Voices: the CMB Blog

In the world of medical technology, the historical driver of value has been feature-driven. Hospitals, insurance companies and other payor audiences have been willing to pay a premium for new features—up to a point.

Today, though, in a climate of increased scrutiny over costs, more competition, and stricter reimbursement rules, payors are no longer eager to pay for minor features. This is especially true when looking to “leaner” markets outside of the US. Furthermore, consumers are becoming more empowered in their healthcare and as a result are increasingly looking for solutions that fit their lifestyles, rather than technical feature sets.It’s time for medical technology companies to think about step-change innovation as a driver of value for them and their customers. And this innovation needs to begin and end with focus:

• …on the customer segment: What are the current and potential markets for this product? Are there under-penetrated segments where a gap exists? Traditionally, companies have not focused on the end-user (the patient); yet this is an opportunity for innovation. We have also seen quite a few products “de-featured” for emerging markets and then brought back to the developed world for a unique segment. Is there a viable market segment that would be served with a “light” version of your product?

• …on the customer goal: What are customers trying to accomplish with your products? How can you make their jobs easier? This requires communicating solutions—rather that discrete features—that directly solve a pain point. This could involve software, services, etc.

• …on regulation: Between healthcare reform, re-admission rules and electronic records, healthcare is a prime field to view regulatory changes as an opportunity to make the customer’s life easier. In what ways will regulations change your customer’s business and how can you help?

Looking for innovation in your existing portfolio can be highly lucrative. An example of a “de-featured” product is from GE India: it stripped the bells, whistles and 423 pounds from GE’s $100,000 Logiq 9 ultrasound machine and introduced a handheld device at about a tenth of the price. While this monitor was less advanced than its predecessor, it was a great fit for India due to small size and portability.

What hidden gems lie in your portfolio? Have you uncovered and exhausted opportunities for innovation?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

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. 

Earlier this year CMB’s MedTech team partnered with the Massachusetts Medical Device Industry Council (MassMEDIC) to survey members for their perspectives on the past, present, and future expectations for innovation and growth in the medical device industry. Click here to download: The 2013 MedTech Industry and Innovation Study.

Today most companies are watching their expenditures closely and are challenged with how to effectively get the word out to prospective customers, but on a limited budget. The key to this is focus, across three different dimensions that we call AMP:

• Audience. It’s tempting to think that “marketing” doesn’t happen until after a product is finished and ready to sell. However, efficient and effective marketing is tailored to specific segments. This requires a company to have a firm focus on what it’s selling and to whom – early on in product development.

• Message. In today’s media environment, generic messages are worthless. With a specific, well-researched target market in mind, companies can craft tailored marketing messages that speak specifically to that target’s needs and goals.

• Promotion. There are some core tactics that every marketer has in his or her arsenal of tools: advertising, PR, conferences, social media, among others. Focus on key tactics and related outlets that you know your target market will look to for the needs you’ve identified.

Blanketing the entire marketplace with broad messaging is expensive, and typically ineffectual for anyone other than big brands who have to maintain broad-based awareness. Doing less in a deliberate way can make your money stretch farther and deliver more tangible results in terms of new, worthwhile prospects. Following the above guidelines, in this specific order, can help you focus your marketing activities.

Do you already have a segment you can hone in on to AMP up your marketing?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

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. 

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. 

A practical and innovative approach to new product development.

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’s 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 award winning case studies click here. 

If you’ll indulge me, I’d like to begin this post with a cheap trick: how many of you marketers, advertisers, researchers, corporate strategists and consultants out there have been asked to “find out what’s important to [some audience]?”  While I don’t actually expect any of you are sitting there with a hand raised in the air (kudos if you are, though), I’m betting you’re probably at least nodding to yourself.  Whatever you’re selling, the basic steps to market a product are simple: figure out who wants it, what’s important to them, and how to communicate that your product delivers on whatever they find to be important to encourage some behavior.  No one ever said marketing was rocket science.

