Slide 1

Report
Marketing Mix, A Strange Brew
by
Harvey Hauschildt
hauschildt1@msn.com
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:
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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
Does the product match our core engineering competencies?
How does this product help the company grow?
How does this product help gain a competitive advantage?
Does the product match our distribution network?
What are the ramifications of not doing the project?
Can the project be acquired faster or less costly by OEM agreement
or company acquisition
What other projects would generate better growth for the company?
Senior
Senior
Senior
Senior
Senior
Global Market Opportunity by Nation
Business Assessment
Annual Dollars
Annual Units Sold
Average Sales Price
Margin Dollars
Number of Competitors
Market Shares of Competitors
Barriers to Market Entry
Cost of Entry
Estimated revenue
Estimated unit sales
ASP by country
Estimated Gross Margins
By country
By country
Costs/distribution/name recognition
Roll up of costs
Product Specification Development
Staffing
Assign Project Manager Coordinator
Assemble Multinational investigational team
Assigned by Senior Management
Assigned by General Manger
Asia
Europe Latin America
US
Asia
Europe Latin America
US
Asia
Europe Latin America
Management
Management
Management/Marketing/Sales
Management/Sales
Management/Marketing
eo
pl
e
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Marketing
Nursing
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2
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2
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2
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2
Manufacturing
Sales
Service
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MIS/IT
Physicians
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1
Data Collection
Assemble Clinical Requirements from ACC/AHA or governing bodies
Assemble competitive product features & advantages
Identify customer issues and requests
List Regulatory Requirements from each Nation
Identify Language Requirements
Call out patient safety issues & mandatory requirements
List labeling requirements
Marketing/Engineering
Sales/Marketing
Sales/Marketing
Regulatory
Regulatory
Regulatory
Regulatory
US
Asia
P
eo
pl
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P
Engineering
Regulatory
Specification Collection
P
P
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pl
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Senior Management & Engineering
Senior Management
Break tasks down into data collection phases by specialty and
schedule completion dates with each major market
International Specification Team
Define technical trends and requirements of market
Define regulatory approval process and certification by country
Work with customers to translate customer requirements into
functional specification
Provide requirements on clinical utility and functionality of device
Investigate best manufacturing practices to reduce time to market and
maxim profit
Obtain customer contacts and competitive input from sales
Insure that final product can be serviced quickly and cost effectively
Insure products meet the present and future demands of networking,
integration to hospitals information and accounting systems
Review and advise on clinical utility and information output of device
US
Europe Latin America
Commercializing The Product

What is it?
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Training programs
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Internal documentation
Programming code
Engineering diagrams
User manuals
Inventory projections
Major component spares
Technical Support
Field Service
Sales Training
Promotional documents
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Data sheets
Brochures
Advertisements/Trade shows
Press releases
White papers/clinical studies
Launch Checklist
Product:
Launch Manager:
Resp. Group
KEY DATE: Pilot units available on
KEY DATE: Production units available on
PRODUCT TARGET MARKET:
Marketing Materials
1. Are any new marketing materials required for this launch? (list each with due date)
1a. Sales sheet
1b. Email
1c. Direct mail
1d. Advertisement
1e. Trade show graphic
1f. Other promotion
3. Does this launch affect any existing marketing materials? (list each with due date)
4. Are any new marketing claims being made?
4a. If yes, what are they and what supporting materials are required?
4b. Is a change to the 510(k) or other regulatory filing required?
5. Update the website
5a. Copy: Review and update any changes in features and product claims
5b. Images: Find and replace all with new
6. Add to the online store
Marketing
Marketing
Marketing/Regulatory
Regulatory
Regulatory
Marketing
Marketing
Marketing
Marketing
Events
1. Will this launch be unveiled at a key event or show? (list show and date)
Marketing
Public Relations
1. Are any PR events planned for this launch? (list and describe)
Marketing
Manuals and Labeling
1. Users Manual
1a. Translation to other language required?
1b. Users manual validation
2. Are any quick start cards or other product materials required? (list each)
2a. Translation to other language required?
3. What labels are required? (list each)
Marketing
Marketing
Marketing
Marketing
Marketing
Marketing/Engineering
Packaging
1. How will this product be shipped?
1a. Is a new box required?
1b. Is any special packaging material required?
1c Any additional materials to be developed or included in packaging? (list each)
1d. Do our warehouses and/or distributors have any new requirements?
Marketing/Engineering
Marketing/Engineering
Marketing/Engineering
Marketing
Operations
Customer Service
1. Is a new troubleshooting guide required for this product?
2. Are changes to an existing troubleshooting guide required?
3. What customer service training is required?
3b. Prepare training materials
4. Schedule customer service training at least 3 weeks prior to launch.
5. Schedule follow up training 2 days prior to launch.
6. Update the price list
7. Make sure Great Plains has the correct part number, product description and price
Engineering/Customer Service
Engineering/Customer Service
Marketing
Marketing
Marketing
Marketing
Operations
Resp Person Due Date Status Comments
Know Where The Land Mines
Are Before You Step
 Market driven growth starts
with:
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
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
10/16/2008
Following The Injury
Home Care
Through The System
Hospital
Physical Therapy
Orthopedic Surgeon
May send patient to
either facility
depending on injury
Out Patient Surgery Center
60% of patients are
self or ER referrals
40% of referrals
from Primary Care
Physicians
Primary Care Physician
Treats non- surgical
patients
Ouch!
Patient
Injury
Emergency Room
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

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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.

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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

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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

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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 can't build a reputation
on what you're going to do.”
Henry Ford
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.

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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
CFO
VP Marketing
VP Engineering
Product Manager
Regulatory
OEM
Clinical Applications
Legal
Western Regional
Manager
Eastern Regional
Manager
Direct Sales
California
Direct Sales
MN,WS,
MR
WA, OR,ID
MR
AZ,CO
Direct Sales
Texas
OK
Direct Sales
MI, IND,IL
MR
NY,PA
MR
LO,MISS,,AK,AB
OEM Management Team
MR
UT, NV
Direct Sales
Florida
ND,SD,WY
New England
MR
KS,OK
Direct
GA,NC,SC
Tales From The Crypt
 R.I.P.
We Learn More From Our
Failures Than Success
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.
Lessons Learned By Companies
 Being Stupid Costs Extra!

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