Human relations

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Reflection

Healthcare Marketing

Module ONE Overview

  

Welcome to Healthcare Marketing! In this course, we will explore key marketing principles as they uniquely apply to healthcare management. Throughout the course, you will be provided with the opportunity to engage in the marketing process by establishing marketing objectives, analyzing the market environment, and developing promotions that will effectively market a healthcare product or service.

We begin the course by introducing basic marketing concepts. In this module, you will define key terms and concepts that form the foundation of marketing and will review their application to healthcare. Marketing functions, techniques, and approaches are described as we consider the challenges of adapting traditional marketing concepts to healthcare. Module One establishes a basic understanding as we prepare to expand upon these ideas in future modules.

As a healthcare marketing professional or healthcare manager, you will be expected to support your organization’s marketing efforts. In Module One, you are introduced to marketing planning, which uses a systematic process for promoting an organization, a product, a service, or a program. Marketing planning may be used for a short-term promotional project or may be a component of a long-term strategic plan. Whatever the scope and purpose, a plan should be in place before any marketing activities begin. Throughout this course, you will gain experience with all phases of marketing planning by developing a strategic marketing proposal.

1-1 Discussion: Introduction to Healthcare Marketing

Discussion Topic

In this discussion, you will have the opportunity to explore marketing strategies that are specific to healthcare. To begin, introduce yourself to your classmates and instructor. Briefly discuss your background, describe your professional goals, explain what you hope to gain from this course, and share what you enjoy doing in your free time.

Then, read Case Study 2.1 in Chapter 2 of your textbook and reflect on what you know about marketing and the concepts presented in the module in responding.

RMC deemed the campaign a success but was not able to specifically determine which promotional techniques had the most impact. To continue your initial post, discuss what you think prompted RMC to invest the time and resources to develop and promote this service line. From among the marketing techniques employed, which do you think would have been most effective in reaching the target population? Support your response by citing fundamental marketing concepts presented in your assigned readings.

(This is response post will send the posts)

In your response posts, respond to peers who selected a different marketing technique than you did in your initial post. Explain why you think the technique you selected in your initial post was more effective in reaching the target audience. Or describe how your peers’ posts helped you to understand how a different technique might be more effective.)

Example of a peer’s post

I believe RMC saw that the baby boomers were going to be needing support as they aged and they took the opportunity to provide that. RMC used direct marketing to start by using the mailing lists and mailing collateral material to those aged 50-65 to let them know if their new services. RMC eventually used social marketing and media marketing to get the word out to not just those aged 50-65 but to those individuals that may be making healthcare decisions for their loved ones that fall in that age group. I feel that the mixture of marketing techniques is what made RMC’s campaign so successful. 

HERE IS THE CASE STUDY

CASE STUDY 2.1

Capturing the “Older Adult” Market

Many healthcare organizations came to see the aging of the baby boom generation as an opportunity to expand their services. Regional Medical Center (RMC, a fictional organization on which this case study is based) responded to this opportunity by establishing a service line devoted to older adults. The intent was to capture the business—and the loyalty—of this large, relatively affluent, and increasingly needy segment of the population. The service line was designed to meet the emerging needs of this population for specialty services such as cardiology, orthopedics, ophthalmology, and urology in a way that would be appealing to this relatively demanding consumer segment.

Because this service was considered innovative in the community served by RMC, an aggressive promotional campaign was undertaken. RMC’s marketing department considered a wide range of marketing options and decided on a multipronged campaign to approach the target population from a variety of directions. The first phase of the promotional campaign focused on internal marketing. It was important that RMC’s employees be familiar with this new program and be able to articulate its merits to potential customers. Many of the customers for the new program were likely to be existing patients of RMC.

Well before the new program was scheduled to open for enrollment, an aggressive PR campaign was initiated. Press releases were distributed, articles were prepared for local publications and professional journals, and celebrity spokespeople were lined up. Simple yet attractive 
collateral materials
 (e.g., business cards, letterhead, envelopes, brochures) were developed for distribution to prospective customers and to referral agents who might channel customers to RMC. Information was distributed to providers and organizations that might serve other needs of the target population, and the community’s major insurance plans were made aware of the new program and its benefits. Tours of the facility housing the new program were provided to key constituents (e.g., referring physicians and health plan representatives), and open houses were scheduled for both medical professionals and the general public.

The marketing initiative also involved direct solicitation of members of the target population. RMC extracted data from its internal database on existing customers and purchased mailing lists of households that included members aged 50 to 65. Using the findings from previous research on the “buttons to push” in this age cohort, marketing staff prepared materials that would appeal to the particular needs of older adults. The address lists were then used to mail materials directly to targeted individuals.

While RMC did not want to rely on expensive media advertising for attracting customers, its marketers felt that some media presence was necessary—not only to attract customers who might be missed through the direct mail campaign but also to make the general public aware of this new program. In some cases, other family members might be making decisions for the older adult population, and awareness of this program on the part of the general public was considered important. After careful research on the communication attributes of family caregivers, a series of newspaper, radio, and television advertisements were produced. These advertisements were placed in the sections of the local newspaper that members of this age group read, aired on the radio stations they preferred, and presented on the television channels they viewed most often. For the electronic media, particular attention was paid to the time of day and day of the week members of the target population were expected to be engaged.

The success of RMC’s new older adult service line during the first year exceeded the expectations of the organization’s administrators. While it was difficult to determine which of the promotional techniques used had the most impact on the program’s early success, the marketing staff concluded, on the basis of its evaluation of the campaign, that it was the integrated approach—a variety of coordinated activities—that led to the successful program launch.

CASE STUDY DISCUSSION QUESTIONS

1.Why did RMC think that older adults presented enough of a market opportunity to establish an entirely new program?

2.What information did RMC need to gather about this target population before the program could be established?

3.What information did RMC need to gather about this target population before the marketing campaign could be planned?

4.What were the different paths through which RMC attempted to reach the target audience?

5.Which marketing techniques did RMC use to reach the target population?

6.Why was internal marketing an important first step in marketing this new program?

Discussion Rubric: Undergraduate

Your active participation in the discussion forums is essential to your overall success this term. Discussion questions are designed to help you make meaningful
connections between the course content and the larger concepts and goals of the course. These discussions offer you the opportunity to express your own
thoughts, ask questions for clarification, and gain insight from your classmates’ responses and instructor’s guidance.

Requirements for Discussion Board Assignments
Students are required to post one initial post and to follow up with at least two response posts for each discussion board assignment.

For your initial post (1), you must do the following:

 Compose a post of one to two paragraphs.
 In Module One, complete the initial post by Thursday at 11:59 p.m.

Eastern Time.

 In Modules Two through Eight, complete the initial post by Thursday at
11:59 p.m. of your local time zone.

 Take into consideration material such as course content and other
discussion boards from the current module and previous modules, when
appropriate (make sure you are using proper citation methods for your
discipline when referencing scholarly or popular resources).

For your response posts (2), you must do the following:

 Reply to at least two different classmates outside of your own initial
post thread.

 In Module One, complete the two response posts by Sunday at 11:59
p.m. Eastern Time.

 In Modules Two through Eight, complete the two response posts by
Sunday at 11:59 p.m. of your local time zone.

 Demonstrate more depth and thought than simply stating that “I agree”
or “You are wrong.” Guidance is provided for you in each discussion
prompt.