But no one ever said it was easy, either.  And determining what’s actually important to your customer isn’t merely another task to check off, it’s a critical component on which a misstep could derail years of effort and potentially billions in R&D spending.  I always tell my clients that you can design an absolutely perfect product, a masterpiece of form and function, but if you can’t communicate why it’s important to someone, there’s no reason for anyone to buy it.  As my esteemed colleague Andrew Wilson will tell you, not even sliced bread sold itself.

So that brings us back to that original, fundamental question: how do we “find out what’s important?”  The simplest method, of course, is simply to ask.  If you’ve ever looked at a research questionnaire, chances are you’ve seen something like this:

When considering purchasing [X/Y/Z Product] from [A/B/C Company], how important to you is each of the following?

This concept, generally known as Stated Importance, is one of the oldest and most used techniques in all of marketing research.  It’s easy to understand and evaluate, allows for a massive number of features to be evaluated (I’ve seen as many as 150), and the reporting is quick.  It produces a ranked list of all features, from 1 to X, giving seemingly clear guidelines on where to focus marketing efforts.  Right?

Well, now hold on.  Imagine you have a list of 40 features.  What incentive is there to say something isn’t important?  Perhaps “Information Security” is a 10, whereas “Price” is a 9.  But if everyone evaluated the list that way, you’d find that almost all of the features were “important.”  In fact, I’ve found this to be common across industries, products, audiences – you name it.  While you can still rank them 1 – 40, there’s little differentiation between the features, and you’ve just spent a big chunk of research money with little to show for it.

By the way, these two features (“Information Security” and “Price”) are, in my experience, two aspects that almost every research study includes, and which virtually always come up as being highly important.  So, using a stated measure only, one might conclude that the best features to communicate to your customers are security and costs.

Now, let’s consider the other general way of measuring importance: Derived Importance.  There are many methods to measure derived importance, but they all involve one general rule: they look for a statistical relationship between a metric, like stated importance, and a behavior – common ones include likelihood to purchase or brand advocacy.  You might use the same question as above, but instead of using a 1 – 40 ranking based on what consumers say, you could instead look for a relationship between what they say is important and their likelihood to purchase your product.

That brings us back to the question of “account security” and “price.”  We know from our discussion of stated importance that most consumers will score these very highly.  But check out what tends to happen when we look at derived importance (using an example from an auto insurance company):

The chart above is something every marketer and advertiser on the planet has probably seen 1,000 times, so bear with me.  On the vertical, or y-axis, we have our derived importance score, the statistical relationship between importance and likelihood to purchase, advocate, or whatever other behavior might be appropriate depending on where you are in your marketing funnel.  On the horizontal, or x-axis, I’m showing stated importance, or how important consumers said these features were when purchasing from Auto Insurance Company X (all of these numbers are made up, but you get the idea).

You’ll see that, as expected, information security and price perform very well on the stated measure, but low on the derived measure.  What we can infer, then, is that while most of the consumers interviewed in this made-up study say information security and price are very important, these features don’t have a strong relationship to the behavior we want to encourage.  These are commonly known as table stakes, or features that everyone says are important but don’t really connect to purchase, advocacy, and the like.

But since the third feature, offering a tool for calculating liability, has a much stronger relationship to our behavioral measure, what we can infer is that while fewer consumers said this was important, those that did view it as important are the most likely to purchase from or advocate for Auto Insurance Company X.  So if you had to pick one of these three features on which to hang your marketer’s hat, we’d recommend the tool for calculating liability – since it’s our job as marketers to figure out what’s going to encourage the behaviors we want, and then communicate that to our customers.

I hope this discussion has lent you some knowledge you can pass along to your clients, internal partners, fellow consultants, friends and whomever else.  There are many ways to calculate derived importance, and many clever techniques that improve on traditional stated importance (like Maximum-Difference Scaling or Point Allocations).  But if you take one thing from this post, let it be this – in this crazy, tech-driven world we live in, simply asking what’s important just isn’t enough anymore.

Nick is a Project Manager with CMB’s Financial Services, Insurance & Healthcare Practice.  He enjoys candlelit dinners, long walks on the beach, and averaging-over-orderings regression.

Speaking of romance, have you seen our latest case study on how we help Match.com use brand health tracking to understand current and potential member needs and connect them with the emotion core of the leading brand?