Tag Archives: Medical Device Marketing

Running a Key Opinion Leader (KOL) Meeting within the Medical Device Market

November 13, 2015 timwalker317526 1 Comment

The Story

I will be running a KOL meeting this week and I thought writing this blog would be a good way of capture advice that I might give myself. KOL panels can be incredibly valuable, if done well. They can also be a bit embarrassing if done poorly. Here are some helpful tips.

#1 tip: Know what your objective is first. Otherwise you will end with, at best a fragmented process, at worst an expensive party.

The top ten list

Bring value to the clinician beyond the honorarium that you will be paying them. i.e. one suggestion is using a keynote address speaker on a relevant topic that is slightly off-axis.
Know what you want to learn before you plan the event or invite a physician.
Don’t settle for narrative as the only input mechanism; get qualitative and quantitative data.
Recruit a physician to co-host the event. This will bring credibility to the event as well as providing you a test bed for your structure.
Don’t solicit advice on issues that you are unwilling to act on.
Work them hard; it communicates how valuable you believe their views are.
Comfort and convenience wins out over fancy and exotic every time.
Leave time in the schedule to let the physicians talk to one another without you present.
If you and they have the time for entertainment, make it memorable not expensive.
Themes are great for spring dances; don’t go overboard with tying everything together.

More tips for success

Logistics, logistics, logistics
A good rule of thumb is to spend 4 hours of planning for every one hour of meeting time.
Structure is important to good data capture, however physicians will rebel against any structure that you might design. Accept that and make sure that within your structured discussions that you plan for unstructured time.
Conducting a pre-meeting survey is a great way to learn of dramatic differences of opinion. Actually using the slides from the survey is a great way to introduce controversial topics without it seeming as though you are trying to stir the pot.

When to utilize professional and independent moderator/facilitator

I have developed the view that whether a professional moderator is used or a skilled facilitator from your own company is employed is dependent on a couple of issues:

1. What is the critical nature of the decisions I am collecting information to support?

For high-risk critical decisions I prefer a non-company based facilitator. It eliminates bias.

For politically charged decisions I prefer an independent facilitator. It takes the pressure off the product marketer.

2. How many physicians will be attending?

I don’t recommend more than 10 physicians, however if you must go above 10 then a professional facilitator is preferred.

3. If there are a number of different physician specialties or a mix of clinician types than a professional facilitator can be helpful managing any accidental friction that occurs.

4. If you are going to spend the time and money to gather a group of physicians to help you resolve your critical issues, an additional $10,000 to have a coach or moderator involved make the chances for success go up dramatically.

5. Take the time to prepare a final report document that captures all that you learn and reveals the data organized by the data or findings that are associated with the critical questions you were trying to resolve.

Tips in selecting the attendees for your KOL panel

Select your attendees based on your objectives.
Make sure the invitees are representative of your target customer base.
Ensure that the physicians are still practicing physicians.
Don’t send the invitations until you have vetted the potential personal conflicts or subservient relationships that may exist.
If you “over-invite” to cover potential no’s or last minute cancellation make sure you can handle the overflow, if it happens. My approach is to nominate 30 physicians who all meet the acceptance criteria. Rank them. Invite 12 to get 10. If you don’t get 10 out of the 12, then extend to the next three people on your list. Keep rolling until you get your 10. This way you minimize your exposure.

Final thought

If you have never organized a KOL panel before, don’t be stubborn, ask for help. If there is no one in your organization that has done one well, hire someone to help.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com.

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Market Development; “is it really different than Product Marketing?”

September 2, 2015 timwalker317526

At the heart of the Marketing continuum are three aspects of strategic marketing: 1) New Product Portfolio Development, 2) Market Development, and 3) New Business Development.

Are they really different? Yes and No is the answer. To be successful in any of the three areas you need a strong understanding of the core principles of marketing, a great understanding of your organizations capabilities and of course, a strong understanding of the nature of the customer and the environment in which they work.

The analytic tools you use will be very similar. The basics of great messaging will apply. Where they differ is in the nature of the problem you are trying to solve.

