i

THE DEVELOPMENT OF A MARKETING PLAN FOR AN EMERGENCY MEDICAL SERVICE

BY

KIM WAYNE BARLEY

Paper presented in partial fulfilment of the requirements for the Masters Degree in Business Administration in the Faculty of Management at the Port Elizabeth Technikon

PROMOTOR:

Doctor T Hutton

DATE:

JANUARY 2003

ii

DECLARATIONS

I, Kim Wayne Barley, hereby declare that:

the work in this paper is my own original work;

all sources used or referred to has been documented and recognised; and

this paper has not been previously submitted in full or partial fulfilment of the requirements for an equivalent or higher qualifications at any other recognised educational institution.

_____________ Kim Wayne Barley

__________ Date

iii

Grateful thanks are extended to all those individuals and organisations that contributed to the successful completion of this study. In particular, the assistance of the following is acknowledged:

To Jesus Christ, my Saviour and Lord, who gave me the opportunity and inspiration to complete this study

My wife, Daphne, for her encouragement, sacrifice and patience

Dr. Tim Hutton for his coaching, encouragement, advisement and motivation

Paramedic Gavin Fischer, for his inspiration, guidance, assistance and support

Behr Climate Control, for providing the finance, the facilities and time required to complete this study

iv

ABSTRACT

The research problem addressed in this study was to develop a comprehensive marketing plan that would help an emergency medical service (EMS) in the Nelson Mandela Metropolitan Municipality (NMMM), capture a significant market share and gain a competitive advantage over competitors.

To achieve this object, a literature study to determine the key components of a marketing plan was undertaken and used as a theoretical model in developing an actual marketing plan.

In addition to the literature study, an empirical study was conducted to identify the key issues critical to the development of a marketing plan for the EMS. The survey method used, based on the key components gained from the literature study, consisted of an in-depth scan of the macro-environment and thorough market investigation of the target industry.

The investigation involved the general management and senior personnel from the local emergency medical industry, medical aid schemes and private hospitals and clinics delimited in the study.

The results of the above literature study were finally combined with the results of the empirical study and a marketing plan for an emergency medical service was developed. This study concludes with recommendations applicable for the implementation of the actual marketing plan.

CONTENTS Page

TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES LIST OF ANNEXURES

ii vi vii viii

vi

TABLE OF CONTENTS

CHAPTER ONE INTRODUCTION, PROBLEM STATEMENT, DEFINITION OF KEY TERMS AND RESEARCH DESIGN

Page

1.1 1.2 1.3

INTRODUCTION AND PROBLEM STATEMENT.................................... 1 SUB PROBLEMS .................................................................................... 2 DELIMITATION OF RESEARCH ............................................................. 3 Planning............................................................................................ 3 Geographic / Demographic............................................................... 3

1.3.1 1.3.2 1.4

DEFINITION OF KEY TERMS................................................................. 4 Marketing Planning ........................................................................... 4 Marketing Plan.................................................................................. 4 Competitive Advantage..................................................................... 6 Market Environment.......................................................................... 6

1.4.1 1.4.2 1.4.3 1.4.4 1.5 1.6

SIGNIFICANCE OF THE RESEARCH .................................................... 7 RESEARCH DESIGN .............................................................................. 8 Research Methodology..................................................................... 8 Literature Study ................................................................................ 8 Empirical Study................................................................................. 8 The Development of a Marketing Plan.............................................. 9

1.6.1 1.6.2 1.6.3 1.6.4 1.7 1.8

PROPOSED PROGRAMME OF STUDY................................................. 9 SUMMARY ............................................................................................ 10

vii

CHAPTER TWO THE IDENTIFICATION OF THE COMPONENTS OF A MARKETING PLAN

Page

2.1 2.2 2.3

INTRODUCTION ................................................................................... 11 EXECUTIVE SUMMARY ....................................................................... 11 SITUATION ANALYSIS ......................................................................... 12 Macro-Environmental Analysis ....................................................... 12 Market Situation.............................................................................. 27 SWOT Analysis .............................................................................. 31 Competition .................................................................................... 35 Product Offering ............................................................................. 37 Keys to Success ............................................................................. 38 Critical Issues ................................................................................. 38 Historical Results............................................................................ 43

2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.3.6 2.3.7 2.3.8 2.4

MARKETING STRATEGY ..................................................................... 43 Mission Statement .......................................................................... 43 Marketing Objectives ...................................................................... 44 Financial Objectives........................................................................ 44 Target Markets ............................................................................... 45 Positioning ...................................................................................... 47 Marketing Mix ................................................................................. 52 Marketing Research........................................................................ 58

2.4.1 2.4.2 2.4.3 2.4.4 2.4.5 2.4.6 2.4.7 2.5

FINANCIALS.......................................................................................... 59 Projected Sales Forecast................................................................ 59 Expense Forecast........................................................................... 60 Contribution Margins....................................................................... 62 Break-even Analysis....................................................................... 62

2.5.1 2.5.2 2.5.3 2.5.4 2.6

CONTROLS........................................................................................... 64 Implementation ............................................................................... 64 Marketing Organisation................................................................... 64

2.6.1 2.6.2

viii

Page

2.6.3 2.7 2.8

Contingency Planning..................................................................... 65

RECOMMENDED MARKETING PLAN STRUCTURE .......................... 66 SUMMARY ............................................................................................ 67

CHAPTER THREE ACTUAL MARKETING PLAN

3.1 3.2

EXECUTIVE SUMMARY ....................................................................... 68 SITUATION ANALYSIS ......................................................................... 69 Market Situation.............................................................................. 69 Macro-Environmental Analysis ....................................................... 76 SWOT Analysis .............................................................................. 83 Competition .................................................................................... 86 Product Offering ............................................................................. 90 Keys to Success ............................................................................. 93 Critical Issues ................................................................................. 94 Historical Results............................................................................ 96

3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.2.7 3.2.8 3.3

GOALS AND OBJECTIVES................................................................... 97 The Mission Statement ................................................................... 97 Target Market Objectives................................................................ 97 Financial Objectives........................................................................ 98

3.3.1 3.3.2 3.3.3 3.4

MARKETING STRATEGY ..................................................................... 99 Target Markets ............................................................................... 99 Positioning .................................................................................... 100 Marketing Mix ............................................................................... 102 Marketing Research...................................................................... 109

3.4.1 3.4.2 3.4.3 3.4.4 3.5

FINANCIAL DOCUMENTS .................................................................. 110 Financial Overview ....................................................................... 110 Sales Forecasts ............................................................................ 111

3.5.1 3.5.2

ix

Page

3.5.3 3.5.4 3.5.5 3.5.6 3.6 3.7

Sales Breakdown.......................................................................... 112 Expense Forecast......................................................................... 114 Contribution to Margins................................................................. 115 Breakeven Analysis ...................................................................... 116

CONTROLS......................................................................................... 116 CONTINGENCY PLANNING ............................................................... 116

CHAPTER FOUR SUMMARY, RECOMMENDATIONS AND CONCLUSION

4.1 4.2 4.3

SUMMARY .......................................................................................... 118 RECOMMENDATIONS........................................................................ 120 CONCLUSION..................................................................................... 121 REFERENCES .................................................................................... 122

LIST OF FIGURES Page

Figure 2.1 Figure 2.2 Figure 2.3 Figure 2.4 Figure 2.5 Figure 2.6 Figure 2.7

Porters five forces framework Opportunity matrix Threat matrix Proctors TOWS matrix The strategy clock: competitive strategy options Communication platforms Break-even analysis calculation

36 40 40 42 50 55 63

xi

LIST OF TABLES Page

Table 3.1 Table 3.2 Table 3.3 Table 3.4 Table 3.5 Table 3.6 Table 3.7 Table 3.8 Table 3.9 Table 3.10

Breakdown of medical aid schemes into service providers Competitor analysis Opportunity matrix Threat matrix TOWSs matrix Internal market segment mix Medical treatment charge under 100 km per incident Medical treatment charge over 100 km per incident Total sales forecast 2003 Total sales breakdown by market segment 2003

72 88 95 96 95 98 103 104 111 113

xii

LIST OF ANNEXURES Page

Annexure A Annexure B Annexure C Annexure D Annexure E Annexure F Annexure G Annexure H Annexure I

Forecast income statement Forecast medical caseload Sales forecast statement Forecast expense statement fixed costs Forecast expense statement variable costs Breakeven analysis Forecast employment cost Medical care evaluation sheet Medical service providers listing

129 130 131 132 133 134 135 136 137

CHAPTER ONE

INTRODUCTION, PROBLEM STATEMENT, DEFINITION OF KEY TERMS AND RESEARCH DESIGN

1.1

INTRODUCTION AND PROBLEM STATEMENT

In the fast changing and increasingly competitive business environment, the marketing approach for todays conditions will almost certainly not be the same approach for those of tomorrow. No companys strategy or operations can afford to be frozen in time and because of competition, the ability to develop effective marketing plans which enable a company to become more responsive and adaptable to the market place, will differentiate the winners from the losers.

When a business fails, often a marketing plan or lack thereof is to blame. This is because without a marketing plan, the management of a company can end up struggling to focus on the market that is best suited for their products, develop a hazy definition of the competition and be uncertain of how the customers should be pursued (Winchester & Manning, 1997: 72). Management will have no concrete measurement for the success or failure of their goals. Royal (1995: 120) maintains that the majority of companies will write a sales or advertising plan and believe they do not need a marketing plan. Without a written marketing plan such essential elements as distribution, advertising and strategies to achieve a competitive advantage may be overlooked.

According to Pophal (2000: 22), attempting to sell a product or service without a plan is like planning a vacation without a map. A person may eventually get where he/she wants to go, but it would take longer and cost more than it should.

Devries (2000: 8) embraces this attitude. He states that a company may have all the necessary resources, but without a map to guide it to the companys ultimate destination, treacherous roadblocks and time consuming detours can keep the management of a company from reaching their goals.

This leads to the following problem, which will be addressed by this research.

What marketing plan can an emergency medical service (EMS) adopt in order to penetrate the existing emergency service market to gain a significant market share and to enhance competitive advantage?

1.2

SUB PROBLEMS

1.

What will the research literature reveal relating to the components of a market plan?

2.

What are the current environmental conditions for the EMS market in the target area?

3.

What opportunities are available for a new emergency medical service provider in the target area?

4.

How can the results obtained from the resolution of sub problems 1-3 above be used to compile an effective marketing plan?

1.3

DELIMITATION OF RESEARCH

In order to ensure that the research project is of a size that is manageable, it is necessary to demarcate the research to the areas listed below:

1.3.1 Planning

The scope of the research is limited to the components of a marketing plan only and excludes all other forms of corporate planning. Corporate planning is the concept that has developed in the literature to mean the summation of all planning that takes place in an organisation. This includes strategic planning, which is concerned with the total organisation planning over the long term and operational planning, which is concerned with each of the business functions separately over a shorter period of time. The marketing plan is a sub section of operational planning (Greenley, 1987: 84).

1.3.2 Geographic / Demographic

The area to be researched is the Port Elizabeth / Uitenhage region of the Nelson Mandela Metropolitan Municipality (NMMM), which is situated in the Eastern Cape region in the Republic of South Africa.

1.4

DEFINITION OF KEY TERMS

1.4.1 Marketing Planning

Marketing planning involves designing activities relating to marketing objectives and the changing marketing environment. Marketing planning is the basis for all marketing strategies and decisions. Issues such as product lines, distribution channels, marketing communications, and pricing are all delineated in the marketing plan (Lamb, Hair & McDaniel, 1998: 24).

Marketing planning is a logical sequence of activities leading to the setting of marketing objectives and the formulation of plans for achieving them. Conceptually the process is simple, calling for a situation review, the formulation of some basic assumptions, setting objectives for what is being sold and to whom, deciding on how the objectives are to be achieved, and scheduling and costing out the actions necessary for implementation (McDonald & Tideman, 1993: 12).

1.4.2 Marketing Plan

The research conducted will result in the formulation of a marketing plan for an emergency medical service. This should assist the service in penetrating the existing emergency service market and enable the service to enhance competitiveness and gain a significant market share. Set out below is a summation of the term marketing plan, as defined in the literature.

McDonald & Tideman (1993: 261) refer to a marketing plan as a business proposition containing proposed courses of action, which in turn have resource implications. A marketing plan is the outcome of the marketing planning process, and helps to make things happen. Lamb et al (1998: 25) feel that a market plan allows the management of a company to examine the marketing environment in conjunction with the inner workings of the business. Once a marketing plan is finalised, it serves as a reference point for the success of future activities.

Winchester & Manning (1997: 72) state that a marketing plan is an all-purpose document that outlines everything a company needs to know about its business. It defines how and why the company is in business, what markets are good targets for its products, and how customers should be pursued. It is an indication that shows management when they have succeeded, when they have fallen short of their goals, and when it is time to redefine a direction to take advantage of new markets or fight against dogged competitors.

According to Royal (1995: 120), there are three tasks a marketing plan should accomplish: It must establish the marketing issues that will determine a companys longterm success; It must focus the companys management team on those goals; and It must track the company' s success in finding customers.

1.4.3 Competitive Advantage

Kotler and Armstrong (1996: 256) define competitive advantage as an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Porter (1990: 19) adds that competitive advantage is created and sustained through differences in structures, values, culture, institutions, and histories that have significant impact on competitive success.

1.4.4 Market Environment

The market environment consists of external variables such as economics, technology, politics, legislation, demographics and the social aspect. An understanding of environmental dynamics is a requisite to sound market planning. Correct identification and analysis of the relevant factors in the external environment will lead to a correct assessment of the marketing opportunities in a marketing plan (Kelley, 1972: 38).

Johnson and Scholes (2002: 102) refer to such an analysis as a PESTEL analysis, referring to the political, economic, socialcultural, technological, environmental and legal influences on the organisation. This analysis can be used as a guideline by management to identifying the different influences of each external variable.

1.5

SIGNIFICANCE OF THE RESEARCH

Planning for the future is important for organisations striving to improve their performance in competitive, dynamic markets. Yet for many it is a task that is ignored, relegated to the bottom of the priority list or considered unimportant in the context of daily operational crises (Abratt, Bick & van Rensburg, 2001: 3).

There are benefits to conducting formal marketing planning. Research has shown that companies that do plan are significantly more profitable in the long term than companies that do not (Abratt et al, 2001: 3). Planning highlights opportunities, identifies contingency plans for changing circumstances, allocates resources more efficiently and focuses managements attention on issues critical to developing and maintaining a competitive advantage.

Abratt & Higgs (1994: 30) conclude that sound marketing planning is essential for the survival of local companies. They further advocate that the marketing planning exercise and the resultant marketing plan are highly beneficial to the survival and prosperity of any organisation. Furthermore, no research relating to a marketing plan has been carried out for the EMS market in the target area. The researcher feels that the research and resultant marketing plan would assist managers in the EMS field to become more responsive and adaptable to market influences. It will assist the organisation in improving its performance in a competitive and dynamic market to open the way for a significant competitive advantage over competitors.

1.6

RESEARCH DESIGN

In this section the methodology to be followed in the research project is described.

1.6.1 Research Methodology

In conducting the research project the following procedure will be adopted to solve the main problem and the sub-problems:

1.6.2 Literature Study

A literature study with be conducted in order to identify the key components of a marketing plan.

1.6.3 Empirical Study

The empirical study will consist of the following parts:

A survey will be carried out in the delimited area to identify the key issues critical to the development of a marketing plan for the EMS.

The survey method to be used, based on the key components gained from the literature study, will consist of an in-depth scan of the macro-environment and thorough market investigation of the target industry, utilising the Internet and

World

Wide

Web,

print

media,

personal

interviews

and

telephonic

conversations.

The population will comprise the general management and senior personnel from the local emergency medical industry, medical aid schemes and private hospitals and clinics delimited in the study.

1.6.4 The Development of a Marketing Plan

The results of the above literature study will be combined with the results of the empirical study to develop a marketing plan for an emergency medical service.

1.7

PROPOSED PROGRAMME OF STUDY

The research has been planned to include the following chapters:

Chapter 1 Chapter 2 Chapter 3 Chapter 4

Introduction, problem statement and definition of key terms. The identification of the components of a marketing plan. Recommended actual marketing plan. Summary, recommendations and conclusion.

10

1.8

SUMMARY

The dynamic and competitive business environment cannot be ignored and quick market response and adaptability to the environment will differentiate the winners from the losers. This chapter has emphasised that failure to respond and adapt to market conditions is often a result of the lack of a marketing plan. Kotler (2000: 88) refers to the marketing plan as one of the most important outputs of the marketing process and is essential for success. The EMS field in the area of research is the epitome of such dynamics and changing conditions. For individual emergency medical services to succeed in these conditions, an effective marketing plan is required. The theoretical elements of a marketing plan and the recommended structure will be covered in the next two chapters, beginning with chapter two, which will identify the necessary components of a marketing plan.

11

CHAPTER TWO

THE IDENTIFICATION OF THE COMPONENTS OF A MARKETING PLAN

2.1

INTRODUCTION

In this chapter, the components of a marketing plan will be identified and described in detail. The aim is to extract the common marketing plan elements recommended by leading authors and used as a theoretical basis to create an effective marketing plan for an EMS service. The process will begin with a situation analysis of the market, including a thorough macro-environmental scan and competitive analysis, marketing strategy, financial documents and conclude with the controls necessary to complete and activate the plan.

