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Business Case for a Marketing Launch by eek12905

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									Product Launch

Value Proposition

     May 2009




                    1
Table of Content


      Table of Content


               1. Concept Definition and Key Challenges

               2. Our Focus and Value Proposition

               3. Our Approach

               4. Why Frost & Sullivan

               5. Case Studies and Key References




                                                          2
1. Concept Definition & Key Challenges
Companies seek out new product launch opportunities for strategic,
commercial and operational reasons
 Typical reasons for launching new products:
       Value-generation                    Commercial                         Operational
 • Additional revenue             • Erosion of margins due to        • Technology exploitation
   streams, reduction &             competition
   diversification of risk                                           • Capitalise on skills base
                                  • Changing market conditions
 • Organic expansion                or opportunities on growing      • Employee motivation and
                                    markets                            retention
 • Value of company, share
   price                          • Emerging markets

 • Opportunity for exponential    • Address changing customer
   and not just incremental         needs
   sales
                                  • Retaining leadership position/
                                    be perceived as an industry
                                    shaper/ innovator

                                  • Copying innovators

                               Generate additional revenue and margin

                                                                                                   3
1. Concept Definition & Key Challenges
Not all launches meet expectations. To be successful, 'classic'
product launch pitfalls need to be avoided
External
           • The product or service should be launched to address customer needs. This is obvious,
             but is probably the biggest cause of launch failures. In today's competitive world, there is a
             shortage of customers, not of products or capacity.

           • The company launching the product should know what specific needs its product will address.
             Which customers (target)? What offering (position)? Why is it better (differentiate)? It's not only
             because it works that customers will pay for it.

           • Companies tend to overestimate revenue forecasts for the new product. They have not fully
             understood the market they are addressing, their ability to deliver and provide service, and how
             their current situation may hinder the launch process.

           • A product launch should be executed by a clearly defined, cross-functional Launch Team,
             integrating key members of Corporate Management, R&D, Sales, Service, Supply Chain. It is
             not just the job of Marketing.

           • A product launch process should be supported by a clearly defined Launch Plan: objectives,
             goals, timelines, toll gates, tasks, responsibilities, report lines, performance measurements.

           • A product launch is a process, not an event.
Internal



                                                                                                                   4
1. Concept Definition & Key Challenges
NPL is the 2nd step of Product Lifecycle Management and it
determines the business success of the new product


                        Scope: New Product Launch in the Product Lifecycle


                                                              Sales
                Value




                0
                              Profit/ loss

                          New Product        New Product        Product
                          Development          Launch          Management




                                                                             5
Table of Content




               1. Concept Definition and Key Challenges

               2. Our Focus and Value Proposition

               3. Our Approach

               4. Why Frost & Sullivan

               5. Case Studies and Key References




                                                          6
2. Our Focus & Value Proposition
Frost & Sullivan gives equal importance to building the fact
foundation, marketing planning and implementation
                          Product Lifecycle & New Product Launch scope

                                                                       Sales
                Value




                0
                              Profit/ loss

                         New Product              New Product           Product
                         Development                Launch             Management




                        Capability
                        Assessment           Marketing    Marketing         Launch
                                              Strategy    Operations      Monitoring &
                                                Plan        Plan          Adjustments
                          Market
                        Assessment



                                                                                         7
2. Our Focus & Value Proposition
Frost & Sullivan focuses on fact-based and actionable analysis and
recommendations
                            Capability Assessment                            Market Assessment
                       • Working value proposition summary           • Segments:
                       • Resource analysis                               • Rank target markets & segments
                            • HR                                         • Addressable market
                            • Production Assets                      • Customers:
                            • Sourcing & Suppliers                       • Needs/ unmet needs
                            • Logistics                                  • Price points, elasticity
                            • Sales & Marketing Network                  • External factors (regulation, etc.)
                       • Budget analysis                             • Competition
                                                                         • Pricing, Positioning
                                                                         • Distribution
                                                                         • Differentiation strategies
                                                                     • Adjustment by country/ region