Rubric

Critical Elements Exemplary Proficient Needs Improvement Not Evident Value

Comprehension Develops an initial post with an
organized, clear point of view or
idea using rich and significant detail
(100%)

Develops an initial post with a
point of view or idea using
adequate organization and
detail (85%)

Develops an initial post with a
point of view or idea but with
some gaps in organization and
detail (55%)

Does not develop an initial post
with an organized point of view
or idea (0%)

40

Timeliness Submits initial post on time
(100%)

Submits initial post one day late
(55%)

Submits initial post two or more
days late (0%)

10

Engagement Provides relevant and meaningful
response posts with clarifying
explanation and detail (100%)

Provides relevant response
posts with some explanation
and detail (85%)

Provides somewhat relevant
response posts with some
explanation and detail (55%)

Provides response posts that
are generic with little
explanation or detail (0%)

30

Writing
(Mechanics)

Writes posts that are easily
understood, clear, and concise
using proper citation methods
where applicable with no errors in
citations (100%)

Writes posts that are easily
understood using proper
citation methods where
applicable with few errors in
citations (85%)

Writes posts that are
understandable using proper
citation methods where
applicable with a number of
errors in citations (55%)

Writes posts that others are not
able to understand and does
not use proper citation
methods where applicable (0%)

20

Total 100%

  • Discussion Rubric: Undergraduate
    • Rubric

Healthcare Marketing CHAPTER

2

BASIC MARKETING CONCEPTS

This chapter introduces the basic marketing concepts used in healthcare and other industries. Standard marketing terminology is presented, and relationships between the concepts are outlined. Many of these concepts are foreign to healthcare, and some are problematic in the healthcare setting. However, these definitions lay the groundwork for an understanding of the marketing endeavor and help health professionals understand the language that marketers use. Most of the concepts considered in this chapter are addressed in more detail in later chapters.

Defining Fundamental Concepts and Terms

Authors of textbooks often dive straight into the intricacies of their subject matter without clearly defining the concepts with which they are working. They assume the reader already has an appreciation of the basics. This assumption is often not valid, and it is certainly not likely to be the case for those approaching healthcare marketing for the first time. For this reason, the fundamental concepts of marketing are presented here, along with a discussion of their applications in the healthcare arena.


Marketing


Marketing
 can be defined in a variety of ways. According to the 
American Marketing Association
, marketing is “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives” (Bennett 1995). Another definition depicts marketing as a management process that identifies, anticipates, and supplies customer requirements efficiently and profitably. Philip Kotler (1999), an early proponent of marketing in healthcare, defines marketing as a social and managerial process by which individuals and groups obtain what they need and want by creating and exchanging products and value with others.

The first definition provides some important information about marketing. First, marketing is a process, which implies that the marketing operation involves several systematic steps. The definition specifies planning as part of the process. In other words, marketing should not be done impulsively; the execution of a 
marketing campaign
 should be well thought out. This definition notes four components of the marketing process (elsewhere referred to as the “four Ps”): product, price, place, and promotion.


Products
 include the ideas, goods, or services an organization is promoting. Ideas may involve such concepts as a hospital’s image or the notion that pregnant women should receive prenatal care. 
Goods
 and 
services
 together are thought of as products. In healthcare, products include tangible goods (e.g., crutches, hospital beds, adhesive bandages) and intangible services (e.g., physical examinations, immunizations, cardiac catheterizations).

The economic aspect of the marketing transaction is demonstrated by the fact that an exchange is regarded as the end result of the marketing process. Thus, a physician offers medical services in exchange for money (directly from the patient or from a third party), a hospital offers physicians staff privileges in exchange for their admissions, and an insurance plan offers healthcare coverage in exchange for the insured’s premiums. All of these exchanges are facilitated through marketing at some level. Ultimately, the intent of marketing is to meet the goals of the organization (the seller) while, at the same time, meeting the needs of the customer (the buyer). Unless the goals of both parties are met, the marketing process is considered unsuccessful.


Healthcare Marketing

When marketing is extended to the healthcare field, not all components of the original definition fit comfortably, and the process must often be modified for application to the healthcare environment. While healthcare marketing is presumably meant to educate consumers about health issues and the resources that are available to them, it often has a self-serving dimension, in that it seeks to improve the market position of the organization doing the marketing. Healthcare marketers, however, may face restrictions that are not found in other industries. For example, healthcare providers may have limited ability to use price as a marketing tool because third-party payers are willing to pay only a specified amount, regardless of the provider’s fee. Or hospitals may be limited in their ability to change their location in response to consumer demand. Thus, one challenge for healthcare marketers is to adapt marketing principles to the unique characteristics of the healthcare industry. Exhibit 2.1 moves beyond the standard definitions and discusses what marketing really is.


Market

The concept of marketing implies the existence of a market. Initially, a 
market
 referred to a real or virtual setting in which potential buyers and potential sellers of goods or services came together for the purpose of exchange. In this sense, it refers to both function (a system for exchange) and form (a marketplace). The notion of a marketplace has been modified to refer to the individuals or organizations in a market that are potential customers. Thus, to marketers, a market is a set of people (or organizations) who have an actual or a potential interest in a good or service or, according to Kotler (1999), a set of actual and potential buyers of a product. Alternatively, a market is defined as a group of consumers who share some characteristic that affects their needs or wants and makes them potential customers for a good or service.

Markets are often thought of in terms of a 
market area
—that is, a geographic area containing the potential customers for a particular organization’s goods or services. Markets may also be defined in nongeographic terms and refer to segments of the population independent of geography. The market, however defined, is thought to generate a measurable level of market demand, which represents the total volume of a product or service likely to be consumed by specific groups of customers in a specified market area during a specified period. (Demand is a problematic concept in healthcare; chapter 7 is devoted to this topic.)

Marketing Functions

Now that the basic definitions are out of the way, it may be worthwhile to consider the actual functions of marketing in healthcare (or any other industry). The functions of marketing form a hierarchy, with the broad, big-picture functions at the top and the narrow-focused functions at the bottom. This section describes the types of marketing functions at the different levels of the hierarchy.


Enterprisewide Functions

The most expansive marketing operations carried out by a healthcare organization affect the entire enterprise (i.e., hospital, health system, health plan). At this level, marketers perform the following functions:

Conceptualizing the market. From the organization’s perspective, a marketer’s primary function is to conceptualize the market in which the organization operates. Conceptualization involves profiling the organization in terms of its attributes, determining the market it serves (and the characteristics of the market area population), assessing the environment in which healthcare functions, and determining how the organization relates to the market.

Determining strategic direction. The marketer’s functions include identifying the organization’s strategic vision (if one has been stated), examining the organization’s position in the market, and identifying opportunities in the marketplace. The marketer considers strategic options and chooses the approach that best fits the organization and the market it seeks to cultivate.

Supporting business goals. The marketer supports the organization’s business development by identifying segments of the market on which to focus, clarifying opportunities in the marketplace, determining the organization’s position in relation to its competitors, and assessing the nature of the services the market desires. A range of promotional techniques can be used to support this function.

Establishing a reputation. Some marketers would argue that the essence of marketing is building and enhancing an organization’s reputation. All organizations are assigned a reputation by the consuming public, whether they want one or not. Marketers are responsible for proactively creating a positive reputation, enhancing it through an integrated marketing approach, and protecting it against the efforts of competitors.


Operational Functions

Enterprisewide marketing addresses the needs of the organization through strategy development and reputation management. Marketing also supports narrower concerns related to the operations of the organization, as indicated by the following functions:

Performing marketing research. Marketing research provides the foundation for all other marketing functions. On an ongoing basis, the marketer should delineate the service area for the organization, specify the service area’s characteristics and population, and analyze the competition. Marketing research should identify opportunities in the market in terms of growing demand, underserved populations, and new product potential.

