Essentials of Healthcare Marketing Q&A 1. What is the major difference between Mass Marketing strategies and Market Segmentation strategies.2. List 3 Cohor

Essentials of Healthcare Marketing Q&A 1. What is the major difference between Mass Marketing strategies and Market Segmentation strategies.2. List 3 Cohort groups and describe them briefly.3. Describe what is the Customer Loyalty Pyramid and its 7 steps that lead from Awareness to Loyalty. Chapter 7
Developing Customer Loyalty
Learning Objectives
• Understand the concept of relationship
marketing
• Recognize the distinction between satisfaction
and loyalty
• Describe the necessary components of a value
added service delivery system
• Appreciate the importance and role of a
recovery system
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Learning Objective 1
• Relationship marketing
– An organization’s attempt to develop a long-term,
cost-effective link with a customer for the benefit
of both the customer and the organization.
– Shift from individual transactions to the
establishment of longer term relationships
• Regular, ongoing contact with patients
4
5
Learning Objective 1
• Relationship marketing
– Focus on what the customer is buying, not what
the organization is providing
• VALUE
– Empowering employees to meet customer needs
– Quality focus – beyond the clinical side of service
delivery
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Learning Objective 2
• Satisfaction or Loyalty?
– Organizations benchmark, depending on their
measurement programs.
– Must aim for more than satisfaction
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Learning Objective 2
• The Customer Loyalty Pyramid
– Progression of customer psychological movement
toward loyalty
•
•
•
•
•
•
•
Awareness
Interest
Evaluation
Trial
Satisfaction
Repeat purchase
Loyalty
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Learning Objective 2
• The value of loyalty
– The loyal customer makes frequent and repeat
purchases
• Is immune from the pull of competition
– Reduction in acquisition costs
• 5:1 ratio
– Lifetime value of customer
– Referrals, word-of-mouth referral
– More tolerant if there is a problem
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Learning Objective 3
• Creating customer value
– The customer defines the appropriate service
quality and price level.
– Customer defines the price/value relationship of
the service.
– This value is relative to competitive offerings.
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Learning Objective 3
• Creating customer value (continued)
– Health care service value equation
• Value=Clinical quality provided+process quality-(Price
+ Service Acquisition Cost)
• Clinical Quality Provided – technology and expertise
• Process quality – the ease with which a customer can
access the clinical quality
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Learning Objective 3
•
Conducting a Gap Analysis
Five possible Gaps
1. Between Expectations of service quality and
management perceptions of customer expectations
2. Between management perceptions of customer
expectations and service quality specifications
3. Between service quality specifications and service
delivery
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FIGURE 7-3 The Sources of Service Gaps
Source: Adapted with the permission of The Free Press, a Division
of Simon & Schuster, Inc., from Delivering Quality Service:
Balancing Customer Perceptions and Expectations by Valerie A.
Zeithaml, A. Parasuraman, Leonard L. Berry. Copyright © 1990 by
The Free Press. All rights reserved.
Learning Objective 3
•
Conducting a Gap Analysis
–
Five possible Gaps continued
4. Between service delivery and external
communications to customers
•
Promotional in nature
5. Between expected service and perceived service
•
•
PERCEPTION IS REALITY TO OUR CUSTOMERS!
Marketers set the expectations
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Learning Objective 3
• Measuring service performance
– Must meet three criteria:
• Measurement tool must be managerially useful
• Tool must recognize the role of customer expectations
• Tool must direct action to the most relevant areas
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Learning Objective 3
• Measuring service performance
– Step 1 in developing a measurement tool is to
conduct a customer audit
• Use of flow charts to observe process and identify
potential difficulties
– Medical service blueprints – mapping processes
• Moments of truth – customer contact points
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Learning Objective 4
• Developing a Customer Recovery System
– An organized system that anticipates service
delivery failures or problems
– Defined scripts for handling problems
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Learning Objective 4
• Developing a Customer Recovery System
– Critical components for implementation
• Focused recovery training must be conducted with all
employees
• Recovery standards must exist
• The organization must be ‘easy to complain to’
• Frontline employees must see themselves as part of the
system
• Employees need to believe they are a part of a qualityconscious organization.
• Customer recovery paradox
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Summary
• Relationship marketing is a shift from a transactional
perspective to the development of longer term loyalty.
• In a transactional focus, the perspective is more on
what the organization is selling; in a relationship
marketing focus, it is more on what the customer
values.
• Satisfaction is not a sufficient goal for customer
behavior; rather, the focus must be loyalty.
• The customer loyalty pyramid has multiple stages:
awareness, interest, evaluation, trial, repeat,
satisfaction, and ultimate loyalty.
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Summary continued
• The lower levels of the customer pyramid are referred
to as the promotional levels.
• Loyal customers have multiple benefits in terms of
reduced acquisition costs, longer term per revenue
growth, more profitable to serve, able to refer others,
and more willing to pay a price premium.
• Loyal patients have a broader zone of tolerance or are
more willing to forgive an organization’s service
lapses.
