Strategies to Thrive in a Competitive Pharmacy Market
Case Study: Pharmacy Market
A local chain retail pharmacy, operating in the city and county areas. Currently, there are four major chain companies in the local market, leading to intense competition. Most people nowadays are reluctant to buy medicine unless there are promotions, typically waiting for special sales days.
However, the challenge is that all major pharmacies run promotional events on those days, making it difficult to cultivate loyal customers. Customers seem to obtain membership cards from any pharmacy, choosing the one with the lowest prices.
Even if there is foot traffic, how can we convert it into effective traffic, increase conversion rates, and boost average transaction values?
- Identifying the Core Issue – Price Wars on Standard Products
Behind every challenge lies a business logic. Analyzing the pharmaceutical industry from a business perspective, there are two main categories: drug manufacturers creating value through production, and pharmacies acting as distributors, conveying value. Pharmacies, like yours, are essentially distributors.
Currently, offline stores face price competition with online stores, especially for standard products. However, your concern is not with online pharmacies but with other local competitors. Therefore, the issue boils down to a price war on standard products among offline pharmacies. - User Segmentation
Lets analyze users based on their motives for purchasing medicine:
1.Household Essentials Users: Those preparing for emergencies, stocking up on essentials like cold medicine, band-aids, and pain relievers for unexpected needs.
2.Emergency Users: Individuals requiring immediate solutions for sudden illnesses, demonstrating a degree of randomness in their purchases.
3.Consumable Medicine Users: Targeting those with chronic conditions needing continuous medication – a bit like the concept of “consumables” introduced by @ Dake Innovative Internet Consulting -Jackson. - Tailored Marketing Solutions
1.Essential Household Medicine Box: Design a range of medicine boxes tailored for different households – for the elderly, pregnant women, infants, and families with children. Offer these pre-prepared medicine boxes, solving the hassle of customers choosing their medicines individually.
Tip: Implement a trade-in system for outdated or unused medicines, providing a discount or loyalty points for new purchases. This ensures continual sales and customer loyalty.
2.Establish Trust through Services: Set up unmanned medicine dispensers in the community, resembling a large-scale version of a “family medicine box.” Include commonly used medicines and promote this as a convenient, quick solution for residents. In addition, assign an area for pharmacists to provide professional services, building trust.
3.Membership System for Consumable Medicine Users: Implement a membership system targeting users with chronic conditions. Calculate the expected annual medicine expenses, design an annual membership plan with a higher discount, and secure customer loyalty by offering a price advantage.
Tip: Focus on services rather than products. Consider offering additional services such as reminders for medication timings through a mobile app or emergency call services.
These strategies aim to transform your role from a mere distributor to a service provider, as standard product differentiation is challenging. By analyzing customer motivations and tailoring solutions, you can enhance the overall shopping experience and encourage customer loyalty.
Summary:
Learn to consistently narrow down the scope of your problems, identify the essence, and shift from being a distributor to a service provider. The key is to differentiate through services, considering the changing landscape of the pharmaceutical industry.