Developing a marketing plan. Health professionals often neglect to develop systematic plans for accomplishing their goals, and marketers sometimes have a tendency to rush into a marketing campaign without an overarching plan. The marketing plan should reflect the goals and objectives established by the organization, not just for marketing but also for overall organizational advancement. The marketer’s primary responsibility is to ensure that a well-conceived marketing plan is in place before any promotional activities are implemented.

Coordinating enterprisewide promotional efforts. One of the first things any marketer should do is identify all existing promotional efforts that are underway on the part of the organization. Existing marketing efforts should be evaluated and standards should be developed to ensure a consistent message across all promotional activities. The marketer should coordinate the marketing efforts of the entities in the organization and serve as a liaison between internal marketing efforts and external marketing resources.

Developing relationships. Many would argue that the primary goal of marketing is to develop relationships, which is also an area of emphasis in contemporary healthcare. Relationships may involve patients and other customers, referring physicians, health plans, business partners, government representatives, and a host of other entities with whom the healthcare organization needs to maintain relationships. The marketer has a key role in most aspects of developing and maintaining relationships.

Creating a marketing organization. Organizations’ marketing efforts often overlook their own employees. Healthcare organizations can establish a marketing mind-set among their employees through internal marketing, thereby turning every associate into a salesperson and creating a marketing organization. Ideally, every employee should have some marketing skills, and every decision should be made with marketing implications in mind. The marketer is responsible for ensuring that marketing is incorporated into the organization’s DNA.


Educational Functions

An important but sometimes overlooked function of marketing is educating the public. As indicated by the following list, providing information to existing and prospective customers, referring physicians, potential donors, and other constituent groups is a major responsibility of marketing professionals.

Educating patients and the general public. With the introduction of new products and the emergence of informed consumers, healthcare organizations must build awareness of their services and educate target audiences about their capabilities. Healthcare consumers have short attention spans, and the public must be continually reminded of the organization’s availability. For some, the educational function of marketing takes precedence over all other functions.

Providing information and referral resources. Healthcare organizations are considered an important resource for the community. Not only does marketing make consumers aware of the organization’s services, but also it fulfills the organization’s responsibility to educate the community regarding positive health behavior. In community after community, the most trusted healthcare organizations are those that are perceived as reliable sources of health information.

Enhancing visibility and corporate image. With the increasing standardization of healthcare services and a growing appreciation of reputation, healthcare organizations find it necessary to initiate marketing campaigns that improve top-of-mind awareness and distinguish them from their competitors. Consumers are bombarded by ever-increasing message “clutter,” and marketers must be able to communicate the organization’s message effectively to maintain a high level of visibility and promote a positive corporate image.

Differentiating the organization and its services. At a time when it is increasingly difficult for healthcare consumers to distinguish one healthcare organization from another, the marketer needs to impress upon the target audience how the organization is different from its competitors and why consumers should care about the difference. In the unlikely case that little or no differences exist, the marketer must make a creative case that establishes a competitive advantage.


Promotional Functions

Promotional activities are generally the first things that come to mind when the topic of marketing comes up. The following functions relate to the day-to-day activities of marketers in a healthcare setting:

Influencing consumer decision-making. With consumers now taking a more active role in healthcare decision-making, marketers have an unprecedented opportunity to make a case for their organization. After building awareness among consumers, the marketer’s next responsibility is to influence consumer behavior. Marketers should be sensitive to the stage of readiness of customer groups and implement marketing techniques accordingly.

Improving market penetration. Healthcare organizations faced with growing competition can use marketing as a means of increasing patient volumes and growing market share. With few new patients in many markets, marketing becomes critical for retaining existing customers and attracting competitors’ customers. Marketers are well positioned to identify opportunities in the marketplace and implement programs that will attract customers and increase market penetration. If the organization cannot establish a favorable position in the market, its competitors will dictate its position.

Increasing profit. On the surface, we might assume that the raison d’être for healthcare marketing should be to increase profits, and hence it should be first among marketing functions. However, the obvious conclusion may not be the most appropriate conclusion in healthcare, given the high proportion of not-for-profit organizations in the industry and the need to satisfy other goals in addition to bottom-line profits. More important is the need to perform a wide range of other functions before the profit motive can even be considered.

Winning awards versus being effective. Note that the previous statements say nothing about winning awards for marketing campaigns. For many marketing professionals who entered healthcare from other industries, the goal was to sponsor award-winning media campaigns that involved flashy promotional materials or television spots. Unfortunately, there appears to be little correlation between receiving accolades for marketing campaigns and the success of the organization being promoted. Decision makers and those paying for services in healthcare are less influenced by slick advertising campaigns than they are by the actual substance offered by the healthcare organization.

Marketing Techniques

The action dimension of marketing is embodied in the techniques marketers use to support the marketing functions. On a day-to-day basis, marketers are likely to pay less attention to the lofty goals of the marketing endeavor and more attention to concrete marketing activities. The techniques marketers use to achieve their objectives are summarized in this section and described in detail in chapters 11 and 12.


Public Relations


Public relations (PR)
 is a form of communication management that uses publicity and other forms of promotion and information to influence feelings, opinions, or beliefs about an organization and its products. The PR function is carried out through press releases, press conferences, distribution of feature stories to the media, public service announcements, and other publicity-oriented activities. In the past, healthcare organizations have used PR to manage crises and control damage, justify questionable actions, and explain negative events. Over time, however, PR has been cast in a more proactive light as healthcare organizations have come to appreciate the benefits of a strong PR program.


Communication

Large healthcare organizations typically establish mechanisms for communicating with their stakeholders (internal and external). Communications staff develops materials to disseminate to the public and to the employees of the organization, generates internal newsletters and publications geared to relevant customer groups (e.g., patients, enrollees), and develops patient education materials. Separate communications departments may be established, or this function may overlap with the public relations or community outreach functions. Marketers expend a great deal of effort in determining the best approaches to communication. Exhibit 2.2 discusses 
communication
 concepts applied to healthcare marketing.

EXHIBIT 2.2 Communication Theories in Marketing

Communication refers to the transmission or exchange of information and implies the sharing of meaning among those who are communicating. Students of marketing have expended considerable effort on specifying models of communication that relate to the marketing process. Communication in marketing may be directed at (1) initiating actions; (2) making needs and requirements known; (3) exchanging information, ideas, attitudes, and beliefs; (4) advancing understanding; or (5) establishing and maintaining relations.

Communication in marketing can occur in a variety of ways:

Face-to-face communication includes formal meetings, interviews, and informal contact.

Oral communication includes telephone contact, public address systems, and video conferencing systems.

Written communication includes letters (external), memoranda (internal), e-mails, reports, forms, notice boards, journals, bulletins, newsletters, and manuals.

Visual communication includes charts, films, slides, videos, and video conferencing.

Electronic communication includes internet chat, voice mail, and electronic data interchange.

A number of communication models have been developed for application to marketing, and Berkowitz (2016) has adapted one of these models for healthcare. According to Berkowitz, this marketing communication model has nine components in healthcare. An understanding of each of these components is important for effective marketing communication.

1.Sender. The sender is the party sending the message to the other party. Also referred to as the communicator or the source, the sender is the “who” of the process and takes the form of a person, company, or spokesperson for someone else.

2.Message. The message is the combination of symbols and words the sender wishes to transmit to the receiver. The message is the “what” of the process and indicates the content the sender wants to convey.

3.Encoding. Encoding is the process of translating the meaning of the message into symbolic form (e.g., words, signs, sounds). At this point, a concept is converted into something transmittable.

