Question

(Marketing in Healthcare)

You have just been hired as the Executive Vice President of Sales and Marketing for a national HMO company that until recently was very successful (both revenue and profit growth) selling traditional HMO plans as its only product. During the last two years, revenue and profits declined, and new sales have slowed dramatically. The Board and CEO of the company recruited you to help the company achieve a strategic goal of 15% growth in revenue and profits each year for the next five years.

a.What stage of the product life cycle are HMO products experiencing in

b. Given the answer to (1) above, name three strategies, with specific examples, that you could suggest modifying the HMO’s life cycle for your new company.

c. Given your answer to (1) above, what is the appropriate marketing mix strategy, by each component, for the company to follow with its HMO product?

d. One of the first things the Board and CEO want you to do is to revise the company’s strategic plan. The Board’s directive is to develop strategies to meet the revenue and profit goals. In order to do this you must develop a SWOT analysis. Outline all the factors you will assess in order to develop the proper SWOT.

Answer 1

HMO - Health Maintenance Organization is a medical insurance group that provides health services for a fixed annual fee.

a. The HMO products are in the Decline stage of product life cycle, where in this stage sales starts daclining due to multiple reasons.Changes in customer preferences,competitive structure in the market, technology and other forces.

b. Strategies that modify HMO into a new company:

1. Product Modification Strategy - A company may attempt to improve product characteristics like improvements in quality, features and style. An example for this is Maruthi launched Multi Point Fuel Injection System and power steering in Maruthi Esteem to bring a noticable product modification.

2. Revamp overall marketing mix - They can bring value for money propositions and organize contests, coupons and sales promotion programs to enrich the customer's overall experience.

3. Harvest - This strategy aimed at reducing the overall costs including production, maintenance, advertising and sales force management. Hindustan Motors continue to produce Ambassador, it would like to harvest the value of Ambassador in India.

c.Appropriate Marketing Mix Startegy:

Value for money propositions

Organize contests

Sales promotion programs to enrich customer's overall experience

d.SWOT:

Strength - Reputation, Speedy service, Trustworthy, knowledge of product and services

Weakness - Weak performers, Inconsistency, Miscommunication

Oppurtunities - Recruiting quality employees,training, customer service skills,exceeding customer expectations

Threats - Losing customers, losing good employees, increased competition