Marketing Processes of BUPA

These 4 small essays will attempt to answer the questions set out about the marketing process at BUPA and how they would go about marketing ‘The Health Checker’ service.

Question 1

The marketing planning process enables organisations to consider the following questions ‘Where are we now?’, ‘Where do we want to be?’, ‘How are we going to get there?’ and ‘Have we been successful?’ Identify the stages of the marketing planning process BUPA would need to undertake to answer those questions.

The first question has a need for BUPA to analyse the market, looking at rivals, customers wants, needs and perceptions, financial information and an internal analysis. The other 3 questions are a forward-looking perspective and are the questions that need to be asked before a marketing plan is put into action.

To determine where a company is currently placed, in terms of market position and where they are perceived in the market, there are some analysis that needs to be carried out. These analyses include; SWOT analysis, PEST analysis and Porters five forces model, there is also a need to define a companies values and goals.

A SWOT analysis is a tool for auditing an organisation and its environment. It is the first stage of planning and helps marketers to focus on key issues. Once key issues have been identified, they feed into marketing objectives.

SWOT stands for strengths, weaknesses, opportunities and threats. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection.

It is very important that an organisation considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organisation's marketing environment is made up from:

1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.

2. The microenvironment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis.

The five forces model was devised by Michael Porter, who provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Five forces looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

Whilst it has been criticised for oversimplifying what can be sometimes be complex commercial problems, the two-dimensional Perceptual Map has become a particularlyuseful vehicle for management to draw attention to an emerging market opportunity, a new strategic direction, or a changing market condition.

On a perceptual map, a grid containing a x and y-axis, a company can see how it is perceived in the eyes of the customer. When a company knows how they are seen by the public they know what there current position is and can then change that if they want to be seen as something different.

From these the company can determine their goals for the coming period, this will include figures and targets that have been derived from market research and by the employees that have been able to predict the field because they have been in this field for a long time.
Once the market environment is known, the company can implement pricing strategies and marketing campaigns. These will be based on the 4P’s, the 4C’s and the 7P’s.

Product	Customer Benefit	Product
Price	Cost to customer	Price
Promotion	Convenient	Promotion
Place	Communications	Place
		People
		Process
		Physical environments

By using a SWOT, PEST, perceptual map, five forces model, the 4P’s, 4C’s, 7P’s and company aims and values it will be possible for a company to see where they are, where they want to be, how they are going to get there and how to measure their success.

The purposes of objectives include:

All objectives should be SMART i.e. Specific, Measurable, Achievable, Realistic, and Timed

BUPA would have been able to see that there was space in the market for other companies such as Norwich Union, PPP and Legal & General to b able to enter the market and take market share from them. They would also have been able to see that consumer demand was starting to flag and they could have offered promotions and increased marketing to win back customers.

The research that has been carried out by BUPA suggests that consumers are not interested in private health care but a one-off health check. BUPA can now tailor the price, promotion and product accordingly for their target market. Research should also be able to tell BUPA how many people they can expect to take up the service and how much money they can make.

Question 2

Why must BUPA’s health insurance product have separate marketing mix executions for its consumer and business target markets? How might these marketing mixes differ?

The marketing mix is based on the 4P’s, conceived in 1960 by James McCarthy, the 4C's and some people may argue that the 7P’s should be included. Albert Frey suggested that these could be broken down into 2 groups the offering and the methods and the tools. The marketing mix focuses on the 4P’s, which have been listed earlier.

The offering is concerned with the product, packaging, service, brand and price, the methods and tools will be how the product is brought to the attention of the consumer and business market.

The business market is also very different to the consumer market and these nuances have to be dealt with in the marketing mix. It is these differences that require the marketing mix to be different based on the customer. Each customer group has different demographics, so business customers can be perceived to have more disposable income and should be targeted in a different way than single consumers

The product, depending on what stage in the product life cycle the company can decide what price to charge, if these changes are not monitored then the customers will lose interest. There cannot be many differences in the product offering, although business customers can be expected to be early adopters and will pay more for the service, although expect a superior quality of service. It can be expected that after BUPA bring out their service that their competitors are likely to copy them.

Place refers to the method of distribution, it is possible to tailor the method of distribution for the different types of market that they are aiming for. It is about deciding what is the cheapest way to get the product to the customer. For business this may mean going into the office to give demonstrations while it will be cheaper for the consumer market to come to BUPA. The business market is supposedly more lucrative and could provide 250 members of staff in one workplace.