4.Channel. The channel is the means used to deliver a marketing message from sender to receiver. The channel is the “how” of the process and connects the sender to the receiver.

5.Receiver. The receiver is the party receiving the message, also known as the audience or the destination. Marketing efforts are directed toward a receiver.

6.Decoding. Decoding refers to the process carried out when the receiver converts the “symbols” transmitted by the sender into a form that makes sense to him or her. This process assumes that the receiver is using the same basis for decoding that the sender used for encoding.

7.Response. Response refers to the receiver’s reaction to the message. At this point, the effect of the message is gauged in terms of the meaning the receiver attaches to it.

8.Feedback. Feedback refers to the aspect of the receiver’s response that the receiver communicates back to the sender. The type of feedback depends on the channel, and the effectiveness of the effort is gauged in terms of the feedback.

9.Noise. Noise refers to any factor that prevents the receiver from decoding a message in the way the sender intended. Noise can be generated by the sender, the receiver, the message, the channel, the environment, and so forth.

The marketing communication process could be unsuccessful for any number of reasons. Factors that might influence this process include selective attention of the receiver, selective distortion by the receiver (i.e., changing the message to fit preconceptions), selective recall (i.e., the receiver absorbs only part of the message), and message rehearsal (i.e., the message reminds the receiver of related issues that tend to distract from the point of the message).

Communication experts indicate that effective communication requires certain attributes: It must contain value for the receiver; be meaningful, relevant, and understandable; and be transmittable in a few seconds. Further, the communication must lend itself to visual presentation, if possible; be relevant to the lives of everyday people; and stimulate the receiver emotionally. Marketing communication must also be interesting, entertaining, and stimulating.

Source: Adapted from Berkowitz (2016).


Community Outreach


Community outreach
 is a form of marketing that seeks to present the organization’s programs to the community and establish relationships with community organizations. Community outreach may involve episodic activities, such as health fairs or educational programs for community residents, or it may involve ongoing initiatives carried out by outreach workers who are visible in the community. This aspect of marketing emphasizes the organization’s commitment to the community and its support of local organizations. Community outreach initiatives seek to generate word-of-mouth publicity for the organization or its services.


Government Relations

Long before most healthcare organizations considered incorporating a formal marketing function, they were involved in 
government relations
 activities. Healthcare organizations are typically regulated by state and federal government agencies. Decisions related to adding, eliminating, or changing a service may be constrained by government regulations, and the reimbursement available to healthcare providers may be controlled by government agencies. Not-for-profit organizations must continually demonstrate that they deserve their tax-exempt status. For these reasons, healthcare organizations must maintain discourse with a variety of government agencies, cultivate relationships with politicians and other policymakers, and often initiate lobbying activities directed toward different levels of government.


Networking


Networking
 involves developing and nurturing relationships with individuals and organizations with which mutually beneficial transactions can be carried out. Physicians and other clinicians—who, until recently, would never deign to advertise—actively network with their colleagues. Networking may take the form of a specialist casually running into potential referring physicians in social situations or a hospital administrator attending meetings that involve potential clients, partners, or referral agents. Networking is particularly effective when dealing with parties who are reluctant to provide “face time” or when one prefers an informal setting involving personal interaction for getting to know prospective business associates.


Sales Promotion


Sales promotion
 involves any activities or materials that act as a direct inducement to customers by offering added value to a product. Sales promotions are more likely to be associated with the sale of consumer health products (e.g., rebates) or business-to-business healthcare sales (e.g., low-interest financing) than with the provision of health services. The sales promotion mix might involve health fairs and trade shows, exhibits, demonstrations, contests and games, premiums and gifts, rebates, low-interest financing, and trade-in allowances. Sales promotion is separate from, but often an adjunct to, personal sales.


Advertising

Advertising refers to any paid form of nonpersonal presentation or promotion of ideas, goods, or services by an identifiable sponsor transmitted through mass media for the purpose of achieving marketing objectives. The advertising mix might include print advertisements, electronic advertisements, mailings, catalogs, brochures, posters, directories, outdoor advertisements, and displays. These activities are organized in the form of an advertising campaign that involves designing a series of advertisements and placing them in advertising media to reach a target market.


Personal Sales


Personal sales
 involve the presentation of promotional material in a conversation with one or more prospective purchasers for the purpose of making sales. The salesperson attempts to foster a mutually profitable economic exchange between buyer and seller through interpersonal contact. The success of personal sales depends on the seller’s ability to communicate the product’s qualities and its benefits for the buyer. Personal sales might encompass sales presentations, sales meetings, incentive programs, distribution of samples, and participation in health fairs and trade shows.


Database Marketing


Database marketing
 involves establishing and exploiting data on past and current customers and future prospects in a way that allows effective marketing strategies to be implemented. Database marketing can be used for any purpose that can benefit from access to customer information. These functions may include evaluating new prospects, cross-selling related products, launching new products to potential prospects, identifying new distribution channels, building customer loyalty, converting occasional users to regular users, generating inquiries and follow-up sales, and establishing niche marketing initiatives. The database established for this purpose often provides the basis for customer relationship management and may be an integral part of an organization’s call center.


Direct Marketing


Direct marketing
 targets groups or individuals with specific characteristics and transmits promotional messages straight to them. These promotional activities may take the form of direct mail or telemarketing as well as other approaches aimed at specific individuals. Increasingly, the internet is being used for direct marketing. An advantage of direct marketing is that the message can be customized to meet the needs of target populations.


Customer Relationship Management


Customer relationship management (CRM)
 is a business strategy designed to optimize profitability, revenue, and 
customer satisfaction
 by focusing on relationships rather than transactions. Although long used in other industries, CRM is relatively new to healthcare. The industry’s lack of focus on customer characteristics and its limited data management capabilities have slowed the acceptance of CRM in healthcare. However, the new market-driven environment is encouraging healthcare organizations to develop and use customer databases.


Social Marketing

In healthcare, 
social marketing
 involves applying commercial marketing techniques to influence the attitudes, knowledge, and behavior of target audiences related to the improvement of individual and community health status. Social marketing differs from other types of marketing only with respect to the objectives of marketers and their organizations. Social marketers seek to influence social behaviors for the benefit of their target audience and general society, not for the benefit of the marketing organization. In contrast to the top-down approach of traditional marketing, social marketers listen to the needs and desires of the target audience and build the marketing campaign from the bottom up.

Case study 2.1 describes a marketing campaign that used a variety of marketing techniques.

CASE STUDY 2.1

Capturing the “Older Adult” Market

Many healthcare organizations came to see the aging of the baby boom generation as an opportunity to expand their services. Regional Medical Center (RMC, a fictional organization on which this case study is based) responded to this opportunity by establishing a service line devoted to older adults. The intent was to capture the business—and the loyalty—of this large, relatively affluent, and increasingly needy segment of the population. The service line was designed to meet the emerging needs of this population for specialty services such as cardiology, orthopedics, ophthalmology, and urology in a way that would be appealing to this relatively demanding consumer segment.

Because this service was considered innovative in the community served by RMC, an aggressive promotional campaign was undertaken. RMC’s marketing department considered a wide range of marketing options and decided on a multipronged campaign to approach the target population from a variety of directions. The first phase of the promotional campaign focused on internal marketing. It was important that RMC’s employees be familiar with this new program and be able to articulate its merits to potential customers. Many of the customers for the new program were likely to be existing patients of RMC.

