Channel_and_Pricing_Strategies

Running head: CHANNEL AND PRICING STRATEGIES BLUE CROSS Channel and Pricing Strategies Blue Cross Marketing/571 January 10, 2011 Andrea D. Benjamin Channel and Pricing Strategies Blue Cross In week twos learning team assignment, Team A discussed the Blue Cross Blue Shield (BCBS) plan bringing new type Medicare coverage to citizens of Canada similar to the one currently in the United States. This week’s team paper will introduce the product to the international market in the United Kingdom (UK) that include channel and pricing strategies and justify the selection of the market selected. Why the United Kingdom' According to statistics (www.statistics.gov.uk), the population of the UK is aging. During the last 25 years, the population of individuals over the age of 65 in the UK has increased 15 to 16%, and predictions are this trend will continue. By 2034, 23% of the population in the UK will be over the age of 65. These statistics support the decision for Team A to make the UK their second selection for introducing our Medicare product internationally. World Bank (2010) indicates there are 61,838,154 people living in the UK with 16% of that population over the age of 65. This means that almost 10,000,000 individuals over the age of 65 are eligible for retirement benefits within the country. The UK currently provides a state pension for individuals who have paid into the system; similar to the social security system in the United States. The UK is a single payer system publicly funded by the government and the state pension includes coverage from the NHS (National Health Service) that is free of charge to all citizens. Although many people within the UK rely solely on the NHS, a large percentage elects to carry private insurance as well. Because members who use the NHS often have to wait a longer period for tests and major surgeries, providing these individuals with our product will allow him or her to receive faster medical care with less waiting periods for service. NHS members usually wait six months or more for surgery, whereas individuals with private insurance usually wait no longer than two weeks. These individuals also choose when and where they receive the treatment and which private hospital he or she wishes to attend (Monetos, 2010). With these factors taken into account, Team A believes this is the best choice of international market for our product. Channel and Pricing Strategies The pricing strategy currently used by the domestic country, Canada, is for individuals who are age 65 or over who need health care coverage not provided by his or her employer. The program used is Medicare and the cost depends on the type of coverage, income, and assets. For Part A the cost is free as long as that individual or spouse paid coverage during his or her working tenure. Under Part B coverage according to WebMD, the cost for most people is $115.40 per month; individuals with incomes over $85,000 annually will cost $116.50 - $369.10 monthly. There is a yearly deductible of $162 for the Part B plan. When entering the UK international market, citizens will also take advantage of the Medicare program offered to Canada. Channel strategy is a method used to control the flow of goods and services from the manufacturer to the receiver (WebMD, 2010). The channel BCBS will currently use is through telephone or the United States postal service. This strategy makes sense as many people over the age of 65 cannot or do not wish to use a computer. The individuals will receive an offer in the mail letting him or her know about how they can sign up for Medicare once they reach the age of 64. They will be able to apply early so once they are 65 they are automatically enrolled. Customer service representatives will also call on him or her by phone to take down information, interest in applying, and explanation of how the program works. Once registered, consumers will receive a welcome package in the mail informing him or her that the coverage will not begin until they reach age 65. The package will also include all pertinent information on the coverage benefits. Canadians and citizens of the UK will both use the same channel to gain access to the Medicare program. Included in the information packet will be contact numbers if any individuals have problems or any questions concerning the coverage. Implications Environmental Factors: Governmental Foreign preference is a factor that must be considered. The existing level of foreign preference should be known, as nothing will sell well without proper demand in the foreign market (Keller & Kotler, 2007). The international demand is not linked to the domestic demand. The domestic market for the Medicare option may not be feasible in the international market. This is why researching foreign markets are very important. In the decision to go abroad to the UK with Medicare insurance to individuals 65 years and older, Blue Cross Blue Shield (BCBS) must learn the lay of the land in this foreign country. The majority of insurance companies who offer Medicare insurance prefer to only offer it in the United States. BCBS has decided to expand its business out of the country. Before BCBS enters the UK they must first discover how the government monitors foreign companies that enter the country. The government has an open policy concerning foreign companies doing business in the UK. The National Health Services (NHS) of the UK has decided to let its citizens make their