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Principles of the Effective Marketing Services in the US - Essay Example

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This paper gives a thought into the need of a marketing team to aid the sales team in the USA. Various reasons supporting the school of thought is put forward with appropriate example. The paper closes with a recommendation to the board of directors of Medi-stim…
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Principles of the Effective Marketing Services in the US
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Executive Summary Necessity is the mother of invention. Customer driven approach is the necessity and a reputed marketing team is the invention which we are in look out for at Medi-stim USA. The production team in Oslo and the sales team in US take care of delivering the produced equipment to the hospitals. The proposed Marketing team in the background should be effectively used to intertwine this with the operational capabilities of Medi-stim and aid the production, sales and management by tipping details of current and changing needs of hospitals, competitor activity and the constantly changing market scenario. Marketing team aids the management to identify and fill the gaps in various steps, improve organizational strengths, and work on the weakness to eliminate them thereby positioning us to take a real advantage of opportunities and equip Medi-stim with the methods to defend against potential risks. Effective marketing services will add to Medi-stim’s success by inducing better returns for the hospitals, growing the client base, expanding the market share in the Americas and increase the hospital/patient satisfaction rates all of them would turn out to have a positive impact on bottom-line of Medi-stim USA’s revenue. In a nutshell, the need is for a brilliant team which can foster new ideas based on the market condition, steer a constructive debate with the management to facilitate the sale and lastly invoke inclusive actions from the management to facilitate all-round growth in market share. The Return of Investment in $, the network and also good will is discussed in this report. Numbers derived in this report are hypothetically forecasted based on q4 2009 results. Introduction: Medi-stim is a 30 MNOK company which has marked its presence in the field of cardio-vascular surgery with its intra-operative quality control equipments. The company has made its presence felt in Europe with divisions in Norway and Germany, in Asia and in the Americas with sales operation headed from Minneapolis. Americas are its second largest market with around 20% of the total sales. This paper gives a thought in to the need of a marketing team to aid the sales team in USA. Various reasons supporting the school of thought is put forward with appropriate example. The paper closes with a recommendation to the board of directors of Medi-stim to have a high quality marketing team and initiate the process for further study. Making the Medi-stim products reachable to a larger set of customer base (hospitals) by making them more marketable, attractive, credible, interesting and cost effective is a real challenge in this competitive, complex, and fast-changing market scenario. Marketing has been largely a debated issue owing to the costs involved in this. There is no surety in returns in any investment in this changing market and marketing is a field which is highly prone to this adverse effect. Marketing also has some times produced inconsistent results when the management and the team are in discord. Sales team opposes the presence of marketing as their credibility is lost however they should coexist and are mutually dependant. “Marketing is usually responsible for the first few steps— building customers’ brand awareness and brand preference, creating a marketing plan, and generating leads for sales. Then Sales executes the marketing plan and follows up on leads” (Kotler, Rackham & Krishnaswamy, n.d.). Global leaders in medical equipment technology such as Philips, GE have all evolved from a smaller level. They were able to do it tactfully with a proper world class marketing team which has grown with the organization which means they grew up in line with the goals and objectives of the organization. Start up companies also opts for marketing consultants when they do not have an in-house team. Effective market research, analysis and actions are the guiding means to the high revenues, brand building and market capture of the current leaders of the industry. At Medi-stim USA, the various steps involved to begin the marketing process including choice of the marketing agency/team, various costs involved in team building and as marketing investment, potential risks and threats from the competitors are discussed through various recommendations in this report. The bottom line is while the numbers could be different for different conditions and products, a inspiring and not an uncommon case study at database marketing which would evoke interest reports that “by spending $50,000 over six months to build relationships with 500 customers, revenue could be increased by $2,565,000” (Huges, 2010, para.8). Understanding marketing: Marketing is all about telling the expected audience of what your product is and what edge it provides over potential competitors. It’s