Well before the new program was scheduled to open for enrollment, an aggressive PR campaign was initiated. Press releases were distributed, articles were prepared for local publications and professional journals, and celebrity spokespeople were lined up. Simple yet attractive 
collateral materials
 (e.g., business cards, letterhead, envelopes, brochures) were developed for distribution to prospective customers and to referral agents who might channel customers to RMC. Information was distributed to providers and organizations that might serve other needs of the target population, and the community’s major insurance plans were made aware of the new program and its benefits. Tours of the facility housing the new program were provided to key constituents (e.g., referring physicians and health plan representatives), and open houses were scheduled for both medical professionals and the general public.

The marketing initiative also involved direct solicitation of members of the target population. RMC extracted data from its internal database on existing customers and purchased mailing lists of households that included members aged 50 to 65. Using the findings from previous research on the “buttons to push” in this age cohort, marketing staff prepared materials that would appeal to the particular needs of older adults. The address lists were then used to mail materials directly to targeted individuals.

While RMC did not want to rely on expensive media advertising for attracting customers, its marketers felt that some media presence was necessary—not only to attract customers who might be missed through the direct mail campaign but also to make the general public aware of this new program. In some cases, other family members might be making decisions for the older adult population, and awareness of this program on the part of the general public was considered important. After careful research on the communication attributes of family caregivers, a series of newspaper, radio, and television advertisements were produced. These advertisements were placed in the sections of the local newspaper that members of this age group read, aired on the radio stations they preferred, and presented on the television channels they viewed most often. For the electronic media, particular attention was paid to the time of day and day of the week members of the target population were expected to be engaged.

The success of RMC’s new older adult service line during the first year exceeded the expectations of the organization’s administrators. While it was difficult to determine which of the promotional techniques used had the most impact on the program’s early success, the marketing staff concluded, on the basis of its evaluation of the campaign, that it was the integrated approach—a variety of coordinated activities—that led to the successful program launch.

CASE STUDY DISCUSSION QUESTIONS

1.Why did RMC think that older adults presented enough of a market opportunity to establish an entirely new program?

2.What information did RMC need to gather about this target population before the program could be established?

3.What information did RMC need to gather about this target population before the marketing campaign could be planned?

4.What were the different paths through which RMC attempted to reach the target audience?

5.Which marketing techniques did RMC use to reach the target population?

6.Why was internal marketing an important first step in marketing this new program?

Marketing Approaches

Marketers employ marketing strategies that reflect the audience they are soliciting. A campaign aimed at the general population will involve a different approach from one targeting a population subgroup. Depending on the circumstances, the approach may include mass marketing, target marketing, or micromarketing.


Mass Marketing


Mass marketing
 involves the development of generic messages that are widely broadcast to the entire service area. No attempt is made to target specific audiences, identify likely best customers, or tailor the message to a particular subgroup. This approach involves the use of mass media (e.g., newspaper, radio, television) to blanket the market area. The message has to be general and typically touts the merits of the organization rather than any specific services.

Hospitals’ use of mass marketing in the past reflected their desire to promote the organization overall (rather than specific services) and their belief that they could be all things to all people. No attempt was made to distinguish between different segments of the population, and only the crudest distinction based on geography was made between markets. This type of approach is effective at disseminating a small amount of information to a large number of people, and it can be useful when marketing a basic product that appeals to a homogenous audience.


Target Marketing


Target marketing
 refers to marketing initiatives that focus on a market segment to which an organization desires to offer goods or services. Target marketing stands in contrast to mass marketing, which aims promotional efforts at the total market. Target markets in healthcare may be defined on the basis of geography, demographics, lifestyle, insurance coverage, usage rate, and other customer attributes. Thus, target marketing is likely to involve the use of customer segmentation systems.

As healthcare marketing has matured as a routine function of healthcare organizations, the emphasis has shifted from mass marketing to target marketing. Target marketing, it could be argued, represents a more advanced approach to customer engagement since it identifies segments of the population, profiles these segments, and implements marketing initiatives geared to the attributes of the specific segments.


Micromarketing


Micromarketing
 is a form of target marketing. Companies that use micromarketing tailor their marketing programs to the needs and wants of consumers narrowly defined in terms of geography, demographics, psychographics, or the benefits they desire. Customers and potential customers are identified at the household or individual level and directly marketed to using customized communication techniques. Micromarketing is most effective when marketers want to reach consumers with a narrow range of attributes.

Healthcare Products and Audiences

The definition of marketing offered at the beginning of this chapter refers to the promotion of ideas, goods, or services. (The term product, used throughout this text, is sometimes used interchangeably with service.) The product to be marketed in healthcare is often difficult to specify, unlike the products of other industries. Most of what healthcare organizations offer takes the form of services, and unlike goods, they tend to be harder to precisely describe.

In addition, the nature of the product in healthcare has changed dramatically over the past couple of decades. Twenty years ago, one could define the product simply as a medical procedure, an orthotic device to correct a physical disability, or a consumer health product. In today’s climate, healthcare products include not only these traditional products but also prepaid health insurance plans offered by health maintenance organizations or a group purchasing contract offered by a provider network. (The nature of healthcare products is discussed further in chapter 6.)

Many healthcare organizations offer a variety of products to their customers. Certainly, the hospital is an example of an organization that offers a wide range of services and goods. A major hospital offers hundreds, if not thousands, of different procedures. In addition, hospitals offer a variety of goods (in the form of drugs, supplies, and equipment) that are charged to the customer. An organization’s product mix can be described in terms of the combination of ideas, goods, and services it offers.


Healthcare Products

Ideas

Much of what healthcare organizations promote takes the form of ideas—intangible concepts that are intended to convey a perception to the consumer. The organization’s image is an idea that is likely to be conveyed through marketing activities. The organization may want to promote the perception of quality care, professionalism, value, or some other subjective attribute. The development of a brand, for example, involves the marketing of an idea. The intent is to establish a mind-set that places the organization at the top of the consumer’s mind on the assumption that familiarity will encourage consumer action.

When healthcare organizations first incorporated advertising, most of the attention was focused on promoting ideas. In particular, early marketers attempted to promote the organization’s image and establish it as the preferred provider in its market. Although the trend has shifted away from image advertising and toward service advertising, many healthcare organizations continue to market ideas to their target audiences.

Goods

For the purposes of this text, products can refer to goods or services. Goods are tangible products typically purchased in an impersonal setting on a one-at-a-time basis. The purchase of goods tends to be a one-time transaction, while the purchase of services may be fulfilled in an ongoing process. Although healthcare is generally perceived in terms of a service, the sale of goods is ubiquitous in the industry. Consumer health products (e.g., soap, condoms, toothpaste) are household products. Pharmaceuticals—whether prescription or over the counter—are purchased by nearly everyone at some point. Consumers are even gaining access to home-testing kits (e.g., pregnancy and ovulation tests) and therapeutic equipment (e.g., hearing aids), and the sale or rental of durable medical equipment (e.g., wheelchairs) is a major industry. Even in a hospital setting, the bill for care is likely to include a number of goods among the itemized charges.

Services

Relative to goods, services are difficult to conceptualize. Services (e.g., physical examinations) are intangible in that they do not take the concrete form of goods (e.g., drugs). Services are more difficult to quantify, and consumers evaluate them differently than tangible products. Because services are often more personal (especially in the case of healthcare), they are likely to be assessed in subjective rather than objective terms. They are variable in that they cannot be subjected to the quality controls placed on goods but reflect the variations that characterize the human beings who provide the services. They are inseparable from the producer in that they are dispensed on the spot without separation from the provider. They are perishable in that they cannot be stored and, once provided, have no residual value. Finally, they defy ownership rules in that, unlike goods, they do not involve transfer of tangible property from the seller to the buyer.