2.2

EXECUTIVE SUMMARY

The marketing plan should open with a short executive summary of the main goals and recommendations to be presented in the plan (Kotler & Armstrong, 1996: 52). The aim of the executive summary is to help senior management understand the plans major thrust quickly and easily. This summary should be brief and to the point. In order for the executive summary to contain the main issues or aspects of the plan, Abratt et al (2001: 2) recommend it should be written last and then inserted at the front of a marketing plan.

12

2.3

SITUATION ANALYSIS

A marketing plan will require a current situation analysis. Martel (2001: 29) defines a situation analysis as a triangulation of a companys whereabouts in relation to the customers that are served, the trends of the marketplace in which the company is situated, as well as who the competition is. The analysis requires some clear thinking and an honest appraisal of the state of the business (Cardone, 1995: 10).

The situation analysis involves a thorough analysis of the external environment as well as an in-depth investigation into the companys current market situation, the competition, and product offerings, as well as an objective look at critical internal issues of the company. The situation analysis will now be dealt with in more detail.

2.3.1 Macro-Environmental Analysis

Before specific marketing activities can be defined, an understanding of the current and potential environment in which the product or service will be marketed must be gained. The macro-environmental factors facing a company in their target market must be analysed. This process, known as environmental scanning, is the collection and interpretation of information about forces, events, and relationships in the external environment that may negatively affect the future of the organisation or the implementation of the marketing plan (Lamb et al, 1998: 30).

13

Johnson & Scholes (2002: 98) consider it important to determine the key forces at work in the macro-environment, both in the present and the future and how they affect the organisation. As a guideline, they recommend that a PESTEL analysis be used to determine these forces. This analysis involves identifying the political, economic, social, technological, environmental and legal influences on an organisation. The positive and negative influences identified here will be instrumental in the drafting of the marketing plan. These influences will have a major impact on the type of market strategy proposed in the plan. It is paramount that management completes an exhaustive analysis and review of the environment in order to eliminate the unknown that may create havoc when the plan is implemented. A more detailed explanation of these macro-

environmental influences, based on the PESTEL format, will now follow.

(a)

Socio-cultural Factors

This environment is one of the most difficult external variables facing companies. Emerging social issues and changing attitudes and lifestyles can instigate industrial change. Social trends developed over time influence people in making decisions about products they will buy, the price they are willing to pay and how sales / marketing promotions will affect them. Over the years, consumers have become more and more demanding, discriminating and environmentally conscious. They also insist on top quality products that add value to their lives.

14

Shifting societal concerns, attitudes, and lifestyles usually favour companies that respond quicker and more creatively with products targeted to the new trends and conditions (Strickland, 1998: 88). It is therefore necessary for organisations to scan the following social-cultural influences in order to strategically position products for maximum advantage in the market.

(i)

Shifts in population demographics and income distribution

Organisations, especially consumer-related industries, must monitor the populations birth rate and life expectancies, life-styles, career expectations, the rate of family formation, growth rate, age distribution, and geographic shifts of a countrys population. By targeting and reacting to these shifts, marketers can gain first mover advantage over competitors and capture market share.

(ii)

Social mobility and lifestyle changes

The term social mobility refers to the extent that individuals can move out of the strata (class or caste system) into which they are born (Hill, 2002: 84). A low mobility can make it difficult for people to become properly educated, gain decent employment and have a high disposable income. Companies operating in a country with low mobility may be faced with an uneducated workforce that cannot work according to world-class manufacturing standards. The opposite may be true for companies that require low skilled cheap labour to produce unsophisticated products in order to gain economies of scale.

15

People placed in certain classes, such as the lower class, may find it difficult to work under other classes, such as the upper class. This can result in a negative culture in an organisation resulting in poor work performances, conflict and lack of motivation.

(iii)

Attitudes to work and leisure

The attitudes of society towards work and leisure need to be taken into account. Countries that have unemployment payment schemes for the unemployed could have a generation of people that have a tendency to be lazy workers not interested in work.

High context cultures, such as the Japanese, work long hours and spend little time in leisure. Organisations operating in such cultures can benefit by high employee productivity, loyalty and dedication. In contrast, middle context cultures, such as Africa and Southern American countries, can have a culture that regards leisure and low productivity as the way of life, taking priority over work. Both situations can affect organisations competing on a global scale.

(iv)

Consumerism

Consumer preferences influence the marketability of different kinds of goods. In many developed countries, there are a growing number of green consumers who are willing to pay a premium for environmentally friendly products. Such

16

consumers may also be unwilling to deal with environmentally unfriendly firms that fail to change.

Green consumerism also can have a major impact on the methods of producing goods and the cost thereof. Producing according to environmental friendly standards may necessitate major re-engineering of operations that can be costly for organisations to implement. Organisations willing to adapt to environmental pressures may pose a threat to competitors that lag behind.

(v)

Levels of education and skills

Formal education plays a key role in a society. Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society (Hill, 2002: 95). Countries that have a high number of educated people can gain a competitive advantage over others that do not. This advantage could be gained through research and development competencies and technological know-how. Global companies that operate a transnational strategy may promote global learning that helps transfer valuable skills and competencies between countries. This may help a company gain an advantage over its local competition.

(b)

Economic Factors

The economic environment can be defined as a set of economic factors that have positive and negative influences on the economy. By assessing these

17

factors, companies can determine the threats and opportunities in the marketplace. By being aware of these threats and opportunities, businesses can adapt their strategies to ensure maximum benefit. The following economic factors are of importance in the economic environment:

(i)

GNP trends

The Gross National Product (GNP) is often regarded as a yardstick for the economic activity of a country. It measures the total value of the goods and services produced annually, and this is reflected as the value per capita (per head of the population). High GNP per capita for a country indicates a high level of economic development, which makes it more attractive for future investment opportunities, industrial growth, and higher consumer disposable income. A low GNP is a reflection of a poor economic climate, which can lead to significant restructuring of local businesses as they struggle to survive.

(ii)

Human development index

Another measurement of a countrys economic development is the Human Development Index (HDI). This index is based upon three measures: life expectancy, literacy rates, and whether average incomes are sufficient to meet the basic needs of life in a country (Hill, 2002: 50). Low HDI indexes indicate a poor economy with low economic activity.

18

(iii)

Interest rates

In countries where inflation is high, interests rates will be high in order to compensate investors for the decline in the value of their money. High interest rates make it more expensive for the consumer or customer to borrow money for investments and purchases. Conversely, lower interest rates boost spending power and make it more attractive for investors.

(iv)

Money supply and inflation rates

When the growth in a countrys money supply is faster than the growth in its output, price inflation is fuelled. A higher inflation will damper consumer and customer spending power and will negatively influences a country' s exchange rate. A depreciating exchange rate also adds to inflation woes owing to the higher cost of imports.

(v)

Unemployment levels

High unemployment levels are an indication of slow or poor economic development in a country. This not only impacts on the purchasing power of the population, but also can negatively affect the HDI of a country. Such high levels can make it unattractive for future investment by industry, which may find investment in other countries with better future prospects. However, the reverse may be true. A high unemployment level may result in lower employment costs due to the abundance of people willing to work for low wages.

19

(vi)

Government intervention

A government that intervenes in its economy in respect of trade and non-tariff barriers, such as import duties, quotes, subsidies and local content requirements can have a dramatic effect on industry. It can increase the cost of the end product, limit availability of certain products to the consumer and place pressure on local companies that traditionally import components to convert to local content. Scarcity of local content may limit the potential for cost competitiveness when imported goods are landed with high tariffs attached.

(vii)

Price controls

Price controls can have both a negative and positive effect on industry. The negative effect is due the capping of prices that could curtail businesses from making maximum profit from their goods or services. Such controls may force businesses to constantly embark on cost-cutting and re-engineering exercises that could be detrimental in the long run. The positive side of price controls is that it prevents greed in the marketplace and makes goods affordable to the consumer. However, literature abounds with warnings that price controls and interference by government does not help anyone and can lead to black markets in which goods are sold at illegal prices, and to a variety of other problems (Elder, 2001: 15).

20

(c)

Environmental Factors

Slack, Chambers & Johnston (2001: 713) indicate that mounting pressure from legislators, regulators, customers and communities worldwide for

environmentally friendly products and services have placed pressure on business to find environmental sensitive solutions in their operations. Two of the more relevant environmental factors constantly highlighted are the protection of the environment and energy consumption.

(i)

Environment protection

Global pressure is forcing governments to put in place environmental protection laws to control their environments against abuse and pollution. Certain industries are required to comply with these laws designed to protect the environment and general population. Organisations may be required to complete environmental impact assessments that measure emissions,

effluence, hazardous and toxic substances, waste and recycling in their operations. The cost and time required to complete and comply with these assessments can be exorbitant for companies that are not geared to operate in such a manner. Non-compliance of such policies can result in the risk of negative market publicity and potential government penalties.

However, Peart (2001: 10) states that companies that strive for continuous improvement of environmental policies can gain a better understanding of the environmental impacts of their manufacturing processes and of potential cost

21

savings that could be achieved while improving performance. Such improvements can give a company a competitive advantage and good public image.

(ii)

Energy availability and cost

The availability and cost of energy for current and future production must be taken into account. Operations using a particular energy source, such as water, may have to change to other sources if water supplies are dwindling. This may necessitate major investments in different technologies, equipment and infrastructure. However, the viability of such dramatic changes will have to be weighed up against the cost and risks of keeping an existing energy source.

(d)

Technological Factors

The role of technology on the macro-environment has seen major advances for the globalisation of markets and production and new innovations. The last decade has seen major advances in communication, information processing and transport technologies that has revolutionised industry. Such changes have either benefited organisations or seen their demise. To ensure that organisations keep abreast of technology, it is important to keep constant watch over the following technological factors:

22

(i)

Research and development and technological focus

Organisations need to be aware that the pace of technological change dictates research and development. Competitors must be monitored closely for signs of new breakthroughs that could render current technology and products obsolete. By becoming a technological leader in the market, companies can gain a competitive edge by means of technological innovations. However, the risk and cost involved in major research and development can be substantial. To compensate for this, companies can invest in minor innovative changes that are less risky, cost less and reach the market place a lot quicker.

(ii)

Intellectual property (patents, copyrights and trademarks)

Companies must keep constant watch for current and new patents, copyrights and trademarks that the competition may own or have applied to own. Such property rights can have a major impact on curtailing new and future product development and product processes. New innovators can gain first mover advantage by registering new innovations, names and processes before the competition, thereby effectively creating an entry barrier. Late innovative movers can wait for the legal rights to expire, thereby allowing them to copy competitor innovations with the possibility of producing generic products at cheaper prices.

23

(iii)

New products and productivity improvements

The accelerated pace of technological change has resulted in vast new ranges of technologies that have revolutionised products and processes. The time lag between innovation and market introduction is shortening as modern day technology feeds upon itself (Kotler, 2000: 150). By keeping abreast of technological changes, a company can ensure that new products are developed continuously and more efficiently. Failure to change can result in the competition gaining a major competitive advantage.

(iv)

Speed of technological transfer

The impact of microprocessors, telecommunications, Internet, World Wide Web and transport technologies on markets and production have seen major improvements in the speed and cost of development, manufacturing and delivery to the final consumer. Companies that fail to adapt to the latest new technologies stand a good chance of not surviving in the future.

(e)

Political / Legal Factors

The economic and legal systems of a country are often shaped by its political system (Hill, 2002: 34). It is important for organisations to understand the political ideology and legal factors relating to business in the country they are

24

operating in. Organisations should be aware of the following political and legal factors:

(i)

Political ideology

The political system refers to the system of governance in a country. Organisations must assess whether a country follows a democratic or totalitarian governance in order to strategically plan their operations. Hill (2002: 39) refers to a democracy as a political system in which governance is by the people, exercised either directly or indirectly through elected representatives. A democracy promotes free trade, freedom of expression and allows people to decide their own economic self-interest. Hill (2002: 39) regards totalitarianism as a form of governance in which one person or political party exercises absolute control over all spheres of human life, and opposition parties are prohibited. Economic freedom is repressed under totalitarianism rule and trade, supply and demand of goods and services will be governed by the state.

(ii)

Special incentives

A government can regulate business activity in a country in accordance with its national goals. It can do this by offering incentives either to divert investment to industries that it wants to develop or in order to promote growth in existing industries. It can offer incentives such as low-interest loans, grants, subsidies or tax concessions. Organisations must be aware of such incentives in order to take the opportunity to reduce costs and increase production.

25

(iii)

Foreign trade regulations and attitudes towards FDI

Foreign trade policy is dependent on the political ideology of a country towards inward or outward foreign direct investment (FDI). Whether a country promotes free market principles or takes a hostile radical stance towards FDI, will have an effect on the investment opportunities of organisations looking for expansion or for new business ventures.

Countries that take a free market approach will welcome inbound FDI in order to stimulate the economy with competition that will give the consumer a choice of product. This can have a detrimental effect on future business for local organisations because they will have to compete with foreign companies as well as local competition.

Counties that promote a hostile FDI approach will in effect protect local industry from foreigners. However, Hill (2002: 209) warns that such a radical view will stifle the local economy and thus lead to poor future business performances and opportunities.

(iv)

Employment laws

Countries that are pro-labour can burden business with cumbersome labour rules and regulations that can be costly to sustain. Laws that promote unionism can place tremendous pressure, in the form of strikes and work disruptions, on organisations trying to compete globally. Organisations working in such

26

environments must be vigilant of all laws that protect employees. Countries such as South Africa allow for industries in similar strategic groups to form employee associations. Such powerful associations can have major influences on a countrys working environment, which may be a burden to smaller enterprises (Bendix, 2000: 140).

(v)

Stability of government

Organisations must be vigilant as to the political, economical and legal risk of operating in certain countries. The risk of major upheaval to the business environment or economic mismanagement by those in power must be monitored constantly for long-term prospects.

Hill (2002: 67) maintains that political risk is influenced to a great extent by social unrest and disorder expressed in the form of mass strikes, demonstrations, terrorism, and violent conflict. Countries experiencing social unrest and disorder usually do not have good future economies.

The stability of government can be measured by its political view to democracy and free market trade and is reflected by the countrys inflation rate and level of business and government debt.

27

(vi)

Tax laws

Organisations should be aware of the effect taxation can have on business profitability and of the many ways taxation can be reduced or deferred. Certain countries place a high tax burden on businesses owing to the governments inability to collect taxes from the general population. Others grant rebates and lower taxation to stimulate business growth. Global companies may be faced with double taxation in both the host and home countries, or they could be based in a country that is a tax haven. It is imperative for organisations to ensure that all taxation issues in all countries are taken into account for longterm strategies.

2.3.2 Market Situation

The market situation is a detailed analysis of the market that the product or service is to be marketed in, and is divided into market demographics, market needs, market trends and market growth.

(a)

Market Demographics (market segmentation)

A company cannot serve everyone because its customers are too numerous and diverse in their buying requirements (Kotler, 2000: 256). The persons responsible for compiling the marketing plan need to select a segment or segments of the greater market that will bring it the best chance of meeting the

28

companys objectives. Thus the potential market needs to be segmented into market segments that can be served more effectively and efficiently.

Authors such as Kotler, Armstrong, McDonald, Tideman, Lamb, Hair and McDaniel, all base consumer market segmentation in terms of geographic, demographic, psychographic and behavioural attribute variables.

A market segment is a subgroup of people sharing one or more characteristics that cause them to have similar product needs (Lamb, Hair & McDaniel, 1994: 164). Analysing the market from this perspective is useful and helpful because it can identify as much as possible about prospective clients and can lead to identifying and confirming opportunities the market presents. However, it may not be possible to identify all the characteristics and responses to each segment variable and depending on the market, a company may only base its segmentation on the most suited variable.

(i)

Market geographics

This refers to the physical location of potential customers. By dividing these into different geographical units such as cities, regions and neighbourhoods, a company will be able to determine and focus on where it would like to operate.

29

(ii)

Market demographics

Market demographics refer to consumers wants, preferences and consumption rates. This is the most popular method for segmenting customer groups (Kotler & Armstrong, 1996: 239). Demographics consider information about customers market age, sex, race, religion, nationality, education, family size and composition, family life cycle, occupation and income.

(iii)

Market psychographics

Market psychographics categorises people according to their lifestyle or personal attributes. Kotler (2000: 266) stresses that this is important to determine because people within the same demographic group can exhibit different psychographic profiles, which in turn can have a major effect on market performance in the target market.

(iv)

Market behaviours

Market behaviour refers to customer analysis based on their knowledge, attitudes, use of or response to a product. These behavioural patterns can be differentiated by the occasions that stimulate a purchase, the benefits realised, user status, their usage rate, loyalty, and attitudes regarding the service on offer. This basis of segmentation is popular with producers of consumer products (Proctor, 1996: 200).

30

(b)

Market Needs

All marketing activities should be based on meeting the underlying needs of the customer. The plan should define the product offering in terms of target market needs, so that focus will be placed on satisfying the buyer needs and not placed on what is sold.

