Walgreen’s morphs the niche they are in

Observation:  It is an interesting time to watch the nation’s largest drug store.  First, in a gutsy revolt against the healthcare system, the chain recently announced they would no longer accept prescription orders reimbursed by insurance-giant Express Scripts.  According to a recent video from supermarket expert Phil Lempert (click here to see that footage), that move could represent as many as 80 million prescriptions.  But that was a hit Walgreen’s was apparently willing to take, in defiance of the prescription management company’s effort to shrink the store’s profit margin on medications.

Another story—this one from Forbes—suggests that Walgreen’s is moving toward a business model that is much more consumer-centric, with product offerings that include a widely expanded beauty products, select groceries (including “wellness” organic foods), wine and cheese shops, and even coffee shops.  Click here to see that story.

Implications:   This is just my opinion, but I see this move as Walgreen’s decision to not let Express Scripts define the business they are in… and take control over that decision for themselves. 

What business are you in?  Is the answer to that question decided by a landlord, vendor or supplier?  Or is it defined by you and your customers?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Relatively speaking, life insurance seems to be skipping a generation (so far)

In what might be seen as a values shift among younger consumers, fewer people under the age of 45 are buying life insurance, according to research from Mintel Comperemedia… and as quoted in today’s Marketing Daily.  Click here to see the story.

Implications:   Are you expecting sales to Generation X and Millennials to behave the same as when the Matures (pre-WWII) and Baby Boomers (post-WWII) defined the market?  Don’t count on it.  In addition to marrying later and having children later, many of these consumers are under the impression that they can wait until later in life to protect life’s treasures.

Are you seeing a similar shift in your line of business?

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Health insurance costs rise sharply

If health insurance is taking a bigger bite out of your paycheck, you’re not alone.  A story in today’s New York Times indicates that policy prices have jumped 9% in the past year according to research from the Kaiser Family Foundation.  Click here to see the story.

Implications:   As I sat in the waiting room before a doctor’s appointment this week, a lady at the front desk was sharply criticizing her bill.  It was a private conversation that I did not want to overhear, but both the volume and the demeanor of the exchange made it impossible to be unaware of.  “All they did was take my blood pressure and do a med check, and I didn’t even see the doctor,” she complained.  (Her only contact on the visit was with a nurse.)  “How can that possibly be worth (more than $175?)”  The woman went on to explain that she did not have insurance, so it would be an out-of-pocket expense. 

I felt sorry for the both the frustrated customer and the office manager trying to explain the charges.  (Even the clinic employee was having a hard time justifying the cost, which amounted to a rate of more than $1,000 per hour.)  With both unemployment rates and health insurance costs at such high levels, we can expect this conversation to be repeated in waiting rooms across the U.S., and often. 

There are two learning points that I took away from this experience and the Time article.  The first one is for the healthcare and insurance industries:  Some of you haven’t done a great job of communicating the value you provide for the dollars you receive, and some of your patients are losing their patience.  Those consumers are likely to start scrutinizing healthcare charges more closely.

Secondly—and this is for folks outside the healthcare field—we can expect consumers to take more health issues into their own hands.  From fitness to nutrition, consumers will be looking for ways to avoid healthcare (and insurance) costs.  Is there any aspect of the business you are in that could constitute “an ounce of prevention?”  Think health-conscious menus at restaurants, any product or service that involves getting some exercise, or packaged goods that involve portion control.  Communicating any healthful attribute your product or service has might be just what the doctor, or… patient, ordered.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Auto insurance one of the casualties of economic distress

An alarming story in today’s USA Today indicates that one in seven drivers is going without auto insurance, in spite of laws in most states requiring it.  Click here to see the story.

Implications:   This is proof that luxuries and extravagances aren’t the only thing being trimmed in the current economy. 

If you’re an insurance company, would an educational campaign make sense, whereby the consequences of driving without insurance could be explained?  Should you reach out to existing (insured) customers to suggest an upgrade in their protection against un-insured or under-insured drivers?  Might this be something that you could suggest to an insurance agency group, or local/regional/national trade association?  

Local/state governments, major trauma centers and even personal injury lawyers might consider a similar campaign… as each has a stake when it comes to deciding how injuries, property damages—or worse—might be paid for.

