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Archive for February 25, 2011

Drug Store Wars

Written by Marks on . Posted in Marketing, Research

Online Garage Sales & Money Saving Medicine for Consumers

Drugstore Marketing Scorecard – Walgreen’s vs CVS Caremark.

Drugstore Marketing Scorecard – Walgreen’s vs CVS Caremark.

With virtually everyone scrambling to deal with rising healthcare costs these days, competition among our country’s mega drugstore chains, CVS and Walgreens, has intensified greatly. Aggressive sector-wide acquisitions, dueling marketing campaigns and loyalty programs are just a few of the many points of contention. A key element of all of this competition is vying for loyalty in their drugstores, as well as diversifying brand messaging to promote their other retail offerings that include beauty products, photo developing and vitamins. And while these are conventional “brick and mortar” businesses, increasingly, the battle is taking place online as well.

Walgreens and third competitor Rite Aid both launched loyalty programs in 2010. While market leader CVS’ ExtraCare loyalty program has been around since 2001, they expanded their loyalty footprint by launching the ExtraCare Beauty Club earlier this year.

There has been a lot of consolidation in the drugstore industry over the past decade, which has made it a lot more competitive, and these retailers believe that loyalty programs help gain an advantage. CVS’ ExtraCare has more than 66 million members, and Walgreens’ Rewards, a pilot program that launched in test market cities in Spring 2010, has about two million members and is growing. And perhaps taking a cue from some of their more successful online retailers—much of the emphasis and indeed the messaging—have been taken online with robust websites and e-mail marketing campaigns. Both companies fill their home pages with as many possible deals and calls-to-action as will fit on the page. E-mail campaigns are often price-offer and coupon-driven—clearly following a more direct-sell marketing model which can sometimes look like a garage sale.

Walgreens and CVS Caremark both generate enough sales each year to plant them firmly in the Fortune 50, with CVS as the larger of the two in terms of revenue. No matter where you shop, for consumers, their intense competitive profiles may just be what the doctor ordered.