Marketing: Strategic Innovation in Globally Diverse Markets
Abstract
BrainLAB is one of the global medical device companies that aim to provide its customers; hospitals and clinicians, with products that could enhance the efficiency of the treatments. The company enjoys a diversified workforce aimed to enhance the performance of the company by providing innovative and creative designs to meet the requirement of the customers. BrainLAB operates in a competitive medical industry and currently employs 1070 people from different background and gender. The overall medical device and technology industry is growing and rapid pace thus providing the company with different opportunities. The company has to come up with effective and efficient marketing strategy in order to take advantage of these opportunities and improve the overall performance and growth.
Macro Environment Audit
Demographic
It is important to acknowledge here that despite of the fact that the end users of some of the medical devices and technology are the patients these medical devices and technology are marketed and provided to the healthcare professionals and providers as shown in the figure below:
(Zhong, 2012)
The hospitals and doctors are inclined to purchase medical devices and machines in order to provide the patients with high quality treatment services (Zhong, 2012). Apart from this the demand of the medical devices and technology is directly related with the aging and health status of the population (Zhong, 2012). The demand of the medical devices and technology increases if there is more high aged and unhealthy population. Hence, it can be said that the rapidly growing and aging population presents high opportunity for the company to increase its sale and improve its performance as according to report by UN the population of the world will increase to around 9 billion in the year 2050 as compared to that of 7 billion in 2010 (Holtzman, 2012). Overall medical devices and technology organizations are adapting to changing trends in the health care industry.
Economic
The overall business environment for the medical device industry has been favorable and conducive for the organizations. According to the survey conducted by the Emergo group (2012) about the overall outlook of the business environment for the medical device industry, most of the respondents classified environment as positive as shown in the figure below:
(Emergo Group, 2012)
Apart from this the most dominant trend in the medical device industry has been of international sales as international sales of different medical devices companies have increased as shown in the figure below:
(Emergo Group, 2012)
Another major trend in the industry is that most of the medical devices and technology organizations are entering into emerging and growing markets like China, Brazil, and India (Emergo Group, 2012). Along with this there is increasing Research and Development and innovations in the medical devices and technology industry.
The company’s response to the economic development and trends was a success. This was observed when Intel for the first time invested in a medical technology company with 7.3M. To meet the economic development and trends, the company acquired Voyant Health in the year 2011. This acquisition provided the company with an opportunity to put together Voyant’s products with BrainLAB’s orthopedic product lines.
Environmental
With software driven medical technology as the core business of BrainLAB, it requires less natural resources as compared to other industries. The availability of natural resources is not a hurdle for technology based company. As far as the carbon footprints and other associated costs related to transportation are concerned, the company has to deal with enormous transportation as most of the products are built in Germany and then transported to client’s sites. BrainLAB’s partners and vendors play an essential role in the shipment of parts that can be installed in the products.
Technological
There have been rapid technological advancements and changes in the medical devices and technology industry. Different organizations are investing in the research and development activities to come up with different innovative ideas and solutions.
With the passage of time, the company has advanced in terms of technology. The company has shifted its focus from initial need for less cumbersome neurosurgery program to development of simple and digitally integrated software that can be efficiently used in medical industry.
Collaboration of BrainLAB and Elekta resulted in the installation of a system that is aimed to make the surgery for the cancer patients more accurate and comfortable (PR Newswire, 2012a). Another advancement in the technology that is frequently used by BrainLAB is cloud computing. This technology was introduced in 2011. This advanced technology provides the company with an access from any secured network to upload or share any information with the members around the globe.
Political
Almost all medical technology and devices organizations have to face different rules and regulations all over the world (Kramer, Xu, and Kesselheim, 2012). The political and regulatory environment is perceived to be the major challenge for the medical devices and technology organizations as shown in the figure below:
Different changes in the rules and regulations result in changing the overall strategies and tactics adopted by the organizations.
The company operates in more than 40 countries due to which the company has to be aware of government regulations and developments. Continuous information regarding the regulations and developments helps the organization to efficiently meet the government’s regulations accurately.
