Essentials of Health Care Marketing 2nd Ed. Eric Berkowitz

1
Essentials of Health Care Marketing 2nd Ed.Eric
Berkowitz

• Chapter 10
• Distribution

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Introduction

• Channel of distribution the path a product
  takes as it travels from the manufacturer to the
  consumer.
• Key decisions
• How the product should be distributed
• Who within the channel should perform specific
  functions
• How much coverage of the market is needed
• How the channel can be controlled

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Learning Objective 1

• Alternative channels of Distribution
• Direct channel Producer directly to consumer
• Indirect channel intermediaries
• Producer wholesaler retailer - consumer

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Learning Objective 1

• Functions in the channel utilities
• Place
• Time
• Possession
• Form

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Learning Objective 1

• Functional shifting
• The movement of different functions between the
  producer of a product or service and its
  intermediaries or the consumer
• Function must be shifted if an intermediary is
  eliminated

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Learning Objective 1

• Channel Management
• Degree of distribution required
• Gaining channel cooperation
• Dealing with conflict
• Organization must decide how available the
  product will be to customers
• Are intermediaries necessary?
• If so, then there is potential for conflict

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Learning Objective 2

• Intensity of Distribution
• Channel intensity will determine how available
  the product is to the ultimate consumer
• Must consider the consumers expenditure of
  effort in external search
• Intensive
• Selective
• Exclusive

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Learning Objective 2

• Intensive Distribution product available in a
  large number of outlets
• Primary care groups
• Multiple satellite facilities, extended hours
• Exclusive Distribution product or service is
  offered in a highly restricted number of outlets
• Highly specialized medical services
• Selective Distribution hybrid
• Has increased in health care

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Learning Objective 3

• Vertical Marketing Systems
• Channels in which intermediaries are integrated
  so their functions are performed at the most
  efficient place within the channel.
• Driven by
• Production cost savings
• Transaction cost savings/improved coordination of
  services
• Overcoming market imperfections
• Management and internal factors
• Environmental changes

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Learning Objective 3

• Forward vertical integration operations are
  acquired or developed that are closer to the
  final buyer
• Backward integration acquiring operations that
  are closer to production
• 3 common forms
• Corporate, administered, contractual

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Learning Objective 3

• Corporate integration
• Combines both the production and distribution of
  a product/service under one corporate ownership
• Administered
• Coordination between channel members, but there
  is no common ownership
• Contractual
• Cooperative agreements between channel members
  on the same level
• Franchise contract that links manufacturing and
  distribution

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Learning Objective 4

• Channel Leadership
• Channel Commander dictates or controls the
  activities of the other members of the channel
• Can be manufacturer when its product is very
  popular
• Can be wholesaler if product is to be distributed
  to a large number of manufacturers or retailers
• Can be retailer when it has a strong image or
  extensive market coverage

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Learning Objective 4

• Channel Leadership
• Sources of power
• Coercive
• Economic
• Reward
• Referent
• expertise

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Learning Objective 5

• Retailing Concepts
• Retail position matrix
• Based on the breadth of the retailers product
  line and the value added (high low)
• Four quadrants
• See figure 9-5, page 275

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Learning Objective 5

• Retail position matrix
• Position must be chosen that offers an identity
  in the market relative to competitors.
• Five steps
• Strategic Direction
• Current Positioning
• Competitive Positioning
• Alternative Evaluation
• Plan Development

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Learning Objective 5

• Retail mix
• Goods and services
• Distribution of services
• Communication strategies

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Learning Objective 5

• The wheel of retailing describes the process of
  how new retail forms enter the market and how
  they evolve over time
• Figure 10-8, p. 288
• Position 1 entry low price, margin, status
• Position 2 higher prices, margins broader
  services
• Position 3 higher prices, margin full service
• Position 4 New outlet enters the market

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Summary

• The channel of distribution is the path a product
  takes as it moves from producer to end user, or
  the path a patient takes as he or she moves
  through the health care system to the appropriate
  level of care.
• Within the channel of distribution,
  intermediaries provide value in the form of
  utility.
• In establishing the channel of distribution,
  organizations must decide the level of intensity
  of service delivery.

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Summary continued

• In order to control the channel of distribution
  and obtain greater efficiencies, organizations
  can integrate either forward or backward.
• The growing formation of integrated delivery
  systems in health care is a vertical integration
  strategy.
• In any distribution channel, there is often a
  single entity or leader who can dictate or
  control policies with its intermediaries.
• There are several sources of power available to
  any distribution channel member.
• Economic power, rewards, referent power,
  coercion, or expertise.

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Summary continued

• Organizations can be positioned perceptually in
  terms of the breadth of their product line and
  the perceived value-added.
• Health care organizations have a retail mix that
  includes their pricing policies, distribution,
  services, and communication tactics.
• In service industries, new market entrants tend
  to start as low margin, low status. As they
  mature and grow, this low-entry position is left
  open to new retail forms.