In spite of the managed care squeeze on hospital operating budgets, providers are investing more dollars in marketing, according to a new study by the American Hospital Association's Society for Healthcare Strategy and Market Development.
This year, hospital commercial advertising budgets jumped 13 percent to $206,180, continuing an upward trend of aggressive marketing. In 1997, advertising budgets surged 25 percent to $182,360 from 1996.
Advertising is consistently the single largest component of hospital marketing budgets, representing more than a third of expenditures, which averaged $469,400 in 1997.
While advertising campaigns are on the rise, branding efforts, in particular, are growing most rapidly at 78.7 percent in 1997, according to the survey of communicators at 124 freestanding hospital-based and integrated delivery systems.
This boost in marketing and advertising signals the need to make sure these efforts are truly building brand equity, which involves understanding your target audiences and using the most effective tools to reach them.
Kimball Herrod, a consultant with El Segundo, Calif.-based The Camden Group healthcare consulting firm, offers the following critical success factors for increasing brand awareness and meeting market share goals.
Listen to the Market
The first step in developing effective marketing and advertising strategies should always be to listen to the market by conducting market research. Ten good interviews with the consumer are better than a thousand good ideas from management. While market research on competitive positioning and general consumer attitudes is important, the high value-added research comes from initiatives that get to the underlying behavioral and decision-making processes of consumers.
Identifying 'Who Loves Ya'
Rather than segmenting your market into typical target audiences by product lines or demographic information, use a technique called "pre-segmentation" to uncover and analyze the needs of your community. Segmenting your market prior to conducting formal research will help you interpret the information gathered.
Pre-segmentation requires gathering information about your target market into three core categories I refer to as: "Love Ya," "Despise Ya" and "Fickle." Determine these categories by finding out the reasons your research participants love or despise your organization, whether they can identify your strengths and what is unique about your services.
To assign consumers to the Love Ya, Despise Ya and Fickle categories, determine why your target uses your services. Individuals in the Love Ya group are those who use your services regularly and exclusively. They are loyal advocates and will often recommend your services to a friend.
Those in the Fickle group are those who either don't know your organization or can't make up their minds to love you. Individuals in the Despise Ya group are those who love your competitors or for some reason - such as a previously bad experience with your organization - really dislike your services.
Do not address head on the negative assessments you glean from the Despise Ya group with advertising promotions. Instead, use public relations to convert them.
Don't Flood The Market
Although healthcare organizations are spending millions of dollars to flood the market with advertising and marketing messages, this does not mean that information is getting through to the intended target or communicating the right message for branding your organization.
Last year, service line promotions were the most popular type of marketing campaign, with an average of 2.7 campaigns, followed by physician/group promotions at 1.9 and positioning/image initiatives at 1.8, according to the AHA study. To remain competitive hospital marketers will need to develop advertising campaigns that integrate service line positioning and organizational identity messages to help meet market share goals. Most importantly, avoid the "one-size-fits-all" approach to developing marketing campaigns.
Building Your Brand
Developing brand identity requires more than simply communicating with target audiences through advertising promotions and positive image campaigns. Branding involves all points of contact with your target, including:
- Where services are delivered (access/convenience, facilities, aesthetics);
- How services are delivered (promptness, cleanliness, quality, friendliness)
- Price of services (out-of-pocket, co-payments, above or below market evaluations); and
- Promotions (health fairs, charitable events, health seminars, lectures).
Herrod specializes in the areas of strategic planning, marketing planning and research/business planning and has assessed the market position of various programs, including cardiac surgery, neonatal intensive care units and mental health. He can be reached at 310/320-3990.
The Marketing Pie
The marketing "pie" is getting bigger for hospitals. In 1997, major marketing campaigns were on the upswing compared to 1996, according to the AHA study. The biggest jumps were seen in:
- Branding campaigns at 78.7 percent;
- Managed care promotions at 68.4 percent;
- Physician/Group promotions at 33.1 percent; and
- Positioning/Image campaigns at 28 percent.
Source: American Hospital Association/Opinion Research Corp.