Draft 1-Marketing Plan
1. Executive Summary
Our marketing plan is for the pediatric rack system used by g-tube patients to be distributed and sold through the Fortune 500 company, Owens & Minor.
2. Company Description
Owens and Minor was established by cofounders Otho O. Owens and G. Gilmer Minor in 1882 to provide healthcare services for the local Richmond community. What started as a drugstore, in a now historic landmark, quickly grew to buy out competitor drugstore Bodeker Drug Company in 1954. With this acquisition, the company briefly changed names to Owens, Minor & Bodeker, commonly known in that day as OMB. In present day Owens and Minor has surpassed any expectations that the origins of the business would ever suggest. Employment numbers sit roughly at about eighteen thousand, while the customer base has reached out as far as ninety different countries. Owens and Minor accomplished consistent business growth by not ever remaining stagnant. An example of this is seen in the company’s change of focus coming in 1999. From the company’s humble beginnings of providing drug products to the community, it developed into more of a business of medical supply chain management. Coming with the business’ rebranding, the company introduced a consulting service, which at that time was innovative for a distribution servicer. The most recent venture of business growth, coming in 2018, was Owen and Minor’s purchase of Halyard Health’s business. Throughout the business’ existence it has remained centered on its customer base. Even present day their company outline states that “We provide sustainable supply chain, product and patient solutions that lower total costs and improve quality of care across the continuum of care.” (Owens & Minor, 2019). Owens and Minor’s business model has always aimed to systematically remove complexity from their services in an attempt to maximize efficiency and cost-effectiveness, allowing the business to grow while continuing their trend of putting customers first. Given the company’s growth patterns, their expansion strategy has been widely successful.
3. Strategic Focus
The Owens and Minor mission statement is “to serve the healthcare industry with dedication, innovation, and a passion for excellent customer service” (Owens-Minor, 2019). The company started in 1882 during the period when antiseptic surgery was in its infancy stage. What started as a drug store in Richmond, Virginia, has grown to a full line of medical distribution, supply, and inventory management company. Owens and Minor serves drug stores to hospitals, medical transportation, as well as inventory management solutions for various supply chains. Ultimately the end user of their products would be anyone seeking healing or in need of medical attention or medical supplies.
They hosted the first healthcare supplier symposium giving way to diversity and innovation in the medical supplier field. . Only one space after periods and punctuation / APA style. Their vision is one that pairs quality and value in the medical field, “we see a future where healthcare delivers on quality of care and financial value” (Owens-Minor, 2019). The use of technology is a driving force behind their vision for the future of the company. Through innovative technology breakthroughs they strive to make inventory and distribution more effective while cutting costs.
Company goals for Owens and Minor include the following goals:
· Nonfinancial goals
1. mMeeting and exceeding customer expectations.
2. , nNarrowing adjusted income per share range.
3. , sSelling more products, and investing back into the company. .
4. Focus on productivity and efficiency operations.
5. Improve customer relations
Edward Pesicka, President and Chief Executive Officer (CEO), states “We continued to improve our service levels in the second quarter and are meeting or exceeding most customer expectations. Finally, we continue to focus on productivity and efficiency initiatives to drive operating improvement” (Owens and Minor, 2019). Improving customer relations, productivity, and efficiency will move the company closer to its financial goals. They plan to achieve their goals by offering lower costs to its customers and providing global support in the form of services and innovative solutions. Secondly, Owens and Minor remains committed to delivering surgical and infection prevention products that are superior to their competitors.
· Financial goals
1. From a financial standpoint the company Sis seeking to reduce costs and become more efficient . .
2. Invest in Fusion5 technologies to provide a value-based payment services and solution for their customers
3. Their partnership with Fusion5 provides improved quality, management of payments, shared risk contracts, and a reduction in cost.
