NEW PRODUCT LAUNCH STAGES OF PRODUCT DEVELOPMENT (grand-finale) Under guidance of Prof. V V Ramasastry ANAND TUTEJA 1B-40 NANDITA KATIYAR 1B-54 ARUN PUNDIR 1B-43 GAURAV ROHATGI 1B-41 SHRAVAN RASTOGI 1B-59 RASWINDER JIT SINGH 1B-31 RUPAL NIMBHORKAR 1B-33
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NEW PRODUCT LAUNCHSTAGES OF PRODUCT DEVELOPMENT
(grand-finale)Under guidance of Prof. V V Ramasastry
3) Third party service providers3a) Clinical trials
3b) Healthcare convenience service providers
3c) Medical Transcription & Telemedicine
3d) Health Insurance Providers
3e) Others (laundry , caterer etc)
4) Bio-pharmaceutical manufacturers
5) Medical Devices manufacturers
OVERVIEW
• The healthcare industry is expected to increase in size
from its current € 12.72 billion to € 29.6 billion by 2012.
• India will spend € 33.8 billion on healthcare in the next
five years as the country, on an economic upsurge, is
witnessing changes in its demographic profile
accompanied with lifestyle diseases and increasing
medical expenses.
• Revenues from the healthcare sector account for 5.2
% of the GDP and it employs over 40 lakh people.
• By 2012, revenues can reach up to 7 % of GDP and
direct and indirect employment can double.
OVERVIEW (contd….)
• Private healthcare will continue to be the largest
component in 2012 and is likely to double to € 26.41
billion.
• It could rise by an additional € 6.5 billion if health
insurance cover is extended to the rich and middle
class.
• Coupled with the expected increase in the
pharmaceutical sector, the total healthcare market in
the country could increase to € 39.22 - 54 billion (6.2-
8.5 per cent of GDP) in the next five years.
OVERVIEW (contd….)
• BP measuring watch has a huge untapped potential in
the Indian market as India has one of the largest number
of Hypertensives in the world. (164 per 1000 in urban and
157 per 1000 in rural areas – 2005 WHO report)
• Such watches exist in foreign markets but have still not
been introduced in the Indian markets.
• This watch gives the option of storing the record of
fluctuations in BP and thus helps in continuous
evaluation of the patient by the cardiologist.
• There is negligible competition in the Indian market and
the technology is already existing so there will be low
R&D costs.
FACTS ABOUT OUR COMPANY
1. Ours is a medical devices manufacturing company with strong technological and R&D expertise. (Artistic designing is not our strength)
2. Our company is trying to foray into the time measuring devices industry.
3. Ours is a company that is financially sound enough to venture into small & medium projects.
4. Our company has strong distributorship network in small electronics & medical devices industries only.
CLASSIFICATION
OF TIME
MEASURING
INSTRUMENTS
Watches
Wrist watch
Pocket watchStop Watch Others
Mechanical
winding
Automatic
winding
Clocks
Wall clocks Table clocks
Instrument
panel clocksSundials
With
alarmWithout
alarm
STAGE 1 :
IDEA GENERATION
IDEA GENERATION
POSSIBLE SOURCES OF INFORMATION : Need gap Study
Feedback from the customers
Internal - R & D, employees
External market research
Competitors
Trade shows & fairs
Seminars & workshops
OBJECTIVE : Systematic generation of maximum no. of
ideas coherent to Market Opportunity, Company Objectives &
Company Resources.
BRAIN STORMING : 7 of us made a group &
had a detailed discussion regarding possible new
ideas and finally arrived at the following 15 ideas.
The brainstorming session had the following
features :
•No negative comments on any idea•People encouraged to give wild ideas•People were allowed to modify others’ ideas
1. Daily use stopwatch
2. Sundials
3. Radio alarm clock
4. Car clocks with weather forecasting & navigation
5. Pen watches
6. Auto turn-off devices
7. Toy & fancy clocks
8. Antique clocks & watches
9. BP measuring watches with alarm system
10. Jewellery watches
11. Chest watches
12. Chess stopwatches
13. High precision watches
STAGE 2 (GATE 1) :
IDEA SCREENING
OBJECTIVE : To reduce the no. of ideas by dropping the poor ideas & spotting good ideas.
