Case 2.3

Kid Stuff? Determining the Best Positioning Strategy for Akron Children’s Hospital

Critical Thinking Questions

1.Akron was growing and four hospitals were competing to win customers in the high-growth areas.The rival hospitals had hired marketing staff.This indicated that the competitive market for hospital services would soon intensify.It was time for Akron Children’s Hospital to claim its desired positioning among the set of competing hospitals.Powell did not want to miss identifying the ideal positioning and wanted to use field research to help identify what Akron Children’s Hospital could say in next year’s communications campaign.

2.Akron Children’s Hospital board wants the hospital to become the preferred hospital in the high-growth areas of the region.Accordingly, we are studying positioning possibilities, so that the board can select the best positioning for next year’s communications campaign intended to boost the number of patient cases 10 percent in the following year.

3.(a) Should research be done at all? and (b) if research is done, should it be just focus groups, or a plan that would feature both focus groups and a telephone survey?

4.This is the crux of the case.Is the investment in research worth the return?In this case, merely positioning Akron Children’s Hospital as “the kids’ hospital” might result in an enormous opportunity cost if the Akron Children’s Hospital loses the chance of claiming something more valuable to its customers and potential customers in the Northeast Ohio region.Speculation about this issue won’t reduce the risk in positioning one way or the other.However, well-conceived and well-executed research can reduce the risk involved.

5.Powell is currently the leading advocate for taking a professional marketing research approach to the issues it faces.Norton is less convinced, but at the end of the case, he appears to distance himself from plan C—the no research option.There appears to be hope for Powell and Jones to win over Norton.Now, they must execute the research with excellence and show its value to the doubters, such as Norton.

6.Context is understood by comparing the different plans.Plan A would provide qualitative insights and cost $20,000.Plan B would include these qualitative insights and likely identify the ideal positioning for the hospital.This would cost three times as much.Importantly, Akron Children’s Hospital will be able to statistically determine the degree of preference among the positioning alternatives.This could be much more valuable than the $40,000 additional cost for the research.Plan C—no research—puts the hospital in the same category as playing the lottery; the odds for success may be very unfavorable.

7.There are alternatives to research.Different designs can return different insights. Such insights can require more expense and effort, as in the combined use of focus groups and survey research.However, the return on this investment can be enormous.It appears that the research design process for Akron Children’s Hospital may lead it to do something it would not have done, otherwise.In this case, professional research will be pursued.

8.Firms considering research should consider multiple courses of action.Even the alternative of “no research” should be considered.Not all issues deserve the time and attention that professionally-done research requires.

Technical Questions

Chapter 1

9. Marketing research can help determining what families are looking for in selecting a children’s hospital and which of alternative positioning strategies for ACH would work best.

Chapter 2

10.The management decision problem is: What positioning strategy should be adopted for ACH?

The marketing research problem consists of a broad statement and specific components.

Broad Statement

Determine the potential level of consumer awareness, as well as preferences and purchase intentions, for the children’s health care services.

Specific Components

  1. What criteria are used by consumers when selecting a children’s hospital?
  2. How does ACH rate, in comparison to competitors, on these criteria?
  3. Which competing hospitals have the best perceived children’s programs?
  4. What are the demographic and psychological profiles of ACH’s customers?For the competition’s customers?
  1. What is the appeal of alternative positioning strategies for ACH to the target consumers?

Chapter 3

11.Initially, Norton and the finance people have a flawed perception about the role of exploratory research.They wrongly view focus groups (an exploratory technique) as rendering conclusive results.In their view, focus groups should be done to confirm what is already known.This is an error that is commonly made by business persons who are not well-grounded in their understanding of marketing research.By comparison, Powell and Jones view focus groups as a way to uncover hidden insights about customers in the high-growth areas in the vicinity of Akron.In a subsequent survey, an inference can be made about the portion of the population of interest (Akronites in high-growth areas) who agree with the insights uncovered in the exploratory phase of the research.This tandem use of exploratory and descriptive research is what was proposed in Plan B.

Alternatively, the sequence of this tandem use of exploratory and descriptive research can be reversed, so that the exploratory research follows the descriptive research.Here, any anomalies emerging from the descriptive research (such as investigating the unexpected preference of women for a particular positioning idea) can be investigated.This was the sequence proposed as Plan D.

12. ACH’s pre-research level of understanding for the customers in the high-growth areas of Akron is a determining factor.If a high degree of understanding about the customers in the high-growth areas is assumed, then Plan D will likely be preferred.By comparison, if a low degree of understanding about the customers in the high-growth areas is assumed, then Plan B will likely be preferred.