Market Development Defined

Market Development is simply the creation or expansion of a market. To expand a market or create a market you have to first “sell” the idea that a problem exists. You need to educate the potential buyers that they have an un-met need that they were unaware of.

Product Marketing Defined

With Product Marketing you are “selling” the solution to an already established problem or un-met need.

The Question is, “do you ever have to do both at the same time?”

The answer is yes, to varying degrees.

Typically, it is very expensive and a slow process to develop a market from scratch. There are many benefits in being the leader who creates a market. Typically the first mover advantage will provide leverage in the market place right up until someone develops a better solution.

On a relative scale product marketing is quicker and less expensive than creating markets.

The Story

A client of mine has a great product. There is a real clinical problem that this product solves. There are three or four “use cases” for this product. Some of the use cases are obvious to the key stakeholders, some aren’t. The strategic marketing challenge is where to place the available funds? Which will drive the right kind of success?

It is not always obvious what to do. What will bring the most success for the least investment? It is times like these, when you are facing complex strategic questions when I fall back on the core principles and tools of marketing.

When in doubt ask a customer (s):

Who is/are the buyer(s)?
Who are the key none buying influencers?
Are the problem(s) that you are solving the same or different?
Is the product the right product for all use cases?
What are the barriers to success?
Is there a genuine value proposition for all stakeholders?
Is the value proposition strong enough to make it worth the users time to be educated?
What resonates with the customers?
What evidence or proof will the buyer need to accept your proposition?

Scan the environment:

How large is each use case opportunity?
Is there competition or are you substituting an alternative solution?
Is there new technology on the horizon?
New laws or regulations that are coming or that are needed to provide leverage?
Are there any parrallel examples of successful strategies

Craft a hypothesis strategy:

Test your hypothesis
Model the potential results of your strategy
Select a strategy
Fire a bullet not a cannon ball[1]

There are no formulae for crafting great market development strategies. You have to eliminate the non-starters and then design tests to explore the ones you have hope for.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

[1] Great by Choice, Jim Collins, Harper Business Press, Chapter 4, p. 60-98.

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The Marketing Continuum: a progression of activities

July 24, 2015 timwalker317526 2 Comments

The Marketing continuum provides a tremendous variation of opportunity for you to ply your special talents. From corporate strategy to advertising, from portfolio planning to merchandizing, from market development to product requirement planning, there is an opportunity for growth for you.

The Story

I met with a recent MBA grad that I found to be brilliant. This person questioned whether they could sustain the excitement that they felt in their first marketing position over a life long marketing career. My first question was, “why worry about it now?” Just enjoy the position. As we spoke it became apparent that no one had ever laid out the opportunities that the marketing continuum could offer him.

Intent

What this blog will do is define the continuum, explain some stages of the continuum and provide a tip or two about working within the continuum.

Caveat

Before I dive in, it is important to explain that the continuum is drawn left to right. There is not a hierarchy. Every role in marketing is equally important. There are a number of other continuums in the Medical Device Company as well. None are superior to the other. It takes a team to commercialize a medical device.

Marketing Continuum Defined

The marketing continuum is the progression of marketing activities that move from high-level strategy to tactical implementation of the business model. Marketing is the framework in which companies get intentional about their pathway to success.

As shown in the figure above there are, about, seven areas of marketing contained within the continuum.

Corporate Strategy
Corporate ID/PR
Strategic marketing
Market development, Product portfolio development, Business development
Commercial marketing
Marketing communications
Field activities

Corporate Strategy is included in the marketing continuum because to develop strong corporate wide strategies many of the areas of expertise that marketers must processes are required. Without a marketing mind-set you cannot develop corporate strategies.

Corporate ID/PR is critically important and must provide an over reaching consistency with the product messaging. I include it to differentiate from the Market Communication role. Corporate Identification, i.e. corporate branding is a very different set of skills than standard marketing communications. There are so many more customers for that type of message, employees, future employees, government, investors, users and buyers, C-suites at your customers, etc. The messaging becomes broader and less specific.

