CVS Health Research: Competition, Marketing and Pricing

CVS Health: Competition, Marketing and Pricing
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CVS Health: Competition, Marketing and Pricing
University of Oregon Investment Group (2011) describes CVS Health as the leading provider of pharmaceutical in the United States. As a merger company of both Caremark and CVS Pharmacy, it has been ranked as the number one in pharmacy specialty and a provident drug prescription retailer as well as a leader in pharmacy benefits administration. The main target audience for the walk-in clinics and pharmaceutical services provided at CVS are women and the elderly. According to the 2010 US census, the number of Americans who are projected to be 60 years and above by 2020 are 75 million while the 57 million were already 60 years and above. With the growing number of the elderly, CVS identified a viable market. The other target audience were women. At the present, 80% of CVS customer base comprise of women, thus, the redesigning of business was to follow the need to fill the gap regarding beauty products. The company had to build more pharmaceutical stores such that 1,200 of the total 6,200 became specifically for meeting women’s needs (University of Oregon Investment Group, 2011). The service to both target population was achieved through market segmentation. The only way that the pharmaceutical presence of CVS could be recognized was through targeting the rapidly increasing population of women and the elderly. Women and the elderly represented the community who required their services and were willing to pay for the services. The other segment of services and product users are the pharmaceutical retailers. The CVS retail sector is the Caremark whose users include independent pharmacies that are taking advantage of CVS’s low-cost products.
The pharmaceutical retail market has been characterized by a stiff competition from drug manufacturers, retailers and a vast number of insurers who are entering the market. The reason behind the rising competition is to make use of customer influx that resulted from Affordable Care Act and the rising availability of affordable generic pharmaceuticals. The competition has been stiff with an estimated annual growth of 3%. The major competitors to CVS include Walgreens and Rite Aid. The retailers have responded to the competition by performing the merging marketing strategy. For example, CVS merged with Caremark in 2007 while Walgreens acquired Envision Pharmaceuticals to step up their marketing plan. For strategic marketing success, the only course of action will be diversification and market segmentation. The appropriate course of action is to ascertain the customers’ needs and organize to offer the services in ways that they can be met better.
Market segmentation is the key step while dealing with competition for any good marketing strategy (Fortenberry, 2012). For CVS, it will imply meeting the needs of the customers in a profitable way by allocating limited resources in strategic ways such that there is profit maximization. The action taken means being able to choose, not wasting time and resources on clients that could render the business less profitable. The segmentation aspect will not be treated as a solitary homogenous populace, but rathe...