. What is the core product ofA camera?Makeup?Drugs?Medication therapy management (MTM)

services?

Marketing myopiaMarketing myopia

Shortsightedness of marketers who become preoccupied with selling the tangible product while failing to consider their core productHow might pharmacists

suffer from marketing myopia?

What are the consequences of this?

TangibleTangibleProductProduct

CoreProduct

Total product conceptTotal product concept

ExpectedExpectedProductProduct

Expected productExpected product

Definition –what the customer expects from the marketer

Depends on the purchasing situation and the expectations set by the marketerStudies have shown that patients do not

expect much from pharmacists.What do patients expect?

CoreProduct

ExpectedProduct

AugmentedProduct

Total product conceptTotal product concept

TangibleTangibleProductProduct

Augmented product (a.k.a. “differentiated”)

Augmented product (a.k.a. “differentiated”)

Definition -- bundle of services that accompany the tangible product

Used to differentiate one’s product package from competitors

Anything provided that is more than that expected by the customer is “augmented”

List some ways that pharmacists augment the core product.

Example: AspirinExample: Aspirin

Tangible

Core

Expected

Augmented

Medication therapy management services

Medication therapy management services

Tangible

Core

Expected

Augmented

Differentiating Pharmaceutical Care

from Basic Dispensing

Differentiating Pharmaceutical Care

from Basic Dispensing

Quickly and clearly describe the difference between

pharmaceutical care and basic dispensing services.

Quickly and clearly describe the difference between

pharmaceutical care and basic dispensing services.

BackgroundBackground

Many pharmacists and students can’t clearly explain the difference between pharmaceutical care and typical dispensing.This is a serious problem because payers and patients

often wrongly believe that pharmaceutical care services are covered by dispensing fees.

In truth, dispensing fees cover only the minimum level of service pharmacists are capable of providing.

If pharmacists wish to expand their service compensation beyond dispensing fees, they must be able to articulate the differences.

BackgroundBackground

OBRA ’90 established the minimum level of care required by pharmacists.

It mandated that pharmacistsAccurately dispenseClarify incomplete or illegible prescriptionsNot dispense “obvious” errors Keep patient profilesCarry out simple drug-use review activities“Offer” to counsel.

Limitations of OBRA ’90Limitations of OBRA ’90

Focuses on tangible products

Addresses only flagrant drug-related problems (DRPs)

Doesn’t recognize value of pharmaceutical care

Establishes standards that are far less than what pharmacists are capable of providing

Pharmaceutical care/MTMPharmaceutical care/MTM

Assistance with drug therapy individualized to patient need Detects, prevents, and minimizes DRPs that

may not be revealed in normal dispensingRequires a greater level of communication,

monitoring, and problem solving e.g., patient and provider consultation,

planned monitoring and follow-up, care plans, education

Services not covered by OBRA ’90

Services not covered by OBRA ’90

Consultations with patients, prescribers, and other health care providers

Treatment plans

Detecting “safe” but less-than-optimal therapyIf it doesn’t hurt, then dispense it.

Assisting in selection of appropriate drugs

Training patients

“Brown bag” drug review sessions

the Market for Determining

Pharmacist Services

the Market for Determining

Pharmacist Services

MarketMarket

A market is a set of anyone who might conceivably buy a given product.Actual buyersPotential buyers

Whenever there is a potential for exchange, there is a market.

PotentialCustomers

TotalPopulation

TargetedCustomers

ActualCustomers

MarketMarket

Actual market size depends onInterest of the customer

Ability to access and pay for the product

Willingness to pay.

Actual market may include untargeted customers.

What is the market for MTM services?

What is the market for MTM services?

Potential customers

Target customers

Actual customers

What do pharmacists need to do to expand the market

for MTM services?

What do pharmacists need to do to expand the market

for MTM services?

Think interest, ability, and willingness.

Think interest, ability, and willingness.

Marketing mix (a.k.a. 4 P’s)

Marketing mix (a.k.a. 4 P’s)

TIP TIP Everything you do is partEverything you do is part

of the marketing mix. of the marketing mix.

TIP TIP Everything you do is partEverything you do is part

of the marketing mix. of the marketing mix.

ProductProduct

PlacePlace

PromotionPromotion

PricePrice

Product

Place

Promotion

PricePositioning

Positioning (the 5th P)Positioning (the 5th P)

Process of creating a favorable image of a product or business in the minds of the customer (i.e., target markets)

Image results from everything that the customer see, hears, touches, smells, tastese.g., Starbucks

Whether there is an active positioning effort or not, an image will occur in the mind of customers

What is the image of:What is the image of:

OprahArnold SchwarzeneggerChristina AguileraBritney SpearsDonald RumsfeldMartha StewartThe average pharmacist

CompetitorsCompetitors

Need to be identified, monitored, and beaten in the market

Identification of competitors requires a clear definition of one’s product(s), customer(s), and market(s)What markets are served by CVS or

Walgreens?

Competitor typesCompetitor types

Intratype - similar or the same products as the organization or individualGM/Ford, McDonald’s/Burger King

Intertype - distinctly different and competing organizations or individualsMovie theaters, Richmond Braves, TV

CompetitionCompetition

Intratype competitors compete by offering similar tangible and augmented products.

Intertype competitors compete in terms of the benefits provided.

Therefore, it is critical for pharmacists to understand how customers view their product.Competition depends on how a product is defined in

the mind of customers.

http://marketplacemoney.publicradio.org/display/web/2005/09/16/clinic_on_aisle_one/

Options for illnesses after MD office hours

Options for illnesses after MD office hours

Urgent Care Clinic

Emergency Room

Retail Store Clinic

What is a customer?What is a customer?

CustomerCustomer

Marketers consider a customer to be any person or group involved in or affected by an exchange.

External – people outside the organization (patients, suppliers, third-party payers, family members, other health care professionals)

Internal – people within the organization (technicians, boss, people in other departments)

Customers of MTM services provided by Walgreens

Customers of MTM services provided by Walgreens

External – people outside the organization

Internal – people within the organization

DefinitionsDefinitions

Customer chain – relationships between internal and external customers that lead to final product

Internal marketing – when management treats internal customers as they would treat external customers

The task of marketing is to influence demand The task of marketing

is to influence demand

through various combinations of the marketing mix.

through various combinations of the marketing mix.

Marketing tasksMarketing tasksConversional marketing

Negative demand (dislike of product)

Understand why people dislike and develop strategies

Stimulational marketingNo demand (indifference or

disinterest)Find ways to connect benefits of

product with person’s needs and interests

Marketing tasks (cont)Marketing tasks (cont)

Developmental marketingLatent demand (strong

need, no product)Identify unmet needs and

develop new products

RemarketingDeclining demand (and

further declines likely)Regenerate demand by

repackaging product

Marketing tasks (cont)Marketing tasks (cont)

SynchromarketingIrregular demand (undesirable

fluctuations in business)Even out by “training” your customers

Maintenance marketingFull demand (ideal situation)Prevent erosion of demandMaintain quality, keep up with customer

tastes, and outdo the competition

Marketing tasks (cont)Marketing tasks (cont)Demarketing

Overfull demand (demand exceeds supply)

Long-term solution - increase production. Short term – raise prices, cut corners, restrict access

CountermarketingUnwholesome demand (socially

undesirable)Help people give up bad behavior

SummarySummary

Knowing marketing terminology helps in learning marketing concepts.

Those concepts can be used toCommunicate with managers

Understand more complex topics.

Questions?Questions?