a kind of recommendation you do about yourself. No matter how great the product, initiative, idea or achievement is, it is of no value unless people get to know about it and are able use it. Marketing is a skill and when rightfully applied at the right time acts like a catapult. Marketing aims to achieve what is called the 4 Ps. Figure -1: The Marketing Mix (The marketing mix 4 p’s model, 2008). The right product is what the customers look out for. The Market research wing takes care of this. An in-depth understanding of the customer requirements and trends is tabulated and observed to reach at this. Pricing could be one reason which could make or break a deal. If equipment is overpriced, the customer should be taken into confidence giving information about the features, safety and quality of the equipment when compared to other competitors. Place is the targeted audience and here the hospitals and paramedical departments in the Americas are target areas covered by the Medi-stim USA sales team. The right promotions mean that what kind of a cross-sell or up-sell is possible. What are the available discounts and would there be an incentive for a further purchase. Need for marketing The product life cycle at Medi-stim involves various teams, departments and even geographies. At the customer-end of this cycle is the sales team which takes care of the product sales of the various equipments produced elsewhere. USA Sales team has done a remarkable job in executing the orders received from the customers across Americas. But, an ideal and hypothetical Marketing team would bring the sales network spread across various cities in USA and Argentina and the final consumers virtually anywhere on Earth to understand what different strands make sense to each of them and collectively to the production team in Oslo. This team would perform an in depth Market research to understand the emerging market demand in a given the region and other potential customers. Roles and Responsibilities of Marketing Team: The end-point in the product cycle – ‘the customer’ is perceived differently by the sales team and the marketing team. For the sales team, it would mean an end of a case, while for the marketing it would mark the beginning of a new relation. The marketing department should have a sound understanding of Medi-stim’s products and should perform research on its customers. The typical research would try to figure out what products need to be marketed, why a doctor/hospital should want this and what are the possible sub-products in the offering. This will result in the data which requires preferential treatment for analysis. With this ground work done, a further analysis would help in understanding the demographics of the customer – who buys and why? Some of the other key facts that are brought out are buying pattern, budget spent, time of the year when the purchases are done, predominant and weak areas of buying. The team effectively becomes the central mouthpiece of the products of Medi-stim. They will proactively come out with a defined campaign aimed at the following: Show to the existing and potential customers how different Medi-stim are in the league Elevation of Medi-stem’s position in the market Creating awareness of Medi-stim’s product and organizational development to the customers through promotional material in print and telecast media. An important market research analysis is called the SWOT - strengths, weaknesses, opportunities, threats. Strengths of the Medi-stim is its high quality products with ergonomic design, existing large customer base in the US, the marketing research analysis tries to concrete the strengths and get more out of it. Weakness is the ones that might be hindering what could have been a better result in terms of market share and customer satisfaction level. Eliminate weakness through organizational strategies is what the marketing team shall look forward to. Opportunity lost for once is lost forever. No customer would buy redundant equipment just because they got to know about Medi-stim just after their annual purchase. Right customers should be reached out to at the right time with good pricing and incentives. Threats could be due to a technical or non-technical problem with the equipment which could tarnish the image of Medi-stim or it could be due to wrong management decision which would create a negative impact for it or it could be just that some of the competitors have started doing better. These threats are to be vended of as early as possible and an effective PR is required to reverse any possible negatives that could have happened. Recommendation details: Benefits – the driving reasons for its Recommendation Delving in to new markets – the Latin Americas’ hidden market It is seen that Medi-stim USA operates in the Latin America from only Buenos Aires, Argentina. The marketing team should concentrate on more populous areas like Sao Paulo which could emerge as a big market. For the client it would matter whether the sales and service is available locally or internationally. If properly marketed and catalogued in Portuguese and Spanish, Latin and Central American countries would become an important market. The current valuation of Medical equipment in Brazil is $ 5 Billion and is expected to grow to $ 8 Billion by 2015. Medi-stim has not figured in ‘Brazil Medical Equipment Market Analysis