OUR METHODOLOGY : Screening in 2 steps
STEP I : Brief analysis of Product
TMS
Competitor
Rough estimate of market size
Rough estimate of product price
Rough estimate of time & cost
Rough estimate of ROR
By doing this first step we eliminate 8 of the 15 ideas.
IDEAS ELIMINATED :
1. DAILY USE STOPWATCH : Minimum possibility of new innovative features that can be added & minimum margins available.
2. SUNDIALS : Market size is very small & distribution capability in that market is weak.
3. RADIO ALARM CLOCKS : Market size small due to decreasing popularity of bulky radios.
4. CHESS STOPWATCHES : Distribution ability is restricted in the sports market.
5 . PEN WATCHES : Distribution insufficient in stationery segment.
6 . ANTIQUE CLOCKS & WATCHES : Unsustainable DA & market saturated due to too many competitors.
7 . JEWELLERY WATCHES : Distribution insufficient in the jewellery market. Moreover jewellery designing is not company’s core competency.
8 . TOY & FANCY CLOCKS : Distribution insufficient in toys segment.
STEP II : Detailed analysis of the remaining ideas by
allocating the following weightages & checking for compatibility of the opportunities with the company’s
objectives & resources :
Strategy & objectives 20 %
Marketing skills & experience 25 %
Financial resources 15 %
Distribution capability 15 %
Production capabilities 15 %
R&D capabilities 10 %
Idea Rating (CAR CLOCKS WITH
WEATHER MONITORING & FORECASTING)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Idea Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.14
Marketing Skills
& Experience 0.25 0.15
Financial
Resources 0.15 0.09
Channels of
Distribution 0.15 0.045
Production
Capability 0.15 0.12
R&D Capability 0.10 0.08
1.00 0.625
Idea Rating (AUTO TURN OFF DEVICES)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.16
Marketing Skills
& Experience 0.25 0.20
Financial
Resources 0.15 0.09
Channels of
Distribution 0.15 0.105
Production
Capability 0.15 0.12
R&D Capability 0.10 0.08
1.00 0.755
Idea Rating (BP MEASURING DEVICES
WITH ALARM SYSTEM)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.20
Marketing Skills
& Experience 0.25 0.225
Financial
Resources 0.15 0.12
Channels of
Distribution 0.15 0.15
Production
Capability 0.15 0.12
R&D Capability 0.10 0.10
1.00 0.915
Idea Rating (CHEST WATCHES)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.20
Marketing Skills
& Experience 0.25 0.225
Financial
Resources 0.15 0.12
Channels of
Distribution 0.15 0.15
Production
Capability 0.15 0.135
R&D Capability 0.10 0.08
1.00 0.91
Idea Rating (HIGH PRECISION WATCHES)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.14
Marketing Skills
& Experience 0.25 0.20
Financial
Resources 0.15 0.12
Channels of
Distribution 0.15 0.105
Production
Capability 0.15 0.12
R&D Capability 0.10 0.04
1.00 0.725
Idea Rating (CUSTOMIZED WATCHES & CLOCKS)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.16
Marketing Skills
& Experience 0.25 0.225
Financial
Resources 0.15 0.135
Channels of
Distribution 0.15 0.09
Production
Capability 0.15 0.15
R&D Capability 0.10 0.09
1.00 0.850
Idea Rating (INSTRUMENT PANEL CLOCKS)
New Product
Success Factor
Relative
Imp
Fit Between Product Idea & Company Capability Rating
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Company Strategy
& Objectives 0.20 0.16
Marketing Skills
& Experience 0.25 0.20
Financial
Resources 0.15 0.12
Channels of
Distribution 0.15 0.105
Production
Capability 0.15 0.12
R&D Capability 0.10 0.08
1.00 0.785
So finally on the basis of these scores, we have short-listed the following 4 ideas in this stage which will further go to CONCEPT DEVELOPMENT & TESTING STAGE
1. BP measuring watches with alarm system
2. Chest watches
3. Instrument panel clocks
4. Customized clocks
STAGE 3 (GATE 2) :
CONCEPT
DEVELOPMENT
& TESTING
CONCEPT
STATEMENTS
BLOOD PRESSURE MEASUREMENT
WATCHES WITH ALARM SYSTEM• Wrist watches.