4. Long-term investments into Fusion5 are projected to increase profitability.
5. Cost reduction efforts are focused towards precise inventory management
6. “For 2019, the company is narrowing its adjusted net income per share guidance range to $0.60 to $0.70, which excludes the impact of currency” (Owens and Minor, 2019).
Cost reduction efforts are focused towards precise inventory management. Previously, the company dedicated its attention strictly patient care and the patient. In regard to company investments, Board of Directors Chairman Robert Sledd asserts “Long-term success depends on a thoughtful balance of short and long-term investments so we will invest in the company for 2019 and beyond” (Owen and Minor, 2019). Owens and Minor will continue to invest in Fusion5 technologies to provide a value-based payment services and solution for their customers. Their partnership with Fusion5 provides improved quality, management of payments, shared risk contracts, and a reduction in cost. Long-term investments into Fusion5 are projected to increase profitability, allowing Owens and Minor to focus on other company goals such as inventory management.
Core Competencies and Sustainable Competitive Advantage
Owens and Minor provide value-addition to their clients through their services. The company is able to fill the gap in replenishment and reverse logistics which is great support for manufacturers. Secondly, the company is compliant and quality assessors through their procedures and services to ensure they meet state and federal regulatory requirements and quality control assurance. Thirdly, the company supports healthcare manufactures through financial transactions and ordering through use of other order-to-cash processes and customer relationship management. Fourthly, the company has succeeded in their supply chain management through promoting supplier diversity for the benefit of healthcare institutions and also producing their private label products called Medi Choice. Fifthly, the company is strategic through its partnership with diversity suppliers who support them in innovation and diversification.
Having a sustainable competitive advantage is key when trying to market a new product. Our product will sustain a competitive advantage by being the first of its kind. Due to the fact that the pediatric RN does not have feeding tubes for babies, Owens and Minor will be the first to offer this as a product. This will draw the attention of other medical facilities and want to use our product. We can also market this product at a reasonable price, while providing a unique service that has not been done yet.
4. Situation Analysis
The following section will include a Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis for Owens & Minor. The company has many strengths as a medical and surgical supplies distributor. Owens and Minor offer its consumers a diverse product portfolio which includes minority, veteran, and women owned business partners. They are regarded as having quality products with a strong customer base. The company operates in over 90 countries to include North America, Latin America, Europe, and the Asia Pacific. Their global impact helps Owens and Minor remain a powerhouse in the medical services industry.
Weaknesses include flaws in their inventory management system, high attrition rates, and poor cash flow. Over the past few years the company has struggled with the direction in which they will strategically evolve. With over 17,000 products, managing inventory can be a challenge for any company. Poor inventory management has caused Owens and Minor to not account for all assets, and have incorrect financial data and statements. More important, these flaws are felt by the consumer who expects timely delivery of their products. A high attrition rate has cost the company money in several areas. Specifically, recruiting and training. Countless hours are dedicated to finding the right people and developing them into model employees, supervisors, and managers. All these factors have affected the company’s financial portfolio. Owens and Minor experienced a loss in Net Income totaling $10.5 million as of June 2019 compared to $183 million around the same time in 2018 (as reported GAAP). Their cash account is down to $91 thousand in June 2019 compared to $118 thousand in June 2018. Finally, dividends have been on a steady decline the previous two years; currently at $0.0075 for the year.
Although Owens and Minor is a Fortune 500 company they have much room for growth. They have opportunities to further advance their brand in the global market. Social media has become a dominant influencer in marketing and branding. A strong campaign on platforms such as Instagram, Facebook, and Twitter could prove to be positive and financially rewarding for Owens and Minor. They have also acquired several companies over the past 10 years. Due to their cash flow problems they have an opportunity to realign themselves in the market and invest in more efficient technology should they find themselves in financial crisis, or see it beneficial for growth. Owens and Minor face competitive threats much like all companies. As technology changes daily, they invest heavily into financial and inventory management software that offer solutions to their consumers. They also face competition by new entrants seeking to become a major player in the medical industry. New entrants are often times able to undercut Owens and Minor’s cost due to not have high overhead costs. In today’s era consumers have (and exercise) more bargaining power than in times past. These factors pose a threat to their current customer base as they may leave for a company who offers similar products and services at a cheaper price.
