What is a Health Care Marketing Plan

8/3/2019 What is a Health Care Marketing Plan

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What Is A Health Care Marketing Plan?

By Stewart Gandolf and Lonnie Hirsch

Here's How We Develop Hospital Marketing Plans,Medical Marketing Plans and Dental Marketing Plans ForOur Clients

A marketing plan is not a list of marketing ideas from which yourandomly select different concepts to test or combine for trial-and-errorexperimentation. That is just random, episodic, spaghetti-on-the-wallmarketing activity - which is almost always a high-risk prescription for

disappointment, frustration and failure.

A marketing plan is a strategic document that is designed to facilitatethe achievement of specific business goals and objectives over aspecific time period.

Would you consider hiring contractors to build out your new office orclinic without first developing and approving the architectural

blueprints? Well, that's essentially what you are doing when youengage in random, reactionary marketing activities without firstdeveloping a well thought out marketing plan.

Most marketing plans are conceived to extend no longer than oneyear before the plan is reassessed for modifications, additions,subtractions or entire reinvention depending on constantly evolvingbusiness goals and circumstances. In fact, a properly implemented

marketing plan is constantly being assessed by accurate andconsistent tracking systems to evaluate the plan's performanceagainst expectations. This continual evaluation is performed so thatongoing adjustments can be made to improve the plan's yield.


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Target Marketing - Establishing Target Customers

Your marketing budget is going to be most effective when it reachesyour selected target market. The benefit of target marketing is

simpleefficiency. Solid target marketing is a method to moreefficiently reach your customers*. Target marketing is a better use ofyour most valuable resources, i.e. time and money, to generateadditional revenue.

(* In this website, we use the terms "patient" and "customer"

interchangeably. We do this intentionally because it is vital that you and

your staff think of and treat your patients AS customers and not simply

as medical or dental charts and records. Apparently, this is easier saidthan done if you judge by the way most patients are treated in most

healthcare practices.)

Your goal is to get to know as much information as you can about yourexisting or prospective customers. The more you know about yourcustomers, the better you will be able to make decisions that willenhance your ability to communicate and connect with them.

Who do you consider will benefit the most from your products andservices? Think of the people and their most common characteristicsand attributes. One of the best ways to identify your target market is tolook at your existing customer base. Who are your ideal clients? Whatdo they have in common? If you do not have an existing customerbase, or if you are targeting a completely new audience, speculate onwho they might be, based on their needs and the benefits they will

receive. Investigate competitors or similar businesses in other marketsto gain insight.

Four Ways to Identify Target Markets


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Use these four category areas as you collect information to identifyand define your target market:

1. Geographics: The location, size of the area, density, and climate

zone of your customers.

2. Demographics: The age, gender, income, family composition andsize, occupation, and education of your customers.

3. Psychographics: The general personality, behavior, life-style, rateof use, repetition of need, benefits sought, and loyalty characteristicsof your customers.

4. Behaviors: The needs and wants your customers seek to fulfill, thelevel of knowledge, information sources, attitude, use or response to aproduct of your customers.

Focus on Benefits

One of the marketing fundamentals is focusing on benefits. This

perspective is critical to target marketing. Establishing an intimateunderstanding about the needs and wants of your desired targetmarket is critical. How will your customer benefit from using yourservices or products?

What tangible or intangible benefits might customers realize, and is itpossible to quantify these benefits? What is your customer reallybuying? This much is certain: No one wants to buy surgery! Ordentistry! Or physical therapy! Or invasive procedures!

People purchase services and products (including healthcareservices) to realize one or more of the following life-improvementbenefits:

1. Pain relief


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2. Productivity

3. Abilities

4. Confidence

5. Appearance6. Personal relationships

7. Peace of mind

Basically, you all sell the same product - a happier life. At least, that iswhat your customer wants to buy.

The Target Market Profile

The target market process allows us to break down these groups ofpeople so we can better understand how to reach them. One way todo this is to create a target market profile. Here is an example of atarget market profile:

1. Geographics:

y Lives within the ZIP codes 97401, 97402 and 97405.

2. Demographics:

y Married.

y Between the ages of 21-35.

y At least one child.

y Condominium or home owner.

y Education experiences beyond high school.

y Earning a combined annual family income of $50,000 or greater.

3. Psychographics:

y Values time and considers it their single most limited resource.

y Excited about accepting and using innovative ideas and products.


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y Consistent Web users. Prefer the Internet over magazines andnewspapers for information they trust.

y Increasing resources invested into safety and security issues.

y Beginning to plan for their future.