• Can measure blood pressure, pulse rate & body temperature using embedded high
technology sensors.
• Will beep & vibrate if BP goes beyond a certain level which can be prefixed by the
operator.
• Can keep a full track of all fluctuations in the blood pressure over a period of time
and thus helps in good follow-up of the patient. So it will help the doctor also in
monitoring the patient.
SEGMENTS : a) Health conscious peopleb) Established Hypertensivesc) People at high risk of developing Hypertension
BENEFITS :a) Self monitoring by patientb) Help in controlling emotions & angerc) Easy & accurate follow up by the doctor
OCCASIONS OF USE :a) Throughout the dayb) Periods of stress & anxiety
CHEST WATCHES• Comes with a chest belt which has a sensor that measures & transfers vital signs like
body temperature, blood pressure, pulse and respiratory rate to the wrist watch which
displays these readings. Gives the benefit of self-monitoring & control.
• Suitable for athletes, sportspersons & health conscious people.
• Can be used during workouts, jogging & otherwise household work also.
CUSTOMIZED CLOCKS AND
WATCHES
Will bear the brand name & logo of
company. Customization can be done in
straps, dials, needles & frames.
Will target the kids & youngsters.
Can be used as gift item.
INSTRUMENT PANEL
CLOCKSSEGMENT : Scientists, Researchers, Labs
BENEFITS : Quality, Accuracy & Precision
OCCASIONS : Experiments, Academics
EVALUATION
TECHNICAL VIABILITY 8 8 7 8
PRODUCTION AT LOW COST 9 9 9 9
FINANCIAL VIABILITY 8 8 9.5 7
DISTRIBUTION VIABILITY 9 9 9 9
BRANDING / MARKETING 7 7 8.5 8
TOTAL 41 41 43 41
CH
ES
T W
AT
CH
CU
ST
OM
ISE
D
CLO
CK
S
BP
ME
AS
UR
EM
EN
T
WA
TC
HE
S
INS
TR
UM
EN
T
PA
NE
L C
LO
CK
S
ANALYSIS OF THE SOURCE OF D.A.
MARKET SIZE 7 9 9 8
MARKET GROWTH 6 8 8.5 8.5
PROFITABILITY 8 9 9 8
COMPETITION 8 7 9 8
RESTRICTION 7 7 5 7
TOTAL 36 40 40.5 39.5
CH
ES
T W
AT
CH
CU
ST
OM
ISE
D
CLO
CK
S
BP
ME
AS
UR
EM
EN
T
WA
TC
HE
S
INS
TR
UM
EN
T
PA
NE
L C
LO
CK
S
ANALYSIS FOR THE ATTRACTIVENESS OF T.M.S
D.A. 41 41 43 41
T.M.S. 36 40 40.5 39.5
TOTAL 77 81 83.5 80.5
CH
ES
T W
AT
CH
CU
ST
OM
ISE
D
CLO
CK
S
BP
ME
AS
UR
EM
EN
T
WA
TC
HE
S
INS
TR
UM
EN
T
PA
NE
L C
LO
CK
S
Total of D.A. & T.M.S.
