marketing mix, a strange brew by harvey hauschildt [email protected]
TRANSCRIPT
Overview of Discussion Market research. Product development procedures. Vetting products and ideas. OEM/Private Label and Licensing
agreements. Tales from the Crypt, when things go
terribly wrong!
You Need To See A Target Before You Can Hit It The best product
development comes from market based research
Research doesn’t have to be complicated, but it does need to answer the hard questions.
Getting The Answers The hard questions:
Does the product (FIT) the customers needs? Can it be delivered in the (FORM) the customer
requires? Does the product provide better performance,
(FUNCTION) or lower costs from what the customer is currently using?
Can you prove your claims? What price point is acceptable to the customer? Do you have the distribution channel to deliver the
product to market?
Identify Strategic Vision Project Assessment US Asia Europe Latin America
Does the product match our core engineering competencies? Senior ManagementHow does this product help the company grow? Senior ManagementHow does this product help gain a competitive advantage? Senior Management/Marketing/SalesDoes the product match our distribution network? Senior Management/SalesWhat are the ramifications of not doing the project? Senior Management/MarketingCan the project be acquired faster or less costly by OEM agreement or company acquisition Senior Management & Engineering What other projects would generate better growth for the company? Senior Management
Global Market Opportunity by Nation Business Assessment US Asia Europe Latin America
Annual Dollars Estimated revenueAnnual Units Sold Estimated unit salesAverage Sales Price ASP by countryMargin Dollars Estimated Gross MarginsNumber of Competitors By countryMarket Shares of Competitors By countryBarriers to Market Entry Costs/distribution/name recognitionCost of Entry Roll up of costs
Product Specification Development Staffing US Asia Europe Latin America
Assign Project Manager Coordinator Assigned by Senior ManagementAssemble Multinational investigational team Assigned by General Manger
Break tasks down into data collection phases by specialty and schedule completion dates with each major market
International Specification TeamDefine technical trends and requirements of market Engineering 1 1 1 1Define regulatory approval process and certification by country Regulatory 1 1 1 1Work with customers to translate customer requirements into functional specification Marketing 1 1 1 1Provide requirements on clinical utility and functionality of device Nursing 2 2 2 2Investigate best manufacturing practices to reduce time to market and maxim profit Manufacturing 1 1 1 1Obtain customer contacts and competitive input from sales Sales 1 1 1 1Insure that final product can be serviced quickly and cost effectively Service 1 1 1 1Insure products meet the present and future demands of networking, integration to hospitals information and accounting systems MIS/IT 2 2 2 2Review and advise on clinical utility and information output of device Physicians 2 2 2 1
Specification Collection Data Collection US Asia Europe Latin America
Assemble Clinical Requirements from ACC/AHA or governing bodies Marketing/EngineeringAssemble competitive product features & advantages Sales/MarketingIdentify customer issues and requests Sales/MarketingList Regulatory Requirements from each Nation RegulatoryIdentify Language Requirements RegulatoryCall out patient safety issues & mandatory requirements RegulatoryList labeling requirements Regulatory
Commercializing The Product What is it?