                                                                                                      Launch Monitoring &
         Marketing Strategy                      Marketing Operations Plan
                                                                                                          Adjustments
•   Value proposition confirmation           •   Product & packaging adjustments               • Performance dashboards
•   Distribution strategies                  •   Price levels                                        • Operation monitoring
•   Draft critical pathway for launch        •   Customer value                                      • Product performance tracking
•   Sales and margins forecasts, KPI's       •   Promotion plan                                • Post launch product fine-tuning (bugs,
•   Impact of new product upon existing      •   Support tools to effective launch (sales,       customisation, targeting…)
    product portfolio                            logistics, provisioning, crm,                 • Marketing plan adjustments
                                                 management)



                                                                                                                                          8
Table of Content




               1. Concept Definition and Key Challenges

               2. Our Focus and Value Proposition

               3. Our Approach

               4. Why Frost & Sullivan

               5. Case Studies and Key References




                                                          9
    3. Our Approach
    The New Product Launch best practice programme is organised in 3
    complementary and successive steps

Step 1: Create a strong
                               Step 2: Confirm new product launch strategy      Step 3: Implement the strategy
   fact foundation



       Capability
.     Assessment
     Output: Opportunity
     validation                     Marketing              Conclusions &          Marketing
                           .        Strategy              Recommendations         Operations
        Market                   Output: Value            Base case scenario    Output: Marketing
                                 proposition + business                         (launch) plan
.     Assessment                 case
                                                          GO/NO GO decision
                                                          Implementation plan
     Output: Opportunity
     validation                                                                                Launch Monitoring
                                                                                                 & Adjustments
                                                                                               .
                                                                                                    Output:
                                                                                                    Implementation roll
                                                                                                    out & impact
                                                                                                    measurement




               Using the components of this framework, careful diagnosis of client challenges and
                        opportunities allows a tailor-made approach to be recommended


                                                                                                                    10
3. Our Approach
Capability Assessment (1)

    Capability Assessment                            Key drivers                              Key questions

                                                                                    • What expectations are common
                                         • Cross-functional stakeholder buy-in        to key stakeholders?
• Working version of value proposition   • Priorities for validation and planning   • What are key challenges and
                                         • Assign Launch team                         opportunities?
                                                                                    • Who is on steering committee?



                                         • Manufacturing needed
                                         • Partner network, suppliers &             • What are our capability & expertise
• Capability gap analysis:
                                           platform needed                            gaps to target these product and
     • Production, Sourcing &
                                         • Organisation structure & RACI              customer segments?
       Suppliers
                                         • Investment needed (human capital,        • What are the required changes?
     • Sales & Marketing, other HR
                                           financial, technologies, assets)         • What are the key success factors?
                                         • Promotion resources required



                                                                                    •   What are ROI scenarios?
                                         • Key financials:
                                                                                    •   How do we manage the risks?
                                             • Revenue streams
• Budget Analysis                                                                   •   What are the key milestones?
                                             • CAPEX, OPEX, margins
                                                                                    •   What are the critical success
                                                                                        factors?




                                                                                                                        11
3. Our Approach
Capability Assessment (2) - Budget Analysis, illustrative

Question: What levels of ROI can be expected and when?
 Return on Investment
                                                                            An estimate of implementation costs suggests
 $35m                                               Cumulative Revenue      payback could begin after 24 months
 $30m               Highest negative in
                    investment cycle
 $25m               $2.6m                                                   Key Assumptions
 $20m                                                                       -Transitional costs tail off after 24 months
 $15m                                              Quarterly Revenue        -Ongoing costs after change remain the same
 $10m                                                                       as now. Any cost savings taken as benefit,
                                                                            any new staff taken on through restructuring
  $5m
    0
                                                                            -Average total cost to employ project team is
                                                                            $1,200 per day during implementation
 -$5m
           Year 1          Year 2         Year 3     Year 4        Year 5

 Benefits of the proposed changes will come from six areas and               Incremental revenue p.a.
 initial forecasts suggest they are significant:                                    by year 5
  1. Increased stand alone Solution XYZ sales                                        $800k-$1m

