Transcript LizTeam_HPV_FinalReport091023

STRICTLY CONFIDENTIAL
MGMT 650B: Consulting Skills for Managers
DiagCor Self-collection HPV Test Marketing Plan
Team E
Yuun Lam (09903803)
Richard Ma (08935005)
Victor Tsang (08936073)
Chris Tsui (08936542)
Elizabeth Siu (08935615)
October 2009
Storyline
Situation
•
DiagCor has developed a new Self-Collection HPV Test for the detection of human papillomaviruses (HPV) in women,
which is 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 $450/Test
Product
•
Testing Kits are bundled with female sanitary products offered by FMCG companies, such as sanitary napkins. Each
Testing Kit includes a sample collection bag, test instructions, and a return mail envelop. Customers will send in samples
and payments via mail. Test results would then be mailed back to customers
•
Joint-promotions with FMCG companies, and a portion of marketing budget supported by DiagCor
•
Testing Kits to be sold together with female sanitary products at supermarkets and pharmacy chains that the partnering
FMCG companies have already established relationship with.
•
Profit will be shared by DiagCor and FMCG partners on a 50-50 basis
•
To dedicate an in-house marketing manager to implement the project. If not, appoint an agent of testing services to
implement the project on a profit sharing basis.
Promotion
Place
Profit Model
Implementation
* The retail price is set according to the results of Online Customer Survey October 2009
Other details please refer to Appendix
2
Expected Results
DiagCor can achieve a revenue of over HK$ 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)
For detailed costing information, please refer to Appendix
3
Why Take This Project Seriously?
1.Prevent the loss 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.If the self-collection diagnostic service model becomes a success –
DiagCor could replicate this success model to other current diagnostic
products
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
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Rationale #1.1 Not enough in-house Marketing/Sales Personnel
DiagCor has indicated no additional funding for internal resources is
available for commitment for the HPV testing project
DiagCor Resources1
Hours
Marketing staff
2,080
Sales staff
4,160
Committed hours – staff running @ 95%
capacity
Available hours
(6,555)
312
Estimated Staff Requirements2
1Assumes
2
Marketing staff
1,040
Sales staff
2,080
Total
3,120
Staffing Deficit
(2,808)
average full-time work week of 40 hours, current staff running at 95% capacity per Diagcor management
Forecast based on 1-year project
Data Source: interview with DiagCor, October 2009.
Rationale #1.2 Corporate Strategy does not support marketing
The agenda of DiagCor leads to limited marketing activities and resources in
marketing diagnostic services in Hong Kong. It would not be effective if marketing
is done in-house.
Quoted from an interview with Diagcor’s COO, Billy Chan, September 29, 2009
“Our goal is to become a leading biotechnology company providing diagnostic products and
service in the Asia-Pac region. To become a technology leader, we invest more than 20% of
our resources in R&D and we have 5 PhD in the research team.”

“Previously, we didn’t have much resource to invest in marketing and I’m responsible for
marketing myself. This year, we employ a marketing staff to handle the marketing stuff. Now, I
plan to allocate 10% of budget to marketing. Since we want to sell our CE-marked in vitro
diagnostic kits, most of the marketing budgets would be allocated to big events like Medica,
Eurogin and other medical conferences where we can meet up with distributors.”

