1. Insight into the Pain Customer – How to Improve the Value Proposition for Community Pharmacy Dr Gary Mortimer Advertising, Marketing & Public Relations

2. Overview Shoppers Profiles –Are Grocery Shoppers any different to Pharmacy Shoppers? Awaking the Sleeping Giants –Supermarkets push into OTC Medicines Price versus Value for Money: What’s the Difference? –Value and Perceived Quality Consumer Decision Making Process –The Pharmacists ‘Trump’ Card

3. Shoppers Profiles: Yesterday, Today & Tomorrow During the ‘60’s and 70’s – MGS were predominately female Today – men and women almost at parity* Aging Consumer – Over the next 40 years, the number of people aged 65 to 84 is expected to more than double* *(ACNielsen Shopper Trends Data, 2010)

4. AFFLUENT 55+ PROVIDE REAL OPPORTUNITY – Have money to spend – Are focused on health and lifestyle – Care about quality – Are looking for new products Kate Carnell, (2011) Challenges and Opportunities Australian Regional Food Conference, AFGC

5. Pharmacy Shoppers and Grocery Shoppers Pharmacy ShoppersGrocery Shoppers Believe staff more competent or helpful Pharmacy offers more choice and variety Trust pharmacist or pharmacies Buy now for immediate use Convenient Close to where they work/love Habitual/routine shoppers Buy now for later use * TNS Shopper research, 2011

6. GROCERY COMPETITORS ARE EQUALLY FOCUSED IN THIS AREA OF OTC -Pain Relief -Coughs, Colds & Flu -Heartburn & Indigestion

7. Awaking the Sleeping Giants State of Play. – Concentrated market – Discounter entrance – SKU rationalisation – Price Wars – Private label Kate Carnell, (2011) Challenges and Opportunities Australian Regional Food Conference, AFGC

8. For the supermarket - medicines are a top priority Growth of many grocery categories has plateaued – Woolworths are looking to healthcare products as a source of growth in the coming years* And they’re investing considerable resource in making it work – Bringing to bear advanced modeling techniques to evaluate potential strategic approaches* Pharmacy should be concerned about the increasing sophistication with which Woolworths and Coles are approaching medicines * Reference TBC (Woolworths presentation)

9. Signage in both chains is undergoing a total revamp * TNS Shopper research, 2011

10. Customers are noticing these improvements 85% of Coles shoppers think medicines are easy to find within their supermarket* In fact, both Coles and Woolworths are now beating pharmacy on the feature ‘it’s easy to find the product you want’* Pharmacy should be very concerned that these retailers are providing an easier shopping experience without the advantage of staff at hand to aid customers * TNS Shopper research, 2011

11. International Supermarket Strategies are being replicated * TNS Shopper research, 2011

12. Awaking the Sleeping Giants Supermarket will focus (and win) on Price and Convenience Yet, supermarkets also are aware of their weaknesses. – High involvement products Vs. Low involvement products High involved products equal more complex buying decisions Reference more product attributes Seek more advice prior to purchase – Legitimacy Supermarkets understand they can not compete with expertly training and highly knowledgeable Pharmacists/Pharmacy Assistants.

13. High involvement products Vs. Low involvement products Pharmacy shoppers tend to have more complex presentations – They consider a greater number of symptoms on each purchase occasion than grocery shoppers* * TNS Shopper research, 2011

14. High involvement products Vs. Low involvement products Cold & Flu More complex symptoms Requiring advice and Involved decisions * TNS Shopper research, 2011

15. High involvement products Vs. Low involvement products Pain Relief More complex symptoms Requiring advice and Involved decisions * TNS Shopper research, 2011

16. High involvement products Vs. Low involvement products Heartburn & Indigestion More complex symptoms Requiring advice and Involved decisions * TNS Shopper research, 2011

17. Legitimacy “The adoption of GS1 GoScan by the Australian food sector will provide a real alternative to the physical label as carrier of trusted information for consumers … making a wealth of compositional, instructional and promotional information available at consumer’s fingertips.” - Kate Carnell, CEO, AFGC * GS1 Australia

18. Staying one step ahead of these innovations is critical Pharmacy is currently known for providing the best advice. If that’s to last, the face to face advice provided by assistants will need to deliver more than technologically innovative alternatives. * TNS Shopper research, 2011

19. Why do shoppers visit Pharmacy instead of Supermarket? 40% cited pharmacy as having better value for money as their reason for visiting.* 25% pharmacy shoppers cited interaction with staff as a motivating factor for choosing a pharmacy* So is it all about price? * TNS Shopper research, 2011

20. Is it all about ‘Price’? Brand name Product strength or efficacy Number of symptoms the product relieves Product speed Type of active ingredient Price * TNS Shopper research, 2011 When purchasing from a Pharmacist, Price is the 6 th attribute considered.

