Cvs: the Web Strategy
Marketing Channels
WRITTEN GROUP CASE ASSIGNMENT
CVS: The Web Strategy
This case is about CVS, one of the biggest drugstore chains in the US. The Harvard case study was made between 1999 and 2001, while CVS was facing the major challenge of acquiring Soma.com and relaunching it as CVS.com, in order to respond to the new trend of web-based drugstores like Drugstore.com and Planet Rx. Our report will summarize the evaluation and analysis of the firm’s existing distribution channel at the time (1999), identify the problems that CVS had to face, and propose solutions to those problems (these solutions will be compared with what CVS actually did between 1999 and 2007).
Thus, this audit will be divided into two main parts: 1/ Current state of the channel (1999):
- Structure
- Members
- Allocation of channel functions
- Flows
- Ability to meet target customer segments’ demands for service outputs
- Power and conflict characteristics
2/ Recommendations and actual evolution of CVS since 1999:
1/ STATE OF THE CHANNEL IN 1999: Structure and Members:
Drugstores are very old retail institutions in the United States. It can be tracked to the mid-1700s. Pharmaceutical wholesalers were first integrated backward and forward. In the nineteenth century, pharmacies that were independent of physicians arose. Wholesalers were no longer integrated backward or forward, they were local and there were lots of them. Independent drugstores gave way to chains during the 1980s and 90s. By 1999 chains controlled 69% of the $115 billion in drugstore revenues (CVS was ranked second right after Walgreen). At first the larger chains (CVS, Walgreen, Rite Aid and Eckerd) pursued strategies of regional dominance, which led progressively to a contest for national presence.
The market for drugstore products was four times the combined sales of books and CDs. In 1999, the typical chain drugstore was about 9000 square feet, serving homes in a radius of five minutes driving time. The
WRITTEN GROUP CASE ASSIGNMENT
CVS: The Web Strategy
This case is about CVS, one of the biggest drugstore chains in the US. The Harvard case study was made between 1999 and 2001, while CVS was facing the major challenge of acquiring Soma.com and relaunching it as CVS.com, in order to respond to the new trend of web-based drugstores like Drugstore.com and Planet Rx. Our report will summarize the evaluation and analysis of the firm’s existing distribution channel at the time (1999), identify the problems that CVS had to face, and propose solutions to those problems (these solutions will be compared with what CVS actually did between 1999 and 2007).
Thus, this audit will be divided into two main parts: 1/ Current state of the channel (1999):
- Structure
- Members
- Allocation of channel functions
- Flows
- Ability to meet target customer segments’ demands for service outputs
- Power and conflict characteristics
2/ Recommendations and actual evolution of CVS since 1999:
1/ STATE OF THE CHANNEL IN 1999: Structure and Members:
Drugstores are very old retail institutions in the United States. It can be tracked to the mid-1700s. Pharmaceutical wholesalers were first integrated backward and forward. In the nineteenth century, pharmacies that were independent of physicians arose. Wholesalers were no longer integrated backward or forward, they were local and there were lots of them. Independent drugstores gave way to chains during the 1980s and 90s. By 1999 chains controlled 69% of the $115 billion in drugstore revenues (CVS was ranked second right after Walgreen). At first the larger chains (CVS, Walgreen, Rite Aid and Eckerd) pursued strategies of regional dominance, which led progressively to a contest for national presence.
The market for drugstore products was four times the combined sales of books and CDs. In 1999, the typical chain drugstore was about 9000 square feet, serving homes in a radius of five minutes driving time. The