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MGMT 650B: Consulting Skills for Managers

STRICTLY CONFIDENTIAL. MGMT 650B: Consulting Skills for Managers. DiagCor Self-collection HPV Test Marketing Plan. October 2009. Storyline. Situation.

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MGMT 650B: Consulting Skills for Managers

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  1. STRICTLY CONFIDENTIAL MGMT 650B: Consulting Skills for Managers DiagCor Self-collection HPV Test Marketing Plan October 2009

  2. 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. • 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 Challenges Question • 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? Answer • 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. Rationale 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 in-house marketing program. • DiagCor cannot effectively achieve its goal with In-house marketing resources and partnerships with other organizations 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 1.1 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.

  3. 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. 2 * The retail price is set according to the results of Online Customer Survey October 2009 Other details please refer to Appendix

  4. Expected Results DiagCor can reach a revenue of over HK$ 1MM with profit 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

  5. Urgencies of the Project • Prevent the lost of first-mover advantage • Realize the potential return of this service immediately • Ride on the recent marketing campaigns run by HPV vaccine providers • Prove that the self-collection diagnostic service model works in Hong Kong so that other tests can be offered via this service model

  6. Rationale #1 In-house Marketing and other Partnerships not working • DiagCor does not have enough in-house marketing resources to carry out new product marketing effectively • DiagCor’s corporate strategy does not support marketing a consumer brand. • Forming partnerships with other organizations is not feasible at the moment. 5

  7. 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 • ~HKD8,000,000 • 200 “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

  8. 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 Data obtained from interviews with DiagCor, October 2009.

  9. 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.”

  10. Rationale #1.3 Potential Partnerships FMCG companies are the most suitable partners Potential customers generation Interests in partnership with DiagCor Assessment Value proposition Staff clubs • Moderate • No • Low FCMG Company • High • Yes • Very high Government • High • No response • High • Moderate Insurance company • Limited • No Medical website • Moderate • No • Low Retail Stores • Moderate • No response • High Universities/ School • Limited • Yes • Low 9 Data obtained from interviews with partners, October 2009.

  11. Rationale #2 Partnering can help DiagCor achieve Sales Goal • The number of customers that FMCG companies can reach allows DiagCor to generate $1M revenue from HPV tests • The Doctor + TV Ad campaign usually adopted by FMCG companies can effectively convince potential test takers • The partnership creates values for FMCG companies so that the win-win situation can be sustainable

  12. 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 $1.23M @$500 / test Census 2007 Expected Market Share to be increased by 0.5% 7,008,300 1 x 65.17% x 23.7% x 50% x 0.5% = 2,729 (Hong Kong Population) (% of eligible population) (J&J market share) (% of interested respondent) (marketing efficiency) ( Potential Tests) • 1. Government population figure published at Jul 2009. 2. 65.17% calculated based on 2007 census data. • Market share data obtained from interview with major retail stores. • 25 out of 50 respondents (50%) showed interest in performing the self-HPV test. • Marketing efficiency based on interview of J&Js product manager.

  13. 2.2 Channels affecting Customer Perception “Doctor + TV Ad” combo - an important means in convincing women to use self-HPV 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 12

  14. 2.3 Value Realized by FMCG Companies FMCG companies see values in partnering with DiagCor, so are willing to work together 13 Data obtained from interviews with partners, October 2009.

  15. 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 + Annual Sales Potential Increase in Sales = 62,000,000 x 0.5% x $1 (market size) (market share increase) (unit price) = HK$ 310,000 Details please refer to Appendix Data from Interview with FMCG Companies, October 2009

  16. Rationale #3 Partnering can lower DiagCor’s Costs and Risks • DiagCor can leverage FMCG companies’ effective marketing channels that costs more than HK$100k, and that DiagCor cannot afford on its own • Product cost of DiagCor HPV Test is a lot lower with FMCG companies as partner • Human resource costs of DiagCor is minimized with FMCG companies as partner

  17. 3.1 Marketing Costs in Hong Kong Effective marketing channels exceeds DiagCor’s Marketing Budget of HK$100k Sole online advertisement without grass-root advertising method is poor in effect. Customers’ perception on direct mail is poor. Costs are obtained from rate cards offered by the companies.

  18. 3.2 Product Cost is lowered by Partnering Package and Consultation Service costs are costly Only feasible when partnering with napkin manufacturer Product Cost (per 1000 pcs) In HK$ Existing packaging method with poor response Product Forms

  19. 3.3 Human Resource Cost is lowered by Partnering Data obtained from interviews with DiagCor and partners, October 2009.

  20. Appendix

  21. 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)

  22. 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.

  23. Customer preference: Distribution (2/2) Age 26-33 women strongly prefer buying the test kit from pharmacies

  24. 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.

  25. 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.

  26. Costs and Expenses of Self-Collection HPV Test Project

  27. 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

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