Voices: the CMB Blog

Over the past 3 years, there has been no shortage of attempts to forecast the impact of the Affordable Care Act (ACA) on patients and insurers, but the truth is, the changing care model has ramifications that extend well beyond the waiting room. The multi-billion dollar medical device industry is smack-dab in the middle of tremendous regulatory and economic changes—including the ACA and the Medical Device Excise Tax (MDET). Earlier this year CMB’s MedTech team partnered with the Massachusetts Medical Device Industry Council (MassMEDIC) to survey 123 of their members for their perspectives on the past, present, and future expectations for innovation and growth in the medical device industry. Below, are a few highlights from The 2013 MedTech Industry and Innovation Study:   

• One of the most profound shifts, reflected in the results of our study, is the emerging influence of economic buyers on medical device innovation. The traditional med device market model places physicians at the center of innovation efforts, and to be sure they’re still very much at the forefront of med device companies’ minds. But as the ACA’s cost containment policies come into effect, hospital administrators and insurers will see their influence grow, as they become increasingly involved in purchasing decisions. Indeed, while just under one third of respondents said they have focused their innovation efforts on economic buyers in the past, 53% said economic buyers would receive their attention in the future.

• Not surprisingly, the MDET has elicited a great deal of conversation, with med device companies’ still strenuously objecting to the tax that came into effect last year. However, while the industry as a whole has actively advocated for MDET’s repeal, a surprising 40% have yet to plan to address the tax. For those who have made or acted upon plans to address the tax, workforce reductions and reductions in R&D spend top the list of mitigating actions.  Despite considerable concerns over the changing care model, many respondents were optimistic for the future, with the bulk of respondents expecting increased revenue, both inside and outside the US in the coming 5 years.

• Asked to evaluate their performance on key success factors, the vast majority indicated that their company currently meets or exceeds expectations when it comes to identifying customer wants and needs and determining the most compelling features set—table stakes in new product development in any industry. Respondents also identified areas for differentiation (i.e., capabilities that are important for future success, but that most don’t perform well on).  Organizations that with the following core skills will win in the future - prioritizing resources, determining how to price product(s)/service(s) given the dramatic changes, and developing compelling clinical data to support their product(s)/service(s). 

Click here to read the full report.

The results of this study were presented at MassMEDIC's 17th Annual Conference on May 8th 2013.

Andrew runs CMB’s MedTech practice and has spent the better part of the past decade helping some of the most successful MedTech companies make difficult strategic decisions.  In his free time, Andrew enjoys scrubbing into tracheotomies with clients, and running with his dog Moby.

When the 820 consecutive home game sell-out streak ended on April 10^th at Fenway Park (just two games into the 2013 season), the Boston Red Sox found themselves in a unique situation…Red Sox brand loyalty was no longer just a guaranteed thing.Since the Red Sox won the World Series in ’04 and again in ‘07, brand loyalty has come easy to the team – the fans were just there, happy to support their world champions.  But after a rocky end to the 2011 season and a weak 2012, loyalty has waned and the organization actually needs to re-build that loyalty again.

So where do they start?  Obviously on the field actions play tremendously into brand loyalty of any professional sports team. If the team is winning, fans will come to cheer them on and if the Red Sox continue their already hot start to the 2013 season that may help to re-build the loyalty all in itself.  But besides just winning games and acquiring new and exciting players to drive fans into the ballpark - what have the Sox done to keep Red Sox Nation committed and coming back to the brand?

• Commitment to the brand’s heaviest users:  A new loyalty program has been put in place for the brand’s repeat purchasers (i.e., the devoted season ticket holders who come to game after game). Enrolled into a tiered loyalty program, they can earn points towards rewards (such as throwing out the first pitch at a game) every time they scan their loyalty card at the ball park or make a purchase at a concession stand. By committing to their heaviest users and brand advocates, the Red Sox are aiming to keep their best customers happy. 

• In-Game Promotions:  To show fans they are valued and appreciated, the Red Sox put promotions in place at food stands around the ballpark for the start of the season, including Kids Eat Free and $5 Beers. Even with high ticket prices, these promotions might drive both new and old fans into the ballpark and provide them with a great customer experience once they are in the door of friendly Fenway Park.

