Marketing strategies need to develop as the market for medical technologies evolves. Baba Awopetu and Akin Sawyerr look at how to access the new NHS budget holders.
AAs the dust settles over the changes in the NHS, we are left with some fundamental truths: both the NHS and the industry still have a unified objective of delivering better care to patients. How much has our working environment really changed? What changes do we need to make in order to ensure that we continue to thrive?
Our lifestyles and our ageing demography have combined to raise alarms about the unsustainable growing cost of healthcare, which is still largely funded by the Government. As a result, the NHS is reorganising and rethinking its operations. The outputs from this include increasing prevalence of buying groups, increasing powers for administrators and a greater emphasis on clinical outcomes to justify premium prices. Therefore many of us have drawn the prudent conclusion that our customers will have less influence on product choice in the future. The question is: how do we adapt to our new reality?
In today’s NHS, decision-making is a role for the group rather than the individual. While traditional customers such as nurses, doctors and hospital managers still remain key players, we now have to contend with broader decisionmaking groups that often contain both clinical and non-clinical customers. There has been a wider distribution of purchasing power across groups. One consequence of this is greater scrutiny on value delivery as the more financially astute members of the purchasing groups attempt to turn decision-making into a price-cutting exercise.
Inevitably, our propositions have to be articulated in clinical and financial terms. Our messages have to be tailored appropriately to the different members, even if the end objective remains the same. For decision-making groups concerned with cost containment, propositions that do not adequately address this priority will face a stiff barrier. Our expressions of customer-centricity will thus need to become broader.
The heat is on
Let’s consider why these changes seem to have arrived so suddenly. Is there perhaps another factor contributing to the new environment we are experiencing?
The theory of industry life cycles states that in its infancy, an industry has few players and these tend to have significant technological advantages. In our industry, patent-protected propositions with distinct advantages over their predecessors have been prevalent. Over a period of time, more players enter the field and their offerings move closer to the differentiated products of their predecessors. The gap narrows, and customers’ bargaining power increases as a result of choice between less differentiated product offerings.
At this stage in the life cycle, the baton is passed swiftly from R&D to marketing for differentiation. (In our industry, in fact, marketing feeds back into R&D to ensure that product design takes account of market segmentation.) R&D and good product development remain critical, although insufficient to ensure that the product will thrive in an increasingly crowded and differentiated market.
When this situation is combined with the environmental pressures on the NHS, the outcome is all the easier to understand. Like a frog being boiled slowly, we have failed to notice the subtle changes as they occurred – and while we were busy preparing for the future, we didn’t notice it had arrived! How can we succeed in this new and rugged landscape?
Segmentation is the key
Fortunately we have seen this in other industries, and we can learn from the way they have coped with life cycle impacts coupled with changes in customer dynamics. First and foremost, innovation has to move beyond the R&D team to sales and marketing operations.
As the chairman of Tesco famously said, “Paranoia is the secret of our success.” The healthcare industry cannot afford to be complacent: constant adaptation is essential.
We need a marketing culture that evolves continually to mirror a rapidly changing landscape. Return on investment, sales and marketing effectiveness should be permanent factors in our thinking. We need to adopt the active marketing approach of our FMCG counterparts – that is, to think customers first, profit second. Otherwise we will not connect with the market at all.
The concept of market segmentation is not always appropriately deployed in our industry. Segmentation means the division of customers into groups with similar needs – presumably so that we can meet these needs better. However, upon reviewing most of the approaches to segmentation within the industry, we see a tendency to segment for improved profit rather than for improved service delivery.
Often we look for the high-category groups that use a lot of our particular product type, so we can target them with our sales force. This approach may be simple, but the long-term result is inevitably suboptimal. We need to rethink our perspective on our customers and segment them in a meaningful way that allows us to meet their needs.
The changes in the healthcare environment make it even more critical that we foster a genuinely customer-focused culture: this is the only route to sustainable growth. Some of the new market segments are customers who are keen to cut costs – and to be fair, this is often prudent. This segment is not exclusive to administrators, nor are all administrators in this segment. Nonetheless, clarity on how our sales proposition helps them to achieve their aim is vital.
We need to get better at articulating the benefits of our offering beyond the clinical benefits – for example, more accurate diagnosis or faster treatment procedures save time and money by getting patients out of hospital faster.
The new NHS can be summed up in a sentence: “Show me the value.” Rather than getting too engrossed with the new barriers in the market, what we really need is a focus on the end users. Our capacity to demonstrate that our services improve the lives of patients is critical to our future success.
In an environment with so many me-too propositions, only organisations that are able to differentiate their offering will survive the drive to cut costs. We said ‘propositions’ because in many scenarios, there is no denying the similarities between core products.
However, we can package services and support systems to further differentiate ourselves. Training, support, integration and patient education are some of the areas that our leading lights are using to demonstrate superior value.
In today’s NHS, there has been a wider distribution of purchasing power across groups. One consequence of this is greater scrutiny on value delivery as the more financially astute members of the purchasing groups attempt to turn decision-making into a price-cutting exercise.
The days of depending on technological advancement alone to help us demonstrate value are over. For example, branding (though still essential) needs to include more than the core product: we need to ensure that all our touch points reinforce our brand proposition. The winners in our industry will be those who can adapt quickly while holding onto classic marketing philosophy.
Our emphasis on customers needs to be broadened and updated. Despite the tougher environment, the industry can continue to be successful. Adaptations to our service delivery and communications will ensure success in meeting needs and generating profits.
Baba Awopetu is Senior Lecturer at The Marketer’s Forum and a freelance healthcare writer. He can be contacted at email@example.com. Akin Sawyerr can be contacted at firstname.lastname@example.org.