BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office DR. BECKETT”S DENTAL OFFICE CASE BACKGROUND Dr. Beckett is a dentistry graduate with high technical expertise. After her studies, she established her dentistry business and she was able to sustain constant revenue with high profit margin. However, in spite of the technical talent she gained from the university, she lacks the core knowledge in business. Since the dentistry industry is rapidly changing due to technology and government regulation in health, Beckett’s margin has declined due to continuously increasing overhead cost. She needs to adapt in the changing environment by investing in new technologies and spend for staff’s trainings. She strongly believes in providing a higher quality level of dental services by enhancing the office service environment and providing her staff with intensive training. PROBLEM STATEMENT: Dr. Beckett recently moved to a bigger dental office which allowed her to revamp the service aspects of the business all geared towards improving quality. While she feels that the company should pursue quality differentiation strategy, she also recognizes that doing so is very demanding and quite difficult. What should be the appropriate long term positioning strategy that the company should adapt and how should it be best communicated to customers? CASE ANALYSIS: Flower of Service Core Service: Beautiful smile and good dental hygiene. Facilitating Elements Information - Dr. Beckett dental service offers high quality dental service by providing high level services. They have good environment architecture; there is an entertainment BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office area while waiting. Her goal is to provide superior dentistry in an efficient, profitable manner within the confines of a caring and quality environment. Order-taking – Patients should be kept waiting not longer 20 minutes without giving option for rescheduling. These enhance the service quality of her business because it reduces and outcome of unsatisfied customers due to long waiting time. Consultation – Patient has to schedule for appointment prior to consultation. It maximizes the office capacity and avoids customer traffic. Since this is a care service, too much crowd will give impression to the customers that they will not be given enough attention because of lots of patients. Billing – a separate person is responsible for billing and operation budgeting. Payment- although it is not mentioned in the case, we assume that person who is responsible for billing is the same person who is doing the billing. This setup gives impressions to customers that Beckett’s business operation is smoothly practiced which enable the clinic to concentrate in its core service. Enhancing Elements Service environment – The new office located in Northern California town. The structure is based from Scandinavian design. It is filled by wooden furniture, live plants and walls are covered with arts. The design gives a value adding to customers because their anxiety and fear on dental clinic is somehow eliminated. Hospitality- Patients can enjoy a cup of coffee, browse from huge selection of magazine while waiting. Security (Not mentioned in the case) Exceptions (Not mentioned in the case) BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office 7 Ps Product / Service Aligned with its vision of offering superior quality dentistry, Dr. Beckett aims to provide customers with a beautiful smile and good dental hygiene for greater confidence. We are assuming that the actual service covers the full range from dental check-up, cleaning, tooth extraction, reconstruction, etc. It’s true that a visit to the dentist is a grudge task and not considered to be a priority by lot of people. Hence there is a need to provide superior quality service to correct the misconceptions and take out the negative feelings from typical customers. Price While Dr. Beckett recognized that profit is important, she didn’t want to compromise quality thus the premium pricing approach. While other dental services may have opted t offer lower price to adapt to the trend of declining health care cost to insurance companies, Dr. Becket took the opposite direction and focused on quality to justify the relatively higher pricing. To support the move, the new office contains state of the art facilities, an updated modern design and several value added service. The pricing strategy is actually aligned to the conceptual target market that Dr. Beckett’s wants to capture – the white collar workers who have the capacity to pay and see the value of having a beautiful and well maintained teeth. Promotion The dental office has been in the business for 22 years now and has generated a customer base of 2,000 active patients simply through positive word of mouth from patients who tried the service. There was no need to advertise heavily through traditional medium. Aside from the fact that advertising was not the norm, margins we’re also good before. With the changes in the market landscape (increased competition, reduction in health care cost, etc), Dr. Beckett may feel that there is a need for her to develop a formal promotional strategy, in line with the total service revamp in order to capture a wider customer base. BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office Process Overall process and service is very professional. In fact it’s commendable that in spite of staying in the business for over 20 years, Dr. Beckett still thought of improving the office system. It was redesigned to standardized routine procedures to reduce error and provide same level of care. Each procedure is timed & staff work to meet the set time. Customers are also not allowed to wait for more than 20 minutes. Availing a dental service is something that is planned so it’s okay to require customers to set appointment to be entertained. Cancellations are also filled in to maximize