Marketing Mix Strategy for a New Venture - Essay Example

?How to start a new business venture: Marketing Plan Table of Contents Introduction 4 2.Background of Scenario 4 3.Situational Analysis 5 3 Marco-environmental Factors 5 3.1.1.Political 5 3.1.2.Economic 5 3.1.3.Socio-cultural 6 3.1.4.Technology 7 3.2.Industry Analysis (Five Forces) 7 3.2.1.Bargaining power of suppliers 8 3.2.2.Bargaining power of consumer 9 3.2.3.Threat from new entrants 11 3.2.4.Threat from substitute 11 3.2.5.Existing rivalry 11 4.Market Segmentation and targeting 11 5.Strategic Directions 12 5.1.1.Ansoff Matrix 12 5.1.2.Porter’s Generic Strategy 13 6.Proposed Marketing Mix for the Venture 14 6.1.1.Product/Service 14 6.1.2.Price 15 6.1.3.Place 15 6.1.4.Promotion 15 6.1.5.People 15 6.1.6.Process 15 6.1.7.Physical Evidence 16 7.Conclusion and Recommendations 16 Reference 18 1. Introduction Starting a venture is much challenging task than the managing the established business. The success rate of new business is very low in the prevailing competitive age. The entrepreneurs have to take multiple troubles for making their new business into a profitable venture. The success of a new venture mainly depends on the entrepreneurs’ skills and success of the new products. According to the Councils to America’s Small Business, Score, during 2008, “there were 627,200 new businesses, 595,600 business closures and 43,546 bankruptcies” (Score, 2010). Therefore, the risks involvements in a new business are very high due its vulnerability in the new market. However, in order to combat with such issues, entrepreneurs must consider a number of tasks before starting a new venture. Effective planning for plausible set of market strategy is one of the most crucial tasks for an entrepreneurs and for this a comprehensive marketing analysis and research is mandatory task (Longenecker et al, 2005, p. 147). This paper will attempt to present marketing mix strategies for a new venture based on the situational analysis in respect of proposed business plans. 2. Background of Scenario This business report deals with the formulation of marketing mix strategy for a new venture of private medical clinic in Birmingham. The private medical clinics offer wide ranges of health care services by taking care of the out patients. As this business associated with the people heath services, it is very necessary to offer a high quality of services to its patient. Besides the high quality services, marketing strategies are very important to promote the brand name in the health care market of Birmingham. Birmingham is a popular city of West Midlands county in England. This primary objective of this paper is to offer a set of plausible marketing mix strategies to the new private clinic supposed to be started in the Birmingham city. In this process, the health care market of Birmingham city as well as the entire UK needs to be assessed for identification of the target market. 3. Situational Analysis 3.1. Marco-environmental Factors Any industry and its players are supposed to be influenced by the multiple macro-economic factors which are uncontrollable external forces. Assessment of macro-economic forces is very necessary to evaluate the viability of new business. In this regard, PEST models are very useful which analyse the political, economic, socio-cultural and technological impact on a certain business (Allen, 2008, p.114). These factors are analysed below in respect of the new venture for private medical clinic. 3.1.1. Political The stable political system of UK is a major strength for the growth of a business. The chief of the state is the Queen and head of the government is the Prime Minister and it is responsible for regulating the business and health care related issues. The department of Health, UK is the apex body in regulating the heath care sectors of UK who develops proper legal frameworks (Department of Health, 2011). Besides, the Birmingham City Council is also responsible to regulate the Birmingham city’s affair. 3.1.2. Economic Stable economic condition of UK is also major requirements of the success of the business. The UK is one of the most power economies in the Europe in terms of economic stability. During 2010 UK’s GDP as per purchasing power parity is nearly $2.189 trillion with real growth rate of 1.6%. The per capita GDP is nearly $35,100. The services sectors are more important as it contributes 77.1% of the total GDP (CIA, 2011). The economic condition of Birmingham is also quite better as income level of people is quite higher with mean and median income of ?484.1 and ?406.8 respectively (University of Birmingham, 2007, p.44). 3.1.3. Socio-cultural UK is densely populated country with 62.2 million populations with annual population growth rate of 0.56% which indicates higher availability of consumers (U.S. Department of State, 2010). However, in Birmingham a large portion of population is work less as shows below in the following figure. Figure 1: Birmingham Population by Work Status (Source: Advantage West Midlands, 2010) Higher rate of unemployment has also caused their poor health and the following figure depicts the rate of poor health in Birmingham. Figure 2: Employment Status and Health of Birmingham People (Source: Advantage West Midlands, 2010) 3.1.4. Technology In UK, the Department of Health encourages new technologies for better health care services. Besides, with the major initiatives taken by Association of British Healthcare Industries Ltd for developing the R&D for better health care. Ministerial Medical Technology Strategy Group is a collaborated council industry and government for framing health care related technologies (Association of British Healthcare Industries Ltd, 2011). 