Subject: FormPrint Ortho 500 Individual/Non-collaborative Take-home Case Final Prep/Analysis
This provides information for your individual/non-collaborative take-home case final for FormPrint Ortho500.
We will preview/prep this case together on 2/24 and 2/25 after we review Chase Sapphire Reserve and Oiselle. This will be your only opportunity to discuss FormPrint with your classmates. There is a video in the FormPrint folder, and you can call me (no texts or emails please) with questions after our class; however, you will do much better; finish faster and be much happier if you are very familiar with FormPrint before we meet on 2/24 and 2/25 (bet you beverages if you are so inclined to wager).
Your assignment (as David Willis, FormPrint’s VP of orthopedic products) is to develop and present ‘your’ integrated go-to-market/launch plan to Bruce Abbott, FormPrint’s SVP of medical products. ‘Your’ plan will cover how FormPrint should market its newest orthopedic 3D printing system, Ortho 500. It’s November 13th of 2013 and you will present your recommendations to Bruce as a WORD document (<= 4 pages, etc.). Optimally in the real world you might cover ‘your’ plan in person and include any other key players in your plan and its presentation
There are some numbers associated with FormPrint. Your familiarity with the case/issues on 2/24 and 2/25 will greatly ease your process and improve your product. Again, I will answer pretty much discuss and answer any and all questions on 2/24 and 2/25. There is a short YouTube gouge video on eLC BUT, all MY hints on economics, breakevens, market share estimates, financials, etc. in the video are based on a single year. What have we been considering as about appropriate time horizons for most go-to-market investments and ROIs? Should you consider the Ortho 500’s strategic role, its role in prospective future European sales, etc.?
FormPrint Ortho 500
FormPrint’s is considering the impending introduction of the new 3D printing system, the Ortho500. The Ortho500 represents an important new opportunity for FormPrint’s orthopedic business unit, but it may require a new/different approach to sales and marketing for FormPrint. One immediate question is whether the product should be sold by FormPrint’s existing orthopedic sales force or by Independent Sales Representatives (ISRs). Remember not to let case writers or anyone else define, delineate or limit your options or key considerations. Issues include the Ortho500’s role in the company’s global marketing strategy; it’s role in the marketing and sales organizations’ ‘books of business’/product offerings; and perhaps even how sales and marketing might work together more effectively as FormPrint navigates a changing health-care marketplace.
Some Starter Questions
You cannot comprehensively address the issues by only answering these questions; however, they should be useful.
1. What factors drive competition, product development and marketing in the 3D printing market? How should FormPrint, as a leader in the high-end 3D medical printing systems market, enter the lower end of the business with the Ortho500? What role do you (David Willis) see for the Ortho500 in FormPrint’s product portfolio and marketing strategy? How will you reconcile your vision/thinking with Mark Wittenberg’s vision/thinking?
2. How should FormPrint take the Ortho 500 to market: a) through the Ortho Division’s sales force; b) through Independent Sales Reps (ISRs); c) through some sort of hybrid effort that involves both; or d) through some other resources that you might be able to marshal drawing on your business experience and creativity and Mark Wittenberg’s skills and resources? What are the economic implications of your choices/recommendations? What are the organizational/cultural implications?
3. While you need to ensure the effective and efficient distribution of this new Ortho 500, what other factors must you consider and address in your recommendations to Bruce Abbott? How deeply do you involve Mark Wittenberg in your thinking and recommendations? Hint: deeply, right? He is the highly respected leader of the sales organization who reports to Bruce Abbott (not to you, David). Can you contemplate going forward to Bruce with a recommendation that does not have Mark’s enthusiastic and fully-engaged support?
4. While the decision to introduce/go-to-market with the Ortho 500 has already been made, what are some pros and cons or likely positives and negatives that you will encounter? Hint: most of the ‘economics’, break-evens and estimates of volumes, profit and market shares in the case (and in my video) are for the NEXT YEAR only. What have we discussed about forecasting the resources that you will need? The numbers of salespeople you will need: do you forecast out one year or three years and why? If this is a rapidly growing and strategic market where a head-start/jump on the competition could really make a difference are we being overly conservative in our approach? What are the implications for hiring? Does a hiring freeze make sense for essential salespeople for a key strategic initiative? Of course, the financials/cash flows matter but, if you don’t have enough salespeople to establish the 500 AND THE OTHER PRODUCTS IN THAT LOWER-PRICE-AND-NOT-SURGICAL-IMPLANT STREAM OF PRODUCTS what are the implications?
