Walgreens Marketing Plan
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The total 2010 combined annual revenue for retail drug industry was $277 billion, according to the National Association of Chain Drug Stores (Drug Store Industry…, 2011, par. 4). The biggest retailers in this industry are Walgreen Co., CVS Caremark, Corp. and Rite-Aid, Corp with Wal-Mart and Target developing more of a presence in recent years. Those 3 major retailers make up %70 of the industry revenue. Just two of them make up 58% which are (31%) Walgreen Co. and (27%) CVS Caremark, Corp. The industry had grown substantially in the last 50 years and will continue to innovate and develop well into the near future. The average age of the U.S. consumer is increasing rapidly as the Baby Boomer generation grows older which leads to increased demand for health services to those who are 65 year old and above. Walgreen primary customer profile is a 25-54 year old woman with two children. She usually has higher education with high income and taking care of elderly parent. Walgreen try attracting this customer profile so she can shop for herself, children, family, and those senior in her life.Strengths. As of 2014, Walgreen operated around 8,000 stores in the U.S. making it the largest retail chain pharmacy in North America. A large chain means a large pool of resources including inventory, talented employees, and knowledge via networking. In addition, Walgreens attempt to provide convenience in its stores by offering drive-through service, all-night hours, snacks, photofinishing, greeting cards, and general merchandise in addition to medications. Also, Walgreen employees are loyal and the company strives to keep their loyalty by taking such measures as making the stores handicapped accessible for workers as well as customers. Weaknesses. Walgreen prefer grows organically to acquisition. Walgreen spend its resources to make and build its own stores from the ground which takes more time and energy and that will affect the firm in such a competitive market. Moreover, Walgreens is getting more involved in its customers’ welfare. Through instore clinics, the company is providing such services as treatment for minor injuries, vaccinations, and physical therapy. These activities raise concerns about company and individual employee liabilities to the patients. Decisions involving malpractice insurance and who pays, employer vs. employee, will have to be addressed.
Threats. One of the biggest threats to Walgreens is its competition with other companies that offer a pharmaceutical component. Retail giants, Wal-Mart and Target are offering prescription medications at steep discounts, undercutting pharmacy chains like Walgreens. Even the competitive nature between Walgreens and CVS poses a threat to the future of the companies. In a New York Times article, Walgreens decided not to accept any customers who were under a new CVS Caremark drug plan and CVS countered back saying that customers currently enrolled in Caremark plans could not fill prescriptions at Walgreens. Another threat to Walgreens is that larger companies often have multiple suppliers and do not suffer from shortages of convenience store products the same as smaller companies. Because many of the same products that Walgreens carries a bigger retailer may also carry, the bigger retailer would be able to keep more in stock.Product strategies. Walgreens is classified as a drug store and convenience store in one. They are basically a pharmacy that offers many necessary everyday items to consumers. Some of the general categories of items the stores offer are makeup, toys, candy, and toiletries. The store offers private labels, such as Big Flats beer or Walgreens soda. Another offering is manufacturer brands, such as Pepsi soda, Tresemme shampoo, and Crest Toothpaste. Lastly, the company also offers generic brands of some drugs, such as Walgreens Pain Reliever. By having many choices for consumers the store can make the sale and the consumer can get exactly what they want, whether it be the cheap, average, or high end product.Pricing Strategies. When Walgreens introduces a new product, pricing strategies are essential to its success. Market penetration pricing is what has been used mostly. The new products tend to be sold at a lower price and Walgreens will also launch promotional activities to enrich customers’ knowledge about their new products. The prices they have been using are all odd prices, such as $4.99 or $2.49. In this way, customers perceive the prices to be lower than they actually are. Since Walgreens also has competitors in the market, such as CVS pharmacy drug store, competitor-based methods are usually applied. The price they set is close to their competitors’ offerings, which signals to the customers that they provide similar products at similar prices. Setting a higher price is a way to let consumers interpret that their products possess higher quality, which is also a method to exploit more profits with a cost advantage. Walgreens can also use value-based method and cost-based method to gain profits.