The Owens, Minor and Bodeker situational analysis for marketing plan of the pediatric feeding tubes will be quite complex considering the nature of the business. The situational analysis is a very important element of the general collaborating marketing plan as it will cover several areas in the organization assessment and evaluation aspects. The situation analysis in this case will include SWOT analysis, industry analysis, key competitors, company analysis and the Customer analysis (Owens & Minor, 2019)
Owens, Minors and Bodeker has been in operation for quite a long time and so in order to advance the marketing plan we will carry out the SWOT analysis which will be evaluating the internal and external factors that will affect the operation of the company both positively and negatively. The plan will also look into areas that may require substantial improvement which will be the availability of the feeding tubes for the babies which is one of the main weaknesses of the company.
The next section that the plan will evaluate is the industry analysis of the company. In this particular aspect the team will be evaluating the effect the company has on the general performance of the industry based on the availability of these feeding tubes. The industry analysis will give the team an inclusive information about the industry. This will be helping to study the industrial marketing approach to make the plan more effective (Büyüközkan, Mukul & Uztürk, 2016).
The key competitors are another sector that is so crucial for the collaborating marketing plan. This will include looking into the approach the players are using. The marketing plan is meant to be competitive, it is therefore important to get to know more about the opponents the company has in the industry and the strategies they are employing in their operations. Our firm lacks the feeding tubes for the babies which makes it vulnerable competition wise. If the other organizations have this particular equipment our organization becomes relatively incompetent.
The other aspect of the situational analysis will be the manner the company is operation in the drug business and the availing of the feeding tubes. This will give substantial information on how the company marketing state is designed and how it will be restructured in an appropriate manner and one that will be efficient.
The final situation is the customers analysis. This will include the study of the general state of the company and the clients the company is handling. The marketing plan will be dealing with the customers directly; it is therefore important to have an inclusive plan that puts into consideration the consumers of the products. For the case of this situation the consumers are the babies who need to use these tubes.
The healthcare logistics industry is projected to grow significantly by 2021. Revenue projections are expected to reach 93.2 billion. According to medspeed.com “healthcare transportation/logistics is a burgeoning business with significant projected growth. IndustryARC estimates that the global healthcare transportation services market will reach $93.2 billion in 2021. That reflects a compounded annual growth rate (CAGR) of 4.17% from $73.48 billion in 2015” (Medspeed, 2019). The medical industry is every growing and changing. Baby boomers are getting older and need more care and geriatric care is increasing. Where there is a demand the supply will increase, and Owens and Minor provides the supplies which lowering costs for their customers.
A few of Owens and Minor’s top competitors include McKesson, Cardinal Health, and AmerisourceBergen. McKesson seems to be the closest related to Owens and Minor in that they offer supply chain management as well. McKesson was formed in 1833 being the oldest of all the competitors and has been in the industry longer than Owens & Minor, who were formed in 1882. Owens and Minor continue to stay ahead of technological needs in the industry and customer satisfaction. Pairing procurement with their other services such as supply chain management, distribution, and logistics sets the apart from their competitors.
Owens and Minor has been cofounded and owned by the same family for generations. Due to this, the families have gained knowledge about the medical supply industry throughout years of experience. From the time the business was established, Owens and Minor has made a point of increasing their services by any means necessary. The business has acquired numerous competitors, and in doing this has continually adopted newer and better ways of conducting business. Owens and Minor is consistently looking for ways to optimize inventory management as a means of producing more product at a faster rate for their consumer market. This in turn has led to a greater business income with which they continue to invest in improvements having to do with efficiencies in their inventory programming.
