Week 4

Go to Lecture Week 4, read the learning objectives for Chapter 8, 9, then, study these chapters. After reading them, do the following exercises.

Chapter 8: Product Strategy

1. Listed below are three different organizations at various stages of the product life cycle. Explain the strategy considerations they might undertake for the specific marketing mix variable listed. Marketing Organization Life cycle stage mix variable

1.  Prucare, a Introduction Promotion managed care plan entering a new metropolitan area

2.  HealthStop, Mature Product an urgent care clinic offering minor ER treatment

3.  Community Decline Product Hospital, a 234-bed facility with seven pediatric beds

2. A large community hospital, River/> Valley/>/>, has recently begun to acquire physician practices. At issue is whether to rename each acquired practice to “ River Valley Associates” or to leave each name alone. What are the trade-offs River/> Valley/>/> should consider in this decision?

3. A company has decided to offer a health savings account plan to its employees. This new option is the first such type of coverage available in the market. Based on the factors that affect the diffusion of innovation, how might the company best accomplish the successful roll-out of this new health care coverage option?

Chapter 9: Price

4. Two medical organizations have recently examined their cost structures. The first group is a radiology practice with a significant investment in diagnostic imaging equipment. The second group is a single-specialty pediatric practice. The cost analysis reveals the following distribution:

                     Radiology Group
	

Pediatric Group
  	

 

Fixed Cost
	

70%
	

20%

Variable Cost
	

30%
	

80%

Explain the implications of these differing cost structures of each medical group in terms of contracting with managed care organizations. 

5. An ophthalmology practice is deciding whether to offer prescription eyeglasses for sale in-house. The new service would require the training and hiring of additional personnel, inventory for glasses and frames, and some minor space alterations. The utilized space in the office would be a charge allocated to the program. The costs for this new service are:

Variable        Costs (electricity,
	

$80 per completed

labor, supplies)
	

 pair of eyeglasses

Total Fixed Cost
	

$36,000

How much volume does the group need to break even if they charge $100 per pair of eyeglasses? If they charge $200?

Extracredit: A dentist in Cali, Colombia has decided to target adult orthodontia patients in the United States. He offers the Invisalign braces that are rather high priced in the United States. Because of the lower cost of labor and the lower price that he can get the braces for in Cali, he can beat the price of any U.S. provider by at least 40%. His spouse owns a four-star hotel in Cali. Suggest a pricing approach for this dental clinic. He wants to develop a Web site and is also thinking of marketing his clinic on YouTube.