Introduction to Marketing
What is marketing intended to do?
Marketing is a term broadly used to describe activities associated with identifying markets as well as interesting potential customers and clients in your services. Marketing involves researching, analyzing, developing, promoting, educating, and informing.
Marketing should answer two important questions:
- Is there a market for the service you are proposing to provide?
- How can we best reach the market for our product or service?
Marketing answers these questions by performing two distinct activities.
- Market Research and Analysis: the analysis of the marketplace that supports program design and business model development decisions
- Promoting, Informing and Educating: the strategies, materials and activities that best promote your service or program
The first question “Is there a market for the service you are proposing?” is the most important. Answering this question is the purpose of a market analysis.
The second question, “How can we best reach the target market for our product or service?” will identify how to best engage your key customers. This is the promoting, informing and education component of marketing.
Why is a market analysis critical for success?
A market analysis helps you clearly define your program, how it is unique and the specific customer needs it fills. It also determines if there is a demand for the service that is backed by the willingness and/or ability of customers to pay for the service. This is called purchasing power.
A strong market analysis will identify: how your new program provides value to your customers, if your program is competitive in the marketplace, how best to engage your key customers and if you have a sustainable model for service delivery.
When should marketing efforts start?
Marketing starts when the service or program is being defined and developed. Marketing research and analysis activities should be incorporated into needs analysis and business plan development. When your product, customers, and external environment are clearly defined, you can begin to develop the materials and activities to promote, communicate, and educate your customer groups.
How does a market analysis fit into the needs analysis and business plan?
A market analysis uses information derived from a needs analysis to assist in defining a program or service that meets needs. The identification and analysis of customers, service/product alternatives, competitive organizations and services, and internal organizational factors are used as part of the overall business plan.
Why do I need to consider both need for services and demand for services?
Need for Services and Demand for Services – there is a difference. A community may need increased availability of medical specialty providers and telemedicine may be an optimal approach for providing these services.
One of the most common errors new telehealth programs make is to assume that since there is a need for the service, there is automatically a demand for the service. You probably have performed a needs analysis to determine the health care needs that are not being met. You identified needs that could be filled using telehealth. Now you need to consider the demand for the telehealth service.
Demand asks what purchasing power is available to pay for the fulfillment of an identified need for a program or service. If there is no purchasing power or revenue to support the program or service, there is no effective demand. Effective demand means that you want something and have the means and are willing to pay for it. Thus, there is both a desire for a service and the means to pay for it. Effective demand does not always require a positive return on investment or revenue generation but it does require some sustainable means to pay for the program, such as an identified level of subsidy or cross-subsidization in an organization.
While the benefits of telemedicine are substantial and meet many community needs, it is critical to know if that need or desire can be backed by the purchasing power necessary to support the creation and operation of the program.
Part of your development tasks will be to determine if you can create a business model that has revenue sources and purchasing power to create effective demand.
Sometimes development grants provide the initial purchasing power to create effective demand in anticipation of creating a model for sustainable demand. Many early telehealth programs dived into the business of telemedicine, with only a basic understanding of need and little or no information on effective demand. As more and more programs enter the market and compete for funding and services, there will be a need for more formal market analysis to assure demand exists for your program. It is dangerous to begin a telehealth program on the assumption that grant funding will provide the effective demand throughout the life of the program. Many unsuccessful telehealth programs began with the assumption that grant funding would service as a continual business foundation.
Sometimes a telemedicine service may not be independently self-sufficient but is seen as having such a significant benefit and is in such alignment with an organization’s mission that a decision is made to operate telehealth services through subsidies from other departments. If that is going to be the case, it is important to understand the nature and extent of the subsidies early on. Sometimes telemedicine services are part of an overall business strategy where telehealth may not be independently sustainable, but when combined with other services, may bring in customers or revenue to another area of the health system. Looking for these opportunities during your program’s development is important. Sometimes the program creates efficiencies in other service areas and the efficiencies gained outweigh the cost of creating and operating the telehealth program.
For example, a regional medical center may have a specialty service program with many types of specialists available. Providing telehealth services to a rural community on its own may not be financially sustainable but the income generated from follow-up procedures or diagnostic testing at the regional center may in fact pay for the telehealth portion of the specialty outreach. Alternatively, a telehealth service may be viewed as analogous to a medical center’s IT department. That is, the telehealth service may be seen as a cost of doing business that provides prestige and credibility to the organization and attracts patients for other services.