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

Learning Objectives • Define the following marketing terms: product; core, expected, and augmented product; 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.

Defining the Product Provided by Pharmacists Defining the Product Provided by Pharmacists

Defining a “product” as a tangible object Typically defined by nonmarketers as physical objects Defining a “product” as a tangible object Typically defined by nonmarketers as physical objects of value, such as a pill. For marketers, the tangible product is only a means of packaging a benefit. Many benefits come in intangible packages (e. g. , pure services such as drug information). People do not buy drugs. They buy the benefits that drugs can provide.

How marketers define “product” Anything satisfying a need or want Can be an object, How marketers define “product” Anything satisfying a need or want Can be an object, service, activity, person, place, organization, or idea This broad definition discourages focusing only on tangible objects (e. g. , drugs) Changes focus from tangible object to benefits received

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

Core product Definition -- benefits resulting from the overall product package It is what 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?

Marketing myopia Shortsightedness of marketers who become preoccupied with selling the tangible product while 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

Total product concept Core Product Expected Product Total product concept Core Product Expected Product

Expected product Definition –what the customer expects from the marketer Depends on the purchasing 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?

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

Augmented product (a. k. a. “differentiated”) Definition -- bundle of services that accompany the Augmented product (a. k. a. “differentiated”) Definition -- bundle of services that accompany the tangible product Used to differentiate one’s product package from competitors Anything provided that is more than that expected by the customer is “augmented” List some ways that pharmacists augment the core product.

Example: Aspirin Tangible Core Expected Augmented Example: Aspirin Tangible Core Expected Augmented

Medication therapy management services Tangible Core Expected Augmented Medication therapy management services Tangible Core Expected Augmented

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

Background Many pharmacists and students can’t clearly explain the difference between pharmaceutical care and 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.

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

Limitations of OBRA ’ 90 Focuses on tangible products Addresses only flagrant drug-related problems 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

Pharmaceutical care/MTM Assistance with drug therapy individualized to patient need Detects, prevents, and minimizes 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

Services not covered by OBRA ’ 90 Consultations with patients, prescribers, and other health 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

the Market for Determining Pharmacist Services the Market for Determining Pharmacist Services

Market A market is a set of anyone who might conceivably buy a given 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.

Total Population Potential Customers Targeted Customers Actual Customers Total Population Potential Customers Targeted Customers Actual Customers

Market Actual market size depends on Interest of the customer Ability to access and 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.

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

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

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

Product Place Price Promotion Product Place Price Promotion

Product Place Positioning Promotion Price Product Place Positioning Promotion Price

Positioning (the th 5 P) Process of creating a favorable image of a product Positioning (the th 5 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 Whethere is an active positioning effort or not, an image will occur in the mind of customers

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

Competitors Need to be identified, monitored, and beaten in the market Identification of competitors 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?

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

Competition Intratype competitors compete by offering similar tangible and augmented products. Intertype competitors compete 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.

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

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

What is a customer? What is a customer?

Customer Marketers consider a customer to be any person or group involved in or 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)

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

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

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

Marketing tasks Conversional marketing Negative demand (dislike of product) Understand why people dislike and 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

Marketing tasks (cont) Developmental marketing Latent demand (strong need, no product) Identify unmet needs 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

Marketing tasks (cont) Synchromarketing Irregular demand (undesirable fluctuations in business) Even out by “training” 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

Marketing tasks (cont) Demarketing Overfull demand (demand exceeds supply) Long-term solution - increase production. 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

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

Questions? Questions?