capacity. The initial exam by Dr. Becket who provides education & counseling to patients adds a personal touch and adds credibility to the service. The only sign that the process can be further improved is the fact that waiting time can range from 3-4 months. We think that this is too long a gap and poses a risk of allowing customers to try out other competing dental services. Physical Environment Coming from a cramped space, Dr. Beckett’ move to a bigger space was aligned with her positioning strategy, giving her the perfect chance to overhaul of her service too. This new place was designed to be an extension on Dr. Beckett’s personality adds to the company’s branding. It didn’t just aimed to provide a pleasant place for the customers but for the staff as well. The investment also was worth it since the physical place is the first thing that customers will see when they visit the dental office. There was intentional balance between function and design which sets the dental office apart from the usual clinical and traditional dental offices. The add on features (play area, classical music, headphones, etc) were all aimed at providing a superior and pleasant dental experience minimizing the unpleasant feelings of going to a dentist. The certificate diplomas displayed, which is a standard practice in most professional service industries adds credibility to the dental office. BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office People It is obvious that Dr. Beckett puts a high regard to the welfare & growth of her 7 staff who are assigned in the ‘front’ and ‘back’ office. This is important for a service company that the staff is happy because it could translate to a good service as well. They are provided monthly bonuses plus an annual travel with the whole team. Beyond the financials, the staff is regularly given opportunities to update skills thru classes & workshops. Clearly, Dr. Beckett sees the value of the staff in delivering her company’s vision and goals. There was also open communication and staff gives inputs and suggestions on how service can be improved. As a result, there is a good dynamics among the staff and they view themselves as part of a larger team. Productivity Given the good employee dynamics among Dr. Becket and the dental staff, over-all process is standardized, streamlined and highly productive. There’s a steady flow of patients and reservation is efficient as well. The true measure of productivity however will be determined once the new revamped operations stabilized. It should be able to provide bigger sales, higher per transaction value and customer count given the bigger space and the significantly improved service. SWOT Analysis Strengths Dr. Beckett knows a lot about technicalities in dentistry. It eliminates the risk of malpractice and reduces the risk of negative information which may destroy their brand image. High level service environment architecture. Great training and growth opportunity provided to staff; excellent teamwork and open communication With 2,000 database of active customers mostly providing positive word of mouth for the company’s service BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office Weaknesses Dr. Beckett previously knows nothing about business side of dentistry. Rising overhead cost. Beckett charges higher than the industry average. Patients usually pay fees for cost not covered by insurance. Opportunities Existence of Health Care Organization (HMO). Although HMO dictates how much fees should a dentist should charge to customers, It still increases the customer portfolio because there are people who has HMO plans and willing to pay extra in return of value added service that Beckett can offer. Customers who were looking for quality service. These are white collar workers like university employees, health care workers and managers. Word of mouth marketing and referrals. Threats Change in dental industry is drastic. Staffs need regular training because of the new technologies and trends are emerging Costly labor and the need for continuous update of equipment and facilities Price inflexibility due to the price set by the HMO companies Low reimbursement rate of insurance company. In the case of Becket, she only reimburses 80-85% Very high customers expectation in terms of technical and patient interaction of staffs Majority of people disliked going to dentist BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office ALTERNATIVE COURSES OF ACTION We are using Porter’s generic strategy matrix to assess the options that are available for the company based on 2 axes – Advantage on the X axis and Target Scope on the Y axis. Being a relatively small community dental company, Dr. Bekett’s dental service is under the Narrow market segment, which makes the company’s option either a low cost or differentiation strategy. Option 1 - Strengthen and pursue the new premium and upgraded service of Dr. Beckett’s Dental Office to support its differentiation strategy Pros: - This direction is aligned with the company’s Vision & Mission statements and the personal values of Dr. Beckett. She views the dental office as an extension of her personality so upholding quality and great service is second nature for her - The existing staff is already oriented with the new service design and quality principles - Provides high level of customer satisfaction based on the referrals from previous customers - The high quality and consistent level of service will allow them to charge a relatively higher price without the customers feeling short changed BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office - The company already invested big in its new bigger space and facility Cons: - It is difficult to sustain high quality all the time both in terms of operating cost and effort - It is a thankless service, customers usually don’t show appreciation Option 2 – Take out the extra complementary services and pursue a low cost