Healthcare Audiences

Consumers


Consumer
, as the term is usually used in healthcare, refers to any individual or organization that is a potential purchaser of a healthcare product. (This definition differs from the more economics-based notion of a consumer as the entity who actually uses the product.) Theoretically, everyone is a potential consumer of health services; consumer research, for example, is generally aimed at the public at large. The consumer is often the end user of a good or service but may not necessarily be the purchaser. The term 
consumer behavior
 refers to the utilization patterns and purchasing practices of the population of a market area.

Customers

In healthcare, the 
customer
 is typically thought of as the actual purchaser of goods or services. Although a patient may be a customer for certain goods and services, the 
end user
 (e.g., the patient) is often not the customer. Someone else may make the purchase on behalf of the patient. Further, treatment decisions may be made by someone other than the patient. For this reason, hospitals and other complex healthcare organizations are likely to serve a range of customers, including patients, referral agents, admitting physicians, employers, and a variety of other parties who may purchase goods or services from the organization. For this reason, the customer identification process in healthcare is more complicated than it is in other industries.

Clients


client
 is a type of customer that consumes services rather than goods. A client relationship implies personal (rather than impersonal) interaction and an ongoing relationship (rather than a single encounter). Professionals typically have clients, whereas retailers have customers or purchasers. The relationships between service providers and clients are likely to be more symmetrical than the relationships between service providers and patients, who are typically dependent on and powerless relative to the service provider. Many also believe the term client implies more respect than the term patient.

Patients

Although the word 
patient
 is used loosely in informal discussion, a patient is someone who has been defined as sick by a physician. This definition almost always implies formal contact with a clinical facility (e.g., physician’s office, hospital). Technically, a symptomatic individual does not become a patient until a physician officially designates the individual as such, even if the prospective patient has consumed over-the-counter drugs and taken other measures for self-care. Under this scenario, an individual remains a “patient” until discharged from medical care.

Nonphysician clinicians may treat patients, but because they do not provide medical services, they are discouraged from using the term. For example, behavioral health counselors are likely to refer to their patients as clients. Dependent practitioners, who work under the supervision of physicians (e.g., physical therapists), however, are likely to define their charges as patients.

Enrollees

Although health insurance plans have historically called their customers 
enrollees
, use of this term has only recently become common among healthcare providers. However, with the ascendancy of managed care as a major force in healthcare, other healthcare organizations began to adopt this term. Thus, providers who contracted to provide services for members of a health plan began to think in terms of enrollees. This shift in nomenclature is significant because enrollees and patients have different attributes. Enrollees may also be referred to as membersinsureds, or covered lives.

Exhibit 2.3 discusses how different definitions of healthcare customers have implications for the operation of the system.

EXHIBIT 2.3 What’s in a Name: Implications of Redefining the Patient

Adevelopment in healthcare that has had significant implications for marketing is the redefinition of health services users. The historical term patient is being replaced by the terms clientconsumer, and customer. Although the nomenclature has changed to reflect the different parties that deal with the patient, this redefinition represents a paradigm shift in the health system’s orientation toward the health services user.

Patient refers to a person who is formally under the care of a physician. Although other clinicians may also refer to their charges as patients, the term implies that a symptomatic person has been formally diagnosed as sick and now takes on a new set of attributes. Conceptually, a patient is more clearly differentiated from a nonpatient than, for example, a customer is from a noncustomer.

The patient role (also referred to as the “sick role”), like any social role, involves certain characteristics. Someone in this role is considered to be “abnormal” and thus different in important ways from other people. The patient role implies a degree of helplessness and a state of dependence on clinicians and health facilities. It also implies a condition of relative powerlessness and an inability to take an active part in the therapeutic process. A patient is also typically characterized by a relative lack of knowledge concerning the situation in question. The patient remains in this role until officially discharged by a physician.

A client is similar to a patient in many ways. In the healthcare context, a client is a patient of a nonphysician. Outside of healthcare, a client is someone who uses the services of a professional, and certain health professionals—such as mental health professionals, social workers, and other nonmedical personnel—may refer to their customers as clients.

The difference between patients and clients extends well beyond the professionals involved. Clients have a more symmetrical power relationship with their service providers than patients do with their doctors. Clients are not typically thought of as being dependent to the extent that patients are, and clients can fire their providers much more readily than patients can fire their doctors. Thus, clients are theoretically less dependent, more involved in the decision-making process, and more knowledgeable about the issue at hand than patients are. Ultimately, clients have more control over their situation than patients do.

As healthcare became more marketing oriented, terms such as consumer and customer were introduced. Although purists may consider the use of these terms a sacrilege, the fact is that—like it or not—patients are steadily taking on the characteristics of consumers and customers, not because of redefinition by marketers but because of the dramatic changes that have occurred in healthcare.

For the purposes of this text, a consumer is anyone who has the potential to purchase a healthcare good or service. In other industries, a consumer is often thought of as the end user of the product, but this is not necessarily a comfortable concept in healthcare. From a marketing perspective, anyone could be considered a consumer because nearly everyone is a potential user of health services. Whereas patients or clients are effectively under the direction, if not control, of health professionals, consumers are thought to independently determine the choices they make regarding health services. Thus, the consumer decision-making process is referred to more often than the patient decision-making process, which implies that the consumer is objectively evaluating health services options and making choices based on a variety of factors.

A customer, on the other hand, is a consumer who is currently using a good or service. For whatever reason, the customer has chosen to purchase a healthcare product. In many cases, this definition may be synonymous with the concept of patient, but from a marketing perspective, customers are thought of in different terms.

Unlike a patient (even if it is the same person), a customer is someone who is knowledgeable about the available options and has made a rational choice to consume particular goods or services. A customer is considered to be more independent and assertive than a patient and is likely to have expectations that differ from those of a patient. A patient might be concerned about humane treatment and effective outcomes, whereas a customer is also likely to expect fast and efficient service, convenient location, respectful treatment by practitioners, value for the money, and a meaningful role in the process.

This new patient-customer is having a major impact on the healthcare system, and the baby boom generation now coming to dominate the patient pool epitomizes the patient-customer. This person wants the outcomes of the healthcare system (as a patient does) as well as the benefits of being a customer. This development not only has implications for the delivery of care but also is important from a marketing perspective. Marketers solicit customers and patients in different ways. Customers and patients bring different traits to the examination room and use different criteria for measuring their satisfaction with services.

Healthcare marketers must be able to recognize the differences among the users of health services and adapt marketing approaches accordingly. Clearly, the marketing approach, the message, the medium, and the means of evaluation will differ depending on whether the marketer is addressing patients, clients, consumers, or customers.

The Four Ps of Marketing

The 
marketing mix
 is the set of controllable variables that an organization involved in marketing uses to influence the target market. The mix includes product, price, place, and promotion. These four Ps have long been the basis for marketing strategy in other industries and are increasingly being considered by healthcare organizations. However, these aspects of the marketing mix do not necessarily have the same meaning for health professionals as they do for marketers in other industries.


Product

As discussed earlier, the product of healthcare represents what healthcare providers are marketing. Because it takes the form of ideas, goods, or services, the product is difficult to precisely define in healthcare, which creates a challenge for healthcare marketers. For example, if a psychiatric problem is being treated with drugs (a good), the product is easy to specify (e.g., how many pills of how much dosage per day). If the same condition is being treated through counseling (a service), the description of the product is not as precise or standardized (e.g., an unpredictable number of counseling sessions).

