Health care Marketing week 4 Product Strategy

Health care Marketing week 4

Chapter 8: Product Strategy

1. Listed below are three different organizations at various stages of the product life cycle. Explain the strategy considerations they might undertake for the specific marketing mix variable listed. 

1.  Prucare, an Introduction Promotion managed care plan entering a new metropolitan area: Introduction-promotion: The introduction promotion is an essential component to consider in the introduction stage. For a truly new product or service, the company must develop primary demand, or interest in purchasing this new class of service. A new product requires significant promotional effort to educate the market about a product’s capabilities.

2.  Health Stop, Mature Product an urgent care clinic offering minor ER treatment: Mature-product: During this stage of the life cycle are made the few major product decision. The key product issue is to develop some new lines that can help reposition the organization to return to the earliest stages of introduction and growth.

3.  Community Decline Product Hospital, a 234-bed facility with seven pediatric beds: Decline-product: The decline stage of the life cycle is difficult for any organization; it must recognize that the service cannot continue grow. Services in the decline stage of the product life cycle can consume a disproportionate share of management time and financial resources. The most difficult option is to drop, or eliminate, the service. There may be significant emotional attachment to the service within the organization. A second option is to contract with another party to provide the product or service. A final option is to harvest the service. This involve paring out the aspect of the service that are truly not profitable and offering a reduced version of the service for loyal customers.

2. A large community hospital, River/> Valley/>/>, has recently begun to acquire physician practices. At issue is whether to rename each acquired practice to “River Valley Associates” or to leave each name alone. What are the trade-offs River/> Valley/>/> should consider in this decision?

In my opinion, River Valley Associates is a better option, because the co-branding (organization markets its name along side another brand name) produce a synergistic effect of the two names. Also, maximize the marketing budget of the organization by creating partnership.

3. A company has decided to offer a health savings account plan to its employees. This new option is the first such type of coverage available in the market. Based on the factors that affect the diffusion of innovation, how might the company best accomplish the successful roll-out of this new health care coverage option?

The best way is develop profiles of the innovators (profiled as the first to adopt a new product, tend to be risk takers who are highly educated and who use multiple information sources) and early adopters (are leaders in their social setting. Tend to be respected by their peers and are turned to for information by slower-adopting groups, act as an opinion leaders and are above average in education). Send these groups information on new product or invite them to conferences where new product announcement are made.

Chapter 9: Price

4. Two medical organizations have recently examined their cost structures. The first group is a radiology practice with a significant investment in diagnostic imaging equipment. The second group is a single-specialty pediatric practice. The cost analysis reveals the following distribution:

Pediatric Group
Fixed Cost 70% 20%:
Variable Cost 30% 80%

Explain the implications of these differing cost structures of each medical group in terms of contracting with managed care organizations. 

Radiology Group: High fixed costs relative to total cost, it makes the most sense to price for volume. When variable costs are high relative to total cost, the organization must price for margin. In which fixed costs are a high percentage of total costs; its major concern is to price in such a way to ensure the coverage of fixed costs. Increasing sales revenue has a dramatic implication since there are little variable costs in the business.

Pediatric Group: Variable costs are a higher proportion of the total cost, with these small increases in margin can result significant increases in profit. Appear a dramatic shift in the cone in low fixed costs, high variable cost business. In this situation it is not so much volume that drives the profitability of the business, but rather a shift in margin that can lead to a dramatic increase or decrease in overall profitability.

5. An ophthalmology practice is deciding whether to offer prescription eyeglasses for sale in-house. The new service would require the training and hiring of additional personnel, inventory for glasses and frames, and some minor space alterations. The utilized space in the office would be a charge allocated to the program. The costs for this new service are:

Variable        Costs (electricity, $80 per completed
labor, supplies)  pair of eyeglasses
Total Fixed Cost $36,000

How much volume does the group need to break even if they charge $100 per pair of eyeglasses? If they charge $200?

$100 per pair of glass: The volume of the group need to break even is 1800.

$200: The volume of the group need to break even is 300.

Extra credit: A dentist in Cali, Colombia has decided to target adult orthodontia patients in the United States. He offers the Invisalign braces that are rather high priced in the United States. Because of the lower cost of labor and the lower price that he can get the braces for in Cali, he can beat the price of any U.S. provider by at least 40%. His spouse owns a four-star hotel in Cali. Suggest a pricing approach for this dental clinic. He wants to develop a Web site and is also thinking of marketing his clinic on YouTube.

Due Day on Monday, July 22, 2013, end of day.