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    Genicon a Surgical Strike Into Emerging Markets

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    839 visualizzazioni12 pagine

    Genicon A Surgical Strike Into Emerging Markets

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    Genicon a Surgical Strike Into Emerging Markets

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    © All Rights Reserved
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    Chapter 21 Market Analysis 13 Customer Analysis customer analpis is designed to provide marketers with an in-depth understanding ofthe com pan/s customers, which consists of consumers other businesses, and nonprofit organizations, The "Ws" ofa customer analysis indude understanding the “who, what, when, and where” of consumer purchases, The “H suggests how purchases are made. ‘An effective marketing program necessitates careful study ofthe consumer buying decision- making process, Each step offers the potential to reach and attract customers. The steps include problem recognition, an internal information search, the evaluation of alternatives, the decision, and « customers postpurchase evaluation of the process, The concepts “share of mind” (awarenes, recall) and “share of hear (loyalty affection) provide helpful ideas about how custom- rs viewa company and its products. Market Potential and Market Demand ‘The marketing team can also benefit from methods that help with understanding market potential and market demand, Market potential consists ofthe total number of individuals or business that right purchase a product. Macket demand is the total current existing demand for a product ‘Company or brand demand expresses the demand for a particular company’s brand and:is often referred toas market share. Demand may be estimated using consumer surveys, sales force estimates, executive opinions, or one of several quantitative methods, including trend projections, moving averages, exponential smoothing, and regression analyses, Producing quality demand estimates keeps a company from ‘over-or under-producing items, ‘Two additional market analysis tots are contribution margins and bresk-even-point analyses, Contribution margin is calculated by subtracting marginal costs from additional revenues. The contiuton made sto Ged cors and prot. Break-even ana identfs the numberof units that need tobe sold in order to cover fixed costs and variable costs, “The purpose of a market andy should be o increase understanding ofthe hey targets of « marketing effort. It identifies the context in which products are sold, the competitors involved, the ‘compaiy’s standing relative to those competitors, and the consumers that might be acquired and. retained through various marketing efforts, § The Cases GENICON: A Surgical Strike Into Emerging Markets GENICON is a US.-based firm that manufactures and sells medical devices for laparoscopic sur- ‘ery. The company’s owner and founder, Gary Haberland, concluded that expanding in the more vwell-dereloped US, market was difficult, He was presented with the opportunity to expand into Europe, and GENICON subsequently entered a total of nearly 30 countries At that point, 85% of, comps wee made in fg matt T contin oro he company ado epan sion was necessary. The case suggests that Haberland believed that the BRIC countries—Brazil, Russia India, and China—offered the most promising new markets. Zach had quantifiable and nonqtuntfable advantages and indvantage A mare only ofeach country woud bp hi make the best decision for the company. (4 CHAPTER 2: MARKET ANALYSIS HyundelCard’s Marketing Strategy ‘The HyundalCard credit card company entered the competitive South Korean market in 1999. An innovative program tying credit card usage to automobile purchases gave the company 2 quick start; however sles soon slowed, Strong competition with well-known brands had halted the imi’ sgrovh, HyundaiCard’s marketing response was based on it electronic customer relations manage- ‘ment program, which helped the fim customize interactions with customers and with target mar- ket segments, The program was a success and demonstrates the value of a well-designed market ‘analysis program. Questions remain as tothe direction the company should take in the future. ‘TerraCycle, Inc. ‘TerraQyce's main product, an all-natural fetlier that helps plants grow, was pat of owner Betsy Cot- ton's desire to create goods that havea low impact on o een replenish natural resources. This approach ‘was in contrast to two major competitors, Scott’ and Relying on relationships with retail giants Walmart and Home Depot, the eco-company looked for ways to continue to grove Individual gardeners constuted the, primary matket. The narating team considered the company’s ymnanagement development of two specic plant foods one for orchids and another for Afvcan violets. With imited resourees, the marketing tam acesed whether to develop one ofthe two producs or both. GENICON: A Surgical Strike Into Emerging Markets By Allen H. Kupetz, Adam Tindall, and Gary Haberland In January 2010, Gary Haberland, president and founder of GENICON, a U.S.