In the past, healthcare providers seldom gave much thought to the product concept. A surgical procedure was considered just that and not something that had to be packaged. Today, however, the design of the product, its perceived attributes, and its packaging are all becoming more important concerns for healthcare providers and healthcare marketers.


Price


Price
 refers to the amount charged for a product, including the fees, charges, premium contributions, deductibles, copayments, and other out-of-pocket costs to consumers of health services. In economic terms, price is thought of in terms of an exchange. In other words, a healthcare provider offers a service in exchange for its customers’ dollars. An employee paying an annual premium to a health plan, an insurance company reimbursing a physician’s fee, or a consumer purchasing over-the-counter drugs are all exchanges involving a price. The price to the customer could also include the pain, discomfort, embarrassment, anxiety, frustration, and other emotional costs of dealing with providers, plans, and the disease or injury that prompted the experience. An obvious objective of marketing is to convince consumers that they will receive benefits for the price they pay.

Given the financing structure in healthcare, price has not historically been a basis for competition. The issue of pricing for health services is a growing concern for marketers as the healthcare environment changes, and a number of factors are increasing the role of the pricing variable in developing a marketing strategy. For marketers, the challenge is understanding what a customer is willing to exchange for some want-satisfying good or service and developing a pricing approach compatible with the organization’s goals and cost constraints.


Place


Place
 represents the way goods or services are distributed for consumer use. Place relates to all factors of the transaction or relationship experience that make it easy, rather than difficult, for consumers to obtain an organization’s products. The obvious factors of location and layout are included, and so are hours, access, obstacles, waits for appointments, claims payment, and so on. In most cases, negative place aspects of an encounter impose such costs as lost time, frustration in finding the service site, a parking fee, boredom, or other emotional burden. Positive place aspects usually nullify such costs. For example, when a physician offers early morning or evening hours, patients can obtain care on their way to or from work and thus avoid having to take time off from their jobs.

In some cases, place factors may enhance perceptions of the product’s quality, as when the physician’s office or hospital is in a trendy location or on a campus that facilitates efficient treatment. Systems or health plans may speed up scheduling by allowing patients to make appointments online. The electronic storage of and online accessibility to medical records have added a different dimension to the concept of place. Allowing patients to sign up for health plans, check their status, and make benefit changes online at a workplace kiosk or at a home computer adds value to place.


Promotion

For many people, 
promotion
 has historically meant advertising, and advertising has meant marketing. Promotion includes any means of informing the marketplace that the organization has developed a response to meet its needs. Promotion involves a range of tactics involving publicity, advertising, and personal selling.

Promotion covers all forms of marketing communication and includes materials that deliver content in addition to those that foster transactions. For example, health plans can devise communications that help new members better understand their coverage, thereby enabling them to use their health plan more effectively. Providers can advise new patients on how to avoid place frustrations and costs, and address symptoms and concerns online before appointments to improve quality and patient satisfaction. The 
promotional mix
 describes the combination of techniques used by the marketer to achieve promotional goals.


Applying the Four Ps

Many observers find applying the traditional four Ps of the marketing mix to healthcare problematic. Some believe these dimensions of marketing are inappropriate for a service-oriented industry such as healthcare. The uncomfortable fit between the four Ps of marketing and healthcare has even led some to pronounce the death of the four Ps and suggest their replacement with some other, more appropriate model for healthcare. Indeed, in today’s competitive environment, some contend that additional Ps should be added to the list. Exhibit 2.4—written by Brian Tracy (2008)—presents the seven Ps, an update of the four Ps. These seven Ps may be more applicable or comprehensive for healthcare marketing purposes.

EXHIBIT 2.4 The 7 Ps of Marketing

Once you’ve developed your marketing strategy, there is a “Seven P Formula” you should use to continually evaluate and reevaluate your business activities. These seven are: product, price, promotion, place, packaging, positioning and people. As products, markets, customers and needs change rapidly, you must continually revisit these seven Ps to make sure you’re on track and achieving the maximum results possible for you in today’s marketplace.

PRODUCT

To begin with, develop the habit of looking at your product as though you were an outside marketing consultant brought in to help your company decide whether or not it’s in the right business at this time. Ask critical questions such as, “Is your current product or service, or mix of products and services, appropriate and suitable for the market and the customers of today?”

Whenever you’re having difficulty selling as much of your products or services as you’d like, you need to develop the habit of assessing your business honestly and asking, “Are these the right products or services for our customers today?”

Is there any product or service you’re offering today that, knowing what you now know, you would not bring out again today? Compared to your competitors, is your product or service superior in some significant way to anything else available? If so, what is it? If not, could you develop an area of superiority? Should you be offering this product or service at all in the current marketplace?

PRICE

The second P in the formula is price. Develop the habit of continually examining and reexamining the prices of the products and services you sell to make sure they’re still appropriate to the realities of the current market. Sometimes you need to lower your prices. At other times, it may be appropriate to raise your prices. Many companies have found that the profitability of certain products or services doesn’t justify the amount of effort and resources that go into producing them. By raising their prices, they may lose a percentage of their customers, but the remaining percentage generates a profit on every sale. Could this be appropriate for you?

Sometimes you need to change your terms and conditions of sale. Sometimes, by spreading your price over a series of months or years, you can sell far more than you are today, and the interest you can charge will more than make up for the delay in cash receipts. Sometimes you can combine products and services together with special offers and special promotions. Sometimes you can include free additional items that cost you very little to produce but make your prices appear far more attractive to your customers.

In business, as in nature, whenever you experience resistance or frustration in any part of your sales or marketing activities, be open to revisiting that area. Be open to the possibility that your current pricing structure is not ideal for the current market. Be open to the need to revise your prices, if necessary, to remain competitive, to survive and thrive in a fast-changing marketplace.

PROMOTION

The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the ways you tell your customers about your products or services and how you then market and sell to them. Small changes in the way you promote and sell your products can lead to dramatic changes in your results. Even small changes in your advertising can lead immediately to higher sales. Experienced copywriters can often increase the response rate from advertising by 500 percent by simply changing the headline on an advertisement.

Large and small companies in every industry continually experiment with different ways of advertising, promoting, and selling their products and services. And here is the rule: Whatever method of marketing and sales you’re using today will, sooner or later, stop working. Sometimes it will stop working for reasons you know, and sometimes it will be for reasons you don’t know. In either case, your methods of marketing and sales will eventually stop working, and you’ll have to develop new sales, marketing and advertising approaches, offerings, and strategies.

PLACE

The fourth P in the marketing mix is the place where your product or service is actually sold. Develop the habit of reviewing and reflecting upon the exact location where the customer meets the salesperson. Sometimes a change in place can lead to a rapid increase in sales.

You can sell your product in many different places. Some companies use direct selling, sending their salespeople out to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through catalogs or mail order. Some sell at trade shows or in retail establishments. Some sell in joint ventures with other similar products or services. Some companies use manufacturers’ representatives or distributors. Many companies use a combination of two or more of these methods.

In each case, the entrepreneur must make the right choice about the very best location or place for the customer to receive essential buying information on the product or service needed to make a buying decision. What is yours? In what way should you change it? Where else could you offer your products or services?

PACKAGING

The fifth element in the marketing mix is the packaging. Develop the habit of standing back and looking at every visual element in the packaging of your product or service through the eyes of a critical prospect. Remember, people form their first impression about you within the first 30 seconds of seeing you or some element of your company. Small improvements in the packaging or external appearance of your product or service can often lead to completely different reactions from your customers.

Packaging refers to the way your product or service appears from the outside. Packaging also refers to your people and how they dress and groom. It refers to your offices, your waiting rooms, your brochures, your correspondence and every single visual element about your company. Everything counts. Everything helps or hurts. Everything affects your customer’s confidence about dealing with you.

