Transcript LizTeam_DummyPack091020a by Chris

STRICTLY CONFIDENTIAL
MGMT 650B: Consulting Skills for Managers
DiagCor Self-collection HPV Test Marketing Plan
October 2009
Storyline
Situation
•
DiagCor has developed a new Self-Collection HPV Test for the detection of HPV virus in women, which is believed to be
the main cause of cervical cancer. DiagCor would like to expand the market for the test in Hong Kong.
Challenges
•
The self-collection diagnostic service model is new to Hong Kong, and DiagCor has limited resources in expanding the
market for the newly developed Self-Collection HPV Test
•
How can DiagCor achieve a sales of HK$ 1M in one year for the Self-Collection HPV Test with a limited budget of HK$
100K?
•
To license the Self-Collection HPV Test technology to FMCG companies such that testing kits will be bundled with
female sanitary products offered by the FMCG companies and sold to customers via supermarkets and pharmacies.
Question
Answer
Rationale
1. DiagCor cannot effectively
achieve its goal with In-house
marketing resources and
partnerships with other
organizations
1.1 DiagCor does not have enough
in-house budget to carry out new
product marketing
1.2 DiagCor’s corporate strategy
does not support marketing a
consumer brand.
1.3 Forming partnerships with other
organizations is not feasible at
the moment.
2. DiagCor can generate at least
$1M revenue in one year by
partnering with FMCG companies
with mutual benefits
3. Diagcor has much lower costs
and risk by partnering with FMCG
companies than sticking to inhouse marketing program.
2.1 The number of customers that
FMCG companies can reach
allows DiagCor to generate $1M
revenue from HPV tests
2.2 The Doctor + TV Ad campaign
usually adopted by FMCG
companies can effectively
convince potential test takers
2.3 The partnership creates value for
FMCG companies so the win-win
situation can be sustainable
3.1 DiagCor can leverage FMCG
companies’ effective marketing
channels that costs more than
HK$100k, and that DiagCor cannot
afford on its own
3.2 Product cost of DiagCor HPV Test
is a lot lower with FMCG companies
as partner
3.3 Human resource cost of DiagCor is
minimized with FMCG companies
as partner
1
Recommendations
Price*
Set at $450/Test
Product
Testing Kits are bundled with female sanitary products offered by FMCG
companies, such as sanitary napkins. Each Testing Kit includes a
sample collection bag, test instructions, and a return mail envelop.
Customers will send in samples and payments via mail. Test results
would then be mailed back to customers
Promotion
Joint-promotions with FMCG companies, and a portion of marketing
budget supported by DiagCor
Place
Testing Kits to be sold together with female sanitary products at
supermarkets and pharmacy chains that the partnering FMCG
companies have already established relationship with
Profit Model
Profit will be shared by DiagCor and FMCG partners on a 50-50 basis
Implementation
To dedicate an in-house marketing manager to implement the project.
If not, appoint an agent of testing services to implement the project on a
profit sharing basis.
* The retail price is set according to the results of Online Customer Survey October 2009
Other details please refer to Appendix
2
Expected Results
DiagCor can reach a revenue of over HK$ 1MM with profit
Profit and Loss Analysis – Proposed Marketing Plan
Sales* **
1,228,050
Cost of Goods Sold
238,250
Gross Profit
989,800
Expense
Marketing
100,000
Operating
220,000
Total Expense
320,000
Operating Profit
669,800
Profit Sharing to FMCG Companies (50%)
334,900
Net Profit to DiagCor
334,900
Includes the cost of
sample collection,
examination, and
result notification
Includes producing
50,000 testing kits for
bundling
Includes cost of test
administrator, website
revamp and overhead
50% profit sharing to
FMCG companies
*Number of Test Sold = 2729 (est.)
= Potential Customer Reached x Marketing Efficiency x Response Rate x Penetration
**Price of Test = HKD450 (from Online Customer Survey, Oct 2009)
Other details please refer to Appendix
3
Urgencies of the Project
1.Prevent the lost of first-mover advantage
2.Realize the potential return of this service immediately
3.Ride on the recent marketing campaigns run by HPV vaccine providers
4.Prove that the self-collection diagnostic service model works in Hong
Kong so that other tests can be offered via this service model
Rationale #1 In-house Marketing and other Partnerships not working
1.DiagCor does not have enough in-house marketing resources to carry
out new product marketing effectively
2.DiagCor’s corporate strategy does not support marketing a consumer
brand.
3.Forming partnerships with other organizations is not feasible at the
moment.
