Cvs: the Web Strategy

2712 WordsOct 8, 200811 Pages
Marketing Channels WRITTEN GROUP CASE ASSIGNMENT CVS: The Web Strategy This case is about CVS, one of the biggest drugstore chains in the US. The Harvard case study was made between 1999 and 2001, while CVS was facing the major challenge of acquiring Soma.com and relaunching it as CVS.com, in order to respond to the new trend of web-based drugstores like Drugstore.com and Planet Rx. Our report will summarize the evaluation and analysis of the firm’s existing distribution channel at the time (1999), identify the problems that CVS had to face, and propose solutions to those problems (these solutions will be compared with what CVS actually did between 1999 and 2007). Thus, this audit will be divided into two main parts: 1/ Current…show more content…
They invested in regional distribution centers and bought drugs in bulk. Co-payments of the customers were lower. Although PBMs bore mailing costs, mail order companies achieved higher per-script margins than pharmacies due to economies of scale. Online dispensing: Internet pharmacy all used the same procedure to fill a consumer’s prescription. Customers had to register at the site, and report if they wanted reimbursement or not. If they did, they were asked to give the name of the MCO and their membership number. Next, the customers could transfer an existing prescription, mail a new one to the site, instruct the prescribing physician to mail, phone or fax it, or instruct the site to phone the physician. The reimbursement approval process adds 2 – 3 days to the time the delivery would take. Customers are not charged for shipping as long as the order included prescription drugs. Online drugstores needed the approval of the customer’s PBM to offer reimbursement and initially PBMs applied the rule that all prescriptions over 30 days would be filled by themselves. It is written in their clients’ contracts that they are the exclusive mail-service provider. The decision to buy soma.com in 1999 was a very clever one. The site offered since 1997 prescription drug fulfillment and refills, and also sold over the counter

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