Physician Marketing Strategies [new title]

Kellogg’s or Post! – What can you learn from Circuit City! – Apple anyone?

Anuj Pant
November 2010

With increased competition from competitor facilities, physician relations and marketing must
continue to move forward; finding ways to improve upon the services they provide to clients.
Companies that succeed are those that realize the need for modernization and understand that
lack of it will lead to stagnation in their businesses. Hence they take steps that will create a
niche for them in the market and will help them gain a bigger share in their industry. The
present times – filled with uncertainty and doubt – present itself as challenging and exciting by
virtue of the fact that companies will need to chase a decreasing number of customers.

How can you better prepare for market downturns like the recent recession? Can
you do something in the present that will prepare you for the events that are
beyond your control?

Undoubtedly you as liaison officers are well aware of the recent market downturn and like so
many other industries, healthcare has been affected as well. Not only are patients holding back
on non-essential medical procedures such as hip replacement and other minor procedures,
they are more likely to wait on other non-life threatening procedures too. Unlike yesterday
when patients would come to a hospital whenever they needed care, patients today are more
prone to prioritize health needs.

USA Today reports that in the first six months of this year, healthcare spending declined by
0.2%1 and looking at slow pace of the market recovery, it doesn’t seem very likely that this will
improve in the short-term. Given these long odds, the only plausible way to start your
company’s recovery is innovation: whether it is in terms of delivering new products to the
market or better dissemination of information about your existing services to a larger base of
customers than you currently have.

Throughout this year, the thought that has been taped to the head of any marketer, healthcare
or otherwise, is the fear of declining business. The bad news is that business has declined on all
fronts and not just healthcare. The even bad news is that things might not improve in the short
term. However, the best news is that it doesn’t have to be that way for your business. With
clever marketing and better utilization of the existing resources you have, you will be able to

1
http://www.usatoday.com/news/nation/2010-09-02-1Ahealthcare02_ST_N.htm
grow in any market conditions and should also be able to ride out through any downturn with a
bigger market share than you previously had.

Kellogg’s or Post!

“Recessions often weed out weaker brands making category leaders

even stronger.”2

- “Brand Building in a Recession”

In the late 1920s, the country was entering the Great Depression. Just like any other market,
the sales of cereals were falling. In the face of decreasing sales and increasing hardships, Post
cut back on advertising spending3. At the same time however, Kellogg’s took the other way
around: it doubled its advertising budget and focused heavily on radio advertising releasing its
new cereal “Rice Krispies” [Snap, Crackle, and Pop also appeared during this time].

Now turning the clock to 1933 when the country is still in the midst of the depression, we see
that the strategy taken by Post backfired. Its sales remained sluggish. On the other hand, profits
at Kellogg’s had risen by thirty percent. To this day, Kellogg’s still remains dominant in their
market and Post has had to play catch up ever since.

Let us now play a little game. The answer: Kellogg’s. I think I can guess your question: which
company would you rather be? Unsurprisingly, the Kellogg’s strategy has been imitated by
many other companies. Hospitals in Chicago spent 16% more in advertising in 2008 than in the
previous year with some hospitals spending almost 70% more than the previous year. This
spending spree despite the recession only shows that marketing is a very effective way of
increasing business during slumps.

In times of tapering market conditions, marketing can help stroke up demands by keeping your
brand and products in the public consciousness. The first casualty of downturn is always
marketing budgets; but if you decrease marketing efforts, it only follows that customers
number will soon follow suit. So, if you are in a situation with lower advertising budgets, find
out one strong point that sets you apart from all of your competition and focus on that core
strength. Good marketing is a very important ingredient of any good business plan and
marketers must understand that lack of it will hurt their business.

What can you learn from Circuit City!

2
Mark Gallagher and Laura Savard Brand Building in a Recession http://www.blackcoffee.com/brand-
related/brand-articles/brand-building-in-a-recession
3
James Surowiecki Hanging Tough (The New Yorker, 2009)
There was a time when Circuit City was a retailing juggernaut; but that was the past and now it
is non-existent in any physical form. Having successfully expanded its operation during the 80s
and 90s, the retailer rested in its laurels while old competitors advanced and new competitors
took a slice of their pie. In the face of decreasing sales, Circuit City took a new step to cut costs.
It fired 3000 of its best performing salespeople and replaced them with high-school teenagers.
As a result of this, customer satisfaction dwindled. So did sales and now, the company is gone.

“Business has only two functions - marketing and innovation.” 4

- Milan Kundera

Circuit City could not understand the nature of its own business. In electronics retailing, a store
needs salespeople that understand the products on sale because of the complexity of the sale
and a natural tendency of customers to know as much as possible before investing on a $2000
HDTV. Hiring high-school students works for Walmart because in Walmart, salespeople are
clerks that stock products on the shelf. Nevertheless, Walmart too has a dedicated electronics
clerk in every superstore.

