Wednesday, December 21, 2016

Grow the Core

As I mentioned in a previous post a couple of weeks ago, I recently spent an invaluable day at the corporate headquarters of American Express in New York along with key members of my marketing team. As we discussed the practice of consumerism and marketing our services directly to consumers, the folks at American Express reiterated the importance of focusing first, and foremost, on one’s core customer.

During that conversation, I was reminded of cautionary tale about Gatorade, the leading sports drink manufacturer, and what happened when they strayed away from their core customer. Since its inception in 1965 when it was first formulated as replenishment beverages for the University of Florida football team and for years that followed, Gatorade’s core customer was the “athlete” looking to energize pre-workout or recover after a game or training session.

In 2001, PespsiCo acquired Gatorade and Coca-Cola, in an attempt to compete for a share of the sports drink market, created Powerade. As a result, the two companies engaged in a price war, along with over 1,400 other brands of noncarbonated beverages. Gatorade saw short term benefits, due to their discounted prices, but it wasn’t long before they started realizing their loss in brand strength.

The result was a decrease in market share as their new customers proved to be elusive and the core athlete started to leave in pursuit of other sports drinks. Gatorade has since recovered by refocusing its brand and marketing its sports drink lines to appeal to athletes of all different levels from the high school student to the marathoner. They invested in innovation, differentiating their core products, and expanding their footprint globally. Their focus was now on defining the sports drink category rather than being reactive and playing defense.

The reality is that in most for-profit businesses, core customers are responsible for the largest percentage of a company’s revenue. Subscribing to the Pareto Principle, some would even say that 80 percent of revenue is generated by 20 percent of customers. Core customers are also more likely to be in it for the long haul and will be the most forgiving when external forces hit. As they like to say at American Express, we should be “growing the core, then adding more.”

At Jupiter Medical Center, we have developed a continuum of care that is completely patient centered. Everything from outpatient ambulatory services, through acute care to a post acute environment, the continuum is designed to support the medical needs from birth to end-of-life care. As our continuum of care expands and the market shifts, there is a greater need to refocus on the idea of our core customer. Historically, our core has been the critically ill. We have been taking care of and marketing to this consumer segment for years. But as we move towards a health and wellness platform, we need to ask ourselves – is our core customer changing? Or perhaps, consider the idea that we may have more than one core customer? Asking these questions and having these conversations will become crucial if we are to remain successful.

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