product management case study ciba vision
DESCRIPTION
Product Management CASE STUDYTRANSCRIPT
CIBA VISION : THE DAILY DISOSABLE LENS PROJECT
PRODUCT MANAGEMENT CASE STUDY -2
PRESENTED BY GROUP-ADITYA M. KARWA
NAGESH KONDALWADE ANUJ SHANDILYAMANISH PRASAD
MAJOR PLAYER IN CONTACT LENS MARKET
CASE FACTS
ON AUGUST 2, 1992, TOP MANAGEMENT MEETING AT CORPORATE HEDQUARTER
“BALUCH”
MAJOR AND RAGED DISCUSSION ABOUT PROPOSED PRJECT TO DEVELOP
“DAILY DISPOSABLE “CONTACT LENS
MANI COMPETITOR AND CIBA WERE OFFERING A SAME PRODUCT NOW 7 DAY
DISPOSABLE
SOME PEOPLE CONSIDERED HUGE POTENTIAL
AS IT OFFERS MANY CONSUMER BENEFITS AND HASTLEFREE USSAGE
MAJOR QUESTION WAS??
WILL IT BE CIBA OR COMPETITION TAKE LEAD???
PRODUCT IDEA WAS ACCEPTED UNIVERSALLY IN ORGANIZATION, FROM R & D TO
MARKETING
SOME PEOPLE WANTED TO CONDUCT A EXTENSIVE MARKET RESARCH BEFORE
LAUNCHING
SOME PEOPLE WERE HAVING DOUBT ON COMPANY’S CAPABILITY TO COMPETE IN THIS
SEGMENT
RICAHARD FRANCIS,MARKETING HEAD,US. SAID-
OUR CORE COMPETENCY IS DIFFRENCIATION
“IN THIS SEGMENT WE NEED TO FIGHT ON COST AND WE WILL NOT BE ABLE COMPETE
WITH J & J ON HIGH VOLUME “
MAJOR CHALLENGES/ PROBLEMS IN CASE-
• LACK TECHNOLOGY UPGRADATION AT R & D• LACK OF NECESSORY COMPETENCIES• LACK OF COMMITMENT FOR THE IDEA• CONFLICT ON - PROPOSAL TO CREATE
ISOLATED TEAM FOR PROJECT• DOMINANT MARKET SHARE ERODED BY J & J• CONVETIONAL MARKET SEGMENT’S WERE
ERODING
FINAL DECISION TO TAKE ON ALL THE
QUESTION’SON THE SAME DAY!!
COMPANY INDUSTRY BACKGROUND-
SUBSIDARY OF CIBA GEIGY ESTB. 1980 1994 SALE WAS 22 BILLION
UNDER LICENSING AGREEMENT WITH GERMAN CO. TITMUS EUROCON
THEN SERIES OF ACQUISITION IN US AND ALL OVER THE WORLD MARKET
SHARE GLOBALLY WAS 15%
INDUSTRY AND COMPETITORS
8 COMPANIES DOMINATED MARKET• COMBINED BY REVENUE 75%• BAUCH AND LAUMB- 18%• J & J 16%• CIBA VISION- 15%• MENICON- 8%
NOTE- J & J DOMINATED HIGH VOLUME SHARE WITH 85% MARKET SHARE
CIBA COMPANY DETAILS-
• LOCATION- HEADQUARTER –BULACH• LARGEST R AND D ATLANTA• SMALLER UNITS- GERMANY• CONTACT LENSE SOLUTION PLANT- CANADA,
GERMANY,ENGLAND• EVERY PLANT WERE PLAYING THE ROLE OF GLOBAL AND
DOMESTIC SUPPLIER WITH DOMESTIC MARKETING TEAM
LENS MARKET TRENDS-
• INNOVATION• HIGH TECHNOLOGY INVOLVED• CIBA WERE HAVING 20 LINES OF PRODCUTS• 2LACK SKU GIVING MAJOR SALES• J AND J WERE OFEERING 2 PRODUCT LINES
AND 1000 SKU • HIGH TECHNOLOGY AND QUALITY MATTERED