POSITIONING

The next P is positioning. You should develop the habit of thinking continually about how you are positioned in the hearts and minds of your customers. How do people think and talk about you when you’re not present? How do people think and talk about your company? What positioning do you have in your market, in terms of the specific words people use when they describe you and your offerings to others?

In the famous book by Al Reis and Jack Trout, Positioning, the authors point out that how you are seen and thought about by your customers is the critical determinant of your success in a competitive marketplace. Attribution theory says that most customers think of you in terms of a single attribute, either positive or negative. Sometimes it’s “service.” Sometimes it’s “excellence.” Sometimes it’s “quality engineering,” as with Mercedes Benz. Sometimes it’s “the ultimate driving machine,” as with BMW. In every case, how deeply entrenched that attribute is in the minds of your customers and prospective customers determines how readily they’ll buy your product or service and how much they’ll pay.

Develop the habit of thinking about how you could improve your positioning. Begin by determining the position you’d like to have. If you could create the ideal impression in the hearts and minds of your customers, what would it be? What would you have to do in every customer interaction to get your customers to think and talk about you in that specific way? What changes do you need to make in the way you interact with customers today to be seen as the very best choice for your customers of tomorrow?

PEOPLE

The final P of the marketing mix is people. Develop the habit of thinking in terms of the people inside and outside of your business who are responsible for every element of your sales and marketing strategy and activities.

It’s amazing how many entrepreneurs and businesspeople will work extremely hard to think through every element of the marketing strategy and the marketing mix, and then pay little attention to the fact that every single decision and policy has to be carried out by a specific person in a specific way. Your ability to select, recruit, hire and retain the proper people, with the skills and abilities to do the job you need to have done, is more important than everything else put together.

In his best-selling book, Good to Great, Jim Collins discovered the most important factor applied by the best companies was that they first of all “got the right people on the bus, and the wrong people off the bus.” Once these companies had hired the right people, the second step was to “get the right people in the right seats on the bus.”

To be successful in business, you must develop the habit of thinking in terms of exactly who is going to carry out each task and responsibility. In many cases, it’s not possible to move forward until you can attract and put the right person into the right position. Many of the best business plans ever developed sit on shelves today because the people who created them could not find the key people who could execute those plans.

Source: Tracy (2008). Used with permission from Brian Tracy International: www.briantracy.com.

Other Marketing Processes

This section explains additional marketing concepts that are useful for readers to understand. Each of these concepts is addressed in greater detail later in the book.


Marketing Planning


Marketing planning
 may be defined as a systematic process for developing a plan for promoting an organization, service, or product. This straightforward definition masks the wide variety of activities and potential complexity that characterize marketing planning. Marketing planning may be limited to a short-term promotional project, or it may be a component of a long-term strategic plan. It can focus on a product, a service, a program, or an organization. The marketing plan should summarize a company’s marketing strategy and serve as a guide for all those involved in the company’s marketing activities.

Of the types of planning that could be carried out by a healthcare organization, marketing planning is most directly related to the customer. Marketing plans are, by definition, market driven, and they are single-minded in their focus on the customer. Whether the targeted customer is the patient, the referring physician, the employer, the health plan, or any number of other possibilities, the marketing plan is built around someone’s needs. Although a consideration of internal factors is often pertinent (and 
internal marketing
 may be a component of many marketing plans), the marketing plan focuses on the characteristics of the external market with the objective of affecting one or more of these characteristics.


Marketing Management


Marketing management
 refers to the analysis, planning, implementation, and control of programs designed to build and maintain beneficial exchanges with targeted buyers for the purpose of achieving organizational objectives. The steps involved in the marketing management process include (1) analyzing marketing opportunities, (2) selecting target markets, (3) developing the marketing mix, and (4) managing the marketing effort.

Although marketing management is a well-defined function in most industries, it is still in its infancy in healthcare. The fragmented approach to much of the marketing that has taken place and the immature status of marketing in healthcare are reflected in the slow development of marketing management skills.


Marketing Research


Marketing research
 is the function that links the consumer, customer, and public to the marketer through information. It is used to identify and define marketing opportunities and problems; to generate, refine, and evaluate marketing actions; to monitor marketing performance; and to improve understanding of the marketing process. Often used interchangeably with the term market research, it also encompasses product research, pricing research, promotional research, and distribution research. The marketing research process serves to identify the nature of the product or service, the characteristics of consumers, the size of the potential market, the nature of competitors, and any number of pieces essential to the marketing puzzle.

Summary

As the healthcare industry has come to accept marketing as a legitimate function, health professionals have been exposed to a new vocabulary—the language of the marketer. Because health professionals hold misconceptions about marketing, it is important to be on the same page when it comes to marketing terminology. Many marketing terms could be adopted by healthcare organizations unchanged, whereas others require modification based on the unique characteristics of healthcare.

Health professionals have many misperceptions about what marketing is and what its functions are. Marketing cannot be pigeonholed as advertising, direct mail, or any specific activity; it involves a whole range of activities—from conducting marketing research to evaluating a completed promotional campaign. Further, the functions of marketing are numerous and range from big-picture functions (e.g., determining the strategic direction of the health system) to highly focused functions (e.g., increasing participation in a patient education class).

The healthcare industry presents a challenge in the application of marketing techniques. The concept of market does not exist in healthcare as it does it other industries, health professionals do not think in terms of products, and the nature of the customer is highly complex. A change of health professionals’ mind-set is required for marketing to be effectively used in healthcare.

The traditional four Ps of marketing—product, price, place, and promotion—have been adapted to healthcare, although not without some limitations. All four are somewhat problematic when applied to healthcare because of the peculiar characteristics of the industry. As a result, attempts have been made to modify these components of the marketing mix or replace them with concepts that are more suitable to the healthcare environment.

Key Points

•The field of marketing has its own vocabulary with which health professionals must become familiar.

•The healthcare field can adopt many marketing concepts directly from other industries, but others must be modified to address the uniqueness of healthcare.

•Marketing should be viewed in the broadest possible light—not simply as a set of marketing tools but as a contributor to organizational development.

•Marketing serves a number of functions in healthcare, and healthcare administrators should be sensitive to the implications marketing has for different levels of the organization.

•A wide range of marketing techniques are available to marketers, and their choice of technique depends on the circumstances.

•The traditional four Ps of the marketing mix—product, price, place, and promotion—can be applied to healthcare with modifications.

•Marketing involves so much more than promotions and must consider such processes as marketing research, marketing planning, and marketing management.

Discussion Questions

1.Why is it difficult to directly apply the marketing approaches used in other industries to healthcare?

2.Why do many health professionals have misconceptions concerning the nature of marketing, and what are those misconceptions?

3.What is the distinction between goods and services, and what are the implications of this distinction for healthcare?

4.What is the role of marketing as it relates to the levels of the healthcare organization (e.g., senior managers versus product line managers)?

5.Which components of healthcare marketing have health professionals been comfortable with historically, and which techniques are gaining more acceptance today?

6.What factors have contributed to the conversion of the patient into a consumer, customer, or client, and what are the implications of this conversion for marketing?

7.What characteristics of healthcare make the four Ps of marketing difficult to apply directly to the healthcare organization?

Additional Resources

American Marketing Association: www.ama.org.

Berkowitz, E. N. 2016. Essentials of Healthcare Marketing, 4th ed. Sudbury, MA: Jones & Bartlett.

MarketingProfs: www.marketingprofs.com.

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