  2. Increased XYZ sales to current customers                                       $480k-$600k

  3. Increased XYZ and technology sales to high-end customers                $5m-$7.5m (IT $1m-$1.5m)

  4. Increased XYZ and technology sales to following market by
                                                                              $5-$6m (IT $500k-$600k)
     developing a targeted proposition

  5. Improved margin                                                           Currently unquantified

  6. Protection from business erosion                                         $1.24m in lost IT share


                                                                                                                            12
3. Our Approach
Market Assessment

       Market Assessment                           Key drivers                    Key issues and questions

• Segments:                            •   Segmentation                       •   How is the market segmented?
     • Rank target markets &           •   Size & growth; forecast            •   What are the opportunities?
       segments                        •   Market penetration                 •   Which ones should be captured?
     • Addressable market              •   Product switch                     •   What share can be reached?


                                       • Regulatory & certifications
• Customers:                           • Characteristics (intrinsic           • What are the trends/ behaviours/
     • Needs/ unmet needs                environment)                           expectations? Interests in new
     • Price points, elasticity        • Features/ technologies required        approach?
     • External factors (regulation,   • Existing technologies & limits       • What are the opportunities?
       etc.)                           • Decision making                      • What are the key success factors?
                                       • Usage trends; sensitivity


                                       •   Key players, offering              • Key competitors SWOT
• Competition
                                       •   Distinctive advantages, barriers   • Most likely scenarios for
     • Pricing, Positioning
                                       •   Best practices                       supply/demand balance,
     • Distribution
                                       •   Economics                            implications
     • Differentiation strategies
                                       •   Go-to market routes                • Transferable best practices?



                                       • Features                             • Does the product need to be
• Adjustment by country/ region        • Segments                               adjusted to local specificities?
                                       • Distribution                         • What’s the impact?




                                                                                                                   13
3. Our Approach
Market Assessment (2) - Competitive Analysis, Illustrative

Question: How does breadth of portfolio translate into revenues and revenue growth?


    Revenue                                          Company C
     growth          Company B



                   Company D                                           Company F
                                                Company G
                                                                              Company H
                                                                                      Revenue
                                                                                        from
                                                                                      segment
                                                                                       (000's)
                     Company A
                     (US only)
                                              Company E


                                 Size of the bubble: relative breadth of portfolio



                                                                                                 14
3. Our Approach
Marketing Strategy

    Marketing Strategy Plan                        Key drivers                          Key questions

                                       • Segment to be targeted                • How is the market segmented?
                                       • Product characteristics               • What is the proposition to
                                       • Unmet needs to be covered by the        customers?
• Validation of value proposition
                                         new product                           • What is the unique selling point?
                                       • Distinctive advantage                 • How can the product best
                                       • Strategic fit with portfolio            complement the portfolio?


                                                                               • What is most effective way to
                                                                                 reach, sell to and retain
• Distribution strategy                • Distribution and channel model          customers?
                                                                               • What adjustments are needed to
                                                                                 current model?


                                       • Roadmap (short, mid, long term)       • What are the pitfalls to avoid?
• Draft critical pathway for launch    • Action plan (quarterly plan for the   • What are the key actions to be
                                         first year)                             launched?

                                                                               • What is the business scenario?
                                       • Sales scenarios
                                                                               • What are the key assumptions?
• Sales and margins forecasts, KPI's   • Margin scenarios
                                                                               • What are the key success
                                       • KPIs relevant to the business (NPV)
                                                                                 indicators to monitor?

                                       • Cannibalisation/ substitution         • Fit with current strategy,
• Impact of new product on existing
                                       • Existing product/ project lifecycle     objectives and projects?
  product portfolio
                                       • Impact over current investments       • Impact on existing projects?