Strategic Marketing represents the general overall positioning that an entire portfolio of products or services will be built around. It will define the opportunities for Market, Products and Services, and Business Development. Strategic marketing is often performed as a staff function, committee or senior management. Many times, too often, an outside consulting firm performs this function.

Market Development creates a larger opportunity, for the products and services by facilitating a new understanding or behavior in your current targeted group of customers.

Portfolio Development creates more products and services that act synergistically to penetrate market segments within the define market.

Business Development or M&A activities create new markets or provide access to technologies that power product and service development.

Commercial Marketing is critical to the success of the continuum. It is where the activities turn toward selling, training and building broader relationship. It is where the needs of the many are converted to the needs of the few or the one.

Marketing Communications is the process by which, all the core messages are posed into a language, an image, a smell, and a feel all to trigger the desired emotional response from the customer. Once created these messages are then packed into different outlets or media types to reach out to the customers in an effective and efficient manner.

Field Activities, such as, sales, clinical support, referral development, national accounts, customer service, service, etc. has the task of taking the general messaging about the corporation, products and services and making it relevant to one customer at a time. Each customer interaction has to be nuanced.

Having a marketing mind-set will serve you well up and down the continuum. The tools vary a bit, but the basics of marketing are the same in each stage of the continuum. I encourage you to work the continuum until you find your best fit.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

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The Inventors Dilemma in Medical Device Start-ups

July 14, 2015 timwalker317526

The Story

This Post may seem a little self-serving, it may be. But I celebrate everyone’s success and feel compelled to sing out when I see inventors going down the wrong road. To some, the issue we are going to discuss is a bit of a chicken and egg scenario. I don’t think so. It is more like the birth of twins.

I have been working with a number of early-stage start-ups [5] over the last several years [3] and have witnessed 15 ‘funding pitches’, or more. I have noticed a trend. Those that get funding have strong technology, strong teams, some traction, and have real solutions to real problems all woven into a story that shows how they will generate revenue (the business case).

To an investor there must be a viable business case. The stronger the case, the more solid the ‘go to market strategy’, the less risk is perceived, the more likely they are to invest.

I watch as these inventors ‘pitch’ their ideas and never deliver the punch line. How will this solution specifically make money? The second thing that is missing is an integrated commercialization strategy [the reason to believe that the solution can be delivered to the target market].

Passion and technology are critical, but they are not enough. Crafting an effective commercialization strategy and packaging it into a clean, understandable story is an art. It can’t be formula driven. Yes, there are several outlines that the story can be organized into, but it is the connective tissue that links the story elements together. Humans make emotional decisions. The investors have to feel the value as much as calculate it.

There are a number of ‘approaches’ to telling your story. Lean start-ups, the Canvas, the five T’s, etc. Many inventors get caught up in these approaches because they don’t have formal business [marketing] training. They think that there is a formula for business success that is disconnected from their solution.

What Can They Do?

Developing that commercialization strategy needs to be done by a “professional” marketer. Yes, it will cost some money. As a scientist, clinician, inventor it is baked into your mind that if you “build it they will come”. The investors that you are presenting to are smart enough to know that it is simply not going to be that easy.

As an inventor/entrepreneur you need to factor into the use of funds during the friends and family or angel rounds enough cash to hire a professional marketer to develop a commercialization strategy that is plausible. At the very least you need to have them scope the process that they would use to develop the story. A plan-to-a- plan. Find a good marketer and let them craft your story and determine the strongest go-to-market strategy.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

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Message Congruency in Medical Device Commercialization

July 2, 2015 timwalker317526 8 Comments

The Story

Have you ever seen messaging related to a new product that was clearly disjointed? Maybe you saw a tradeshow booth that spoke of the product a bit differently than the sales brochure and the salesman’s pitch was a different story all together?

A VP of Marketing hired me to figure out why their dynamite new product wasn’t gaining the momentum that they had expected. This is one of the most enjoyable and potentially beneficial services that I get to perform for clients. Consider it a launch autopsy.

