by Al E. Atta, DDS, MSD, MBA

The core of our competitive advantage

Sadly, most health professionals perceive marketing as glamorized public relations, so that they rush to invest in marketing only when their market changes or when their business is declining or facing slow growth.1

A balanced marketing mix must be part of our growth and profit strategy. The mix should contain external marketing, which can consist of advertising in mass media or the Yellow Pages, or the use of direct mailing. Advertising alone is an option with no ensured return. Internal marketing is centered on the patient, with the goal of ensuring loyalty so that current patients will invite new patients. Integrated marketing integrates internal marketing with other business functions, such as operations, management, or cost-accounting, to ensure growth and profit. If there is no growth, your profit will shrink and your practice will decline. This article will explore internal marketing as applied to your practice.

Internal marketing is the customized values presented to our patients. It is focused on three c’s: sustained and differentiated Competitive advantage, identifying and serving customers’ needs through Customization, and Collaboration—conducting a dialogue with suppliers and other professionals to best serve patients.2

We are in a continuously changing, competitive market centered on the customer’s satisfaction. Orthodontic treatment must be presented as an ensured value for which the future return and benefits far exceed the present cost. It is a capital investment in the patient’s health and happiness.

 We must ask ourselves a basic question: Why are patients attracted to our practice?3 Does our treatment process give us a competitive advantage? Can our business environment parlay such a competitive advantage into economic profitability? In a competitive market one must have an advantage to grow, but we are not competing with one another or within the dental profession. We are after the family budget allocated to health care. Our profession is price inelastic—the law of supply and demand does not apply. Orthodontic treatment is not a commodity but rather a differentiated service. A practice’s competitive advantage does not come from fees charged or from an advertised intangible quality alone. It must come from our core competency and customer satisfaction.

 The assumption that lower fees will attract more new patients is a loss-loss strategy that must be avoided. Our profession delivers what is perceived as a high-fee and high-value service, so we cannot reduce the benefits of our service by practicing at a loss.

Engaging in a price war is a symptom of our fear of competition, of a new entry in the market, or of an inefficient practice that has escalated the fees it charges to support high costs. Underutilized capacity, labor costs, and the high cost of technology shrink the profit margin without enhancing our core competency. The assumption that lowering your fees or investing in external advertising alone will solve your problems is a symptom of decline. Any business that sets a low price and does not have a low cost of service will be out of business. Any practice that charges high prices without perceived high benefits to their patients will attract no new patients.

There is no substitute for quality service in orthodontics. If patients do not recognize it, others will. It is in our core competency. Our profession must not compete with those who serve partial or intangible quality, or with new entries who offer hype that does not last.

Competitive must come mainly from sustained and tangible principles, which can include an outcome that is stable for life as patients expect it to be; or differentiated and customized mechanics that deliver on-time treatment, since patients strongly value shorter treatment.

Competitive advantages based on intangibles such as mission or goal statements, image, yo-yo mechanics, or obsolescence of high technology with a cost that exceeds its benefits, do not ensure success or attract new patients. They may become a barrier and distraction from improving your core competency. Technology and gimmicks lead to creative destruction. For example, a few years ago a “no initial fees” marketing notion was introduced by a management organization. It attracted a large number of patients. Then, the idea was duplicated and the management organization faded as the patients realized that this was an intangible that did not address their core needs or offer them value for life.

Al E. Atta, DDS, MSD, MBA, has a private practice in Deerfield, Ill. He is certified by the American Board of Orthodontics, and he can be reached at [email protected]

References
1. Kotler P,  Clark R. Marketing for Health Care Organizations.  Upper Saddle River, NJ:Prentice–Hall;1986.

2. Kotler P. Marketing Management, Analysis Planning, Implementation and Control. 9th ed. Upper Saddle River, NJ:Prentice-Hall;1997.

3. Dranove D. Kellogg on Strategy. New York: John Wiley & Son; 2005.