Meanwhile, I'm going to touch bases with my agent to make sure I'm protected against uninsured motorists.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

Consumers delay healthcare, insurers profit (for now)

Among the purchases that were deferred or delayed in response to the recession:  Medical Procedures, according to a recent story from the New York Times (click to link).

Implications:  The idea of pent-up demand seems easy to grasp for things like furniture, automobiles, clothing or appliances.  But healthcare is not immune, either; a fact that has brought profit to insurance companies, at least until such time as patients decide to get caught-up on their overdue procedures.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.

UPDATE: Channel-shifting consumers

Speaking of channel-shifting (which I was just a few moments ago; see posting below), here’s a story from today’s Marketing Daily, which indicates that kiosks (Red Box, et al) have replaced retail as the primary destination for movie rentals. Click here to see the story.

Implications: Again, will your next competitive threat come from a competitor… or a new, unexpected adversary?

Mike Anderson

Channel-shifting consumers

The traditional place to buy groceries has long been a supermarket or grocery store. But for more and more consumers, groceries are an incidental item one picks up while shopping at the local discount or drug store. And those alternate outlets are adapting to these customer preferences, by adding aisles devoted to food.

See this recent story from the New York Times for a greater understanding of the matter (click to link).

Implications: Changing channels has hit a lot of sectors. Grocery stores now offer heat-to-complete and deli options that compete nicely with restaurants. Drug and discount stores now offer in-store clinics that compete nicely with the traditional doctor’s office. Banks sell insurance, and insurance agents sell investments.

Will your next competitive threat come from a competitor? Or a new, unexpected channel adversary?

Mike Anderson

A generation of emerging investors... overlooked?

In a story from Marketing Daily this week, an interesting pair of questions is asked: Has the investment industry overlooked an entire generation of new prospects? And are they doing enough to court Millennials? Click here to see the complete story.

Implications: This year, I’ve facilitated dozens of workshops we refer to as “Audience DNA” and “Consumer DNA” programs. In the DNA workshops, we mine through volumes of qualitative research to understand the demographics, lifestyle (nature) and affinities of various population segments and industry categories.

One category that is particularly interesting is banking and investments. We typically explore whether a financial institution is wiser to court “blue chip investors” (which I define as having at least a six-figure household income, and who pays for the counsel of a financial planner, accountant or full-service stock broker), or whether it might be wiser to consider reaching “emerging investors” (which I define as having an above-average income, but someone who does NOT yet have a financial planner, accountant, or full-service stock broker).

This challenge raises the perfect conundrum: The blue chip investor has more money, but is already a customer in the category. (To win their business, they’d first have to fire whomever they are using now.) The emerging investor has less money, but has nothing to unlearn, no habits that need breaking, and might therefore represent “a path of less resistance.”

Are your best prospects for the future the same as the best customers from your past?

Mike Anderson

Hospitals—and health care options—are changing

While traveling last week, I noted an article in USA Today about the challenges facing independent hospitals (click here to see the story).

Implications: I was born and raised in a small Midwestern community… one that lost its town hospital in the late sixties. A larger city about fifty miles to our south had a comparatively massive hospital complex, and a new superhighway suddenly linked our small town to that more sophisticated treatment. (Doctors could earn much more in the major medical center than in a small town practice, another factor leading to the closing of the local hospital.)

It seems that similar circumstances are hitting more hospitals these days. But instead of changes in physical infrastructure (a highway that carries patients to alternative medical centers), it seems these changes are in the financial and regulatory infrastructure of healthcare. Insurance and government requirements are increasingly difficult for the local hospital to fulfill.

I was interested to see how the facilities mentioned in the article are re-inventing their approach to health care, capital improvements and physician staffing. This article is a great example of organizations that are tuning-in to changes in the patient and competitive landscape, and adapting to those new circumstances as best they can.

Those who fail to evolve amid this change—among customers and conditions—won’t have a very good prognosis.

Mike Anderson

Young adults are thinking about the future

Research from IPSOS indicates that young adults are thinking about their retirement, and how it will be funded. Click here to see the press release.

Implications: Gen Y and Gen X consumers have heard many of their boomer friends and family members talking about what the Great Recession and its impact on their retirement. All of this trauma surrounding nest eggs has folks of all ages hedging their retirement bets. But I wonder if retirement is the only topic that will receive more forward thinking…

Are your customers thinking more long-term than they used to?

