Case Study: Healthcare Services – Marketing Misfire

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Case Study: Healthcare Services – Marketing Misfire

Case 3: NOT Following Ethridge’s Advice Results in a Marketing Misfire

Before Hiring Ethridge

A not-for-profit hospital in a relatively small suburban community was concerned that they were about to lose market share because a competing hospital in their market was about to be bought out by a national for-profit hospital chain. The hospital’s Board of Directors and its advertising and public relations agency created the idea of emphasizing to the market that their hospital was a locally owned, not-for-profit hospital, that had been serving local patients with local doctors and nurses dating back to the Civil War, and that all of the money that comes into the hospital stays local. The idea was to contrast this hospital’s non-profit status with the for-profit status of the other hospital that would now be owned by a national chain, implying that the doctors might come in from out of town and that the profits from the hospital would go out of town and no longer support the local economy. The Board of Directors and the agency wanted to hire Ethridge & Associates, L.L.C. to confirm that this was the right strategy.

After Hiring Ethridge

Note, first, that this situation is typical to what marketing consulting and research firms face all too often from clients. The client’s mind is already made up about a creative idea that they think will work and they want to do research to “prove” that they are right. This is what the famous advertising agency executive David Ogilvy referred in his book Confessions of An Advertising Man, when he said that many clients and agencies want to use research “like a drunkard would use a lamp post: for support rather than illumination.”

Before we even designed a research project, Ethridge advised the hospital’s Board of Directors and the agency that, based on our many years of doing marketing research for hospitals, it would be a mistake to use the strategy that they had conceived. The reason, we explained, was that people care more about health care benefits — like having a high quality of health care overall andholding down the cost of healthcare — than about whether a hospital was for-profit or not-for-profit, or whether the hospital is locally owned, and whether the “profits” of a hospital remain local. True to the characteristics of how David Ogilvy said clients often use research, the client went ahead with producing ads and press releases according to their pre-conceived strategy even while we were designing and conducting the research.

To address this issue, we used our very adaptable, comprehensive marketing planning and benchmarking tool, our proprietary Marketing Opportunity Analysis. Key findings from the study were as follows:

  • As we had hypothesized, the most influential attributes on the market’s preference of hospitals in this market were the overall quality of healthcare provided, holding down the cost of healthcare, having highly skilled doctors on staff, and having highly skilled nurses on staff.
  • In this particular marketing situation (Caution: these findings have not been the same in all geographic markets!), the consumer market was much more likely to prefer a for-profit hospital than a not-for-profit hospital.
    • The reason was that “for-profit” meant, to this market, that a hospital had more money with which to pay for up-to-date medical equipment, highly skilled doctors, and highly skilled nurses.
    • In contrast, “not-for-profit” meant to this market that a hospital had out-of-date equipment and less skilled doctors and nurses on staff.
  • The market was mostly unaware of whether the client was a not-for-profit hospital or a for-profit hospital.
  • The client hospital had the strongest image of all hospitals in its service area on the attributes has a high quality of health care overall and working to hold down the cost of healthcare.
  • Due to the client hospital’s image on quality of healthcare provided, it ranked in first place as the most preferred hospital in the market.

Ethridge’s Recommendations

These findings confirmed Ethridge’s hypothesis that it would be a mistake for the client to emphasis its not-for-profit status. Based on the research findings, we cautioned that if the hospital were to run the campaign that they previously had in mind, that it would actually weaken the hospital’s image as a hospital that provides a high quality of healthcare overall and cause the hospital to lose its enviable most preferred status in the market. We recommended instead that the hospital develop a campaign that would reinforce its position as the highest quality hospital in the market, its efforts to hold down the cost of healthcare, and its highly skilled doctors and nurses.

Results of NOT Following Ethridge’s Recommendations

As sometimes happens due to management’s psychological investment in their own ideas, internal office politics, and in this case, because they had gone ahead and invested dollars in producing their previously conceived campaign, the Board of Directors ignored our advice and insisted that the agency run the campaign that they had in mind before we did the research. The agency reluctantly did as the Board directed, but asked us to do a follow-up, post-campaign repeat of the Marketing Opportunity Analysis and compare it to the benchmark study to measure the effects of the campaign.

The follow-up study showed that, because of the ill-conceived campaign that the Board of Directors insisted upon, the client hospital dropped dramatically from first place to third place as the most preferred hospital in the market and the hospital’s image in providing a high quality of healthcare overall had been destroyed. Its image on this attribute dropped from the category of a competitive advantage to that of a competitive disadvantage.

The damage of not following our advice was so severe that it is taking years for the hospital to rebuild its image and market share. As has been said, “It takes a long time to build a good reputation, but you can lose one overnight.”

The lessons from this and many other cases like it,  in which clients either did not do research or did not follow our research-based advice are:

  1. When the stakes are high, never rely on judgment alone but use scientific research to increase certainty that you are making the right decision.
  2. When stakes are high, always test your assumptions using valid, reliable, scientific research.
  3. Listen to the advice of people who have done thousands of marketing and public opinion research studies on similar topics, because with thousands of studies comes knowledge and wisdom.
  4. Once your assumptions and judgment have been tested by good, scientific research, and someone with years of experience who knows how to correctly interpret the research has given you research-based advice, recognize that because that experienced advice is research based, it represents wisdom; then follow the wisdom of the advice, for the opposite of wisdom is foolishness, and fools suffer to their own peril, often beyond hope of repair.
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