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Summary continued
• Customer value equation has four variables’
clinical quality, service process quality less out
of pocket cost less effort expended.
• Conducting a Gap Analysis can help identify
the opportunities for the delivery of customer
value.
• A customer contact audit or medical service
blueprint is a flowchart of each step in service
delivery.
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Summary continued
• A customer contact audit highlights
opportunities for establishing a differential
advantage.
• Measuring satisfaction is a function of
expectations and the importance of each point
of contact.
• A customer recovery system is defined script
that anticipates how to react when a problem
arises in service delivery.
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Chapter 6
Market Segmentation
Chapter 6 Objectives
1. Understand alternative market segmentation
strategies
2. Recognize relevant criteria for selecting
market segments
3. Identify alternative bases for industrial
segmentation
4. Appreciate the hierarchy of segmentation
alternatives
Learning Objective 1
•
Mass marketing
– Develop marketing mix to appeal to the broadest group
– Everyone in the market wants the same product delivered
priced and promoted the same way.
– Cost advantage
– Disadvantage – people have different demands, needs,
habits; genericism of strategy
Learning Objective 1
• Market segmentation
– Grouping into clusters consumers who have
similar wants or needs to which an organization
can respond by tailoring one or more elements of
the marketing mix
– Can be accomplished with any element of the
marketing mix
• Concentration strategies
• Multisegment strategies
Learning Objective 1
• Market segmentation
– Concentration strategies
• Targeting one segment
• Majority fallacy
• Niche strategy – very narrow segment
Learning Objective 1
• Market segmentation
– Multisegment Strategy
• Pursue several market segments with varying mixes
• Product differentiation – positioning strategy
Learning Objective 1
•
Market segmentation
– Selecting Market Segments – criteria
•
•
•
•
•
•
•
•
Identifiable
Accessibility (promotion or distribution)
Members are inclined to buy product/service
Able to buy
Profitable to serve
Desirability – image of organization
Consistency (with message)
Availability (brand loyal elsewhere?)
Learning Objective 2
• Bases for segmentation
– Sociodemographic
• Age, gender, ethnicity
– Geographic
– Psychographic
• Lifestyles, social class
Learning Objective 2
• Bases for segmentation continued
– Usage
• Usage rates
– heavy half consumer – 80/20
• Type of usage
– How it is used
• Brand loyalty
– Hard core loyal, split loyalist, switchers
• Benefit segmentation
Learning Objective 2
• Bases for segmentation continued
– Cohort Segmentation
• Group of people bound together in history by a set of
events
• Depression
• WWII
• Post-War
• Boomers I and II
• Generation X
• N-Gen
• Millenials
Learning Objective 3
• Segmenting Business Markets
– Demographics
• Size of company, Industry type (SIC code), customer
location
– Operating variables
• Technology, product use, customer capabilities
– Purchasing approaches
• Purchasing procedures, purchasing criteria
– Usage segmentation
Learning Objective 4
• The Heuristics of Segmentation
– Health care marketers are attempting to determine
if segmenting and tailoring offerings to a segment
is worth the time.
– Marketers want to affect the actual purchase,
which is the most accurate level of market
segmentation
Conclusions
• Health care is acting more like traditional
businesses vis-à-vis market segmentation
strategies.
Summary
• In a mass marketing strategy, the marketing mix is
designed to appeal to the broadest market, while in a
market segmentation approach, the marketing mix is
designed to appeal to subgroups of consumers.
• In following a concentration strategy of targeting only
one segment, an organization should not focus only
on the largest segment, because competitive intensity
can render this segment the least profitable.
Summary continued
• In selecting from multiple market segments, there are
several criteria to consider: Segments should be
identifiable, accessible, inclined to buy, able to buy,
profitable, desirable, consistent, and available.
• Markets can be segmented sociodemographically,
geographically, and psychographically by usage, and
recently by cohorts.
Summary continued
• In selecting from multiple market segments, there are
several criteria to consider: Segments should be
identifiable, accessible, inclined to buy, able to buy,
profitable, desirable, consistent, and available.
• Markets can be segmented sociodemographically,
geographically, and psychographically by usage, and
recently by cohorts.
Summary continued
• In usage segmentation, it is important to identify the
heavy half consumer who purchases a
disproportionate share of a product, or cho accounts
for a disproportionate amount of a service’s volume.
• The important aspect of cohort segmentation is to
realize that cohorts’ attitudes and value systems stay
with them even as they age. Thus a health care
organization must develop a strategy to respond to the
market.
Summary continued
• Business markets can also be segmented by
several criteria. The federal government has
developed the SIC coding system, which is a
common basis for industrial segmentation.
• As corporations play an increasingly important
role in health care purchases, health care
organizations may need to segment them by
purchase procedures or purchase criteria.
Summary continued
• There is a heuristic method to segmentation that
moves from purely descriptive measures
(demographics) to actual purchase (usage)
• The ultimate purpose of segmentation is to tailor an
organization’s marketing mix with the intent of
positively affecting consumer behavior. If
segmentation does not differentially affect this
purpose, there is little value to segmenting the market
on that particular criterion.

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