and Forecasts to 2015’. “The report provides market landscape, competitive landscape and market trends information on 17 medical equipment markets. The report provides comprehensive information on the key trends affecting these markets, and key analytical insight on the market dynamics” (Brazil medical equipment market analysis and forecasts to 2015, 2010, para.1). The dearth of Medi-stim marketing is already felt. If we apply localized marketing in such potential markets, Medi-stim would be able to capitalize on the uptrend of the industry as a whole. Up-sell and Cross-sell considerations Today’s customers are more demanding due to the obvious range of choices they have. They are going in for options which provide cross-sell and up-sell. While cross-sell deals more with providing accessories for a good-will purpose, up-sell can happen at two levels – during the deal, educating the customer about a more expensive but advanced equipment and the second being after the deal where an upgrade is provided at a nominal or fairly negotiable price. “It isn't the price. It's your ability to demonstrate value to prospects. And people will pay for value” (Salz, 2010, para.4). Cross-sell and up-sell should be in such a way that customer’s necessity is met and is beneficial to hospital. This is basically a trust building measure and can be done by keeping track of the customer’s data by the market analysis. The option of cross-sell and up-sale should be managed such that not more than 3% of the revenue is affected. Which means we expect that there should not be more than 3% customers who are ‘important’ and value add customers and must be kept happy to allow, facilitate and recommend further deals with Medi-stim. It is not possible or recommended to go beyond this value as the revenues will go down. Sustaining Competition: Competition from the other market players is also getting stiff everyday. Siemens, Philips, GE Healthcare, VNUS Medical Technologies, Inc., Abiomed, Inc., AtriCure, Inc., Synovis Life Technologies, Inc. are all picking up quite well and Medi-stim products needs to outshine among these. Proper marketing is required not only to stay in the competition but also to emerge in the elite pool of medical equipment vendors in Americas. Competition can be sustained and countered only when the opponents are clearly understood. Marketing team would perform analysis which would try to figure out what makes Med-stim’s products different from others and what are the similarities. Having this, why would the customer (hospital) tender chose Medi-stim equipment and not others’? This intuitive analysis is basically a set of assumptions that the marketing team arrives at and has to constantly retest these to keep apace with the competitors. “Remaining marketable in such fast changing and demanding times is now essential if an individual is to continue to be successful in their work” (Student news letter Brighton school of business and management January 2010, 2010, para.5). Grabbing opportunities Medi-stim’s sales in the Americas are poised to grow with two kinds of opportunities. The first one is the available customer base with the existing profile. The second one is the opportunities available once we become more marketable which is by enhancing our primary strengths as in quality of equipment and cost effectiveness and reducing the weakness – such as lack of potential customer base. As we dream of improved opportunities and sales, the risk factor also increases. Risk should also be assessed as the one that is currently faced (new markets, more competitors, low stock value) and the ones that could pop up in the future. Documenting and assessing the present situation is a major activity and becomes more rewarding as we take leaps in to the future. With this information on the current and future market conditions, existing and potential customers and the competitors – their products and strategy, it shall become easier for Medi-stim to move on to the next step at a faster rate. A closer look into the recommendations and benefits Firstly there would be a cost involved in recruiting and setting up the marketing team. It is the most important step as the attitude and motivation of the team will show off in its outputs. Marketing consultant firms who have prior experience in medical equipment is the obvious choice to build upon the network they already have. An effective Marketing Team should be able to talk the language of revenue – something that the CEO and the board understand. The role of the marketing team would be as simple as understanding the objectives and goals of the board and deliver realistic benefits as returns. These returns should serve as the key revenue obtained by the USA Medi-stim team. In most basic terms, ROI (return of Investment) is the return per unit invested. But since we need to check the ROI based on a specific marketing campaign, it should go as ROI = (Gross Value – Marketing Investment)/Marketing Investment Where Gross Value is Total profits – Sales expenses and the marketing investment encapsulates all the risks, campaign, staff and media etc. The sales expense covers the distribution, discounts and offers to the customers. “A useful definition of marketing is the anticipation and identification of customer needs and requirements so as to be able to meet them, make a profit or achieve other key