The type of customers who are likely going to buy this product are nurses and other hospitals who are in need of this product. Since it is the first of its kind, our customers will be many variations of hospitals who are in need of feeding tubes for babies. This product is often bought by customers who have a higher level of education. Our feeding tubes are also purchased by large companies who own a facility in order to help newborns and babies. Since there is a way to feed babies now, it is not very effective and takes more time; therefore, our customers are looking for convenience and have money to spend on a product to feed babies through a tube.
5. Product-Market Focus
The five-year marketing plan and objectives for Owen’s and Minor are customer oriented
and the section below will identify the target markets, points of difference, and positioning of its new pediatric g-tube unit called “The Rack” into the medical device market.
Marketing and Product Objectives
Within the medical industry it is hard, sometimes impossible, to find supplies or products that are both efficient and affordable for lower income businesses or households. Owens and Minor has created a Niche within the medical industry that allows for more efficient products at a market leading cost. The creation of this niche market has allowed for Owens and Minor to maintain flexibility in their sales which has helped in efforts of maintaining customers. Due to a more specialized market, product from Owens and Minor should not have to go through head-to-head product placement. Even though head-to-head would be a great strategy for showcasing the differences of product pricing and durability, differentiation positioning would be more effective because of the ability it gives Owens and Minor to conform to its niche.
“The product manager, sometimes called a brand manager, manages the marketing efforts for a close-knit family of products or brands” (Kerin & Hartley, 2019, p. 276). As a brand manager, the positioning strategy for Owens and Minor will be head-to-head positioning due to the industry in which they sell goods. Direct competitors to Owens and Minor include Cardinal Health, AmerisourceBerge, McKesson and Ryder System. Due to the diversity of products sold by Owens and Minor, the marketing strategy is better suited by not selling to one particular type of customer, or to target specific customers. The medical services industry is a specialized market which only attract consumers directly related to this type of business. The products sold by this company are specialty products that consumers have to spend extensive time researching in order to purchase. The marketing strategy will be unlike shopping or convenience products due to the requirements of the medical industry.
Products sold by Owens and Minor are specific to hospitals, clinics, and other medical professionals such as collegiate and professional level sports medical teams. Pricing is right in line with industry averages and pose no potential threat from outside competitors. In order to establish better and more effective communication with existing and potential new clients, the use of social media e.g., Twitter, will be used to market products and the brand of Owens and Minor. Currently, Owens and Minor is lacking in the social media output department. Brand loyalty is high with specialty products due to their scarcity in the marketplace. Often times, consumers do not wish to substitute quality products with sub-par goods in order to save on cost. In addition, the place where their products are sold is very limited. Direct purchasing through Owens and Minor is the primary method of obtaining goods. Amazon has become a distribution partner which aids in the marketing and selling of products.
There are several marketing approaches and strategies that will be used in marketing these babies feeding tubes. This is a new product and at the same time the company is offering it to a new market. The first step that will be considered in this case is the segmentation and targeting the market for this product. The company will have to come up with a conclusive strategy that will ensure that the product makes it through to the market and in this case the target market is the nursing institutions who need the product for their clients as well as the parents who may need the product to help their babies. So in this case the company will come up with a flexible strategy that will sell to the medical institutions as well as the individuals. The segmentation of the targeted market should therefore be well strategized. This product is generally new to the market it will therefore be marketed to the prospective clients from all over in the targeted market.
The marketing plan will be a conclusive one and considering that these products are getting to the market for the first time which means it will be a significant piece of work for the company that will be doing the marketing. According to the research that we carried out before this it was quite clear that these items are not available in the market and so there will be no significant competition for the product. The minimum competition will therefore give the company less challenge in trying to balance the issues because they just need to spend a little in differentiation. In the event that the product faces some level of competition in the industry in future, we will have to adjust the quality of the packaging with the brand name to bring about some differences in the organization and maintain the company profitability (Owens & Minor, Inc .2019).