The major concern for the company is the approval from FDA in USA for the introduction of any new product in the market. For BrainLAB to successfully introduce any product in the market, it requires acceptance and approval from FDA (PR Newswire, 2011). This approval ensures that the product is safe and secure to be used at the hospitals.
Cultural
The products offered by the company are culturally accepted by the clients. This reflects that the strategic partners have faith and believes in the BrainLAB’s mission and products. The company’s president was awarded with Bavaria’s most prestigious award for his out-standing service in 2000. A year later, the BrainLAB’s president was awarded Entrepreneur of the year award. In 2002, the president of BrainLAB was selected as the World Entrepreneur of the Year. Recently BrainLAB won a coveted Red Dot Award in the year 2012 for its latest and technologically advanced product design, Curve (PR Newswire, 2012b).
Market
According to a survey conducted by the German Medical Technological Association, the German medical technological industry has observed an increase in sales rate by 5 percent in 2011 (Emergo Group, 2011). It has also been observed that the profits that were earned were greatly reduced due to the excise taxes on the sale of medical devices in US and since 40% of the sales come from the US, the profits have to be reduced (Ernst & Young, 2012). Apart from this the German medical device is also improving its share in the international markets by improving the exports statistics as shown in the figures below:
(Germany Trade & Invest, 2011)
(Germany Trade & Invest, 2011)
The total sale of medical technology in Europe was about € 94.590.044.867out of which 24 percent of the sales were observed in Germany. The sale observed in Germany was around € 23.000.000.000 (Eucomed, 2011).
Customers
BrainLAB’s customers are mainly the hospitals that encourage the use of technology. Being able to provide the customers with innovative products at competitive price allows the company to create a bonding with its customers. Speed is another dimension that the organization works towards in order to attract and retain its customers. By providing the customers with prototype in the short time period allows the organization to garner quality feedback from the customers. This feedback provides the organization with information regarding the customer’s requirement so that the company can use innovation to work smoothly by making the best use of innovation.
The competitive price allows the customers from different segment to make their purchasing decisions. Along with competitive price, the company offers innovative products with quality. All of these features are eye-catching for customers. On the other hand, financial ability is another factor on which the purchasing decision highly relies upon.
With the main clients being hospitals, the company has developed a customer group based on doctors from different hospitals. These doctors provide the company with an insight regarding the needs of hospitals as well as the changes that should be made in specific product lines in order to improve them.
Competitors
BrainLAB is one of the organizations that operate in the medical technological industry with an aim to provide its clients with innovative technological products that could enhance the efficiency of the treatment. Some of the major competitors of BrainLAB in the medical technological industry are Medtronic, Varian, and Johnson and Johnson.
- Varian
BrainLAB has a strategic partnership with Varian but since the company does not have the exclusive rights to Varian technologies, Varian has developed partnership with many top leading companies in the industry. Varian is known for its cancer treatment and X-rays but still BrainLAB competes with Varian in spinal treatment technologies. The primary objective of the company according to Scott Tredennick; Director, Global Service Logistics for Varian Medical Systems, is to provide quality service to the customers while efficiently managing the inventory level across the globe (Business Wire, 2011).
One of the major strength of Varian is its cancer treatment systems that carefully target the tumors from outside the body; apart from this another major strength of the company is its partnership with leading companies in the medical technology industry. Acquisition is another major strength of Varian which allows the company to be more competitive in the market as such acquisitions enhance the products offering to customers (Rivervest, 2012).
- Johnson and Johnson
Johnson and Johnson is another indirect competitor of BrainLAB as this company provides many leading companies with parts of the Ortho product lines. The aim of this company is to save the most of the human lives with the help of advanced technology and to help the patients to restore the joys of living. The core strength of this rival company is the advanced and extensive product lines that have helped the company to reach the height of success in previous years. DePuy is another of the strength of the company. This company provides most of the leading companies with parts that could be useful in the development of products. DePuy even provides BrainLAB with Ortho parts. The strategy that the company focuses upon is the selling of technologically advanced products to only licensed practitioner, hospitals and clinics (Johnson & Johnson, 2012). Another strategy of the company is to focus upon key drivers that could help the company to enhance the potential of future growth and to provide the customers and clients with innovative products (Johnson & Johnson, 2013).
