2009 Kaplan University Graduate School of Business and Management GB530 Marketing Management: Brand Extension Marketing Plan
TRY L. MULLER
A brand extension marketing plan that highlights the specifics of a new product offering taking into consideration the market, demand, value proposition, product benefits and projected financials.
GB530 Brand Extension Marketing Plan 1.0 Executive Summary The medical device field is a $100 billion industry. Medical device equipment, like that of which is developed by Venture Manufacturing, accounts for $55 billion of that revenue. It is also important to note that industry growth is at an extraordinary rate of 8.4% annually. The reason for such growth can be attributed to needs expressed by medical professional in the midst of a volatile economy. This has resulted in many opportunities for companies to address these expressed needs through the introduction of new and improved products. Two of these needs that Venture Manufacturing has looked to address is 1) the need for better patient turnover in hospitals to improve efficiency in the patient flow process and 2) a better way to monitor patients who do not require 24/7 inpatient care, but who are stilled considered at-risk individuals. Thus, after considering how to mitigate both issues, Venture Manufacturing will introduce LifeTrak to the market in January of 2010. LifeTrak is the first patient monitoring device capable of not only running the patient’s diagnostics, but also communicating this information to the physicians and hospitals in order to provide updates as to the person’s condition and symptoms. It is also directly linked to ERM systems (Electronic Records Management) of hospitals, clinics, and private practice offices. Like its competitors it also notifies emergency services of serious situations that require immediate attention. However, LifeTrak takes it a step further by being able to send an electronic alert to both hospitals and EMT’s if the diagnostics warrant such a response. Thus, LifeTrak will be offered to hospitals, clinics, and private practice doctor’s offices. This is approximately 55,000 physicians and groups responsible for purchasing at the specific medical facility. The physicians who have discretion over issuing the device will now have more control their patient turnover rates, bed space, and to what extent and when they monitor the patient— improving work processes and providing even better patient care. Hospitals should be able to reduce their in-patient numbers since they will be able to receive medical from its higher-risk patients at any time during the day while the patient carries on with his or her normal routine outside of the hospital. Physicians will now have the
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GB530 Brand Extension Marketing Plan luxury to provide a patient with check-ups without the person being at armâ€™s length. LifeTrak is going to add a new dynamic to patient care that will ultimately create a mutually beneficial patient-physician relationship.
There are implications that LifeTrak will have a favorable start to its movement in the market. Sales first year are projected to be over $5 million. This is a modest forecast considering the implications LifeTrak has for the market and how effective it is at addressing the needs expressed by medical professionals. Furthermore, if LifeTrak increases sales by 10% for the next 3 years, it will have reached its break-even point. It is anticipated that the market response will potentially move this timeline up to approximately 2.5 years. LifeTrak will perform well on all fronts and help redefine how we view healthcare. LifeTrak will stimulate the market as it facilitates initiatives by physicians to create more efficient patient care systems and ultimately maximize their ability to serve the patient. The market will experience higher levels of stability and reliability as it will see patient satisfaction and confidence improve. LifeTrak will further enhance the capabilities of the marketâ€™s professionals on a nationwide scale and, eventually, a global scale. In essence, LifeTrak will perpetuate the medical fieldâ€™s desire to provide innovative and effective ways to monitor and save lives.
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GB530 Brand Extension Marketing Plan 2.0 SITUATION ANALYSIS Venture manufacturing has been in the medical device manufacturing industry for seven years. In correlation with their slogan, ―Turning Ideas Into Life-Enhancing Products‖, Venture Manufacturing’s products have generated significant financial returns and improved the proficiency level of operations and communications in the medical field. Its products have allowed Venture Manufacturing to open and operate facilities all over the country while still sustaining high levels of quality assurance and accountability. They offer
communication, and services. Currently, hospitals need two things: 1) Better patient turnover (space for patients) and 2) a better way to monitor at-risk patients who may or may not require 24-hr medical attention— but who do not reside in a medical facility. Hence, the brand extension that will be offered to the market in attempt to mitigate these issues is called LifeTrak. LifeTrak will address these needs by allowing patients who do not need to have around the clock attention the opportunity to go home and still be monitored by their doctors— inevitably freeing up space in the hospital and while still tracking a person’s condition. 2.1 Market Summary
Since Venture Manufacturing is designing and manufacturing such a high-end, digitally based product, the target customer base will not directly include the general public. Instead it will be offered directly to the medical field: physicians (public and private practice), clinics, and hospitals. The general public will clearly be serviced through this market. Insurance companies will make it possible for the general public to access LifeTrak though the medical professionals.
