Strategic Healthcare Marketing: Core Concepts, Explained

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Strategic Healthcare Marketing: Core Concepts

Healthcare Organization and Management · Chapter 15: Healthcare Marketing: Strategy and the Marketing MixSection 15.1 · lesson 90 of 10510 min · free with a free account

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In this lesson

Marketing versus promotion, segmentation, targeting, and positioning in health care.

  • Distinguish marketing from promotion and explain the order marketing runs in
  • Explain three features that make health care hard to market, including credence goods
  • Segment a healthcare market and explain why capacity limits targeting
  • Write a positioning statement that names its alternative

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Transcript

Everything said in the video, section by section (1,307 words). Read along, or search it.

Opening Case

A Campaign That Raised Calls, Not Studies

Larkfield opened an outpatient sleep center in the spring. Two quarters later, it runs eleven studies a week. The business plan assumed eighteen. Helen Wu, the chief executive, asks Colleen Lawson, the marketing director, to fix the volume. Colleen has already tried. Radio spots, flyers at the library and the grocery store, and a new page on the website, in plain language. Awareness rose. Calls to the center doubled. Studies stayed at eleven. So why did a campaign that clearly worked change nothing?

Tracing the Route

Every Study Began With a Referral

Back at her desk, Colleen traces the route into the center. How did each completed study actually begin? Every one began with a referral from a physician. The public had no way to book a sleep study directly at all. She had been talking to the people who use the service. The people who decide whether it's used are the referring doctors, and nothing had reached them.

Definition

Marketing Versus Promotion

That's the difference between marketing and promotion. Marketing is the management function that finds what a defined group needs. It shapes a service that can meet that need, and makes the service known, available and understandable to them. Promotion is one part of it: the communication. Advertising, outreach, publicity. So marketing runs in order. First, what do people need? Then, which needs will we serve, and how? Only then, what do we say, and where? Start with the campaign, and it can hit its own target while missing the hospital's. Awareness rises, and nothing changes, because information was never the barrier.

Why Health Care Differs

Choosers, Need Versus Demand, Credence Goods

Colleen briefs her team on why health care is harder to market than almost anything else. Three features set it apart. First, the person who uses the service often isn't the one who chooses it. A clinician writes the referral, an employer picks the network, an ambulance protocol picks the hospital. Second, need and demand split apart. Need is the care a person requires, judged by a professional standard. Demand is the desire for a service, backed by the means to get it. People with real need may show no demand: they don't recognize the problem, can't pay, or can't get there. And demand can be created for services that meet little need. Third, health services are largely credence goods, a term from economists Michael Darby and Edi Karni in nineteen seventy-three. Their quality can't be judged even after you've used them. A patient can tell whether she was listened to, and how long she waited. She usually can't judge the clinical reasoning. So people judge what they can see: access, courtesy, communication. Marketing sits right on that gap.

Quick Check

A Cut Bus Route to the Clinic

Quick check. Few patients from the east side reach Larkfield's wound clinic. Interviews show their bus route was cut last year. Which response is marketing, and not just promotion? Pause, and decide. A shuttle, or a clinic session on the east side. The barrier is getting there, so the fix changes the service, not the message. Ads and brochures are tempting because they're quick and visible. But they tell people about a clinic they still can't reach.

Multiple Markets

Several Markets, Several Questions

Back with Helen, Colleen lays out a harder truth. A hospital doesn't have one market. It has several, each asking a different question. Patients ask, will this help me, and can I get there? Families and caregivers ask what will be asked of them. Referring clinicians ask, will my patient be seen promptly, will I hear back, and will they come back to me satisfied? Employers ask about cost, access and time off work. Payers ask about network adequacy, cost per episode and measured performance. So the first question in any marketing problem is which of these markets controls the decision. Often it's not the one the hospital finds most natural to talk to.

Segmentation

Four Standard Bases for Segments

Colleen now divides the market. Segmentation splits a market into groups whose members respond alike to what's offered, and differently from other groups. Four bases are standard. Geographic, by drive time: under twenty minutes, twenty to forty-five, and beyond. The farthest band needs a home sleep test, not ads for the main site. Demographic, by age and by coverage: employer plan, public program, or uninsured. Coverage changes the message, not just the audience. Behavioral, by use: new patients, regulars, and people who started treatment and drifted away. That last group is often the cheapest to win back, because the relationship already exists. And need-based, by the problem a person is trying to solve: reassurance about snoring, or help staying awake at work. One caution covers all four. A segment is useful only if Larkfield can tell who's in it, reach them, and serve them differently.

Targeting

Capacity Limits Targeting More Than Budget

Tom Brennan, the chief financial officer, asks which segments to chase. That's targeting: deciding which segments to serve, and in what priority. In most businesses, the marketing budget limits targeting. In health care, the real limit is almost always capacity: beds, sessions, staff. The sleep center has four study beds, five nights a week. That's twenty studies at most. Win more than that, and everyone waits longer, including the patients already booked. So targeting belongs to marketing and operations together, and the capacity question gets answered before a segment is chosen, not after the calls arrive.

Positioning

Writing a Positioning Statement

Then positioning: the distinct place a service holds in the customer's mind, compared with the alternatives that customer has. It isn't what the hospital says about itself. It's what the customer concludes, and the two match only when the claim fits the experience. A positioning statement forces the choice into one sentence: for this segment, who need this, our service provides this benefit, unlike that alternative, because of this reason. The clause most often dropped is the alternative. Without it, you can write a sentence no competitor would disagree with. The test: could any provider in town sign the same sentence? If so, it describes the category. It isn't a position within it.

