Chapter 10: Distribution - Audio

Chapter 10: Distribution : 

Chapter 10: Distribution HSCA 4201: Health Care MarketingDr. Alice Adams

Learning Objectives : 

Learning Objectives Understand the concept of channel structure and the alternative channels available Know the various levels of distribution intensity and the implementation issues of each. Recognize the application of retailing in health care strategy. Describe the nature of channel leadership and the source of channel power. Understand vertical marketing systems and their application in health care.

Basics of Distribution : 

Basics of Distribution Core part of marketing mix How & where the product/service is accessed by the customer Channel of distribution – path the product takes from producer to end user Marketers must decide: How should product/service be distributed? Who within channel should performeach function? How much coverage of market is needed? How can the channel be controlled?

Basics of Distribution : 

Basics of Distribution In health care, channel of distribution is often the path of referrals among providers Distribution decisions are not always under direct control of health care marketers Channel length: number of people or organizations (intermediaries) between producer and end user

Direct Channels of Distribution : 

Direct Channels of Distribution Producer Consumer Primary Care MD Patient MinuteClinic Patient Wellness Center Client Physician Patient ONLINE

Intermediaries : 

Intermediaries A person or organization who facilitates the distribution of goods to the consumer Resellers (wholesalers and retailers) Logistics companies (shipping companies) Financers (banks and insurance companies)

Direct Channels of Distribution : 

Direct Channels of Distribution Primary Care MD Patient Insurance Company

Indirect Channels of Distribution : 

Indirect Channels of Distribution Producer Consumer Producer Wholesaler Retailer Consumer Academic Medical Center Acute Care Hospital Specialist MD Primary Care MD Patient Intermediary Insurance Company

How Intermediaries Add Value : 

How Intermediaries Add Value Geographic accessibility (Place utility) Time accessibility (Time utility) Financial Assistance/Affordability (Possession utility) Customization to individual needs/wants (Form utility)

Channel Management : 

Channel Management Organizations must decide how to distribute their products/services to customers How many and which intermediaries to use? How wide? How standardized? Distribution decisions directly affect costs, which affects prices Must work well with all other elements of the marketing mix Potential for conflict among channel members

Intensity of Distribution : 

Intensity of Distribution Intensive Exclusive Selective Widely available and accessible Little control Wide market coverage Limited availability Moderate control Moderate market coverage Restricted availability High degree of control Narrow market coverage

Vertical Integration : 

Vertical Integration “Vertical marketing systems” Direction Forward integration Backward integration Extent of integration Ownership Alliances Contracts/Franchising

Vertical Integration : 

Vertical Integration Vertically Integrated Delivery Systems Theoretical advantages: Cost savings through reduction of duplication and improved coordination/continuity of care Improved quality through improved coordination/continuity of care Fewer conflicts among channel members Improved access for patients Easier navigation for patients Increased market power

Channel Leadership : 

Channel Leadership Channel commander Bases of power Coercive/Reward Referent (brand name awareness) Expertise Economic Concerns and limitation on using power Damage to long-term relationships Incentives to vertically integrate U.S. Department of Justice and Federal Trade Commission

Retail Positioning Matrix : 

Retail Positioning Matrix I IV III II Amount of Value Added Breadth of Product Line High Low BROAD narrow Mayo Clinic Academic Medical Centers Community Hospitals Multi-specialty group practices Primary care practices Specialty Hospitals Concierge medical practices

Determining Retail Position : 

Determining Retail Position Strategic direction – mass vs. target marketing Current positioning – consumers’ perceptions of value Competitors’ positioning – consumers’ perceptions of value Identify gaps and opportunities Develop plan & implement

Organizational Evolution : 

Organizational Evolution New business created to compete exploit gaps & opportunities Low price Low margin Low status Narrow product line Business grows Raise prices Better margins Gain status Broader product line Business matures Higher prices High margins Full service & broad product line  New gaps develop Another new business created to exploit gaps & opportunities Low price Low margin Low status Narrow product line . . . .

Putting It All Together: The Marketing Mix : 

Putting It All Together: The Marketing Mix