Transcript LizTeam_DummyPack091016

STRICTLY CONFIDENTIAL
MGMT 650B: Consulting Skills forManagers
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 test 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 expand the market via leveraging the strong marketing capability and established distribution networks of a FMCG
partner, Johnson & Johnson (J & J), rather than relying on the limited in-house marketing resources. The testing kit will
be bundled with J & J’s sanitary napkins and sold to customers via supermarkets and pharmacies during promotion
period. Customers will mail in samples and payments, and test results will be mailed back to them.
Question
Answer
Rationale
1. Diagcor can generate at least $1M
revenue in one year by partnering
with Johnson & Johnson with mutual
benefits
2. Diagcor has much lower costs and
risk by partnering with J & J than
sticking to in-house marketing
program.
1.1 The partnership creates value for
J&J
1.2 The number of customers that J
& J reaches allows Diagcor to
generate $1M revenue for
Diagcor.
1.3 Customers have strong
preference to purchase new
medical service from well-known
brands that appears frequently
on TV/Radio, such as J & J
2.1 The marketing costs in promoting a
new product is >$100K and Diagcor
cannot afford the huge sunk costs
required for reaching a critical mass
in customer base.
2.2 Product cost of DiagCor HPV Test
is a lot lower with J & J as partner
2.3 Distribution cost of DiagCor is
minimized with J & J as partner
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3. Diagcor cannot achieve revenue
goal by in-house marketing program
and formation of other partnerships
3.1 DiagCor does not have enough
in-house marketing/sales
personnel to administer larger
scale marketing activities
3.2 DiagCor’s corporate strategy
does not support marketing a
consumer brand.
3.3 Forming partnerships with other
organizations is not feasible at
the moment.
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1
Recommendations
Price*
Set at $500/Test
Product
Testing Kits are bundled with the Sanitary Napkins offered
by Johnson & Johnson. Each Testing Kit includes a
sample collection bag, test instructions, and a
return mail envelop. Customers will send in samples and
payments via mail. Test results would then be mailed
back to customers
Promotion
Joint-promotions with Johnson & Johnson
Place
Testing Kits to be sold together with Sanitary Napkins at
supermarkets and pharmacy chains
* The retail price is set according to the results of Customer Survey October 2009
Other details please refer to Appendix
2
Expected Results
DiagCor can reach a revenue of over HK$ 1MM with profit
Profit and Loss Analysis – Proposed Marketing Plan
Sales* **
1,250,000
Cost of Goods Sold
238,250
Gross Profit
Includes the cost of
sample collection,
examination, and
result notification
1,011,750
Expense
Marketing
100,000
Operating
220,000
Total Expense
320,000
Operating Profit
691,750
Profit Sharing to J & J (50%)
345,875
Net Profit to DiagCor
345,875
Includes producing
50,000 testing kits for
bundling
Includes cost of test
administrator, website
revamp and overhead
50% margin cut to J &
J
*Number of Test Sold = 2500 (est.)
= Potential Customer Reached by J & J x Marketing Efficacy x Response Rate x Penetration
**Price of Test = HKD500 (from Customer Survey, Oct 2009)
Other details please refer to Appendix
3
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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Rationale #1 Partnering with J & J creates “Win-Win”
1.The partnership creates value to J & J
2.The numbers of customers reached by J & J makes DiagCor’s goal of
generating $1M revenue for Self-Collection HPV Test in one year
feasible
3.Customers have strong preference to purchase new medical service
from well-known brands that appears frequently on TV/Radio, such as J
& J.
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1.1 Value Proposition to J & J
J & J see values in the partnership with DiagCor’s HPV Test
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)
Feedbacks from Interviews
J&J
•Very interesting idea
•Fits with J&J’s corporate values
•Possibility to differentiate products from competitors
•Need to further explore product/partnership opportunity. J&J makes sure that
their products and partners deliver high quality services.
Data obtained from interviews with partners, October 2009.
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1.1 Benefits of the Partnership to J & J
J&J enjoys 50% of the project’s profit plus a potential increase of 0.5% market share via
the marketing effort.
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 J & J (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 J & J, October 2009
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1.2 Female Sanitary Product Market in Hong Kong
The annual consumption of Female Sanitary Products, especially Sanitary Napkin,
is significant to the number of potential Self-Collection HPV Test to be generated.
100,000,000
62,000,000
10,000,000
1,426,000
1,000,000
100,000
71,000
55,000
12,000
10,000
Annual Moving SKUs
1,633
1,265
Potential Test Takers
1,000
276
100
10
1
Sanitary Napkin
Tampon
Femina Protective
Washes
Femina Wipes
Annual Monthly SKUs: Data obtained from major retail chains.
Potential Test Takers: Estimated by online customer survey (N=500), which showed 2.3% of respondent s are interested in doing
the HPV test .
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1.2 The Sanitary Napkin Market in Hong Kong
J & J captured an overall 23.2% of the sanitary napkin market in Hong Kong, and
can generate a maximum of 330,832 potential tests in 1 year.