Internal documentation Programming code Engineering diagrams User manuals Inventory projections Major component spares
Training programs Technical Support Field Service Sales Training
Promotional documents Data sheets Brochures Advertisements/Trade shows Press releases White papers/clinical studies
Launch Checklist Resp. Group Resp Person Due Date Status CommentsProduct: Launch Manager:
KEY DATE: Pilot units available onKEY DATE: Production units available onPRODUCT TARGET MARKET:
Marketing Materials1. Are any new marketing materials required for this launch? (list each with due date) Marketing 1a. Sales sheet 1b. Email 1c. Direct mail 1d. Advertisement 1e. Trade show graphic 1f. Other promotion3. Does this launch affect any existing marketing materials? (list each with due date) Marketing4. Are any new marketing claims being made? Marketing/Regulatory4a. If yes, what are they and what supporting materials are required? Regulatory4b. Is a change to the 510(k) or other regulatory filing required? Regulatory5. Update the website Marketing 5a. Copy: Review and update any changes in features and product claims Marketing 5b. Images: Find and replace all with new Marketing6. Add to the online store Marketing
Events1. Will this launch be unveiled at a key event or show? (list show and date) Marketing
Public Relations1. Are any PR events planned for this launch? (list and describe) Marketing
Manuals and Labeling1. Users Manual Marketing 1a. Translation to other language required? Marketing
1b. Users manual validation Marketing2. Are any quick start cards or other product materials required? (list each) Marketing 2a. Translation to other language required? Marketing3. What labels are required? (list each) Marketing/Engineering
Packaging1. How will this product be shipped? Marketing/Engineering
1a. Is a new box required? Marketing/Engineering1b. Is any special packaging material required? Marketing/Engineering1c Any additional materials to be developed or included in packaging? (list each) Marketing1d. Do our warehouses and/or distributors have any new requirements? Operations
Customer Service1. Is a new troubleshooting guide required for this product? Engineering/Customer Service2. Are changes to an existing troubleshooting guide required? Engineering/Customer Service3. What customer service training is required? Marketing
3b. Prepare training materials4. Schedule customer service training at least 3 weeks prior to launch. Marketing5. Schedule follow up training 2 days prior to launch. Marketing6. Update the price list Marketing7. Make sure Great Plains has the correct part number, product description and price Operations
Know Where The Land Mines Are Before You Step Market driven growth starts
with: Sound product development
procedures. Seeks to leverages core
competencies. Strives to strengthens & grow I.P. Insures correct distribution channel
is in place. Includes options for both vertical
and horizontal paths for growth.
Current Project
Project: Penetrate hospital market. 20 million dollar company Dominates sports medicine, Physical
Therapy and well regarded in Orthopedics.
Where to start?
Expansion Markets
Hospitals HMO’s & GPO’s Military & Veterans
Hospitals Surgery Centers OEM/Private Label
Agreements International Markets
Primary Care Physician
Physical Therapy
Orthopedic Surgeon
Hospital Out Patient Surgery Center
40% of referrals from Primary Care
Physicians
May send patient to either facility
depending on injury
60% of patients are self or ER referrals
Ouch!Patient Injury
Through The System
10/16/2008
Following The Injury
Emergency Room
Treats non- surgical patients
Hom
e C
are
Hospital – Military & VA Conduct Three Regional Focus Groups by March 2009
Understand product applications, (Fit) by department & what is currently used.
OR-PACU-ICU-MED/SURG-ER-PT-CS-BIOMED Discover issues surrounding products (Form)
Is it acceptable in it’s present configuration? What changes need to be made? Does the revenue potential justify the changes?
Map work processes by departments When would the product be used and by whom?
Identify Decision Makers Who are they and what are their needs?
Pin Point Barriers To Entry
Infection Control Issues MRSA
Methicillin-Resistant Staphylococcus Aureus
Drug resistant infections kill two times more people annually in the U.S. than AIDS
VRE Vancomycin-Resistant
Enterococci Infections According to the CDC
the incidence of occurrence in hospitals is increasing
Infection Control Issues
The Joint Commission National Safety Goal .07.05.01
Hospitals must implement best practices for preventing surgical site infections.
Medicare will no longer reimburse hospitals for preventable nosocomial infections
Products must meet strict guidelines for eliminating the spread of infectious organisms
Keys To Hospital Integration
Identify key personnel that order and administer the technology.
Determine the correct economic models Ownership vs. Rent per use program
Evidence-Based Medicine Ability to prove one’s superior clinical outcomes
over traditional therapy. Getting rid of “Sacred Cows”.
Meeting The Challenge
Use current customers to create anecdotal articles that validate the product.
Generate case studies that compare sports injuries and treatments with those seen in a hospital.
Establish multiple clinical studies that validate both therapy and economical advantages of product.
Clinical Studies
Clinical Studies are a long term investment. Studies should be managed by a full time
Clinical Coordinator with a Clinical Research Organization background.
Studies must address both the clinical and economic benefits of the product and be conclusive in their outcome.
Challenges Continued
Establish beta sites for R&D. Establish reference sites that can be used as
validation to new customers. Develop strategic hospital alliances to test
different economic use models. Define the roll of the Medical Advisory Board
and actively engage them for clinical oversight and to promote the company.