5
Rationale #1.1 Not Enough In-house Marketing Resources
DiagCor has very limited marketing resources to market new
product/service as compared to FMCG companies (eg. J & J)
No. Of Consumer Products Marketing budget
20
~HKD300,000
200
~HKD8,000,000
“Marketing Resource/Product” Ratio of DiagCor is only 37.5% that
of FMCG companies (eg. J & J)
*Data source: interviews with DiagCor and Partners October 2009
6
Rationale #1.1 Not enough in-house Marketing/Sales Personnel
DiagCor Resources
Hours
Marketing staff
2,300
Sales staff
4,600
Committed hours – staff running @ 95% capacity
Available hours
(6,555)
345
Estimated Staff Requirements
Marketing staff
1,600
Sales staff
4,600
Total
6,200
Staffing Deficit
(5,855)
*DiagCor has indicated no additional funding for internal resources is
available for commitment for the HPV testing project
Data obtained from interviews with DiagCor, October 2009.
Rationale #1.2 Corporate Strategy does not support marketing
The belief of DiagCor leads to limited marketing activities and resources. It would
not be effective if marketing is done in-house.
Quoted from an interview with Diagcor’s COO, Billy Chan, September 29, 2009
“We are a technology company, and we spend most of our
resources in the development of better products/services.
We don’t need to do much marketing because we believe if
our products/services are the best in the market, people will
naturally come to buy from us.”
8
Rationale #1.3 Potential Partnerships
FMCG companies are the most suitable partners
Interests in partnership
with DiagCor
Value proposition
Potential customers
generation
Staff clubs
•
Moderate
•
No
•
Low
FCMG Company
•
High
•
Yes
•
Very high
Government
•
High
•
No response
•
High
Insurance
company
•
Limited
•
No
•
Moderate
Medical website
•
Moderate
•
No
•
Low
Retail Stores
•
Moderate
•
No response
•
High
Universities/
School
•
Limited
•
Yes
•
Low
Data obtained from interviews with partners, October 2009.
Assessment
9
Rationale #2 Partnering can help DiagCor achieve Sales Goal
1.The number of customers that FMCG companies can reach allows
DiagCor to generate $1M revenue from HPV tests
2.The Doctor + TV Ad campaign usually adopted by FMCG companies
can effectively convince potential test takers
3.The partnership creates values for FMCG companies so that the win-win
situation can be sustainable
10
2.1 Expected Sales by Partnering with FMCG Companies
Partnership with FMCG Companies, eg. J&J, allows DiagCor to reach enough
potential customers to generate $1.36M of revenue on self-collection HPV test
Others
11.8%
J&J
23.2%
Kimberly Clark
29.3%
P&G
35.7%
$1.23M
Census 2007
7,008,300 1
x
(Hong Kong Population)
65.17%
x
23.7%
Expected Market Share to
be increased by 0.5%
x
50%
x
@$500 / test
0.5%
(% of eligible population) (J&J market share) (% of interested respondent) (marketing efficiency)
1.
Government population figure published at Jul 2009.
3.
Market share data obtained from interview with major retail stores.
4.
25 out of 50 respondents (50%) showed interest in performing the self-HPV test.
5.
Marketing efficiency based on interview of J&Js product manager.
=
2,729
( Potential Tests)
2. 65.17% calculated based on 2007 census data.
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2.2 Channels affecting Customer Perception
“Doctor + TV Ad” combo - an important means in convincing women to use selfHPV testing.
Preferences are based on online customer survey,
Oct2009 (N=50)
*Medical Journals are powerful, but general public do NOT read them often;
*Government would not help advertising a commodity;
*News report is not as far reaching as TV/Radio
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2.3 Value Realized by FMCG Companies
FMCG companies see values in partnering with DiagCor, so are willing to work together
Presented Value Propositions
1
Project a caring image and increase customer satisfaction
2
Differentiate from competitors, promote conversion
3
Benefit from the margin cut
4
Fit with brand equity (healthcare for J&J, innovation for P&G, etc)
Feedbacks from Interviews
FMCG
Companies
•Very interesting idea
•Fits with our corporate values
•Possibility to differentiate products from competitors
•Need to further explore product/partnership opportunity.
Data obtained from interviews with partners, October 2009.
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2.3 Benefits of the Partnership to FMCG Companies
FMCG companies can enjoy 50% of the project’s profit plus a potential increase of 0.5%
market share via the marketing effort. So the partnership is sustainable
Proposed P & L
Sales
1,250,000
Cost of Goods Sold
Gross Profit
238,250
1,011,750
+
Annual Sales
Expense
Marketing
100,000
Operating
220,000
Total Expense
320,000
Operating Profit
691,750
Profit Sharing to FMCG
Copanies (50%)
345,875
Net Profit to DiagCor
345,875
Potential Increase in Sales
= 62,000,000
(market size)
Details please refer to Appendix
x
0.5%
x
$1
(market share increase) (unit price)
= HK$ 310,000
Data from Interview with FMCG Companies, October 2009
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Rationale #3 Partnering can lower DiagCor’s Costs and Risks
1.DiagCor can leverage FMCG companies’ effective marketing channels
that costs more than HK$100k, and that DiagCor cannot afford on its
own
2.Product cost of DiagCor HPV Test is a lot lower with FMCG companies
as partner
3.Human resource costs of DiagCor is minimized with FMCG companies
as partner
15
3.1 Marketing Costs in Hong Kong
Effective marketing channels exceeds DiagCor’s Marketing Budget of HK$100k
Search Engine (Google, Yahoo)
60
Direct Mail (50000)
65
Sole online advertisement without grass-root
advertising method is poor in effect.
