Healthcare industry, I may say is an important evil. The differentiating factor of healthcare industry fortunately or unfortunately is its negative demand. The products and services in this industry are such that common people would never want to go for in their good health.
Marketing as we know is all about identifying and meeting human and social needs. A more precise definition as given by Philip Kotler – Marketing is the activity, set of institutions, and process of creating,communicating,delivering and exchanging offerings that have value for customers,clients,partners and society at large.
In simpler terms marketing helps not only to create need but also fulfils it. We can take example of any product, let’s say a car. The first car introduced by Ford found the unmet need of faster means of transport and met it with his cars. He promoted his cars as a modern and faster means of transport. People went for the promotions because it was something they wanted and rest is history.
In healthcare industry we do not find hospitals marketing themselves or even drugs advertising themselves. Why?? The simple reason behind it is the negative demand which is associated with such products and services. Nobody, including me would want to visit a hospital howsoever good, well equipped or modern it is. We in general think of healthcare only in unhealthy state. It is by force and not by choice that a person visits a healthcare facility. The force being the debilitated state which hampers normal workings.
Healthcare industry has to find a unique way for marketing as it cannot promote its products or services like other industries. They can only provide information about them. Marketing in healthcare has developed over the years. It can be defined as follows:
Healthcare marketing is educating ourselves as to the wants and needs of our potential customers and, based on the knowledge we gain, educating our customers and offering them valued services that fulfil their needs when and where they need those services. “
-Patrick BUCKLEY
General Characteristics of Healthcare Industry
Here let us take each and every term in detail
- Consumer’s perspective
- Quality ,cost and satisfaction
Consumers always want the best quality in terms of services as well as products. It should be the motto of the providers also, nevertheless the quality is controlled by governing bodies, as this industry has a bigger risk of life and death.
The rising inflation, increase in out of pocket payment, lesser public sector healthcare services, lack of insurances have put the consumers in a situation where they cannot pay any more out of pocket.
On the other hand, rise in taxes, rejection of MTA by the government and inflation has just added to the burden of the R&D costs for the manufacturers of drugs and devices.
So there is always an issue about the cost of healthcare services
- Cognitive dissonance, anxiety, lack of control
Healthcare is a field where the consumer/patient is majorly dependent of the healthcare provider’s advice. He is unaware of the biological complexities of the issues. So there is a natural anxiety that exists among the consumers. There are many instances that may result in cognitive dissonance and hence affect the customer loyalty
- Healthcare Provider’s perspective
- Mutation of Medical Focus- The industry now has to focus not only on quality of care but also the regulatory guidelines.
- Rising costs – Pressure of payers and rising costs have put the healthcare providers in a very difficult situation. They have to cope up with the government rejection of exemption of MLT and look at different avenues for investments in healthcare. eg REIT( Real estate investment trusts).
- Escalading healthcare providers- the rising number of healthcare providers have resulted in cut throat competition among the healthcare providers.
Roadblocks in Healthcare Marketing
- Regulations
Healthcare industry is a highly regulated industry. The regulatory bodies are specific to the country but US FDA guidelines are generally been followed in India too. The Indian governing body is the DCGI. (Drug controller General of India). In case of new product development (drug, device), each and every process right from the idea generation till the commercial launch is monitored by the regulatory bodies and has to be approved by them.
Regulations are there at every step be it marketing, packaging, labelling and even pricing. The introduction of various acts like Patient Protection Act and Sunshine Act are targeted at keeping the prices low.
- Time and Cost
The entire process is highly time taking as well as cost intensive. It takes around 14 years on an average for a drug to be launched in the market. The patent period allotted to the drug is usually 20 years. So the manufacturers have only 6 years in hand to launch their drug and generate revenues from it. So Time to market is very essential in this industry.
Hence the time plays a major factor in Healthcare industry. It is a big constraint because as soon as the patent goes off, the exclusive rights of selling the particular drug is lost and a number of players providing generic drugs enter the market. The price of the drug goes down, has to go down because of the substitutes available.
- Informative Advertising
The drugs are generally of two types; Prescription drugs and OTC (over the counter) drugs. Each drug at the initial stages is classified into one of these two headings. Now the major marketing challenge with the prescription drugs is that they cannot be advertised. Here I would request you to try and remember any antibiotic that was /is being advertised. You may have various examples of Cronin, Disprin, Anacin and so on and so forth. But these are over the counter drugs which are analgesic and antipyretic in nature.
No prescribed drug can be promoted directly to the consumers. The major reason being the public is unaware of the effective dosage. Secondly indiscriminate use of antibiotics may not only result in side effects but also to one of the major issues that haunts the pharmaceutical industry-Drug Resistance.
Similar is the case with medical devices. Only few medical devices like pregnancy test kits, blood sugar test kits etc. are available directly to the consumers. It is because the result that these devices provide are very crucial for the healthy life of the consumers. The reliability on the OTC devices is yet not 100 percent. Still the ideal method for diagnostics is going to labs for the check-up. Marketers of medical devices may look for a higher share in market by introducing an OTC version of their available lab tests. Here they have a market share of the lab tests and some percent of the people may go for OTC devices. But as we know this is the context of human life, a person will not be sure about the test results until and unless he has an expert’s advice. The experts here are the healthcare providers. They themselves to be sure to provide an advice need a confirmation lab test. So it’s a win win situation for the medical device manufacturers and marketers.
- Payer pressure
The other side of the story is the rising prices of the healthcare services. There is constant pressure from the payers for the reduction of prices.
- Consumerism/internet Access
Rising consumerism is also a challenge for healthcare services. We can find n number of applications that will provide a check on your vitals. Rising indulgence of consumers with internet has loaded them with information. The consumers today are not easy to satisfy. They need a perfect explanation, pricing and stepwise allocation to each service. Many of the consumers try to cure themselves thanks to the internet.
- Current payment Model -fee for service model
Fee for service model has resulted in the physicians going for quantity of service rather quality of service. They generate revenues by charging patients per visit, per call etc. They also incorporate the specialist referral as a service and charge for it. This has led to increase in prices and kept the patients away from integrated care. So now reforms are taking place to move this fee for service model to fee for performance.
- Tailored segmentation and tailored Targeting
In healthcare industry, one of the major challenges is that the marketers have to cater to two segments of customers:
- At the healthcare provider level
- At the end consumer level
So marketers have to bring about different policies for different set.
- Customer Relationship management
It is one area where healthcare industry should work to retain and maintain the loyalty of customers
- Social Media Marketing
Healthcare industry is the last industry to accept IT in its operations. Still at various places it has not been incorporated with it completely.
Accepting IT and making use of it in social media marketing is yet another field which poses as a challenge.
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