Problem Statement: Westmount’s business model lands in peril because of intense local competition, varying demographical trends, and an obsolete costing model which lacks on analyzing the medical services availed by individual patients. Roswel is presented with a challenge to reform the costing system to include individual care factors and gain a 15% net profit margin.
SWOT: Strengths: - Current revenues are $2.5 million with 2.3% profit margin at $57,446. They have higher occupancy rate, loyal client base, and relatively profitable business operations.
Weakness: Inadequacy of working capital may cause insufficient funds to meet futuristic needs of patient care and erodes stakeholder’s wealth. Costing system lacks in individual cost estimates.
Opportunity: Better agility of patients and more aspects of medical provision are open now. Post retrials based assisted living industry is on a boom in the current trends.
Threat: Almost 17 local competitors are present in London. Demographical trends are persistently varying with low price flexibility due to fixed income patterns for target customers.
Market Analysis: First of all, with better agility and rise in population, the post-retirement based assisted living industry is on a growth. Secondly, number of beds is expected to raise from 1.84 Lac beds (1997) to 5.65 Lac beds (2031) due to sustenance of more customers in their eighties. Thirdly, customers are price conscious due to almost 17 competitors present in London. Finally, an average retiral income is capable of spending only 21% of its net worth whereas; retirement homes need at least 85% of it. Rates vary from $1,840 (radio suite) to $ 2,235 (1 bedroom) which depends on medical care and services provided.
Marketing Mix: Price-The pricing depends on room size, inflation (5-8%) & profit-margin (15%).
Place- The retirement facility for Westmount is placed in London, Ontario.
Promotion- No separate promotional efforts are taken by Westmount as they had high occupancy.
Product-Westmount retirement centre has excellent variety and quality of services and medical care.
Segmentation Analysis: The target customers are generally 75 years of age and have two distinct segments. First is the independent support based residents who avail only social benefits with meals and emergency care based services. Second is the assisted living facility which caters from moderate to severe ailment like listening, vision based, speaking, mobility, and medical agility. There is also a segmentation on the basis of medical needs viz. no, medium and high needs.
Competition Analysis: With 17 retirement facility in London itself, price factor is dominant in patient’s preference. Westmount faces 3 close competitors who vary in prices due to monthly services and care facilities. Chelsey park retirement facility is biggest facility (565 residents) and they offer competitive pricing on basis of economies of scale and good access to basic amenities. Chelsey lacks only on front of extra charges levied for its medical services. Central park lodge is again very good in variety and accessibility to basic amenities. However, it lacks on provision of 2 bedroom suite and charges extra $3200 for medical care. Finally, Longworth retirement village has good variety of services with A La carter services but it lacks on high prices for suites and no included medical services included in the residential program.
Financial analysis: The individual component of price analysis are lacking in current systems like price differentiation based only on room size. Secondly, support and overhead costs are informally allocated irrespective of individual services. Finally, no couple or sharing suites are accounted for. The new model should use ABC analysis and account for resident strength, room size and Medicare.
Alternative solution: A fully competition oriented pricing model can be developed which tries to assimilate data from completion and ensure either below or above or at par pricing with rest. The only cons with such model can be that it can again ignore individual cost concers and may even cross the spending capacity of a retiree.
