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Cvs Marketing Development

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Cvs Marketing Development
Porter’s Five Forces
Forces Grade Note
Segment Rivalry Strong The current market is divided between a few powerful competitors that can relatively easily attract customers from one another as the switching costs are low and practical absence of product differentiation contributes to the easy loss of market share.
Threat of Mobility Weak While the new entrants only need a relatively simple GUI and a supplier in order to enter the market, the federal and local regulations will require significant investments prior to any positive cash flow. Again, the differentiation is practically non-existent and the new entrants will have to compete with financially established enterprises capitalizing on competitive advantage.
Supplier power Strong In order to sustain the market share in this highly competitive industry the pharmacies have to establish and maintain strong working relationships with PBMs that have power to divest particular clients from a pharmacy by denying reimbursement privileges to their customers.
Buyer Power Strong It is not hard to obtain the same drugs from different sources so the customer loyalty is virtually non-existent and the pharmacies have to try extremely hard to sustain their consumer base.
Threats of substitutes Weak There are very few alternatives to drugs. The alternatives are practically limited to traditional medicine. Therefore, the threat of substitute is weak.
Conclusion: CVS is in a favorable position because it already controls the large share of the market and its brand name is known to the populace. Therefore, it is crucial for the company to protect its market share and pursue the aggressive expansion policy to secure even large customer base. Financial Analysis
CVS was able to secure such a large market share in part because of its strong financial base. Since the pharmaceutical industry is not strongly correlated with the market (average beta is 0.2) the slowing economy does not affect much CVS financial

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