Others
11.8%
J&J
23.2%
J&J
P&G
Kimberly Clark
29.3%
Kimberly Clark
Others
P&G
35.7%
62,000,000
(annual napkin consumption)
x
23.2%
(market share)
x
2.3%
(% of interested respondent)
=
330,832
( Potential Tests)
Potential Test Takers: Estimated by online customer survey (N=500), which showed 2.3% of respondent s are interested in doing
the HPV test .
Data obtained from major retail chains.
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1.3 Channels affecting Customer Perception
Doctors’ Opinion featured in TV Ad is an important means in convincing women to
use self-HPV testing.
Credibility Index
1
1.5
2
2.5
3
3.5
4
4.5
5
Government Campaign
Doctors/Pharmacies
Medical Journals
News report
TV/Radio
Friends
Public transportation advertisements
Newspaper / Magazine Ad
Internet
Direct Mails
Estimated by online customer survey (N=500)
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Rationale #2 Partnering can lower DiagCor’s Costs and Risks
1.DiagCor can minimize the marketing cost of launching the new HPV Test
product, which is estimated to be > than HK$ 100k
2.Product cost of DiagCor HPV Test is a lot lower with J & J as partner
3.Distribution cost of DiagCor is minimized with J & J as partner
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2.1 Marketing Costs/Effects in Hong Kong
Major marketing channels exceeds DiagCor’s Budget of HK$100k
Cost-Effect Analysis: Marketing Channels
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Study based on a survey of over 500 women in Hong Kong in October 2009.
2.2 Product Cost of HPV Test Kit (With and Without Partner)
Package and Consultation Service costs are costly
90000
80000
70000
Product Cost
(per 1000 pcs)
60000
50000
In HK$
40000
30000
20000
10000
0
Online Only
Coupon on
Napkins
Mini-Kit on
Napkins
Product Forms
Test Kit with
Napkin
Test Kit with
Consultation
Service
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2.3 Distribution Cost of HPV Test Kit (With and Without Partner)
Distribution Cost of 2,000 Test via Different Channels
350000
300000
250000
200000
HK$
150000
100000
50000
0
Direct Mail
Online
Product
Bundling
Clinics
Vending
Stores
Distribution Channels
Fixed Cost
Cost per 2000 Tests
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Rationale #3 In-house Marketing and other Partnerships not working
1.DiagCor does not have enough in-house marketing/sales personnel to
administer larger scale marketing activities
2.DiagCor’s corporate strategy does not support marketing a consumer
brand.
3.Forming partnerships with other organizations is not feasible at the
moment.
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Rationale #3.1 Not enough in-house Marketing/Sales Personnel
Ratio of Marketing/Sales Personnel is significantly lower than a
product marketing company.
DiagCor
J&J
No. of Marketing Personnel
No. of Sales Personnel
No. of Product Lines
Marketing/Sales
Personnel to Product
Lines Ratio
•
1
•
2
•
30
•
1:10
•
5
•
25
•
80
•
3:8
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Rationale #3.2 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.”
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Rationale #3.3 Potential Partnerships
FMCG companies are the most suitable partners
Interests in partnership
with Diagcor
Value proposition
Potential customers
generation
Staff clubs
•
Limited
•
No
•
Very low
FCMG Company
•
High
•
Yes
•
Very high
Government
•
High
•
No response
•
High
Insurance
company
•
Limited
•
No
•
Medium
Medical website
•
Limited
•
No
•
Low
Retail Stores
•
High
•
No response
•
High
Universities/
School
•
Limited
•
Yes
•
Low
Data obtained from interviews with partners, October 2009.
Assessment
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Appendix
Customer Preference: Price
High-Value Customers would pay $401-600 for take-home HPV test
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Customer preference: product
HPV test with doctor’s consultation is most preferred by customers
I would like to receive a one-one doctor's
consultation after the HPV test
89%
I think self testing is convenient and manageable
79%
I am embarassed to go to clinic for cervical cancer
screening
47%
I am somehow embarassed to go to clinic for
cervical cancer screening
36%
I am not embarassed to go to clinic for cervical
cancer screening
I like to receive a diagnosis report without doctor's
consultation
Study based on a survey of over 500 women in Hong Kong in October 2009.
49%
25%
Customer preference: Distribution
Age 26-33 women strongly prefer buying the test kit from internet
50
45
40
35
30
25
20
15
10
5
0
<18
18-25
26-33
34-41
42-49
>49
store
clinic
groups
online vending
Study based on a survey of over 500 women in Hong Kong in October 2009.
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Customer Awareness
Age group 35-45 women are most receptive to HPV screening
Customer preference: Promotion
Internet and Magazines are among the most preferred marketing channels
TV/Radio
98%
Medical Journal
88%
Newspaper
77%
Magazine
66%
Internet
55%
Poster
44%
Billboards
33%
Newletter
22%
Word of mouth
Tele-marketing
11%
5%
Study based on a survey of over 500 women in Hong Kong in October 2009.
Sample Customer Case
Age : 27, Accountant, HKD 40k
Health conscious, sexually active
Conduct body check-up on regular basis
Feel embarrassed going to clinic for HPV screening
Willing to pay extra to run the test anonymously
Would refer to friends if the HPV test kit satisfies her
preference
Study based on a survey of over 500 women in Hong Kong in October 2009.
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