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Amy Modini

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What’s in a Name: CVS-Aetna Acquisition Brand Strategy

Posted by Amy Modini

Tue, Mar 20, 2018

merging.jpg

Earlier this month, shareholders approved the $69 billion CVS-Aetna acquisition, marking one step closer to what would be the largest health insurance deal in history—far exceeding Express Scripts’ 2012 acquisition of Medco Health and  the CVS-Caremark Rx deal of 2006.

The CVS-Aetna announcement could dramatically reshape the healthcare industry.

From a brand strategy perspective, this acquisition is interesting because it involves two distinguished brands in the healthcare space—CVS is the country’s largest pharmacy while Aetna is the nation’s third largest healthcare provider.

Two powerful brands coming together

There are many layers to mergers and acquisitions (M&A), but developing a sound brand strategy is one of the most critical components of any agreement—especially when it involves two mega brands like CVS and Aetna.

Aligning on a brand strategy is as important as sorting out financials, operations, logistics, and everything else that comes with the complexities of this kind of deal.

The tricky part is there’s no prescribed framework for the “perfect” M&A brand strategy. How CVS and Aetna plan to proceed is still unclear—whether they remain separate, combine names, or land somewhere in the middle.

But there are several best practices to consider when developing an M&A brand strategy.

Brand strategy must match the business strategy

Why are you merging/acquiring? Is it to expand a geographical footprint? To fill a product or service gap? Whatever the reason, the “why” (e.g., the business strategy) MUST inform your brand strategy.

Dig into each brand to identify what the intrinsic qualities are and let those distinct value propositions guide your strategy.

Account for your audience(s)

Internal and external brand communications must align and support the overall brand strategy and should be tailored to each brand’s audience(s).

In the CVS and Aetna case, both brands touch many constituents—patients, employers, physicians, etc. The brand strategy must account for all these touchpoints and create messaging and experiences that meet each group’s specific expectations and needs.

Bring everyone to the table

M&A is a unique opportunity for brands to refresh their image. However, developing a lasting strategy should include employee input and buy-in from the top down.

Be transparent about the chosen brand path—ideally employees should be privy to changes ahead of time so they can begin to internalize the new brand promise.

Especially in the CVS-Aetna case, employees on the frontline who interact with patients and customers every day need to understand the chosen brand path to ensure a smooth and successful branding transition.

The branding gist

Whether it’s a $69 billion acquisition or the merging of two “mom and pop” shops, building a brand strategy is an integral piece of the M&A puzzle.

There’s no “right” way to approach this, but keeping in mind the business strategy, impacted audiences, and employee input will help make the development and implementation of an effective M&A brand strategy much smoother.

Topics: healthcare research, health insurance research, insurance research, brand health and positioning

CMB Researcher in Residence: UPMC Health Plan's Jim Villella

Posted by Amy Modini

Tue, Apr 26, 2016

jim_upmc2.pngUniversity of Pittsburgh Medical Center Health Plan’s Director of Market Intelligence, Jim Villella, sat down with CMB’s Amy Modini to discuss the role of insights and market research at UPMC and the health insurance industry at large.

AM: Tell us a bit about your role as Director of Market Intelligence at University of Pittsburgh Medical Center (UPMC) Health Plan.

JV: I oversee all external and internal intelligence within the health insurance industry in our market. Our Insurance Services Division (ISD) includes a lot more than just health insurance. Within the ISD, there are health insurance products as well as a suite of workplace productivity solutions under the WorkPartners brand.  WorkPartners offers worker’s compensation insurance, employee assistance programs, wellness programs, and some business productivity solutions, such as FMLA and short-term disability. Primary research is obviously one of the services that my team offers to all of UPMC ISD. This research is often an assessment of where we are compared to our competitors as well as opinions and attitudes of our current members. We also manage our marketing relational database, which is built at the consumer and employer level, so that we can do targeted marketing campaigns. Overall, it’s a pretty broad list of responsibilities.

