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Economic downturn
causes consumers to spend less on medicines
NEW YORK, Feb. 25 /PRNewswire/ -- Consumers
say they are spending an estimated 3% less
on prescription drugs this year versus last
year thanks, in part, to the economic
downturn, according to Kurt Salmon
Associates' recent evaluation of more than
8,000 shoppers' opinions.
The decline is likely the result of a
continued shift towards lower-cost generic
drugs and an increasing number of consumers
who are looking to save money by
self-medicating or simply reducing overall
drug consumption.
KSA's analysis suggests that retailers that
can manage consumers' perceptions of price
-- as much as price itself -- are the most
likely to be successful in the prescription
drug category, especially in the present
economy.
Wal-Mart gaining share; Target gets high
advocacy and price-to-value
For example, many retailers have adopted
discount and generic drugs programs. But
Wal-Mart Stores Inc. has been the most
successful at marketing its discount drug
offering and appears to be gaining share
from traditional drug chains, such as Rite
Aid Corp., which consumers perceive as
having higher prices.
Target Corp. also could prove an advantage
in the prescription drug category.
Consumers give the multiline retailer high
advocacy and price-to-value scores.
Conducted in partnership with Prosper Inc.,
a leader in online market intelligence, the
research includes more than three years'
worth of comprehensive consumer data and
shows that:
Prescription drug users are increasingly
price sensitive. In January 2009, 20% of
prescription drug consumers cited price as a
reason for switching retailers, which is up
from 16% in 2008.
Retailers with a value orientation are
winning the share war in this economy.
Wal-Mart grew its customer base 9% over the
past year.
The share gains for value-based retailers
come at the expense of the stores that
consumers perceive as having higher prices.
Rite Aid lost a disproportionate amount of
market share to Wal-Mart, approximately 2%
over the past year, because consumers
believe it has higher prices.
Despite the increasing importance of price
perception, location remains the no. 1
reason why consumers choose a particular
retailer for prescription drug purchases.
Walgreens and CVS continue to maintain share
based primarily on convenient locations.
Price-sensitive consumers are responding to
discount prescription drugs programs. More
than half (57%) of Wal-Mart pharmaceutical
shoppers cited the retailer's
$4-generic-drugs program as a main reason
for their choice of retailer.
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