Going To Market
Traditional hospital distribution channels Direct Sales Force Manufacturer
Representative Distributors OEM/Private Label
Agreements
What Are The Differences?
Direct sales people are paid company employees. Pro’s:
Company has complete focus on customers and results. Provides superior control of product and understanding
of the customer. Con’s:
Added overhead cost until sufficient sales are generated.
Requires additional layer of management
Distributors As A Sales Channel
Distributors purchase and re-sell products in an exclusive territory.
Pro’s: Distributors contractually are required to buy specific levels
of inventory providing a financial investment in selling the product.
Minimal overhead cost to the company. Con’s:
Diffused market focus do to dividing sales time between multiple manufactures.
Less control over final pricing,where product is sold and more company exposure to false product claims.
Manufacture Representatives As A Sales Channel Independent Sales Representative paid a
commission on each sale. Pro’s
Minimal impact on over-head. A must sell situation to survive, company maintains control
of the billing and location of customer. Con’s
Company gets only a fraction of mind-share do to competing interests from other companies.
More discounting by representative to get the business fast.
OEM/Private Label Agreement
Company builds the product for another manufacturer. Pro’s
NRE funding for development may pay for R&D. Well established manufacturers can provide a focused sales
presence in a target market and shorten sales ramp up time. Minimum revenue levels can be contractually guaranteed. Very successful OEM relationships can result in selecting
the company that buys you. Long term contracts increase company value and strengthen
its product portfolio.
OEM/Private Label Agreement
OEM/Con’s Successful sales growth is not associated with
manufacturers name by the industry. No control over sales process or end user pricing or
knowledge of where products go. Exiting the relationship can be complicated and time
consuming. Company intervention in OEM sales process is almost
impossible.
Opportunities For License Agreements/OEM Products
Technology is extremely competitive. Manufacturers are resource constrained and often
short on fresh ideas. Product differentiation is critical to selling. Evidence based medicine is economically driven and
required. Disruptive technology can be the pot of gold for
everyone.
You Are Not Henry Ford..Yet!
What you should know about big companies Hard to get to a qualified decision maker, easy to
get people who say they are. Have a well oiled NIH program in engineering.
May still work against you once contracts are signed.
Will give you contracts that are very one sided. Can take up to a year to sign a contract once
everyone is agreed to go forward. Can easily absorb the failure if project bombs.
Good Ideas Are Always In Demand Targets
Small to medium sized companies that have a reputation for innovation.
Licensing agreements that change the competitive landscape.
Get help selling your idea Protect your intellectual property. Get help in Sales & Marketing. Get sound legal advice. Understand financial ramifications of business
transactions.
CEO
VP Hospital Sales
Product Manager
Eastern Regional Manager
Western Regional Manager
Direct SalesCalifornia
MRWA, OR,ID
MRAZ,CO
Direct SalesMN,WS,
Direct SalesMI, IND,IL
MRNY,PA
Direct SalesTexas
OK MRLO,MISS,,AK,AB
OEM
VP Engineering
VP Marketing
OEM Management Team
CFO
Regulatory
Direct SalesFlorida
MRUT, NV
New England
ND,SD,WY
MRKS,OK Direct
GA,NC,SC
Clinical Applications
Legal
When Things Go Terribly Wrong
MARS 2000 Technology that is to far ahead of the market and to
complicated to explain. Black Fish
Wonderful technology that everyone wanted except the sales force, marketing and engineering.
Q-Flop Engineering never thought it necessary to see how the
product was used. OEM- Mock Apple Pie
It looked like a product and seemed to function like a product, but it never was a product.
What These Projects Had In Common Someone knew from the beginning that projects were
badly flawed in Fit, Form or Function. With one exception, there was no market research or
customer input and no beta testing prior to release. Senior management did not understand enough
about the technology or the market to audit the development process and correct problems before they happened.
Two out of 4 projects were OEM because they fell outside core competencies of the company.
Tales of The Crypt Continued
Two products required extensive re-design over a span of two years to be acceptable to market.
One product was killed as it would never work. One product ended up in litigation and was re-sold to
another company.
The Costs
2-to-5 Years of development per project.
Cost of each project 1.5-to-5 million dollars.
Lost revenue from failed projects 100 million dollars.