Succeeding at a new product on the market is difficult for many different reasons even if the product is good in every way, and even perceived as affordable. This is especially true in medical technology because the development time is often long and the product can not only be launched directly on the market due to the industry’s regulatory requirements.
The factors for success are many and some of them can not be influenced. Among many other things, the product must be adapted to the target group and then penetrate the noise of global competition. There must be the right sales channels and sometimes the right timing is also needed, even if it is a potentially revolutionary innovation. And so on.
But you can do a lot of preparatory work to minimize the risks of failure. Before you start investing large resources in product development based on an ever so good idea, there are some other jobs to do. And finally, as always, those who do not bet cannot win either.
In the article below, three steps are presented that can help minimize the risk. Good luck with your product ideas!
Many product developments fail when they are launched, even if they have been properly prepared and a lot of time has been spent on them. This is often because they are not optimally adapted to the target group. With a preliminary analysis, many problems can be avoided already in the development phase.
Product development in medical technology is time consuming and associated with high costs. Consequently, it has serious consequences when a new product flops. Nevertheless, the flop rate for new products is generally around 70 percent in many industries. The reason: in many companies it is still common to make development decisions solely on the basis of some internal opinions and not to include an external target group.
It follows that the products are not optimally adapted to the actual target group and the customers’ needs. The exclusion of customers means that the sales potential is not reached, margins shrink and the potential willingness to pay cannot be fully utilized.
However, there are simple ways to assess the chances of success of a product at an early stage of development so that the development process can be adapted to customers’ willingness to buy and pay. One method is to make a preliminary analysis that makes it possible to make well-founded go / no go decisions for product concepts at an early stage so that these are developed in a targeted manner for specific market needs and a principled willingness to buy in order to increase the products’ success in the market.
1. Mapping of the market landscape
To get an overall picture of the market, it must be examined from different perspectives. An analysis is needed that includes processes, doctors, payers, patients and competitors. To gain the necessary knowledge about each factor, discussions are needed with internal and external experts and secondary sources such as scientific literature, market reports and various companies’ websites.
At least two thirds of the experts surveyed should be based in countries that are potential target markets for the new product. This ensures that the respondents’ perspectives match all aspects of the product. The knowledge and experience of the individual experts is more important than a large number of respondents. Personal discussions at the respondent’s workplace usually give the best results.
An analysis of processes provides information on which players need to be addressed, and how, when the new product enters the market. To do this, you follow the patient flows for diagnosis, treatment and follow-up and where these take place physically. For each step, problem areas, needs and optimization potential are revealed. In this way, you gain knowledge about which customer or doctor segments are most important, who decides on a purchase and what is specifically important for each country. In Japan, for example, neurosurgeons play a crucial role in the treatment of mental illness, while in Europe they are treated by psychiatrists. The process thus provides information about who, depending on the product, you need to address when you later establish yourself on the market.
Here the focus is on identification and segmentation of medical target groups. Characteristics such as willingness to use, buying potential, willingness to innovate or knowledge of and use of digital opportunities can be integrated into the segmentation. Groups of physicians can often be segmented according to three archetypes: scientifically driven experts who place great value on product precision and less weight on price, generalists with high demands on product management, and commercial optimizers. In addition to the division into individual segments, it is important to understand their size and development. For example, the proportion of traditional and digitally undeveloped general practitioners may decrease in the next few years, as they retire.
The goal of the analysis is to create a profile for payers and an understanding of cash flow. In the case of medical devices, the costs are often not borne by doctors or patients but by health insurance companies or, as in Sweden: government institutions. These have their own requirements that are essential for the product and its price to be accepted. For the international sale of new products, it is good to collect country-specific information for the analysis and to distinguish between private and public payers. The price of a medical device can be derived from an understanding of the regulatory requirements for doctors and hospitals, the rate of reimbursement from the payer, the average life of the product and the hospital’s or doctor’s cost share.
One should also have an understanding of how the procurement procedures work and for how long time agreements are written in the different markets; it can be extremely beneficial if, for example, you succeed with the timing of the launch.
