An Rx for Women

CVS Caremark aims to be a one-stop shop for stressed customers

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Internally, the company divides its female customers into three segments, named after CVS: Caroline, the 25-to-34-year-old who may be single or newly married; Vanessa, the 35-to-54-year-old who is usually caring for children and possibly parents; and Sophie, the 55-plus woman who tends to use a lot of prescription medications. The Vanessas, says Foulkes, make up the lion's share of CVS customers and are the ones most in need of me time. In October, the company rolled out its new women-centered ad campaign, featuring a caring, female CVS pharmacist, now running during Dancing With the Stars, Oprah, and The Ellen DeGeneres Show. The narrator says, "It's in your nature to care for others. To listen, to advise, to always be there. Isn't it nice that there's a pharmacy that cares as much as you do?"

Marti Barletta, author of Marketing to Women, says women, especially those in the 50-plus category, respond well to caregiving themes. "I think I would rather go to a place that talks to me like that...than a place [that] says, '79 cents off on shampoo this week,'" she says. But there is a bit of risk here. Some women may feel that the ad campaign is condescending, says Michele Miller, author of WonderBranding, a blog on marketing to women.

CVS's recent expansions into pharmacy benefit management with Caremark and into convenience care with MinuteClinics are part of the company's efforts to turn itself into a full-service shop. The MinuteClinics, staffed with nurse practitioners who can treat and prescribe medicines for common illnesses, also appeal to stressed-out parents. So far, about 345 stores have MinuteClinics, and the company plans to add 55 more by the end of the year.

The clinics also appeal to the growing number of uninsured, who now number 47 million, according to the Census Bureau. Judith McKelvey of Lincoln, Va., recently visited a local CVS MinuteClinic to get a flu shot. Because she lacks health insurance, she says, a visit to a doctor would have cost her $47, plus a fee for the shot. "Here, it's just $30, and it's quick," she says. She decided to shop for Halloween candy after receiving a $2 coupon from her flu shot.

That's the kind of synergy CEO Tom Ryan is hoping for. "It doesn't hurt that about 25 percent of the people who use MinuteClinic have never been in a CVS pharmacy and we have the chance to convert those customers," he told analysts earlier this year.

Is bigger better? The stores also stand to gain foot traffic from the merger with Caremark, which makes up about 40 percent of the new company's operating profits. While mergers are often problematic, analysts and industry experts say bigger is probably better in this case. "You are taking care of customers across their continuum of need," says Helen Darling, president of the National Business Group on Health, a nonprofit that represents large employers.

For investors, though, there is still some uncertainty. Edmund Nicklin, a portfolio manager for the Westport Funds, an investment management group that owned about 650,000 shares of CVS Caremark as of the end of September, says it's not yet clear whether CVS will provide the superior in-person service to Caremark customers that the company promises. And Mitchell Corwin, stock analyst at Morningstar, worries about the usual integration issues that inevitably arise when combining two very different companies that have historically served different customers. "This more vertical business model on this type of scale is untested," he says.

The customers driving CVS sales appear not to share those reservations. According to J. D. Power & Associates, CVS ranks high in customer satisfaction. One reason, says David Stefan, executive director of healthcare at J. D. Power, is that customers reported some of the lowest wait times at CVS.

And that—time—is what many shoppers value most.