Cvs Marketing Development Essay example

1559 Words Nov 19th, 2008 7 Pages
Porter’s Five Forces
Forces Grade Note
Segment Rivalry Strong The current market is divided between a few powerful competitors that can relatively easily attract customers from one another as the switching costs are low and practical absence of product differentiation contributes to the easy loss of market share.
Threat of Mobility Weak While the new entrants only need a relatively simple GUI and a supplier in order to enter the market, the federal and local regulations will require significant investments prior to any positive cash flow. Again, the differentiation is practically non-existent and the new entrants will have to compete with financially established enterprises capitalizing on competitive advantage.
Supplier
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The same approach was taken by CVS to the on-line sales offering the consumers user friendly intuitive format and live customer support 24/7.
Market
The market is highly regulated and is subject to established relationships between health care providers and PBMs. Currently the pharmaceutical retail market is divided mostly between large chain stores such as CVS, Walgreen, Rite Aid, etc. The market is rather saturated and the competition is strong on the part of the comparable size players as well as online retailers and supermarkets. The industry faces personnel shortages especially in qualified pharmacists and pharmacy technicians. In the past the industry was strictly regionally dominated with Walgreen dominating the West, Rite Aid was strong in the South and Southeast, and CVS spread throughout the Northeast. However, the CVS broke the balance by advancing into the Rite Aid domain in 1997 creating the nation-wide competition between the companies.
The ecommerce forced the major retailers to launch internet based services to compete with the new entrants such as WebMD.com and Drugstore.com. The price war in the cyber space resulted in lowering prices at the retail locations as well as shifted paradigm of in-store pharmacy assistance to the full-blown internet-based services. New short-lived phenomena emerged in a form of acquisitions of PBMs by the drug manufacturers in order to…