EHG’ other promotional activities included partnerships with trade and workers associations. While these agreements included sharing a portion of the revenue from examinations with the associations, they were targeting one of their key segments: executives – in this case female executives. Additional campaigns along these lines may have proven more useful.
EHG’s segmentation and targeting efforts reflected a weak response to the market opportunity. Their products were clearly oriented to executives and higher-level employees but they found it difficult directly accessing this channel, as benefit managers often served as gatekeepers. Even when EHG convinced benefit managers of their value, it had no strategy on how to tap into the potential employee pool and encourage employees to use their services – EHG needed a hook through either providing information or by making it easier to sign up/book an appointment, for example some sort of worksite benefits awareness campaign such as onsite biometric screening that could then lead to a full blown examination.
Along these lines, EHG lacked a strategy to directly target executives. Flatley recognized this gap and the need for both himself and his sales VP to be directly involved in the process but had yet to commit to this process –Flatley cited control over his calendar and one has to question his priorities, as successfully targeting CEOs and providing a good experience is marketing source in itself. Finally some sales processes took several months to years making it difficult to close deals and with a compensation system based on yearly bonuses this may have detracted from longer-term sales negotiations. Compounding the poor marketing effort was the fact that there was no real effort to retain those patients who were attained.
Question 2: what is the market opportunity for EHG? How valuable is the typical EHG examinee? At the time of case, Time magazine (June 15, 1998) reported that ‘executive health programs have sprung up around the country’ driven by demand for more comprehensive services and recognition that healthy executives had a significant positive impact on a companies performance. Essentially during this period, there was a growing demand for comprehensive examinations resulting from the backlash to HMOs and the growing recognition of the CEO’s health impact on performance.
To understand EHG’s market opportunity, we should first examine its capacity. At the time EHG was performing 21,000 exams per year running at a 60% capacity, suggesting that it had capacity of around 35,000 exams. So EHG had room to take on more opportunity and this was reflected by Flatley who recognized that EHG could do the ‘current level of business renting only half a floor in this building’. In addition, EHG may not have been making the most use of its current space. The VIP room was underutilized and the growing need for record documentation was…