The growth of this market is uncapped since today’s market for medical devices is one of the key components in the healthcare industry. The worldwide medical device market generates approximately $100 billion in revenue, while the U.S. alone accounts for $58 billion. Combine this with an annual growth rate of 8%, this market does not show signs of regression. It has excellent implications for the opportunities Venture Manufacturing will have in positioning its new products.
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GB530 Brand Extension Marketing Plan
LifeTrak exudes superior technology, and the implications it has for operational efficiency, cost-effectiveness, and patient services are endless. While it may see some competition in this market, LifeTrak is cutting-edge, and competitors will only be able to focus on the intangibles of the device. Since it offers economic, safety, clinical, and convenience benefits, the value proposition is high— which should translate to an immediate impact and long-lasting growth in the market.
2.1.1 Market Demographics
The market hosts 25,750 health clinics, 21,000 private practices, and 8000 hospitals
The market employs approximately 50,000 physicians with complete discretionary power and 5000+ GPO’s (Group Purchase Organizations)
There are well over a hundred universities in this market that have a primary care facility as part of the campus
There is no defined geographic area for marketing LifeTrak. The market has medical care facilities scattered throughout the U.S.
The target population— only those with discretion in regard to purchasing decisions— is approximately 55,000 nationwide.
Behavioral Factors (Psychographics and Lifestyle considerations)
More and more Americans are reducing health coverage or dropping it all together— given that there is no requirement for federal insurance. Therefore, the demand for LifeTrak can be adversely affected. The medical
disproportionate purchases. For instance, over 10% of Detroit’s population is uninsured, which means that the medical facilities in that area may demand below average quantities of LifeTrak because they know that at least 10% of the population will not have the means to purchase it. Page 5 of 24
GB530 Brand Extension Marketing Plan
People have moved towards wellness and prevention. Dieting and being fit has become very popular— even more so since people are dropping healthcare coverage. The potential movement to a more healthy society has long-term implications for the market. The more people devoted to maintaining healthy lifestyles may lead to less healthcare visits and confidence in reducing healthcare coverage.
2.1.2 Market Needs Customer Value Proposition: LifeTrak is providing the healthcare industry with a mobile patient alert system designed to improve the efficiency of the patient monitoring and emergency response systems. The company seeks to address the following needs:
Outpatient monitoring: communication between physicians and at-risk patients must be improved in order to make emergency response more effective on behalf of both parties.
IT communication supplements: digitalized analysis is needed to improve how the patient’s progress is tracked so that data is always accurate and readily accessible. The introduction of EMR (electronic medical record) needs to be facilitated by products that require its technology.
Efficient care delivery: medical professionals need to find a way to get patients in and out quicker, while not sacrificing the quality of their service.
2.1.3 Market Trends The increase of unpaid medical bills and the increasing number of people dropping health insurance is forcing hospitals to think about consolidation. The less recessionproof medical facilities may have to succumb to merger & acquisitions just to stay in operation. Hence, the more recession-proof organizations will be able to capitalize on these opportunities if this trend continues.