12
Watches
Stop watches
Wrist watches
Stand alone
Sundials Alarm clocks
Desktop clocks
Radio Alarm Watches
Wrist watches
Car clocks
GPS enabled
Auto synchronizing
watches
Specialized watches
Health
Parameter monitoring
watched
Metered Dosage watches
Adventure
Parameter monitoring
watches
GPS and Waypoint
Sport
Water resistant
All Weather
Specialized
High Precision
Atomic clocks
Research
Antique clocks
Grand father clocks
Collectibles
Wrist watches
Digital
Analog
Pocket watches
Technological Break Down Structure
Market Break down structure
Regular Users
Affluent People
Students
Fashion Conscious users
Office Goers
Children
Adventurers
Specialized Users
Scientists
Long haul Drivers
Patients
Health Conscious people
Aviators
Factory Workmen
Model Type Movement Display Price Features
Car clocks Wired to Car battery Digital/Analog Low To High Features like lap timers/
Radio alarm clock Battery/AC power Digital HighMultiple alarms, Radio,
Versatile
GPS Watches Battery Digital HighWaypoint tracking ,
Weather functions
Specialized health
WatchesBattery Digital High
Health monitoring,
Recording, alarm functions
Jewelry or luxury
watches
Hand cranked/Battery/
crystal/eco drivesAnalog Very High
High resale value,
Fashionable, Customizable
and Novelty Factor
Sport watches
Hand
movement/Battery/Ha
nd wound/ Solar
Digital or analog Low to High
Water resistant/weather
proof/ Lap timers/stop
watch functions/Rugged/
Scratch resistant
AntiqueManual or hand
crankedAnalog Very High
Novelty Factor,
Collectible, High resale
value,
Kids Battery Digital or analog Low to mediumCustomizable, fashionable
, Rugged
PDC FOR BP
MONITORING WATCHES
Market Related Criteria For BP
monitoring wrist watches1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Market demand for product 5
Market Need for product 4
Uniqueness relative to competition 5
Competitive Advantage 5
Ability to explain product to consumer 4
Trade channel for product 4
Company’s understanding of the product 4
Customers acceptance of product 4
Synergy of new product with current product offered 5
TOTAL 40
Technology Related Criteria for BP
Monitoring watchesUniqueness of Technology 5Potential life cycle of Technology 4Ability to develop the technology 5Ability to patent the technology 5Ability to keep the development cost under control 2Ability to manufacture the technology 4Applicability of technology to future product 5Ability to keep the minimum potential risk associated with the
technology2
TOTAL 32
Background Arena Goals/
Objective
Special
guidelines
To Provide
precision
electronics
and medical
devices
Company has
strong R & D
capabilities and
a heritage of
high precision
medical
devices
Company aims
to capture
35 % of the
market share in
two years
To Provide
accurate and
reliable
BP/Pulse/Temper
ature
measurements
with up to 2 hours
of data storage
Mission Statement
• We are an established watchmaker in the
Premium and value segment and aim to
capture 35% of the Medical and health
conscious market in 1 year by providing
benefits like real time Health diagnostics
and Monitoring.
PDC FOR CHEST WATCHES
Market related criteria for Chest watches
1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Market demand for product 3
Market Need for product 3
Uniqueness relative to competition 3
Competitive Advantage 5
Ability to explain product to consumer 4
Trade channel for product 5
Company’s understanding of the product 5
Customers acceptance of product 3
Synergy of new product with current product offered 4
TOTAL 35
Technology related criteria –
Chest watches1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Uniqueness of Technology 3Potential life cycle of Technology 3Ability to develop the technology 5Ability to patent the technology 5Ability to keep the development cost under control 2Ability to manufacture the technology 5Applicability of technology to future product 5Ability to keep the minimum potential risk associated with the
technology3
TOTAL 31
Background Arena Goals/
Objective
Special
guidelines
To Provide
precision
electronics
and medical
devices
Company has
strong R & D
capabilities and
a heritage of
high precision
medical
devices
Company aims
to capture
35 % of the
market share in
two years
To provide an all
in one medical
diagnostic system
with alarm
fucntions
Mission Statement
• We are an established precision electronics
supplier in the medical and electronics
segment and aim to capture 10% of health
conscious and patients in two years by
providing an all in one health monitoring
system.
