A brief summary of the case shows that the business in question, MedNet is a medical information website that delivers free health advice to its users. MedNet setup its website with three main aims, to provide scientific material to a nonprofessional audience, to give this information freely and to generate its’ profits from advertising revenue. The major money making part of the business does have some competition to its market share in the form of Marvel, a rival ad-clicking company who are already doing business with Windham Pharmaceuticals, MedNet’s biggest advertiser.
Some of the major problems facing the organization revolve around Marvel and how it has been aggressively targeting MedNet’s advertising revenue by way of the click through system of advertising. The presence of alternative therapy websites is also an issue for MedNet, as it commands a big market share of consumers who are generally wary of pharmaceutical companies and western medicine in general. There is also a group of for-profit websites dedicated to specific conditions that provide a similar service as MedNet, but at a cost to the user, unlike MedNet’s free website.
Some of the major opportunities available to the organization are that they have business integrity as well as
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With the current opportunities and threats that exist towards MedNet, a change of strategy is essential if they wish to remain as a profitable market leader. The first of these would be to target a high profit audience for specific medicines and aim to produce a targeted audience who are more likely to buy the product than a person who has clicked the link from a search engine. Content would be charged and the company would not be as dependant on advertising revenue.
This however may be unpopular as demonstrated by the response to the visitor survey results in Exhibit 3, which shows that 75% of respondents would not be willing to pay for content at the MedNet website. The second course of action for overcoming problems that MedNet face is to widen the product mix and bring alternative therapies to the content of the website. This would increase the target audience, however may not be successful due to some of the problems outlined previously. However specific targeted marketing may be able to overcome this potential problem.
Finally MedNet could aim to exploit the culture of the organization and build the entire organization around their role as a market leader in providing relevant information, as well as taking on the role of manager and consolidator of other pharmaceutical and medicinal websites and organizations. If the business model is expanded whilst retaining the advertising income from its current operations, profitability at MedNet would improve dramatically. Exhibit 1 shows the current income statement for MedNet, and current net income is currently $1,000,000.
This could be consolidated by aiming to improve the targeting of the audience in a similar way to Cholesterol. com, where the probability of a sale being made is far higher than with Marvel. This can be seen in Exhibit 4, which shows the average profit margin per prescription for a certain medicine. For a general interest website such as Marvel, the contribution per sale is only $48. However if this information is compared with the contribution per sale on a health care website, the contribution if $150 per sale, an increase of $102. This scenario would seem to be the best course of action based on the evidence provided.