Introduction and product/service description
This report has been created with the purpose of designing a marketing plan to cover the national (USA) launch of a blood pressure monitoring watch designed for high risk high blood pressure patients. Increasing health awareness has built a need for health and safety products and equipments which should not only be effective but easier and convenient to use without any nursing service.
The following represents a detailed overview of a marketing plan created specifically for the purpose of launching a new product - a blood pressure wristwatch on the territory of the USA. This paper covers several important areas of a comprehensive marketing plan which include the selection of the target market, analysis of the market size, product make-or-buy analysis, an overview of the rationale for the construction of the sales price for the product, and the distribution plan. In addition, a profit/loss statement for the first year after commencing operations is provided. A pro-forma profit/loss statement for the first year is also included.
Target market segment
According to the Centers for Disease Control and Prevention, more than 67 million Americans suffer from high blood pressure, which accounts for about 31 per cent of the total adult population. The condition is especially present in people that suffer from chronic diseases. Thus, 69 % of people with a heart attack, 74% of people with chronic heart conditions and 77% of people with stroke have problems with high blood pressure (CDC, 2009). It has also been associated with kidney diseases. All of these people constitute the target market for the new product.
Demographics and psychographics
A research conducted y the CDC shows that all adult groups (according to age and gender) are likely to develop high blood pressure. Statistics indicates that the percentage grows in the age groups of 45 years and older, whereas women are more likely to develop the condition in the elderly population (CDC, 2009). The appendix shows table 1.1: the percentages by age and gender.
In addition, statistics show that African Americans are more prone to the condition than the other races, as it can be seen in the table 1.2 in appendix (CDC, 2009)
Presumed cost for provision of the service
According to Tech Briefs (2013), Texas Instruments have used a low-cost Chronos development platform to make a wristwatch for measuring blood pressure. The instrument relies on a sensor which is placed against a wrist artery and detects the pressure of the wave of blood as it flows through the artery. Unlike other similar instruments which cost about $2,500, the one developed by Texas Instruments is a low-cost instrument with a price tag that is under $100, which makes it available to anybody (Tech Briefs, 2013). When this price is compared through a make-or-buy analysis, it becomes evident that the production of such a device will cost much more, especially if the cost of design is taken into consideration. Hence, it will be much more adequate to buy than to produce this product.
Competitive advantage
As it has been already stated, the chosen product has a considerable advantage in comparison with other similar products due to its low price (Tech Briefs, 2013). In addition to the low cost of the product, it is also very easy to use, has a simple and appealing design and is based on an innovative technology that allows it to be small and accessible at all times. Furthermore, it does not take time or effort on the side of the patient in order to operate it. All of these features give this product a significant competitive advantage which should lead to fast acceptance from the target market and the achievement of the desired sales.
Mark up for retail or sales price for service
It is proposed that, in the analysis of the price, the cost of the products, all other additional expenses and the desired profit are taken as the base for a markup percent. Given the nature of the product, it is also proposed that the cost is used as a base for calculating the selling price, which will be calculated as follows (Deitz and Southam, 2013):
Dollar markup = markup percent * cost = 0.80*$92=$73.6
Selling price = cost + dollar markup = $92 + $73.6 = $165.6
Market size (in units or service elements)
In accordance with the previously stated in regards of the target segment for the new product, it becomes evident that only in the USA, the need for such product is measured in millions. In addition, the number of people suffering from this condition in 2005 has increased for over 30 per cent in comparison with the previous decade, and it is expected that this number will continue to grow due to modern day habits and lifestyles (Divine, 2006). In addition, it is important to mention that experts have begun calling for home blood pressure monitoring, which means that more and more people will be advised by their doctors and health providers to purchase their own device for monitoring blood pressure (HHP, 2009). Therefore, the market size for this product in the USA for the first year alone can be estimated to 1-2 million units.
Profit/loss for product/service including estimated administrative costs
In accordance with the proposed traditional model of distribution (see the section bellow), it is recommended that the company opens one office/storage in a specific location which has easy access to the chosen distributors. This means that the company will only need one location that will need to be staffed with one administrative employee and two employees working in the warehouse, in addition to the manager. All other services, including legal advice and guidance are proposed to be outsourced according to the need. Therefore, it is estimated that the cost of operations will be limited to facility costs, staff, purchasing products, distribution and marketing. In line with the mark up sales price of the products, it is estimated that breakeven will be achieved at the end of the first year. A detailed pro-forma profit/loss statement is included in the last section of this document.
Promotion of the product
Having in mind the demographics and psychographics of the target audience, it is recommended that an extensive promotional campaign is used for this product through traditional media (Stroud and Walker, 2013). This means that TV and newspapers advertisements will be used, and in addition, printed promotional materials will be created and distributed in pharmacies and doctor's offices. Furthermore, promotions caravans can be introduced in nursery homes and community centers.
Distribution/transportation issues
It is recommended that, in order to ensure that the patients have access to the product when and where they need it, the traditional distribution model is used. For medicinal and pharmacological products on the territory of the USA, this model consist of distributing the products through distributors which make sure that pharmacies and drug stores have it available. The three major distributors for these products in the USA are McKesson, AmeriSource Bergen and Cardinal Health. Due to their existing connections with the pharmacies all over the USA, and their established distribution and supply chains, it is recommended that these three companies are also used, which means that contracts will have to be signed with all three prior to the releasing of the products to the public (RxCommercial Research, 2012). Later on, and in accordance with the demand growth, more detailed analysis can be made about availability and distribution of the products in specific geographic areas.
Fig 2 shows a Pro forma profit/loss for the first year. This helps in forecasting financial issues that may occur at the early stages of a new product launch and therefore the company should be well prepared to handle it.
References
CDC - Centers for Disease Control and Prevention. (2009). High blood pressure facts. Retrieved from: http://www.cdc.gov/bloodpressure/facts.htm
Deitz, J. & Southam, J. (2013). Contemporary business mathematics for colleges, 16th Ed. Mason, OH: Cengage Learning
Divine, J. (2006). Action plan for high blood pressure. American College of Sports Medicine.
HHP-Harvard Health Publications. (2009). Experts call for home blood pressure monitoring. Retrieved from: http://www.health.harvard.edu/newsletters/Harvard_Womens_Health_Watch/2009/August/Experts-call-for-home-blood-pressure-monitoring
RxCommercial Research. (2012). Commercialization of pharmaceutical products in the USA: a practical guide. 2nd Ed. New Jersey, NJ: RxCommercial Research International Inc.
Stroud, D. & Walker, K. (2013). Marketing to the aging consumer: the secrets to building an age-friendly business. Basingstoke, UK: Palgrave Macmillan.
Tech Briefs. (2013). A low-cost wristwatch for non-invasive continuous blood pressure monitoring. Retrieved from: http://contest.techbriefs.com/2013/entries/medical/3689
Appendix
Fig: 1.1:Percentages by age and gender.
Fig 2: Pro forma profit/loss for the first year.