PDC FOR INSTRUMENT
PANEL CLOCKS
Market related criteria for
Instrument panel clocks
1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Market demand for product 4
Market Need for product 4
Uniqueness relative to competition 3
Competitive Advantage 3
Ability to explain product to consumer 4
Trade channel for product 3
Company’s understanding of the product 4
Customers acceptance of product 3
Synergy of new product with current product offered 3
TOTAL 31
Technology related criteria -
instrument panel watches1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Uniqueness of Technology 3Potential life cycle of Technology 3Ability to develop the technology 4Ability to patent the technology 3Ability to keep the development cost under control 2Ability to manufacture the technology 3Applicability of technology to future product 4Ability to keep the minimum potential risk associated with the
technology2
TOTAL 24
Background Arena Goals/
Objective
Special
guidelines
To Provide
precision
electronics
and medical
devices
Company has
strong R & D
capabilities and
a heritage of
high precision
medical
devices
Company aims
to capture
35 % of the
market share in
two years
It will
incorporate user
assignable
parameter
monitoring and
real time
monitoring
functions.
Mission Statement
• We are an established precision electronics
supplier in the medical and electronics
segment and aim to capture 30% of
industrial and aviation displays segment in
two years by providing benefits like
precision displays and real time monitoring
of user assigned parameters
PDC FOR
CUSTOMIZED WATCHES
Market related criteria for Customized clocks
1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Market demand for product 4
Market Need for product 4
Uniqueness relative to competition 3
Competitive Advantage 4
Ability to explain product to consumer 4
Trade channel for product 3
Company’s understanding of the product 5
Customers acceptance of product 3
Synergy of new product with current product offered 3
TOTAL 33
Technology related criteria -
Customized clocks1-poor 2-Fair 3-Good 4-very Good 5- Excellent
Uniqueness of Technology 3Potential life cycle of Technology 3Ability to develop the technology 5Ability to patent the technology 4Ability to keep the development cost under control 2Ability to manufacture the technology 3Applicability of technology to future product 5Ability to keep the minimum potential risk associated with the
technology3
TOTAL 28
Background Arena Goals/
Objective
Special
guidelines
To Provide
precision
electronics
and medical
devices
Company has
strong R & D
capabilities and
a heritage of
high precision
medical
devices
Company aims
to capture
35 % of the
market share in
two years
To provide a
completely bare
bone product with
a variety of add
on and inter
changeable
casings and
straps.
Mission Statement
• We are an established precision electronics
supplier in the medical and electronics
segment and aim to capture 30% of the
customized watches and fashion segment in
two years by providing benefits like
changeable dials and snap on straps and
changeable casings.
Aggregate Total
Market Score Technology
Score
Score
BP Monitoring
Watches
40 32 72
Chest Watches 35 31 66
Instrument
Panels
31 24 55
Customized
Watches
33 28 61
Competitors of BP Measuring Device
As this is a new concept , there is no direct competitor of this device.
However indirect competitors exist , namely
Sphygmomanometer
Electronic inflatable measuring devices
High Price Branded Wrist Watches
• The perception maps are plotted on the following parameters :
Price VS Quality
Ease of use VS Quality
Ease of use VS Price
Product Perception Map : PRICE - QUALITY
SPHYGMOMANOMETER
ELECTRONIC INFLATABLE
MEASURING DEVICE
HIGH PRICED
BRANDED WATCHES
BP MEASURING
WATCHES
Product Perception Map : EASE OF USE - QUALITY
SPHYGMOMANOMETERELECTRONIC INFLATABLE
MEASURING DEVICE
HIGH PRICED
BRANDED WATCHES
BP MEASURING
WATCHES
Product Perception Map : EASE OF USE - PRICE
SPHYGMOMANOMETERELECTRONIC INFLATABLE
MEASURING DEVICE
HIGH PRICED
BRANDED WATCHES
BP MEASURING
WATCHES
DETAILED CONCEPT DESCRIPTION
1. FORM : A sturdy & sleek watch with sensors on the
underside.
2. QUANTITY : 1 per pack with the instruction booklet & an
extra free strap.