21. Price vs. Value If it were just about price, we would all drive cheap cars, wear cheap jeans, buy cheap appliances, etc…

22. Perceived Quality “The consumers’ evaluative judgement about an entity’s overall excellence or superiority in providing desired benefits”. Arnould, E.J., Price, L. L. & Zinkham, G. M. (2004)

23. Judgements of Quality Extrinsic – price, brand name, packaging size, colour and prior use Intrinsic – Inherent within the product or service (subjective) – Degree of professionalism from staff – Level of service and responsiveness – Accuracy of information and advice – Extent of customer relationship with retailer – Trust and integrity Teas, K. R. & Agarwal, S. (2000)

24. Judgements of Quality Judgments of quality can be influenced by you and your team.

25. Consumer Decision Making Models: Customer Store Loyalty Model Customer satisfaction is influence by… – Individualised Value – Trusting the Assistant will cater to their individual needs and provide individual, independent quality advice – Economic Value – Customers perception of ‘value for money’ – Customers willing to pay more for pain relief. Perception that if it costs more, it must work better, faster… – Social-psychological Value – Customers perception of the long term, interactive, consultative and trusted relationship Chen, S. & Quester, P. G. (2006) Modelling Store Loyalty: Perceived Value in Market Orientation Practices. Journal of Services Marketing. 20 (3) pp. 188-198

26. Consumer Decision Making Models: Customer Store Loyalty Model Chen & Quester (2006) found… – ‘….service employee’ efforts to deliver individual and economic value and to provide social-psychological interaction [lead to] highly satisfied customers.” – Store loyalty drove intention to re-visit, consumption frequency, expenditure and recommendation (WOM) Chen, S. & Quester, P. G. (2006) Modelling Store Loyalty: Perceived Value in Market Orientation Practices. Journal of Services Marketing. 20 (3) pp. 188-198

27. Consumer Decision Making Models: Customer Store Loyalty Model How do you get your customers to trust and value you and your team?

28. Consumer Decision Making Process: Consumer Trust Model So what did Lee et al (2005) conclude... Providing information was the most important factor to build up trust. Benevolence was the second important factor to build trust. – Understanding shoppers are vulnerable because they do not have the scientific or medical training when making purchases. Integrity was the third most important factor relating to trust. – Communicating the benefits of new products will promote consumer trust Yee, W. M. S, Yeung, R. & Morris, J. (2005) "Food safety: building consumer trust for potential purchase behaviour", British Food Journal, Vol. 107 Iss: 11, pp.841 - 854

29. Consumer Decision Making Process: Value & Trust Pharmacy Assistants will create value and trust in three primary ways:

30. Consumer Decision Making Process: Value & Trust Help customers understand their problems, symptoms and issues in a new or different way Help customers arrive at new or better solutions to their problems than they would have discovered on their own To act as the customer’s advocate inside the pharmacy, ensuring the timely allocation of resources to deliver customised or unique solutions that meet the customer’s special needs. Yee, W. M. S, Yeung, R. & Morris, J. (2005) "Food safety: building consumer trust for potential purchase behaviour", British Food Journal, Vol. 107 Iss: 11, pp.841 - 854

31. A review of 24 internationally published journal articles measuring ‘customer satisfaction with community pharmacies’ found one common theme... “…studies reviewed indicated that the higher the frequency of counseling, monitoring and the more directed the guidance and advice, the greater the satisfaction rating.” (Panvelkar, P. N.; Sani, B. & Armour, C (2009) Measurement of patient satisfaction with community pharmacy services: A review. Pharmacy World Science, 31. pp. 525-537)

32. In closing... Customer trust is a central antecedent to solid and lasting customer commitment. Trust is built over a period of time, involving multiple interactions.

33. In closing... Research establishes that Quality Advice is an important antecedent in a consumers’ perception of Value and Trust. Quality of advice builds consumer trust, which accordingly leads to long lasting, profitable customer relationships.

34. Let me leave you with three challenges... 40% of PA’s are not confident in advising customers on pain relief for Children* How do we improve the ‘confidence’ our front line teams? 32% of PA’s prefer to direct customer queries to the Pharmacist* How can we get our PA’s to meet the expectations of your customer, first hand? 98% of PAs want further training* How do you fund training efficiently and where do you find the time? * Metis quantitative research, 2011

35. Thank you. “Simply put, pharmacists and pharmacies of tomorrow must find ways to increase profit margins by… focusing more on patient counseling and education…” (James Owen (2009) Director of Professional Practice, American Pharmacists Association)