strategy. Although, this particular option was not explicitly presented in the case as Dr. Beckett herself has already decided to pursue quality differentiation, we are still assessing this option due to the considerations below: There are several complementary services being offered. It is possible that some ‘extra services’ like DVD player or hanging mobiles is non value adding or not relevant to customers so removing it will not impact on the patronage. Pros: - Less effort to sustain the high standards set - Less pressure for Dr. Beckett and the staff - It’s possible that taking out some of features like free coffee or ice tea will not lessen their service performance from the point of view of the customers - This may allow them to rapidly expand customer base (due to lower price) that will allow them to maximize the bigger space and facilities already purchased Cons: - The improvements they started will be put to waste - They will attract the lower income market segments will might erode the ‘premium’ brand equity that it has initially built BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office - Quality service is compromised so old customers who were used to the top notch quality might get turned off and transfer to other dental services. - The company may be faced with more competition since the other dental services are commonly competing based on price. This is usually not a sustainable, not only will quality be compromised, the company may operate at a loss due to high operating cost. RECOMMENDATIONS In line with the pros and cons previously presented, we are recommending that Dr. Beckett’s Dental Office continue to pursue and sustain its quality differentiation strategy. Not only will it allow them to realize the company’s mission and vision, the capabilities of the company in terms of manpower, culture and facilities prepares them to keep up with the high demands of quality differentiation. Specific action items can include the following: REVIEW: Rationalization of the ‘add on’ services (e.g. free coffee, headphones, etc) – Dr. Beckett should review all the nice features that they are offering and identify which are value adding and which are simply nice to have and (would not matter to customers if taken out). This will save the company resources allocated to these special services. A simple way to find out is to do a simple survey with customers e.g. those waiting for their turn to get serviced. Then Dr. Beckett can do a final assessment of which services to stop, continue or improve. This way, they can get possible savings on maintenance and operations and ensure all complementary service has commercial values as well. CONTINUE/IMPROVE: Invest in employees - Selecting and training employees and creating a culture within the dental clinic can empower and can lead to increased employee satisfaction and employee competence. This will result in superior service delivery and customer satisfaction and loyalty. BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office Focus on customer satisfaction – Focus on the totality of the whole dental care experience especially since customer consider going to the dentist as a grudge task. Dental consultation takes lots of process. A single disappointing experience in a single step may not significantly reduce the strength of the business relationship if the customer's overall perception of quality remains high. They have to make sure that every process is aligned and will not provide confusion. START: Build the dental office as a BRAND - One of the key challenges that Dr. Beckett must address is how to communicate the new and improved quality positioning of the company. Since the dental office is operating in a narrow market segment with a highly differentiated positioning, they can do targeted marketing aimed creating a positive brand equity. They must ensure that efforts will have a long term impact to sustain and grow the brand. Target marketing efforts can include the ff: 1. Build a formal customer relationship program. There’s opportunity to grow the 2,000 active customers especially now that physical space is bigger. They must be taken cared of as they are less inclined to switch and also tend to be less price sensitive. They are the customers who initiate free word of mouth promotions and referrals and are less likely to switch to competitors. To expand the existing customer base, they can launch a customer loyalty and referral program that rewards frequent customers and those who will bring in their friends to the dental office. Points can be recorded and entitle them to some free dental service (e.g. cleaning) once a certain level is reached. 2. Formalize the service blue print then hire and train a couple of more dentists to accommodate more customers. This would shorten waiting time for patients too. Adding more dentist, under professional supervision of Dr. Beckett can add prestige and credibility to the company. 3. Use the mobile/digital/online platform to communicate to its target white collared workers. The company is mainly targeting the upwardly mobile professionals (office BA 235 Services Marketing Case Solution ~ Dr. Beckett’s Dental Office employees) who most likely have access to the internet. Dr. Beckett can build database of email addresses and contact numbers and release simple dental bulletins – e.g. dental care tips (with lifestyle angle), reminders on when the next schedule the patient should come back. The bulletins can contain pictures of the dental office’ new facility and add on services. 4. Launch a local community CSR program. To balance the image that the company is ‘expensive’, the company can participate in local CSR activities in partnership with the local Rotary Club or Girls Scouts. They usually conduct medical missions and the company can provide the dental requirements needed. This way, people in the community will further respect the company and improve goodwill.
