solution

SNAPSHOT

Institution: Knightsbridge Health System, a for-profit, 1575-bed health system consisting of six medical centers providing general medical and surgical services

Location: Laurel (population 594,210), located in the East South Central region of the United States Characters: Mr. Kevin Foster, Chief Marketing Officer Ms. Dana Sutherland, Chief Executive Officer (both of Knightsbridge Health System)

Context: In this case, the top marketing executive of a health system recommends an innovative method for improving the patient experience by introducing retail elements into the servicescape. Kevin Foster, Chief Marketing Officer at Knightsbridge Health System, is excited. Several weeks ago, he was asked to join an architectural planning committee to discuss the design and construction of Knightsbridge Health System’s newest hospital, Knightsbridge-Eastgate Medical Center. Kevin is new to Knightsbridge Health System, taking the position as marketing chief just three months ago. Still, he has worked quickly to learn the operations of his new organization and was honored to be selected to serve on the planning committee. Kevin’s first opportunity to serve at the helm of a marketing department, but his education and former employment positions have prepared him well for the role. Kevin entered marketing through a less traditional route. Instead of earning a college degree in marketing or business administration, he pursued a degree in commercial art. He entered marketing on the creative side, preparing artwork for several advertising agencies before moving into his first management position in sales. He worked for an apparel company with retail outlets in shopping malls across America. Eventually becoming the company’s national sales manager, he acquired a Master of Business Administration throughout his retail service to broaden his knowledge of marketing and other business disciplines. With 15 years of experience under his belt, he was ready for a change, applied for the Knightsbridge Health System Chief Marketing Officer position, and was awarded the opportunity. Knightsbridge Health System comprises six medical centers having a total of 1575 licensed beds. It is located in Laurel, a city of 594,210 residents located in the East South Central region of the United States. The for-profit health system operates medical centers in all but one region of the city—Eastgate—an area that has witnessed significant growth in recent years as the population of Laurel expands. Knightsbridge-Eastgate Medical Center, Knightsbridge Health System’s seventh property that will add 250 beds to the system’s total, will fill this void and afford Knightsbridge Health System with total market coverage in Laurel. Knightsbridge Health System embraces a moderately conservative approach to healthcare delivery, emphasizing traditional positives such as high-quality care, employee excellence, and devotion to a guiding mission that focuses on patient attention, care, respect, and shareholder value. But the system is not afraid to take chances and, as such, has gained the reputation of being an innovator, at least within the local healthcare marketplace. Still, Knightsbridge Health System seldom looks outside of the healthcare industry for proven practices from other industries that could be adopted or adapted for gains, something not atypical in the healthcare industry. Kevin, however, views marketing practices, regardless of the industry of origin and use, to be fair game for incorporation into any setting, including health care. From his perspective, the trick is to cast one’s net broadly, searching for innovative ideas across business and industry. Then, assess their feasibility for use in the healthcare industry, investigating if they can be adopted outright or adapted without losing the characteristics that made the practices successful in other industries. Kevin readily acknowledges the unique nature of the healthcare industry in comparison to other industries. Still, with zeal, creativity, and improvisation, he views many gains, already tested and proven elsewhere, to be capable of incorporation in the healthcare environment for massive benefits to patients and the healthcare entities that serve them. As a member of the architectural planning committee, Kevin has been exposed to many discussions regarding Knightsbridge-Eastgate Medical Center, with his greatest interest pertaining to the design and functionality of the servicescape, the physical setting of the facility from parking to landscaping to facility signage to ergonomics to employee attire and beyond. Mostly observing and providing occasional commentary, Kevin was surprised in a recent meeting when Dana Sutherland, Knightsbridge Health System’s Chief Executive Officer, asked him for insights that would take Knightsbridge-Eastgate Medical Center’s servicescape to the next level. Seeking to tap into Kevin’s diverse background and newness to both Knightsbridge Health System and the healthcare industry, she specifically wanted perspectives from someone who, unlike everyone else sitting around the conference table, had experience outside of the healthcare industry, and Kevin fit the bill. Kevin was flattered by Dana’s request. As luck would have it, he had already conceptualized a unique servicescape that, just as Dana was seeking, changed the rules of servicescape design in the healthcare sector. As the team rookie, he had been somewhat hesitant to share his vision, but he was afforded the perfect opportunity to present his ideas at Dana’s request. Kevin communicated that his vision was unique to health care but not to another industry with similar attributes—the transportation industry, with airports serving as the primary model. At airports, passengers are essentially captive, and the wait times for flight departures, even when operating on schedule, are often lengthy. The same hardships exist in healthcare institutions, with patients being captives who often face lengthy waits before being seen by caregivers. Just as in airports, family members often accompany their loved ones to healthcare institutions, bringing yet another party into the service venue. Kevin communicated that airports have responded to this by incorporating retail operations that permit waits to be less frustrating and potentially even productive for captive audiences. Modern airports, especially those in large cities, incorporate shopping opportunities, restaurants, video arcades, and art galleries, among many other things, to enhance the travel experience. These establishments typically are not operated by the airports themselves but rather by companies that lease space from the airports, providing a revenue source and passenger benefit. Given the obvious parallels, Kevin thought that healthcare entities could do the same, incorporating retail elements for a vastly improved services-cape and potentially even generating revenue for healthcare providers. He echoed that this, of course, would go well beyond the typical hospital gift shop or cafeteria. However, since Knightsbridge-Eastgate Medical Center was still on the drawing board, the system had the perfect opportunity to do something innovative. After Kevin presented his vision, some of the audience members chuckled, reminding him that Knightsbridge Health System was in the business of health care, not retailing. But they were quickly silenced when Dana applauded Kevin for thinking in a very innovative way and expressed that his idea had merit. She went on to say that his vision not only would benefit patients and potentially the medical center’s bottom line, but, if done well, it would represent an unbelievably robust product differentiation tool. As the meeting drew to a close, Dana challenged Kevin to refine his idea, requesting a detailed plan for the forthcoming meeting and tapping into his skill as a graphic designer, associated servicescape illustrations. Excited by the positive feedback and upcoming challenge, Kevin thought that this was an excellent way to begin his healthcare career.