own decisions regarding extra health services he or she decides to add. The major legal entity of the UK health care system is the residents. The UK provides health insurance to all legal residents. Citizens are also given the option to purchase private insurance. Citizens, who purchase this extra insurance coverage, may receive liberties that others in the NHS do not; waiting times for diagnostic procedures and treatment will be shorter and private rooms are available when admitted to the hospital rather than semi-private accommodations in a ward (Monetos, 2010). The UK residents will influence BCBS choices by their needs. Individuals 65 years and older need extra coverage as a result of extra health issues that may arise related to age. Some of the risks BCBS face is the risk of residents who are not able to afford the private insurance. Some residents will decide to only accept the free coverage but BCBS must advertise the advantages of the private insurance option. Economic Considerations The role of interest rates, exchange rates, and monetary or fiscal policies in the UK health care system is very important. Interest rates are the indicators of the fiscal policy all over the world. Interest rates also recognize the stability of the financial market. By taking on policies that influence the interest rate, the assumption is that the investment in private health care is negatively related to the interest rates. BCBS will use the factors that influence interest rate and fiscal policies to influence its role in the UK economy. Presently, the economy of the UK is struggling like other economies all over the world, but the need for private health care insurance for the elderly is growing. By privatizing insurance for the elderly, they will shorten wait times, and they will receive private rooms if hospitalized. Innovation, Technology, Social and Demographic As health care can often be inefficient and expensive, the system needs ideas on how health care can be more innovative (Morse, 2010). When introducing the new health care coverage to the older generation of individuals in Canada and the UK, BCBS will work with doctors in their provider network to make certain he or she provides innovative and technology clever ways to enhance the healthcare experience and entice him or her to purchase the new product. Morse (2010) suggests an innovative way to update the health care system would be to use checklists. A checklist is something the doctor will make and follow before performing surgery on a patient. Some items on the checklist can include did the doctor wash his or her hands before coming in contact with a patient, which limb or organ is being operated on, patient name, etc. Using a simple list such as this could reduce deaths in surgeries by almost half. Another innovative way to make health care better is the practice of behavioral economics. Behavioral economic tools can guide patients to behave a desired way. Reminders, rewards, and social pressure from friends and relatives can help patients improve compliance with his or her doctor’s orders. Doctors can also benefit from behavioral economics. Using tools such as virtual visits to his or her patient only takes seconds and is a low cost way for patients and doctors to visit without meeting face to face (Morse, 2010). BCBS will also work with global technology companies to provide efficient and cost- effective medical device products for both the provider and the patient. These products include medical devices such as those implanted during surgical procedures, diagnostic devices or tests used to detect or monitor medical conditions and technologies that give greater independence to patients. Located in the UK is a global company providing such devices; BD (Becton, Dickinson and Company) (Unknown, n.d.). BCBS will work with this organization in both the Canadian and UK markets. Conclusion After reviewing and researching the international market, Team A believes that the two countries chosen for our product launch are the best choices in which to introduce the new Medicare product. Each country is a single payer system in which basic health care is provided free of charge to patients. The downside to this issue is that the single payer health care system often constitutes long waiting periods for tests and surgeries, and consumers have no option in who will provide the service. Because both countries consist of a large population of residents over the age of 65, Team A believes this BCBS product will give elderly consumers a bigger voice in his or her health care coverage, and provide him or her with the excellent service he or she deserves. References Keller, K. & Kotler, P. (2007). A Framework for Marketing Management, 3rd ed. [University of Phoenix Custom Edition e-text]. Upper Saddle River, NJ: Prentice Hall. Retrieved from University of Phoenix, MKT571-Marketing Course Web site. Monetos. (2010). Health Insurance in the United Kingdom. Retrieved from http://www.monetos.co.uk/insurance/health-insurance/uk/ Morse, Gardiner (2010). Most promising healthcare innovations. Retrieved from http://www.businessweek.com/managing/content/mar2010/ca2010039_575207.htm United Kingdom (December, 2010). The World Bank. Retrieved from http://data.worldbank.org/country/united-kingdom Unknown, Author (N.D.) BD Medical Technology Retrieved from http://www.bd.com/uk What does Medicare cost' (2011, January 7). Retrieved from http://www.webmd.com/medicare/what-does-medicare-cost