Mike Anderson

Auto insurance gets a sense of churn... and how to avoid it

Churn takes place in every category, but a recent story from Media Post Marketing Daily suggests that up to 62% of customers are considering a change in their auto insurance in the next year. Click here to read the story, which cites the results of a survey by Acxiom Corp.

Implications: Early in this story, as one might expect, great attention is given to the issue of price. But the second half of the story indicates some non-price factors can influence consumers. For example, they don’t want their insurance company to behave like an insurance company; they think of insurance as just one aspect in the overall experience of owning a car. They would appreciate it if their agent or insurer would also provide tips on driving safety, auto ownership and maintenance, etc.

Does your customer see you as simply the purveyor of the product/service you sell? Or do they wish you looked at the world as if you were part of another, bigger experience?

Could being part of that experience make you a more vital provider in the customer’s eyes?

Mike Anderson

Courting the "unbanked"

Note: The focal point of this story is financial services. But the essence of the story could have implications for a wide variety of business categories.

Recently, a number of issues and stories in the trade press have ignited my curiosity about the banking business, and more specifically, those people who do not use banks or do not use them with regularity.

The first of these articles was from McKinsey Quarterly, “Counting the world’s unbanked.” If you enjoy lofty articles about global issues, click here to read the story. (I found it to be one of those stories that was interesting, but in the context of Elm Street Economics, not entirely useful.)

Of greater interest to me is that pool of local folks who don’t use a traditional bank or credit union… and evidence suggests that the number is growing. These “unbanked” consumers might be living in a mainly cash economy, or sating their basic financial service needs through emerging, non-traditional providers like check cashing services.

If you work for a bank or credit union, this headline will get your attention: Wal-Mart is expanding their focus on financial services, according to this story from Media Post Marketing Daily. The article cites a recent survey by the Federal Deposit Insurance Corp. that found 25.6% of all U.S. households are unbanked or “under-banked.” When I did a Google search on the topic, I actually came across this one-page fact sheet—on Wal-Mart letterhead, dated 2008—gauging the depth and opportunity of this market.

Here's a more recent story on the matter, from CNN/Money.

Implications: When every fourth household in the U.S. is undecided or uncommitted with regard to their banking relationships, it’s a category worth thinking about. And if you’re in any category of retail service, you might ask whether similar conditions exist in your industry/business:

Has the industry focused on “blue chip” consumers for so long than an entire generation of emerging customers has not been sought after or fought over? If you’re a bank, does your marketing welcome consideration by the unbanked or under-banked consumer?

Has the consumer changed in ways that are not matched by changes in the banking industry?

With the fiscal meltdown and bank bailouts that were symptomatic of The Great Recession, has the credibility and stature of this category been further diminished? (Let’s face it: Even if you run the most solvent bank on the planet, you’re still a bank… and the banking industry has received a lot of bad press over the past few years.)

Insurance companies now sell investments, car dealerships offer auto loans, employers offer retirement plans, a plethora of companies (including numerous dot-coms) sell mortgages, and home improvement stores offer credit cards that can conveniently replace a home improvement loan. How do banks regain their standing as the chief financial service provider for the household, amidst all of this diverse competition? (Especially when a company like Wal-Mart is has decided to become another of those competitors.)

With all of those diverse financial resources to compete with, which niche could provide the most significant opportunity—a place for the financial institution to gain a foothold in their quest to re-acquire customers?

Sometimes, the value in trend watching is not to have all the right answers, but to begin asking all the right questions.

Mike Anderson

Reforming healthcare reform

Tomorrow (Monday) morning, President Obama will propose limits on rate increases from health insurance companies. That's according to a report this evening from the New York Times. At it might be attributed to the considerable press given to the issue during the past week.

A rate increase of 30% or more is enough to get anyone’s attention, when inflation is running somewhere under 3%. So it’s not surprising that Anthem was on the receiving end of media coverage last week, from the New York Times to ABC News.



Implications: Healthcare reform was already an ill-defined concept. It was popular, early-on, because voters were told simply that, “somebody is making too much money, and we’re going to find out who it is and put a stop to it.” But in recent months—not surprisingly—the issue has attracted more confusion rather than clarity… as differing interests seem to be positioning the matter in different ways. (Healthcare providers would like it to be an insurance and drug company issue… insurance providers would like all of this to be positioned as a care provider and pharmaceutical issue… and drug companies are quick to respond that strong profits fuel research and development of new and better treatments.)