There are many other causes for a slow takeoff of a new product. For this particular client the issue was a confusing message. So confusing that one might describe it as conflicting. Why is this a big deal? Walker’s Law of Congruency™ states, “As human beings we seek congruency. We constantly are trying to connect the dots. The price has to match the value of the product. The color schemes have to represent the claims, etc. When our minds detect an incongruent message we start to doubt everything about the issue or in our case the product. The customer loses trust in the product.”

How do we prevent incongruent messages as marketers? There are lots of factors, but simply we need to know exactly what our message is, more importantly everyone that is working on or near the launch must understand the message.

How do we stay on message?

We write. We publish the five documents that then serve as the source for every piece of collateral, every training script, every creative brief.

Segmentation
Targeting (user and buyer)
Product positioning statement
Product value proposition
Pricing strategy

These are the five documents that act as the base. Everything else flows from here.

In addition to these five basic documents there is a format to the story line. It is not mine; it is something that is adapted from other sources.

Problem statement
Solution statement
Reasons to believe
Proof set
Call to action

If you publish the five core documents and keep any promotional materials and sales pitches in the five-element format it is unlikely that you will have incongruent or even worst conflicting messages.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

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Hard and Soft Cost Reduction defined for Medical Devices

May 15, 2015 timwalker317526

The Story

I received a text, after the Value Proposition post, from a colleague who asked me to define the difference between Hard and Soft cost savings. This is the response to that request.

The Context

From the Value Proposition blog post: “Material management processes within hospitals have become much more sophisticated over the past decade. They no longer will “buy” a good story. They need to see the health-economic data to believe. Realized increases in value are considered hard savings. Those unrealizable cost savings that you include in your story are considered soft savings. Hospitals will hold you accountable for whatever value increase that you claim/promise your product or service will deliver.”

Hard Cost Savings Defined

The Hard Cost savings are those resource utilization reductions that are tangibly realized. Such as, your new device does the jobs of three devices.

As an example, (Price of device 1 + Price of device 2 + the Price of device 3) – The price of the new combination device = Hard cost savings.

($100.00 + $60.00 + $35.00) – $125.00 = $70.00 x 1,000 (the quantity of devices used) = $70,000 (realized cost reduction)

Soft Cost Savings Defined

The Soft Cost savings are those theoretic savings that don’t add up to a real reduction, or are those that may or may not be realized based on a probability, or those that might be saved by a department that is not in the same service line as the therapy that your new device is intended for.

Example 1: Let’s say that using your device will reduce OR time by 10 minutes per procedure. OR time is valued at a rate of $1,000 / min. Therefore you tell the hospital that they will save $3,000 per procedure. This is a soft cost reduction. Why? The hospital has three OR suites that run concurrently. So any corresponding labor reduction won’t reduce staffing. The timesaving isn’t enough to do an extra procedure, so there is no increase in capacity. So the likelihood that the hospital will realize the benefit, in a monetary sense, is low.

Example 2: The national numbers indicate that a Serious Adverse Event (SAE) occurs for this procedure at a rate of 1/1,000 procedures. Nationally there are 100,000 procedures done. 100 SAEs per year. Your device reduces the probability of that SAE occurring to .1/1,000, so there would be 10 SAEs per year. The cost of that SAE to the hospital is $100,000. So, Nationally the cost of those SAEs is $10 Million dollars.

The hospital you are selling to does 500 procedures per year. The probability that they will experience an SAE is .05%, not very likely. The national story is solid but the local reality is that this is a Soft Cost reduction.

Hard vs. Soft

Focus on the hard costs as a promise. The soft costs are bonus points, emphasis them in hospitals where they are more likely to matter. From example 2 above, if they are a hospital that does 10,000 procedures per year, or if they recently experienced the SAE they might be more inclined to see the benefit in the soft cost.

Remember

This post only deals with the monetization of the value proposition. If your product doesn’t add utility the cost of it doesn’t really matter.