-based firm that ‘manufictured and distributed medical devices used this point and what the future might hold for the young company. Itwas not long ago that GENICON ‘was near bankruptcy, as had been the cate with ‘many small companies inthis industry. GENICON, ‘unlike mast of the startup companies that had suc- ccumbed to the pressures of the medical device industry, was not only able to remain open but actually thrived: it did this by focusing on its inter- national distribution strategy since the early stages ofitslaunch, Thisstrategy not onl saved GENICON Copii © 200, bey Management Series fiom the vast and often fickle bariers of the US. market, but also came to define the company. Haberland knew that inorder for GENICON to grow end diversify, new markets would have to be ‘denied, evaluated, and developed. Although the animal invasive surgery (MAIS) devie market inthe ‘United States had long been the largest inthe word, International markets were expected to grow at @ much fister rate than the five percent growth fore- casted forthe US. market forthe foreseeable foture. ‘According tothe 209 GENICON business plan, growth for the Paci Rim was estimated to be 14 perent, with 11 percent forthe Middle Bas nine percent for Europe and six percent for Latin Americ; addition- ally it was extremely difficult to gain market share in the Unite Stats. Since the early 1990s, distribution cof MIS devices had been controlled by companies Veron: (A) 2010-06-30 GENICON: A Surgical Stike Into Emerging Markets. 15 ‘Early internatlonal success & ‘not change the fact that GENICON needed to constantly identify ‘what market it should enter next. The capital invest- rent and ik associated with enteting anew market ‘was high for a firm the size of GENICON. Although the cost varied depending on the market and the local regulatory process, it would cost approximately $50,000" per market up front, with another $20,000 in costs for distributor assessment, market sampling and channel contracting. There was aio an opportunity cost as Haberand dd vitwally all the new business development and thus he was often out of the office attending tradeshows and meeting potential new dis- tributors; furthermore, the time| initial invest- ‘ment and the point at which the fst revenues were realized had been as much as three years. As was the ‘cave with many start-up companies, capital resources we ia oconeby andes yaousmas simultaneously was simply not feasible, A Look Inside the Laparoscopic Industry | Laparoscopic surgery, a subset of MIS, allows phy- minimally invasive techniques, During scopic surgery, the sbdomen remains closed while specialized surgical instruments are inserted through a number of small inciscns. Compared to open surgery, laparoscopy reduces trauma to the skin and muscles and reduces post-operative pain: this leads to shorter hospital stays and recovery times, providing dear advantages for both patients ‘aid hospitals. ‘The global market for MIS devices and instru- ‘ments was worth an estimated $12 billion in 2005 and was expected to reach $185 billion by 2011, an average annual growth rate (AAGR) of 75 percent ‘between 2006 and 2011. The United States accounted forapproximately 60 percent ofthe world market, or $7.2bilion in 2005, and was growing at an AAGR of 72 percent. The US. market forall MIS procedures was approrimately $77 billion in 2006 and was ‘expected to reach SIL billion by 2011; thus, there ‘waa matket ouside the United States of more than ‘$7 lion for GENICON to pursue, ‘While strong future sales growth was expected, this growth rate was forecasted to delineyeat-over- ‘the worldwide financial condition, hospitals did not ‘want to invest lige sls of money in intrumenta- tion, Many hospitals argued over the value of owning whether disposable or reus- able instruments were appropriate i their business models; additionally, in some, developing interna- tional markets, sues involving the re-use of dispos- able instruments put downward pressure on sles in those markets. GENICON was certain however that the ease-of-use and innovation of the disposable device markets would continue to guarantee their use and market share. When taking all factors into account, the outlook for the entie laparoscopic device industry was deemed very promising by Hiberland and many industry observers. ‘The Genesis of GENICON In 1996, while working fora large medical device ‘company, Haberland and a small development team ‘were tasked to perform an analysis as to whether the ‘company should mature its soft goods line to include laparoscopic medical devices. The firm 16 CHAPTER 2: MARKET ANALYSIS \vas hesitant, considering it was primarily involved in orthopaedics and this would represent signifi- «ant deviation from their current operations; add- tionally, maturing their line to include laparoscopic ovices would require a large investment