3. MATERIAL : Made of bio-compatible non allergic rust free
material.
4. AESTHETICS : Sleek & stylish. Available in 4 colors –
Navy Blue, Grey, Lemon & Pink. Strap also available in
various colors. Completely mimics the appearance of a
normal watch.
BELIEVABLE CLAIMS : The watch monitors the
BP regularly. Beeps if there is an abnormal
increase due to anxiety or emotions & warns the
patient to be in control. Also stores weekly data
that can be transferred to the doctor’s PC for
monitoring & follow up.
TECHNOLOGY : Made of the latest German
technology. Fool proof tried & tested.
COMFORT : Very comfortable. Has a velvet
cushion coating on the underside of the strap. Soft
non irritable sensors on the underside of the body.
8. REASON FOR PREFERENCE : It’s the first of its kind in the market. Gives extreme emotional flexibility to the hypertensive patients.
9. AFFORDABILITY : Priced at a competitive 300 rupees.
10. RISK FREEDOM : Made of reliable non allergic & comfortable material. No side effects.
11. VALUABILITY : Price considerably low as compared to the benefits offered hence increases the value tremendously.
12. CONTRAINDICATIONS : People with artificial pacemakers installed in their bodies should not use this watch as it interferes with the frequency of the pacemaker.
People with Siderosis should also avoid the watch.
13. AVAILABILITY : Available at all major surgical stores. Tie ups with major pharmacy chains. Also available through the internet channel.
14. ACTIONABILITY : Easy to wear, maintain & replace batteries.
15. SHELF LIFE : Unlimited. However battery life restricted to 6 months.
16. PORTABILITY : Can be worn anywhere, even in water during swimming or in gym during exercise. Easy to carry. Provided with a shock insulating case.
17. EASE OF USE : Just program it according to doctor’s instructions & wear it. Everything else will be taken care of by the watch.
STAGE 4 :
DEVELOPING A
MARKETING STRATEGY
Marketing Strategy Development – ITERATIVE PROCESS
OBJECTIVE : To find an AFFORDABLE, BALANCED & COST EFFECTIVE marketing strategy.
TMS SIZE : 90,00,000 hypertensives out of a total of 5 crore
hypertensives in India.
TMS STRUCTURE :
Upper Class & Upper Middle Class
Primarily Urban
Medical NGOs working for social welfare
TMS BEHAVIOR :
Health Conscious People
People having blood pressure problems
Patients away from doctors & requiring continuous monitoring
PLANNED PRODUCT POSITIONING :
SHORT TERM GOALS :
1st year :
SALES : Rs 12,00,00,000 /-
PROFIT / LOSS : Loss of Rs. 2,43,90,000 /-
2nd year :
SALES : Rs 13,75,00,000 /-
PROFIT / LOSS : Profit of Rs. 31,00,000
I. Product Variants – Watches will be available in
different strap sizes and body colors – Navy blue, grey, lemon,
pink.
II. Pricing Strategy –
Maximum in first year and then gradually decrease to compete with competitors.
Skimming layer by layer.
Differential Pricing i.e. prices will be different for individual customers,
corporate customers, NGOs.
III. Distribution
Tie ups with Hospitals
Doctors
Pharmacies
NGOs
Health Associations
Internet Channel
Direct Selling through exclusive outlets in 4 Metros
Exclusive kiosks in big hospital campuses.
IV. Promotion Strategy
Advertising budget – Rs. 5 crore
Split 50:50 national : local
1/3rd into TV , 1/3rd into newspapers, 1/3rd into direct selling & tie ups
Special offers for senior citizens i.e. > 65 yrs of age
Long run sales & profit goals.
Product quality –To start high & continue to improve through R&D.
Price – Moderate.
Variants expand over the year.
Promotion Budget- To increase each yr by 2-5 %
With initial Ad /sales promotion split of 65 : 35 evolving eventually to 50 : 50 by
the end of 3rd year.