                                                                                                                     15
3. Our Approach
Marketing Strategy (2) - Value Proposition, Illustrative

Question: what set of features and benefits are most likely to lead to purchase?
Conjoint Analysis of Customer Priorities, Medical Technologies
                                                                                                   Q
             Category                            Utility/Score                   Category                         Utility/Score

Q      Top long term complications                                  100
         Top short term side effects                           85
                                                          62                     Quality of
                  Top target values
                                                     48
                                                                          !      Treatment                                          100
     Middle long term complications
                                                     47
      Middle short term side effects
                                                26                               Total Cost                  27
 C         Top cost of disposables          23
        Top machine purchase cost           20
                                                                                  Ease of               15
 E                    Standard size         19
                                                                              Use/Ergonomics
                  Top learning time        17
 C                                         14
                  Top staffing time                                            Customers overwhelmingly traded Cost and Ease of
                                           14                                                      E
         Middle cost of disposables                                            Use for Quality of Treatment. The ranking of sub-
                                           14                                  levels showed meaningful variations per country.
 E             Middle learning time
                                           13                                  Conjoint analysis tests the criteria buyers use to
 C Middle machine purchase cost                      Q                         make purchase decisions by forcing them to make
                                       6                  Quality
                                                                               trade-offs between different features/benefits.
 E                       Small size                  C Cost
                    Top integration
                                                     E Ease of Use


                                                                                                                                    16
3. Our Approach
Marketing Operations

  Marketing Operations Plan                        Key drivers                            Key questions

                                       • Local Product usage & preferences      • What product adjustments are
                                       • Product features specific to             required to adapt locally?
• Product & packaging adjustments        targeted local market                  • Any certification required?
                                       • Packaging specific to targeted local   • What are local regulatory
                                         market                                   requirements?

                                       •   Competitor price                     • How price sensitive are
                                       •   Churn rate                             customers?
• Price levels
                                       •   Production costs                     • What’s the price elasticity?
                                       •   Customer price acceptance            • Do we target premium position?

                                       •   Brand                                • What is our unique selling point?
                                       •   Product features & quality level     • What are the priorities of our target
• Customer value
                                       •   Warranty                               customer?
                                       •   Packaging                            • Do we target premium position?

                                       • Promotional mix: advertising, sales,   • Which message will resonate best
                                         promotions, PR                           with the customer segment?
• Promotion plan                       • Budget                                 • Which media provide optimal
                                       • Program & targeted impact                access to our target?
                                       • CRM model                              • How do we roll it out over time?

                                       •   Sales force, tools & training        • Who will sell/ distribute and how?
                                       •   Distribution & logistics             • What are the tangible/ intangible
• Support tools for effective launch   •   CRM tools                              assets needed?
                                       •   Product management tools & KPIs      • What are the projected results &
                                                                                  boundaries?


                                                                                                                    17
3. Our Approach
Launch Monitoring & Adjustments

      Launch Monitoring &
                                                   Key drivers                         Key questions
         Adjustments

                                       • Product features & quality level     • Is product delivering as expected?
• Post-launch product fine-tuning      • Packaging                            • What adjustments are required?

                                                                              • Is product delivering as expected?
                                       • Market penetration
                                                                              • Are we progressing according to
• Post-launch product tracking         • Customer satisfaction
                                                                                plan?
                                       • Actual sales, costs & margin
                                                                              • Which KPIs need strengthening?

                                       • Promotion                            • Is performance in line with
• Post-launch product operation                                                 forecasts?
                                       • Distribution
  monitoring                                                                  • Have unforeseen external factors
                                       • Price levels
                                                                                impacted progression?
                                                                              • What adjustment are required?


                                                                              • What evidence is available to
                                       •   Sales, costs and margin forecast
                                                                                support marketing and promotional
• Post-launch product marketing plan   •   Targeted customer segment
                                                                                efficacy?
  adjustment                           •   Promotion
                                                                              • How do we address the weakest
                                       •   Distribution
                                                                                links?
                                       •   Price levels
                                                                              • Any adjustment required to our
                                                                                forecast plan as a result?




