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Contents

8
Preface
About the Authors

Chapter 1 Strategy Development


and the Strategic
Mindset
What Is Strategy?
Development of the Strategic Mindset
Clear Vision, Focused Strategy, and
Understanding by the Leadership
Focus on the Customer
Change Is Relentless
Search for a Better Way
Decision-Making Role of the Marketplace
Need for a Champion
Trade-Offs in Courses of Action
Beware of Growing and Shrinking at the
Same Time—Market Share Is the Key
Force and Focus
Unique Selling Proposition
Creating Barriers for Competitors’ Entry
and Minimizing Barriers for Self Exit
Diversion and Dissuasion
Growth in the Present Market
Fall on Your Sword
Summary
Questions for Discussion
Notes

9
Chapter 2 Understanding the
Strategic, Business, and
Marketing Planning
Process
Resolving the Confusion: Relating the
Strategic Plan to the Business Plan and
to the Marketing Plan
Business Plan
Marketing Plan
The Process of Starting a New Venture—
What It Might Look Like
When the Customer’s View Is Different from
Your View
Overall Strategic and Marketing Model
Summary
Questions for Discussion
Notes

Chapter 3 The Challenge of a


Competitive Marketplace
The External Environment
Environmental Trends
The Growing Use of Technology
Increase in Competition
Shifts in the Corporate Market
Summary
Questions for Discussion
Notes

10
Chapter 4 Step 1: Conducting the
Internal/External
Assessment
The Assessment Process
Blue Ocean Strategy
The Environment
The Market and Its Needs
The Competition
Internal Capability
Marketing Activities
Market Research
Summary
Questions for Discussion
Notes

Chapter 5 Step 2: Creating the


Mission, Vision, and
Critical Success Factors
Establishing the Context
Constituent Participation
Understanding the Difference Between
Vision and Mission
Should We Create A Broad or Narrow
Strategy?
Stating the Mission
Defining the Vision
Tools to Work Through the Vision
Conversation

11
What Should a Good Vision Statement
Look Like?
Critical Success Factors
What Next? Who Does What?
Summary
General Strategic Planning Checklist
Questions for Discussion
Notes
Further Reading

Chapter 6 Step 3: The


Strategy/Action Match
Perspectives on Strategy
Alternative Models for Considering
Business Strategies
Ansoff Product-Market Growth Matrix
Developing the Strategy/Action Match
Strategy Options
Setting Marketing Objectives
Summary
Questions for Discussion
Notes

Chapter 7 Step 4: Determining


Marketing Actions
Devising Tactics
Product/Service
Distribution
Pricing

12
Promotion
The Integrated Marketing Communications
Integrating Paid, Owned, and Earned Media
Advertising
Sales
Summary
Questions for Discussion
Notes

Chapter 8 Step 5: Integration of the


Marketing Plan with the
Business Plan and the
Strategic Plan
The Necessity of Integration
Integration of Plans with Other
Management Functions
Integration Within the Organization’s
Portfolio
Summary
Questions for Discussion

Chapter 9 Step 6: The Approval and


Monitoring Process
An End and A Beginning
Approval Process: Establishing Guidelines
for Selecting Among Alternative Plans
Monitoring Systems
The Balanced Scorecard
The Need for Contingency Plans

13
Planning for Next Year
Summary
Questions for Discussion
Notes
Further Reading

Chapter 10 Conclusion
Strategy Versus Tactics
Planning Issues
The Future of Strategy and Marketing
Questions for Discussion
Notes

Appendix A
Appendix B
Appendix C
Index

14
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Preface

15
T
hirty-five years ago, the first edition of this
book was published. Since that time, many
changes have occurred in the healthcare
environment. However, as we look back and re-
read our preface from that first edition, much of
what was written holds true today. As health care
continues to dramatically evolve, the need for
well-formulated approaches to market-based
planning as this text espouses and helps the
reader understand is ever more essential.

Thirty-five years ago, health care was


transforming, as we described, from a cottage
industry to a competitive market in which
organizations were restructuring to be more
organized entities to respond to a marketplace of
“buyers.” The provider systems now recognize
that it is important to understand the buyers’
needs and that identifying and deconstructing
competitive alternatives are key components in
effective market strategic planning.