AM: It certainly is! As we know, it’s been a disruptive few years for the healthcare industry. Looking ahead, what challenges and opportunities do you see coming?

JV: One of the biggest challenges for many health insurance companies who don’t have a large direct-to-consumer business sector is the end of the extension of the allowance for small groups under 50 to keep the plans they had prior to the implementation of the ACA. When the allowance goes away in 2017, those groups are going to have to move to community-rated insurance plans. Many of those groups will have to evaluate their situation when rates change in 2018, so that’s a challenge that insurers will face: transitioning what happens with those groups. The insurance companies will have to meet that challenge and ensure that they continue to insure those same people, whether it’s through a group or through the individual process. 

There are a lot of constraints on insurance companies with the Affordable Care Act (ACA). There are limitations on profitability and also on mitigating risk, so it’s a little bit harder to make a profit. And, as you can see in some markets, some of the more profit-driven public entities have chosen to take themselves out of the individual market in many areas because they’re finding it hard to have a viable business model in the current environment. There’s a lot of uncertainty in the market about who’s going to be there to provide the insurance solutions that are part of the ACA. 

AM: Do you think being part of an integrated system puts UPMC in a different position than other carriers that are just health insurance companies?

JV: Yes, I do. Because we’re an integrated delivery system, we have a lot more dialogue between the provider and the payer, which gives us more opportunities to intervene and identify solutions that will help people get better and stay healthy. Different payment models also emerge out of this position, which allows us to move away from a situation in which someone is paying providers for a service and move toward compensating them based on the effectiveness of the care. That’s much easier to do in an integrated system where we have direct relationships with a big portion of our provider-base. 

AM: What role do you believe healthcare insights, in particular, could play with some of the challenges and changes in the industry you mentioned?

JV: At the end of the day, much of what we deliver in the insurance business is somewhat commoditized. You have to offer things, in addition to paying claims and providing access to doctors and hospitals that members want, so that they remain with you when they have the opportunity to evaluate options in open enrollment periods. Research helps us immensely in identifying those unmet needs or identifying how well we can meet their needs that go beyond the basics of health insurance. 

Carriers have to move toward having one-on-one relationships between themselves and the individuals that they cover. In the past, carriers have had more of a relationship with a group that covers hundreds or thousands of people at a time, so the model is narrowing to an individual-level, much like auto insurance. You don’t really have employer-sponsored auto insurance. Every one of those carriers is dealing with each individual person one at a time, and that’s what the future of health insurance appears to be moving rapidly toward. The employer model is still the foundation for most U.S. health care, but if the health insurance exchanges continue to be successful and maintain competition and lower premiums—depending on who’s elected—it could continue to become more of an accepted way for Americans to obtain health insurance. 

AM: Let’s shift gears a little bit. Let’s talk about the market share analysis work we’ve done with you over the past couple of years. Can you talk a little bit about this work, and why it’s so important now?

JV: The rapid change in market share, year over year, is something we need to assess as quickly as possible, and the secondary sources we rely on to give us our definitive market share take several months to report. So, when we want to know in January what the market share shift has been, waiting for our secondary sources until July is simply too long. We partner with CMB so we can get a very quick, but accurate, assessment of how much the share has changed. The change in market share used to move at a glacial pace, but now it changes several percentage points for some carriers in a single year. We need to know about those changes as quickly as possible. We also use that study to assess perceptions and opinions of brands as well as what’s important to decision-makers, which helps us do some strategic planning for marketing purposes. 

AM: You’ve already touched on this a little bit, but how does this work play into your larger insights strategy?

JV: It helps us position ourselves and try to identify which areas of the geography we’re in that we could potentially focus on more. We get a more robust view of that at the county level from our secondary source in July. If we were to find opportunities or weaknesses in that share data—such as gaining or losing to a particular carrier in a particular region—we could react to that. It also helps us understand where the national competitors have gained traction—which ones are winning out and where. We need to be able to respond and understand who our competitors are as quickly as possible. 