You sell locally, not nationally. Make sure that when you localize your story it still plays. As an aside, your value proposition may not play across borders. Don’t assume, do your research.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

www.medicaldevicemrktgblog.com

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Value Proposition Development for Medical Devices

Image May 11, 2015 timwalker317526 6 Comments

The Story

No story this time, sorry that I am breaking my format. As a reminder, the purpose of this blog is to share experiences and lessons from a 30-year (still going strong) career marketing Medical Devices. Not all of the lessons are directly applicable to every situation. At best I hope you gain a “golden nugget” of insight that will be helpful.

I received a phone call, after the pricing post, from a friend who asked me to layout my thinking on value proposition development. This is the response to that request.

Reminder about Value

Value is the Utility of the device divided by the cost of acquisition plus installation or other switching cost – total resource savings.

What is a Value Proposition?

The value proposition is the step between the Positioning Statement and Pricing in the Value Development Process. The diagram below is a little misleading in that it shows only one arrow.

The truth is that each step is gone through multiple times. First as a “vision”, then they are revised to a “hypothesis”, then they are revised once data is received as a “preliminary” plan, then once again after verification data is collected and again as after pre-launch market evaluations (validation).

Yes, I am sorry, that is five sets of revisions. Fortunately, the bulk of the work is done early so each subsequent revision is a matter of changing numbers or the priority of the features.

If you find yourself re-writing the value proposition every time you revise it something is wrong with the original version.

The value proposition is the gross amount of economic benefit (expressed in words and numbers) that you will deliver to the user, the economic utility. As mentioned above, it goes through a number of progressively more “proven” phases of development.

How Should I Start Thinking About the Value Proposition of My New Device?

Suffice it to say, that the sources of value (utility) are not foreign or complex. Better, faster, cheaper, simpler, safer or access to new customer based revenue are the sources. Combining the sources of value is a great way to enhance your story. What can be very complex is, understanding the puts and takes of significant changes in the cost structure of the therapy that your new device will be used with. Even tougher is, proving that the value will be realized in a specific hospital or practice.

How Do I Start?

Start by creating a resource utilization map for the procedure that your device is used with. Find a friendly hospital/physician combination and follow the patient, with their permission, and write down, time or cost for every action, supply or RX used, from the time they are moved to the procedure suite until they are released to home, include anything they are required to take home with them. Map it. Cost it. Sum it. This becomes the source for your “vision”.

Ask yourself, with my new device, in a perfect world, how would the map change? Brainstorm the possible sources of value. There will be puts and takes (+, -). Pay particular attention to reductions is steps, reductions in meds, reductions in labor, and reductions in devices used. Also pay attention to, increases in safety, increases in clinical outcomes, increases in resource utilization, etc.

Look at the resources used in accomplishing the therapy the old way. Then inject your device into the therapy map. Measure (theoretic) change through modeling. Then work to verify and validate those changes.

Find ways of proving the value will be realized on a hospital-by-hospital basis. Test the map with different types of hospitals, rural vs. urban, community vs. university, private vs governmental, teaching vs. non-teaching, large vs. small, etc. The most important ones will be those included in your customer profile or your segmentation and targeting.

A Good Tool

Now that you have the actual data, it is fairly simple to build an excel based cost savings calculator. Having a tool that the sale professional can use to walk the materials manager through the value story is a strong way to customize the story and make it more real for the manager. If they give you their numbers to plug into a validated cost model it makes it real hard to argue the conclusions.

Material management processes within hospitals have become much more sophisticated over the past decade. They no longer will “buy” a good story. They need to see the health-economic data to believe. Realized increases in value are considered hard savings. Those unrealizable cost savings that you include in your story are considered soft savings. Hospitals will hold you accountable for whatever value increase that you claim/promise your product or service will deliver.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

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Positioning Statement Development for Medical Devices

April 20, 2015 timwalker317526 9 Comments

The Story

Once during a staff meeting, the marketing team was discussing the portfolio of products that were under development. Of the Product Managers gathered at that time, five of them were preparing to launch new products and two were post-opportunity recognition and pre-requirements planning.

