I would like to start series of articles about MBA for medical institutions, namely for plastic surgery clinics. I have long lasting intention to create comprehensive set of articles, so anyone can learn theoretical part of MBA from them.  Certainly, there are a lot of high profile books for various MBA courses, or even specialized sites on it, like http://education.kulichki.com/mba. However, my major intention is not only to summarize the MBA knowledge, but also to investigate the value of MBA for different industries, and plastic surgery  is one of such “industries”.

Plastic surgery is a part of health care industry and certainly has some specifics, namely:

-         professional skills are very important;

-         demanding customers and high level of responsibility;

-         reputation is important;

-         high margins, high costs.

At first glance, it’s hardly to imagine MBA graduate in any place of surgery clinics, except office of finance or marketing manager, and that can be way to go.  However, to be specific and to understand whether finance and marketing are the only places for MBA’s ,I will:

-         list MBA disciplines in series of articles (so, you’ll have understanding of MBA) ;

-         explain what these disciplines in details (so, you’ll learn MBA);

-         apply knowledge of each discipline for plastic surgery.

I hope, my articles will work not only as a manual for those willing to learn MBA, but also for me, as a framework to continue to apply MBA knowledge in my life.

I finished MBA in 2003 (CWRU, TOP 100 by FT) and work as a finance director in international company.

I want to explore the following MBA disciplines:

-         Finance:

o       Finance management

o       Finance accounting

o       Management accounting

-         Marketing and sales

o       Marketing and market research

o       Sales force management

-         Operations

o       Statistics

o       Operations management

-         Management

o       HRM

o       Strategy

o       Business law

Marketing and market research for plastic surgery

The point of marketing is to make people willing to buy your product or at least to identify right product to sell. Marketing is all about models. Regardless of what you do, marketing good and services, you need to know and apply right model

4P – Product, price, promotion and place or marketing mix. The similar model is 4C- context, competition, customer, cost.  It’s fashionable also now to add 5th element like “people” to model to show “social responsibility”.  These models are core of marketing and applied to almost to any activity, from creation of marketing plan to analyzing sales results.

Product in essence is a description of values for customer. In plastic surgery the values can be young and slim body, changes in career or sexual life, improvement of inborn defects, etc. It’s funny, but plastic surgery is an excellent example to show what is the product in 4P model. Many people fail to understand this correctly and believe Product is a list of features. And now you can see plastic surgery as a Product definitely can not be described as a list like: painless procedure, modern technique, or short recovery period. Hardly someone pays for surgery just because it’s painless or has whatever feature. So here we see the necessity to understand the customer and his needs, but not to present product.  That’s why 4P is closely connected to 4C with Customer as an inherent part.

Promotion brings product to the market and keeps it there. As it’s clear, “brings” relates to new products and “keeps” - to existing ones. Promotion is the most innovative part of marketing mix and may follow another model: AIDA (Attention, Interest, Desire, and Action). This means, that promotion medium must:

-         attract attention,

-          create interest which transforms

-         to desire to buy and

-         actual purchase.

You may encounter Promotion in various forms:

-         Coca Cola intensive promotion with final goal to create image of this drink as a default;

-         Cosmetics  door-to-door  promotion with final goal to build a network of loyal customers, without spending a penny for media advertisements;

-         Food supplements silent promotion by local physicians with final goal to feed patients with this stuff to the end of days.  

In plastic surgery Promotion is closely related to lifestyle and may involve not only advertisement of clinics, but even creation of passion for perfection. Like it may happen with many TV worshippers after “Extreme makeover”.  Promotion for plastic surgery creates huge room of opportunities for smart and ambitious marketer. Obviously there’s difference between “Drink Coca Cola” campaign and campaign of Liposculpture  liposuction technique. In the first case you work on how you would implement the goal, while it the second, for example, you should first convince customer that he needs liposuction at all, the second that he need to buy the most effective nowadays infrasonic Liposculpture, and the third he’s buy it from your clinics. 

Price is how much customer is willing to pay for your product. Pricing can be:

-         cost based, when customers are not price sensitive, there’s competition on the market and it’s difficult/expensive to determine market price. Despite the fact that cost based pricing is verbally often rejected by marketers, actually  it appears even more often than other types of pricing: prices for food (bakery, vegetables, fruits…), tools and instruments, home appliances, etc.   

-         market based, believed to be correct pricing, when marketer looks on price level on similar products,  abilities to create/promote additional values of product,  place in product life cycle. Product life cycle is a diagram, consisting from product periods: introduction, maturity and decline. In introductory period margins can be higher, during maturity – stable, and while decline- decreasing.

Plastic surgery is more about market based pricing, because people rarely use price as the only factor to select cosmetic surgeon. However, clinics may try to decrease costs and create locations in low cost countries like Thailand or Estonia, and still charge premium for additional benefits like location in resort areas or intimate atmosphere far away from relatives or paparazzi.

 If we apply product lifecycle to plastic surgery, we may see it in maturity phase with extensive competition and comparable pricing, even among various countries. When was introductory phase ? I would say, in 60th when one American surgeon first made liposuction with scalpel to his wife. This fact made plastic surgery a consumer product, since liposuction is the most popular plastic surgery from all others: facelift, breast enlargement, tummy tuck, etc. However, some people may argue stating examples of reconstructive surgery in ancient Egypt or Rome. But this article about marketing for plastic surgery, not history, and I even was lazy to look for name of the first surgeon who made lipo.

Place is how do you distribute the Product. In some cases it can be even more important than Promotion, Product or Price (all parts of marketing mix are equal, but some may be more equal than others). Example from my life is chain of bakeries, making ugly bread, but having kiosks on high traffic places across city. Basically people have choice to buy bread elsewhere, but buy rubbish from kiosk to save time.  Another example is soft drink you may got in McDonalds; there will be no surprise in any restaurant worldwide. Distribution plays very important role in retail, especially if seller does not have space for stock, or demand is high, like it happens with breweries in summer time.  Some companies, especially in Japan, do not have stock at all, leaving supply for distribution.

In plastic surgery Place is a very sensitive issue and closely related to:

-         your target customer base, which means clinics can not target celebrities if located in blue collar area;

-         building trust to customers. Like in case with banks, which must demonstrate solidness and stability to those who lend them money. To us, I mean.  

To make market research we need to collect relevant information from direct and indirect sources. Indirect sources can provide data, not available in open media, but still important to make strategic decision. For example, to identify market size for innovative liposuction procedure we need to know:

-         total market for liposuction;

-         estimation of % willing to use this new technique;

-         estimation of % willing to make liposuction because this technique has become available.

This means we need to make segmentation of our target market and differentiation of our product, which to the great extent requires knowledge of customer behavior in plastic surgery. Liposuction is the most popular plastic surgery procedure and it’s believed to be the less risky and problematic in this industry. So it’s unlikely people would reject the new technique,  comparing to situation with breast enlargement, when patient would be very conscious about new material of breast implants. However, this rule of thumb definitely will not work if making decision to replace working laser liposuction machine with new, ultrasonic one, costing few hundreds thousand dollars. Manager of plastic surgery clinics would need sound marketing plan with sales forecast, proving such investment.  Study of customer behavior in this situation may show:

-         how people are concerned with liposuction risks: this new technique decreases risks, so it’s possible to attract more clients,

-         how loyal are people to service providers: e.g. you can account only on existing customers or their relatives or friends.