Understanding customer needs is not always simple. However, this can be largely overcome with a creative marketing approach. A creative marketer discovers and produces solutions customers did not ask for but to which they enthusiastically respond (Kotler, 2000: 21). What is important when determining the needs of the customer is to determine whether the need existed before the product was offered and to determine whether other products offer different ways of satisfying this same need.

(c)

Market Trends

In order to establish a competitive advantage over competitors, the plan must seize the potential window of opportunity that exists in the market. Since timing is critical to any marketing strategy, the plan must establish what trends are changing the market or changing the business. Kotler (2000: 137) states that a trend reveals the shape of the future. The plan must recognise and respond to both the latest and future trends in order to ensure profitability of the product or service. Market trends could involve changes in demographics, changes in

31

customer needs, a new sense of style or fashion, or other factors that may influence purchase behaviour of the market (Burger, 2001: 4).

(d)

Market Growth

Documenting the target market growth is important, as it will enhance the implied value and potential of the business. The plan must indicate whether the target market is growing, static, or shrinking and what strategy will be used to take advantage of the stage the market is in.

Determination of the growth of the market must be as accurate as possible. Estimating unreasonable growth rates can create unrealistic expectations or missed opportunities. Both will adversely affect the marketing plan and ultimately the profitability of the product.

2.3.3 SWOT Analysis

A valuable step in the situational analysis is to assess the companys internal strengths and weaknesses and its external opportunities and threats. This is commonly known as a SWOT analysis.

A SWOT analysis is a way to organise information and assign probabilities to potential events, both good and bad, as the basis for developing a business strategy or a business (marketing) plan. According to Slocum & McGill (1994: 33), the goal of a SWOT analysis is to help a firm identify its critical strategic

32

factors and then build on vital strengths, correct glaring weaknesses, exploit significant opportunities, and avoid disaster-laden threats. It will allow management to take an objective look at the business and break free of traditional modes of thinking and planning.

The analysis should focus on key factors only, contain concise statements, include only relevant and important data, and give emphasis to creative analysis (McDonald & Tideman, 1993: 27).

The SWOT analysis begins by conducting an inventory of the companys internal strengths and weaknesses, followed by determining the opportunities and threats that are external to the organisation, based on the market and the overall environment.

(a)

Strengths

A strength is any resource, capability or positive aspects internal to a business that allows management to achieve their stated goals and give a company an edge over the competition.

Strengths describe the positive intangible and tangible assets of the company. Intangible assets consist of the attributes of the personnel of the company, including their knowledge, skills, education, credentials, capabilities and reputations in the marketplace. Tangible assets refer to the availability of

33

capital, equipment, established customers, copyrights, patents, the level of computer technology, and other valuable resources within the business.

(b)

Weaknesses

Weaknesses are negative internal factors that detract the company from the ability to have a competitive edge. They are factors that are in need of improvement, and can be improved if management controls them.

They include the lack of managerial depth and talent, no clear strategic direction, limited resources, internal operation problems, a weak distribution network, poor technology, lack of training, skills deficiency, inferior product attributes, a poor track record in implementing strategy and poor plant positioning and location (Peter & Donnelly, 1998: 271).

Kotler (2000: 79) cites that a common weakness is the failure of employees to work together as a team. He stresses it is critically important to assess the inter-departmental working relationships when analysing weaknesses.

(c)

Opportunities

Opportunities assess the attractive factors that represent the reason for being in business and reflect the potential of the company that can be realised through implementation of the companys marketing strategies (Burger, 2001: 6).

34

When examining external opportunities, managers must analyse aspects of marketing environment. This involves scanning the external environment to look for the opportunities. The PESTEL analysis can be used for this purpose.

Opportunities may be the result of market growth or positive market perceptions, customer lifestyle changes, failure of the competition to capture market share, weak or favourable legislation, or the ability to offer superior products or services in the market.

(d)

Threats

Threats are non-controllable external factors that could place the marketing plan, the business or market at risk. Kotler (2000: 77) refers to an environmental threat as a challenge posed by an unfavourable trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profits.

Threats may include the competition, major supplier price increases, high product elasticity, increased global competition, unfavourable government regulations, economic downturns or recessions, bad coverage by the media or press, changing buyer needs and tastes, and fast pace technological changes that may cause large scale obsolescence. The PESTEL analysis can also be used to scan the external environment to look for threats.

35

For management to be proactive in dealing with any threat, the plan should class each threat according to how serious each one is and the probability of occurrence of each one.

2.3.4 Competition

In this section, management should determine who are the direct competitors in the market are and determine what market position they enjoy in relation to the position of the company.

Martle (2001: 30) points out that it is worthwhile to consider what goals and strategies these competitors might have, as well as what customers think of the products and services offered by those operations. In addition, it is recommended to try and determine what the competitions strengths and weaknesses are. . Peter & Donnelly (1998: 265) advocate that a complete industry analysis be undertaken in order to fully assess the competition. They recommend that Michael Porters five forces framework be used to identify the sources of competition (refer Figure 2.1). Using this framework will ensure that a good understanding of the competition will be gained.

However, Porter (1980, 47) recommends that a more in-depth analysis for a competitor analysis be undertaken to determine the strategic moves and reactions of each competitor in relation to market/industry changes and

36

environmental shifts. This type of analysis is best suited for determining competitive strategy for a company as a whole and can be time-consuming, costly and become a burden on a marketing plan. For this reason, the basic framework will be followed.

Figure 2.1: Porters five forces framework

Source: Johnson & Scholes (2002: 113)

The following is a brief description of these five forces:

(a)

Threat of new entrants

The threat of entry refers to competition that intends to enter the same market with similar products.

37

(b)

Rivalry among existing competitors

Competitive rivals are businesses with similar products and services aimed at the same customer group.

(c)

Threat of substitute products

Substitute products are products that are similar in nature that provide a higher perceived benefit or value to the customer. Such products can reduce the demand for a product as customers switch to the alternate substitutes (Johnson & Scholes, 2002: 115).

(d)

Bargaining power of buyers and of suppliers

The relationship between buyers and sellers can have similar effects in constraining the strategic freedom of an organisation (Johnson & Scholes, 2002: 117). When certain conditions are prevalent in the market place, the power of buyers and sellers can be high.

2.3.5 Product Offering

The product offering is a detailed list and description of the products that the company offers. The offerings not only include the physical unit, but also the product attributes such as packaging, warranty, service intervals, features, installation, quality level, brand, company image and other features (Perreault &

38

McCarthy, 1996: 51). The list should detail the purpose and benefits of each product and should include the type of customer that would buy the product, including the reason why such customers would want to purchase it and the customer need the product will be satisfying.

2.3.6 Keys to Success

The keys to success relate to key factors that make the difference between success and failure of a company. They will depend on the company, its management style and focus, style of operations, structure, and how business is conducted.

A marketing plan should not be bogged down by too many key factors and should be limited to the effectiveness of the implementation of the plan.

2.3.7 Critical Issues

Completing a relevant and concise SWOT analysis should result in a clear understanding of the main thrust of the business. By bringing the four areas of the SWOT analysis together, the critical issues affecting the marketing plan can be formulated. Several matrix methods can be used to do this, two of which will be discussed here. Irrespective of which method is used, they have the same overall objective, namely that of leveraging the strengths of the business to take advantage of the available opportunities, offset or improve the stated weaknesses, and minimise the risk of potential threats (Burger, 2001: 8).

39

(a)

Kotlers Opportunity and Threat Matrix

By allocating each opportunity and threat in a matrix according to a low or high probability of occurrence, the possible outcome in which a company can find itself can be determined (Kotler, 2000: 77). Four possible outcomes are possible, namely:

Ideal - High in major opportunities and low in major threats (good success factors).

Speculative - High in major opportunities and high in major threats (risky situation with potentially large returns).

Mature - Low in major opportunities and low in threats (indicates limited growth potential with relatively low risk).

Troubled - Low in both opportunities and high in threats (No potential and requires immediate reconsideration).

Kotler explains both the opportunity and threat matrixes with an example of a TV-lighting equipment company faced with the following opportunities and threats. These are illustrated in Figure 2.2 and Figure 2.3.

40 Figure 2.2: Opportunity matrix

SUCCESS PROBABILITY High High ATTRACTIVENESS Low Low

Source: Kotler (2000: 77)

Opportunity matrix explanation 1. 2. The company develops a more powerful lighting system. The company develops a device for measuring the energy efficiency of any lighting system. 3. 4. The company develops a device for measuring illumination levels. The company develops a software program to teach lighting

fundamentals to TV studio personnel.

Figure 2.3: Threat matrix

PROBABILITY OF OCCURANCE High High SERIOUSNESS Low Low

Source: Kotler (2000: 77)

41

Threat matrix explanation 1. 2. 3. 4. A close competitor develops a superior lighting system. The advent of a major prolonged economic depression. Higher costs. Legislation that reduces the number of TV studio licences.

(b)

Proctor s TOWS Matrix

Proctor prefers to use a TOWS matrix as a mechanism for facilitating the linkage of the SWOT analysis and a framework for identifying and formulating strategies.

This matrix allows for the external and internal factors to be entered on the grid and different combinations to be studied. For example, the entry to one cell of the grid could involve maximising opportunities and strengths. This would amount to putting together at least one strength and one opportunity to produce a strategy that capitalises upon this combination (Proctor, 1996: 259). This is illustrated in Figure 2.4, with an example for rubbish disposal bags.

42

Figure 2.4: Proctors TOWS matrix

Strengths 1. 2. 3. Brand name Distribution Low costs 1. 2.

Weaknesses Exports Sales force

Opportunities 1. Need for robust rubbish disposal bags 2. European markets 3. Scented bin-liners Use existing distribution and brand name to market scented bin-liners (S1,S2,O3) Strengthen sales force and export skills. Look to European markets (W1,W2,O2)

Threats 1. Substitute materials 2. Imports Capitalise on brand name, distribution, and low costs to meet competition from imports (S1,S2,S3,T2) Develop capability in substitute materials particularly for products that can be sold to export markets (T1,W1)

Source: Proctor (1996: 259)

More than one strategy can be formulated in the matrix quadrants and different strategy combinations can be drawn up until the most suitable is obtained. The marketing plan should be geared around these strategies in order to maximise a companys strengths and opportunities and minimise the threats and weaknesses facing it.

43

2.3.8 Historical Results

Any marketing activities employed previously should be analysed to determine the success of such strategies. A brief summary of the pros and cons, weaknesses and strengths and lessons learned should be made. Such an analysis can be helpful in the development of future marketing strategies.

2.4

MARKETING STRATEGY

The marketing strategy outlines the game plan of the marketing plan and normally includes the mission statement, financial and marketing objectives, target market strategies, product positioning, and detailed discussion of the marketing mix.

2.4.1 Mission Statement

A mission statement defines the direction in which the organisation is heading and how it will succeed in reaching its desired goal (Peter & Donnelly, 1998: 11). It is the long-term vision of what the organisation strives to be.

The mission statement should not be too narrow or too broad. It should be practical, easy to identify with, realistic and practical. The statement should not be defined in a product or technological term, but should be defined in a marketorientated manner, one that defines the business in terms of satisfying basic customer needs (Kotler & Armstrong, 1996: 36).

44

McDonald (1989: 36) feels that the mission statement is the most difficult aspect of the marketing plan for managers to master. This is largely owing to the statement being philosophical and qualitative in nature. However, once mastered, the mission statement will provide a future vision and direction for all managers and employees to follow.

2.4.2 Marketing Objectives

Marketing objectives should be stated as goals that the company would like to attain during the plans term. Without objectives, there is no basis for measuring the success of the marketing plan activities (Lamb et al, 1998: 28). These objectives cover areas such as sales, market share, market positioning, image, awareness, and related objectives.

The objectives should be concrete, measurable, achievable and time specific. Lamb et al (1994: 181) purports that developing the objectives with such criteria will ensure that the plan provides clear direction for the management team, forces clear thinking by senior management, acts as a employee motivator by creating something that the company can strive for and forms the basis of control.

2.4.3 Financial Objectives

Financial objectives are very different from marketing objectives, but both are interrelated with each other when being set. Financial objectives relate to

45

specific financial measurements that may require an improvement in profit, a reduction in expenditure and a certain financial return. An example of a financial objective might be to increase profits by a certain percentage over a given period of time. In relation to this, a marketing objective to increase market share might have to be developed in order for the profit to be attained.

2.4.4 Target Markets

The market segment opportunities, identified in the current situation analysis, must be evaluated in order to determine the target market the company wishes to enter.

Lamb et al (1994: 181) and Proctor (1996: 216) identify three general strategies for selecting target markets undifferentiated, concentrated and multi-segment targeting. The following is a brief description of each:

(a)

Undifferentiated

This strategy adopts a mass-market philosophy, viewing the market as one big market with no individual segments. This philosophy assumes that customers have similar needs and wants that can be met with a common marketing mix, such as a standardised product or service, using similar pricing structures and using a similar distribution channel.

46

(b)

Concentrated

This strategy concentrates on a single market or segment for its marketing efforts and is sometimes referred to as niche marketing. Instead of striving for a small share of a big market, companies that use a concentrated strategy strive after a large share of one or a few sub-markets.

(c)

Multi-segment

This strategy refers to targeting two or more market segments using a distinct marketing mix for each segment. Although this approach can reduce the risk of being over-committed in one area, it can be extremely resource demanding.

Kotler (2000: 274) supports the above strategies, but does put forward an additional two strategies that can be considered for target selection, namely product and market specialisation.

(d)

Product Specialisation

This strategy is used by businesses that specialise in a certain product that it sells to several market segments. Even though such companies may make and distribute different types of the same product, they do not manufacture other products the market may need.

47

(e)

Market Specialisation

A market specialisation strategy is used by businesses that concentrate on serving many needs of a particular customer group.

(f)

Target Market Summary

In evaluating these market segments, the management must address two factors, that of the market segments overall attractiveness and the companys objectives and resources. The marketing plan must explain in detail which strategy the company will follow, taking into account these two factors.

2.4.5 Positioning

Once the management of a company have decided which segments of the market it will enter, they must decide what position they want to occupy in those segments. This positioning must ultimately give the company the greatest advantage over competitors in the selected target market.

Lamb et al (1994: 186) refer to positioning as the development of a specific marketing mix that influences potential customers overall perception of a brand, product line or organisation. This basically amounts to arranging for a product or service to occupy a clear, distinctive and desirable place, relative to competing products, in the minds of the target customers.

48

The following procedure can be used as a guideline for positioning a product or service (Proctor, 1996: 224):

Find out and explore the nature of the product attributes that are considered important by customers.

Establish how the importance of these attributes varies among the different market segments.

Examine the best position for the product with respect to each attribute, taking into account the positions of existing brands.

An overall position for the brand (based upon the overall match between product attributes and their distribution in the population and the positioning of existing brands) is finally worked out.

According to Kotler & Armstrong (1996: 255), there are a number of different ways or strategies to position a product:

A company can position its products on specific product attributes, such as quality, low-cost or superior performance or service (refer to the strategic clock in Figure 2.5).

Products can be positioned on the needs they fill or the benefits they offer.

49

Products can be positioned according to usage occasions e.g. suntan lotion for summer time.

A product can be positioned directly against a competitors, using the strength or weakness of the competitors products to promote the companys own product.

The product can be positioned for different product classes, for example, butter positioned against margarine.

A combination of all the above can also be used.

50

Figure 2.5: The strategy clock: competitive strategy options

Source: Johnson & Scholes (2002: 320)

Source: Johnson & Scholes (2002: 320)

Strategic clock

The strategic clock represents different competitive strategic options that a company can follow in order to position its product or service in the market. The aim is to enjoy a position in the clock that allows a competitive advantage to that of the competitors. The options are based on the price of the product or service and the perceived value to the customer. The product or service is perceived by the customer to provide better added value or benefits than that available elsewhere. The following is a brief description of each option (Johnson & Scholes, 2002: 322):

51

No frills

This strategy seeks to offer a product or service that is low in price and is perceived to be low in value by the customer.

Low price

This strategy seeks to achieve a lower price than competitors whilst trying to maintain similar value of product or service to that offered by competitors.

Hybrid

This

strategy

seeks

to

simultaneously

achieve

differentiation of product or service and a price lower than that of competitors. It is dependant on delivering enhanced value in terms of customer needs whilst maintaining or lowering prices.

Differentiation

This strategy seeks to provide a product or service that is different from and priced the same or higher than those of the competitors.

Focussed

This strategy seeks to provide a high perceived valued product or service that justifies a high price premium, usually in selected market segments.

Failed

These strategies are doomed to failure because they attract a high product or service value that has little or low perceived customer value.

52

2.4.6 Marketing Mix

The term marketing mix refers to a unique blend of product, distribution (place), promotion, and pricing strategies designed to produce mutually satisfying exchanges with a target market (Lamb et al, 1998: 39).

These authors stipulate that all four components must be blended together to achieve the optimal result of satisfying target market needs and achieving competitive success. Thus the marketing mix is the combination of the marketing programs, including the product positioning, product life cycle, pricing, distribution channels, advertising and promotion, service, delivery and other factors. An effective marketing program blends all of the marketing mix elements into a coordinated program designed to achieve the companys marketing objective by delivering value to target customers (Kotler & Armstrong, 1996: 49).