3.2. Industry Analysis (Five Forces) For measuring the profitability of an industry, an analysis of driving factors is inevitable. In this respect, the Porter’s five force analysis is an important model with includes five major driving factors i.e. bargaining power of suppliers & consumer, threat from new entrants & substitute, and existing rivalry (Hill and Jones, 2009, p.42). 3.2.1. Bargaining power of suppliers The major suppliers in heath care sectors include the manufacturers of medical equipments and employees. Availability of employees is quite higher as a large number of skilled employees are available. The following table shows statistical data on workforce in healthcare. Table 1: Workforce in Healthcare Sector and in Other Industries by Government Office Region, 2001 (Source: Yar, Dix and Bajekal, 2006) On the other hand, key workers like doctors and nurses are also available, and this availability is also rising with time as shown below in graph. Figure 3: Key healthcare workers (Source: Yar, Dix and Bajekal, 2006) On the other hand, a large number of drug suppliers and other medical equipments providers are present. Hence, bargaining power of suppliers is quite moderate. 3.2.2. Bargaining power of consumer The health care sectors of UK is primarily unaffected by the bargaining power of buyers. Due to increasing health related problems, the UK people are availing frequent medical services for multiple health related issues. With increasing age health related issues are rising in UK as per the given figure. Figure 4: Age and Health (Source: Office for national Statistics-a, 2006) Moreover, UK people has reduced their healthcare services by home visits of consultants and instead, they frequently visits medical clinic and hospitals as per given figure. Figure 5: Use of services (Source: Office for national Statistics-b, 2006) Therefore, the bargaining power of buyers remains lower. 3.2.3. Threat from new entrants Threat from the new entrants is quite higher as market entry barrier is quite higher. This industry requires a significant amount of the investments and greater technical expertise. It is very difficult to enter and sustain in the completive environment. 3.2.4. Threat from substitute As a whole, the health care services have no substitute but in case of private medical services, there are other substitute healthcare service providers like hospitals. On the other hand, increasing popularity of method of healthcare like acupuncture, Easter herbal healthcare etc are potential threat of substitute products. 3.2.5. Existing rivalry The competition in UK health care specifically in private healthcare is very high as large number of private medical clinics is present. On the other the hand, present of the giant hospitals like Spire, General Healthcare, Nuffield Health, HCA and Ramsay increase the competition level among the small private clinic more intense as these five hospitals have greater levels of concentration as per a OFT report (Timmins and Mishkin, 2010). 4. Market Segmentation and targeting Marketing segmentation is a task for identifying the potential and relevant target market. Hutchison et al (2009) have defined the marketing segmentation as “the process of dividing a large market into smaller segments of consumers that are similar characteristics, behaviours, wants and needs” (Allen, 2011, p.70). As per the above situational analysis, the target market for the new private medical clinic is given below. Target consumer will vary as per the services. For example, for people affecting from breathing problem mostly belongs to the aged group and overweight people (Winston, 1985, p.60). As most of aged people are frequent user of health care services, the target consumers will belong to the age group of 35 and above including the male and female. As infant mortality rate is high, another major target markets will be the new born babies. Most of the people from Birmingham and nearly areas will be targeted for the initial years. Most of target consumers will belong to middle income groups with sound literacy rate. 5. Strategic Directions 5.1.1. Ansoff Matrix Ansoff matrix is helpful in identifying the strategic direction for a new organisation in a specific market. Ansoff matrix shows four strategic directions in respect of the market and product. The following model depicts the Ansoff matrix. Figure 6: Ansoff Matrix (Source: Burtonshaw-Gunn, 2010) The new private medical clinic will aim to enter in the existing market with the existing products like healthcare services which are already offered by other competitors. Therefore, as per the model, the private clinic must try to enter in healthcare market with market penetration strategy. 