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GB530 Brand Extension Marketing Plan
Medical facilities are making more IT investments due to projected financial and operational benefits. The introduction of EMR to the healthcare industry is a major technology trend that is trying to peak despite a poor economy. Digitally tracking medical records has numerous implications for the industry. The biggest barrier to continuing the implementation of EMR across the board is the economic outlook. There will be fewer and fewer personnel shortages in hospitals as physicians, who have been adversely affected by the economy, are lured back to their positions by needy hospitals. Physicians need securityâ€” retirement accounts have been depletedâ€” and hospitals need the physicians. 2.1.4 Market Growth In 1999 the revenue for U.S. medical devices was $46.7 billion and today is forecasted to be over $107 billion by 2011. Today, the medical device market generates revenue over $100 billion. So it seems that it is growing at a steady rate since its revenue has increased by over 100% in 10 years. So, the market for this brand extension will not only facilitate the growth, but it will also allow natural upward movement as foreshadowed by the medical device market projections. In other words, a strong flow in the medical device market should naturally pull LifeTrak alongâ€” inherently increasing the market for it. Since the market is growing it is important to try and provide it sustenance in the midst of an economic downturn. The growing market should allow easy infusion of LifeTrak within the current scope of medical devices in the industry. The market cannot be addressed aggressively because of the fragile state that a lot of medical facilities are in. If LifeTrak approaches the market with idea of improving processes and service it should find its place as a very popular supplement to the improvement of the healthcare industry. 2.2 SWOT Analysis 2.2.1 Strengths
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GB530 Brand Extension Marketing Plan 1. LifeTrak be easily integrated within the patient flow process EMR 2. LifeTrak runs and reads its own diagnostic information and sends the information to the hospital. 3. The diagnostic information generated is universal and can be read at any hospital nationwide. 2.2.2 Weaknesses 1. It may not read diagnostic information as accurately as stationary hospital machines. 2. The device is not protected from the natural elements and may need to remain in the most favorable conditions to be truly effective 3. It obviously uses a lot of battery life and will need to be frequently charged to be effective and accurate. 2.2.3 Opportunities 1. Introducing new medical capabilities for healthcare 2. Providing a sense of extended long-term care to patients 3. Giving caretakers and live-in aids the ability to improve their responsibilities 2.2.4 Threats 1. The economy is in a downturn and EMR systems may not be integrated across the board which could make the device communication ineffective 2. Health insurance is currently losing its priority. A lot of people will not be able to use LifeTrak if insurance companies cannot make systematic adjustments for the at-risk patients who may only have moderate coverage. 3. Competitors with specialized devices and tools may infuse a variety of low-cost products into market and nullify the need for LifeTrak.
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GB530 Brand Extension Marketing Plan 2.3 Competition LifeTrak will face intense competition as new lifesaving innovative technologies are being put on the market every day. The company will be competing with device manufacturing powerhouses such as Johnson and Johnson, GE Health Care, Philips Medical Systems, and Siemens Medical Systems. These companies cover all aspects of healthcare industry from medical imaging and information technologies to patient monitoring. These companies obviously exhibit extraordinary brand strength. However, the customers will be attracted to LifeTrak because it adds a very critical dynamic to patient monitoring: mobility. The ability to monitor a patient in his everyday life— without him being in the facility or coming for checkup— has not been fully addressed. Hence, the only way to compete with these well-positioned companies is to hedge our way in the market with discounted wholesale product offerings and trial offers for the smaller facilities. This discreet approach should develop a following, and only then can we address the market in its entirety— hopefully taking competitors by surprise.