Price can be seen as a determinant of the quality of a service, normally the higher the price the higher the quality. Small businesses will be able to and more willing to pay more money to be seen to appease the staff, they also have more money than single consumers. The price will need to be set at a suitable level, which BUPA staff will be able to set having worked in the industry for a long time.

Promotion would allow BUPA to offer discounts to bulk buying, so when a small business comes to BUPA with 200 staff wanting to have subscribe to ‘The Health Checker’ service they can offer then a discount instead of charging them fullprice. Promotion is also about how the product will be advertised, this will vary on the demographics of the target community. Small businesses and business people will read and visit different Internet sites from single consumers, the questions that need to be asked are ‘Where do my customers hang out?’ and ‘What would attract them to this product?’

Question 3

Assume BUPA have decided to launch ‘The Health Checker’ service:

a) Discuss the pricing strategy that should be adopted for the consumer market only

b) Suggest where/how this service might be made available for both the consumer and corporate markets

Companies habitually charge less than they could for new products, especially with revolutionary offers. Underestimating a product's value can be a costly mistake, since the introductory price often fixes its worth in the buyer's mind. How much should you charge for a new product? Charge too much and it won't sell -a problem that can be fixed relatively easily by reducing the price. Charging too little is far more dangerous: a company not only forgoes significant revenues and profits but also fixes the product's market value position at a low level. And as companies have found time and again, once prices hit the market it is difficult, even impossible, to raise them.

A pricing strategy is dependent on the company’s research and previous experience gained in the field, the price should be pitched at a level according to a number of factors. These factors include; where the product is in the product life cycle, consumer demographics, quality of the service, buyer behaviour and if there is any promotion running.

Pricing strategies

Premium pricing is using a high price where there is a uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Penetration pricing is when the price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased.

Economy pricing is a no frills, low price. The cost of marketing and manufacture are kept at a minimum. Price skimming occurs when the company charges a high price because they have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented

a) As BUPA are first to move in this market they hold all the aces, whatever they decide to do will attract customers and create a market. This is called a revolutionary product. Because of the research carried out by BUPA they should know the potential size of the market and at what level they should set their launch price. It must be remembered that the price for the consumer market is likely to be less than the business market.

BUPA will be looking to employ a premium or penetration pricing strategy, this will forever link the product as a high quality product, the best pricing strategy is most probably somewhere in-between. The early adopters will be the first to take up the product, at an early stage and they will be willing to pay more, although after the honeymoon period when there are no competitors there will need to be a reduction in price. In the early stages of the product life cycle there will be no competition, a near monopoly in the market, when others start to enter the market it will be time to lower the prices and compete on price, the product may be entering the growth stage of the product life cycle at this stage.

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b) Where and how this product is made available will affect the sales and revenue, if the product is not seen by the right people in the right places then no matter how much BUPA spend on advertising and marketing the product will fail. BUPA has to carry out further research into where their target communities will be most susceptible to their service.

It is likely that people who go to health clubs, sport clubs and gyms will want to improve their fitness and using the ‘Health Checker’ service may help in their quest. BUPA may also want to advertise at sports events that may appear on television and entice amateur sports people to use the service.

The service also offers to look at lifestyle, so BUPA can target people who are too busy, in the work or private lives to handle this personally, including managers of small businesses and city workers. The best place to advertise to this market would include conferences and networking events. BUPA could set up a stall to demonstrate to potential customers the benefit of the ‘Health Checker’.

Question 4

Recommend a six-month promotional plan to launch the ‘Health Checker’ service to both segments of the market.

Promotion can take place in many forms and at any time, using many different methods and media. These include, television, the Internet, mailings, billposters, radio, magazines, newspapers, specialist publications such as trade journals and demonstrations.

The promotion strategy can start with a broad scale promotion and generally get more direct as the launch date approaches. More money can be spent on the business market, as they are perceived as bringing in the most revenue by BUPA. Another alternative to this promotion is to advertise on television and poster campaigns although these media re more expensive.

BIBLIOGRAPHY:

Jobber, D Principles and Practice of Marketing, 3rd Ed. McGraw-Hill Education (2001)

Kotler, P Marketing Management US Imports & PHIPEs (2002)

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