Case Analysis of Giant Foods.
This case involves convergent technologies, a blending of traditional and cutting-edge business models and an alliance between an established pharmaceutical provider and a fledgling, Information Technology based, Drug marketing firm. Together, these two companies endeavored to create a patient education and prescription drug compliance program by deploying the deep well of customer data acquired by Giant Foods and the proprietary software of Elensys Care services, Inc. Elensys uses information from Giants pharmacy to send personalized letters, written on pharmacy letterhead but often paid for by pharmaceutical companies, that remind customers to refill prescriptions and pitch new products to customers with particular ailments. Giant first tested the feasibility of running a drug compliance program in-house but quickly determined that its’ Information System requirements were too overwhelming and decided to outsource the program to Elensys. However, the backlash to this new initiative was negative and strong as dozens of angry customers called officials at Giant to complain. Privacy specialists said the practice raised new questions about patient confidentiality and also blurs the line between medicine and marketing."People assume that their medical information, including prescription information, is held in the strictest confidence," said Beth Givens, director of the Privacy Rights Clearinghouse, a nonprofit consumer group in San Diego. "When that information is shared with a third party, they're surprised and outraged." This case exemplifies the privacy issues surrounding Giant Food's decision to outsource a prescription drug compliance program to Elensys. Ignoring for a moment the underlying profit motive of this program, approximately half of all patients stop taking their medication within the first six months of being prescribed, compliance programs remind patients to refill their prescriptions and help address a major public health issue. However, these programs also raise privacy issues because they involve the use of sensitive personal information. This case provides business and law students, firms and legislators with an opportunity to assess the privacy issues raised by this situation. The case also provides an opportunity for firms to deal with the challenges of developing a privacy sensitive implementation strategy and CRM programs in general.
Giant Foods, Inc.
Beginning in February of 1936, Giant Foods was brought to life by N.M. Cohen and Samuel Lehrman. Using the business model of offering a large, self-service grocery store with revenue based on high volume and low prices, the store was an instant success. An innovator from the very start, Giant Foods was the first to install front-end scanners in all its stores, market a private label house brand and the first to hire a consumer advocate to promote its products. Much of the success that Giant has earned is due to technology, innovation and well planned vertical integration. Giant presently operates its own bakery, dairy and soft drink firm. Giant also builds its own stores, produces its commercials and advertising in-house and even makes its own signs. This vertical integration strategy has been highly successful in the food-pharmacy combination with which Giant helped to pioneer. The fact that each Giant pharmacy fills over 1,000 prescriptions per week suggests that this is a profitable tactic and highly regarded by its customers. Elensys:
Elensys began its business life in 1993, in Burlington Massachusetts. Its business model was one of an IT enabled information system built as a “prescription compliance” program between consumers and Pharmacists. Elensys, whose name comes from an ancient Greek city known for medicine and health, was a “first mover” in this area and, due to strong network effects, was able to reach a critical mass within three years. Initially, Elensys started with...
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