Similar competitor products: LifeStation, Alert1 o Product LifeStation – offered in the form of a mini-watch with a button that corresponds to a portable speaker device which allows the person to communicate to LifeStation Care Specialists (nationwide monitoring center). It has 4 products within the LifeStation portfolio: main system (watch, response console), lock box, emergency bathroom button, and activity assurance service. Alert1 – identical process and service as LifeStation. This offers 5 products within the portfolio: main system (watch/pendant, response console), room button, hallway button, voice extender, and key box. o Price: LifeStation – All products are priced with a monthly service fee. The main system (watch/ response console) is $29.95/month, hallway button at
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GB530 Brand Extension Marketing Plan $2.49/month,
$5.99/month. Alert1 – A service fee (for the response center) of $29.95/month for the main system (watch/pendant, response console) and the minimum contract is 1 year ($360/yr). The additional products within the portfolio except for the Voice Extender are a one-time cost of $39.95. The Voice Extender costs $99. o Promotion LifeStation – promoted as giving ―peace of mind‖ to loved ones who may have to provide some level of care. Testimonials are given from the perspective of adults who have elderly parents who may need help when they [the kids] are not around to help. Commercials also lean towards marketing to the elderly; however the option is open to everyone. Product(s) sold directly to customers. Alert1 – this is promoted in almost identical fashion, but geared completely to the elderly. However, it took a different approach by making sure consumers know it was featured on Good Morning America. It is also sold directly to customers. o Place LifeStation/Alert1 – Both products are distributed domestically throughout the U.S. They use the internet (websites) and television as their channels to the consumer. They use a zero – level consumer marketing channel. 2.4 Product Offering Product/features/benefits: LifeTrak is the brand extension that we are preparing to introduce into the market. It is a mobile diagnostics device that monitors a patient’s vital signs and physiological functions and reports this information back to the physician’s database. It also acts as an emergency alert system that automatically notifies physicians and EMT units of an individual’s symptoms so that necessary protocol can be followed. Other, less explicit benefits include:
A mobile emergency system that will inevitably save and improve lives
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GB530 Brand Extension Marketing Plan
Cost-effective way to monitor patients
Providing patients a way to monitor themselves and track their well-being
Designed to be inconspicuous (in the form of an oversized watch)
Patients will spend less time in the hospital
Physicians can monitor patients on a daily basis if necessary without requiring face-to-face appointments
Brand Equity Model
LifeTrak will build brand equity using the Brand Resonance Model. LifeTrak is essentially a life-changing product, so it will be natural for customers to identify with the brand. Linking the tangible and intangible brand associations seems fairly easy considering it will look like a big watch and it the implications it has for the well-being of the individual. Hence, the anticipated brand response will provide an avenue by which to capture customer loyalty. Brand equity will essentially be built by sending the message to our customers that we are devoted to improving their quality of life and we want them to feel secure even in the most critical times.
2.5 Keys to Success 1) Communicating the benefit of LifeTrak to the market so as to lay the foundation for what is to be expected. 2) Analyzing and studying the competition so as to make the necessary improvements to LifeTrak. 3) Monitoring physician and patient response to LifeTrak. 2.6 Critical Issues It is important to use the EMR as a platform from which to promote the device. The easy integration of LifeTrak with EMR technology is a strong point that physicians will be able to easily relate to. Also, the SWOT strengths highlight the fact that LifeTrak selfservicing and needs little to no maintenance except for charging the device. The strengths will be catalysts to the marketing approach we use to capture customer value.
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GB530 Brand Extension Marketing Plan LifeTrak is currently in the introduction phase of the product life cycle because we do not want to push for a strong surge in the market until we have completed the initial trial product offering and we can assess the feedback. The biggest point-of-difference is that each device is corresponds to the patients place in a database. Any time information needs to be pulled up on diagnostics, the person can take their LifeTrak band to the nearest hospital and the necessary information will can be accessed. A competitive point-of-parity is that the device reads diagnostics as well as that of a stationary diagnostics machine. If not as well, the disparity is so slight that the physicians and patients will not be able to tell the difference. Thus, it should break even in this area with the competition’s products and act as a catalyst to customer loyalty in the long-run. 3.0 MARKETING STRATEGY 3.1 Mission Venture Manufacturing’s mission is to provide the medical profession with cutting-edge instruments that will improve processes and services in regards to the well-being of the patient. These products will exude the medical profession’s desire to help its patients maintain and improve their quality of life while improving and sustaining the doctorpatient relationship. Due to this mission, LifeTrak will be introduced to the market in order to facilitate an efficient patient care and monitoring process.