4. Behaviors:

y They are leaders in product selection and respond to the opinionsof the "industry experts" when making purchase decisions.

y This group will first look to the Internet to acquire this information.

y They defend these decisions under most any circumstance and willadamantly "sell" those that ask why they use the product or service

and why they made the choice they did.y This group can be a powerful, unpaid sales force resulting from the

referral network they build and use.

Competition

Success is not achieved by ignoring your competitors but rather by

anticipating competitive issues and influences so you can always havea proactive plan and strategy for staying ahead of your competition.There are many ways to compile good research on your competition.Here we will list the easiest and most effective processes.

Internet Competitive Research

Media Competitive researchEar-to-the-ground Competitive Research

Analyzing Your Data

Internet Competitive Research

In today's Internet society, access to information has never beenbetter or easier.


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For the primary competitors you have already identified, you canconduct a simple Google search with the name of the practice or thename of the owner(s) and that will usually lead you to their website (ifthey have one). In many cases, their website will feature how they areattempting to position and differentiate themselves, as well as listingthe scope of programs, services and/or products they offer.

In addition to a competitor's website, you may also find otherinteresting information about the provider(s) or the practice. Thisinformation might include articles they have authored, mediainterviews, legal actions that are public information, etc.

For a more comprehensive list of your competitors, you can do anInternet search by your profession or specialty and your area, just likea prospective patient might do. For example, if you type "plasticsurgeons Los Angeles" you will draw up a search result that includes:

y sites that list plastic surgeons throughout the Los Angeles area

y "find a doctor" sites

y Yellow Pages online directory sites

y individual sites of some of your more sophisticated and aggressiveInternet competitors who have managed to get a high searchengine ranking for their website through effective searchoptimization.

In many cases, the compilation list sites include links to the individualpractice websites (if they have one).

Media Competitive research

There are many ways you can study your local media to get additionalcompetitive information.

For example, even though Yellow Pages advertising has beenimpacted somewhat by increasing Internet marketing, you will still find


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the most aggressive marketing competitors through their large spacedisplay ads in your local Yellow Pages directories.

As with your competitive website research, you will learn from these

Yellow Pages ads how your more ambitious competitors try to positionand differentiate themselves, as well as the programs, services andproducts that they offer, their hours of operation, special features andbenefits, emergency access, etc.

You can also scan and collect competitive advertising from localnewspaper ads, direct mail, TV commercials, radio commercials,billboards or other media. When you pay more attention, you will also

begin to notice any articles, publicity or other public relations exposurethat your competitors may achieve in the media.

If you don't live in the area where you practice, you can enlist the helpof others who do live in the area of your practice. This group mayinclude employees, friends, relatives or even your patients (assumingthey are unquestionably loyal to you).

Ear-to-the-ground Competitive Research

Often, this type of "in the field" sleuthing is the most effective way togain competitive intelligence, especially from those competitors whosemarketing is not advertising-based or visible in the media. You can -and should enlist a virtually army of "special agents" who areconditioned to have their ears to the ground for anything they hear orlearn about your competitors.

This group includes pharmaceutical detail reps, vendors, loyalpatients, hospital staff, your employees, friends and relatives. Youmay be surprised at how much information is available to you if youknow how to uncover it.

Analyzing Your Data


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When you ferret out valuable competitive research, you need to takeadvantage of what you learn. Success in business is aboutanticipation, planning and action. Business is not designed to be fairand 80% of the business will go to 20% of the players (The 80-20Rule). The winners in that 20% group are able to anticipate, plan andtake decisive action before their competitors even know what hit them.

Analyze your competitive research and put together your own decisiveplan of action that is designed to put you (or keep you) at the top ofthe food chain.

SWOT Analysis (Strengths, Weaknesses, Opportunities

and Threats)

SWOT is an acronym for Strengths, Weaknesses, Opportunities andThreats. A periodic evaluation of your internal and externalenvironment is an important part of the strategic planning process.Because SWOTS are inherently subjective, it is always good to get anexternal SWOT analysis from a well-informed but objective third partythat can be compared to your own SWOT.

Strengths and Weaknesses are the internal evaluation components ofthe SWOT. Opportunities and Threats comprise the externalevaluation.

One of the more interesting definitions of marketing is that "Marketingis the process by which resources are brought to bear againstopportunities and threats." In order to determine which resources youcan bring to bear against opportunities and threats, you have to

understand your strengths and weaknesses.