• Rebuilding brand trust:  Maybe most importantly, the Red Sox have campaigned to bring trust back to its fans. The Red Sox have always had brand loyalty— even in the 86 year stretch without a World Series win – but trust kept those fans believing that soon their suffering would be over. After the 2012 season, many fans were left feeling that the team had quit on them and weren’t committed to winning.  To combat this mentality in 2013, commercial, print advertisements and billboards showcase players with the message that “What’s Broken Can Be Fixed” and “162 Ways to Restore the Faith.” New manager John Farrell has also promised to do everything he can to help the team win.  However, while this assurance and transparency with the fans is reassuring off the field, the team now must follow through with this commitment on the field to truly gain back the trust.  

Professional sport teams are a unique brand; sometimes no matter how much loyalty the Red Sox organization might try to create – advertising, loyalty programs, promotions, none of it will matter without a competitive team on the field.  However, it’s times like this when the Red Sox can show their dedicated fans they really are valued. They must maintain their brand advocates and deliver on their promise of a committed ball club in order to keep Red Sox Nation faithful even when the League Standings on the Green Monster might show the Red Sox slipping a few games behind the dreaded Yankees. 

Jen Golden is a Senior Associate Researcher at CMB. She’ll never forget the first time her Dad took her to her first Sox game and she saw the Green Monster for the first time – her brand loyalty for the team has never wavered since.

Interested in joining our team? We're hiring, check out the opportunities here on our Career page.

Next week you'll find us at the Front End of Innovation 2013 sharing how we, along with our partners at South Street Strategy, took a practical, focused, and innovative approach to new product development for Tauck Worldwide. Read a little bit about what we did here:

The Challenge

Tauck Worldwide, an industry leader with over 85 years experience in premium guided tours, wanted to create a new travel concept to meet the needs of a population increasingly comfortable with researching, planning, and traveling on their own. Tauck needed innovative thinking to define and build a new type of tour product – one that appealed to next gen customers, conveyed a unique brand identity while standing out from competitors in the crowded travel market space. 

What We Did

CMB and principals from South Street Strategy Group used a multi-method, multi-source approach to:

• Select top opportunities on which to focus

• Ideate across functions with executives and senior managers, leveraging insight and experience in the market

• Research and assess the competitive landscape and baby boomer’s core  travel goals and needs – particularly un-met needs

• Test alternatives to guide product development, pricing and identify target guests who are most interested in the new product line

• Identify acquisition targets in the travel industry, new business models, and new product offerings, by leveraging core competencies, that would create significant value for the company and address baby boomer needs

• Work with the CEO, CFO, and COO and the New Ventures Group to ensure recommendations were aligned with business constraints, addressed operational challenges and met business goals

How It Was Used

Tauck launched the Culturious brand as a totally new product line on time and with unanimous board approval. The new brand, which currently consists of 8 packages and destinations, meets customer needs by offering small-group tours geared toward active baby boomers with an interest in active, culturally engaging travel. The brand has won awards, including the 2010 Innovation prize from the Connecticut Quality Improvement Award Partnerships (CQIA).

To learn more about our approach to New Product and Service Development click here.

For more of our case studies click here. 

With ever more crowded industries, and customers’ ever-growing access to information that guides decision-making, if ever there was an era where the customer came first, this is it. Landing on a strategy that will delight current and prospective customers requires getting to know them both qualitatively and quantitatively. And herein lies the challenge. This kind of insight takes time and money and often gets pushed off or short-changed.

It’s true that data should not be the only driver of your strategy. Indeed, as Steve Lohr of the New York Times recently wrote: Listening to the data is important…but so is experience and intuition. After all, what is intuition at its best but large amounts of data of all kinds filtered through a human brain rather than a math model?

Taking these words to heart, strategy is both an art and a science. At some point, asking for the umpteenth model of sensitivity analysis simply isn’t productive to decision-making. On the flip side, building a strategy based on anecdotal evidence from the sales team (for example) will usually result in more pain than gain, financially and operationally.

Data will ground your thinking in facts. Intuition and experience will guide your thinking on why the facts are what they are and how to take action.