Value Proposition: LifeTrak facilitate efficiency in the patient care process and help physicians to provide more extensive services to patients. The medical profession will experience higher levels of stability and reliability as it will see patient satisfaction and confidence improve. LifeTrak will further enhance the capabilities of the market’s medical professionals. In essence, LifeTrak will perpetuate the medical field’s desire to provide innovative and efficient ways to monitor and save lives.
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GB530 Brand Extension Marketing Plan Fundamental goals:
Maintaining superior levels of quality assurance
Adhering to high performance standards and expectations
Effectively communicating the value, benefits, and economic implications of the products to medical purchasing committees
3.2 Objectives Marketing Objectives:
Stable and gradual annual growth that results in a .002% ($70million) market share by the eighth year of production. This is a $100 billion dollar market and 35% ($35 billion) is made up of medical devices and equipment. Thus, LifeTrak would like to capture at least double the current market share (.001% or $35million) in the next 8 years. This means producing an average sales floor of $8.7 million in each of the first 8 years of production.
Developing at least on client in each state by the sixth year of business— maximizing LifeTrak’s coverage.
Increasing patient turnover rate by 1% in hospitals
Positioning: LifeTrak will position itself as a superior medical device that will leverage its advanced technology to render the most dynamic and effective products. LifeTrak is a product of expert medical professionals who understand the daily nuances involved in patient care. Hence, it perpetuates the market’s devotion to improving the environment for physicians and, consequently, the quality of life for the patients. The experience and dedication put into developing LifeTrak will facilitate its introduction to the market and allow it to hedge its way as a superior product. Market Size and Share: The market size is approximately 55,000. This is combination of physicians with discretion of purchasing, GPO (group purchasing organizations), and hospital procurement professionals. Venture’s current share is .01% and LifeTrak is expected to double that.
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GB530 Brand Extension Marketing Plan Brand Image: Venture is currently perceived as a research and development company that periodically has mediocre product offerings. Needless to say, the brand image is currently weak because it has not created a strong enough product that could facilitate a legitimate surge into the market. The image needs to be strengthened to create confidence in the quality of its product offerings. LifeTrak will mitigate some of these image issues and redefine Venture’s role in the market and change consumer perspective on the quality and innovation to be expected from Venture in the near future. Brand Awareness: Venture has faded into the background as a typical medical device company. It has not differentiated itself from the rest of the landscape and other industry players have positioned themselves as a more popular option. Venture has to reassert itself and establish its brand as an active player in the market. LifeTrak will inevitably help in this area because its response to the market will grab attention and peak interest. 3.4 Target Markets The target market segments are as follows: GPO: Approximately 4,000 (7%) will purchase for hospitals Clinics: Approximately 26,000 (46%) of the market GP/Family Doctor/Private Practice: Approximately 22,000 (40%) Hospitals without GPO’s: Approximately 4,000 (7%)
Segmenting the market in this way is essential to how potential customers will be introduced to LifeTrak. Clinics may pose a barrier to entry such as not enough funding and there will have to be more negotiation in the purchasing process. GPO’s also pose a barrier simply because it is an intermediary to deal with instead of direct hospital employees. The private practice doctor’s offices and hospitals without GPO’s often could be the most accessible markets.
