Cvs – Web Strategy

Running head representative abridgment CVS THE weathervane outline Abstract CVS stubborn to expand its services by col a Web -based drugstore. Initially, there were many doubts concerning how to do it right mental synthesis it from function, or acquisition were the options on hand. After studying the possibilities CVS decided to take up Soma. com and gradually (less than 3 months) turn it into CVS. com. on that point were many challenges during the process organize a bicoastal ecesis (Soma. om supply were in Seattle and CVS headquarters were in Rhode Island), find out how the reimbursement were going to be handle for online purchases, building brand awareness and change magnitude traffi c and sales on the new channel (the Web). This paper intends to contemplate CVS Web strategy and provide some recommendations on that area. 1 CASE ANALYSIS CVS THE sack up STRATEGY 2 CASE ANALYSIS C VS THE WEB STRATEGY After carefully studying how to venture in a new distribution c hannel (the Web), CVS decided to acquire an open company (Soma. com). The goal was to re -launch Soma. com as CVS. om, in further a few months. The pressure was high since the competition was fierce and constantly increasing. By the date CVS acquired Soma. com there were already strong competitors in the grocery store Drugstore. com and orbiter Rx. Venturing on a Web-based drugstore was based on the fact that the market for drugstore crossroads was four times the combined sales of books and CDs, 2 sectors that had flourished on the mesh (Shah, 1999, p. 1). Everyday more and more drugstores were thinking closely the possibility of venturing with online presence, the Internet was flourishing and everyone wanted to take value of it.According to Shah (1999), CVS decided to acquire Soma. com for several reasons speed, human resource quality, fully automated warehouse, and akin(predicate) health -care-foc utilize beliefs. Speed was crucial to respond to the fast -growing compe tition, it would have interpreted them 3 to 4 months to build what they bought for the same cost (Shah, 1999, p. 6). In fact, Soma. com used top nonch technology to operate and control its business, managing up to 3,000 SKUs of just prescription drug medicines. Moreover, Soma. coms huma n resource was a great asset that came with the price.Soma. com was especially careful about hiring people with post sanctify prescription backgrounds (Shah, 1999, p. 6). Therefore, hiring qualified employees to manage the new distribution channel was not a concern for CVS. The following t equal was design to summarize the analytic thinking of the provided information about CVS web venture. The table summarizes the strengths and weaknesses of the organization and the opportunities and threats of its environment. CASE ANALYSIS CVS THE WEB STRATEGY 3 Table 1 CVS Web-based Drugstore debone Analysis Strengths ?CVS brand equity second drugstore in the US, Weaknesses ? Bicoastal organization Soma. c om and the one with more number of stores. Detailed and well-design cognitive process process from headquarters were in Rhode Island. Time dispensing to shipping registration required, ? headquarters were in Seattle and CVS contrast is a challenge. specified reimbursement need from the node, ? Privacy discovers user sensibility to overlap different options to present the prescription, free shipping of lay outs that included prescription reminders were not in sync with brick -and- edicines. ? medical information online, e-mail prescription mortars drugstores. email prescription refill reminders for registered ? fashioning a product available on cvs. com was users, and 24-hour access to pharmacists via email or telephone (Shah, 1999, p. 6) Top-notch automated technology in the can click on the dosage, indications and description of ingredients (Pigott as cited in prescription medicines. ? to web-enable each product to baffle sure you warehouse, able to deal with up to 3,000 S KU of ? time consuming To add a new SKU we haveShah, 1999, p. 8) Xtra CVS frequent shopper program, which ? hassle to agree on joint developing could be utilize online. Making cvs. com a tool to facilitate physic ians enable more products for purchase through the jobs A physician could visit cvs. com site to website (such as cosmetics, opposite related prescribe, confirm a prescription or learn a healthcare products, greeting cards), but the patients formulary CVS needs to make it website team management constantly wa s in easier to prescribe through CVS than elsewhere ? trategies for the website CVS wanted to disagreement with this idea. (Shah, 1999, p. 7) ? ? Different manner of speaking options an order could be mailed to the customers home or picked up at the Undefined semipermanent pricing strategy for the website. ? Inability to successfully draw customers to use local