You, as liaison officers, need to understand your business and know what potential patients
look for. You are in the business of long-term relationships with physicians who send you their
patients hoping that they get the best care. McKinsey Quarterly shows that 70 % of doctors
were influenced by their patient’s requests when deciding the hospital to send their patients
to5. Thus, one bad experience will result in the patient moving to a different hospital.

“Tactics will get you nowhere if you present them to the wrong person,
in the wrong fashion, without sufficient information, or at the wrong
time.”6

- Neil Rackham
Unlike a travelling salesman, the success of your enterprise depends entirely on properly
disseminating the right information about your product to the right person. Thus a key factor
defining your achievements is how good your liaison officers are when they talk to physicians.
Although you are selling the same services, you need to treat each physician differently and
ensure that your liaison officers are well aware of all of the needs of the physician and his/her
patients.

4
http://thinkexist.com/quotes/milan_kundera/
5
Kurt D. Grote, John R. S. Newman and Saumya S. Sutaria A better hospital experience (McKinsey Quarterly, 2007)
6
Neil Rackham Strategic Selling (William Morrow and Company, Inc., 1985)
MRI is one machine but it is used differently by different physicians. Hence, ensure that your
liaison officer is well-informed about the services offered by an MRI to an orthopedic which
could be different from what the same machine offers to a cardiologist.

Refer to previous MarketWare whitepapers for more information on what fellow marketers
have done to attract more business: “The SPLIT Factor in Physician Relations” talks about how
an audiology clinic in Idaho used the SPLIT factor to maximize referrals to his clinic. “How To
Ask The Right Questions” can provide you with information on how liaison officers can make
the most out of physician visits.

Most other marketers are obliged to create a demand for their product. Physician liaison
officers have this taken care of. You are offering a service that patients and doctors cannot do
without. The only task that remains is to properly address the customer’s needs. Hence, some
research into customer’s demands can go a long way into getting a referral to come to your
establishment.

Apple anyone?
Apple has ceased to be a fruit anymore. To anyone living today, Apple is the company that
makes MacBook, iPods and iPhones. Today, Apple is the epitome of innovation and originality.
With cutting edge products, Apple has consistently stayed ahead of the field. Do we really need
40000 songs in our pocket? However Apple came up with a 160 GB iPod and it sells even to this
day. (I should know; I bought mine recently!) Pairing innovation with creative advertising, Apple
has created a demand for its products in the market that did not exist before and has always
been very successful at this.

“In the business world, the rearview mirror is always clearer than the
windshield.”7

- Warren Buffett
The biggest challenge for any company is preparing for the future. While anyone will say that
predicting future is mumbo-jumbo, there are various tools that you can use to forecast the
prospect for your hospital. As physician liaison officers, you need to focus on two matters:
liaison relationship with physicians and how satisfied are patients with your hospital.

Liaison officers have a direct contact with physicians and are in the front-line in your battle to
get referrals. Past statistics is always a great starting point when trying to predict the future.
Hence, these officers should always keep records of their past physician visits to see what

7
http://thinkexist.com/quotation/in-the-business-world-the-rearview-mirror-is/357219.html
strategies worked and other that did not. These records will serve as important gauze of what
will work in the future and can also provide you information with the approaches that can
work. In a recession environment, these statistics are the cheapest investment that you can
make towards better preparing yourself for the future.

Patient satisfaction rating is another important measure of how successful your hospital will be.
Remember that a physician will be less likely to refer a patient to your hospital if his previous
patient had a bad experience at that hospital. Hence, you should always be aware of how
patients feel about coming to your hospital and this can serve to be the most important
measure of future successes.

Cancer Treatment Centers of America (CTCA) use Net Promoter® Score to measure customer
satisfaction8. This survey is based around one question: “How likely are you to recommend this
company or product/service to a friend or colleague?” On a scale of 0-to-10, customers are
rated as loyal if they score 9 or 10, passive customers are those that score 7 or 8 while those
scoring lower that 6 are classified as detractors. This scale is very important in companies such
as Apple, Four Seasons Hotels, American Express, General Electric and Philips as it helps
quantify the impact of the services provided by the company. Research also shows that that
companies with loyal followings grow revenues at more than twice the rate that their
competitors do.

Marketing and Innovation

The importance of these two words cannot be understated at any business. For any business,
there can only be two life stages: growing or dying. You can choose where you want your
business to be. With increased competition and market slump, innovation and proper
marketing can be the advantages that set you apart from the competition that you face.

8
Julie Coffman and Phyllis Yale Would you recommend this hospital to a friend? (Bain & Company, 2007)