5. Many of the company’s (very high-end ortho) sales managers in the health-care division favor distribution of the Ortho 500 through your existing direct sales organization (of very high-end and expensive sales resources). Conversely, FormPrint’s marketing and business managers seem to favor distribution of the product using Independent Sales Representatives (ISRs). Think through, assess and incorporate the strategic, financial and political/cultural ramifications in your recommendations to Bruce Abbott. Are there ways that Mark Wittenberg can provide you with additional horsepower that you cannot deliver yourself? From where might you and Bruce assemble an effective ‘tiger team’?
6. Why do Mark Wittenberg and his existing (very high-end, specialized and expensive) Ortho salespeople want the Ortho 500? How might they ‘treat’ this new item and what are the implications for the Ortho 500 and for their existing book of products or product portfolio? How many Ortho 500s do they need to sell to equal the commissions they earn on the average current high-end FormPrint 1300-1700 sale?
7. The marketing group calculates that the ISR option is more economically efficient at sales volumes of approximately $1.7M per salesperson. Wittenberg and his folks estimate this ‘breakeven’ at $1.1M with sales at higher levels better executed by the existing sales organization. What differences in assumptions lead to these differences? What other considerations likely come into play that they are not capturing in this seemingly simple calculation. Here’s a key question that’s not answered in the case (so you have to make an assumption, state it and incorporate it into your case analysis and write-up): when competitors to the Ortho 500-line/type of products shifted from ISRs to their own/internal sales reps, DID THEY USE OR SHIFT TO EXISTING REPS regardless of their cost and capabilities/what they were selling or DID THEY HIRE or ‘FIND’ NEW and LESS EXPENSIVE REPS FOR THE LOWER-COST LINE to match the selling task/process consistent with the skills (and costs) of the reps that would be selling their lower-cost/non-implant ortho devices? Do your current reps ($400K fully costed) make sense for the Ortho 500 in terms of sales processes, customers, costs (of reps), etc.? (It’s not just the Benjamins, right)? If not, how might you (and Wittenberg who will actually lead all of these folks regardless of who they might be and who has the juice to get what needs doing done with Abbott) ‘align’ the processes, etc. with the ‘right’ sales resources?
8. Some relevant issues and mechanisms available to you (as David Willis) in formulating your recommendations/plan for Bruce Abbott might include:
a) Measurement systems: if ISRs can truly accelerate the Ortho 500’s introduction/sales, should Marketing consider absorbing some of the costs for adding this channel/these asset rather than leaving the costs to be allocated by sales districts?
b) Compensation: should you (David) estimate and recommend the costs and effects of higher commission rates for the Ortho 500 for the existing sales team versus other existing, higher-priced products in the current portfolio/book? What other alternative variable compensation/IC approaches might be appropriate: bonuses based on meeting Ortho 500 sales quotas? Bonuses dependent on maintaining existing product portfolio business as well as achieving Ortho 500 targets? Possibilities of unintended consequences?
c) Information systems: information flows and communications need to be improved between product management and sales management regardless of whether the sales force or ISRs sell the Ortho 500, right? Business Development seems to be the main liaison between sales and marketing and is responsible for many interface activities. Should you (David Willis) recommend shifting some of your ‘marketing’ folks to Business Development for the Otho 500 launch?
d) Personal relationships: Carly Wallace (Business Development) suggests that Sales’ assumption is that HQ is out of touch. She believes that credibility comes primarily through traveling with the FormPrint sales reps, attending trade shows and socializing over drinks. She may be on to something but is this all there is?
e) Leadership engagement and support: Mark Wittenberg is highly respected, and he has recently changed/realigned the FormPrint Ortho group’s sales compensation systems. How do you engage and involve him? (‘Involve’ as in how you ensure his enthusiastic support and full-engagement in your go-to-market plan or how do you intend to succeed without these things?)
f) Financials: think about the economics/financials of ISRs vs. the Direct/Existing Sales folks as well as the breakeven calculations for the smaller orthopedic clinics. I will review these/work these on the white board with you all on 1/24 and 1/25. You will be much happier if you are fully prepared/read-in and able to ask questions and to understand your classmates’ questions and our discussions on 1/24 and 1/25 (betcha).
After your prep/review and familiarity with the case and our discussion on 1/24 and 1/25, you will be able to leave class and complete your analysis and write-up in @ 5 hours or less. You will email your < 4 page WORD doc (your name and FormPrint as the WORD file name) by NLT midnight Wednesday evening, March 1st and you will be done with EMBA 7250. I WILL be happy to discuss your individual questions or issues after I’ve returned your marked up FormPrint case and you will all be welcome to call me as you complete your Terry EMBA’s and thereafter. For example – How much might you expect to spend to acquire and maintain a safe and livable ocean cruising sailboat? Answer: How much $ do you have?
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