organisational objectives” (Aims of marketing department, 2010, para.5). () With this definition, the impetus on organizational goals is also brought into picture. While the calculation gives the revenue in terms of $, there are a number of returns that a good marketing team can deliver such as good will, better network of potential customers, more market data for deeper and newer market deployment. Brand building is an important exercise and this leads to higher ROI in long term. Sponsoring an event such as a medical practitioner’s summit (like HIPAA Summit) would show into results for a short term. The customers for Medi-stim are not the people in the down town. The potential customers are the corporate hospitals, highly educated doctors and the paramedics. The marketing campaign should hit the right customers in the right way. Exploring the internet based marketing (like MedSEO) would be the cheapest option that is available and use of advertisement, banners and pop-ups with an intuitive content on the web sites providing medical information is sufficient. “Online can be targeted to an individual – the flexibility of the medium means targeting is much tighter than in any other marketing channel. Messages can be targeted by search term (PPC), by individual (email) and by context (online classified)” (Johnson & Peal, 2009, p.10). Print media should be efficiently used to campaign for the equipments especially since it’s a foreign parent company. Medical journals and magazines like the IEEE spectrum can both have an advertisement and paid or unpaid articles about the Medi-stim equipments. These have to be particularly taken care when there is a new product launch. Customers should get to know that such a thing exists in market. Conference speaker opportunities (like at BMES) should be utilized and should be used to position Medi-Stim’s spokesperson and brand as an industry expert and to boost the company’s reputation. The corporate website is the company’s face to an unknown customer. This should include valuable information on products, ratings, testimonials from existing customers as a confidence building measure for the customer. The availability of right contact information to trade enquires is also quite important. Some number crunching to show what marketing can do In a business life cycle Time is also a parameter which can be weighed on $ terms. Time lost is revenue lost. A revamp in the operational methodology by introducing marketing team should not take more than 3 months (1 Quarter). Q4 is preferable time for the inception as the customers tend to spend less during the last quarter. With market analysis and research in this time, the team will be ready for action in Q1 which would be the right timeframe to test the new strategies as the customers have new budgets for purchases. Medi-stim USA’s revenues are based on the Medi-stim’s procedures, systems and stethoscopes. It is interesting to see that the sales of each of these has gone up in 2009 Q4 when compare to 2008 Q4 (procedures UP 2.5 %, systems UP 100%, stethoscopes UP 36%). However the revenues from the sales have gone DOWN 15%. Recession can not be blamed because the purchase has been better. This is an indication that operating margins might have been brought down by the Medi-stim and to maintain the lead, it is required to have more sales facilitated by extensive marketing. “Stock quotes information is linked directly to the Oslo Stock Exchange” (Press releases/stock quotes, n.d., para.1). (Pressreleases)) where it’s traded is hovering around the NOK 23-25 levels. Stock is an indication of the company’s financial and operating health. It is expected that with a product launch or expansion or acquisition of a profitable business, there are spikes in the cost of the share. But in the case of Medi-stim, there hardly seems to be any spikes. There is a growth in the stock value which is attributed to the good governance by the management, but we need to be rightfully showcased and marketed when ever there is favorable news. Let us assume a situation where bulk orders are received 2 times in the next 2010 Q1 and expect that Medi-stim plans in the next financial year 2 new products and would like to delve into Asian markets like India and China. In graph, Series 1 represents news flow (influencing the stock price) at the organization, series 2 stock price movement in a marketed situation and series 3 is the same in a non marketed condition (as existing). Graph – 1: In indicative plot depicting the expected stock price. Assume that 10% (on the high side) of the revenue from 2009 Q4 was invested, which would be 39050 NOK for this marketing. With 533989 shares, the change in revenue only from the stock would be (32-25) = 7 * 533989 = 3737923 NOK. So the returns are ~ 30%. projected sales growth (A)Sales in NOK (B)Q4 contribution to Revenue (11%) in NOK (C)NOK spent Annually for marketing (10% of Q4 revenue) (D )= (B) - (C) Net Revenue Revenue difference (compared w.r.t Q4 base) in NOK revenue increase % 0% 40486000 3563000 0 3563000 0 0.00 10% 44534600 4898806 356300 4542506 979506 27.49 20% 48583200 5344152 356300 4987852 1424852 39.99 30% 52631800 5789498 356300 5433198 1870198 52.49 40% 56680400 6234844 356300 5878544 2315544 64.99 Table -1: Impact of marketing on sales and revenues (Actual of Q4 data taken from http://medistim.com/Documents/Global/4quarter%202009.pdf) This