Chapters 4 and 5

  1. The roles of different kinds of secondary data are discussed.

Internal

Internal sources should be consulted first in a search of secondary data.Investigation of ACH’s admission records may reveal useful information such as:

  1. Number of admissions by type of service rendered (i.e., surgery, illness, accident, etc.).
  1. Average revenues or profit per type of service.
  1. Demographic profiles constructed from admission information.
  1. Admissions which required multiple services, and identification of the service combinations.
  1. Type of payment made for services (i.e., cash, credit, insurance).
  1. Number of admissions for elective (i.e., unnecessary medical procedures),treatments, such as cosmetic surgery, sterilization, etc.
  1. Number of admissions per month, broken down by type of service rendered.
  1. Trends in the types and quantities of services consumed.

External

External sources may come in one of three forms:published sources, computer databases, and syndicated services.

Published secondary sources may come from the government, nonprofit organizations or many other sources.The government bodies who legislate federal and state hospital policy may conduct and publish studies on the hospital industry.Professional organizations, such as the American Medical Association, may have relevant statistics.Additionally, insurance firms may collect data from their own research or claims that are pertinent to ACH’s problem.Also, it would be worthwhile to consult the Encyclopedia of Associations, or the National Trade and Professional Associations of the United States, to see if an association affiliated with the hospital industry conducts related research or proceedings.

A search could also be conducted for other marketing research reports on similar topics, to give added direction to the researcher.One way to locate these studies would be Findex, The Directory of Marketing Research Reports, Studies and Surveys.Predicast is yet another source.Computerized databases include online sources that can be searched for information.Some examples are DIALOG (a network which accesses several hundred databases) and the Directory of Online Databases.Offline databases that have information contained on CD-ROM discs may be useful—U.S. Census Statistics and Datext (industry and corporate profiles) are a few examples.

Syndicated sources may provide information cheaper and more efficiently than the process of collecting primary data.Use of syndicated services also provides easier access to a larger pool of respondents.Also, the data from these sources can be somewhat customized, as only the relevant data might be extracted from generalized survey information.However, fully customized data can be obtained through a syndicate service, although this is more expensive than generalized data; but it may be cheaper than the researcher collecting the primary data him/herself—if a large number of diverse respondents is needed.

For our purposes of solving ACH’s problem we might only access generalized surveys, such as information routinely collected for insurance companies, because customized information may be too narrowly defined for our study.Generalized information that is solicited from syndicated services might include household survey data or industry services data.

Chapter 6

  1. The two major direct techniques are focus groups and depth interviews.A focus group is an interview conducted by a trained moderator among a small group of respondents in a non-structured manner—with the goal of gaining insights about the research problem from the target market.Depth interviews are similar to focus groups in that they are unstructured; however, they are conducted on a one-to-one basis.

In order to conduct a focus group for ACH, we have to first specify the objectives of the qualitative research.The objectives should center on the research questions for the study.The objectives of ACH might be conceptualized as:

  1. Determine how consumers become aware of children’s hospitals and form selection criteria.
  1. Identify the selection criteria consumers use to choose a children’s hospital.
  1. Determine which children’s hospitals are considered the best (in the community), and what factors contribute to this perception.
  1. Identify demographic and psychological characteristics of consumers who view acute care as an asset or a major factor in children’s hospital selection.
  1. Identify characteristics and criteria of consumers who have a need or a potential need for children’s acute care.

Then, a detailed list of objectives must be drawn up.In the case of ACH, this list may include objectives such as:

a.The effect advertising has on awareness.

b.The effect of price on selection?Location?Staff?Parking?Quality of care?

c.The differences and similarities, or desirable and undesirable characteristics of local children’s hospitals.

d.The criteria used to evaluate acute children health care programs.

e.The existence of a perceived need for acute children health care.

At this point, an appropriate moderator’s outline must be developed, and focus groups formed such that members are homogeneous on salient characteristics.Analysis of the results may lead to new hypotheses in addition to those derived a priori.These hypotheses could then be incorporated and tested in the quantitative research portion of the research project.

A depth interview for ACH might begin with the question “How do you feel about going to local children’s hospitals for acute care?”The interviewer would then try to get the respondent to talk freely about his or her attitudes about, and perceptions of, local hospitals.The interviewer should listen closely to the responses of the subjects so that probing questions may be asked.

We also give examples of each of the four projective techniques in the context of ACH’s marketing research problem.

Association

For ACH’s study, test words might be:

  • acute care______
  • hospital ______
  • delivery room______
  • hospital room______
  • location______

Completion

Sentence completion examples might be:

  • Someone who is a patient at ACH ______.
  • Someone whose child needs acute care should ______.
  • When I think of taking my child to a hospital for acute treatment, I ______.

Story completion might involve the following:

Sue was expecting her first child.After several weeks of careful consideration, Sue and her husband decided to go to Hospital X when it was time to deliver.However, about one week after Sue had made her decision, she saw an advertisement for Hospital Y that mentioned that Hospital Y has the most modern facilities for maternity care.What is Sue’s response? Why?