- Medtronic
Medtronic’s objective is to reduce or eliminate the pain and to restore the health of the patients in order to extent their life. The company, Medtronic is the leader in the medical equipments that helps the practitioners and hospitals to enhance the life of patients by helping them to overcome their pain. The major strength of the business is its partnership with another revolutionary device; iPad. This partnership has helped the business to communicate with the licensed clinicians (Apple, 2013). Apart from this, another major strength of the business is to work across boundaries to create new and innovative medical technologies that add real customer value. The marketing strategy of this technologically advanced company is the use of iPad to communicate effectively with the clinicians in order to provide them with updated information regarding the medicines and medical therapies that could enhance the life of the patients.
Distribution and Dealers
BrainLAB provide its clients with the requested products through carrier service. This enables the company to ship its products from Germany to all over the world. The company also provides its customers with additional facilities such as warehousing to store the product for short duration so that the clients could have enough time to accept the requested products. The time period to temporarily store the ordered product is few additional days. The disposable items of the company are stored and protected at the Westchester, Illinois till the client places an order. BrainLAB frequently uses the carrier services of FedEx and UPS in order to provide the customers with their desired products.
BrainLAB has distributors such as Chindex International, Inc. that aims to provide the customers of China with the innovative and technology based systems to hospitals throughout the country (Chindex, 2013).
Suppliers
BrainLAB aims to provide its customers with the best quality products available in the market within limited time-frame. To make sure that the products are of best quality, the company uses the resources from infamous companies that have been around in the market for about 50 years. With companies that large and famous, BrainLAB’s outcomes are favorable. This indicates that the key suppliers provide the company with resources frequently and of high quality in order for BrainLAB to provide its customers and clients with high quality products.
BrainLAB keeps close contacts with the key vendors so that the company could provide its clients with disposable products timely. This close contact with the vendors eliminates the discrepancies that the organization had to face in the past due to FDA.
The key trends among suppliers has enhanced and encouraged the business for BrainLAB. Suppliers are now turning to advanced technology which provides the clients and the customers with convenience as the entire product’s information is available on supplier’s portals. BrainLAB has always relied upon the use of internet as the primary source to connect to the rest of the world and since the suppliers are doing the same now, it has increased the efficiency of the business.
Facilitators and Marketing Firms
Since the company ships most of the finished products to the rest of the world, the transportation cost is high. The products are developed in Germany and shipped to the clients from different part of the world due to which the company faces high transportation cost. The costs associated with warehousing are minimal as the parts to be stored require less space. Along with the space, the storing of disposable parts reduces the costs to great extent. The company builds the systems when orders are placed; this has also helped the company to reduce the costs.
The company’s advertisement is the backbone of the business. BrainLAB advertises through traditional means such as journals, magazines and tradeshows. The marketing and advertisement agencies are quite efficient and effective, this was observed when the company’s products where used in the creation of X-Files in 2008.
Marketing Function and Strategy Audit
Marketing Function Audit
Products
The BrainLAB’s reason for existence is to develop technological based products that could enhance the efficiency of the physicians and their patients. BrainLAB has quite an extensive product lines which includes Neurosurgery, Orthopedic surgery, Spinal surgery, ENT/CMF surgery, Trauma surgery, Sports medicine, Radiation Oncology and Healthcare IT. The company has different identity and strategy for each product line.
Price
BrainLAB’s pricing objective is to provide its customers; hospitals and licensed practitioners with products at competitive price. This pricing objective has helped the organization to enhance its sales in the past years.
The company’s products are sold at different prices. This means that the cost varies from product to product.
Distribution
The company provides its clients with the required products timely with the help of its strategic partners and joint ventures. This indicates that the company has adequate market coverage but in order to be the best in the market, the company would have to enhance its market coverage to tower the direct competitors as well as indirect competitors.