of capital resources. After Several months of research and negoti ith the development team, upper ‘management decided to forgo entry into this il citing high barriers to entry and compatibility with the company’s current operational structure as factors in their decision. Haberland, bafiled by management's assessment, resigned and created GENICON. ‘ing part ofa lege coxporation let Haberland litte knovsledge or experience concerning low to create a company of his own. hough it was clear to Haberland that there was an enormous unmet need inthe endoscopic industry, he was unaware of how to go about mecting this need for example, he knew nothing ofthe process to gain approval from the Food and Drug Administration (EDA) to manufacture afid market medical products. Haber- land learned that in order to file with the FDA he needed a company, and in order to have a company hhe needed his first product After vetting the vari- cous devices used in laparoscopic surgery, he decided to start with trocar a device used in every laparoscopic procedure to provide the initial means cof aceess into the abdominal evity (see Exhibit 1. Considering his limited resources for develop- ‘ment the tocar was the most logical option. Being ‘one-man company meant that Haberland had to ‘outsource any research and development requiring specific technical skills. The knowledge base for these instruments was well established and readily available, reducing the capital investment needed to produce a prototype; more importantly, several ‘of the patents on these devices had expired since many had been on the market for more than a decade. Taking this approach was much less costly than developing a completely new product, which was extremely important considering Haberland’s limited financial resources. 111998, GENICON achieved its first sale toan Atlantacbased distributor for $20,000. This was a monumental achievement for the company at the FERED sister centcontsreaconyy See: Company ects, me, but further sales had to be obtained quickly as expenses rapidly began to pile up. Haberlond inikially targeted US. customers, Considering that approximately half of the world’s laparoscopic procedures were performed in the United Stats, and given GENICO! market seemed to be the log pecting brisk Sales within the fst year, GENICON would then use that capital to sustain operations and grow the company. Though there was a large and increasing demand for laparoscopic surgical devices, unfore= seen barrets to obtaining these sales loomed large. ‘The US. health care market heavily favored pur- chasing through GPOs, which then sold to hospi- tals and other primary cae facilities. While lnrger medica device firms had few problems selling their products under this arrangement, smaller compa- nies faced a daunting challenge to obtain contracts GENICON: A Surgical Strike loto Emerging Markets 17 from GPOs, This industry structure led to GENICON’s inability to sell any significant amount of product digits yr of per tion. To farther compound the young problems it was quill running out of capital. If these issues persisted, the company would almost certainly fail within a year. | GENICON Goes International In 1998, Haberland learned thit the American College of Surgeons would be holding their nual smeeting atthe Orlando Convention Center, just minutes from his home. Although it wes not « trade show, Hsberland figured it would be a good leo eter and en pet fo sags It was not inside the convention, however, were Habetiand received advice that would dras- tically change GENICON's market focus. While ‘walking to the convention centet, he ran into an. respective businesses and thelr mative for being at the conference, Upon leaming’ of GENICON’s troubles doing business in the United States, the sentleman asked if Haberland bad ever thought of taking his business to the European market. Haber- land had envisioned one day being an international company, but to this point had ever given it any serious consideration, As the two spoke and Haber- land dwelled on his recent experiences trying to penetrate the U.S, market, he expressed interest in the proposal. Fllowing the dscission and some tial opportunity existed in Europ, and that it was Snhi compnysbet inter to ep tht oppor tunity. With BSI’ assistance, GENICON became the smallest company ever to receive the regulatory authority allowing its products to be sold through- out the European Union (EU). ‘While gzining this approyal, GENICON's domestic business continued to remain slugeish. Realizing that it was going to be duct business in the United States until GPO sible to con. contracts were obtained, Haberland decided to focus his efforts on the newly opened European inariet Though ths statogy poe its own tof Fiss, there was no other option. Learning of GENI- ‘CON’s recent European approval, a sharcholder recommended that Haberland attend MEDICA in Germany, one of the largest tradeshows for medical

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