STAGE 5 (GATE 3) :
FINANCIAL ANALYSIS
CASE DETAILS
No. of hypertensives in India= 5 crores
Target market segment= Upper middle class and upper class primarily urban
Target population= 9,000,000
Cost per unit 1st year = Rs 3000 per unit
2nd year = Rs 2500 per unit
3rd year = Rs 2000 per unit
REALISTIC SCENARIO
OPTIMISTIC SCENARIO
PESSIMISTIC SCENARIO
Financial Objectives
1. Payback time < 4 yrs
2. BEP (sales value) < Rs. 15 Crore
3. Maximum Loss < Rs 5.5 Crore
4. IRR for first four years must not be < - 10 %
5. All the above conditions must be fulfilled even
in the pessimistic scenario.
Realistic Scenario
•Discounting rate= 15%
•Maximum investment exposure = Rs3.5 cr
•Payback = 1.8 years
• IRR = 3.5 %
Optimistic scenario
• Sales go up by 10%
•Cost of goods sold come down by 10%
•Discounting rate = 15%
•Maximum investment exposure = Rs3.5 cr
•Payback = 1.2 years
• IRR = 6 %
Pessimistic scenario
•Sales come down by 10%
•Costs of goods sold increase by 10%
•Maximum investment exposure = Rs3.5 cr
•Payback = 3.77 yrs
•IRR = - 4.75 %
The concept clears the financial objectives of the company even in
the Pessimistic Scenario.
Hence we proceed further !
• Awareness
• Trial
• Availability
• Repeat Purchases
• The no. of hypertensives in India are approximately 5 crore.
• The target population is upper middle class and the upper class which is approximately 9 million.
• Through aggressive marketing campaigns 60 %can be made aware of the product
• 30 % of the target market can be expected to try the product
• 5 % of these customers willing to buy the product
• 50 % of availability of the product in the existing distribution channel
No. of units sold in First year
= 9000000 X 0.6 X 0.3 X 0.5 X 0.05
= 40,500
Price of each unit = Rs 3000 /-
Sales = 40500 X 3000
= Rs 12,15,00,000 /-
Sensitivity Analysis
TARGET
POPULATION
AWARENESS TRIAL AVAILABILITY REPEAT
PURCHASE
PURCHASE
FREQUENCY
9000000 0.6 .3 .5 .05 1
9000000 0.61 .3 .5 .05 1
9000000 0.6 0.31 .5 .05 1
9000000 0.6 .3 0.51 .05 1
9000000 0.6 .3 .5 .051 1
9000000 0.6 .3 .5 .05 2
40500
41175
41850
41310
41310
81000
•The most important parameter is the
PURCHASE FREQUENCY but watch
being a search good is generally not purchased
more than once a year.
•Therefore TRIAL RATIO which is the next
most important parameter should be
considered & focused on.
( EXPECTED / ESTIMATED
COMMERCIAL VALUE )
CON-
CEPT
NPV
(in Rs
cr)
PROB
OF
TECH
SUCCESS
PROB
OF
COMM
SUCCESS
DEV.
COSTS
(in Rs
cr)
MKTNG
COSTS
(in Rs
cr)
ECV
BP
WATCHES
33.65 0.9 0.4 3.5 5 4.114
STAGE 6 (GATE 4) :
PROTOTYPE
DEVELOPMENT
AND TESTING
1. TARGET MARKET SEGMENT..
Class: Upper middle , Elite class
Age: 35 to 80 years
Profile: Health conscious people, established
hypertensives, people with high risk of
developing hypertension
2. POSITIONING
Check your blood pressure ,keep a
weekly record of it, transfer this
data to your doctor, get an
appointment
- all this while on the move wearing
your favorite watch.
3. PRODUCT ATTRIBUTES..
Blood pressure measuring device inbuilt in a wrist watch.
Bluetooth compatibility for data transfer and a mini memory card for data storage
Stylish looks
Waterproof
Alarm enabled
4. COMPETETIVE COMPARISION..
No competition as it’s the first of its kind
However indirect competitors exist , namely
• Sphygmomanometer
• Electronic inflatable BP measuring devices
• High Price Branded Wrist Watches
5. AUGMENTATION DIMENSION
Free one year warranty
Safe and durable
Competitive post sales service
Monitors your blood pressure and avoids risk of heart attack by warning you in case your blood pressure increases due to anger, excessive exercise, exertion etc.