hypothetical table expects that the operating margin remains 11% as in Q4 2009. Marketing strategies applied to improve them will show case further improved results. Internet based marketing can be the first point to start and it can start as cheap as 5$.This indicates that the range of Medi-Stims proposed marketing expense can vary from 31NOK (5$) to 356300 NOK (58750$). Counter arguments and its rebuttal Introduction of a new team is like a new product being launched. While every attempt should be made to be bankable, we should minimize the chance of a complete failure of the proposal. This can be facilitated with a better research of the situation. It would be a better method if a small proportion (10 -15%) of the marketing budget is allotted for innovation and testing. This aids in improving the results. Too much of an experiment will back fire and will become a difficult situation to handle. “The product’s life cycle - period usually consists of five major steps or phases: Product development, Product introduction, Product growth, Product maturity and finally Product decline” (Komninos, 2002, p.4). Product life cycle is too tight and there marketing would only be an overhead. The counter argument to this is that this is exactly when the role of a separate marketing team comes into play. The pre-launch marketing is very important and should provide sufficient hype within the medical circles and should keep the doctors guessing for their new wonder product. By the time of launch, a definite set of potential customers must be at the sales’ team disposal. Recession time, marketing is money lost. Marketing is all about relation and not about how much is invested on it. The best marketing plan starts with only spending time and not money. There is no rule as to some % is to be spent on marketing. It is always a reasonable amount with respect to the expected returns and actual gained. Medi-stim already strong in the market does not need marketing. The market is an evolving place and new players are coming in time and then. The competitors are getting stronger and it is required by Medi-stim also to catch up the momentum and maintain the lead. It hardly takes any time for a customer to get carried away by another equipment manufacturer which means loss of Medi-stim’s business. Conclusion: Medi-stim is a globally acclaimed medical equipment manufacturer and deals with cardio vascular surgery applications in specific. USA sales team is the one which has shown constant growth in sales numbers but the revenues have been toggling. A well directed, experienced and motivated marketing team is required to boost the capabilities of the sales team and help Medi-stim USA operations to regain a larger market capitalization in the markets like Latin America and untouched areas of USA itself. This can be done by branding the products and organization using internet, print media or motion media. Market research and strategies employing SWOT and 4P should be brought in effectively to have an existing and potential customer network, work on customer grievances’, match up to customer expectation and deliver to the customer’s requirement. The field analysis should also ensure that the moves of the competitors and their methods do not cross lines with that of Medi-stim. The objective of the organization would be the guiding value for the marketing team which would strive to increase the revenues, improve market share and take Medi-stim to a newer height of reputation and a brand looked upon with lot of expectations. Reference List Aims of marketing department, 2010. The Times 100. Retrieved March 26, 2010, from http://www.thetimes100.co.uk/theory/theory--aims-marketing-department--181.php Brazil medical equipment market analysis and forecasts to 2015, (2010). Office Wire. Retrieved March 26, 2010, from http://www.officialwire.com/main.php?action=posted_news&rid=115980&catid=675 Hughes, M.A. (2010). How relationship marketing built profits. Database Marketing Institute. Retrieved March 26, 2010, from http://www.dbmarketing.com/articles/Art171.htm Johnson, C.T., & Peal, P. (2009). Marketing in recession. Barker Johnson Peal. Retrieved March 26, 2010, from http://www.the-mia.com/assets/Marketing_in_a_recession_-_final.pdf Komninos, I. (2002). Product life cycle Management. Retrieved March 26, 2010, from http://www.urenio.org/tools/en/Product_Life_Cycle_Management.pdf Kotler, P., Rackham, N., & Krishnaswamy, S. (n.d.) Ending the war between sales and marketing. Press releases/stock quotes. (n.d.). Midistrim. Retrieved March 26, 2010, from http://medistim.com/Global/Main.asp?Branch=Global&App=Investor Salz, B.L., (2010). Sales architects: If price really matters. Nielson Business Media. Retrieved March 26, 2010, from http://www.salesandmarketing.com/msg/content_display/publications/e3i23d7d40f3e52e10e8e72adedc1f8929d The marketing mix 4 p’s model. (2008). TRUMP University. Retrieved March 26, 2010, from http://www.trumpuniversity.com/business-briefings/post/2008/04/the-marketing-mix-4-ps-model.cfm Student news letter Brighton school of business and management January 2010. (2010). Brighton school of Business and Management. Retrieved March 26, 2010, from http://www.brightonsbm.com/news/student-newsletter-brighton-school-of-business-and-management-january-2010/ Read More
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