I often find that data is at its most valuable when used to:

• Prioritize. Having data around which questions or problems are most important to address and which opportunities are most attractive is imperative to prioritizing which paths or solutions a company chooses. Even one data point can have big impact: when one of our clients learned that 50% of its online directory was inaccurate in some way, the decision around which customer-facing channel to focus on first was easy to make.

• Challenge assumptions. Without an outside-in approach, companies are making big bets on assumptions about the market and their customers. An insurance company I once worked with wanted to extend their brand into what seemed to be an adjacent product space from their point of view. However, customer research revealed that customers actually didn’t trust that company—or any insurance company—to manage this new line of business well.

• Shore up confidence. Whether launching a new product or service, redesigning a brand or moving into an adjacent market, a new strategy needs to be sold up the executive chain. Data, from the mouth of the customer, not only reduces risk in decision-making but helps sell the decision internally. Bringing the outside in changes people’s minds.

How well do you apply the science of data to the art of strategy?

Jennifer von Briesen is a Director at  South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies.

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.

The New York Times article, The Extraordinary Science of Addictive Junk Food, caught my attention by linking the hot topic of “junk food” and the obesity epidemic to the market research that supports it.  This is where my inner geek gets really excited—it’s not often that two things I’m passionate about (nutrition and market research) are so perfectly linked. 

Ever wonder why it’s virtually impossible to eat just one Dorito? Or how they got the recipe for Dr. Pepper just right?  How do you think they engineered Cheetos into the perfect cheesy, crunchy, melt-in-your-mouth treat?  As any market researcher knows, it goes far beyond basic trial and error—this isn’t like asking a few people if they like your new brownie mix. But even for someone who lives and breathes market research, the article was incredibly illuminating. Companies put a lot of time and effort into developing foods that will both taste good and be profitable; they consider the basic principles of supply and demand, and couple that with food science and a lot of market research to fill our needs and desires.

Because I know very little about food science, I won’t talk about the “bliss point” (the levels of sugar, fat and salt in processed food that keep us craving more) though I find it fascinating.  Instead, here are some fascinating examples of how market research plays a role in determining what foods end up on the shelves of your local grocery store and in millions of pantries around the world.

Qualitative research identifies a need
In the article, we learn how Oscar Meyer conducted focus groups comprised of working moms to learn not what they were feeding their kids for lunch, but how they felt about the challenges and expectations they had in providing meals for their children. Oscar Meyer learned that these moms were strapped for time and felt pressured to provide a full lunch, while also getting themselves out the door, and to the office. The qualitative research revealed some of the tremendous sociological, psychological, and economic pressures faced by moms.  The company’s solution was Lunchables—a hugely successful product, with sales of $218 million in the first year.

Conjoint analysis configures a new product
Campbell’s Soup used a statistical method called conjoint analysis, to determine the optimal product configuration(s) for their soups.  We use conjoint analysis quite often ourselves because it lets us measure and evaluate the relative importance of individual characteristics and determine the right combinations of these characteristics. Campbell’s used conjoint the same way—to optimize the perfect combinations of ingredients, texture, taste, mouth feel, and so on, to (literally) engineer the ideal food.

Segmentation pinpoints a new target audience
Prego conducted segmentation research to find that there are three primary segments of spaghetti sauce consumers: those who like their sauce plain, those who prefer it to be spicy, and those who like it extra-chunky; the key here is that when the research was conducted, there was no extra-chunky tomato sauce on the market! Prego was able to identify a huge segment of the market whose needs (for extra-chunky tomato sauce) were not being met; the result was a new Prego “extra chunky” sauce that dominated the market.

Food is more than just fuel, especially for those of us lucky enough to have plenty to eat… it’s about things like family, comfort, convenience and love.  And whether you won’t touch a GMO or want Mayor Bloomberg to leave your giant sodas alone, it’s important to know when you grab that bag of chips—the first ingredient is most likely a ton of market research.

Dana is Research Director at CMB. Her husband’s recent conversion to a vegan diet has her thinking about food science even more than usual, though she continues to enjoy cheese.

Check out our latest webinar: The 6 Secrets of Succesful Segmentation, it's much healthier than Doritos we promise.