In: Operations Management
Coloplast is ~10 years old in the U.S. but is widely known in Europe and is a well-respected, 65 year old Danish company. Coloplast has a medical device implant (product) that is used for elective procedures that is considered extremely safe, highly effective and easy to use. Coloplast has a 30% market share in the U.S., and 25% market share outside of the U.S., where the prices are lower (by half) but the market grows 3X faster as the U.S. market is more mature. The procedures are less common outside of the U.S. as they are not typically covered (reimbursed) under government insurance plans. Therefore, outside of the U.S., they are largely paid out-of-pocket.
Boston Scientific is 40 years old, American, and has a competing product that is safe, also as effective, and nearly as easy to use, but holds a 70% U.S. market share. Boston Scientific has a 75% share outside of the U.S., where prices are lower by half, but the market grows 3X as fast as the U.S. due to lower penetration and less market maturity Their impressive share is largely based on longevity / brand recognition (by almost 30 years), alliances with notable physician advocates, loyalties to company and overall company recognition and reputation.
Most objective physicians, if asked, will acknowledge, though, that Coloplast is better, even if they use Boston Scientific, only as it is perceived easier to implant. The Key Opinion Leaders around the world admit both products are excellent. Scientific studies and data for both products are largely equivalent. Both companies sell in all competing markets for roughly the same average selling price.
The market shares above have been stable for about 5 years and neither company is investing in a next generation product as this is a duopoly. As this is an elective procedure, both companies focus on market development.....so growing the market size.
You should research marketing, patient awareness and education opportunities for Coloplast to gain 15% global market share points in 3 years.
What programs or tactics should Coloplast do to achieve ~50% global market share? Please include your Business Description, Marketing Plan, Operational Plan and Financial Plan.
Aim: To gain 50% global market share for Coloplast
Reasons why Boston Scientific (BS) has 70% share in US, 75% outside US
1) Longevity/Brand Recognition - BS is 40 years old and a renowned brand. If people attribute to longevity of BS, then Coloplast was founded 65 years ago. There seems to be a gap in the communication or people's perception about the longevity of Coloplast. This needs to be addressed.
2) Alliances with notable physician advocates - BS maintains good relationship and may be provide lot of benefits to hospital and physicians to use their product. However, objective physicians will acknowledge that Coloplast is better even though they use BS products. This clearly states that there needs to be a relationship building required between Coloplast and physicians to understand why they are not using the product. There is a perception that BS products are easier to implant. Educating the physicians is one focus area for coloplast
3) Loyalty - People are loyal to BS, because of the superior quality of the product. This product quality is matched by Coloplast according to key opinion leaders. With 75% outside US market share, most of the customers will be already loyal to BS. So Coloplast needs to focus on the untapped market as well as pricing strategy to make people try the Coloplast product. A word-of-mouth enhancing campaign also needs to be designed.
4) Company recognition & reputation - Coloplast is also not far behind in this area, but there needs to be focus on marketing efforts to make people realise the value of Coloplast as a brand.
To increase its market share
Coloplast needs to have 2 different strategies. One for US and one outside US as the markets are entirely different.
1) US market
The process in US is covered under the government insurance plan. Hence its more popular in the US market and the penetration is huge. Hence the focus here is on creating more awareness of the brand and a distribution strategy to make the product available for ease of choice of the customer.
Marketing Plan
Target audience - Physicians, Hospitals, Insurance firms, Marketing campaigns
a) Organize a free educational workshop at a fancy place for all the recognized physicians. This would include product sampling, educating about the product and on how it is easy to implant.
b) Design a better commission structure for the hospital, so that they make a better margin on our product than BS product. We keep the price same as BS product, however the commission structure will be altered so that hospital finds Coloplast products more beneficial to sell.
c) Marketing campaigns in hospital. medical shops so that the Coloplast brand can be recollected at the time of purchase.
Customer story campaign - this campaign aims at sharing the story of patients who have used Coloplast products. This helps in reaching out to public on how superior and good the product is.
d) Partner with an insurance firm to provide pre approved insurance coverage for Coloplast products.
e) Since the cusomers are very loyal to BS, lowering the price is also adviced for a short period. This makes the price conscious segment of customers to prefer Coloplast instead of BS. This can lead to increase in market share.
Operational Plan
a) Make the product available at all hospitals
b) Create a partner network of hospitals who benefit from a better commission structure and starts pushing Coloplast product
Financial Plan
a) The plan is to reduce net profit per unit, and invest it in the commission revision of hospitals. This investment should result in an incremental sale.
b) The incremental sale will result in a higher market share. The overall profit will increase with the increase in the sales volumes.
2) Outside US market
The product is not very popular in this market as people has to pay for the product from their pocket. Its a growing market with an yearly growth of 3X. The focus here is to accure more new customers and provide maximum benefits so that they become loyal customers.
Marketing Plan
Target Audience - Physicians, Hospitals, Public
a) Physicians need to be educated on the usage of the product and how easy to use. An incentive based program for the physicians to recommend the product to the patients is one way of market penetration. Education campaigns with free gifts for physicians will attract them and Coloplast willl educate them as well as describe the incentive campaign
b) Hospitals - Better commision structure than BS so that Coloplast gets promoted inside the hospital. Making use of hospital marketing - vising card marketing, reports branding etc
c) Public - marketing campaigns focused at awareness. Brand awareness as well as product awareness. Free consultation camps to increase sampling and educating the public. Better pricing so that people dont find it expensive if they are interested.
d) Longevity awareness campign - This can be a social media, OOH or TV ad campaign focussed on the existance of Coloplast for 65 years and how happy the company is to serve the customers.
Operational Plan
a) Make the product available at all hospitals
b) Create a partner network of hospitals who benefit from a better commission structure and starts pushing Coloplast product
c) Small kiosks for awareness as well as educational purposes
Financial Plan
Lower margins as the cost of customer acquisition is high. Since the market is high growth, the opportunity for raising capital is a good plan. Commission revision, lower margins or better pricing to beat the competition.