6. TIMING
Product launch after diwali i.e. 3rd/4th week
of November as a new innovative product
7. MARKETING REQUIREMENTS
One month prior to launch
Advertisements in newspapers, radio,
televisions
Tie up with pharmaceuticals so as to provide
doctors with a complementary watch and
promote our product.
Provide hospitals with posters
~40,000 units in 1year
8. FINANCIAL REQUIREMENTS
• We have sufficient funds
• Breakeven: By 1.8 years
• Development cost required: Rs 3,50,00,000
• Marketing cost required:
• Rs 5 crore for the 1st Year
• Rs 3.5 crore for the 2nd Year
9. PRODUCTION REQUIREMENT
Cutting edge technology
Highly sensitive sensors
Nano technology
10. REGULATORY REQUIREMENTS..
ISO 14971: 2007 (It specifies a process
for a manufacturer to identify the
hazards associated with medical
devices)
HMU certification
Indian Medical Association Recognition
11. CORPORATE STRATEGY..
Top management committed to for
development while middle management
responsible for product management.
KAIZEN
Our corporate competency is our distribution
network and patented superior technology.
12. POTHOLES..
High maintenance
Initial discomfort of use (slightly bulky)
STAGE 7 (GATE 5) :
TEST MARKETING
TEST MARKETING
Gives opportunity to test the product & the Marketing
program :-
• Positioning Strategy.
• Advertising .
• Distribution
• Pricing
• Branding and packaging
• Budget levels
CONSUMER PRODUCT
TESTING
Standard Test
Markets
Controlled Test
Markets
Simulated Test
Markets
STANDARD TEST MARKETS
• Find small no of representative test cities.
• Conduct full marketing program /campaign
• Use store audit, consumer & Distributor surveys to gauge product performance.
• Use results to forecast national sales and profits, discover potential product problems & fine tune marketing program.
• Length of test marketing 15 – 20 days and analysis 10 days
• Tie ups with Fortis hospital, Delhi as a test market.
• Tie up with them as the product to be used, to be promoted
to all patients, with high or low BP and also to senior
citizens.
• Offer attractive schemes and discounts to the hospitals on
bulk purchases.
• Ad campaigns in all media : TV commercials , newspaper,
radio, internet, billboards.
• Hoardings all over town.
• Collaborations with hospital for introduction at medical
seminars and meets.
• Promotional pamphlets to be provided outside hospitals.
• Have stalls and counters in seminar, meets and gatherings.
• Give free merchandise to aware people of the product, with
different slogans and depictions (caps , t-shirts , badges, pens)
STAGE 8 :
COMMERCIALIZATION
LAUNCH & COMMERCIALIZATION..
• Direct marketing.
• Introduced in various hospitals.
• Ad campaigns in all media : TV commercials , newspaper, radio,
internet.
LAUNCH & COMMERCIALIZATION..
• Brand ambassador : Famous Heart Specialist
NARESH TREHAN
• Tagline: YOUR HEALTH IN YOUR HANDS
• Hoardings all over town, in hospitals.
• Free Health Checkups in various cities.
• Expanding to other metros and tier one cities.
• Slowly moving to tier two cities.
• Refreshing the advertisement campaign.
• Link the advertising to the commonwealth games. (Delhi)
• Develop telephone based or online processes for order
placements and service requests.
• Set up a helpline for people who want more information.
STAGE 9 :
LIFE CYCLE
MANAGEMENT
FOLLOWING ACTIONS ARE VISUALIZED
• Constant maintenance of focus as laid down
• No Gap
• Maintain motivation and zeal in the team
• KAIZEN = Improvement
• Meeting / conferences / interaction on weekly basis
• Constant visit by mgmt to different cities on promotional rounds.