Data Source: interview with DiagCor, October 2009.
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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
•
Willing to explore
more
•
Low
FCMG Company
•
High
•
Yes
•
Very high
Government
•
High
•
No response
•
High
Insurance
company
•
Limited
•
No response
•
Moderate
Medical website
•
Moderate
•
No
•
Low
Retail Stores
•
Moderate
•
No response
•
High
Universities/
School
•
Limited
•
Willing to explore
more
•
Low
Data Source: Interviews with partners, October 2009.
Assessment
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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
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2.1 DiagCor can reach over 1 Million Customers via Partnership
FMCG companies distribution channel cover > 80% of potential HPV test takers and
sanitary napkins allowing DiagCor to reach out to 1,822,500 women.
Department of Health recommends every women
who have ever had sexual experiences from 25 to
64 should screen for cervical cancer routinely
(every 1 to 3 years).2
2,321,000
Women of age 12-55 routinely purchase feminine
sanitary products from FMCG companies.23
100,000,000
70,478,554 4
10,000,000
2,030,246
Annual SKUs sold
1,875,000
2,416,960
1,000,000
100,000
97.20%5
10,000
1,000
100
10
1,822,500
1
Sanitary Napkin
Tampon
Essential Sanitary Products
Data Sources:
• Demographic data from census and statistics department.
• Cervical cancer screening program, department of health website
• NIH Medline information about female menstrual cycle. Indian consumption study data (HLFPPT).
• US statistics showed that each woman consumes 300 pcs of napkins / year. The most common SKU = 10 pcs. Total number of essential
sanitary product consumption is 72,508,800.
• Sales ratio for napkin and tampons is based on the annual sales data of one local retail store.
2.1 Expected Sales by Partnering with FMCG Companies
Partnership with FMCG Companies, e.g. J&J, allows DiagCor to reach enough
potential customers to generate $1.23M of revenue on self-collection HPV test
Hong Kong Sanitary Napkin Market Share Distribution, 2009
Others,
12.65%
Kimberly
Clark, 23.20%
P&G, 34.70%
Assume Sales Growth by
0.5% due to bundle sales
with HPV test
$1.23M
@$450
J&J, 29.45%
Take J&J as an example:
1,822,500
(Hong Kong Population)
x
29.95%1
(J&J market share)
x
50%2
(% of Interested Respondent)
x
1%3
=
(Marketing Efficiency)
2,729
( Number of Tests)
Data Sources:
• Market share is based on the annual sales data of one local retail store.
• % of interested respondent is based on survey data (N=50).
• Marketing efficiency is based on the past performance of similar-size marketing campaign (interview of FMCG product manager).
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2.2 Channels affecting Customer Perception
“Doctor + TV Ad” combo - an important means in convincing women to use selfHPV testing.
Data Source: 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 Sources: 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 (DiagCor)
Sales
1,228,050
Cost of Goods Sold
238,250
Gross Profit
989,800
+
Annual Sales
Expense
Marketing
100,000
Operating
220,000
Total Expense
320,000
Operating Profit
669,800
Profit Sharing to FMCG
Copanies (50%)
334,900
Net Profit to DiagCor
334,900
Potential Increase in Sales (FMCG Company)
= 70,478,554
(market size)
Details please refer to Appendix
x
0.5%
x
$14.2
(market share increase) (unit price)
= HK$ 5,003,977
Data Sources: Interview with partners, October 2009
SKU size = 10pcs, average SKU price = $14.2
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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
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3.1 Marketing Costs
Effective marketing channels exceeds DiagCor’s Marketing Budget of HK$100k
TV Ad (TVB, 50 spots, J5/F7/10s plan)
4,895
Road Show (5s, 1000 bus, 100 spots)
1,440
MTR PosterAds 4-Sheet Network (Frequency Plan)
280
MTR Trackside PosterAds (High Impact Plan)
331
Newspaper Ad (2 papers, 1/2p, 21d, CYMK)
900
Ladies' Magazine (8 weeks)
120
Featured Articles (4 articles)
80
News Report
Effectiveness of
the Marketing
Channel in
Ascending Order*
5
Direct Mail (50,000)
65
Search Engine (Yahoo, Google)
60
0
1,000
2,000
3,000
Marketing Expense
4,000
5,000
6,000
Thousands
Possible Marketing Options
Comments
Diagcor
Search engine Ad + Direct Mail + News
Report (~$130,000)
These channels have been adopted by Diagcor with limited success.
Partnership
with FMCG
TV Ad + MTR 4-sheet network + Ladies’
Magazine + Search Engine Ad + Featured
Articles (~$5,435,000)
By experience, these marketing channels can create impact. Only
FMCG companies with the existing marketing budget allocated to
promotion of sanitary napkins can afford this marketing expense.
Data Sources: Effectiveness of different marketing channels are based on the interview with the product manager of a FMCG company.
Costs are obtained from rate cards offered by the companies.
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3.2 Product and Distribution costs
Forming partnership reduces the up-front product and distribution
costs.
500,000
449,000
450,000
400,000
350,000
Partnership
317,000
300,000
227,000
250,000
200,000
150,000
100,000
50,000
0
40,000
35,000
Online sales
only
1
Estimated N/A
Inventory
Website Revamp
Fee
$35,000
65,000
Box-sets2sold in
retail chains
Box-sets3sold by
vending machines
Box-sets4
distributed in
clinics
Coupons5 on
sanitary napkins
Coupons6 on
sanitary napkins
with collection
bags
3,000
3,000
10,000
500,000
500,000
Design Cost
(Box)
$15,000
Design Cost
(Box)
$15,000
Design Cost
(Box)2
$15,000
Design Cost
(Coupon)
$10,000
Design Cost
(Coupon)
$10,000
Production Fee
$9,000
Production Fee
$9,000
Production Fee
$20,000
Printing Fee
$30,000
Printing Fee
$30,000
Sanitary Napkin
$3,000
Sanitary Napkin
$3,000
Consignment Fee
(100) 200,000
Consignment
Payment (25 shops)
$350,000
Vending Machine
Lease (30)
$150,000
Logistics Cost
$72,000
Logistics Cost
$50,000
Collection Bag
$25,000
Data Source: Cost data from quoting of design houses, vending
machine lease company, a retail chain, and clinic. Logistics data
is calculated by the salary of one more staff & transport fee.
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3.3 Human Resource Cost is lowered by Partnering
Forming partnership reduces DiagCor’s HR costs by 76.5%
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
Personnel Required with
Partners
Qty
Annual Salary
(HKD)
Test Administrator
1
120,000
Total
HR Costs without Partners
Personnel Required without
Partners
Qty
Annual Salary
(HKD)
120,000
Test Administrator
1
120,000
120,000
120,000
Marketing Personnel
0.5
300,000
150,000
Sales Personnel
2
120,000
240,000
Total
510,000
Total
(HKD)
Total
(HKD)
Data Sources: Interviews with DiagCor and partners, October 2009.
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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 Customer Survey, Oct2009 (N=50)
21
Customer preference: Distribution (1/2)
Age 26-33 women strongly prefer buying the test kit from pharmacies
* Study based on Online Customer Survey, Oct2009 (N=50)
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Customer preference: Distribution (2/2)
Age 26-33 women strongly prefer buying the test kit from pharmacies
* Study based on Online Customer Survey, Oct2009 (N=50)
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Customer preference: Promotion
Poster/Pamphlets are among the most preferred marketing channels
* Study based on Online Customer Survey, Oct2009 (N=50)
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 Online Customer Survey, Oct2009 (N=50)
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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 Administrator
120000
HKD10000/month, including benefits
Website Revamp
50000
Development and Maintenance of backend test tracking system
Overhead
50000
Transportation, etc
Total
220000
* Study based on Interview with DiagCor, Oct2009, and market research
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
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