CVS (Shah, 1999, p. 8) Cvs. com site was treated as a SBU. It had its own strategies employ for it (fr ee shipping, merchandising team and manager, who responded to ? the website, despite the different marketing lower prices, 24-hour service, etc. ). CVS marketing director. Online pricing strategy lower than in stores. CASE ANALYSIS CVS THE WEB STRATEGY 4 Opportunities ? Great market possibility four times as big as Threats ? Online drugstores were a novelty. No one books and CDs, products that successfully were being sold online. ? knew how remunerative and feasible they really were. Increased negotiation power due to mergers and ? There was a risk of losing the reimbursement acquisitions in the drugstore industry, leaving only to online drugstores PBMs have threatened four major drugstores and the rest as industry with that. ndependents. ? ? Strong and increasing direct competition Possibility of being able to have an online (Drugstore. com, Planet Rx, Walgreens. com pharmacy build within the PBMs dispensary and e-pharmacy. com), as well as indirect (Shah, 1999, p. 9). (healthc are sites without prescription filling such as WebMD, which later became Healtheon). ? Mail-order companies created by PBMs to fill long-term prescriptions created a conflict of take amid suppliers and online drugstores. CVS had everything figured out for a smooth launching and operation of cvs. om detailed and careful design purchasing process, differentiated prices, and quality customer service. All these were supported on CVS brand equity. However, they forgot to truly integrate both(prenominal) companies not only technol ogically but functionally. Even though it appeared to be the outdo way to do it, having different marketing teams on different time zones created an issue for the company. That was onl y one of CVS integration issues, another one was that the website database was not synchronized with the stores database, which made the e mail reminder tool ineffective.It appears to be that the main cause of cvs. com issues was the rush of launching the site no long-term st rategies were planned. There was uncertainty in pri cing strategies for the CASE ANALYSIS CVS THE WEB STRATEGY 5 website, as well as expansion in product religious offerings. I t was challenging to look for common ground between CVS and the team managing cvs. com. To make cvs. com a successful distribution channel, CVS needed to start working on long term strategies for growth. CVS needed to take return of the great amount of product possibilities available under the drugstore market.There were already other online healthcare sites without prescription filling services (WebMD or Healtheon) offering rela ted products. Hence, more products needed to be introduced for online purchase, and the frequent -shopper program Xtra should have been implemented online as well. It was a fact that the hybrid order -and-delivery offering created an advantage over pur e online competition (Foulkes as cited in Shah, 1999, p. 8), however, i f they offered different delivery options, they should o ffer different pricing strategies.Therefore, a dissolve based on the amount purchased could be designed to increase the website traffic, or a double-point system could be developed for those customers that were Xtra users. Another major issue that needed attention was the PBMs relationship. Conflicts of interest were rising due to the similarities in the delivery process between the PBMs mail -order prescription program and the online drugstores. Contracts liabilities with the PBMs were at risk under this new distribution channel. In conclusion, cvs. com built its foundation but forgot to plan for growth.More efforts need to be made on long-term, consistent marketing strategies strategies that are a ble to attract loyal customers to the site. Moreover, CVS inadequacy of planning is putting at risk the relationship with the suppliers (PBMs). To avoid impuissance and committing greater mistakes, CVS should set a marketing plan that allows them to know the write of the online custom er, their needs and wants. Based on that r esearch, they should r e-design a nd implement features on the website. Moreover, they need to develop strategies to keep their suppliers ( PBMs) satisfied, withoutCASE ANALYSIS CVS THE WEB STRATEGY 6 feeling at risk of losing business from their mail -order programs. For that specific issue, maybe a joint strategy could be implemented to increase awareness among their customers about whom their PBMs are. By doing so, all the 30 -day refills could be made through them. I f CVS is able to design a nd implement a long-term marketing plan for cvs. com, the website as a new distribution channel would be a hump success. CASE ANALYSIS CVS THE WEB STRATEGY 7 Reference Shah, A. (1999). CVS The web strategy. Harvard Business School.