Quick Check

Position Versus Category Description

Quick check. Here are three draft lines for a new Larkfield sleep service. Which one is a real position, rather than a description of the category? Pause, and decide. The weekend studies for night-shift workers. It names a segment and a need, and it sets itself against what every other lab offers. Board-certified specialists sound specific, which makes that line tempting. But every accredited lab in town could sign it, so it tells nobody why to choose Larkfield.

Differentiation and Brand

Brand Is Everything the Hospital Does

Differentiation means a difference customers can see, and care about. It's hard in health care, because services look interchangeable, and standards deliberately reduce variation. What's left is access, continuity, the experience around the care, and the particular groups a hospital has learned to serve well. And brand isn't the logo on the sign. It's the impression left by everything the hospital does: booking that works, staff who behave consistently, and how it acts when something goes wrong. A campaign can make a brand known. Only the service can make it believable.

Resolution

Reaching the Referring Physicians

Back to Colleen's sleep center. She moves what's left of her budget to the customers who decide. She visits Dr. Martin Ostrowski, a primary care physician who refers often, with a one-page statement of what the center accepts, a named scheduler, and a promise: the report back within three days. It produces nothing she can show at a board meeting. But it reaches the people who write the referrals. So the campaign hadn't failed at its own goal. It succeeded at awareness, with the users. The decision belonged to someone else.

Key Takeaways

Start With Need, Not the Campaign

To recap. Marketing starts with need. Promotion is the communication part. In health care, the user, the chooser and the payer are often different people. Segment only on groups you can identify, reach and serve differently. Capacity, more than budget, limits targeting. And a real position names its alternative, so no rival could sign it.

Reflection

Who Decides Whether a Service Is Used

Something to think about: for a service you know well, who actually decides whether it gets used?

About Healthcare Organization and Management at UPI Study

Healthcare Organization and Management (Health 302) is a self-paced online course of 105 video lessons in 18 chapters, from health systems and the law to ethics, leadership, teams, strategy, informatics, finance, quality, human resources, marketing and evidence-based practice. It carries a NCCRS credit recommendation for 3 semester credits.

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How hospitals and clinics are runHealthcare Organization and Management covers how care organizations are led and run: health law and ethics, leadership and teams, strategic planning, health informatics, budgets, quality improvement, staffing and marketing. It is a core course in healthcare administration and health management degrees.
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Universities that work with NCCRS

Healthcare Organization and Management carries a NCCRS credit recommendation. These universities work with NCCRS; some are UPI Study's signed partners. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.

Thomas Edison State UniversityThomas Edison State UniversitySigned partnerUniversity of the PeopleUniversity of the PeopleSigned partnerCharter Oak State CollegeCharter Oak State CollegeSigned partnerStrayer UniversityStrayer UniversitySigned partnerColumbia Southern UniversityColumbia Southern UniversitySigned partnerIndiana TechIndiana TechSigned partnerPenn StatePenn StateWorks with NCCRSSouthern New Hampshire UniversitySouthern New Hampshire UniversityWorks with NCCRSSUNYSUNYWorks with NCCRS +many more cooperating universitiesFind my college →

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FAQ

Questions students ask us

About Strategic Healthcare Marketing: Core Concepts

What is the difference between marketing and promotion in health care?
Marketing is the management function that finds what a defined group needs, shapes a service to meet that need, and makes it known, available, and understandable. Promotion is only the communication part, such as advertising, outreach, and publicity. Starting with a campaign before understanding needs can raise awareness without changing use, because information may never have been the barrier.
Why are health services called credence goods?
Health services are largely credence goods, a term from economists Michael Darby and Edi Karni in 1973, because their quality is hard to judge even after use. A patient can tell whether she was listened to and how long she waited but usually cannot judge the clinical reasoning. So people judge what they can see, such as access, courtesy, and communication.
What is the difference between need and demand in healthcare marketing?
Need is the care a person requires, judged by a professional standard, while demand is the desire for a service backed by the means to get it. People with real need may show no demand because they do not recognize the problem, cannot pay, or cannot get there. Demand can also be created for services that meet little need.
What makes a good positioning statement for a healthcare service?
A good positioning statement names the segment, its need, the benefit, the alternative it is compared with, and the reason to believe it. The clause most often dropped is the alternative, which leaves a sentence any provider could sign. A useful test: if every competitor in town could agree with the statement, it describes the category rather than a distinct position within it.

About the Healthcare Organization and Management course

How many college credits is Healthcare Organization and Management?
Healthcare Organization and Management (Health 302) carries a NCCRS credit recommendation for 3 semester credits. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities.
How much does Healthcare Organization and Management cost and what is included?
$250, paid once, with lifetime access: all 105 video lessons, a practice quiz after each, the graded work and final exam, and an official transcript when you finish. Students who want several courses choose UPI Study PRO instead.
Which universities accept UPI Study credits?
UPI Study has signed partner agreements with universities such as Thomas Edison State University, University of the People and Charter Oak State College, and works with universities such as Penn State, SNHU and SUNY. ACE and NCCRS have over 2,100 cooperating colleges that will consider accepting credits; the final decision is with the universities. Use "Find my college" on this page to check yours.
How long does Healthcare Organization and Management take?
It is self-paced with no deadlines. The 105 lessons total about 17 hours of video; most students add reading and practice time and finish in a few weeks to a few months, on their own schedule.
How are the exams done?
Quizzes and assignments are online in the course. The final exam is taken online with proctoring; a person on the UPI Study team checks assignments, usually within two days.
How do my credits reach my college?
When the course shows 100% complete, request the official transcript from your dashboard. It is sent to the college you name, and you can send it to more than one. Check your college first with "Find my college" on this page, or ask Athena.

Ready for the full course? Earn 3 credits in Healthcare Organization and Management.

105 video lessons, a quiz after each one, and the graded work that earns the credit. Recommended for credit by NCCRS.

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