7-1 Milestone Three

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1 7-1 Milestone Three: Marketing Mix 7-1 Milestone Three: Marketing Mix Paige Katz INT 640 International Marketing Strategy Dr. Pesakovic January 26, 2024

2 7-1 Milestone Three: Marketing Mix Marketing Mix Introduction CVS provides healthcare and retail shopping to millions of Americans every day. They have pharmacies, clinics, and stores in all 50 states. The intention of this next step is to expand the CVS brand and make it international. The company plan to open MinuteClinic locations in India. Starting in major cities, we want to provide the quality care we are known for to a wider audience that needs it. As laid out in the STP proposal, the target audience for the Indian market is women and young adults aged 20 or older and children under 18. We want to open the environment to families and young students mostly. People with no jobs or more informal jobs with little to no higher education. The target audience will have busy lives with low incomes. They are more susceptible to small bumps, bruises, and aches as well as colds and flus. The MinuteClinic will be a place for them to receive minor healthcare that is fast and affordable. It fits into their lives and their values of care, family, and health. Product Product-Related Problems Healthcare in India is becoming slightly more accessible. The government is working towards more healthcare provisions. However, the government is unstable and not always honest or operating for the people’s best interests (SOURCE). The system is underfunded and there is a shortage on resources. Low-income families don’t have the same ability to pay out of pocket (India summary,” 2023). According to India Summary (2023), 65% of healthcare costs are

3 7-1 Milestone Three: Marketing Mix coming out of patients’ pockets. Therefore, CVS will be a private, outsourced option for people to have access to easy and affordable healthcare. Another issue the audience may face related to the clinics is getting to them. It isn’t feasible to have more than a few locations open immediately. It will have to be strategic on the company’s part as to where they go. But whether patients are local or not, they need to be able to transport themselves. The target audience is meant to be busy so that CVS is a fast option for healthcare. If they are too busy, though, they might not have all day to get into or across the city. Product Design’s Features and Benefits Healthcare is a global commodity. It has a low level of highly local responsiveness and is marketed similarly around the world. CVS can use the same branding and identity with this new market. The launch of the service in India will be emphasized with three main points that are vital to CVS’ brand: affordable, high-quality, and accessible. They are mentioned frequently throughout each report because they are so important. The design of the service will likely be different from the existing structure for the U.S. simply due to resource allocation and cost. The clinics offer many forms of testing, scans, treatments, and medications/pharmacy needs. CVS will have to ensure access to all of those capabilities, whether they bring some of the technology with them or partner with a more local lab service. The main functions provided will be simple disease and virus testing, check-ups for small issues like lice and rashes. Patients will be able to get help for some external and internal injuries (with potential for referral to a tertiary hospital). They can have vaccines and monitoring for long-term ailments like diabetes, cholesterol, osteoporosis, etc. Appointments can easily be made online or by calling. There is also drop in

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4 7-1 Milestone Three: Marketing Mix availability that is subject to slightly longer wait times (“MinuteClinic price list,” n.d.). The consumers make the appointments based on their own schedules and transportation. If someone is trying to go to an ER at a hospital, they could wait for a long time just for basic care. At the CVS MinuteClinic, they can come when they need and be done quickly. Not only that, but the price is also lower. Despite the government’s attempt to provide free healthcare, so many still pay out of pocket (India summary,” 2023). MinuteClinic pricing stays under $200 before insurance in the U.S. (“MinuteClinic price list,” n.d.). This allows the low-income target audience to get the quality healthcare they need without also worrying too much about how they are going to pay for it. Responsiveness The customer responsiveness will be key to the expansion into other part of India. The cities are the easiest locations to access, but it should be a goal to be opening clinics in the more rural areas where CVS is needed most. CVS always encourages feedback. Each visit will provide a short survey either on paper in the waiting room or in email form when possible. This will be a random response pool, but it will be imperative to receive that feedback and adjust where necessary. The metrics of website visits, appointments made, appointment follow through, and return customers will be watched for additional consumer information. The demographics of each customer will also be important to watch to see that we are reaching the target audience or shift strategies to line up with those who are showing the most interest. It’s about keeping them happy with the fast, low-cost, quality care CVS is known for. Due to technology and information access, there may be a slow take-off. That is another reason starting in cities will be best, there is

