Healthcare Marketing:
History and Concepts
Chapter 1
The Origin and Evolution of Marketing
in Healthcare
The History of Marketing
Phase One: Product Differentiation and the
Rise of the Consumer
The History of Marketing
There are two primary reasons for emerging of marketing :
First, consumers had to be introduced to and educated about
these new goods and services.
Second, the entry of new producers into the market introduced
a level of competition that was unknown in the prewar period.
The History of Marketing
Phase Two: The Role of Sales
The second stage of marketing evolution focused on sales.
Many U.S. producers had enjoyed regional monopolies.
The History of Marketing
Phase Three: The Rise of the Customer
Shift from a product orientation to a service orientation.
Marketing in Healthcare
Stages of Healthcare Marketing
The 1950s: Hospitals and physicians, for the most part, considered marketing
(read: advertising) to be inappropriate and even unethical.
The 1960s: The Media relations in this era often consisted of answering
reporters’ questions about patients’ conditions.
The 1970s: Some early attempts at advertising health services were made, and
interest in marketing research was beginning to emerge. Marketing by the
healthcare establishment was officially recognized in a conference on the
topic during the mid-1970s, sponsored by American Hospital Association
(AHA).
Marketing in Healthcare
Stages of Healthcare Marketing
The 1980s: Hospitals realized that marketing directly to consumers for such
services as obstetrics, cosmetic surgery, and outpatient care could generate
revenue and enhance market share.
The 1990s: The consolidation of healthcare organizations into ever-larger
systems resulted in the creation of larger organizations with expanded
resources and more sophisticated management. Many executives entered the
field from outside of healthcare, bringing a more businesslike atmosphere
with them..
Why Healthcare Is Different from
Other Industries
Because marketing philosophies and techniques cannot be readily
transferred from other industries to healthcare, healthcare marketing
requires its own unique approach and takes on characteristics unlike
those of marketing in other industries. Marketing in healthcare is different
for the following reasons:
Why Healthcare Is Different from
Other Industries
• The demand for many health services is relatively rare and
highly unpredictable.
• The end user may not be the target for the marketing
campaign.
• The product being marketed may be highly complex and may
not lend itself to easy categorization.
• Not all prospective customers for a health service are
considered desirable.
Why Healthcare Is Different from
Other Industries
• It is difficult to measure the outcome of the provision
of health services.
• It is difficult to quantify the differences between
healthcare organizations and the services they deliver.
• It is more of a challenge to market services than
goods.
Developments Encouraging
Healthcare Marketing
The following list includes some of
these important developments:
•
•
•
•
•
Introduction of competition.
Overcapacity in the hospital industry.
Rise of the consumer.
Introduction of new services.
Growth of elective procedures.
Developments Encouraging
Healthcare Marketing
The following list includes some of
these important developments:
• Introduction of a retail component.
• Entry of entrepreneurs.
• Service-line development.
• Mergers and acquisitions.
• Need for social marketing.
Reasons Healthcare Should Be
Marketed
•
•
•
•
•
Building awareness.
Enhancing visibility or image.
Improving market penetration.
Increasing prestige.
Attracting medical staff and
employees.
Reasons Healthcare Should Be
Marketed
• Serving as an information resource.
• Influencing consumer decision
making.
• Offsetting competitive marketing.
Healthcare Marketing Comes of
Age
During the period after World War II, the concept
of marketing was unknown in healthcare. The
public relations role was expanded over time, and
communications and government relations
functions were added.
By the late 1970s, formal marketing activities
were being initiated, and advertising on the part
of healthcare providers was becoming common.
Healthcare Marketing Comes of Age
• By the end of the 1980s, marketing was being
incorporated into the structure of healthcare
organizations. Marketing was moving from the
periphery of the organization to the boardroom.
• A 2007 Society for Healthcare Strategy and Market
Development (SHSMD) survey of nearly 300 hospitals
found that hospital marketing departments averaged
4.9 staff members and budgets of $1.2 million.
Key Points
Unit One
•
Although American industry accepted marketing in the
1950s, a number of factors prevented the healthcare
industry from adopting marketing initially.
•
The pioneers in healthcare marketing can be traced
back to the 1970s, but marketing was not widely
accepted as a legitimate function for healthcare
organizations until much later.
•
Early on, there were no experienced healthcare
marketers, and marketing experts had to be imported
from other industries.
Key Points
Unit One
• Changes in the healthcare arena during the 1980s
(particularly the increase in competition) resulted in
a surge of interest in marketing.
• Once health professionals accepted marketing, the
field underwent various stages of growth and
contraction in response to market developments.
• Initially, marketing was often equated with
advertising,
and
organizations
underwent
considerable trial and error before accepting other
promotional techniques.
Key Points
Unit One
• By the 1990s, healthcare marketing was maturing as
a field, and a new generation of hospital
administrators and healthcare marketers was on
board.
• By the turn of the twenty-first century, healthcare
organizations had come to consider marketing an
essential function for healthcare organizations, and
marketing resources were increasingly wed to
strategic planning and development efforts.