Managers are cautioned to ensure that they control all four components with the same emphasis, as the marketing mix is only as good as the weakest link. Management must also ensure that each component is in alignment and fits in with the rest of the marketing strategy.

(a)

Product Life Cycle

Every product has a life cycle. The elements of the marketing mix are greatly influenced by the life cycle of the product and the stage of the cycle in which the

53

product is. In general, life cycles exhibit the following features (Proctor, 1996: 247):

Products have a finite life span; The stages of the cycle through which the product passes include introduction, growth, maturity and decline;

The life cycle of a product may be prolonged by finding new uses or new users for the product, or by getting present users to increase their usage; and

During the passage of the life cycle, the average profitability per unit of the product sold first increases then eventually begins to decline.

Every stage in the life cycle brings with it environmental threats and opportunities that require changes to be made in the marketing strategy and have implications for the marketing plan. Each stage poses a different challenge that must be taken into account when determining the marketing mix.

(b)

Price

This is the most flexible element of the marketing mix. The price structure of the product, including discounts and rebates, if any, should be stated in detail and justified.

Peter & Donnelly (1998: 197) stress that the pricing of the product is not always under the control of the company. Prices can be influenced by external factors

54

such as competition, government regulations and the type of distribution channel chosen. Other important pricing factors that may influence pricing are the perishability of the product and the products elasticity in the target market.

All of these factors and any other pertinent to a specific product or market have to be considered before stipulating the pricing structure.

(c)

Promotion

Promotion relates to the activities that communicate the merits of the product with the express aim of persuading target customers to buy it (Kotler & Armstrong, 1996: 49).

To determine what promotions are required for the companys product or service, a promotional mix must be established. This mix will depend on the advertising budget, competition and external environmental changes in the market.

Management must strive for the right mix of promotional elements to make sure the product is well received. The promotion effort must obtain as much as possible out of the promotional tools available in order to take maximum advantage of any opportunities that may be present in the SWOT analysis.

55

Kotler (2000: 551) lists five communication platforms that can be used in the promotion strategy. These platforms consist of various promotional tools, of which the most common are detailed in Figure 2.6:

Figure 2.6: Communication platforms

Advertising Print and broadcast ads Packaging Brochures and booklets Posters and leaflets Directories Display signs and billboards Video tapes Sales promotion Trade shows and exhibits Demonstrations Low interest financing Trade-in allowances and rebates Personal selling Sales presentations and meetings Incentive programmes

Public Relations Seminars and press kits Annual reports Sponsorships and events Publications Community relations Identity media

Direct marketing Telemarketing Electronic shopping Internet technologies (World Wide Web) Catalogues E-mail, fax mail and voice mail

Source: Kotler (2000: 551)

(d)

Service

Because services possess certain distinguishing characteristics, the task of determining the marketing mix ingredients for a service marketing strategy may

56

raise different and more difficult problems than those encountered in marketing products (Peter & Donnelly, 1998: 208).

Management must consider four service characteristics when designing a marketing plan that has service as an important element of the marketing mix (Kotler & Armstrong, 1996: 660).

(i)

Intangibility

Because a service is intangible, it cannot be touched, seen, tasted, felt, heard, or smelled in the same manner as goods can be sensed. To reduce uncertainty, the customers will look for signals of quality service and then draw conclusions about the quality of the service from the place, price, equipment and communication material that they can see.

(ii)

Inseparability

Owing to services being typically produced and consumed simultaneously, the service cannot be separated from the provider. Good service will depend upon the quality, experience and training of the font line staff who will deal with the customer.

57

(iii)

Variability

The quality of service depends on who provides them, as well as where, when and how they are provided.

(iv)

Perishability

A service cannot be later stored for later sale or use. When the customer requires the service, it must be available. Management must find an equilibrium between the demand and supply of the service.

(e)

Channels of distribution

All products will reach the customer through a channel of distribution. According to Perreault & McCarthy (1996: 51), a channel of distribution is any series of firms (or individuals) from the producer to the final user or consumer. This channel can be very short and may run directly from a producer to the final user, as in the case of services industries. In other instances, the channel may be very complex involving many different kinds of intermediaries and specialists, such as a retailer, wholesaler and an agent. Irrespective of the type of channel chosen, the end result must be a distribution system that gets the product to the customer in an efficient and effective manner.

The plan must indicate how the product or service will reach the clients, whether the company plans to deal directly or utilise an intermediary in the channel of

58

distribution. The process must be described in detail and include the benefits, limitations and cost involved with the chosen channel. Peter & Donnelly (1998: 185) recommend caution when no traditional channel exists for the product or service. All too often in the early stages of channel design, an elaborate channel is mapped out, only to find on implementation of the plan, that no such independent intermediaries for the firms products exist in the selected geographic area.

2.4.7 Marketing Research

Market research will be required during the development and after the implementation of the marketing plan. The research may range from customer surveys that determine customer needs to market surveys that determine future sales and market trends. Regular external environment scans and competitor analyses must be conducted to keep abreast of factors that may negatively or positively influence the plan.

The type of research required, the objectives, scope, and implementation plan for the research must be described in detail.

59

2.5

FINANCIALS

The financial section is concerned with the projected financial objectives of the marketing plan. This would typically cover projected sales by product group and/or category, projected gross margin percentage by product group, projected marketing expenses and the projected net contribution to overheads (Abratt et al, 2001: 3). In addition, an income statement and a break-even analysis can be compiled.

2.5.1 Projected Sales Forecast

This section serves as a highlight of the sales forecast. It is preferably summarised to give an overview in terms of sales values and units. A detailed analysis per month should be included in the annexure section at the end of the plan.

In addition, the projections, assumptions, growth rates, and the driving force used to create the sales forecast and to make it happen must be explained in detail. The sales forecast should be believable, relate to the target segments of the plan and be attainable in the time frame set out in the marketing strategy.

A risk analysis of possible events that could cause severe fluctuations in the sales projections, assumptions and growth rates should also be included.

60

(a)

Sales breakdown

An optional section of the plan is to break down the sales forecast by category, such as sales by region, market, channel, product, strategy, etc. This section is also a brief overview with a more detailed analysis shown in the annexure.

This breakdown must also relate to the strategy of the plan and will be used extensively when measuring the plan sales against actual sales

(b)

Sales breakdown - additional

If further breakdown in other sales categories is required for the plan, then they must be specified and explained here. Caution must be exercised in creating too many categories that may result in over-analysis, confusion and distraction to the more relevant measurements.

2.5.2 Expense Forecast

This section serves as a highlight of the expense forecast. It is preferably summarised to give an overview in terms of expenses, subdivided into fixed and variable expenses.

Fixed costs are costs that are incurred in operations irrespective of whether a product is made or service is offered. These costs, such as the rent of a

61

building, remain relatively fixed during a period and are unaffected by fluctuations in operation activities.

Variable costs are seen to change on an exact predetermined basis with volume of product or service. When there is no output, variable costs are zero (Paek, 2000: 40). These costs, such as wages, vary in proportion to fluctuations in operational activities. The more products made and sold or services offered, the higher these costs will become.

A detailed analysis per month should be included in the annexure section at the end of the plan. In addition, the assumptions for expenditure levels and their relationship to the sales forecasts should be explained in detail. The expense forecast should be believable, realistic and relate to the target segments of the plan strategy.

A risk analysis of possible events that could cause severe fluctuations in the expense projections or assumptions should also be included.

(a)

Expense breakdown

Any sales forecast breakdown included in the plan should be supported by an expense breakdown relating to the same sales category, such as expense by region, market, channel, product, strategy, etc. This section is also a brief overview with a more detailed analysis shown in the annexure.

62

This breakdown must also relate to the strategy of the plan and will be used extensively when measuring the plan expenses against actual expenses.

(b)

Expense breakdown - additional

Additional sales breakdowns included in the plan must be supported by an additional expense breakdown. This section is also a brief overview with a more detailed analysis shown in the annexure.

2.5.3 Contribution Margins

This section serves as an explanation of the important points of the sales and expense projections, such as percentage increase in sales, gross margins, operating profits and areas of focus in management of expenses. The detailed annual projections of contributions to margin should be included in a tabular format in the annexure section at the end of the plan.

2.5.4 Break-even Analysis

Break-even analysis is most often used to determine the sales volumes required for a firm to break even (Salvatore, 2001: 312). Break-even analysis provides the number of units that must be sold at a certain price in order to cover fixed and variable costs. In its most basic form, it is the point at which operations just break-even, neither making nor losing money. Any sales after the break-even point will result in profit for the company.

63

Break-even analysis is also a measurement of risk, comparing fixed costs to variable costs. The lower the fixed costs in relation to total sales, the less the risk. The lower the break-even point, the less the risk.

The basic calculation for break-even analysis consists of two formulae:

Figure 2.7: Break-even analysis calculation

a.

Break-even point

b.

Contribution factor

Total Variable Costs Total Sales Value

Total Fixed Costs 1 Contribution Factor

Source: Paek (2000: 44)

A basic assumption in break-even analysis is that all relevant costs can be categorised as either fixed or variable.

The marketing plan should include a tabular overview, indicating the break-even point in units and sales value. A detailed analysis per month should be included in the annexure section at the end of the plan. The break-even analysis can also be illustrated in graphic format in order to gain a clearer understanding of the relationship between costs, prices and the break-even point.

64

2.6

CONTROLS

2.6.1 Implementation

As the actual strategy unfolds, the plan implementers will need to continuously track actual results against the marketing plan and monitor new development in the internal and external environments. This monitoring is extremely important and should be done on a monthly or quarterly basis. It is important to monitor actual performance against the goals and expectations of the plan. Reviewing the results will enable management to identify any misalignment and give them the opportunity to modify the marketing plan as necessary. . The dynamic nature of the market environment previously can result in major deviations to the marketing plan. If these deviations have or have not evolved in the direction anticipated in the marketing plan, then the plan must be reviewed to determine whether it is still viable or not.

The control section of the plan also provides a way of checking to see that the programmes are supporting the planned strategies and that they are consistent with the key objectives of the marketing plan (Burger, 2001: 16).

2.6.2 Marketing Organisation

The marketing and sales structure of the organisation, the roles, relationships and responsibilities of the sales and marketing team should be defined to

65

determine whether the marketing organisation aligns with the marketing plan. Is the existing marketing set-up capable of carrying out the marketing plan? An organisation chart depicting the marketing structure or proposed structure should be included in the annexure.

Any weaknesses or threats that may be detrimental to the success of the marketing plan must be highlighted and recommendations as to corrective action must be included in this section.

2.6.3 Contingency Planning

The objective of contingency planning is to avoid or minimise any negative impact on the marketing plan, and to have alternate plans in place for such an event. Contingency planning encourages a person to think about the challenges ahead and consider alternatives (Burger, 2001: 16).

A thorough investigation of possible internal and external problems or factors that are most likely to cause trouble should be documented. The weaknesses and threats that have been identified in the SWOT analysis are a good source of possible problems.

A worst case scenario can also be drawn up and the possible strategic options that might be pursued as a remedy.

66

2.7

RECOMMENDED MARKETING PLAN STRUCTURE

Based on the marketing plan elements covered in this chapter and utilising the Bplan.com website as a guideline (Marketing plan outline, 2002), the following marketing plan structure is recommended for an effective marketing plan:

1. 2. 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3. 3.1 3.2 3.3 4. 4.1 4.2 4.3 4.4

EXECUTIVE SUMMARY SITUATION ANALYSIS Market Situation Macro- Environmental Analysis SWOT Analysis Competition Product Offering Keys to Success Critical Issues Historical Results GOALS AND OBJECTIVES The Mission Statement Target Market Objectives Financial Objectives MARKETING STRATEGY Target Markets Positioning Marketing Mix Marketing Research

67

5. 5.1 5.2 5.3 5.4 5.5 5.6 6 7

FINANCIAL DOCUMENTS AND CONTROLS Financial Overview Sales Forecasts Sales Breakdown Expense Forecast Contribution to Margins Breakeven Analysis CONTROLS CONTINGENCY PLANNING

This recommended structure will be used in chapter three to create an actual comprehensive marketing plan to help an emergency medical service penetrate the emergency medical market in order to gain a significant market share and a competitive advantage.

2.8

SUMMARY

It is evident that following a set marketing plan framework will ensure that a marketing plan is compiled that takes into account all current and future internal/external issues facing organisations. Even though some of the elements in the framework may not be applicable to all marketing plans, adhering to the elements best suited to each organisation should ensure that the plan is sufficient for its needs.

68

CHAPTER THREE

ACTUAL MARKETING PLAN

3.1

EXECUTIVE SUMMARY

Nationally, the effects of the escalating crime rate, unemployment and poverty have placed tremendous pressure on the countrys government emergency medical services. In the Nelson Mandela Metropolitan Municipality (NMMM), the Metro Emergency Medical Rescue Service, previously known for its efficient and professional medical service, has deteriorated to such an extent that a wide gap in quality pre/post-hospital emergency treatment and transportation has occurred.

The aim of this plan is to help an existing private emergency medical service, namely Netcare911 Eastern Cape, fill this gap by aiming to become the preferred provider for pre/post-hospital emergency medical needs in the target market segments. This will ensure that a competitive advantage is gained in the market place that will allow for an increase in market share.

The plan focuses on three core target market segments that are the cornerstone to achieving this goal, namely medical aid schemes, employed population and private hospitals and clinics. The plan deals with each market separately, focusing on the current market situation, the goals and objectives, market strategy and financial aspects.

69

The plan excludes certain non-core markets that will at present hinder the focus on the core markets. These markets will become the new focus once market domination of the core markets has been achieved.

3.2

SITUATION ANALYSIS

3.2.1 Market Situation

A geographic and demographic basis for market segmentation will be used for this plan.

(a)

Market geographics / Demographics

The target area for operations is the Port Elizabeth and Uitenhage sectors of the NMMM. It is in these regions that the majority of Netcare911 Eastern Cape target customers are contained. These customers can be divided into the following core customer segments:

Core target markets Medical aid schemes Employed population Hospitals and clinics

The target area also contains segments that are either not profitable, require more dedicated time or are an inconvenience to normal running operations.

70

Netcare911 Eastern Cape will, however, undertake to provide an adhoc service to these segments if called upon. These segments are therefore regarded as non-core and have been excluded from the plan.

Non-core target markets General practitioners, specialists and surgeries Businesses (manufacturing and retail) Indigenous population (no medical aid or employment)

(b)

Base of operations

The base of operations is situated centrally, on Cape Road, Port Elizabeth, opposite the Greenacres shopping centre. The location of this base gives easy and direct access to the main road routes in and around Port Elizabeth, which allows for rapid emergency response in all directions.

(c)

Demographic breakdown for core market segments

This section will cover issues relating to the market needs, trends and growth for each of the core target market segments chosen for the plan.

(i)

Medical aid schemes

The cost of medicines and health care has increased dramatically over the last few years. This is the result of high medicine and hospitalisation costs, medical

71

aid abuse, unscrupulous medical companies and the new laws passed by the government forcing medical aids to accept all applicants to its membership, irrespective of prior medical history. Medical aid schemes have responded by increasing member subscriptions, reducing benefits, and creating tailor-made packages for their members. In addition, they have also enforced their members to utilise preferred medical services and in some cases, preferred medical facilities.

In an attempt to fix pre/post-hospital medical charges at favourable rates for their medical aid members, many medical aid schemes have moved away from the traditional fee for service basis and moved towards exclusive service provider agreements with emergency medical services. In addition, a number of medical aid schemes have gone further and moved towards contracting out emergency medical administration to medical care providers, who administer the medical funds on behalf of the medical aids (Medical aid service providers listing, 2002).

The move towards contracting out administration has resulted in five medical service providers, namely International SOS, MRI Criticare, Meditrac, Netcare911 and Care Assist. The number of medical aid schemes in operation in the target area is 163, of which 32% are not attached to any service agreement. This is represented in Table 3.1. Annexure I contains a detailed listing of operating medical aid schemes.

72

Table 3.1:

Breakdown of medical aid schemes into service providers

Service Providers International MRI Non Service Netcare911 SOS Criticare Careassist Meditract Providers Medical Aid Schemes 79 48% 15 9% 10 6% 5 3% 2 1% 52 32%

Total 163

The Netcare911 service provider agreement guarantees exclusive rights to Netcare911 ambulances countrywide to the medical aids falling under the agreement. All other service providers follow a similar policy, utilising their own or preferred emergency medical services. However, cross utilisation is not uncommon between the service providers in times of necessity.

According to Vanessa Leonard-Roberts, senor medical representative of Protector Health Group, Pretoria, there is a strong possibility that the medical care provider system will fall away or experience a reduction in membership, as this has not been a cost-effective option so far. This will allow such medical aid schemes to deal with emergency medical service providers directly, either through an exclusive agreement or though the traditional fee for service option.

Vanessa also indicated that the majority of the current non-service provider medical aid schemes hold a yearly tender process to allow emergency medical service providers to tender their services. This will increase with the reduction or demise of the medical care provider system. She maintains that the critical success factors for these tenders are low costs, reliable service and market

73

location. In addition, it is common practice to load unsuccessful tenders onto databases as a failsafe alternative in the event of service delivery problems.

