Marketing is Two-Way Street
Edition: August 2001 - Vol 9 Number 08
Designing and manufacturing a new product is exciting. But getting it into the market is another story.
Manufacturers that use distributors to get their new products to market need to understand that for both parties to succeed, they must meet halfway, says Cindy Juhas, president of Hospital Associates, Anaheim, CA.
''One of the key things I look for is whether or not the manufacturer has a plan,'' says Juhas. ''Do they have a long-range strategy, and does it include how they're going to market the product and what their distributor network will look like?
''Sometimes people have a great product, but they don't know what to do with it,'' she adds.
Most distributors simply lack the time to develop a well-thought-out marketing plan for a new product, says Juhas. That's why it's incumbent on the manufacturer to do so, or at least work with the distributor to draw up a mutually agreeable one.
''If they have a good plan and it fits with my focus, together we can put together a plan of attack,'' she says.
Question No. 2 is this: How will the manufacturer support the distributor? What kind of training will it provide? How many sales reps?
It's important for the distributor to understand the manufacturer's distributor strategy, says Juhas. Will the vendor offer exclusive relationships or semi-exclusive ones? Will it use local or regional firms, or will it attempt to capture the attention of the nationals once the product has been established?
Where does the new product fit in the manufacturer's overall market strategy?
New manufacturers with new products will probably focus all their energies on those products, says Juhas. But when a manufacturer has multiple lines, the distributor needs to know where its newest product fits in.
''Wherever the manufacturer's marketing efforts are, that's probably where I want to focus my efforts,'' she says.
Manufacturers should try to define the ''market opportunity'' associated with their new products, says Juhas.
For example, can the manufacturer identify how many doctors or clinicians are performing the procedure in question? Does the manufacturer know who's getting the lion's share of the business now?
Can the manufacturer clearly compare its new product with the current technology on the market? And that doesn't mean just from a clinical point of view. Rather, the manufacturer should know whether clinicians will get reimbursed for using the product, and what its CPT code is.
In short, says Juhas, rather than focus on product features and benefits, the manufacturer should spell out to distributors the bottom line benefits of the product to clinicians. Will it save them time or money? Will it help them make more money? What problem does the doctor have that this new product will solve?
Being upfront about sales cycles is always helpful, adds Juhas.
''Distributors have short attention spans,'' she says. ''If the manufacturer tells them they can sell something in a month and it takes six, they'll lose interest. But if the distributor knows upfront it might take six months, at least they're prepared.''
Certainly not least among the potential problems that have to be solved when introducing a new product is that of margin. How much does the distributor get? If the distributor carries demo equipment, advertises, carries out direct-mail campaigns and does inservicing, that distributor should expect a greater margin than those who fail to do such things.
But the responsibilities are not just on the side of the manufacturer, Juhas says. The distributor has to communicate its strategies, market share, sales force strengths, etc. to the manufacturer also.
''When both distributor and manufacturer are honest, open, committed to success and willing to focus resources, a new product launch will be very successful.''