Healthcare reform is not confusing because consumers are easily confused. It is confusing because many players have competing interests, and they all seem to be talking at once. From a trend-watching point-of-view, I’m wondering how long the consumer will be tolerant of all this noise.

Examples like this media story about Anthem seem to lay bare both the greed (record profits, accompanied by selective rate increases of nearly forty percent), as well as the complex challenges facing the insurance sector (like healthy patients canceling policies while sick patients tap insurance company resources). In either event, I’d watch for consumers to be increasingly hungry for point-blank stories that bring clarity to this issue, whether the target is drug companies, doctors, insurers… or politicians who attempt to profit from the dilemma in votes, while contributing little in the way of solutions.

Whether you are a healthcare provider, drug company, politician, or an insurance company...

Consider clarity.

Mike Anderson

The Recovery: Slight uptick in pre-owned vehicle prices?

Following a link from the Automotive Digest newsletter yesterday, I was led to this story from Auto Remarketing, a trade resource for folks in the used car business. It indicates a slight rise in prices paid at auction for pre-owned vehicles.

Implications: A while back, I offered a posting at this site about the possibility of rising vehicle prices, resulting from the “Cash for Clunkers” program (“When supplies are crushed,” 8/10/09). The idea was simply that by taking so many used cars “out of the market,” the program could affect the balance of supply and demand in the used vehicle market.

Something else that could affect prices, of course, is if demand is either going up, or is anticipated to be going up. With increasing signs that a recovery is underway, dealers might be preparing for more shoppers walking on to the lot or into the showroom.

Mike Anderson

The odds of crashing your computer, literally, are going up

More manufacturers are putting more devices into more cars. We’re not just talking about stereo systems and GPS devices, here… but full display computers with access to the web.

One could argue that consumers were first to bring technology into the vehicle, first with cell phones and then with text messaging via handheld device. In fact, the topic has grown into a major series of columns in the New York Times about the dangers of using technology while behind the wheel, called “Driven to Distraction."

The most recent story focuses on models that make it easy to surf the Internet—from your dashboard—and interact with your smart phone via Blue Tooth. And an "open platform" from some companies invites the development of more and more applications for in-car computing.

Implications: As a marketer, it occurs to me that many web sites are still “built” for that traditional, iconic computer that sits on a desk in the home or office. But increasingly, the consumer is using non-traditional channels to access the web, including very basic mobile phones, sophisticated smart phones, and now, even their cars. Many companies “optimize” their websites for mobile, in terms of programming, but fail to optimize their web sites for a highly mobile consumer. Does your site have an “executive summary” on the home page, which abbreviates your story for the small-screen user? Is there a convenient “click to map” button (so I don’t have to search Google maps to find you, thus giving me the chance to see one of your competitors)?

As a driver, I’m wondering how long it will be before regulators intervene further… with regard to the way technology is offered or used on the road. (Many states already have laws against texting while driving, and the Department of Transportation has launched a web site on the matter, at http://www.distraction.gov/.) According to the NY Times series, 11% of drivers are on their phone at any given time; an estimated 2,600 deaths occur each year… in traffic accidents involving drivers who were using a mobile phone. One final tidbit of interest: Half of Americans believe texting while driving should be punished every bit as harshly as driving while drunk.

We already shake our fists at drivers who cut us off, swerve in traffic, or nearly rear-end us while yacking on the phone or checking their email. How will we feel about sharing the road with drivers who are trying to catch the latest funny YouTube video? It conjures an image of people, literally, crashing their computers.

Mike Anderson

They're not just buying the car. They're buying the road ahead.

A story in yesterday’s Marketing Daily cited a report from J.D. Power and Associates… not about why people will buy a particular vehicle… but why they won’t. Called the “Avoider” report, the findings indicate that one in five people will avoid a particular vehicle because of the perceived health of the brand.

Implications: It’s a very good time to tell consumers why your company, brand and product are stable… and offer proof that you have a future. And that might be true for any company that sells a big-ticket (long-term) product or service. Home builders, appliance manufacturers, furniture factories, insurance companies. It might be said that if you sell a big-ticket (long-term) item, you're selling people on the idea of their--and your--future.

Whether it’s your heritage, your track record, testimonials from satisfied customers, or a demonstration that you’re investing in the future… find a way of communicating your strength and resilience. People want to do business with companies that have a future.