(ii)

Employed population

This segment has been targeted because the employed population have the means to pay for private pre/post-hospital medical treatment. Irrespective of whether the employed belong to a medical aid scheme or not, the service is available at the recommended tariffs applicable to emergency medical services. The use of private emergency medical services in the target area is steadily growing as a result of the following:

The high crime rate in the country and the related medical emergencies; The high vehicle accident rate on the countrys roads; The Aids pandemic; The run-down government hospitals; and The poor quality and slow service being offered by the government emergency medical services.

The current publicity regarding the state of government emergency medical services substantiates the above. Recently, as reported by the Herald

newspaper, the Metro Emergency Medical Service went on a day strike to highlight extremely bad working conditions in the NMMM. These conditions, such as the constant threat from the criminal element, insufficient protective

74

gear against diseases, run down defective vehicles, and poor medical equipment and facilities are a risk and a hazard to patients (Bantam, 2002).

For employees who are members of medical aid schemes that stipulate the use of specific services only, Netcare911 Eastern Cape will still be available for emergencies - it is common practice for all medical aids to pay for any emergency treatment undertaken by registered emergency medical services. By promoting this aspect to all medical aid members, the fear of utilising other alternate services should be reduced.

(iii)

Hospitals and clinics

Hospitals and clinics that have been targeted can be further segmented into core and non-core segments. Non-core segments are the public health facilities and are also excluded from this plan.

Core Segments

Private hospitals Netcare Greenacres Hospital - central Port Elizabeth. St Georges Hospital - central Port Elizabeth. Mercantile Hospital - northern areas Port Elizabeth. Cuyler Clinic - central Uitenhage. Aurora Rehabilitation Centre south-west Port Elizabeth.

75

Private clinics Medicross - 5 locations in Port Elizabeth and Uitenhage. Primecure - 4 locations in Port Elizabeth and Uitenhage.

Non-Core Segments

Government hospitals Provincial Hospital central Port Elizabeth. Livingstone Hospital northern areas Port Elizabeth. Dora Nginza Hospital - northern areas Port Elizabeth. Provincial Hospital central Uitenhage.

Even though this market segment is significant to this marketing plan, it is expected that the segment will shrink as the demand for service provider agreements with medical aid schemes increases. Medical aid patients requiring medical transportation to and from private hospitals are normally required to use an emergency medical service stipulated by their medical aid scheme. However, the current demand from patients not required to use a preferred emergency medical service, is sufficient for inclusion in this plan. In addition, the following must also be taken into account:

The limited number of government ambulances operational in the NMMM and the high rate of patient turnover in public hospitals, lead to long waiting periods for patients with medical aids who wish to use the traditional cheaper metro emergency medical service for transportation to

76

and from private hospitals. This frustrates not only hospital and clinic nursing sisters, but also the patients. Most people do not like to be in a hospital or clinic and even the smallest thing can upset their stay. An unsatisfied patient can have a negative influence on other future patients, even if the medical treatment and hospitality were good.

Private hospitals and clinics, whose primary goal is to make money, need constant turnover of satisfied patients if they are to remain viable. To cater for these problems, and to keep patients and nursing satisfied, private hospitals and clinics now utilise private emergency medical services when ever possible (Christo Bekker, Cuyler Clinic General Manager).

3.2.2 Macro-Environmental Analysis

The PESTEL format, as recommended by Johnson and Scholes (2002: 98), has been used to identify the macro-environment issues that are relevant to the emergency medical services industry. These issues, which may have a direct and/or indirect effect on job creation and sustainability, consumer disposable income and medical aid membership, have been listed in order of importance according to negative and positive issues.

77

(a)

Negative current environmental issues

(i)

Fuel

The dependency on oil imports for South African fuel consumption has seen the cost of petrol increase drastically in 2002. The latest forecast for November 2002 is 420 cents for one litre of petrol. This figure is more than one Rand higher than for the same period last year. The potential for a war between America and Iraq and the increased tension between Palestine and Israel, could potentially push the price of petrol to R9.60 a litre (Thomas, 2002: 1).

The current cost of maintaining diesel vehicles is exorbitant in South Africa owing to the poor diesel quality used. The current sulphur content, 1000% higher that world standards, reduces diesel engine life by half, is a high pollutant and increases maintenance and running costs (Low sulphur diesel in South Africa, 2002: 1). . (ii) Occupational Health and Safety Act 85 of 1993 (OHSACT)

The environment of the emergency care field places a tremendous amount of psychological and physical stress and pressure on emergency medical field personnel. To implement and enforce the required safety requirements as stipulated by the OHSACT can be costly. To ensure compliance with the Act, additional expenses may have to be absorbed for employee psychological

78

counselling, danger pay, high-risk insurance, vaccinations against diseases, medical check ups, and ergo-dynamic equipment, vehicles and furniture.

(iii)

Labour union activity

Pro labour legislation in South Africa may negatively affect operations. Union activity in Netcare911 Eastern Cape is currently low, but a move by staff members to join a union could create additional operating pressure, influence the smooth running of operations and place an additional cost burden on tight margins.

(iv)

Interest rates / Inflation

Short-term interest rates for October 2002 were 17.0%, an increase of 30.8% from the 2001 rates of 13.0% (Interest rates, 2002: 99).

The October 2002 consumer price index (CPI) reflected inflation at 11.6%, up from 4.6% for the same period last year. However, the latest ABSA banking indicators forecast a small improvement for the remainder of the year (Economic indicators, 2002: 99).

The alarming increase in inflation and subsequent increase in interest rates will reduce consumer disposable income. This has the potential to influence medical aid members to resign from medical aid schemes in order to maintain current living standards or in order to survive. In addition, it will force such

79

consumers to switch to government medical services, irrespective of the lower quality service levels.

(v)

Exchange rates

Exchange rates have depreciated over the 2002 period by the following averages (Exchange rates, 2002: 99):

USD (13.7%) Euro (24.8%) GBP (23.0%)

The weakening of the currency and possible further depreciation will negatively affect future equipment purchases from overseas countries, increasing costs and reducing profitability. In addition, further depreciation could negatively influence local interest / inflation rates.

(b)

Negative long term environmental issues

(i)

Emigration

Affirmative action policies, the crime rate, unemployment and political uncertainties have resulted in a massive brain drain of the skilled workforce to overseas destinations. The past three years have seen over 100 000 people leaving South Africa. Currently, over 70% of skilled South Africans are

80

considering emigration. In addition, the loss of every skilled professional costs up to 10 unskilled jobs (South Africa hit by brain drain, 2002: 1). . (ii) Immigration

The reaction of the South African Government regarding the brain drain has been slow. The replacement of jobs by overseas skilled workers has not been supported by the government, resulting in only unskilled immigrants entering the country. The government would prefer to fill the gaps by training and educating South African blacks, under the Growth, Employment and Redistribution (GEAR) programme. This however, will take time and will not remedy the current shortage of skilled people. Good economic growth is only attainable by replacing skilled labour with foreign skills and the current attitude of the government will negatively affect future economic growth (South Africa hit by brain drain, 2002: 3).

(iii)

Acquired Immune Deficiency Syndrome (Aids) pandemic

By 2008, over 500 000 South Africans will die of AIDS each year. This will lower the average life expectancy from about 60 years to 40 years between 1998 and 2008. The macro-economic impact Aids is likely to have is a one percent annual reduction to the Gross National Product (GNP) (Aids in South Africa, 2002, 2).

The future impact of aids will result in over a million orphans under the age of 15 by 2005. This will have a negative impact on the literacy of the future

81

workforce, thereby negatively influencing employment numbers (Aids in South Africa, 2002, 2).

(iv)

Unemployment

Unemployment figures for 2002 reflect that six in 10 young people between 16 and 30 years old are jobless. This represents 40 percent of the available labour market (Haffajee, 2002). This frightening statistic is growing each year as more jobs are shed under global competition.

(v)

Computer technology

Exclusive agreements with medical aid schemes may create a lock in situation regarding computer technology. The move towards collaborative exchange systems and dedicated online medical programs for each medical aid scheme can be costly and difficult to maintain.

(vi)

Foreign Direct Investment (FDI)

The governments commitment to a free market economy has resulted in major cuts in import tariff rates, and significant reductions in non-tariff barriers and has allowed foreign investors 100 percent ownership on their assets in this country (Field, 2001: 4). This free market approach has the potential for increased competition from well-established overseas companies.

82

(c)

Positive current environmental issues

(i)

Gross National Product (GNP)

Based on the June 2002 statistics, the Gross National Product showed an overall annualised increase of 3.1%. The service sector registered a 3.0% annualised growth. This increase is a positive indicator of good economic growth and a future increase in employment figures (Economic indicators, 2002: 99).

(d)

Positive long term environmental issues

(i)

Social mobility

Affirmative action policies have resulted in more underprivileged people gaining education and employment. This upward swing in social mobility for black people will have a positive impact on medical aid membership numbers and create more disposable income in more households.

(ii)

Literacy Rates

The move by government to improve literacy rates in South Africa through the implementation of the Adult Basic Education and Training (ABET) programme will see an increase in educated and skilled people in the future. The

83

programme will have a positive influence on future employment numbers (Literacy exchange: world resource on literacy, 2002: 2).

(iii)

Foreign Direct Investment (FDI)

The reduction in import tariff rates and the significant reduction in non-tariff barriers will ultimately make it cheaper to import medical equipment from overseas suppliers. FDI by medical companies could make it cheaper to buy locally produced medical equipment.

(iv)

Fuel

International and local pressure on the South African Government to reduce the sulphur content in diesel has made it possible for a planned reduction in the next couple of years to match that of world standards. This will ultimately mean that diesel delivery vehicles, including emergency medical vehicles, will be cheaper to operate and have a longer life span than petrol vehicles (Low sulphur diesel in South Africa, 2002: 2).

3.2.3 SWOT Analysis

An analysis of Netcare911 Eastern Capes internal strengths and weaknesses and external opportunities and threats revealed the following:

84

(a)

Strengths

Strong national office with countrywide coverage. Good brand image as a result of Code Red television programmes. Netcare911 is a subsidiary of Trauma Link, which is a joint venture between Netcare and Europ Assist. Netcare are the majority shareholders of Greenacres Hospital, Cuyler Clinic and Medicross medical centres.

National recognised training centre. Good positioning (location) of base of operations central to main routes. Excellent service quality.

(b)

Weaknesses

Poor communication with central office. The centralised human resources (HR) department cannot be approached directly by employees, only through the branch manager.

The HR department is too distant for effective HR management at the branches they are not in touch with employee needs.

Netcare911 central office do not allow decentralised decision-making the branches have no freedom to operate. Management at central office must approve all decisions.

Ivory Tower Attitude from personnel at central office. Every decision they make is always right.

Autocratic management style by central office creates a negative work culture.

85

(c)

Opportunities

Tender independently for exclusive contracts with medical aid schemes for the NMMM target area.

Joint local venture with the South African Police (SAP), NMMM traffic department and vehicle breakdown services.

Exclusive agreements with retirement villages and old age homes in the NMMM target area.

Replace petrol vehicle fleet (on replacement dates) with diesel vehicles when new sulphur regulations are passed.

Untapped employed population target market. Untapped Injuries on Duty (IOD) market at places of employment (Noncore target market).

Possible indigent agreement with Bisho government that allows for a flat fee to be charged on all indigent medical cases (Non-core target market).

Exclusive agreements with private practice medical practitioners (Noncore target market).

(d)

Threats

Increased competition from private emergency medical services in the NMMM.

Possible loss by central office of the medical care provider contracts, including losing the replacement exclusive contracts.

86

Negative marketing campaigns by competition, i.e. false rumours. Bad press and media coverage for poor patient treatment or poor emergency scene control.

Tight margin squeeze from medical aid schemes requiring reduced contract rates.

Increased business insolvency and unemployment will reduce the target markets.

Increased Aids patients and other common diseases (risk factor). Exchange rate deterioration, higher inflation and high interest rate levels can lead to margin squeeze.

Complete compliance with the Occupational Health and Safety Act may be expensive.

Increased union membership.

3.2.4 Competition

The private emergency medical service sector in the NMMM is currently in the growth stage of the product life cycle. The last four years have seen an increase in competition with four new private emergency medical services opening, including Netcare911 Eastern Cape.

A major influence for the target markets to use private emergency medical services is the poor service offered by the government metro services. However, within the private service sphere, patients are also ignorant as to what

87

type of quality services they should receive. Even though all services offer the same benefits, the quality of service differs among them.

Netcare911 Easter Cape has an advantage over competitors because the Netcare911 organisation in South Africa has a good reputation nationwide amongst the medical businesses, institutions and general population. To influence the target markets in the NMMM to increase their use of the services of Netcare911 Eastern Cape, the medical response and treatment must continue to be quick, clean, efficient, professional and of excellent quality. Through positive word of mouth, promotion and good media coverage of the qualities of Netcare911, the target markets can be persuaded to use the service.

Using Michael Porters five forces framework, the following basic competitive analysis can be compiled:

(a)

Competitive rivalry

Table 3.2 summarises the current competitors of Netcare911 Eastern Cape that offer similar services in the target area:

88

Table 3.2:

Competitor analysis
Threat Quality Total of Service Market Share Core Market Share Medical Aids / Private Hospitals / Employed Population Current 2002 Growth Rate / Degree of Growth

Competitor

Netcare 911

Major

Good

21.5%

41.0%

Increasing High

Metro Services

Medium

Poor

57.0%

21.0%

Decreasing High Increasing Medium Increasing Low Even

Guardmed

Major

Good

12.0%

35.0%

Cardio Med

Low

Poor

4.0%

2.0%

Patient Care

Medium

Poor

4.0%

1.0%

IOD

Low

Poor

1.0%

0.0%

Even

BLS

Low

Medium

0.5%

0.0%

Even

(b)

Threat of new entrants

A major threat to Netcare911 Eastern Cape operations is the recent launching of ER24, a national emergency medical service under the control of Afrox Health Care. Afrox have recently entered into service provider agreements with strategically placed private emergency medical services countrywide. This will enable these services to provide a direct service for hospitals falling under the Afrox umbrella. In the NMMM, St Georges Hospital and Mercantile Hospital fall under the control of Afrox. ER24 policy dictates that such hospitals can only utilise ER24 service providers for hospital transfers. This will become a major

89

threat to Netcare911 Eastern Capes current transfer call rates at these hospitals.

A national ER24 control centre controls emergency medical services that have entered into a service provider agreement. Guardmed, Netcare911 Eastern Capes closest competitor in the target area, has recently joined ER24, but has yet to make any significant impact in the market in relation to its current market share.

(c)

Threat of substitute products

There are no threats of substitute products.

(d)

Bargaining power of buyers and sellers

(i)

Buyers

The vast size and power of some medical aids, the number of medical aids in operation and low switching costs between emergency medical services have resulted in the medical aids having high bargaining power. Such high power can constrain Netcare911 Eastern Capes freedom relating to future strategic moves and can lead to undue pressure on margins.

90

(ii)

Sellers

The majority of the technical medical equipment required for emergency vehicles is imported from a limited supplier base in America. Medical companies in America are world market leaders in emergency medical equipment and enjoy high power over prices and customer choice. In addition, the equipment is expensive, largely influenced by deteriorating exchange rates.

There is no local substitute for such equipment. However, the market is flooded with obsolete equipment that could be used, but such equipment may compromise the quality of service offered and lead to possible litigation.

3.2.5 Product Offering

Netcare911 offer the following core product services nationwide (Netcare911 product benefits, 2002): 24-hour emergency telephonic 911 medical advice and information undertaken by central head office. Life saving medical advice and information, given by doctors, nurses and/or emergency medical personnel, is relayed to callers for emergency aid to be administered while the medical team is en route. Callers are talked through crisis situations until medical assistance arrives. 24-hour emergency medical response by road or air to scene of medical emergency. This is an immediate response using the most appropriate and closest road or air medical response vehicle, staffed by paramedics

91

and emergency care personnel, administering instant life-saving treatments, resuscitation and stabilisation.

24-hour transfer of patients to most appropriate medical facility. In all lifethreatening emergencies, transfer by road or air will be to the closest, appropriate medical facility. If the situation is not life threatening, the transfer will be to the patients preferred hospital.

24-hour routine medically justified emergency medical transfers. Routine emergency medical transportation including inter-hospital transfers is provided, based on medical necessity.

Additional benefits offered by Netcare911 are as follows:

Emotional support and telephone counselling following any emotional and/or traumatic event. Medical support and counselling will be provided by the central office with the aim of assisting the patient to enjoy a normal life. Furthermore, patients will be referred to help and support groups to assist with recovery.

Transfer of life-saving medication/blood. Where the patient cannot be moved, life-saving emergency medications or blood products will be transported to the patient.

92

Companionship and/or care of stranded minors. Minors left stranded owing to a medical emergency, away from home, will be accompanied back to their residence or other place of safety.

Repatriation of patient or return of mortal remains. Repatriation by air or road, whichever is most appropriate, is provided for any patient away from home who requires medical assistance. Should death occur away from home, repatriation of mortal remains to the members hometown is undertaken.