Strengths are your capabilities and resources that can be used as thebasis for developing a competitive advantage.Strengths could include:


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y your special expertise and/or experience

y a new, innovative product or service

y location of your business

y

quality processes and proceduresy any other aspect of your business that adds value to your product

or service. Weaknesses include areas you need to improve and/oravoid. Weaknesses can sometimes be considered as the absenceof certain strengths. In some cases, a weakness may actually bethe flip side of one of your strengths.

Weaknesses could include: - lack of marketing expertise, plan orsystem (or all three) - undifferentiated products or services (i.e. in

relation to your competitors) - location of your business - poor qualitygoods or services - damaged reputation In addition to new orsignificant trends or other opportunities you may already know,additional opportunities can spring up based on your externalenvironment analysis. Opportunities could include:

y a developing market (such as the Internet)

y a new technology, service or procedure you can offer

y mergers, joint ventures or strategic alliancesy moving into new market segments that offer improved profits

y a market vacated by an ineffective competitor

y changes in population profile, social patterns, lifestyle changes,etc. A threat could be anything that stands in the way of yoursuccess. No practice is immune to threats, but too many practiceowners miss or ignore these threats, often at great cost.

Threats could include:y a new competitor in your home market

y price wars with competitors

y a competitor has a new, innovative product or service

y competitors have superior access to channels of distribution


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y economic slowdown

y change in governmental policies and/or regulations

y changing insurance plans and/or contracts for major areaemployers Simple rules for successful SWOT analysis

y be realistic about the strengths and weaknesses of your practice

y analysis should distinguish between where your organization istoday, and where it could be in the future

y be specific. Avoid gray areas.

y always analyze in relation to your competition i.e. better than orworse than your competition

y keep your SWOT short and simple. Avoid complexity and over

analysis Once key issues have been identified, they feed intomarketing goals. You can also apply SWOT analysis to yourcompetitors. This may produce some interesting insights!

SMARTGoals

You are probably familiar with popular quotations like "You can't hit atarget if you haven't even decided where to aim" or "You don't have tobe great to get started, but you have to get started to be great."

Well, it may be familiar but it also happens to be true.

So many businesses fail to thrive because they have never reallyestablished SMART goals. SMART is used as an acronym in goal-setting discussions.

S=specific, significant, systematic, synergisticM=measurable, meaningful, motivational

A=achievable, agreed-upon, action-based, accountableR=relevant, realistic, responsible, results-oriented, rewardingT=tangible, time-based, thoughtful

Long-term vs. Short-term goals


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Most businesses that consider goals seriously establish both short-term and long-term goals. Marketing plans are generally real-timeexercises in goal-achievement, so most marketing plans emphasizeshort-term goals (achievable within one year or less). Remember thatmarketing plans are organic, dynamic and constantly evolving, so theyare well-suited to short-term goals.

If you are just establishing or reinventing your marketing system, youmay also establish long-term goals in your initial marketing planbecause you will need to include long-term system infrastructure inyour initial marketing plan. However, with ongoing, year-to-yearmarketing plans, short-terms goals will typically be the primary focus.

Marketing Strategies and Tactics

After you have identified your goals, you need to evaluate, prioritizeand organize the combination of specific marketing strategies andtactics that will be best suited for you to use in pursuing your goals.

A well constructed marketing plan is a perfect illustration of a wholethat is greater than the sum of its parts. The selected strategies andtactics work synergistically to complement one another for exponentialpositive results.

Goals vs. Strategies vs. Tactics

Goals are specific, measurable, achievable, relevant and tangiblebusiness objectives. (SMART, remember?)

Strategies are the ideas and approaches that are developed toachieve the goals.

Tactics are the specific actions, details and activities that must occurin order for the strategy to succeed.


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Here's one good example of the relationship between goals, strategiesand tactics. This example represents only a few of the possiblestrategies and tactics for the sample goal.

Goal: Increase new patient volume by 20% in the next year

Strategy: Improve patient experience to inspire more word-of-mouthreferrals

Tactics:

y Institute quarterly customer service training sessions for staff andowners

y Create incentive program for staff based on increased referralvolume

y Devote one staff meeting per month to new ideas for improvingpatient

experience - Create and display a framed poster in reception areadefining our practice's unwavering patient satisfaction commitment

Strategy: Leverage relationships with established patients andimproved patient experience for more word-of-mouth referrals

Tactics:

y Develop and institute new patient satisfaction survey. Leave spaceon survey for happy patients to refer others.

y Practice owner(s) asks patients for referrals at opportune times

y Staff supports owner(s) with additional encouragement to patients

to refer when the opportunity presents itselfy Post "Thank You For Referring" bulletin board in reception area

with names of patients who have referred others

Strategy: Develop and test targeted external advertising campaign


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Cost Centers vs. Revenue Centers

Most practice owners and administrators put most of their focus onbudgeting for operational cost centers. A cost center is an accounting

term used to refer to a department in a business that incurs expensesbut does not generate revenue directly.