AM: As you think about the next challenges for your organization, tell us what you look for in an insights partner.

JV: Several things:

  • Experience with our industry is helpful if not essential. Health insurance is a very complicated industry. I think it’s very difficult to partner with a research vendor that has no familiarity with the business. Even the terminology is difficult, so it would be hard to have to explain things about the industry over and over again.
  • A partner that does independent preparation and doesn’t rely exclusively on us to provide everything because they’ve done their homework.
  • Good problem-solving skills. Marketing and market research is basically just problem solving, and that manifests itself in even trying to design a research study. We need a partner that’s constantly asking: what’s the best way to do this?
  • Creative sample design. We sometimes have difficulty reaching certain audiences because we’re limited by our geographic footprint in western PA. So, finding a partner that can suggest alternatives for reliable ways of getting the same level of information is a huge component of what we need in a partner.
  • Visual interpretation of data is another one. That’s an art and a science, and partners who know how to show you information in a visual way are extremely helpful because that’s usually how it gets delivered to senior management, which is much easier to access than large, detailed crosstabs. 

These are all things we have working with you, and of course, we’ve had many years working together, so you know us very well and that familiarity is very helpful.

Got a market research question that you're just dying to have answered? Ask our Chief Methodologist and VP of Advanced Analytics, and he might tackle your question in his next blog!

Ask Dr. Jay! 

Topics: healthcare research, health insurance research, Researchers in Residence

Stitch Fix's Fixation on the Customer Experience

Posted by Amy Modini

Wed, Nov 05, 2014

iStock 000004343641SmallHow many of you are always looking for another minute in the day? Or perhaps some of you want something new, but don’t have time to get to a store? And how many others of you just simply hate going to brick and mortar stores? Stitch Fix, an online personal shopping stylist, is a service in which you set up a profile and pay a $20 styling fee to have five items shipped to your door. The styling fee is applied to the items you keep, and anything you don’t want has to be sent back within three days (in the pre-paid postage package provided). The service appeals to those busy women needing convenience. 

I ordered my first “fix” last December and loved it. Like the 70% of customers, I returned for a second time. Not only is this service convenient (after setting up your profile, you literally click a button to order your next fix and select a date), but it offers fairly reasonable prices. I get excited every time Stitch Fix sends me a box, and that excitement quickly accelerates or disappears after I see what’s inside. While I loved every piece in my first fix, I’ve since had mixed results, loving and hating certain pieces.

Since launching in 2011, Stitch Fix has done several things right as it continues to build its brand and enhance the customer experience. Here are a few:

1. Knowing the target audience.  

Stitch Fix does this well. Even though the company states that its customers range from teenagers to senior citizens, it realizes that busy women in their late twenties to thirties are its primary audience. This is why convenience is at the company’s core. For busy women, the experience needs to be quick, easy, and stress-free, and Stitch Fix has been able to do just that. The company is also appealing to those women who take fashion risks, dislike brick and mortar shopping, look for the latest and greatest trends, and are perhaps less price sensitive than others. 

2. Leveraging word of mouth and building advocates.  

An integral part of this service is its referral code system. The referral codes allow customers to earn $25 toward another fix if a friend uses the referral code for her first fix. I have seen countless friends post about Stitch Fix online. Even I have told some friends about the service—especially when I receive a compliment on one of my Stitch Fix pieces—so it doesn’t surprise me that word of mouth referrals account for 95% of Stitch Fix’s new customers.

3. Listening customers and making adjustments.

Several months ago, Stich Fix began to get a lot of publicity. Thus, demand increased and wait times became significantly longer. The company quickly realized that this resulted in a not-so-positive customer experience, so it expanded its team of stylists and shipment centers, which ultimately reduced wait times. Stitch Fix’s goal is to provide the best possible “fix” for each customer, so it continues to encourage customers to communicate through a variety of ways such as writing notes to stylists, setting up a Pinterest board to show pieces you like, and sending specific feedback on the clothing pieces you receive.