5.1.2. Porter’s Generic Strategy Porter’s generic strategies are the core strategies which are very effective for entering into a new market. Michael E. Porter has identified three core strategies i.e. cost leadership, focused and differentiation strategies. With the help of these three strategies four types of strategies can be formulated and it presented in the following diagram. Figure 7: Porter’s generic strategies (Source: Eldring, 2009, p.7) The majority of the target markets for the new private clinic business belong to the middle income group of people, and hence, the cost is a major factor. Besides, wide ranges of healthcare services are also important criteria. Therefore, it should try to offer a wide range of services with cost leadership strategy to penetrate the market. 6. Proposed Marketing Mix for the Venture The new private medical clinic will offer healthcare services and hence, it is in a typical service sector. In case service industries, the four Ps of marketing mix is extended to the seven Ps of marketing. The following table lists these seven Ps. Table 2: Seven Ps in Professional Services (Source: Crane, 1993, p.16) Each of the above stated components of marketing mix are explained below for the new private medical clinic. 6.1.1. Product/Service Service ranges will cover large types of healthcare services so that wider segments of market can be targeted. Moreover, high quality services will be the USP for this business. In order to improve the quality better technology will be used. 6.1.2. Price The pricing strategy should be determined on the basis of three factors i.e. expenditure behaviour of Birmingham people, competitors’ price, fixed and variable cost of services. However, low cost leadership, other expenses will be reduced and cost effective measures will be adopted. 6.1.3. Place The private medical clinic will be present is the convenient place of Birmingham so that the patients and clients can easily visit. In this regard, the other factors like parking, transport availability etc will also be considered. 6.1.4. Promotion For promotional mix, the integrated marketing communication (IMC) is the most appropriate approach. IMC focuses on the better communication and relationship with consumers. On the other hand, the as per the market segmentation, the advertising tools should be selected. 6.1.5. People People are the most important criteria in service industry as the services are delivered to the clients by the skilled people or employees. Major skilled people for multiple healthcare services will include doctors, nurses and other healthcare professional. 6.1.6. Process Healthcare services will be delivered through a structured and predetermined process, so the clients and patients get the optimum level of the benefits. The following model presents a value chain for healthcare care service that will also be followed by the new private medical clinic. Figure 8: Value Chain for Healthcare Service (Source: Healthonomics, 2008) 6.1.7. Physical Evidence The better environment of the clinic will be helpful got the creating value for the clients and patients. For healthcare services, the ambiance of the clinical must be health and safe and this will be helpful in enhancing the effectiveness of the healthcare services. 7. Conclusion and Recommendations This paper has presented a marketing mix strategy for a venture of private medical clinic business which is supposed to be located in Birmingham. For framing a comprehensive marketing mix, it is necessary to understand the external environments and this paper has present an extensive analysis of the macro-economic and industry using the PEST and Porter’s five forces. This analysis also help to identify the target market, strategic directions based on which marketing mix strategies are farmed. For effective formulations, execution and evaluation of the marketing mix, a set of the plausible recommendations are given below. Conduct an extensive primary research for identifying the major diseases for which the people avail healthcare service very frequently and it will also help in identifies the consumers’ decision process in healthcare service. Try to offer wide ranges of healthcare services which must include the services like emergency services, Diagnostic services, Ambulance services and Pharmacy services etc. For cost leadership, it is necessary to follow cost effective measures without sacrificing the service quality. Skilled staffs like doctors, nurses, diagnostics etc are the most important resources and therefore, experienced and skilful employees must be recruited very carefully. Technology plays an instrumental role in the healthcare services and hence, the new private medical clinic must avail these technologies. In healthcare services, personal relationship is an essential key success factors which is also very important for the development of brand and loyal customers. Health related issues are sensitive area and it is very necessary to build trust among the client for sustainability. Reference Advantage West Midlands. (September 2010). Birmingham Summary of Key Economic Issues. [Pdf]. Available at: http://www.advantagewm.co.uk/Images/Birmingham%20Summary%20of%20Key%20Economic%20Issues_tcm9-33257.pdf. [Accessed on April 21, 2011]. Allen, K. R. (2008). Launching New Ventures: An Entrepreneurial Approach. 5th ed. Cengage Learning. Allen, P. (2011). 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