Confidential non-emergency medical information and advice.

The treatment for the product offering can be categorised into three life-support categories:

Basic life-support

Basic life-support caters for patients who have minor injuries or who require a simple transport to and from a medical facility. All registered emergency medical personnel subject to a minimum requirement of a qualified basic life support medic can carry out the support.

Intermediate life-support

Intermediate life support caters for patients who are severely injured but who are not critical.

93

Such support can only be carried out by qualified ambulance emergency assistants or qualified paramedics.

Advanced life-support

Advanced life-support caters for patients who are critically injured. Only qualified paramedics can carry out such support.

Product summary

Netcare911 Eastern Capes complement consists of three advanced life support vehicles and two paramedic rapid response motor vehicles. Each ambulance is capable of carrying four stretcher patients. The standard ambulance crew per vehicle consists of a qualified ambulance emergency assistant and a qualified basic life support medic. An advanced life support paramedic can join the crew when the need arises. The employee cost of operating these vehicles 24-hours per day is shown in Annexure G.

3.2.6 Keys to Success

The following factors are key paramount to success:

Quality of service. Professional, effective and efficient treatment. Keeping abreast of new technology and treatment techniques.

94

3.2.7 Critical Issues

Two methods will be used to formulate the critical issues of the SWOT analysis, namely Kotlers Opportunity and Threat Matrix and Proctors TOWS Matrix.

(a)

Kotlers Opportunity and Threat Matrix

Both the opportunities and threats facing Netcare911 Eastern Cape have been placed according to a low or high probability of occurrence.

Table 3.3:

Opportunity matrix

Opportunity Matrix
S U C C E S S P R O B A B I L I T Y

High
A T T R A C T I V E N E S S

Low 8. Possible indigent agreement with Bisho government

High

1. Independent tendering for exclusive medical aid contracts in the target area 2. Joint venture opportunities (SAP, ect.) 3. Exclusive retirement home agreements 4. Untapped employed population target market 5. Untapped Injuries on Duty (IOD) 6. Upgrade to diesel vehicles

Low

7. Exclusive agreements with private practice medical practitioners

95

Table 3.4:

Threat matrix

Threat Matrix
PROBABILITY OF OCCURANCE

High 1. Possible loss of medical care provider contracts, incl. exclusive contracts 2. Increased local competition 3. Tight margin squeeze from medical aid schemes 4. Exchange rate deterioration, high inflation and high interest rates 5. Compliance with OHSACT 6. Increased union membership 7. Increased business insolvency and unemployment

Low 8. Negative marketing campaigns 9. Bad press and media coverage

S E R I O U S N E S S

High

Low

10. Increased Aids patients and other common diseases

(b)

Proctors TOWS Matrix.

The Proctors TOWS Matrix (Table 3.5) reflects the results of the SWOT analysis, listed in order of relevance, and includes the proposed strategies that will be implemented in order to gain and improve competitive advantage.

96

Table 3.5:

TOWSs matrix

TOWS Matrix
Strengths 1. National coverage. 2. Good brand image 3. Netcare911 a subsidiary of Trauma Link 4. National recognised training centre. 5. Good location of base of operations 6. Excellent service quality 1. 2. 3. 4. 5. Weaknesses Poor communication with central office. Non decentralised decision making. Distant HR department Ivory Tower Attitude from central office Negative organisational culture

Opportunities

1. Independent tendering for exclusive medical aid contracts 2. Joint venture with SAP, traffic and breakdown services 3. Exclusive agreements with retirement villages 4. Untapped employed population target market 5. Untapped Injuries on Duty (IOD) 6. Exclusive agreements with private practice medical practitioners 7. Possible indigent agreement with Bisho government
8. Replace with diesel vehicles

Utilise brand image, the strength of national coverage, the quality of service and operation location to influence medical aid tender processes (S1,S2,S5,S6,O1) Use brand image and location of operations to change the mindset of the employed and non core target markets to use Netcare911 (S2,S5,S6,O4,O5) Use brand image and quality of service to to capture exclusive agreements and joint ventures (S2,S6,O2,O3,O6,O7)

Investigate and attempt to modify company culture to improve internal communications (O1,W1,W3,W5) Motivate for a decentralised structure to improve local operational efficiencies. (W2,W3,W4,O2,O3,O4,O5)

Threats

1. Loss of medical care provider contracts, incl. exclusive contracts 2. Increased local competition 3. Tight margin squeeze from medical aid schemes 4. Exchange rate deterioration, high inflation and high interest rates 5. Compliance with OHSACT 6. Increased union membership 7. Increased business insolvency and unemployment 8. Negative marketing campaigns 9. Bad press and media coverage 10.Increased Aids patients and other common diseases

Capitalise on brand name, national coverage and quality of operations to meet increased competition (S1,S2,S6,T1,T2) Implemement a cost savings drive to lower costs and improve operational inefficiencies (S6,T3,T4) Implement a continuous quality programme to maintain and improve service quality (S6,T2,T5,T6,T7,T8)

Motivate for decentralised decision making at branches to facilitate quicker response to local competition and changing customer needs (T2,T3,W1,W2)

3.2.8 Historical Results

Netcare911 Eastern Cape was officially opened at the beginning of 2001. The intention was to cater for exclusive national medical aid members and for

97

holders of the Netcare911 national policy, which offers pre-hospital medical coverage for members in the entire country. No previous financial data or marketing plan exist for this area. A central marketing department presently undertakes all marketing activities. The only mandate that has been given to the local manager is to remain cash positive, maintain costs and make a positive return.

3.3

GOALS AND OBJECTIVES

3.3.1 The Mission Statement

Netcare911 Eastern Cape aspires to be the preferred emergency medical service through strategic partnership, professionalism, innovation and service excellence.

3.3.2 Target Market Objectives

The total core market share for 2003 is projected to increase to 53 percent from the current 2002 market share of 41 percent (refer Table 3.2 for the current market share analysis). To attain this, the current turnover of 300 chargeable medical cases per month will increase to an average of 388 chargeable cases per month in 2003. This will involve a 31.8 percent improvement in the call ratio. This objective does not include unavoidable indigent (non payment) cases that may occur during the normal course of business.

98

The following table reflects the change to the internal segment mix that is expected in order to attain this increase in market share.

Table 3.6:

Internal segment mix

Core Target Market Medical Aids Employed Population Hospitals and Clinics Other

Dec-02 Segment Share 65.0% 10.0% 15.0% 10.0%

Dec-03 Segment Share 69.0% 15.0% 9.0% 7.0%

Movement 6.2% 50.0% -40.0% -30.0%

2003 Avg Segment Share 66.9% 13.7% 11.3% 8.1%

The positive movement for the employed population and medical aid scheme segments is a result of the actions planned in the critical issues analysis and the proposed promotional activities detailed in section 3.4.3(b). The negative growth rate for hospitals and clinics and other segments is mainly the result of the sacrifice needed to increase the employed population segment and the increase in exclusive contracts with medical aids.

3.3.3 Financial Objectives

To ensure a 10 percent net return on revenue. To keep employee costs below 43 percent of revenue.

99

3.4

MARKETING STRATEGY

3.4.1 Target Markets

A concentrated strategy will be used for the three core target segments, with the goal of maximising possible market share for each segment. The focus on the target markets has evolved as a result of the attractiveness of each type of client within these segments. The three core segments, namely medical aids, the employed population and private hospitals and clinics, consist of customers who are economically active, who either earn an income that would enable them to pay for the services offered and/or have medical aid coverage. The last population census indicated that the economically active population in the NMMM is 42.1 percent (Population census, 1991: 400). In addition, the Kaiser Foundation found that 24 percent of the population have medical aid cover (The second family Kaiser Foundation survey of health care in South Africa, 1998: 9).

The non-core segments, those of the general practitioners, businesses and the indigent population, consist of consumers that have a low call ratio, are an inconvenience to the core market operations or have no income. Netcare911 Eastern Cape will cater for adhoc calls in these segments if the calls do not clash with daily operations and if proof of medical aid or proof of employment is given.

100

3.4.2 Positioning

In order to attain a competitive advantage over competitors, Netcare911 Eastern Cape will position its service in each target segment as a low price service with differentiation. This hybrid strategy seeks to provide a differentiated service to that of competitors at a similar or lower price. This positioning will give Netcare911 Eastern Cape the greatest advantage over competitors for each target segment.

(a)

Medical aid schemes

The most important target market is the medical aid schemes. Even though the expected growth in this segment is only 6.2 percent, the plan takes into account lost medical aid contracts through the expected demise of the medical care provider system and subsequent gaining of exclusive contracts in the local market of those medical aid schemes.

The medical aid companies are under pressure to reduce costs. It is important to them to offer a quality service to their members at the lowest cost possible. To gain acceptance with medical aid schemes in the target area, a quality 24hour service can be offered at favourable industry rates that will satisfy the tender requirements and still ensure that the service is profitable. An exclusivity agreement will ensure that no abuse in charge rates will occur and that medical treatment will fall in the scope of the agreement. An exclusive agreement also

101

ensures a large core base of customers and a guaranteed payment fee and structure for services rendered.

(b)

Employed population

The second most important segment is the employed population. This segment is expected to grow by 50 percent as a result of the negative factors mentioned in section 3.2.1.c (ii). Netcare911 Eastern Cape can reduce the above problems and public fears by offering the employed population a professional quality service that utilises only modern equipment, facilities and vehicles and operates according to the best operating practices. All vehicles are cleaned and sterilised after every case and only one patient is transported at one time, except in the case of multiple casualties. Multiple casualty patients are kept apart in the ambulances and separate staff hygiene procedures are followed to prevent cross infection. The patient or patients can be transported to any preferred hospital and will have peace of mind when all the necessary paper work and medical aid pre-notifications are taken care by experienced personnel.

(c)

Hospitals and clinics

The last important segment is the private hospitals and clinics. Even though this market is expected to decline by 40 percent, the market is still attractive. Netcare911 Eastern Cape can satisfy both private hospital and clinic patient transport needs, mentioned in section 3.2.1.c (iii), by offering an efficient and quick service 24 hours a day with the target hospitals. By ensuring that the duty

102

nursing sisters in each ward are aware of the type of service offered, and that they have direct communication by telephone to the ambulance control room, patient details, the required documentation and medical aid approval can be pre-arranged and completed prior to transfer of the patient. This will ensure that the patient is less inconvenienced and transported in a quick and efficient manner. This will also ensure quicker bed turnover rates for the hospitals.

3.4.3 Marketing Mix

(a)

Price

The price of emergency medical treatment is categorised into three pricing structures:

Contracted medical aid rates - such prices are based upon the Board of Healthcare Fund (BHF) tariff structure.

Netcare Policy Holders - The cost of this policy is R12.50 per month and it entitles the policyholder and his immediate family to all of the benefits offered in section 3.2.5 free of charge, 365 days per year, anywhere in the Republic of South Africa. This policy is available for all non-medical aid members or for customers whose medical aid utilises another preferred emergency service provider and such persons prefer the services Netcare911.

103

Private Rates - there is no limit that can be charged by emergency medical services. However, the Ambulance Association of SA is the watchdog of the industry and clamps down on any abuse. Even though it is possible to charge higher rates, especially for private patients with no medical aid, it is recommended to use the BHF pricing owing to the high substitution of services in the target area.

BHF pricing - these are set at predetermined tariffs. These prices are the industry norm and are adhered to by all private emergency medical services. These tariffs are structured according to what type of medical service is offered and according to the time taken for the medical emergency. Table 3.7 and 3.8 reflect the current BHF rates for 2002/3.

Table 3.7:

Medical treatment charge under 100 km per incident

Life Support Up to 45 minutes Up to 60 minutes Every 15 minutes thereafter

Basic R386.58 R506.23 R124.30

Intermediate R515.26 R168.60

Advanced R1152.83 R377.54

Source: Benchmark tariffs (2002)

104

Table 3.8:

Medical treatment charge over 100 km per incident

Life Support Per km > 100 km - with patient Per km > 100 km empty Maximum per trip

Basic R6.50 R3.20 R1700.00

Intermediate R9.50 R3.20 R1700.00

Advanced R19.50 R3.20 R1700.00

Source: Benchmark tariffs (2002)

(b)

Promotion

The promotional strategies will differ for each core target market and range from sales promotion, advertising and public relations. Mass media advertising will be undertaken by head office for the country as a whole. A set management fee is charged to each division by the central head office according to the size of each divisional market.

(i)

Medical aid schemes

Promotions at all the medical aid companies in the country will be undertaken by head office. They currently use personal selling methods and public relations, such as direct meetings, seminars, lobbying and trade shows. The fees for this service are included in the monthly management fee. Netcare911 Eastern Cape can contribute to this process by maintaining the companys good brand image and continuing to improve on the quality of service offered.

105

(ii)

Employed population

This target market is cared for by head office mass marketing. This takes the form of television and magazine advertisements and through television documentaries, such as Code Red. Locally, various forms of advertising and personal selling techniques can be used and will be attempted for this segment. These are as follows:

Sales promotional techniques such as exhibits and demonstrations at trade shows. This includes all forms of beach front activities during on and off peak holiday periods. A volunteer group of medical staff will undertake this function under the control of permanent staff.

Medical duties at major sporting events, company product launches, school rugby and major music concerts. This function will be undertaken by permanent staff members, but can be supported by a volunteer group of medical staff if required.

Joint venture with the South African Police (SAP), traffic department and vehicle breakdown services to offer a rapid response for medical emergencies in and around the NMMM road network. This includes work-related injuries, motor vehicle accidents and injuries caused by such members against third parties whilst on duty. A discussion is currently underway with all parties to install joint radio communications in Netacare911 Eastern Cape vehicles.

106

Ensuring that all vehicles are constantly visible to the public eye in the NMMM area. This includes routine road patrols and positioning vehicles at strategic road points during peak traffic hours.

Advertisements in local newspaper, on bus stops, refuse bins, yellow pages and on display signs.

Netcare911 head office also operates an Internet direct marketing web page for advertising and interactive marketing. The web site contains an information database of medical emergencies that can be viewed by customers. There is a facility for customer feedback to gain information and to make recommendations on the service or benefits.

(iii)

Hospitals and clinics

Promotions at local hospital and clinics will be the task of each branch and each is responsible for the cost thereof. A personal selling method and public relations are required in this segment. Direct meetings and feedback sessions with the management and senior nursing staff of each hospital and clinic will be necessary by Netcare911 Eastern Cape management to determine and monitor customer wants and needs. In addition, Netcare911 staff members will maintain constant visibility in the hospitals or walk the corridors daily during off peak times, keeping in constant contact with staff members (staff nurses), line supervisors (nursing sisters) and lower management (ward sisters).

107

Brochures, pamphlets and booklets, posters, leaflets, stickers and fridge magnets will be issued in each ward for advertising. Each ward will be fitted with a suggestion box for nursing staff and practitioners to make suggestions regarding the service.

Public Relations will take the form of event support and local trade shows. Private hospitals are regularly required to provide medical support for major social and sporting events in the NMMM. This normally requires the backing of an emergency medical service, which has personnel experienced in fieldwork, and the required emergency vehicles. Netcare911 Eastern Cape is the obvious choice for Netcare controlled hospitals, but not for hospitals controlled by the opposition. However, it is envisaged that the selling techniques to be employed at all hospitals should ensure Netcare911 Eastern Cape is the preferred choice or preferred alternative in the future.

(c)

Service

The fixed BHF tariff structure and the high substitution of services in the emergency medical industry make quality of service paramount to becoming market leaders. This quality relates to speed of service, cleanliness, professional treatment, superior equipment, and compassionate and friendly emergency medical crews. Since word of mouth is one of the strongest forms of promotions, it is the quest of Netcare911 Eastern Cape to have satisfied customers every time the service is used. In addition, all front line emergency

108

medical crews will be trained in customer relations and counselling techniques to ensure that customer needs are catered for at all times. Monthly feedback sessions will be held to discuss customer and service problems.

(d)

Channels of distribution

The main channel of distribution will be through the Vodacom number, 082 911, operated by a national control centre at head office. This will ensure that all calls nationwide can be received and controlled by a core of control room specialists. Each control room dispatcher will log the calls on computer and can keep an open line with the customer until the medical service is completed. The strength here is that the caller will have constant contact with medically qualified dispatchers who can and will offer medical advice until the nearest ambulance arrives. The calls are despatched to the relevant divisions using a case number as a unique control number. All the response times, patient history and medical treatment are noted on pre-printed, pre-numbered patient forms. Central office personnel load the details on the forms onto a central database.

Emergency calls received locally that bypass the Vodacom number, such as calls from the local authorities, general public and hospitals, will be automatically logged at the national control room by the local personnel.

109

3.4.4 Marketing Research

A close relationship with the management of local medical aid schemes, or the representatives thereof, hospitals and clinics will be maintained on an ongoing base. Changes in the needs of these customers will be indicated through this relationship. Weekly or monthly feedback meetings will be held with the relevant parties at the target hospitals, clinics and local medical aid offices.