In order to ship a product from Germany to USA, BrainLAB uses carrier services for distribution of latest products directly to the clients. The most frequent used distributors are FedEx and UPS. Both these distributors helps BrainLAB to timely deliver the products to the customers and clients without any discrepancies.
Integrated Marketing Communications
The advertising media are relatively well chosen by the company. These advertisement sources allow the clients to remain updated regarding the new products offered by the company. Suppliers also play an important role in providing information to the customers regarding the price along with additional information to the customers via portals.
Strategy AuditBusiness Mission
The purpose of BrainLAB according to Stefan VIlsmeier (President and CEO) is “to create medical products based on technology and knowledge to be easily accessible by physicians in order to treat the patients accurately and efficiently” (Brainlab, 2013).
BrainLAB has provided the medical industry with innovative technological products with the help of strategic partners. BrainLAB is famous for its innovative and creative technological products that includes from Neurosurgery and Oncology to Orthopedics, ENT, CMF and Spine & Trauma. This indicates the feasibility of the business and its mission statement.
Marketing Objectives and Goals
The goals and objectives of BrainLAB are crystal clear in order to guide and direct the marketing planning and performance measurement. For BrainLAB to introduce a product in USA, it is essential for the business to acquire approval from FDA. Since USA constitute more than 40 percent of the company’s sale, BrainLAB constantly guides and measures the performance of the business in order to effectively meet the standards set by the FDA.
Operating in a competitive technology based medical market, the marketing goals and objectives are appropriately set by BrainLAB. The resources and the opportunities also play an essential role in the setting of marketing objectives. Since BrainLAB is backed by its parent company BrainLAB, AG the company enjoys strong position in the medical industry. BrainLAB’s marketing objectives highly focuses on expansion of business in the rest of the world to effectively meet the rising demands of high-tech products that could enhance the performance of the treatment and could radically reduce the risks involved in the treatment.
Strategy
The operations of the company provide a quick glance regarding the marketing objectives and strategies. Since the company has strategic partnership with leaders in the medical high-tech industry, the company has somehow enabled itself to achieve its marketing objectives with support from these companies. Regarding the effective positioning and marketing mix for each target segment, it was observed that BrainLAB has sustainably developed its marketing mix in order to attract target segments towards the high-tech products offered by the company.
Conclusion
For BrainLAB to successfully improve the overall marketing effectiveness of the business BrainLAB should enhance its marketing strategy. The marketing mix strategy is the most important tool for the organizations and it is important to master this skill of marketing mix strategy development (D’Esopo and Almquist, 2007). This marketing strategy should include the ways that will enhance the customer’s engagement and will provide competitive edge over other competitors in the market. BrainLAB should focus on creating co-creation experiences in order to improve the overall value (Prahalad and Ramaswamy, 2004). The second short-term step to overall improve the marketing effectiveness would include the successful execution of the marketing strategy. This step would include the use of every single possible factor; people, process and technology that would enable the execution of marketing strategy. The third and the last step to overall enhance the marketing effectiveness is the marketing measurement in order to assess the effectiveness of different marketing mediums.
For BrainLAB to improve its overall marketing effectiveness, it should take these 3 long-term steps into consideration:
- Making the products to meet the customer’s requirement. This first long-term step indicates that the high-tech products should be specifically for the customers so that the product could meet the needs accurately.
- Narrowing of the customer’s base. Since the products offered by the company are just limited to hospitals and licensed clinicians, the company should further narrow down the customer base.
- Geographical expansion. In order to improve the marketing effectiveness, the company should geographically expand into those regions that are in dire need of high-tech medical products.
Marketing audit is another important dimension that the business should take into consideration. Marketing audit provides the company with the basic information regarding the primary goals that the company is trying to accomplish. According to Loya (2011), marketing audit is the identification of external factors along with internal marketing goals and objectives that the organization aims to accomplish to enhance its efficiencies. Marketing audit is critically important for an organization as it highlights external environment, internal marketing goals and objectives.
References
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