AND RECCOMENDATION BY SPECIALIST DOCTORES
MAJOR PRODUCT IN MARKET LASTLY-
7-DAY DISPOSABLE LENSIT CAN BE WORN CONTINEOUSLY FOR 7DAYS AND
DISCARDED
BEFORE LAUNCHING THIS GREAT R & D WORK TOOK PLACE AND J & J PATENDED PROCESS TO IT
AT LOW COST
BUYING BEHAVIOUR
CIBA VISION LAUNCHED THEIR PRODUCT IN 1988 “ACUVE” IN SAME CATEGORY
CIBA VISION STRUGGLED AT INITIAL LEVEL AT PRODUCTION DUE TO EXCLUSIVE CONTRACT OF
J AND J
LATER THIS SEGMENT WAS GOING FOR PRICE WAR
CIBA VISION TO REDUCE PRODUCTION COST STARTED A PROJECT GODZILLA
PROBLEMS IN PROJECT-• CONFLICT IN R & D AND PRODUCTION TEAMS• RESOURCE SCARCITY• CHANGING TEAMS• TOO MUCH OVERLOAD • TOO MANY PROJECT AT THE SAME TIME• RESEARCH CHEMIST AWAY FROM GROUND
REALITY • IN 3 YEARS TALKS AND TALKS NO RESULT
• CEO WAS FRUSTETED DONE INVESTMENT IN NEW PLANT AT INDONESIA DUE TO CERTAN ADVANTAGES
• MORE PROBLEMS AT GERMANY PLANT COST OF PRODUCTION WAS THRICE THAN ATLANTA
• ANALYSIS SHOWED TO TRANSFER MANUFACTURING OF PRODUCTS TO ATLANTA AND IN INDONESIS
PRODUCT DEVELOPMENT
DIFFRENTIATION STRATEGY OF CIBA- VISION WAS GETTING AFFECTED
DEVELOPMENT OF MANY PROJECTS WERE STALLED
LONG TERM CONCERNS AS COMPANY WAS LOOSING THEIR INNOVATIVE EDGE
TWO INTERNAL REVIEWS WERE CONDUCTED ON NEW PRODUCT LAUNCH PROCESS OF NEW PRODUCT
“EXCELENS”
FIRST SOFT LENS IN 20YEARS IT WAS VERY HIGH QUALITY PRODUCT , HIGH EXPECTATIONS FROM IT
AFTER CLINICAL TRIALS
BIG FALIURE IN FACTORY 0% YIELD
FACTORY WAS UNABLE TO REPLICATE R & D
PROCESS DUE TO 0% INTEGRATION BETWEEN 2 DEPARTMENTS
LATER PULLED OUT FROM THE MARKET
THE COST WHICH WAS DECIDED TO BE $5/LENSIT CAME TO AROUND
$15/LENS
ONE YEAR MORE IN R & D STILL LOW YIELD AND COST WAS HIGH SO IN 1992 EACH EXELENS SOLD
CONTRIBUTED –VE TOWARDS MARGINS
IT WAS REAL EYE OPENER FOR CO AS 20 R & D PROJECT WERE WORKING ON INCREMENTAL REFINEMENTS OF
EXISTING PRODUCTS IN MARKET
WHICH WERE BASICLY ME2 PRODUCTS
ADVANCED DEVELOPMENT INITIATIVES
THE EXTENDED WEAR PROJECT
IT WAS A VERY AMBITIOUS PROJECT AND HAD MANY ADVANTAGES FOR USER CONVINIENCE
USER DON’T NEED TO REOMOVE IN THE NIGHT BEFORE SLEEPING, HE CAN WEAR IT FOR SEVERAL WEEKS
IN SENIOR MANAGEMENT MEETING AT BULACH UNIVERSALLY AGREED TO CARRY OUT THE PROJECT
CONSIDERING EARLIER FAILED ATTEMPTS SPECIAL TEAM WAS APPOINTED BUDGET WAS $5MILLION FOR 2 YEARS
IF VIABLE THEN BUDGET WOULD ESCALATE DRATICALLY