To maintain a quality service and to satisfy end customers needs, yearly customer surveys will be conducted on past patients and current medical aid members. This will help determine their fears, preferences, and likes and dislikes regarding pre-hospital medical cover. The Netcare911 Eastern Cape customer database as well as medical aid databases can be used as a data source. The survey will randomly choose from the data source to gather information through a telephonic questionnaire.

The interactive Web page will contain the same questionnaire for web browsers to complete.

A macro-environmental analysis will be completed every second year to ensure that the service keeps abreast of the latest and future environmental changes influencing the industry. The Internet and local market research specialists will be used.

110

Customer database

All customers that have used the service will be loaded onto a central database containing the customers details and medical history. This database will be used as a basis to gather research material from these customers shortly after they have utilised the service. Where possible, customers will be asked to compete a Likert scale questionnaire to determine their satisfaction level. Refer to Annexure H for the proposed questionnaire.

3.5

FINANCIAL DOCUMENTS

3.5.1 Financial Overview

The total increase in medical caseloads for the year 2003 is expected to be 31.8 percent, which relates to an increase of an average 88 cases per month (total of 4 650 cases per year). Refer to Annexure B for a detailed medical caseload forecast.

The total operating profit for the year level for all the markets is expected to be an average 11.9 percent on total revenue. Refer to Annexure A for a detailed forecast income statement.

111

Exceptions and exclusions

The financial calculations exclude the opportunity income and cost of the noncore target markets. Any actual income derived from these sources during the course of business in 2003, will be classified as other income.

All Netcare911 national policyholder medical cases are costed according to the BHF tariff rates and are not reflected as a no charge. In reality, actual policyholder cases are reimbursed by central office from the national policyholder fund.

3.5.2 Sales Forecasts

Total forecast revenue for 2003 is R3 147 043. An overview of this figure is shown in Table 3.9.

Table 3.9:

Total sales forecast 2003

Basic Life Support Intermediate Life Support Advanced Life Support Indigents Injured on Duty Additional Duties Other

Medical Cases Number 1,964 1,757 372 465 93 120 40 4,810

Total Income R 966,609 1,123,984 707,635 56,265 32,550 60,000 200,000 3,147,043

112

The sales forecast is based on prior actual results from the 2001/2002 period and projected forward using forecasts derived from central office and from local medical representatives and hospital and clinic management. There is 100% confidence that these forecasts will be achieved.

However, fluctuations to these figures could arise during the final quarter of the year owing to many medical aid members having low or no benefits remaining in their medical aid fund. This could negatively affect the basic life support category, which includes most normal hospital transfers.

Refer to Annexure C for a detailed sales forecast analysis.

3.5.3 Sales Breakdown

The sales breakdown by market segment is shown in Table 3.10.

113

Table 3.10: Total sales breakdown by market segment 2003

Medical Cases Number Basic Life Support BLS Calls (45 Minutes) BLS Calls (60 Minutes) BLS Calls (15 Minutes) BLS Long Distance Calls 785 923 196 59 1,964 Total Income R 303,619 467,170 24,406 171,414 966,609

Intermediate Life Support ILS Calls (45 Minutes) ILS Calls (15 Minutes) ILS Long Distance Calls

1,458 211 88 1,757

751,200 35,537 337,248 1,123,984

Advanced Life Support ALS Calls (60 Minutes) ALS Calls (15 Minutes) ALS Long Distance Calls - car ALS Long Distance Calls - ambulance

223 74 37 37 372

257,326 28,089 59,520 362,700 707,635

Indigents All Calls Injured on Duty All Calls Additional Duties Events and sporting duties Other Retirement home contracts

465

56,265

93

32,550

120

60,000

40 4,810

200,000 3,147,043

The call ratio between and within the segments is based upon the Netcare911 Eastern Cape 2001/2002 call ratio statistics. This basis has been used to proportion the 2003 caseload increases.

114

3.5.4 Expense Forecast

Total forecast expenses for 2003 is R2 772 614 (88.1% of turnover). These costs are based on the current 2002 expense levels and projected forward taking into account inflation and increased medical caseloads. Expenses include the cost for fruitless cases where no payment is received or the medical service is declined. The high cost expense items are detailed below in the fixed and variable cost sections.

(a)

Fixed costs

Total fixed costs for 2003 are R2 007 062 (63.7% of turnover). The major portion of these costs relate to employment costs, which amount to R1 296 000 (41.2% of turnover). Employment costs are derived from the need to have three ambulances and one response vehicle on duty 24 hours per day, divided into two shifts. Each shift will be manned by one paramedic, three ambulance emergency assistants (AEA), and three basic life support (BLS) medics. Each employee is contracted on a fixed salary package scheme, which includes the total cost to the company for each employee. Overtime is kept to an absolute minimum and is limited to extreme situations. Refer to Annexure G for a detailed salary expense breakdown.

115

(b)

Variable costs

Total variable costs for 2003 are R765 552 (24.3% of turnover). A large portion of these costs, R220 293 (7.0% of turnover), relates to vehicle fuel and oil. These costs fluctuate in accordance with the number of medical cases completed and include additional expenses for planned promotional activities. In addition, R269 735 (8.6% of turnover) will be spent on local advertising and promotions.

Refer to Annexure D and E for a detailed fixed and variable expense breakdown.

3.5.5 Contribution to Margins

The target operating profit of R374 430 (11.9% of income) has been achieved by both the incremental increase in caseloads (average 88 cases per month) and through tight controls over expenditure. Management focus on these two issues is paramount to attaining the financial and marketing goals set in this marketing plan and to attaining and maintaining a competitive advantage in the local market.

Additional focus must be placed on employment costs and employee productivity rates. Due to the nature of emergency medical services, a high percentage of idle operation hours are possible whilst waiting for cases to occur. This idle time must be utilised to the benefit of this plan by ensuring that

116

other staff functions, such as in-house training, cleaning, equipment maintenance and promotions are carried out.

3.5.6 Breakeven Analysis

The average breakeven sales analysis for the year 2003 is R2 652 250. This is equivalent to 327 cases per month. The unit cost is based on the average unit price for all BHF pricing categories. Refer to Annexure F for a detailed breakeven analysis.

3.6

CONTROLS

The champion of the marketing plan is the regional manager. He will be responsible to ensure that the plan remains on track and that all staff members promote and tie into the plan. Actual results must be measured against the plan and submitted to central office on a monthly basis. Progress reports must be presented quarterly to a national management meeting. The manager will also be responsible for the local promotional requirements of the plan, including market research and customer questionnaires, customer follow-ups and statistics.

3.7

CONTINGENCY PLANNING

A major factor that could cause a problem to the plan is the autocratic control central office has over the divisions. The lack of freedom allowed for decision-

117

making will curtail innovative management ideas and slow divisional decisionmaking. Their Ivory Tower Attitude could lead to unmotivated staff members and bring in a negative work ethos. Each divisional manager must place constant pressure upon central management in order to be allowed more freedom to operate and to pursue a change to a more democratic management style. This will allow the plan to come to fruition.

118

CHAPTER FOUR

SUMMARY, RECOMMENDATIONS AND CONCLUSION

4.1

SUMMARY

The main problem identified to be resolved in this research was: What marketing plan can an emergency medical service adopt in order to penetrate the existing emergency service market to gain a significant market share and to enhance competitive advantage?

The motivation behind this study is that for private emergency medical services to survive in the fast changing and increasingly competitive South African business environment, they must be able to immediately identify, respond to and adapt to such conditions ahead of their competitors. The diverse nature of South African economy, people and trading conditions cannot be ignored or assumed to be the same across provinces. Such diversity must be dealt with in detail in order to clearly understand the market that is operated in. Creating the correct marketing approach will differentiate the winners from the losers.

In the light of the above, it was felt that the research would be useful to Netcare911 Eastern Cape, a private emergency medical service with strong national ties, which does not operate according to any local marketing plan, but haphazardly under a national plan. This national plan focuses on the country as

119

a whole and does not focus on or take into account local trading conditions in the NMMM. Their policy is that one plan fits all.

The basis for the research was a literature study to identify the key components of a marketing plan, followed by an empirical survey of the key issues critical to the development of a marketing plan for the EMS. The empirical survey method used consisted of an in-depth scan of the macro-environment and thorough market investigation of the target industry, utilising the Internet and World Wide Web, print media, personal interviews and telephonic conversations. The population comprised the general management and senior personnel from the local emergency medical industry, medical aid schemes and private hospitals and clinics delimited in the study.

In answering the main problem, the sub-problems listed in section 1.2 were answered. The literature research revealed the required components necessary to create a marketing plan. The in-depth environmental scan, conducted in conjunction with a market analysis of the target area, a detailed SWOT and competitive analysis revealed the current and future environmental conditions affecting the emergency services market and identified available opportunities in the target area.

The combination of the above provided the necessary ingredients for an effective marketing plan for Netcare911 Eastern Cape.

120

4.2

RECOMMENDATIONS

To aid the implementation of the plan, the following issues are recommended:

The local manager must embrace the plan and give full commitment to its success. He must accept the plan as an integral part of daily operations. It should not just be considered an inconvenience and relegated to the bottom of the priority list.

To avoid complacency and the risk of strategic drift, or unseen deviations from the plan, the local manager must monitor the actual performance against that of the plan. The manager must also be proactive and vigilant to changes to the market and environment.

The manager must ensure that the plans activities and progress are continuously communicated to all employees and senior management.

The plan is not a static plan. It must be adjusted to take into account any changes to the market and the internal or external environment that affect the implementation of the plan.

It is essential the employees buy into the plan. The success of this plan is reliant on the commitment and performance of all the employees in the Eastern Cape branch.

121

A forcefield analysis is recommended to identify forces in the organisation, whether cultural or other, that are for and against change (Johnson & Scholes, 2002: 544). Any negative forces should be addressed prior to or during the implementation of the plan.

Milestones, once achieved, should be celebrated. Failure to recognise or award achievements will create a negative attitude towards the plan.

4.3

CONCLUSION

McDonald & Tideman (1993:261) maintain that a marketing plan is effectively a business proposition containing a proposed or a number of proposed courses of action and measuring the progress along the way. These proposals and measurements must become the blueprint for the organisation if the management intends to succeed in the strategies planned. With this in mind, the course of actions proposed in this marketing plan must be adhered to if the outcomes desired by Netcare911 Eastern Cape are to be achieved.

122

REFERENCES

Abratt, R. & Bick, B. & van Rensburg, H. 21 October 2001. Its my business. Business Times, Sunday Times , 3.

Abratt, R. & Higgs, N. 1994. Marketing planning practices of South African companies. Marketing Intelligence and Planning, Vol. 12 (2), 26 31.

Aids in South Africa [online], 2002. Available: http://www.aids.org.za/ aids_in_south_africa.htm [Accessed 25 Oct. 2002].

Bantam, H. 23 Sept. 2002, PE paramedics in protest, The Herald [online], Available: http://www. theherald.co.za/herald/2002/09/23/ news/n09_23092002.htm [Accessed 07 Oct. 2002].

Benchmark tariffs [online], 2002. Available: http://www.bhfglobal.com /e_suite/tariffs/tariff%20search/tariffsrch/itemrslt.php [Accessed 3 Oct. 2002].

Bendix, S. 2000.The basics of labour relations . Cape Town: Juta.

Burger, J. 2001. A marketing plan framework . Unpublished manuscript.

123

Cardone, S. 1995. Write a marketing plan for your small business. Sailing Business, May/June. 10 12.

Devries, H.J. 2000. Checklist approach to creating a marketing plan. San Diego Business Journal, Vol. 21 (15), 8.

Economic indicators, 18 October 2002. Financial Mail, Vol. 168, 99.

Exchange rates, 18 October 2002. Financial Mail, Vol. 168, 99.

Elder, L. 2001. Price controls: Bad idea whether temporary or permanent. Human Events , Vol. 57 (25), 15-17.

Field, A.M. 2001, Business challenges abound, Plants Sites & Parks Magazine [online], Available:http://www.bizsites.com/2001/on01/Import export.html [Accessed 28 Oct. 2002].

Greenley, G.E. 1987. An exposition of empirical research into marketing planning. Journal of Marketing Management, Vol. 3 (1), 83 102.

Haffajee, F. 27 Sep. 2002, Young, black and jobless, Financial Mail [online], Available: http://free.financialmail.co.za/02/0927/focus/ffocus. htm [Accessed 25 Oct. 2002].

124

Hill, C.W.L. 2002. International Business - Competing in the global marketplace (3rd ed.). New York: McGraw-Hill/Irwin.

Interest rates, 18 October 2002. Financial Mail, Vol. 168, 99.

Johnson, G. & Scholes, K. 2002. Exploring corporate strategy (6th ed.). Europe: Prentice-Hall.

Kelley, E.J. 1972. Marketing planning and competitive strategy. Englewood Cliffs, NJ: Prentice-Hall.

Kotler, P. 2000. Marketing management (millennium ed.). Upper Saddle River, NJ: Prentice-Hall.

Kotler, P. & Armstrong, G.1996. Principles of marketing (7th ed.). Englewood Cliffs, NJ: Prentice-Hall.

Lamb, C.W. & Hair, J.F. & McDaniel, C. 1994. Principles of marketing (2nd ed.). Cincinnati, Ohio: South-Western Publishing.

Lamb, C.W. & Hair, J.F. & McDaniel, C. 1998. Marketing (4th ed.). Cincinnati, Ohio: South-Western Publishing.

125

Literacy exchange: World resource on literacy [online], 2002. Available: http://www.literacyexchange.net/southafricadata.htm [Accessed 25 Oct. 2002].

Low

sulphur

diesel

in

South

Africa

[online],

2002.

Available:

http://www.landyonline.co.za/news/low_sulphur_diesel.htm [Accessed 28 Oct. 2002].

Marketing plan outline [online], 2002. Available: http://www.bplans.com [Accessed 11 Jul. 2002].

Martel, L. 2001. Marketing. American Nurseryman, Vol. 194 (6), 28 - 37.

McDonald, M.H.B. 1989. Marketing plans (2nd ed.). Jordan Hill, Oxford: Butterworth-Heinemann.

McDonald, M.H.B. & Tideman, C.C.S. 1993. Retail marketing plans. Jordan Hill, Oxford: Butterworth-Heinemann.

Netcare911

product

benefits

[online],

2002.

Available:

http://www.netcare911.co.za/product/product_bene.htm [Accessed 23 Oct. 2002].

126

Paek, J.H. 2000. Running a profitable construction analysis: Revisited break-even analysis. Journal of Management in Engineering, May/June. 40 - 46.

Peart, R. 2001. External

factors

influencing the environmental

performance of South African firms. South African Journal of Science, Vol. 97 (1), 2-19.

Perreault, W.D. & McCarthy, E.J. 1996. Basic marketing - A global management approach (12th Ed.). Irwin, USA: Times Mirror.

Peter, J.P. & Donnelly, J.H. 1998. Marketing management Knowledge and skills (5th ed.). New York: McGraw-Hill.

Pophal, L. 2000. Marketing plans work. Communication World, Vol.17 (7), 22.

Population census . 1991. Port Elizabeth/Uitenhage. Report No 03-01-13. Pretoria: Central Statistical Services.

Porter, M.E.1980. Competitive strategy: Techniques for analyzing industries and competition. New York: Free Press.

Porter, M.E.1990. The competitive advantage of nations. Houndmills: Macmillan.

127

Proctor, T. 1996. Marketing management Integrating theory and practice. High Holborn, London: International Thomas Business Press.

Royal, W.F. 1995. Marketing with a plan. Sales & Marketing Management, Vol.147 (10), 120.

Salvatore, D. 2001. Managerial economics in a global economy (4th ed.). Orlando, FL: Hartcourt.

Slack, N. Chambers, S. & Johnston, R. 2001. Operations management (3rd ed.). Essex: Prentice Hall.

Slocum, J.W. & McGill, M. 1994. The new learning strategy: Anytime, anything, anywhere. Organisational Dynamics, Vol. 23 (2), 33.

South

Africa

hit

by

brain

drain

[online],

2002.

Available:

http://news.bbc.co.uk/1/hi/world/africa/2149297.stm [Accessed 25 Oct. 2002].

Strickland, T. 1998. Strategic management Concept and cases (10th ed.). New York: McGraw-Hill/Irwin.

128

The second Kaiser Family Foundation survey of Health Care in South Africa [online], 1998. Available: http://www.case.org. za/htm/kaiser2.htm [Accessed 24 Oct. 2002].

Thomas, S. 04 Oct. 2002, Oil price blues, Financial Mail [online], Available: http://free.financialmail.co.za/02/1004/ecomark/aecomark.htm [Accessed 25 Oct. 2002].

Winchester, J. & Manning, L 1997. So whats the plan? Sales & Marketing Management, Vol.149 (11), 72.