The discussion worked its way around to the realization that only one of the seven managers had formally written the “positioning statement” for their respective products. We bantered about the question of when should you write the positioning statement for the new product. There were positions voiced around the table that ranged from, after verification testing, to after limited market evaluations.

Coming out of that meeting all seven managers were given the assignment of writing position statements for their new products. Not surprisingly, over the next three days I was asked, “What makes a good positioning statement?” I was also asked, “Why one needed to be written them at all?”

Why write product-positioning statements?

I have always believed, that the most enjoyable part of being a Product Manager was the early phases of defining a potential new product. No boundaries, no conditions, a clean canvas upon which you painted a dreamscape for your product. This is when you reach for the stars. This creative writing exercise, for me, often resulted in two-to-five pages of text and included a description of the clinical environment, the nature of the clinician character, the problem statement, the perfect utility that the product could deliver, a forecast, a theme and never, never was restricted by the technology that was known to my company at that time. Very few of these stories have ever been read or even been seen by my colleagues. I used to think that it was a silly indulgence. What I now believe is that it is a critical aspect, which differentiates good new product definitions, from great ones.

What are marketers, if not the inventor of the story and the keepers of the vision?

Why write them?

Simply, we need to write the Product Positioning Statements to be able to concisely describe a vision to others, so that they can join us in making that story come to life. It is our elevator pitch to the organization and parallels the sales persons elevator pitch to the clinician customer. It is the executive summary of the multi-page story.

One real benefit to me has been that writing and telling the story imprints a vision of success in my mind and spirit. These visions of success often infected those around me, and instill a sense of confidence within them.

When should we write them?

So I think it is obvious that the value proposition should be written before the requirements planning process. The expense associated with research and other VOC activities is significant. You owe the organization a complete vision before you incur those expenses. If you can’t generate some excitement with your vision then you shouldn’t move forward, yet. Requirements planning reduces the grand story to something particle, that is tied to internal limits of resource and capability. The initial positioning statement never survives to the launch. Keep it current and revise it as needed. Always ask the question, “Is it still worth going after?”

What makes a good one?*

For the first ten-years of my marketing career I didn’t know what made a good positioning statement. I wrote good ones instinctively and mine were never consistent from product to product. At some point I took a class and some really smart instructors from Stanford laid out a template. I use this template as a starting point for every positioning statement I have written since then.

There are seven distinct elements required for a complete positioning statement:

Customer identification
Description of those customers problem
The name of the product (preliminary)
A basic description of the product utility
A description of the components that offer the most relevant value (functional or emotional benefits)
How it is different from competition
Reasons to believe

Format of a positioning statement

The statement is typically written as a single paragraph, I use two. However, your style can vary as long as you include the seven elements, can recite it in 15 seconds, and it test as a strong statement. The paragraph typically follows the following structure:

For… . Who… . The… . Is a… . That… . Unlike… . It… .

Example (completely fictitious):

For the cardiovascular surgeon, who believes in the clinical benefits of beating heat surgery. The Squid is a combination rib spreader, holder, and electrical isolation device. The (that) Squid offers maximum visibility and access to the heart, hands-free stabilization and counter traction, with the added ability to electrically isolate small areas of the muscle, all to provide a still and placid surface on which to sew. Unlike many devices on the market today that perform only one of these functions and do not offer an integrated solution to the problem of high quality stitching on a beating heart, such as the: [list competition here].

The Squid (it) is offered by the leading manufacture of surgeon-focused equipment in the World today. It was designed for the unique requirements of the CV surgeon as directed by Dr. Spock, head of surgery at the Never-Never Land Heart Institute.

How strong a statement is it?

Test your statement against the following four questions:

Is it compelling?
Is it distinct?
Is it achievable?
Is it sustainable?

Have a group or independent marketers score the strength of your statement against the above four questions. Have them provide the reasons for their scores and then try to incorporate their feedback until an independent group scores you strong on all four counts. Strong, average, poor makes a good scale.