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GB530 Brand Extension Marketing Plan 3.5 Positioning LifeTrak will be positioned as the first mobile life-monitoring device to run, analyze, and communicate diagnostic information while still functioning as an emergency alert system. The superior technology used in crafting the device has made it possible for the individual to read diagnostics pre-emergency, to notify medics and physicians of an individual’s condition during an emergency, and is easily integrated into the existing EMR system. Thus, it offers 24-hour mobile monitoring. Unlike the competition, we are not specializing in specific aspects of preventive care. Instead, LifeTrak is taking preventive care to the next level by offering a product that gives warning signs, day-by-day analysis, and emergency alerts to the physician and the patient. This will improve emergency response and allow a physician to be better prepared for each patient’s situation. LifeTrak distinguishes itself by offering mobile diagnostics and monitoring without requiring daily inpatient attention. 3.7 Marketing Mix Product LifeTrak differentiates itself on the following components: form, features, performance quality, durability, reliability. In terms of form, LifeTrak offers various sizes and colors from infant to adult. The performance quality is a key component because it monitors any irregular symptoms from moderate conditions (influenza) to much more serious conditions (cardiovascular). If offers various features available to the physician and the patient like the ability to run on-the-spot diagnostics, send emergency alerts to EMT’s and physicians, and use certain percentage of solar power to save battery life. It is also a very durable device as it is a combination of stainless steel and rubber components— much like a high-end sports watch. LifeTrak offers more value to the target market segments because of time and efficiency. Hospital, clinic, and general practice physicians will be able to help more patients because they will require less face-to-face and inpatient monitoring. The
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GB530 Brand Extension Marketing Plan target market segments will experience better workflow and have more discretion over when it is necessary to actually see a patient. Price Price Objective: LifeTrak will have a product-quality leadership objective. LifeTrak is offering a high-end product. So it makes sense to also exemplify leadership in qualityâ€” justifying costs that may be higher than competitors. Demand: The market for wireless patient monitoring devices is expected to reach $6.5 billion by 2012. Currently 66 million Americans are monitored and treated remotely for a chronic condition. With numbers expected to be reach 120 million by 2020, it is obvious that demand for these devices will continue to grow. However, current demand will not be quantifiable until the product is tested on the market. Costs: 500 units/week, 26000units/year Fixed Costs: 50 direct labor employees ($45000 average salary), 3 executives ($300K average salary), 5 line managers ($65,000 average salary) (exclude utilities and facility is owned). = $133.65/ per unit Variable Costs: rubber, stainless steel, packaging, technology, shipping (per batch/500 units) â€“ $100,000 = $200/ unit Competitorâ€™s price: LifeStation and Alert1 are competitors that closely parallels what LifeTrak is doing. The main system is costs $29.95/month with a minimum one-year contract. They offer direct sale to customers and also charge monthly fees for any additional product in the portfolio (i.e. Activity Assurance). Thus, the individual pays $360 a year. Pricing method: LifeTrak will use perceived-value pricing as it aims to deliver on its value proposition and exceed consumer expectation. It believes that the value and quality of the product to the consumer will balance out price issues. Final price: The final price for the LifeTrak device will be $375. The price difference with the competitors is marginal, can be reduced and still have a profit margin, and it leaves room for increases over time to match higher demand. The technology also allows it to perform more extensive functions than the competitive alternative. Page 16 of 24
GB530 Brand Extension Marketing Plan
Place Pull: LifeTrak will use a pull strategy so that it can incite patients to demand the product from the physicians at clinics, general practice offices, and most importantly, hospitals. The patient response should evoke a need for the physicians to order the product Channel Design Decisions: Exclusive Distribution â€“ LifeTrak will use exclusive distribution so that it has a significant amount of control over the training and motivation of channel members. By using a few strong intermediaries, it could improve brand strength and brand awareness. Potential intermediaries are GPOâ€™s (Group Purchasing Organizations) and strong public companies like that of Siemens and Guidant Corp. E-Commerce Marketing Practices: LifeTrak will offer an e-commerce channel in order to get response from consumers, get information from potential consumers, and provide the consumer with pertinent information to the product. Wholesaling: LifeTrak will use wholesaling as it is the most efficient means given the scope of the business. The marketing logistics will be managed by EIS (Electronic Information Systems) that will effectively manage order processing, inventory control, shipping, and tracking operations. Promotion Objective: To increase the percentage of hospitals, clinics, and general practitioners who use LifeTrak, by at least 1% each year through the use of informative and reinforcement advertising methods. Message & Vehicles: The target market segments need to read about and see the product. Articles will be published in magazines, healthcare newsletters, and product brochures. Also, the internet will provide a great vehicle for communicating product quality and characteristics. Results: Surveying customers during the product purchase process as to how they heard of LifeTrak, where they heard it, and their initial response. We will also
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GB530 Brand Extension Marketing Plan analyze how the ratio of advertising and promotional costs related to sales on a monthly, quarterly, and yearly basis. 3.8 Marketing Research Objective: Understanding how much money the target market segments allocate to the purchasing of medical devices and understanding where and how to do the initial product offering. Scope: Initial research must be conducted on a broad scale to take the temperature of the market. Each segment will have to continue to be surveyed and there must be participatory marketing with current customers who may help promote brand awareness and offer suggestions as to how to better reach the market as a whole. LifeTrak will thrive on customer surveys, potential customer surveys, and CRM initiatives such as offering free products to current and potential customers as a means of sales promotion. Implementation: The research will be implemented at all phases of the process: prepurchase, purchase, post-purchase, and promotion. The research is the catalysts to LifeTrakâ€™s infusion into the market.