In today’s healthcare environment, the forces of


change are rooted in technology, demography,
government policies, and structural shifts. All
these forces significantly impact the need for
healthcare organizations and the leaders of those
entities to be more sophisticated in planning their
marketing strategy and appropriate tactics
considering these forces. As we noted in the last
edition of this text, entrepreneurs recognized
health care as a place for considerable

16
opportunity. In this edition, many of these
entrepreneurial opportunities have resulted in
disruptive new services that influence the
strategies for others within the healthcare
provider ecosystem. Plans must be developed
considering the marketplace changes.
Demographics impact services in terms of
opportunities. Planning must reflect these realties
and shape marketing strategies. Over the course
of the previous four editions, government policies
have changed as health policy has changed.
While this book is not a discourse on
reimbursement rules and regulations, it is
important to link the environment to strategy and
to action and to understand the influence of these
forces. Finally, the structural shifts that have
occurred have been dramatic. As plans are
developed relative to the competition, new
entrants into the market, realignment with
mergers and acquisitions, and the impact of
global competitors all are ever more present
factors in the 35th year of this text’s edition.

These changes today make healthcare market


strategy ever more complex. Strategy under the
rules of cost-based reimbursement of some 40
years ago for those who may still remember and
long for them or those who study healthcare
reimbursement and wish they were the rules
today recognize the ease of management
strategy. Patients were admitted, care was

17
delivered for the necessary procedure, and the
costs were passed along to an insurer. Now,
there is value-based care, high deductible
healthcare plans, individuals who may still buy on
an exchange, “center of excellence” contracting,
reference pricing, as well as other variations that
may affect the price component of marketing as
well as overall marketing strategy.

In promotional planning, technology as well as


marketplace behavior has dramatically altered
over the decades. Social media strategies are a
major component of strategy and resultant tactics.
Competitors’ presence—along with third-party
sites for education as well as for evaluative
reference—is now utilized by consumers. Here
too, healthcare strategy must be linked to these
environmental shifts compared to the simpler
days of media that were dictated by broadcast
and print and message control and tactics under
the organization’s control.

Marketing strategy and planning today may be no


greater changed than in terms of distribution. New
technology and new competitors have entered
through Web-based alternatives. From a
competitive perspective, the organization and the
leadership must broaden their views with regard
to whom they consider within their competitive set
of players.

Finally, it is important to understand our goal in


this text. We have tried to further refine a market-

18
focused approach between strategy design and
tactical implementation. Reading an introductory
text in marketing or strategic management alone
does not equip one to take the next step in
planning a strategy with the tactics to move the
organization to act. In our foundation of creating a
strategy/action match based on when an
organization enters the market and the stage of
market development, a leader can consider the
alternative possibilities in terms of strategy and
the appropriate tactics to consider.

For those who have used the earlier editions of


this text or for our loyal readers of the past
edition, you will notice many updates and
additions in each of the chapters throughout this
text, some of which we want to highlight for you.

Chapter 1—The first chapter sets the stage for


the balance of the text. The chapter is a set of
basic observations and beliefs that that we have
found helpful when working with organizations as
they develop strategies and actions. Over the
years, we have observed—to the dismay of many
executives—that change is relentless and that
clear and dedicated focus is critical. We also
would suggest that before a senior management
team or board of directors or a group of
physicians begins the strategic process, it would
be wise for them to use Chapter 1 as a starting
point to gain a common understanding that we
call the strategic mindset.

19
Chapter 2—The process of creating an
integrated strategic and marketing plan begins
here. First, it is necessary to clarify the
connection between the strategic plan, the
business plan, and the marketing plan to avoid
confusion. Furthermore, for each of these
elements, we offer key observations to enable
executives to make better decisions. For
example, we note that in many strategic plans,
these plans are often too general to offer
guidance to managers or too far removed from
reality to be believable. In this chapter, we offer
ideas that are designed to help executives
establish clear strategies and integrate strategic,
business, and market plans.

Chapter 3—This chapter discusses the changes


in the competitive marketplace. As a result, you
will notice significant changes, updates, and
additions throughout your reading. As the U.S.
policy on immigration is changing, there is some
discussion regarding how the immigration
population affects population growth in the United
States. Additionally, there is an interesting
discussion of patient portal use across ethnicity.
Similarly, there is an expanded and significantly
revised discussion of aging in the United States.
In this chapter, we provide the concept of
domestic tourism as a new factor. The discussion
of transparency has been significantly revised

20
with greater depth of government transparency
sites, along with third-party sites, such as YELP.