Customers’ perception on direct mail is poor.
Ladies' Magazine (8 weeks)
160
MTR PosterAds 4-Sheet Network (Frequency)
175
Pop Magazine (8 weeks)
280
Newspaper Ad (2 papers, 1/2p, 7d, CYMK)
300
MTR Trackside PosterAds (High Impact)
331
Road Show (200 spots, 10s, 1000 bus)
4,126
TV Ad (TVB, 50 spots, J5/F7/10s plan)
6,000
5,000
4,000
3,000
2,000
1,000
0
4,895
Cost (k HKD)
16
Costs are obtained from rate cards offered by the companies.
3.2 Product Cost is lowered by Partnering
Package and Consultation Service costs are costly
90000
80000
70000
Product Cost
(per 1000 pcs)
Only feasible when
partnering with
napkin
manufacturer
60000
50000
In HK$
40000
30000
20000
Existing packaging
method with poor
response
10000
0
Online Only
Coupon on
Napkins
Mini-Kit on
Napkins
Product Forms
Test Kit with
Napkin
Test Kit with
Consultation
Service
17
3.3 Human Resource Cost is lowered by Partnering
DiagCor's HR Cost with or without Partners
600,000
500,000
400,000
300,000
HKD
200,000
100,000
0
HR Costs with Partners
HR Required with Partners
Test Administrator
Annual Salary
Qty
(HKD)
1
120000
Total
Total
(HKD)
120000
120000
HR Costs without Partners
HR Required without Partners
Test Administrator
Marketing Personnel
Sales Personnel
Data obtained from interviews with DiagCor and partners, October 2009.
Annual Salary
Qty
(HKD)
1
120000
0.5
300000
2
120000
Total
Total
(HKD)
120000
150000
240000
510000
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Appendix
Customer Preference: Price
Over 90% of High Value Customers would pay $401-600 for
take-home HPV test
* Study based on online survey, Oct2009 (N=50)
20
Customer preference: Distribution (1/2)
Age 26-33 women strongly prefer buying the test kit from pharmacies
Study based on a survey of over 50 women in Hong Kong in October 2009.
21
Customer preference: Distribution (2/2)
Age 26-33 women strongly prefer buying the test kit from pharmacies
22
Customer preference: Promotion
Poster/Pamphets are among the most preferred marketing channels
Study based on a survey of over 50 women in Hong Kong in October 2009.
Sample Customer Case
Age : 26-33, Accountant
Conduct body check-up on regular basis
Feel embarrassed going to clinic for HPV screening
Willing to pay equal price to run the test anonymously
Would like to get the testing kit from pharmaceutical stores
Study based on a survey of over 50 women in Hong Kong in October 2009.
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Costs and Expenses of Self-Collection HPV Test Project
Cost of Goods Sold
Items
HKD
Remarks
Test
90
Test taking fee
Mailing Charges
3.3
Bulk mail, to/from customers
Test Result Handling
2
Total per unit cost
95.3
Marketing Expense
Testing Kit Items
HKD
Remarks
Sanitary bag
0.4
2C printed sanitary bags at 50,000 pcs
Instructions
0.1
4C printed instructions @ 50,000 pcs
Return mail envelop
0.3
2C printed envelops @ 50,000 pcs
Wrap
0.2
4C printed PVC bags @ 50,000 pcs
Packaging Cost
1
Total per unit cost
2
Including testing kit packaging and bundling, @ 50,000 pcs
Operating Expense
Items
HKD
Remarks
Salary of Test handler
120000
HKD10000/month, including benefits
Website Revamp
50000
Development and Maintenance of backend test tracking system
Overhead
50000
Transportation, etc
Total
220000
Proposed Implementation Schedule
After the promotion campaign is designed, the bundled testing kit will be distributed to
Customers in 4 phases, each phase’s duration is 1 quarter
Year 2009/2010
Activity
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1. Signing of Partnership Contract
2. Promotion Campaign Design (Testing kit, message, etc)
3. Production of Testing Kits
4. 1st Quarter Promotion
5. Marketing Data Collection and Analysis
6. Campaign Review and Improvement
7. 2nd Quarter Promotion
8. 3nd Quarter Promotion
9. Campaign Review and Improvement
10. 4th Quarter Promotion
11. Campaign Review and Analysis
26