5 7-1 Milestone Three: Marketing Mix more people. Once the audience is penetrated, the nature of the target audience will allow penetration of the market to be smoother. CVS is target families and people who rely on community connections. That creates an unintentional word-of-mouth marketing that aides the advertising the company will do. It spreads information or at least the company’s name to anyone who may need it. If one woman in New Delhi has a good experience any of her mom friends or husband’s work friends can hear the story and look into using CVS’ services as their needs arise. Price Pricing Strategy and Justification For consistency, the goal is to keep pricing as similar to the U.S. pricing as possible in accordance with the income. The access to resources may cause adjustment but those aren’t possible for me to estimate exactly. The strategy to keep prices as low as possible for the company to still profit. The income of the target age range is between INR 4,000 to INR 13,500 (Tambe & Jain, 2024). That’s about USD 50 to USD 430. Using a low average of about INR 10,000 the highest price offering from the clinic would be about INR 75. This is based off the U.S. low class average income of $27,000. I took $200 as about .75% of the annual income and applied that percentage to the INR 11,000 to get the INR 75 (Legate-Wolfe, 2023). The consistency in pricing averages allows CVS to maintain a reputation as affordable. They can’t charge USD to the Indian market because the exchange rate makes that out to be more than the target market makes in a year. Prices for certain tests would start at INR 10 ($25 is the lowest price in the American pricing, that’s .09% of the average income).

6 7-1 Milestone Three: Marketing Mix I believe adjusting the pricing for the income is the only way to make the costs they have to meet doable. If CVS is going to market themselves as affordable in a foreign market they have to adjust to that market’s economy. The U.S. has a very different consumer environment. Everyone has very different priorities than another country. The prices will range and CVS will rely on large volume and market saturation (Kotabe & Helsen, 2020 p. 650). The domestic currency is weak in India. CVS will have to be careful in promoting the benefits and reduce the offered services to those they feel will be used most. That minimizes expenditures and makes it easier to work with local suppliers and labs (Kotabe & Helsen, 2020 p.438). Pricing a service is different than a product because there is more for the customer to weigh when considering the cost and trade-offs. That’s another reason I kept the same percentage. Healthcare, as I mention can be more a global service and people can view it in a similar manner. In India, where access is limited more than it is in the U.S. a lower cost is preferable but a slightly higher cost for better, more accessible care may be more worth it. It’s almost employing a penetrative or value pricing strategy. It’s more about the customer and their values than making immediate, large profit. Although profit remains a goal, that doesn’t always mean jumping out the gate with premium costs (Boucher, 2023). Cross-Border Prices A cross-border price will depend on whether CVS is using local supplier or importing their materials from the same distributors they use for the U.S. locations. For medicine and other pharmaceutical needs, they might have to charge a fee for bringing it into the country. India has solid, developing trade agreements with both the U.S. and China. That will allow for easier

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7 7-1 Milestone Three: Marketing Mix transportation of cheap goods that may not be made in India. However, the medical sector in India is growing. CVS might find it easier, cheaper, and better for market relations to invest in domestic distribution and manufacturing for the India locations. It could also help relations with the Indian government and is a way to move towards working with them to expand the healthcare coverage for low-income families exclusively through CVS (Kotabe & Helsen, 2020 p. 423). Risks A lot of the pricing risks come from the uncertainty surround the government reactions and unstable trade/import allowances. CVS is a big brand with a strong reputation but that might not be as well known in a foreign country. They’re entering a low-income economy with no stake in the market. If they lower the prices too much to meet popular demand they will not make a profit after their own costs regardless of where they get their materials. If the costs are too high they will not reach the target market. Monitoring competitors costs will also be an important part of their pricing and there is always a risk that they can’t meet the kind of scales those competitors use. The healthcare market is new and changing in India. Between the policies and the emerging industry, flexibility is key to facing and overcoming the risks of change.

8 7-1 Milestone Three: Marketing Mix References Boucher, K. (2023, July 10). Pricing strategy examples . Podium | Tools to Convert and Manage Leads. https://www.podium.com/article/pricing-strategy/ INDIA Summary . (2023, January 31). Columbia University Mailman School of Public Health. https://www.publichealth.columbia.edu/research/others/comparative-health- policy-library/india-summary Kotabe, M., & Helsen, K. (2020). Marketing strategies for emerging markets. In Global marketing management (9th ed.). John Wiley & Sons. https://bookshelf.vitalsource.com/books/9781119888727 Legate-Wolfe, A. (2023, June 1). Here's the annual income you need to fall in America's lower, middle, and upper class — plus 3 simple tips to pull yourself up the ladder . Yahoo Finance. https://finance.yahoo.com/news/heres-net-worth-fall-americas-130000535.html MinuteClinic price list . (n.d.). CVS.com. https://www.cvs.com/minuteclinic/services/price-lists Tambe, N., & Jain, A. (2024, January 4). Average salary in India by age (2024) . Forbes Advisor INDIA. https://www.forbes.com/advisor/in/business/average-salary-by-age/ #average_salary_by_age_in_india

7-1 Milestone Three

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