ANNEXURE A

c 2003

Jan R

Feb R

Mar R

1/4 R

Apr R

May R

Jun R

2/4 R

Jul R

Aug R

Sep R

3/4 R

Oct R

Nov R

Dec R

4/4 R

Total R

191,361

225,871

232,421

649,653

256,057

256,057

273,481

785,595

273,481

285,905

285,905

845,292

309,541

309,541

247,421

866,504

3,147,043

167,255 41,454

167,255 47,770

167,255 48,969

501,766 138,193

167,255 64,817

167,255 64,817

167,255 68,790

501,766 198,424

167,255 68,790

167,255 71,623

167,255 71,651

501,766 212,064

167,255 77,012

167,255 77,012

167,255 62,848

501,766 216,871

2,007,062 765,552

2,772,614

88.10%

(17,349)

10,846

16,197

9,694

23,985

23,985

37,436

85,406

37,436

47,027

46,999

131,463

65,274

65,274

17,318

147,867

374,430

-9.07%

4.80%

6.97%

1.49%

9.37%

9.37%

13.69%

10.87%

13.69%

16.45%

16.44%

15.55%

21.09%

21.09%

7.00%

17.06%

11.90%

87.40%

74.05%

71.96%

77.24%

65.32%

65.32%

61.16%

63.87%

61.16%

58.50%

58.50%

59.36%

54.03%

54.03%

67.60%

57.91%

63.78%

21.66%

21.15%

21.07%

21.27%

25.31%

25.31%

25.15%

25.26%

25.15%

25.05%

25.06%

25.09%

24.88%

24.88%

25.40%

25.03%

24.33%

56.44%

47.81%

46.47%

49.87%

42.18%

42.18%

39.49%

41.24%

39.49%

37.77%

37.77%

38.33%

34.89%

34.89%

43.65%

37.39%

41.18%

EMERGENCY MEDICAL CARE EVALUATION

Annexure H

At Netcare911 our service is aimed at exceeding your expectations, and fulfilling your needs is the primary concern of every staff member. We realise that injury or sickness can be extremely stressful and traumatic to you and your loved ones.

We are absolutely committed to ensuring that our treatment and service are as adequate and professional as possible. In order to achieve this, your assistance in evaluating our service levels is of utmost importance.

Please assist us by completing this questionnaire using the scale shown below. Once completed, please hand to the Netcare911 representative or if you prefer, deliver to the Netcare911 branch at 29 Cape Road, Greenacres, Port Elizabeth.

The Star-o-dometer

*****
Excellent

****
Good

***
Fair

**
Poor

*
Unacceptable

1. Overall Rating Overall, how would you rate the service of Netcare911 Based on your overall experience, would you recommend this ambulance service to anyone else? Yes No ***** **** *** ** *

2. Emergency Medical Response Waiting time for ambulance Minutes Less than <10 <15 <20 <30 Yes ***** **** *** ** >30 No *

6. Medical Aid Do you have medical aid? Is Netcare911 the preferred service of your medical aid? Medical aid scheme name:

Did you use the 082 911 telephone number for assistance? If yes, how do you rate the control centre service? Comments:

7. Where did you hear about us? Television 3. Netcare911 Emergency Care Personnel Attention of ambulance staff to you on arrival Warmth and understanding of ambulance staff Competence and professionalism of ambulance staff ***** **** ***** **** ***** **** *** *** *** ** ** ** * * * Radio Newspaper / Periodicals / Flyers Medical Aid Hospital

Explanation of treatment and procedures Neatness of ambulance staff Cleanliness of vehicle and equipment

***** **** ***** **** ***** ****

*** *** ***

** ** **

* * *

Friends Visibility of Netcare911 emergency vehicles Other If other, please specify

4. Emergency Care Were you satisfied with the emergency care provided? Did the staff use the proper equipment and techniques? Do you feel the treatment taken was correct and adequate? If no , please comment: Was this form completed by the patient? If completed by a staff member on behalf of the patient, supply name of staff member Name: Date of Completion: 9. Patient details (unless anonymity requested) 5. Advanced Life Support How would you rate the support provided by the Advance Life Support Paramedic? ***** **** *** ** * Name: Age (years): Gender of patient: <24 25 Unsure Unsure Unsure Yes Yes Yes No No No 8. If you could positively change one thing about this Emergency Medical Service, what would it be?

Waiting time for Paramedic

Minutes

Less than

<10

<15 <20

<30

>30

Address:

MEDICAL SERVICE PROVIDERS LISTING APRIL 2002

INTERNATIONAL SOS

MRI CRITICARE
CARE ASSIST MEDITRAC

SCHEME NAME

ADMINISTRATOR

SERVICE PROVIDER

ABI MEDICAL SCHEME

MEDSCHEME

NETCARE 911

AECI MEDICAL AID SOCIETY

MEDSCHEME

NETCARE 911

INTERNATIONAL AFROX MEDICAL AID SOCIETY METROPOLITAN HEALTH SOS

ALLCARE CHAMBER MEDICAL AID SCHEME ALLCARE MRI CRITICARE

ALLIANCE MIDMED MEDICAL SCHEME

MEDSCHEME

INTERNATIONAL SOS

ALPHA MEDICAL SCHEME

METROPOLITAN

NETCARE 911

ALLCARE ALTRON MEDICAL AID SCHEME

MRI CRITICARE

AMMOSAL BENEFIT SOCIETY

AMMOSAL BENEFIT SOCIETY

ANGLO SCHEME

AMERICAN

CORPORATION

MEDICAL SOVEREIGN HEALTH NETCARE 911

ANGLO GOLD MEDICAL SCHEME (GOLDMED)

IGOLIDE HEALTH

INTERNATIONAL SOS

ANGLOVAAL GROUP MEDICAL SCHEME

DISCOVERY HEALTH

INTERNATIONAL SOS

ARANDA MEDICAL SCHEME

INTERNATIONAL SOS AUMED MEDICAL AID SCHEME DISCOVERY HEALTH

NETCARE 911 BANKMED NEW MED

BARLOW MEDSCHEME WORLD MEDICAL SCHEME NETCARE 911

BMS BENMED ADMINISTRATORS NETCARE 911

BESTMED MEDICAL SCHEME

BESTMED MEDICAL SCHEME

NETCARE 911

BILLMED MEDICAL SCHEME

OLD MUTUAL

MRI CRITICARE

MEDSCHEME

NETCARE 911

BMW EMPLOYEES MEDICAL AID SOCIETY

BONITAS MEDICAL AID FUND

MEDSCHEME

NETCARE 911

BOTSWANA MEDICAL AID

BOTSWANA PUBLIC OFFICERS MEDICAL AID SCHEME

BPSA MEDICAL SCHEME

NEW MED

NETCARE

BUILDING

&

CONSTRUCTION

INDUSTRY INDUSTRIAL COUNCIL

MEDICAL AID FUND

CAPE MEDICAL PLAN

CAPE MEDICAL PLAN

MRI CRITICARE

CAREMED MEDICAL SCHEME

OLD MUTUAL

MRI CRITICARE

CAWMED MEDICAL SCHEME

ALLCARE

CHAMBER OF CHAMBER OF MINES MEDICAL AID SOCIETY SOCIETY

MINES MEDICAL AID

CHARTERED ACCOUNTANTS (SA) CAMAF MEDICAL AID FUND NETCARE 911

OLD MUTUAL CLICKS GROUP

MEDICAL SCHEME

CO-ORDINATED HEALTH PLAN

COMMERCIAL AND INDUSTRIAL MEDICAL AID STATUS SOCIETY NETCARE 911

COMMERCIAL UNION MEDICAL

BANKMED

INTERNATIONAL SOS

COMMUNITY MEDICAL AID SCHEME (COMMED)

IMPILO HEALTH

NETCARE 911

COMPCARE MEDICAL SCHEME

STATUS

NETCARE 911

CSIR MEDICAL SCHEME

DISCOVERY HEALTH

INTERNATIONAL SOS

DA GAMA MEDICAL AID FUND

DCMED MEDICAL AID FUND

MEDSCHEME

DE BEERS BENEFIT SOCIETY

DE BEERS BENEFIT SOCIETY

DECISION HEALTH

PRETMED

NETCARE 911

DISCOVERY HEALTH MEDICAL SCHEME

INTERNATIONAL SOS

EDCON MEDICAL AID SCHEME

METROPOLITAN HEALTH

ELLERINES MEDSCHEME HOLDINGS MEDICAL AID SOCIETY

ENGEN MEDICAL BENEFIT FUND

METROPOLITAN HEALTH

EYETHUMED MEDICAL SCHEME

FEDSURE HEALTH

MEDSCHEME

NETCARE 911

FOOD WORKERS MEDICAL BENEFIT FUND

FOSCHINI GROUP METROPOLITAN HEALTH MEDICAL AID SCHEME

FREE STATE MEDICAL AID SCHEME

FREE STATE MEDICAL AID SCHEME

NETCARE 911

FURNITURE

BEDDING

&

UPHOLSTERY NETCARE 911

INDUSTRY BARGAINING COUNCIL MEDICAL AID

G5MED

MEDSCHEME

NETCARE 911

GEN HEALTH MEDICAL SCHEME

GENESIS MEDICAL SCHEME

NETCARE 911

GLOBAL HEALTH EX NATAL MED

NETCARE 911

GOLDEN ARROWS EMPLOYEES MEDICAL BENEFIT FUND NETCARE 911

GOOD HOPE MEDICAL AID SOCIETY

STATUS

NETCARE 911

GRINTEK ELECTRONICS MEDICAL AID SCHEME STATUS INTERNATIONAL SOS

HIGHVELD MEDICAL SCHEME

HOSMED MEDICAL AID SCHEME

THEBE BENEFIT CONSULTANTS NETCARE 911

IBM (SA) MEDICAL AID SOCIETY

DISCOVERY HEALTH

INTERNATIONAL SOS

IMPERIAL GROUP MEDICAL SCHEME

OLD MUTUAL

INDEPENDENT NEWSPAPERS MEDICAL AID SCHEME

MEDSCHEME

NETCARE 911

INGWE HEALTH PLAN

IMPILO HEALTH

NETCARE 911

METROPOLITAN CHAMBER OF COMMERCE AND INDUSTRY MEDICAL AID SOCIETY

JOMED MEDICAL SCHEME

NETCARE 911

KLERKSDORP (KDM)

MEDICAL

BENEFIT

SOCIETY

KOPANO HEALTHCARE

CARE ASSIST

KPMG MEDICAL AID SOCIETY

KWA-ZULU NATAL MEDICAL AID SCHEME

LAMAF MEDICAL SCHEME

NETCARE 911

LIBCARE MEDICAL SCHEME

MEDSCHEME

NETCARE 911

LIFEMED MEDICAL SCHEME

STATUS

NETCARE 911

M-MED

OLD MUTUAL

CARE ASSIST

ALLCARE

MALCOR MEDICAL SCHEME

CARE ASSIST

MEDSCHEME MASSMART HEALTH PLAN

MEDCOR

MEDICAL EXPENSES DISTRIBUTION SOCIETY (MEDS) MEDSCHEME NETCARE 911

MEDICOVER 2000

NETCARE 911

MRI CRITICARE MEDIHELP

MEDIHELP MEDICAL SCHEME

MEDSCHEME

MEDITRAC

MEDIPOS MEDICAL SCHEME

OLD MUTUAL

MEDISENSE MEDICAL SCHEME

MEDSHIELD MEDICAL SCHEME

MEDSCHEME

METRAC

MEDSURE MEDICAL AID SCHEME

MERIDIAN HEALTH EX BELAND MEDICAL AID

SOVEREIGN HEALTH

NETCARE 911

METHEALTH OPENPLAN MEDICAL SCHEME

NETCARE 911

MEDSCHEME METROCARE

METROPOLITAN MEDICAL SCHEME

NETCARE 911

MINEMED MEDICAL SCHEME

NETCARE 911

MOREMED MEDICAL SCHEME

OLD MUTUAL

MRI CRITICARE

MSP SIZWE MSP SIZWE MEDICAL SCHEME MEDICAL SERVICE NETCARE 911

MUNIMED

MUNIMED

NETCARE 911

MUTUAL & FEDERAL MEDICAL AID FUND

OLD MUTUAL

MRI CRITICARE

NAMDEB

PROSPERITY SOLUTIONS

NETCARE 911

NAMIBIA HEALTH PLAN

MEDSCHEME

NETCARE 911

NAMPAK GROUP MEDICAL AID

SOVEREIGN HEALTH

NETCARE 911

NASPERS MEDICAL FUND

NASPERS MEDICAL FUND

MEDITRAC

10

NATIONAL

INDEPENDENT

MEDICAL

AID

NATIONAL INDEPENDENT MEDICAL AID SOCIETY

NETCARE 911

SOCIETY (NIMAS)

NATIONAL MEDICAL PLAN (NMP)

SOVEREIGN HEALTH

NETCARE 911

NBC MEDICAL SCHEME

OLD MUTUAL

NBS / BOE GROUP MEDICAL AID FUND

MEDSCHEME

NETCARE 911

NEDCOR MEDICAL AID SCHEME

OLD MUTUAL

NUFAWSA SICK BENEFIT SOCIETY

NETCARE 911

OLD MUTUAL STAFF MEDICAL AID SCHEME

OLD MUTUAL

NETCARE 911 OMNIHEALTH MEDSCHEME

OPTIMUM MEDICAL SCHEME (OPMED)

OPTIMUM MEDICAL SCHEME

PARMED MEDICAL AID SCHEME

MEDSCHEME

NETCARE 911

PATHFINDER MEDICAL SCHEME

MX HEALTH

NETCARE 911

ALL CARE PG BISON MEDICAL AID SCHEME INTERNATIONAL SOS

11

PG GROUP MEDICAL SCHEME

MX HEALTH

NETCARE 911

PHAROS MEDICAL PLAN

PRIVATE HEALTH ADMINISTRATORS

PICK & PAY MEDICAL SCHEME

BANKMED

INTERNATIONAL SOS

PLATINUM HEALTH

NETCARE 911

PRETORIA MUNICIPAL AID (PRETMED)

PRETMED

NETCARE 911

PROCURE MEDICAL SCHEME

LIBERTY HEALTH CARE

NETCARE 911

PRO SANO MEDICAL SCHEME

SIGMA HEALTH

NETCARE 911

PROFMED

NETCARE 911

PROSPERITY HEALTH NAMIBIA

NETCARE 911

PROSPERITY SOLUTIONS

NETCARE 911

PROTEA MEDICAL AID SOCIETY

STATUS

NETCARE 911

PROTECTOR HEALTH

CARE ASSIST

12

PROVIA MEDICAL SCHEME

LIBERTY HEALTHCARE

NETCARE 911

QUANTUM MEDICAL AID SOCIETY

MEDSCHEME

NETCARE 911

RAND WATER MEDICAL SCHEME

RAND WATER MEDICAL SCHEME

RELYANI MEDICAL SCHEME

NETCARE 911

REMEDI MEDICAL AID SCHEME

INTERNATIONAL SOS

RESOLUTION HEALTH MEDICAL SCHEME

MX HEALTH

NETCARE 911

RETAIL MEDICAL SCHEME

SA BREWERIES MEDICAL AID SOCIETY

MEDSCHEME

NETCARE 911

SAB CASTELLIONJ MEDICAL SCHEME

MEDSCHEME

NETCARE 911

OLD MUTUAL SAAMMED MEDICAL SCHEME

NETCARE 911 SABC MEDICAL AID SCHEME MEDSCHEME

SAMANCOR HEALTH PLAN

OLD MUTUAL

NETCARE 911

13

SAPPI MEDICAL AID SCHEME

MEDSCHEME SASOLMED

SEDMED

NETCARE 911 SELFMED MEDICAL SCHEME MEDSCHEME

SIEMENS MEDICAL SCHEME

MEDSCHEME

NETCARE 911

SOUTH

AFRICAN

MUNICIPAL

WORKERSS

UNION MEDICAL SCHEME (SAMWUMED)

SOUTH AFRICAN POLICE SERVICE MEDICAL SCHEME (POLMED) MX HEALTH NETCARE 911

SOUTHERN SUN MEDICAL AID SCHEME

NETCARE 911 SPECTRAMED

NETCARE 911 STOCKSMED MEDSCHEME

NETCARE 911 SUREMED HEALTH

14

INTERNATIONAL TELEMED TELEMED OPTION ONLY)

SOS

(MVA

TERTIARY RHODES

EDUCATION

MEDICAL

SCHEME PROVIDENCE NETCARE 911

TIGER BRANDS MEDICAL SCHEME

TOPMED MEDICAL SCHEME

MEDSCHEME

NETCARE 911

TRANSMED MEDICAL FUND

CARE ASSIST

TRAWLERMENS MEDICAL FUND

UMED

NETCARE 911

UNIVERSAL MEDICAL SCHEME

UNIVERSITY OF NATAL MEDICAL SCHEME

MEDSCHEME

UNIVERSITY OF THE WITWATERSRAND STAFF MEDSCHEME MEDICAL AID SCHEME NETCARE 911

VENDA POLICE & PRISONS MEDICAL SCHEME (POLPRISMED)

15

VISIMED MEDICAL SCHEME

OLD MUTUAL

MRI CRITICARE

VULAMED MEDICAL AID SOCIETY

MEDSCHEME

NETCARE 911

WITBANK COALFIELDS MEDICAL AID WITBANK COALFIELDS MEDICAL AID SCHEME SCHEME

WOOLTRU HEALTHCARE FUND

X-STRATA MEDICAL AID SCHEME

MEDSCHEME

NETCARE 911

NETCARE 911 XPRESS CARE MEDICAL SCHEME

16

Annexure B to G were not included in the thesis.

17

18

19

20

21

22

23

24