The knowledge of the market size is a very important because it will be quite important in defining the general number of customers to be served. When the size of the market to be served is well estimated it even makes it easy for the company to adjust to enhance the quality of the product and the quantity of the tubes to be availed to these customers in the market. The company to be used in the has been in the operation for quite long. Owen and Minor company is quite known and using in this particular market plan will work out quite well for the product.
The final part of this product marketing pan will include the positioning strategy which will come after selecting a target market for the product. The target market in this case has been well selected to incorporate the various probable users of the product. The target market selection will be so key in the overall positioning of the product. This will be the final stage of the marketing plan and in order to enhance the success of the company and this new product in the market. This part will also cover the various issues that a brand manager got to face like the having to deal with the various competition forces in the industry (Büyüközkan, Mukul & Uztürk, 2016).
The marketing plan is built on five main steps that are meant to make the process more solid. The first step will be grouping the potential buyers into segment so as to facilitate the marketing process and make it more efficient. The next step will be grouping the products to be sold and in this case there will be no more of grouping considering there is only a single product. The third step will be developing a market-product grid and estimate the size of the markets. This will be key in the overall valuation. Next will be selecting target market to know where the product will be taken and analyse them critically. Finally, will be taking the relevant marketing actions to reach target markets. They are located in different places and so it will be important identify the areas where the target markets are located to facilitate the distribution.
This product is being offered to very open market and so it means that in as much as there is no significant level of competition currently, the company needs to prepare for such forces. It is important to make the marketing mix strategy quite incorporative to hold all the factors that are necessary for the company and the product to work it through in the market. Babies feeding tubes seem to be very important products for the customers or rather the prospective consumers of the product in the market. When the product is well positioned it will easily gain substantial popularity in the market and will remain doing well for quite a long time.
In conclusion the marketing plan will be summarized by properly taking the marketing actions to reach the target markets. These products will have to be marketed continuously in order to enhance the general organization performance. All the target markets will be covered in the process. It is important to cover all the aspects of the product in order to make sure the various aspects are touched.
Points of Difference
The primary points of difference for this product is that it is designed for babies. Feeding tubes are not necessarily a new product. The way that our company is marketing feeding tubes is what sets us apart from the rest. There has never been feeding tubes delivery system designed specifically for babies. Being the first company to market this product is our primary point of difference.
The pediatric g-tube unit called “The Rack” will not occupy the traditional retail consumer market, it will be positioned in and around the medical industry, specifically those that handle surgeries and surgical care for pediatric patients. The unit will be essential to hospitals and treatment centers for children with newly implanted g-tubes. Since there is no known product on the market today that is gentle enough to ease the gassy stomachs of infants after a g-tube insertion surgery, head to head positioning is not logical. This is a new product and will be marketed to pediatric care units, it will involve differentiation positioning, “which involves seeking a less-competitive, smaller market niche” (Kerin & Hartley, p. 228). The plan is once accepted and proven to be effective with the nurses and caregivers it will promote itself. The positioning statement for the medical field market:
For the sensitive stomach of infants, comes a feeding system that will ease the pain and discomfort associated with newly implanted g-tubes. Owens & Minor is dedicated to providing the best in the industry, and this new product will change the way health care providers ease the transition of surgery to daily feeding.
The Rack would be classified as a medical device product and since there is already a device on the market for newly installed g-tubes for adults, unveiling the pediatric version will soon become a regularly stocked product in all pediatric surgical units. This product is similar to the adult version but functions differently so it will be classified as a new product since “the amount of learning effort consumers must exert to use the product” would take specialized training to use it properly (Kerin & Hartley, p. 244). The success in the product will be the comfort level of the patient. Children are often cranky and uncomfortable enough immediately after surgery, then to have extreme bloating and discomfort due to a new feeding tube on top of that, just causes undue stress on the infant and family. The Rack will ease the discomfort and remove any air in the line to aid in the physical transition from surgery to feedings. Once the product has proven itself to the test markets, doctors and nurses will demand The Rack for the follow up care of pediatric g-tube.