Basically, your cost centers cover the expenses that are required toservice and operate your business.

A revenue center, on the other hand, refers to departments and/oractivities engaged in by the business that generate revenues directly

into the business.In other words, money in your business flows out of your cost centersand money flows in to your revenue centers (or should). Another wayof understanding the relationship is that without sufficient revenuecoming into the business, you will not be able to afford to fund yourcost centers without operating in the red, which eventually leads youinto the blackhole of bankruptcy.

Revenue centers also incur expenses for the specific purpose ofstimulating and generating revenue into the business - unlike costcenters, which are required to operate the business but do notgenerate revenue directly.

Revenue Center Profit Influences vs. Cost Center Profit Influences

Because cost centers service the revenue generated by the business

but don't contribute directly to that revenue, the key to increasedprofitability in cost center management is based on efficiency. Themore efficiently the business functions to keep operating costs as lowas possible without compromising quality, the more profit that is left atthe end of the process.


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Since most of the focus of owners, administrators and management ofthe practice is on cost centers, it is common for owners and managersof the practice to assume that keeping costs under control is the keyto all profitability for the business.

To operate the practice with this mentality is often a critical mistakebecause the cost center profitability model does not work for revenuecenters. In fact, the exact opposite model applies to revenue centerprofitability.

Revenue centers require "fuel" in the form of investment capital inorder to stimulate and generate the desired revenue. (The old axiom

that "it takes money to make money" definitely applies here.) If youdon't put enough fuel in your engine, you're going to run out of gas!

Marketing is a Revenue Center - NOT a Cost Center

Because marketing is primarily concerned with generating andprotecting sources of revenue, a marketing budget belongs in arevenue center, not a cost center. Marketing budgets should beevaluated in the context of supporting your SMART goals.

If you don't have the financial resources or the willingness to committhem to this category of investment in the growth and/or protection ofyou, you may need to rethink your goals and possibly establish lessambitious objectives.

Marketing Budgets Based on Month-to-Month Cash Flow are NOT

Budgets

Effective marketing is a consistent, ongoing process based on solidsystems, good planning and excellent implementation. If you attemptto fund your marketing budget based on a month-to-monthassessment of positive cash flow, you will find that you cannot


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maintain consistency in your marketing plan and your results will beseriously compromised - sometimes disastrously.

A marketing budget must be taken seriously as a financial

commitment to your business success or your efforts will almostcertainly be doomed to disappointment and failure.

Does this mean that you have to have your entire annual marketingbudget secured in some separate account before you begin yourimplementation program? Not necessarily.

You may not have all of your necessary budget funding set aside

when you start, but you have to know with confidence that you willhave access to those funds as you need to utilize them without havingto rely on the hope that your cash flow will be continuously positiveenough to support your budget without compromise or interruption.

Budget Models

There are many different budgetary models you can consider. Herewe list the most common, in order from the most highly recommended

for practice owners who are serious about their goals to those modelsthat are not recommended but do exist.

Objective and Task Budgets

This method is probably the "purest" budgeting method for amarketing plan. Here the budgeter must specify exactly what goalsand outcomes are expected. Budgets are then based on this expected

outcome. (For example, the primary objective could be to increaseoverall revenues by 20% over a 12-month period.)

The following steps are followed in developing an Objective and TaskBudget:


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a. Specify the marketing objective(s) to be achieved. Ideally, thesegoals must be quantifiable and measurable.

b. Specify the marketing strategies and tactics necessary to achieve

the stated objectives (i.e., brand development or enhancement,advertising, public relations, networking, internal marketing, training,etc.) including quantity and frequency of activity and associated costs.

c. Evaluate profitability of marketing plan if goals are achieved at theexpected costs.

c. Assuming profitability level is acceptable, assign budget based on

anticipated costs associated with strategies and tactics necessary toachieve the goal.

d. Launch plan, monitoring and tracking closely to adjust strategiesand tactics as necessary to achieve, maintain or exceed anticipatedprofit levels.

ROI-based Budgets

In this model, the marketing budget is established based on a ratio ofanticipated return-on-investment for the budget and its associatedmarketing activities. The challenge in ROI-based budgets comes inidentifying a reasonable expectation for return.