3. After presenting his vision, Kevin experienced a period of slight ridiculed by some of his colleagues, who chuckled at his idea before Dana’s response silenced them. Bold new directions will always face ridicule and objection by status quo executives and managers, but they at least should be shared as each has the potential to yield results. Still, the possibility of ridicule often prevents individuals with innovative ideas from coming forward, which, at least in some cases, results in brilliant ideas going to waste.

Describe the distribution channel(direct/indirect) you would recommend and why?

In health care services , the channel of distribution is the path a patient takes as he or she accesses the appropriate level of care .

A direct channel is one in which no one stands between the producer of the product and the ultimate consumer .

An indirect channel may have several intermediaries between the producer and the ultimate consumer .

Select a channel intensity (intensive, selective, and exclusive) and why?

When forming a channel , the provider of the product or service must first decide how intensive the distribution should be . This channel intensity , as it is called , will then determine how available the product is to the ultimate consumer .

The greater the desired coverage , the more the strategy leans toward intensive distribution with more outlets for distributing the service . Intensive Distribution This strategy is typical of consumer goods manufacturers . With intensive distribution , the product is available in a large number of outlets .

Exclusive Distribution The opposite of intensive distribution is exclusive distribution , whereby the product or service is offered in a highly restricted number of outlets .

An intermediate intensity strategy is that of selective distribution . As noted in Figure 10 – 3 , this approach involves fewer retailers than the intensive approach and is particularly attractive to manufacturers of shopping goods . At this distribution level , the consumer compares alternatives on selected attributes and compares the value .

Identify any potential channel conflict and how to address it.