It’s not difficult to see that Stitch Fix has no shortage of data to analyze or algorithms to apply when determining which pieces customers will enjoy, but it doesn’t rely solely on the data. It takes the data and combines it with the expertise of a stylist. In the market research world, I see this as the delicate blend of art and science.

It’s been a few months since I’ve gotten a fix, and with the season change, it’s about time I click that button to order my next one! 

Amy is an Account Director and a mother of two small kids, which makes her an ideal target for this service. She’s willing to give her Stitch Fix referral code to anyone who wants to try it.

New Webinar: The New Hotel Path to Purchase: The Mobile, Social, and Online Journey – As part of CMB’s Consumer Pulse program, we asked 2,000 leisure travelers to share their journey from awareness to booking. This webinar will give insight into the role of mobile, apps, customer reviews, and social media. 

Watch Now!

Topics: marketing strategy, customer experience and loyalty, retail research

WEBINAR: Using Discrete Choice to Better Position your Brand in a Complex Market

Posted by Amy Modini

Thu, Feb 20, 2014

CMB webinarsPlease join CMB's Amy Modini and UPMC's Jim Villella today at 12:30pm ET for our latest webinar: Using discrete choice to better position your brand in a complex changing market

Is your industry evolving?  In this webinar you'll learn how UPMC and CMB applied a discrete choice methodology, accounting for various factors to estimate shifting consumer preferences, make key product development and marketing strategy decisions, and ultimately position UPMC for success.

The health insurance industry faces an urgent need to prepare for a new competitive market introduced by healthcare reform. UPMC recognized the opportunity to gain competitive strength in the market through innovation and new product development. However, the research supporting these decisions would need to account for a wide range of market changes and influences. To apply a trade-off exercise UPMC needed to address many challenges, including:

  • New shopping and purchase channels

  • Controlling the effect of discounts and subsidies on price

  • Introduction of entirely new consumer segments for whom purchase behavior is unknown

  • Product optimization for multi-tier offerings

Register here

Did you miss one? All of our webinars are available here

Topics: healthcare research, webinar, brand health and positioning

CMB Webinar 7/25: Creating Brand-Building Customer Experiences

Posted by Amy Modini

Tue, Jul 23, 2013

What do Crayola, Amazon, Cheerios, Apple, and Subway have in common?

Brand building CMB

Over the years they’ve each been named one of America’s most loved brands. Of course there are lots of strong brands (nearly as many as there are “most loved brands” lists) but what is it that makes those brands so strong? No one will deny the importance of the brand name, positioning, or communications, but what these beloved brands have in common is how they deliver their brand experience.When M3 Insurance, Wisconsin’s largest privately held provider of commercial insurance, decided they wanted to strengthen their brand position, they had a few options. One common approach is to invest time and money into a brand’s value proposition and the brand promises they’re making to their customers. A company that takes this approach will spend a lot of time building enthusiasm and energy around a brand position, both internally and externally.  They might have banners, posters, and many companywide meetings to communicate the brand to employees.

There’s a lot of good stuff in this traditional approach, but our experience tells us that it rarely, if ever, goes far enough. Brands that stand out are able to find ways that empower their employees to make decisions that support the brand.  They’re able to articulate how employees can/should act to deliver on the brand promises and benefits—they use each interaction with their customers as a chance to deliver brand value—something even the best company-wide meetings can’t inspire alone.

With M3, our approach was both practical and comprehensive. At center, was the need to ensure customers’ experience aligned with M3’s brand promise. Guided by that core principle we developed a plan to determine how (customer facing) employees should behave to deliver the brand promise. Want to learn how we did it? Join M3’s Traci Mandell and me this Thursday to learn a new approach to developing and measuring truly brand-building customer experiences.

Click here to register.

Posted by Amy Modini. Amy is Account Director for CMB’s Healthcare and Insurance Practice, when she gets the time she loves going to the beach with her two kids.

Topics: insurance research, webinar, brand health and positioning, customer experience and loyalty