“APOLLO HEALTH AND

LIFESTYLE LIMITED- RETAIL

FRANSCHISE ADD ON IN
HEALTHCARE INDUSTRY”

PRESENTED BY:-
LALATENDU KESARI MOHANTY
ROLL NO-320SM1010
MBA, 2ND YEAR
BACKGROUND:-
• Apollo Hospital Enterprise was established by Dr. Pratap C.
Reddy in 1983
• Public Health care service provider
• First hospital at Chennai
• First corporate hospital and first to have foreign investment
• Promoting preventive healthcare
• Apollo Group diversify to various region including Hyderabad,
Madurai, New Delhi, Ahmedabad, Bangalore, Kolkota
• Aim at providing quality and standardise health service at low
premium price which get triggered after the incident of
coronary heart failure patient due to non-payment
 INTRODUCTION:-
• Ratan Jalan (IIT KGP Alumni), CEO of Apollo Hospital (25 years rich
marketing experience- HCL, Lintas, Duncan, Asian Health Service)- crucial
role in AHHL
• Time horizon- 6years to set up Apollo Clinic Model and execution of
franchise model to achieve target of 250 clinic within 5 years. Apollo
Clinic Model was executed in 1980
• Reason of franchise model- To enhance market coverage and provide
effective health care solutions to community (change price-perception)
Family Based
Apollo Clinic

Value based
Ambience Consistency
pricing

• Problem- Only 50 franchise set up in six years

HEALTHCARE INDUSTRY:-
Government/ Corporate led Doctor led Nursing &
Trust Hospital hospital hospital clinics

 Being a less power buyer country, the hospitality service is highly

scattered market with few organized players. As per KSA Techno Pak,
nearly 11% of household income is invested in healthcare. There are no
strict guidelines in hospital service in India which declined their quality
 Government hospital (less quality, unhygienic, low fees, located at
metros)
 Corporate hospital (Profit based, superior quality medical equipment-
service, high quality, Premium pricing)
 Doctor led hospital (Doctor turned entrepreneur, selection of own
quality of standard)
 Nursing & Clinics (High volume availability with no prior certification)
COMPETITIVE ANALYSIS:-
Hospital Features
Max Secondary and tertiary care treatment centre (Delhi),
Healthcare 800 seated bed in 7 hospitals
Fortis Tertiary care support (Delhi, Amritsar), 2000 beds in 12
hospitals
Wockhardt Specialized healthcare service started as
pharmaceutical (Kolkata, Bengaluru, Delhi), 1500 beds
across 10 hospitals
VLCC Positioned as beauty and health care service provider
Thyrocare Specifically for thyroid treatment
Apollo Family based preventive healthcare service
Dr Batra Focused to homeopathic healthcare as well as
allopathic treatment
 AHLL FRANCHISE SYSTEM:-
• AHLL created its own unique brand different from branding element of
Apollo Hospital. Brand logo signifies family (Mother, father, child) with
warmth orange colour
• One stop service and affordable to transform experience of patients
(middle class family-large segments)
• Mr. Chokalingam (COO, AHLL) claim franchise model to be effective as
franchisor are well aware of location factors and can predict changing
behaviour complexity of consumer. Franchise can exercise the power of
entrepreneurship and can avail benefits from medical services
• Mr. Jalan was more focused towards quality healthcare services but
North region marketing head Mr.Behl was more interested towards
enhancement of ambience and value adding services to drive customer
• Mr. Chokalingam also found franchise problem to be genuine in terms of
bed capacity and service pricing
AHLL FRANCHISE DILEMMA:-
Letter from Franchise CEO View

Being at busy place of Delhi, still low Non licensing of pharmacy

patient flow
Lack in quality medical service at low Bad behaviour with old customer
price and more stressed to ambience care executive team and less
experienced new customer care team
Lot of incentives and referral Overcharging of money from patient
charged by doctor and faulty data supply with huge
delay time (not recorded in
database)
Non-support from doctors appointed Very less patient flow at Delhi clinic
for service at clinic which doesn’t attract doctor (low
pricing)
Restricted other doctor for service Failed to analyse the customer
practice by Apollo Authority requirement
Non-visit of Apollo doctor at clinic Royalty withdraw
APOLLO CLINIC REVENUE MODEL:-
• a) Health check up in which patients are suggested from 24*7 pharmacy b)
Consultation- All types of medical facility consultation is available (Urology,
Orthopaedics, Neurology, Dermatology, Gastroenterology, Cardiology, Dentistry,
Paediatrics, Orthopaedics, Pulmonology, Endocrinology, ENT and Ophthalmology,
etc). c) After consultation, patients are sent for diagnosis or diverted towards
Apollo hospital. Ultrasonic and Telemedicine practice are also performed d) 24*7
service of pharmacy e) Associate service such as first aid and other minor
treatment facility is also available in Apollo

Consultation Diagnostics

Health
Check up

Refer to
Pharmacy Apollo
Hospital
 APOLLO
Functional CLINIC KEY FEATURES AND
SERVICES
Efficiency
(Drive resource
Cost effective Providing Sustainability in
medium Ambience selection of
utilization, (sense of material (ease of
(Growth of
productivity, comfort) replication)
bottom line)
customer
•satisfaction
Service features:-
Large poster
at entrance,
proper
signage
Adequate
Same
seating
material for
arrangemen
interior
t, TV,
design
Magazine

Design &
Ambience
Pleasant
colour,
Feedback Standard
form uniform of
Customer
Pharmacies Executive
at entrance
and
attached
with clinic
KEY SERVICE QUALITY AND SERVICE
PRICING:-
People Process Infrastructu
related related re related

 A Service Quality checklist is designed

across various functional areas, like the
Entrance to the Clinic, the Pharmacy, the
Front Office and Enquiry Desks, public
areas within the Clinic like Waiting areas,
Toilets, Pantry, etc., service areas like the
Consultation chambers, Treatment room,
Phlebotomy area, X-Ray room, Ultrasound
room, ECG/PFT, and TMT rooms.

