There is an increase in eye-care building in many cities across the United States, reflecting the industry’s fragmented nature. The geographic location of the service center as well indicates the high demand for refractive operation. The specific service area is the Charlotte, Mecklenburg County, North Carolina. Charlotte is the largest city in North Carolina located on the border. Many people visit the area for their health care (Fahey, 2016). Many insurance companies cover injury to the eye but do not cover the corrective surgery as the firms consider the process elective. Approximately sixty percent of Americans requires corrective surgery with thirty percent having myopia. The eye surgery industry has exhibited growth in the past five years because of new technologies that have resulted in better patient outcome services (Turk, 2014). The high rates of efficacy have resulted in many patients demanding LASIK surgery.
Median household income in Charlotte is approximately forty-nine thousand dollars. The economy of Charlotte is increasing with an increase in some jobs, but unemployment is still quite high in the area. Charlotte people can afford the surgery cost since it is one of the top cities for entrepreneurs with nearly eighty percent of residents working in businesses of less than one hundred employees (Fahey, 2016). People with high income in the area are interested and opt for LASIK surgery. However, the unemployed always postpone the purchase of procedure, as they have to spend out-of-pocket.
Demographics also plays a major role in corrective eye surgery. More than six hundred and twenty people live within Charlotte city limits, eight hundred thousand in Mecklenburg County and 1.5 million in the MSA. There are more young people in the area, which indicates more chances of adapting to the refractive surgery. There are also more educated people in the area, and they are more likely to pay for the surgery. Approximately thirty-three percent of the population comprises of the Black, and they have been slow to adapt to the new surgery techniques, but with gaining more experience, the market for surgery will increase.
Charlotte is generally full of a healthy population. The new surgery, however, only requires healthy candidates. Lasik is also not recommended for patients with chronic complications. These complications are polygenic disease, atrophic arthritis, chronic glaucoma, skin disease, and cataracts (Wilkinson, 2017). However, there is a high population of patients with diabetes in the south that greatly affects the industry by reducing the number of patients qualified for surgery. Some health risks result because of laser eye correction. The health risks are swollen corneal, blemishing, blindness, under and overcorrection (Wilkinson, 2017). However, only few clients complain of these after surgery side effects.
The vision industry has experienced competition mainly based on creativity, quality, and patient outcome performance. Technology has played a major role in the industry. Facilities that are popularly known can also have more customers compared to the lesser-known clinics. The clinics also offered innovative services, which acted as a barrier to the competition (Knudsen, 2005). The new operation tool also reduces surgery cost and time — the vision firm has also faced competition from non-surgical treatment to correct the laser operation ailments.
Competition is generally medium because it depends on new technology, regulations, and high industry competitors to prevent important and potential industry entries. The LASIK clinics require an expensive laser. Therefore, the high buying cost, which translates to the need for high capital outlay may also prevent the entry of potential industries (Knudsen, 2005). Additional barrier to new entries include government policies such as the Food, Drug, and Cosmetic Act that offers a baseline to product marketing, labeling, and performance monitoring. The insurance fee against the refractive surgery also deters other companies’ entry (Knudsen, 2005). Additionally, access to the highly skilled labor force is important and acts as a barrier to entry. The number of service providers has increased because of the new graduates with the ophthalmology specialization. The intensity of rivalry is high because of the good balance among the competitors. The strategic stakeholders are also high, making it difficult to exit the market. Thirteen physicians perform laser eye surgery, and the capacity has improved in large increments- a laser costs between two hundred thousand dollars to eight hundred thousand dollars, which is quite expensive.
The company has threat substitutes to refractive surgery. Photorefractive Keratomileusis is one the substitutes, which push and scarps epithelium aside to regrow (Turk, 2014). There are significant moderate complications such as pain, tear, photophobia, and blurred vision after the process. LASEK is also another process that involves the removal of epithelium using alcohol rather than a laser (Turk, 2014). Additionally, there is lenticule extraction substitute, which involves FLEX and SMILE.
Customer’s power in the industry is high because of the elective nature of the surgery and the out-of-pocket costs. Customers have the opportunity to make decisions for a much less expensive vision corrective substitute or wait for prices to decrease (Knudsen, 2005). Customers can as well gauge enough information to gain bargaining advantage. The supplier’s power is medium, currently five with FDA approval. The Alcon, Bausch, and Lomb, IntraLase, nidek, and Visx companies have been important in and powerful suppliers to the industry because of their important array of services (Knudsen, 2005). The companies supply the center with Ladar vision system, technolas 217Z, IntraLase FS, nidek EC-5000, and Visx star s3 that helps the industry provide laser operations. However, the center does not expect equipment substitutes any soon.
The LASIK surgery center has several competitors in the Charlotte service area. The TLC laser center is a national organization with its headquarters in Canada. The firm has fifty centers in the U.S, seven in Canada, two in Mexico, and one in London (Knudsen, 2005). The firm has six employees with two local ophthalmologists on staff. The center performs one hundred and seventy-six operations monthly. It has the best customer satisfaction rates with a network of forty-five physicians and optometrist. Despite the strengths, the center has less local orientation. A corporate made up of local coordinators are the marketers of the firm with a near capacity at the current location. The firm as well does not have a proper referral follow-up and relies on the telephone rather than a website for referrals.
There has been a gradual increase in the number of service providers, price competition, and advertising amount. Consumer demand for surgery is also increasing as it is less painful and more accurate (Knudsen, 2005). TLC, LASIK plus center, and Charlotte center are dependent on each other. Intense rivalry exists as they attempt to improve their positions in the market. The centers as well should be aware of the new technologies and receive approval by FDA (Knudsen, 2005). The competitive analysis indicates that a new service provider would have to develop some competitive advantages, which are not yet successful.
Fahey . A. (2016). Charlotte has become a magnet for millennials, population trends show. Retrieved from https://www.bizjournals.com/charlotte/news/2016/10/26/charlottes-a-magnet-for-millennials-population.html
Knudsen W., (2005). Service area competitor analysis. Retrieved from http://www.blackwellpublishing.com/swayne/chapter3.pdf
Turk. S, (2014). Clear vision: Eye surgery clinics will exhibit growth due to high efficacy rates of LASIK surgery: IBISWorld Industry Report OD4159 Eye Surgery Clinics in the US. Retrieved from https://sbmarketingstrategy.files.wordpress.com/2014/11/od4159-eye-surgery-clinics-industry-report.pdf
Wilkinson M. J, Cozine W. E., Khan R. A., (2017). Refractive Eye Surgery: Helping Patients Make Informed Decisions About LASIK. Journal of Am Fam Physician 95(10): 637-644