Marketing Mix and Marketing Strategy of CVS Health
Health care in US has evolved at a fast rate and if CVS Caremark has emerged as a winner then the reason is its ability to deliver affordable, accessible and effective care. The health brand is in a strong position to take upcoming challenges head on and to address the issues born of policy changes. Focus on three key points has helped CVS Caremark deliver efficiently in 2016. Most of its focus remained on three key financial pillars that are essential to deliver shareholder value – Driving productive, long-term growth; Generating significant levels of free cash flow; and Optimizing capital allocation. The result has been a 16 percent rise in net revenue which touched $177 billion.
CVS Caremark’s integrated business model continues to rock in the health care market. Integrated offerings high satisfaction rates and its unique trend management capabilities are driving its business growth. CVS was founded in 1964 and has come a long way since then. The brand has kept growing through acquisitions and diversification and has the most unique mix of patient touch points that enable it to deliver a diverse web of healthcare services efficiently. In these more than 50 years, it has become the nation’s biggest operator of health clinics and the largest dispenser of prescription drugs.
This is a discussion of the marketing mix of CVS Caremark explaining the 7 P’s in its service mix.
Product: CVS offers a large and broad gamut of services that are meant to make healthcare affordable and accessible. Its extensive suite of assets enables it to play a leading role in solving cost quality and access issues in healthcare. Here is a brief overview of the products and services offered by CVS:
Retail pharmacy: 9600 of CVS Pharmacy stores dispense more prescriptions than any other drugstore chain in the world. Pharmacists provide face to face counselling at these pharmacies and suggest cost effective drug therapies.
Retail clinics: There are more than 1100 minute clinic locations through which its physicians assistants and nurse practitioners treat minor health issues and perform screenings as well as monitor chronic conditions and provide wellness services and vaccinations.
Infusion services: Its Coram is among the largest providers of comprehensive infusion services and cares for more than 140,000 patients annually. It has a national network that works through 85 locations and a large home infusion network in US.
Long term care pharmacy: Omnicare was acquired by CVS in 2015 and is a leading provider of pharmacy services to the long term care market. Omnicare’s role with regards to the CVS’ delivery of care for elderly patients is important.
Medical Claims Editing: CVS manages the claims for drugs covered under medical benefit.
Other clinical and benefits management programs: Apart from these programs CVS also provides other clinical and benefits management programs through its specialty pharmacy and other unique clinical programs. CVS Caremark plan designs minimize costs for the clients as well as work to improve outcomes of the 75 millions of plan members. The focus of the entire range of services and programs is on three things costs, quality and access.
Place: Size and scale does matter in healthcare especially if the focus is on quality and access. CVS pharmacy has 9,600 locations with 27,000 retail pharmacists and 73,000 pharmacy technicians who provide their services to patients in need of care. CVS expanded its footprint by 20 percent by acquiring nearly 1700 pharmacies from Target. 80 retail clinics acquired from Target have been rebranded as Minute Clinics. In total it operates more than 1100 such clinics across 33 states which is three times more than its nearest competitor. In this way, CVS has managed an enormous size that helps it are to the needs of millions of patients every year.
Price: Affordability and access are an important focus at CVS. The rising drug prices are a major part of the healthcare crisis in US and create big burdens over the patents. CVS’ Pharmacy Benefits Management is a solution to the rising drug prices in US. CVS Caremark provides a large array of cost management solutions that have worked to reduce the client costs. There are several challenges to reducing prices for the patients. However, CVS is focussed at delivering quality care at affordable costs and its size and scale are important facilitators on its path to better care for everyone.
Promotion: CVS has a large footprint throughout US and that works to a great extent to promote and market its brand. Price is also an important element in the marketing mix of CVS which enables fast growth and popularity. Apart from these things CVS also promotes its brand using other methods. To further establish itself as a brand devoted to healthcare, it removed the tobacco products from its stores. This has helped it improve its image as a brand that cares for its clients and their health and manage a clean image of an accountable healthcare brand. It also uses its own website and social media to promote its brand.
People: CVS employs around 250,000 people across the 50 states. The brand employs 27000 retail pharmacists and 73000 Pharmacy technicians through its CVS pharmacy stores. In total it employs 36000 pharmacists and clinicians. Apart from that it also employs 3,000 nurse practitioners and physician assistants. There are more than 250 rare disease nurses too employed by CVS.
Physical evidence: Services are physically intangible. However, still they have physical evidences attached to them like bills, prescriptions etc. It also includes the physical environment in which the services are delivered. CVS has extensive presence throughout US. Its pharmacies are located in 9600 locations and it employs more than 250 K through its 50 states.
Process: Process in the 7Ps implies the process through which the services are delivered by a service brand. The physical checkup, monitoring and counselling of the clients and patients by the physicians and nurses is a part of the care process that CVS has managed. The nurse practitioners and physicians employed by the minute clinics diagnose and treat minor health conditions, perform health screenings, monitor chronic conditions and deliver vaccinations. After having acquired Omnicare, it also provides Long Term Care operations that include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings.
Marketing Strategy of CVS Health:
To understand the marketing and branding strategy of CVS you must first understand its purpose. The purpose of CVS is to help people on their path to better health. Its branding strategy has played a central role in its marketing and growth. It has established itself as a people and health friendly brand. The focus has remained on two main things – quality and value. The brand has kept growing through mergers and acquisitions. CVS health brand was introduced in 2014 with the intent to create a more customer friendly image. Customers that are looking for health services want both value and quality for their purchases. Its high quality store brands including the Minute Clinics and CVS pharmacies deliver both quality services and products. However, to strengthen its image as US’ favorite health brand, it went on a rebranding strategy. As of October 1, 2014, it discontinued tobacco products from its stores. Initially, it might have affected CVS’ sales but in the long term it is going to have a positive effect on its image and will thus strengthen its position and help it gain higher credibility which CVS believes is important for its growth. However, it can also be understood as a move away from the traditional health retail model.
Apart from it, CVS has also used digital marketing and the power of IT to market and grow its brand. It released its own pharmacy app that the customers could use to get access to quality healthcare easily. The app saves them both time and money. The app can also be used to receive notifications on most important deals. It also has the largest health loyalty program meant to deepen customer engagement and increase usage rate. The customers can use their Extra Care card to benefit the most from coupons and rewards. With consumers having moved to smart-phones, the brand has used a smart M-Commerce strategy to both promote its products and services and for customer relationship and engagement. CVS has also used social media for higher effectiveness and reach in its marketing strategy. It uses social media to promote its products and brand and to inform the customers of the best rewards and deals. Especially, the beauty products and deals on them are promoted heavily through Facebook and other social media channels. Overall, the brand has adopted a great digital marketing strategy for advertising and higher customer engagement.