 Value based pricing strategy, Focus was on

volume rather than margin to extract
profitability. Need of aggressive
communication strategy to change the
perception of competitive based pricing
strategy to value based pricing strategy
SELECTION
Need of
OF FRANCHISE:-
Franchise Franchise
Receive
Criteria- selection Shortlist
Application
Entrepreneuri Advertisement
al background,
financial Demonstration
ability Background Interview by of Apollo
Check of Senior Model by
Selection of Franchise Personnel Experienced
Franchise Personnel
Ground of Rejection
Involved in Real estate business
Other business interest
MoU sign Financial Constraint
Leveraging Apollo Brand for
expanding own practice
Involved in Illegal practices at past
AGREEMENT WITH FRANCHISE:-
Franchise Agreement Features with Apollo
Franchise has to pay Rs 5 lakh while licensing for business development
and operational development which are reimbursed at later stage
Development stage time length-8 months from launch, Operation licensing-
7 years from launch
Additional non refundable payment of 15 lakhs for development rights and
marks used by AHLL
Franchise required to pay 5% of gross revenue to be done on quarterly
basis
For renewal purpose (7 years). Franchise has to pay 30% of its license fees
Failure to meet the terms leads to cancellation of Franchise
 FRANCHISE TRAINING:-
 Before commencement of Business operation, Franchise has to undergo
comprehensive Business Education programme conducted by IIM Bangalore for
15 days

 AHLL provides training for franchise related to establishing standardized

process for operations. It also provides input of service quality standard and
process manuals to guide franchise and avoid illegal practices (ex- overcharging
for service)

 AHLL provides service quality training, operation training, inputs for manpower
planning (job responsibility, reward structure, compensation)
 BUSINESS PROMOTION AND MARKETING
Other promotion-
Promotional DMP (customer),
Disease
Programme Clinic Based Continued medical
Management
coordinated by Promotion education for doctor,
Programme
AHLL Customer focused
non-healthcare
• Advertisement- Newspaper advertisement, TV scrolls, Banners andprogram
Posters
• Limited paid advertising and spends; focused on word of mouth, PR, local
promotional initiatives, telemarketing
• Unique health identity for each customer in clinic to track the service and
frequency of purchase
• Health check up promotions in certain occasions (World Health Day, World
Diabetes Day)
• Launched “Health Edge Card” to repeat customer with nominal amount of
Rs 500 and gain discounts on certain purchase for every visit. Nearly 7 out
of 10 are repeat customers
• Scratch and win programme, guarantee gift packages to drive custome r
SERVICE GUARANTEE:-
Regular 24*7 Consultative Support from
healthcare Pharmacy and diagnosis Apollo
facility service service Hospital

Quality Equipment
Ambience to Value based
training and Service
customer service to
program to support to
through space customer
Franchise franchise

Promotional Promotional Information and

Program Program support Institutional
support to to Customer support to
Doctor (CME) (DMP) franchise
SERVICE BLUEPRINT OF APOLLO CLINIC:-
POTENTIAL FAIL POINT IN THE HEALTHCARE
CLINIC SERVICE:-

Unavailable medical
equipment or
medicines

Unhygienic and lack

of quality standard

Overpricing & lack

of support to
customer
Absence of
Pharmacy &
Consultative
support
CURRENT SITUATION:-
Continue with Develop new
Vs
franchise model

• After six years of operation, AHLL is able to generate only 5

crores with low profitability. With aim of opening 250 clinics
within span of 5 years, it is only able to open 50 operated
clinics.
• Huge dependency on initial licensing fee of franchise to
recover financials
• Low conversion rate to franchise (<5%)- delay in
implementation after signing agreements
• To create repeat purchase, advertising plays a key role in
adding value to customer experience
RECOMMENDATION:-
• Volume of the treatment, standardisation of service, max customer are
one time visit in healthcare sector. Customer should be encouraged for
repeated preventive healthcare service through frequent check ups
and reduction in cycle time gap
• Aggressive market strategy is required to spread awareness and
create unique customer experience through ambient atmosphere
which will drive customer
• Franchise model is an effective medium to share risk and outsource
the activity. It would help Apollo Hospital to focus on core competency
• Proper training, motivation, recognition and incentive should be
provided along with awareness regarding pricing to avoid all the
unethical practice
 APPROACH TO CASE QUESTIONS:-
• Q1. Should the company continue with the franchise model at all?
Alternatively, should it decide on setting up an owned model?
Ans- Through franchise model-a) Apollo can able to enhance their market
coverage and diversify market b)outsource their activity to focus upon core
competency c) Franchise can predict location and changing behavior of
customer in better way. Hence coordination between Apollo and Franchise is
important.
Q2. Should the decision to launch the clinics under a new brand be reviewed?
Or, is there any way of exploiting the brand image of the Apollo Hospitals for
the Apollo Clinics?
Ans- Brand image and service should be restricted to low premium pricing to
drive middle class people as there are huge market of middle class people in
India. Hence competitive pricing won’t be working over there. Hence the
awareness should be spread with the help of franchise to change the mindset
regarding premium pricing charged by Apollo for services. Hence Apollo will be
successful in providing quality service to maximum people of India.
THANK
YOU!!!