Construction

Picture Response

A picture of two expectant mothers can be shown.Respondents are told that the mothers are discussing the features of a desirable maternity care program, and that one of the women plans to go to Hospital X for delivery, and the other woman to Hospital Y (where both X and Y are the names of hospitals known to the respondent).Then the respondents are required to tell a story about the two women, or to describe the two women.

Their responses might reveal the perceived characteristics of the two hospitals’ maternity services and of the users of these two hospitals.

Cartoon Tests

The respondent is asked to fill in the empty bubble with a response to the friend’s statement.

Expressive Techniques

Role Playing

The respondent can be asked to assume the role of PR director for a children’s hospital’s acute care line.The aspects of the line that the respondent emphasizes can reveal his or her attitudes toward the maternity line.

Third Person

The respondent could be asked a question such as “What do most people think about ACH?”

Chapter 7

  1. Yes, Norton should commission a survey.The use of physical stimuli is a dominant criterion in this case, as respondents will have to be able to see alternative positioning statements and asked to evaluate them.Sample control and response rate are additional factors that must be considered because the results have to be projectable to the target population.The target population is very specific and consists of parents who are the primary decision makers for health care decisions within the family and have a child— newborn to 18 years old—with an acute condition and who have spent at least three consecutive days in a hospital.A mail panel survey best meets these criteria.

Chapter 8

16.An experiment could be conducted to determine the target consumers’ response to alternative positioning strategies for ACH.A factorial design in which the alternative positioning strategies for ACH would constitute one factor would be appropriate.

Chapters 9 and 10

  1. The measurement scales commonly used in marketing research are: nominal, ordinal, interval, and ratio.

Nominal Scales

A nominal scale might be used to assign a label to each hospital included in the study.For example, the five hospitals in ACH’s market might be identified in the survey (for the coding purposes of the researcher, see Chapter 10) by the numbers one through five.

1)___ACH

2)___Hospital B

3)___Hospital C

4)___Hospital D

5)___Hospital E

Therefore, ACH would be identified or coded by the number 1.

Ordinal Scale

It has been repeatedly mentioned in previous chapter solutions that the relative awareness and importance of criteria for selection of ACH are vital to ACH’s study.Therefore, we could use an ordinal, or ranking scale, to see the relative positions of local hospitals in terms of awareness.For example, we might ask the following on our survey:

Please rank each of the hospitals below (with a number between 1 and 5) to indicate how aware you are of the hospital (1=most aware and 5=least aware; use each number only once).

___ACH

___Hospital B

___Hospital C

___Hospital D

___Hospital E

Also, since at this point we should have already generated a list of criteria that are used in the selection of a hospital (from qualitative research) we can now ask respondents to rank the criteria according to importance:

Please rank the following factors in order of their importance to you when you decided which hospital to go to for delivery (1=most important):

___Reputation of hospital

___ Quality of care

___ Convenience

___ Advice from friends

___ Advice from doctor

___Information from promotional literature

___ Information from advertisements

___ Staff

___ State-of-the-art children’s facilities

Interval Scale

We can use interval scales to determine how each hospital compares to the others on each of the selection criteria.We might do this by using a Likert-type scale, such as the one below:

StronglyDisagreeNeitherAgreeStrongly

DisagreeAgree NorAgree

Disagree

ACH offers high-

quality care12345

You would have a scale with a statement for each of the criteria, and then you would collect measurements on the same scales for these same statements for each of the other hospitals.Then a comparison could be made to see which criteria ACH ranked better on, as compared to its competitors, and which Hospital was ranked the highest on each criterion.

Ratio Scale

This scale might be used to reveal how many times a subject has gone to a particular hospital for treatment.

How many times in the last year have you received treatment from:

ACH___

Hospital B___

Hospital C___

Hospital D___

Hospital E___

The two types of noncomparative techniques are continuous and itemized rating scales.

Continuous

Please draw a vertical line on each scale shown below to indicate your feelings regarding the following statements:

1)How would you rate ACH as a quality caregiver?

Probably Probably

the ______the

worstbest

You would continue to list statements for each of the hospitals on each of the criteria.

Itemized

a)Likert Scale

See the example under Interval Scales.

b)Semantic Differential

Judge the concept of ACH on each of the scales below by placing an “X” in the blank that best represents your feelingsabout ACH on that dimension:

Poor: __ : __ : __ : __ : __ : __ : __ :High

QualityQuality

Very: __ : __ : __ : __ : __ : __ : __ :Very

InconvenientConvenient

You would give a scale for each dimension or criterion of hospital selection and repeat all the scales for each of the hospitals.

c)Stapel Scale

ACH