IT WOULD BE DONE BY COLLABORATING WITH CIBA GIEGY CENTRAL RESEARCH IN ,BASEL “AND CRCER” ONE OF THE MOST LEADING CONTACT LENS RESEARCH FIRM
IN AUSTRALIA
FIRST TIM EIN THE HISTORY OF CIBA- VISION ENTIRE RESPONSIBILITY OF PROJECT WAS GIVEN TO ONE MAN
IT WAS GIVEN TO MR. NICK LEONARD THAT WAS WIN OR LOSE GAME FOR HIM
THE DAILY DISPOSABLE PROJECT PROPOSAL
CHALLENGES-
• FINACIAL ASPECT IT INVOLVED HUGE INVESTMENT• CHANGING PERCEPTION ABOUT DISPOSABILITY• CONVINCING INTERNAL TEAM TO GET FULL
COMMITMENT• ISSUE OF CANNIBALIZATION – 50% REVENUE FROM
CIBA VISION LENS CARE SOLUTION WILL BE EATEN UP
• TECHNICAL ASPECTS MAKING IT AT LOWEST COSTNO MORE THA $0.20/LENS CANNOT BE SOLD MORE
THAN $0.30/LENS• J $J WAS PODUCING 7 DAY DISPOSABLE AT 0.85$• TO DEVELOP ENTIRELY NEW BREAKTHROUGH
PROCESS• BIGGEST IS COMPETITOR’S THREAT J AND J MAY
COME UP WITH THIS PRODUCT • SO HAVE TO DEVELOP BEFORE THEM• AS HUGE FIRST MOVER ADVANTAGE IS THEIR • AS USERS AND DOCTORS DON’T SWITCH THEIR
BRANDS UNLESS THERE IS PROBLEM
PROPOSALS GIVEN
A.CREATING A AUTONOMOUS PROJECT TEAM UNDER ONE LEADER AND TAKING EXTERNAL SUPPORT AND
THEIR PACKAGES WILL BE TIED UP WITH SUCCES OF THE PROJECT
2ND WAS LOCATING A TEAM IN GERMANY TO AVOID INFLUENCE OF R AND D TEAM IN ATLANTA THIS WAY
“DDL” TEAM WILL BE PHYSICALLY AND ORGANIZATIONALLY SAPERATE
ARGUMENTS BY EXECUTIVE MEMBERS
NO POINT IN SETTING UP A NEW SAPEARTE PROJECT TEAM LIKE ANOTHER COMPANY WHICH WILL REPORT
TO ONE PERSON ONLY WE HAVE NOT DONE IT BEFORE
NO POINT IN SETTING UP A PLANT IN GERMANY AS GERMANY IS 3 TIME COSTLIER THAN ATLANTA AND
TARGET MARKET IS IN USA
RECOMMENDATION’S
SET UP SAPERATE CROSSFUNCTIONAL PROJECT TEAMUNDER ONE PROJECT MANAGER WHICH WILL REPORT
DIRECTLY TO CEO AND GIVE THEM EXTERNAL TECHNICAL SUPPORT
SET UP PLANT IN ATLANTA ONLY BUT COMPLETELY DIFFERENT TEAM OF R AND D SCIENTIST’S THEY WILL BE 101% COMMITED TO THIS PROJECT NO SHUFFLING
SAPERATE RESOURCES FOR THIS PROJECT
GERMANY IS NOT RECOMMENDED AS COST IN 3 PERCENT HIGH AND INVESTMENT WILL BE MUCH
HIGHER PROFITS WILL BE REDUCED
COST OF PRODUCTION IN $3.23 ATLANTA $ 7.32 IN GERMANY
NEED TO WORK ON IT VERY FAST WITH EXTERNAL AND INTERNAL SUPPORT NEED TO DEVELOP IT BEFORE J & J
AS REGISTERING IT WILL GIVE EXCLUSIVE RIGHT TO CIBA VISION
WHILE LAUNCHING INTRODUCING THE PRODUCT WITH EXTENSIVE MARKETING CAMPAIGN SHOWING
CONVINIENCE AS BENEFIT FOR CERONSU
CIBA’S DAILY DISPOSABLE LENS IN MARKET