*I have committed this template to memory and I don’t have any of the original course material. There is no way I can attribute this to its source. Suffice it to say that I did not create it and take no credit for it. I have used it more than 20 times and every time the exercise has proven invaluable to me.

“Experience is what you get, right after you need it most.”

Make it a great day!

Tim Walker

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Building a Medical Device Marketing Team

April 15, 2015 timwalker317526 2 Comments

The Story

In my last two job assignments my role has been to build strong marketing teams. Both times there has been a nucleus of talent that were identified as “Product Managers”. These product managers had a wide variety of knowledge, skills, education, background, and ability. Each manager was a valuable asset to the department; but only a handful had the classic marketing skills and education that one would seek in a prototypical Product or Marketing manager. The choices were pretty straight forward, 1) clean house and start from scratch, 2) build and develop the people you have on board already, 3) or some hybrid. In both cases there was pressure from above to selectively clean house.

Building a Team

Great marketing professionals come in all types of personalities, backgrounds, and education. In general terms, you need a person who is creative and disciplined, analytical and decisive, service oriented and focused, listener and doer, in short you need a schizophrenic master of all things.

Another way of looking at it is, you need many, practical, aware, mature, talent rich, knowledge rich, persons who possess all the tools that you learn in MBA classes. Or, you need a collection of professionals all who have unique skills sets that when combined give you a capability that leads to success.

In my experience it is nearly impossible to find a number of prototypical marketers with which to build a team. Too many A-players can lead to disruptive environments. Institutional memory is too important to discount. In the medical device world, technical understanding, clinical understanding, customer relationships, and marketing skills all have great value. They are seldom present in any one person, at the start.

There are so many variables in building a team that it is almost impossible to account for them all, intellectually. Sometimes it just has to feel right. What I look for in a team member are the intangibles.

Positive attitude
Appropriate motivation
Ability and willingness to learn
Strong communications skills
Situational awareness

The tangible aspects of the team members are that they must bring significant value. The value typically manifests in a specific knowledge or experience base and are more than likely surrounding one or more of the following:

Technical knowledge
Clinical knowledge
Process skills
Marketing skills
Relationships
History

If your team members bring value and have all the intangibles (core skills) you are likely to be able to build a team that will be successful.

My advice

Set a timeline for yourself to evaluate the current team members in several different settings, say 90-180 days. Be intentional about that activity. Hold yourself accountable for personal de-briefing sessions. If at anytime you determine that a team member is lacking in one of the above five areas or does not bring significant content value, start planning an exit strategy for them.

Watch out

Make sure that your direct supervisor understands what your approach will be and fully supports your approach. Evaluation over a 90-180 period might look like a lack of leadership or decisiveness. Don’t make that mistake; keep your chain of command fully informed.

My answer

A hybrid approach to building the initial team has been my choice every time. After the evaluation period it becomes pretty clear who will stay and who will go. It is not always clear when the change needs to happen. Do I think that cleaning house has a place, yes I do. Do I believe that building a team without any change to personnel is possible, yes. If you do clean house be prepared for significant disruption and long nights. If you don’t clean house, be prepared for a slow, patient, teaching process.

In my career, I have only needed to make three (3) changes out of 60 inherited team members. By choosing to develop team members and let them contribute the value they brought to the team I have accepted the responsibility to teach. Fortunately or unfortunately I have a teaching gene.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

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Pricing a New Medical Device

April 10, 2015 timwalker317526

The Story

A prospective client approached me recently who needed help in setting the price for the new medical device they were about to commercialize. We sat down to go over the project and they indeed needed help. The first thing he told me was that they needed a 65% margin and the fully burden manufacturing cost of the device was expected to be $50.00, the plan was to price the device at $150.00.

I said great! You have met your goals. He stared at me for a while and then said, “but I think it is worth a lot more than $150.00.” As he got up and started to leave I said, “Why do you think it is worth more than $150.00?” He responded, “if they use my device instead of how they do it today, they can save time, reduce nursing injuries, and reduce their stocking inventories”.

