Chapter 2 Important Marketing Concepts

1. Chapter 2Important Marketing Concepts Chapter 2 slides for MarketingforPharmacists, 2nd Edition TIP Know the terms to know the concepts.

2. Learning 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.

3. Defining the Product Provided by Pharmacists

4. 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.

5. 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

6. Total product concept Defines products on several levels Core Product

7. Core product • Definition -- benefits resulting from the overall product package • It is what the customer is really buying. What is the core product of • A camera? • Makeup? • Drugs? • Medication therapy management (MTM) services?

8. Marketing myopia • Shortsightedness of marketers who become preoccupied with selling the tangible product while failing to consider their core product • How might pharmacists suffer from marketing myopia? • What are the consequences of this? Tangible Product

9. Total product concept Core Product Expected Product

10. Expected product • Definition –what the customer expects from the marketer • Depends on the purchasing situation and the expectations set by the marketer • Studies have shown that patients do not expect much from pharmacists. • What do patients expect?

11. Total product concept Core Product Expected Product Tangible Product Augmented Product

12. 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.

13. Example: Aspirin • Tangible • Core • Expected • Augmented

14. Medication therapy management services • Tangible • Core • Expected • Augmented

15. Differentiating Pharmaceutical Care from Basic Dispensing Quickly and clearly describe the difference between pharmaceutical care and basic dispensing services.

16. Background • 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.

17. Background • OBRA ’90 established the minimum level of care required by pharmacists. • It mandated that pharmacists • Accurately dispense • Clarify incomplete or illegible prescriptions • Not dispense “obvious” errors • Keep patient profiles • Carry out simple drug-use review activities • “Offer” to counsel.

18. Limitations 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

19. Pharmaceutical care/MTM • Assistance with drug therapy individualized to patient need • Detects, prevents, and minimizes DRPs that may not be revealed in normal dispensing • Requires a greater level of communication, monitoring, and problem solving • e.g., patient and provider consultation, planned monitoring and follow-up, care plans, education How can you communicate this to people?

20. Services not covered by OBRA ’90 • Consultations with patients, prescribers, and other health care providers • Treatment plans • Detecting “safe” but less-than-optimal therapy • If it doesn’t hurt, then dispense it. • Assisting in selection of appropriate drugs • Training patients • “Brown bag” drug review sessions

21. the Market for Determining Pharmacist Services

22. Market • A market is a set of anyone who might conceivably buy a given product. • Actual buyers • Potential buyers • Whenever there is a potential for exchange, there is a market.

23. Potential Customers Targeted Customers Actual Customers Total Population

24. Market • Actual market size depends on • Interest of the customer • Ability to access and pay for the product • Willingness to pay. • Actual market may include untargeted customers.

25. What is the market for MTM services? • Potential customers • Target customers • Actual customers

26. What do pharmacists need to do to expand the market for MTM services? Think interest, ability, and willingness.

27. Marketing mix (a.k.a. 4 P’s) TIP Everything you do is part of the marketing mix.

28. Product Place Price Promotion

30. Product Place Positioning Price Promotion

31. 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, tastes • e.g., Starbucks • Whether there is an active positioning effort or not, an image will occur in the mind of customers

32. What is the image of: • Oprah • Arnold Schwarzenegger • Christina Aguilera • Britney Spears • Donald Rumsfeld • Martha Stewart • The average pharmacist

33. Competitors • 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?

34. Competitor types • Intratype - similar or the same products as the organization or individual • GM/Ford, McDonald’s/Burger King • Intertype - distinctly different and competing organizations or individuals • Movie theaters, Richmond Braves, TV

35. Competition • 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.

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

37. Options for illnesses after MD office hours Urgent Care Clinic Retail Store Clinic Emergency Room

38. What is a customer?

39. Customer 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)

40. Customers of MTM services provided by Walgreens External – people outside the organization Internal – people within the organization

41. Definitions • 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

42. The task of marketing is to influence demand through various combinations of the marketing mix.

43. Marketing tasks • Conversional marketing • Negative demand (dislike of product) • Understand why people dislike and develop strategies • Stimulational marketing • No demand (indifference or disinterest) • Find ways to connect benefits of product with person’s needs and interests

44. Marketing tasks (cont) • Developmental marketing • Latent demand (strong need, no product) • Identify unmet needs and develop new products • Remarketing • Declining demand (and further declines likely) • Regenerate demand by repackaging product

45. Marketing tasks (cont) • Synchromarketing • Irregular demand (undesirable fluctuations in business) • Even out by “training” your customers • Maintenance marketing • Full demand (ideal situation) • Prevent erosion of demand • Maintain quality, keep up with customer tastes, and outdo the competition

46. Marketing tasks (cont) • Demarketing • Overfull demand (demand exceeds supply) • Long-term solution - increase production. Short term – raise prices, cut corners, restrict access • Countermarketing • Unwholesome demand (socially undesirable) • Help people give up bad behavior

47. Summary • Knowing marketing terminology helps in learning marketing concepts. • Those concepts can be used to • Communicate with managers • Understand more complex topics.

48. Questions?