                                                                                                                18
Table of Content




               1. Concept Definition and Key Challenges

               2. Our Focus and Value Proposition

               3. Our Approach

               4. Why Frost & Sullivan

               5. Case Studies and Key References




                                                          19
Why Frost & Sullivan?

                Frost & Sullivan assets for a successful new product launch project :


                                                         Dedicated focus on growth and how new
   Frost & Sullivan is the Growth                        product launches contribute to growth.
    strategy consulting firm                             Track record of successful new product launch
                                                          consulting projects over 45 years.

                                                         Industry expertise supported by an international
   Frost & Sullivan combines                             pool of functional experts
    both Consulting and Research                         Best-in-class consulting methodologies proven
    expertise                                             to be effective through experience in multiple
                                                          new product launch projects

                                                         International organisation with 32 offices across
                                                          all key regional markets
   Frost & Sullivan offers both
                                                         Strong understanding of the local issues which
    global and local perspectives                         underpin the success of new product launch
                                                          strategies and roll-out
                                                         Experience gained across a complete range of
   Frost & Sullivan generates                            industries and services used to advantage in
    synergies across different                            product launch projects
    sectors and markets                                  Capability to identify new product launch
                                                          opportunities across different industries and
                                                          markets

                                                                                                              20
Table of Content




               1. Concept Definition and Key Challenges

               2. Our Focus and Value Proposition

               3. Our Approach

               4. Why Frost & Sullivan

               5. Case Studies and Key References




                                                          21
5. Case Studies & Key References
Develop Value Proposition - Medical Technology

The client:
                                                                   The Objectives
• A global medical technology and healthcare company with
                                                                   • Develop a market-entry/ development
  leading positions in renal care markets
                                                                     roadmap
The challenge
• Steady decline in market share of a core revenue-generator       • Undertake end-user analysis to support
• Product perceived as less reliable than competition                the value proposition
• Gaps in their product line and pipeline                          • Complement its business planning with a
• Hence a need to redefine the product portfolio and                 robust business case
  establish the value proposition for new products due for
  launch mid-term.


  Our approach & work
  • Stage 1 - Validate the existing processes and assumptions
  • Stage 2 - Define the Value Proposition by understanding user requirements and perceptions (Conjoint &
    Qualitative Analyses).
  • Stage3 - Develop a business case to define the product mix, generate addressable market plan, identify
    risks and generate input for making business plan.

   Outcome & business impact
   • Clear value proposition to focus all pre-launch initiatives    • Cross-functional team alignment
   • Shift in focus from product to market                            around market needs
   • Market-driven business case for Board                          • and client value proposition
   • Investment in key product features to support the value        • ‘Best practice’ precedent for ongoing
     proposition                                                      product portfolio assessments

                                                                                                               22
5. Case Studies & Key References
International launch, innovative ultrasound system, market
potential assessment

The Client                                                             The Objectives
• Our client was created in 2005 by ultrasound medical imaging         • Validate key points of client’s
  experts. Funded by venture capital firms, our client had already       business case for EU and US:
  performed early-stage clinical studies which demonstrated            • Validate price points for novel
  significant improvements in diagnostic specificity.                    system across 6 countries
The Challenge                                                          • Validate volume and value market
• They were about to launch their first system for use in breast         potential and estimate five-year
  cancer diagnosis. To support further investment decisions and          adoption curve
  attract further investors, the client and their key VC partner       • Identify distributor remuneration
  needed to validate both the price premium for the new                  models
  technology and their corresponding business case for launch.

 Our approach & work
 Supported with secondary research, markets were modelled based on information gathered from key
 opinion leaders in leading breast centres, ultrasound manufacturers and distributors. Market models were
 drafted for multifunction, breast-dedicated and the client ultrasound system. Market penetration scenarios
 were drafted based on weighted competitive, quantitative and qualitative factors

Outcome & business impact
Key success factors were identified for our client and price premium ranges were validated. The detailed
market scenarios highlighted the impact of validated clinical evidence short-term and of price pressures long-
term. The improved understanding of regional variants helped validate go-to-market strategy.
The client will use the assessment as objective, third-party validation when raising further capital and during
marketing launch at the RSNA annual congress.

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