The prospective client had put the cart before the horse, and instinctively knew it.

Understanding the value proposition of the device (the devices utility), in the eyes of the clinician users and economic buyers, is the first step. Pricing is the monetizing of that value, the second step.

Pricing Strategy

I am a big fan of writing out your pricing strategy very early in the commercialization process. Start with your financial goals, your unit / time goals, your situational analysis and the value proposition. Craft a sentence that best describes your intentions with respect to pricing an elevator speech for the sales force.

We will set our price, to ensure that we signal a congruent message with our value proposition, garner at least 50% of the added value of our widget, we will be profitable and we will be 80% confident that the price will not become a barrier to success in more than 20% of the A accounts.

Pricing

The art of monetizing value, pricing, is just that an art. I have spent as much as $140,000 doing value + pricing studies. I’ve spent as little as nothing. You need to do a situational review before you set off on value or price determination. By understanding the situation you can “right size” your effort (risk stratify the work). This is especially important for start-ups who need efficiency over effectiveness.

With setting price, it is never one size fits all. Here is a partial list of the questions that will lead you to understanding your pricing situation better:

What is the nature of the product that you are launching?

Commodity
Line extension
Line expansion
New product area within your current portfolio
New portfolio
Disruptive technology

What is the nature of the market into which you are launching the product?

Current geography or new geography
New segment or current segment
New customer base or current base
New channel or current channel
Will there be value added services or not

Determine the risk if you under or over value the product?

How forgiving have your customers been historically
Do they give you second bites at the apple
What are the consequences if you price incorrectly out of the gate?
1. Do you slow the momentum down
2. Do you cast doubt in the minds of the customers about the value of the product
What will the competitive response be to a pricing error?

Watch out!

It is critical that your value proposition and your price point support each other. If you are talking about the device as, the greatest advancement of the therapy and you price it at the same price point of old technology, it sets up a disconnect in the hearts of the target customer. You have to resolve that disconnect before they will emotionally accept the value story.

So how do I set a price?

I am not trying to be disingenuous, but it depends. As a general rule of thumb, I try to split the increased value with the customer. For example, if my perspective client demonstrated an increase in hard value of 30% over the current state of the art product, I would increase my price, volume for volume, by 30% over the competition, hoping to realize 15%.

Caveats

In the medical device space there are always nuances that need to be taken into account. Reimbursement and service line profitability are always two potential barriers to realizing the true value of a new product. If the hospital service can absorb the premium and there are savings within that service then you may get the full value of the device. However, when you are selling into a service line that is barely profitable and you are changing their reimbursement/cost relationship, you may not get all you had hoped for.

A Happy Ending

We did the work to determine the added utility that the product in question brought to the critical care nurses and it came out to a 100% increase over the current technique. Total cost for the current technique was monetized at $308.00. Some of that 100% was based on a reduction of inventory cost, some was on saving time and some was on increased safety for the nurses (a reduction in lost time accidents). So our hypothesized price point was $600, not the $150 that the client has targeted.

We tested the monetization with a few nurse managers and no matter how much evidence we showed them, they just could not get their minds and hearts to accept the $600 value. Strategically, if we had priced the device at the point that we could justify, we would have either slowed acceptance, lowered demand, or failed all together.

Because the risk of being wrong had both a high probability (based on the initial qualitative interviews) and a high severity (given the financial state of the company) additional testing was warranted. We surveyed 30 key customers in the US. We selected the Van Westendorp PSM technique as our methodology. We discovered that 65% of our 30 surveyed customers would consider the product a good value between $300 – $400 dollars. An additional 23% indicated that they would consider $400 – $500 too expensive for general use, but would still purchase the device. Historically, I would have set the price point in the $450.00 range. There is typically a low bias when using survey methods to determine price points. However, in this case we set the Average Selling Price at $375.00 and held firm to that target. List price was set at $400.00.

We exceeded the target profit margin, we garnered a premium over current technology, and we did not inhibit the sales process. A win-win-win result!\

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Medical Device Marketing Insights

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