4.0 FINANCIALS 4.1 Break-even Analysis First year sales revenue for the LifeTrak product is estimated to be $5,270,500. The average sales price is $375 per unit with the variable expense per unit at $200. This results in a contribution margin of $175 per unit. The sales volume in the first year is estimated to be 14,054 units. Estimated fixed costs for the first year are $3,175,000. Using the contribution margin method, estimated losses in the first year will be ($715,550).
Sales (14,054 units) Less variable expenses
TOTAL $5,270,500 $2,810,800
PER UNIT $375 $200
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GB530 Brand Extension Marketing Plan Contribution Margin
Less fixed expenses
Net operating income
The following analysis assumes that the average cost per unit will be $375 with a variable cost per unit of $200. LifeTrak should break even at 18,143 units as inferred from ($3,175,000 / $175). TOTAL $6,803,625 $3,628,600
PER UNIT $375 $200
Less fixed expenses
Net operating income
Sales (18,143) Less variable expenses
Break even point
8 Total Revenue 6 4
Total Expense Loss
2 1st year position
0 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Units sold (thousands)
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GB530 Brand Extension Marketing Plan On average, in a perfect world, it takes a medical device business 2 â€“ 3 years to become profitable. Hence, it will take at least 1.5 years for the company to hit the depicted break-even point. In order to hit the break-even point, sales have to be increased by 29%. LifeTrak can reach this goal in for years if it increases sales by 10% each year (Y1 to Y2, Y2 to Y3, and Y3 to Y4).
4.2 Sales Forecast: 1st year by month; 2nd and 3rd years by quarter Y1
GP Clinic s Hospi tal
Year 2 580K
5.0 CONTROLS Monitoring expenses and revenue Expenses and revenue will be monitored through accounting practices such as quarterly and monthly income statements as well as cash flow statements. For the first year it may be necessary to monitor these components monthly. Marketing effectiveness Corporate â€“ we will have to assess our capacity to continue marketing based on Page 20 of 24
GB530 Brand Extension Marketing Plan what our ROMI (Return on Marketing Investments). If our ROMI reflects our marketing efficiency then we can continue to implement the current strategy. Competitive â€“ we must analyze how competitors are reacting to our marketing efforts. Our marketing efforts should incite competitors implement competitive strategies. Customer/Consumers â€“ we must understand the consumer and how he/she makes decisions. If our consumer is satisfied then we are delivering the value that we marketed. So, post-purchase surveys and customer input will help identify ways to improve strategy. The best way to improve effectiveness is to interact with those who have experienced the product. Changes in the environment Changes in the environment will be assessed first through trend reporting. We must identify changes in when purchases are made, who is making them, and how much the purchases are worth. We then must analyze the market to identify relationships between environmental factors (consumer habits, economy, purchasing power) and make the necessary adjustments. 5.2 Marketing Organization The Director of Operations will be the pivotal player in implementing the marketing program. He will be in charge of identifying marketing channels and he will collaborate with the Chief Financial Officer as to the organizationâ€™s financial capacity to implement the program. Line managers will also devote a significant amount of time to marketing and will be the main source of expertise to the channel members as to how to create appeal for the product. The Director of Operations will oversee the whole marketing process and will provide in-depth analysis of current activity and future endeavors.