Chapter 4—In this chapter discussing the


Internal/External Assessment, we have added a
new and important presentation on Scenario
planning as an input to internal assessment. More
so in this edition than in the previous, our review
of the SWOT and Five Forces model has
increased emphasis on healthcare examples for
students who might use this text as well as
greater applicability for practitioners. A significant
change is the addition of a third model or
framework “Blue Ocean Strategy” that has
recently received some recognition in the
management literature. It is helpful to consider
these three models (SWOT, Five Forces, and
Blue Ocean) in the context of the Strategy/Action
Match presented in our book. Finally, in the
section on market research data, we have added
a new discussion on sentiment (opinion) mining
that is now being utilized to analyze discussions
in social media sites.

Chapter 5—Ultimately, this book is about


achieving to actionable marketing strategies. In
order to get to that specific level, organizations
need to be clear about who they are (mission),
where they are going (vision), and what is critical
in terms of a successful vision (critical success
factors). Successful business organizations
typically know where they are headed, and they

21
begin to place resources to achieve that vision. In
health care, we tend to see less than accurate
mission statements, generalized vision direction,
and little attention or investment in critical
success factors. This chapter is designed to add
more rigor to the mission, vision, critical success
factor conversation, and decision-making.
Chapter 6—The healthcare environment is
constantly changing at the local, statewide, and
national policy levels. Some organizations are
growing, while others are not. Disruption is a
common term at the clinical, health system, and
payer levels. Growing organizations have
different tactical opportunities than organizations
that are in decline. The focus of this chapter is to
help organizations understand the kind of
marketing tactics they should use for each major
market condition. This model that we created is
called the “Strategy/Action Match.”

Chapter 7—This chapter focuses on the


determination of marketing actions. Within the
Product/Service section, a central component is
the evaluation of core quality. As a result, we
have expanded our presentation of the federal
government’s expansion of their comparison
websites for quality and its impact on
reimbursement. In response to greater structural
changes in the healthcare industry with mergers
and acquisitions, there has been more focus on
branding. Strategy and the resultant tactics have

22
been at the forefront of marketing concerns. This
edition has an expanded and revised discussion
on choosing a brand strategy. Similarly, as the
changes in distribution strategy and tactics have
been so significant since our last edition, we have
revised and enhanced our approach in this
chapter; readers of prior editions will note the
impact of technology discussion in terms of the
distribution and channel and the discussion on
the changing nature of channels. In terms of
marketing actions, pricing has undergone
significant enhancement as the tactics in this
component of marketing have seen renewed
emphasis within health care since our last edition.
Discounting, contracting variations, center of
excellence contracting, price bundling are but a
few of the tactics to consider within the marketing
planning approach. “Integrated Marketing
Communications” is a new section in this chapter
within the overall discussion of strategy in
promotional planning. This edition also has
included the costing discussion regarding how to
do so for digital media alternatives.

Chapter 8—Coordination is the focus of this


chapter. Understanding how one clinical product
line, such as the cardiology marketing plan, fits as
a part of the overall business plan is key. Creating
a system where multiple hospitals in a system
work in concert is the focus of this chapter. This
concept can be difficult because while hospitals

23
might be in the same system, individual hospitals
may still compete even though they are part of
the same organization. Great strategies on paper
often become difficult to execute when it comes to
coordination across health system or clinical
lines.

Chapter 9—Creating strategy and implementing


it can be energizing. Monitoring strategy can often
be less satisfying. But it is necessary. All
organizations monitor results monthly with
financial statements. This chapter assumes that
financial statements are in place. Therefore, the
goal of Chapter 9 is to provide ideas on how to
monitor results that go beyond the traditional
financial statements, and we provide ideas on
how to evaluate marketing tactics, including
salespersons and advertising results.
Chapter 10—In our last chapter, we have added
a brief new discussion on “expecting the
unexpected” and the steps by which this must be
factored into the planning process. Additionally, to
enforce reexamination of assumptions,
organizations intent on developing a plan with a
team must consider “the inclusion of programmed
conflict.” We have observed that many
organizations often say, “The marketing dollars
were poorly spent.” While in many instances that
statement might have some merit, we have added
a new discussion of the sequence of values
process and promotional expenditures as it

24
pertains to the marketing message. The role of
the Chief Marketing Officer is changing, and we
have provided in this edition three trends that are
making this role more important to consider.
Hopefully, with some guidance in implementing
strategy and tactics in this book, we have helped
in some small way.

25
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