Market Share
Obstetrical services are going to be one of the things that my company offers to patients at ECRH. To begin, a comprehensive market study is carried out to determine the demographic that is being targeted and to acquire insights into the healthcare environment that is currently in place. The healthcare product’s total addressable market (TAM) is evaluated. Total addressable market (TAM) refers to the demand for a specific product within a particular geographic region or business sector. This stage contributes to generating realistic expectations for the market’s potential size in the future.
The next step, which involves estimating the Served Addressable Market (SAM) size, comes after the initial step of identifying the Total Addressable Market (TAM). According to the data provided by the US Census Bureau 2023, the region’s population under investigation is 433,689 people, with women making up 46.73 percent of the overall population. My clinics are estimated to have a TAM share of 46.73 percent of the entire market size of 433,689, which results in a TAM of 202,662 potential patients.
According to the case study’s findings, a sizeable percentage of women in Chestnut County, namely 72%, indicate a readiness to use the women’s services provided by East Chestnut Regional Medical Centre (US Census Bureau, 2023). SAM for our clinics, which represents the proportion of the market we occupy, is forecast to reach 72% of the entire market size of 202,662, equivalent to 145,917 women. This growth is expected to occur over the next three years. The estimated market share of people likely to buy the proposed product is 20% of 202,662, equaling 40532 people.
Age demographics indicate that Chestnut County has an average age of 37.7 years, which may indicate some conditions for medical providers. First, there is a need to serve the adult population and potential childbearing. This should include scheduling seven, as well as prenatal care and general health care. Oak and Maple Counties have an aging population of 46.6 and 48.2 years old. This results in a greater demand for geriatric care, chronic disease management, and mobility-related care. In all countries, the racial diversity of the population may require special attention to be paid to migrants or natives.
Breakeven Analysis
The new piece of equipment will add $100,000 in expenses, and the redesign will add an additional $40,000 for a total of $140,000 in fixed expenditures. The gynecologist at the clinic charges a fee of $800 for an office visit that lasts thirty minutes. Every patient visit to the office costs the business $300 in staff time, and each visit lasts only 15 minutes. It is projected that each visit to the office will cost $200 in materials. The medical center projects that each patient’s 15-minute office visit will bring in total revenue of $1500 for the business.
It is essential to enter the provided values into the appropriate formula to determine when our OB service will become profitable. After doing so, the breakeven point may then be determined. It is possible to compute the break-even amount by dividing the fixed costs of $50,000 by the difference between the selling price ($200) and the variable cost per unit ($100). After investigating our clinic’s fixed costs, variable costs, and revenue per patient visit, it has been found that for our business to reach the point where it will be profitable again within one year, we will need to have a minimum of 700 OB office visits. The medical facility has deliberated and concluded that it will broaden the scope of its services by introducing obstetrical care at the women’s center.
Table 1 – Breakeven Analysis.
Proforma Income Statement
Market Size Calculation
The market size calculation for various ECRH initiatives and services is based on population demographics. At the same time, all parameters that should be considered may affect the number of people who want to use the company’s products. The company aims to improve obstetric birth by 20% in three years, which sets certain conditions.
The calculated market share was 40,532, and they could become potential customers and use the services and products of the organization. This market size indicates potentially large volumes of services provided, which may indicate the feasibility of creating a planned program. Thus, this number is large in several countries, which measures how much obstetric delivery has improved. Providing services in several regions will allow the company to expand its customer base and profit by attracting local partners and creating services and products in collaboration for optimal recognition and reputation.
Analysis
Reaching the break-even point is an important period when the planned business can move into a more reliable phase so that the investment will be returned. The break-even analysis of obstetric services includes calculating revenues, fixed and variable costs, and the income per patient that the company can receive if the strategy is implemented. As a result of repair work and the introduction of new equipment, the company’s total cost is $140,000. Each patient visit is combined with a cost of $300 for staff time and services and $200 for equipment and tools.
At the same time, the total income from one visit is $1,500. Thus, it would take 700 visits to reach the breakeven point within a year. The break-even calculation showed that the planned plan to change equipment and repair buildings can be profitable quickly, which justifies this investment.
Summary of Projected Profit
Estimates of projected profits include an analysis of sales volumes, revenue, cost of sales, and expenses for obstetric services. If we also consider the profit calculated earlier, then ECRHS’s gross profit can be $200,000 for every 1000 patients. Operating and marketing expenses of $12,000 would need to be deducted from the estimated profit to arrive at $188,000. Thus, the company’s profitability growth can be ensured since the income is large enough to cover all costs during the year.
The anticipated income statement estimates unit sales, revenue, cost of sales, gross profit, and operational expenses to predict a company’s financial performance. Divide the income statement into parts:
- Units: This indicates the company’s expected healthcare product sales.
- Revenue per unit: The healthcare product’s retail price. This is $1,500.00 per unit.
- Projected Sales: This column calculates healthcare product sales revenue. Multiplies sales by revenue per unit. If 1000 units are sold, revenue is $1,500.00 x 1000 = $1,500,000.00.
- Cost of Sales: The corporation pays to make each healthcare product. The unit price is $1,300.00.
- Gross profit: the difference between projected sales and sales costs. It indicates firm earnings before operating expenses. For 1000 units sold, the gross profit is $1,500,000.00 – $1,300,000.00 = $200,000. Expenses related to running the business, including marketing. Marketing expenses are $12,000.00 every period.
- Net Operating Profit: Gross profit minus operational expenses. It shows the company’s predicted profit after expenses. When 1000 units are sold, the net operating profit is $200,000 – $12,000 = $188,000.00. As the number of units sold increases, the revenue, gross profit, and net operating profit also increase, demonstrating the potential growth and profitability of the healthcare product.
Economic and Financial Impact on Marketing Strategies
It is essential for ECRHS to maintain constant vigilance in the search for new technologies and to keep abreast of any developments in these areas since doing so will allow the company to remain competitive. Economic influence can determine the marketing strategies for an organization as the current market position guides managers. Long-term financial expectations may change significantly due to regulators’ introduction of new rules (U. S. Census Bureau, 2023). It is possible for the influence of government policies on the pricing or reimbursement rates of healthcare items to have direct repercussions on a company’s revenue and profit margins. For ECRHS to solve this problem, the organization must prioritize lobbying efforts to sway policymakers.
Several aspects of the economy can potentially impact the correlation between price sensitivity and consumer demand for healthcare products like those offered by ECRHS. Confidence on the Part of Investors and Stakeholders The financial projections that ECRHS provides will affect the confidence of investors and stakeholders. The extent to which the company can reach or surpass its expected financial targets will impact the performance of its stock and its access to finance. The current economic climate can influence the level of competition within the healthcare business.
The economic and financial issues that ECRHS is currently facing will have a considerable impact on the marketing initiatives that the organization implements. It is essential to take into consideration a variety of aspects to design an effective marketing strategy. These factors include price sensitivity, competition, changes in regulatory requirements, technology, global dynamics, public health concerns, and investor confidence. ECRHS can increase its market position, maintain growth, and meet its financial goals because the organization smartly adapts its marketing strategy in reaction to economic variables.
Reference
U. S. Census Bureau. (2023). Measuring America’s people, places, and economy. Census. Web.
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