Mike Anderson

Surviving the injury or disease, but not the debt

Playing into the hands of the health care debate this year has been the idea that many bankruptcy and foreclosure problems have not hit families because of the housing bubble, the recession or the volatile job market; the financial woes, for many folks, have been brought on by the cost of health care. For reference, see this story from the New York Times.

Implications: News stories like this, or the idea that many elected officials are granted health coverage that is beyond the reach of their constituents, help to elevate the perceived need for health care reform of some kind. I’m among those who are not sure what the right answer is. Only that the current system probably needs attention.

Politics aside, in what ways might the cost of health care impact the way you do business? Do you offer a product or service that might deliver healthy or preventive benefits? From safety devices to fitness centers—and of course, health providers and drug companies—the elevated profile of health care might influence many consumer decisions over the next few years.

In an era where much about the future of health care is unknown, consumers might be more likely to control what they can, in terms of diet, exercise, and self-health.

Mike Anderson

Generally speaking, not enough physicians

A quick check of almost any medical school will lead you to one diagnosis: We’re headed toward a shortage of general practice physicians. A recent story from Kansas (Wichita Business Journal) indicates that 86% of medical students there plan to pursue a specialty… leaving just 14% who will be content to serve as “family doctors.” A similar story from San Jose (Silicon Valley/San Jose Business Journal) warns of the same condition: There are not enough new primary care candidates in the pipeline to meet the needs of an aging population. Partly because so many medical students are electing to pursue a specialty… but also due to the fact that more than a quarter of the country’s current primary care doctors are age 55 or older, which means they’re nearing retirement.

Implications: I’m not going to join the politically-charged debate on healthcare here. But I am going to point-out that health care, like any other field, is subject to the laws of supply and demand.

Most “specialty” care providers make more money than most general-practice physicians, which is one big reason why so many students head in that direction. According to the San Jose story, salaries for a new primary care doctor start at about $150,000 a year, compared with dermatologists who make about $300,000 and orthopedists making about $400,000.
According to a specialist I spoke with today, the hours are often more stable for a specialist, too. (For example, “I accept referral appointments on M-W-F, and I do surgeries on Tuesdays and Thursdays.”)

So, the American medical consumer should prepare to have increasing difficulty getting an appointment with the family doctor in the years to come. As that supply of physicians goes down, expect the prices for services rendered to go up, further aggravating an already complex set of healthcare cost issues.

If you’re in the business of fitness, self-health, or nutrition… are you positioned as an alternative to traditional office visits?

Mike Anderson

See also: “How the debate on health care might affect you,” 7/31/09.

See also: This story from CBS News, broadcast in late July, about the emerging primary care shortage.

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From unemployed to "Me, Inc."

It turns out necessity could be the mother of more than just invention.

Some people dream of starting a business, but don’t, because there’s too much to lose. (It can be difficult to walk away from the security and benefits of a good job, after all.)

But when the job walks away from the worker, the idea of starting a business is a proposition that goes from “too much to lose” to “nothing to lose” in a big hurry!

I’ve written about this phenomenon before [see “Creating competitors or collaborators” from last February]. But a recent newspaper story reminded me that nothing inspires new business start-ups like old-business lay-offs. I encourage you to walk through this article from the August 22, 2009 NY Times.

Implications: What kinds of business opportunities might emerge, as you think of ways to serve a growing number of people who are now either self-employed, or running a small company of their own?

The small business owner or “company of one” often has rapidly changing needs. Their previous job might have featured insurance and other benefits, an I.T. department if anything when wrong with their laptop, a break room with all the amenities… and a regularly-scheduled paycheck. Now, the CEO of “Me, Inc.,” might just be shopping for things like an affordable group to join for health insurance, a place to go for computer repairs or enterprise solutions, or even something as simple as a new coffee pot. And of course, financial services will be required to help manage the ebb and flow of cash flow that happens with almost every new business start-up.

Beware. The next consumer to walk into your lobby, dealership or store… could really be a company, in disguise.

Mike Anderson

UPDATE: Getting texting under control

Last week, I wrote about anticipated responses to the increasing incidence of distracted driving (see "Getting texting under control B4 it's 2L8," July 31).

In today's New York Times, there was a story that seems to confirm that a greater regulatory response is in the offing. See the story by clicking here.

Mike Anderson