Most ROI-based budgets work from a source of quantified data onperformance of similar marketing plans or activities in similarsituations and circumstances to those of the budgeter. The difficulties

in this model are a) limitations on availability of statistically meaningfulcomparative data; and b) there is no guarantee that the performanceof the new budgeter's marketing plan will mirror those whose data wasused for the ROI modeling.


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There are many variables that affect the performance of a marketingplan which are difficult or impossible to measure and compare. Theseinclude personal initiative, attitude, sales skills, focus, etc.

Still, ROI-based budgets are employed in certain situations - assumingthe data is available - where a marketer wants some level ofreassurance, however unscientific, that the odds of success are intheir favor.

Percentage Method

In using this method, the budgeter simply allots a predetermined

percentage amount for marketing. That percentage might be apercentage of profits, a percentage of revenues, a percentage ofsales, etc.

Although this method is easy to administer, there are some problemsassociated with it.

For example, how do you determine what percentage to assign formarketing? Is 5% too much? Is 2% too little? The assignment of a

percentage is typically subjective or even arbitrary, based on advice offinancial advisors, experience, "gut feel" or other factors.

Also, with this method, the marketing budget increases as profits,revenues or sales go up or are expected to go up. What happens to anew product with few sales? Also if there is a recessionary period,sales generally go down. If sales go down, advertising dollars alsodecline. In this situation, it may be wiser to increase marketing budget

to generate additional market share and sales rather than letting themarketing budget have less financial support.

The percentage method of budgeting does not necessarily correspondto goal achievement, even if it worked successfully during a previousperiod.


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Zero-based Budgets

A zero-based budget is one where you start with no predetermined orauthorized funds. In a zero-based budget, each activity to be funded

must be justified - or re-justified - each time a new budget isevaluated.

The problem with zero-based marketing budgets is that the basicconcept of the model compromises consistency, which is essential forlong-term success in marketing. For most small business owners,zero-based budgeting means that each marketing expenditure, eventhough previously assigned to the plan and marketing budget, is

constantly being re-evaluated and re-justified as the money needs tobe committed.

Most small business owners find it difficult or impossible to avoidsecond-guessing their previous commitments due to fear or financialstrain of the moment or uncertain circumstances or any combination ofthese factors, most of which are constantly present in a smallbusiness environment.

Often, therefore, previously committed marketing activities andassociated funding is withdrawn or reallocated. This interrupts or evendestroys the consistency of the marketing effort and the chances forsuccess of the plan as originally conceived.

SWAG Budgets

SWAG is defined variously as everything from "super wild ass guess"

to "sophisticated wild ass guess" to "scientific wild ass guess" to "sillywild ass guess." Regardless of your preferred definition, please notethe common words in all the variations.

SWAG budgets are anything BUT scientific. Usually, these budgetsare based more of emotional beliefs, perceptions, misperceptions and


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comfort levels. Rarely and only accidentally do SWAG budgets haveany relationship to success in achieving one's goals.

All-you-can-afford Budgets

In this method, the budgeter looks at the funds that remain after allother budgets have been developed. Whatever is left over is spent onmarketing.

This is usually a model for disappointment and failure of the marketingplan because marketing has already been determined to be ofrelatively low importance and priority to the business.

On-the-fly Budgets

This is the most common method for assigning marketing costs inmost small businesses - particularly in private practice healthcare. It isalso the most consistently unsuccessful.

On-the-fly budgets are not really budgets at all. Marketingexpenditures are determined on a case-by-case basis as a marketing

opportunity is identified. There is no real plan, no strategy - justreactive, spontaneous behavior. It is not difficult to understand why themargin for error is so high and the odds of success so low with thismethod.

Marketing System

The quality of implementation of a marketing plan is certainly ascritical as the quality of the plan itself to the chances for a successfuloutcome.

While the success formula here may not exactly correspond to theThomas Edison quote that "Genius is 1% inspiration and 99%perspiration," it is clear that effective implementation of a well


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conceived marketing plan is at least half the battle. Dramaticdifferences in the outcome of similar or identical marketing strategiesand plans, executed in similar or identical situations, reinforces thisreality.

Like so many other business processes, marketing implementation isfar more successful when a practice executes a solid marketing planwith the support of a structured system.

See What is a Marketing SYSTEM? for extensive details on how tostructure and manage a successful, ongoing implementation systemto support your marketing plan and get the most yield from your

efforts.

What is a Health Care Marketing Plan

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