Consumers Spending Less on Prescription Drugs: Research
Consumers say they're spending an estimated 3 percent less on prescription drugs this year vs. last year, due in part to the economic outlook, according to Kurt Salmon Associates' (KSA) recent evaluation of over 8,000 shoppers' opinions.
The decline is likely the result of a continued shift toward lower-cost generic drugs and a rising number of consumers who are trying to save money by self-medicating or just 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 succeed in the prescription drug category, particularly in the present economy.
For instance, many retailers have adopted discount and generic drugs programs. Walmart 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, the research found, as consumers gave the retailer high advocacy and price-to-value scores.
Conducted together with online market intelligence firm Prosper, Inc., the research includes more than three years' worth of comprehensive consumer data, including:
--Prescription drug users are increasingly price-sensitive: In January 2009, 20 percent of prescription drug consumers cited price as a reason for switching retailers, from 16 percent in 2008.
--Retailers with a value orientation are winning the share war in this economy: Walmart boosted its customer base 9 percent 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 Walmart -- about 2 percent over the past year -- because consumers perceive it as having higher prices.
--Despite the increasing importance of price perception, location remains the top reason consumers choose a particular retailer for prescription drug purchases: Walgreens and CVS continue to maintain share based mainly on convenient locations.
--Price-sensitive consumers are responding to discount prescription drug programs: Over half (57 percent) of Wal-Mart pharmaceutical shoppers cited the retailer's $4-generic-drug program as a primary reason for their choice of retailer.
The decline is likely the result of a continued shift toward lower-cost generic drugs and a rising number of consumers who are trying to save money by self-medicating or just 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 succeed in the prescription drug category, particularly in the present economy.
For instance, many retailers have adopted discount and generic drugs programs. Walmart 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, the research found, as consumers gave the retailer high advocacy and price-to-value scores.
Conducted together with online market intelligence firm Prosper, Inc., the research includes more than three years' worth of comprehensive consumer data, including:
--Prescription drug users are increasingly price-sensitive: In January 2009, 20 percent of prescription drug consumers cited price as a reason for switching retailers, from 16 percent in 2008.
--Retailers with a value orientation are winning the share war in this economy: Walmart boosted its customer base 9 percent 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 Walmart -- about 2 percent over the past year -- because consumers perceive it as having higher prices.
--Despite the increasing importance of price perception, location remains the top reason consumers choose a particular retailer for prescription drug purchases: Walgreens and CVS continue to maintain share based mainly on convenient locations.
--Price-sensitive consumers are responding to discount prescription drug programs: Over half (57 percent) of Wal-Mart pharmaceutical shoppers cited the retailer's $4-generic-drug program as a primary reason for their choice of retailer.