Positioning and Differentiation Strategies for UnitedHealth Group and WellPoint - Research Paper Example

? UnitedHealth Group and WellPoint, Inc Positioning and Differentiation Strategies UnitedHealth Group and WellPoint, Inc.: Positioning and Differentiation Strategies Introduction Competition has reached new heights in today’s business world. Every industry and market is seeing intense competition among numerous players. There are very few companies or businesses that dominate a market or an industry. In such a scenario, it becomes very important for businesses to market their products and services in an effective way in order to reach the target market. They also need to differentiate themselves from the competitors in order to be attractive to the customers. Failure to position and differentiate from competitors will make it highly difficult for business to survive and sustain growth in today’s highly competitive business world. This paper analyses and compares the positioning and differentiation strategy adopted by two health insurance companies in the US. The two companies chosen are: UnitedHealth Group and WellPoint, Inc. Positioning Positioning is a marketing process used to position a product or a service in the mind of the customer in the best way that the company believes that the product or service must be perceived by the customer. There is very little change that is made to the product unlike the name product positioning suggests. Positioning is all about changing how the product is perceived by the customer (Ries & Trout, 2001). Therefore, positioning is the essence of a marketing mix. It throws light on how the company defines its market segments, its competition and target markets (Schiffman & Kanuk, 2007). It does not induce any new features into a product or service but uses the existing features in order to project the product or service in an effective way to the target market. Companies must take great care in positioning its products and services, as once positioned it would be very difficult for the company to reposition its products and services without having to destroy its credibility. Differentiation Differentiation is another marketing strategy used by businesses to achieve competitive advantage. In differentiation, businesses highlight the unique distinctive features of its products and services that are different from its competitors. By highlighting the differences between its competitors, businesses try to make its products and services more attractive to the target customer group (Hoskisson et al., 2008). Differentiation is vital for any product or service as it will create a niche for the product or service within a well defined closed target market group. Therefore, a well differentiated product or service will have a competitive advantage over its competitors. Successful differentiation will also give a business the freedom in pricing the products and services as the differentiating features will make for the extra cost from a customer’s perspective (Hoskisson et al., 2009). UnitedHealth Group With headquarters in Minnetonka, Minnesota UnitedHealth Group is one of the leading health care companies in the world. Across the globe, the company serves more than 75 million people. It offers a range of products and services to its customers. UnitedHealth Group was created in 1977 but its origin can be dated back to 1974 when a group of physicians and healthcare professionals founded the Charter Med Incorporated. The company was incorporated with the main purpose of increasing or expanding consumer’s health coverage options (UnitedHealth Group, 2012). Today the company has grown on to become the biggest health carrier in the United States. Positioning UnitedHealth Group which primarily started as an insurance company has diversified its products and services to cater to the needs of the entire health care industry. The company positions itself as leading health care companies which not only address the needs of consumers with heal benefit products and services but also the service sector of the health care industry. It positions itself as a company with products and services spread across the health care spectrum. It is a multidimensional company that offers 360 degree solutions to the entire industry. It positions itself as a company that is working towards improving the whole health system and not in turn improving the overall quality of health and wellbeing. The company also projects itself as a socially responsible and innovative company that thrives to find new and innovative ways to promote good health in communities. Therefore on a whole the company positions itself as managed health care company. Differentiation The company has gone great lengths to differentiate from its competitors. As it can be seen from its positioning, the company has differentiated itself from its competitors by not remaining only a health care benefits company instead by being a managed health care company. The company products and services are also designed in a way to differentiate it from competitors. The company offers customized solutions to meet the needs of the different market segments such as UnitedHealthcare Medicare & Retirement that addresses the needs of individuals above the age of 50. UnitedHealthcare Employer & Individual is addressed to meet the needs of individuals as well as organizations. It also addresses the needs of the services sector of the health care industry through its services businesses such as OptumInsight, OptumRx and OptumInsight. It offers consultation services on heal care issues which most companies in the industry do not do. The company also differentiates itself by focusing greatly on quality and consumer experience. It has established itself a niche by having a quality focus over price focus. WellPoint, Inc. Formed in 2004 as a result of the merger between Anthem, Inc. and WellPoint Health Networks Inc., WellPoint, Inc. is one of the leading health benefits company in the US. The company has its headquarters in Indianapolis, Indiana. The company is a license of Blue Cross and Blue Shield Association (WellPoint, 2012). Through its wide networks throughout the country, the company offers a wide range of products and services related to health care benefits. Positioning WellPoint, Inc. positions itself as a leading managed health care company in the US. It has positioned itself as a healthcare insurance company that addresses the needs of the different customer groups in the market. It has built itself a reputation of being innovation oriented. It has projected itself as a niche company that primarily focuses on health care benefits plans that meet the specific needs of the different customer groups. The company solely concentrates on products and services related to health care benefit plans. It has also projected itself as being flexible with respect to the needs of its customers. It has positioned itself as customer focused with initiatives/values such as one company one team, customers first, etc. WellPoint, Inc. in all its communication; stresses on the point that its primary goal is to serve its customers and communities. Differentiation The company has differentiated its products and services by focusing on specific customer groups. It has products and services to meet a range of customer segments such as individuals, seniors, national accounts, local groups, federal employees, businesses sponsored by the state, etc. Therefore the company has differentiated itself by focusing heavily on the customer needs and at the same time respecting price sensitive requirements of the customers. The narrow focus health care benefit plans allows the company to understand the needs of its customers and design products and services accordingly. Compare and Contrast Even though both the companies operate in the same industry, each has used a different positioning and differentiation strategy. UnitedHealth Group positions itself as a company that addresses the needs of the entire industry and works the greater good of the citizens of the country. It does not limit itself to its own customers or communities that it operates in. Also it positions itself as 360 degree company working on all aspects of the industry. WellPoint on the other hand, positions itself as a company that solely focuses on the good health of its customers and communities that it operates in. It positions itself narrow focused company operating on a specific niche in the market. It does not try to address all needs of the market but focuses solely on health care benefit plans hence making itself a niche organization. Both companies are similar in the approach that they position themselves as customer driven and customer focused. They also position as companies offering customized solutions to different market segments. UnitedHealth Group differentiates itself with products and services that cater to industry as a whole while as mentioned earlier, differentiates itself with products that are designed to meet only the needs of a specific market sector. Conclusion The paper has successfully discussed the positioning and differentiation strategies of UnitedHealth Group and WellPoint, Inc. top 2 health care companies in the US. In the process it also has explained the concepts of positioning and differentiation in detail. References Hoskisson, R.E., Hitt, M.A., Ireland, R.D. & Harrison, J.E. (2008). Competing for Advantage. OH: Thomson Higher Learning. Hoskisson, R.E., Hitt, M.A. & Ireland, R.D.(2009). Strategic Management: Competitiveness and Globalization, Concepts. OH: Thomson Higher Learning. Ries, A. & Trout, J. (2001). Positioning: The Battle For Your Mind. NY: McGraw-Hill Companies. Schiffman, L.G. & Kanuk, L.L. (2007). Consumer Behavior. NJ: Prentice Hall. UnitedHealth Group (2012). UnitedHealth Group. [Online]. Available at: http://www.unitedhealthgroup.com/main/AboutUs.aspx. Accessed on 3 July 2012. WellPoint (2012). WellPoint. [Online]. Available at: http://www.wellpoint.com/index.htm. Accessed on 3 July 2012. Read More