5.3 Contingency Planning Risks Since Venture is a manufacturer, we do not sell directly to the consumer. Even though we distribute exclusively in order to retain power within the channels, not all direction will come strictly from us. Thus, the marketing plan man not be as effective
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GB530 Brand Extension Marketing Plan as we would like it to be in its entirety since we do not have complete control. Another risk is that the industry is flooded with so many devices that we may not experience any economies of scale. Differentiation may not be enough to get the market to leave what they know and use a brand new and relatively unfounded product. Lastly, given the economy, the variable costs in producing the units could continue to rise if the dollar continues to lose value and technology, materials, and shipping become inflated. The market may not react favorably to higher prices if we have to increase them in order to cover inflation costs. We cannot take on that type of burden during the inception stage of this product. Monitoring risk We must first internalize our marketing strategy so that everyone is aligned with goals, purpose, and expected outcome of the plan. Furthermore, we must look for a cost-effective competitive advantageâ€” potentially a partnershipâ€” that will allow us to remain stable in a favorable or unfavorable market. Furthermore, we must continue to improve on delivering on our customer value proposition. Hedging into a broad and deep industry of products means that quality assurance and reliability translate to differentiation. Once we have improved in that area, we must think beyond the product, and how we can use our product to appeal to the latent wants or the consumer. Adapting to adversity In the most adverse conditions we will have a standard marketing process that we can revert to while we find equilibrium again. Establishing strong customer relationships will provide a stronghold for the organization should market conditions become unfavorable. A strategy that involves more intensive distribution instead of exclusive distribution could be initiated to create more market coverage in efforts to alleviate the burdens. There will be a survival process that involves streamlining operations if adversity is expected to present a long-term situation.
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GB530 Brand Extension Marketing Plan References ―The Camden Group Outlines Major Healthcare Industry Trends And Challenges For 2009‖. Retrieved from Medical News Today database. November 28,2009. http://www.medicalnewstoday.com/articles/134857.php Enoch, J.S. (2007). Seniors‘ Fear of Falling Keeps LifeAlert Flush. Retrieved from Consumers Affairs database. http://www.consumeraffairs.com/news04/2007/09/lifealert_folo.html Kotler, P. & Keller, K.L. (2009). Marketing management (13th ed.). Upper Saddle River, NJ: Pearson Prentice Hall Marianne, P. (2008).‖Make Healthcare Costs Part of Economic Cure‖. Retrieved from Freep database. November 28,2009. http://www.freep.com/article/20080930/OPINION02/809300328/Make-healthcare-costs-part-of-economic-cure Posner, S. (2009).―Value Proposition Is Key to New Product Success in a CostConscious Medtech Market‖. Retrieved from Medical Devices Today database. http://www.medicaldevicestoday.com/2009/10/value-proposition-is-key-to-newproduct-success-in-a-costconscious-medtech-market.html Taper, S. (2007). What’s Your Share of the $5 Billion Medical Monitoring Market? Retreived from the TechRepublic database. http://whitepapers.techrepublic.com.com/thankyou.aspx?&docid=972585&view=972585 &load=1 Vanden Plas, J. (2008). ―U.S. can learn from others in adopting electronic health records‖. Retrieved from WTN News database. Dec. 5, 2008. http://wistechnology.com/articles/5057/
Werner, C. (2007). "Analyst reports medical device market flourishes". Healthcare Purchasing News. FindArticles.com. 01 Dec, 2009. http://findarticles.com/p/articles/mi_m0BPC/is_4_27/ai_100484234/
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GB530 Brand Extension Marketing Plan
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