If the product is to be used by the patients themselves, it is very important to interview them. These can be blood glucose meters or breathing aids in the home and many other solutions in various physical and digital care areas. The purpose of the analysis in this step is to develop patient categories and their emotional decision basis. Patients represent a relatively new target group: just a few years ago, purchasing decisions were made mostly by the doctor, now an increasingly self-sufficient patient population focuses on their own needs.
Two related, often forgotten interest groups are the patient’s family members and patient organizations. By not only including patients but also these two groups in product development, companies significantly increase acceptance of the new product solution.
The purpose of the analysis is to understand the competitors in the market. This also includes the market regions and segments they work with. This is how white spots can be identified on the market – areas that have great potential during a market introduction. In this step, an arrangement of the competing products in a matrix (for example with the dimensions target customers and customer needs fulfillment) is helpful. Through the analysis of the costs of competing products and their marketing strategy, best practices can be obtained for the own new product.
2. Requirements and customer needs
After mapping the market, the next step is to translate the market understanding obtained into specific customer needs and product requirements. In this way, the criteria for the own product concept are tested.
Tendency to buy
The tendency to buy arises when the properties of the new product meet the customer’s requirements and unmet needs. To identify these characteristics, data from all relevant interest groups (eg market experts, doctors, payers and patients) must be analyzed. In this way, weaknesses in current product solutions and unmet needs are revealed.
Here it is important to consider that different types of end users have different product requirements. What is important to one customer is a secondary function for others. The differentiation of product characteristics into overall requirement categories (“must have” and “can be good to have”) means that these can be prioritized and an adapted strategy for market positioning can be developed. The focus is mainly on the medical benefit and need, which in combination with the technical feasibility defines the product profile you want to achieve.
Willingness to pay
Finding the optimal price for a product is always a big challenge. Different methods can help with this: discussions with experts are good to get an initial assessment of the end user’s willingness to pay. In combination with market research methods (for example the van Westendorp price analysis or the Gabor Granger method), prices are determined that correspond to customers’ expectations. Costs for similar or related competing products may provide additional information.
With the help of these methods, a clear initial estimate of the willingness to pay is made possible. It is important to note that the willingness to pay differs between countries, segments and medical groups. In addition to the willingness to pay, the payment methods are also important for the final price. Depending on the product type, different models are established in medical technology. They include different concepts such as paying per use or buying. There are payment models where the appliance is cheap but the consumable is expensive or you can rent the product. In order to identify a suitable payment model, it is important to ensure that it meets both the manufacturer’s and customers’ needs.
Obstacles to a market introduction
In medical technology, it is often difficult to enter the market. There is a lot of competition, such as local dominance from an established supplier or price pressure through cheaper products from suppliers in low-wage countries. But there are also additional external and internal barriers that make it more difficult to enter the market. External barriers can be strict rules for new products such as FDA rules, low compensation levels or established technology. Internal barriers are usually difficult to change established work processes, prevailing infrastructures and getting customers to accept new products.
För att undvika dessa inträdesbarriärer är det viktigt att inte bara känna till fördelarna med den egna produktlösningen utan också att presentera dessa på ett övertygande sätt för andra aktörer. Föranalysen skapar den nödvändiga kunskapsbasen för detta.
3. Evaluation of the product potential
The last complementary step in the pre-analysis is the assessment of the product potential and the probability of its success. This step ensures a reliable and well-founded decision-making and highlights different scenarios from best to worst outcome.
An estimate of the market potential is crucial for determining sales and profitability expectations. For this purpose, a financial case study is made where the expected costs are included. The previously determined upper and lower price limits and the average willingness to pay for each product are also used in the calculation. This information is supplemented with market data from secondary sources such as the number of customers per customer segment or used appliances as well as a quantitative forecast that contains current and forecasted future trends to assess market developments.
The previous two steps in the pre-analysis ensure that the required information is available. It is recommended that you also validate the results in dialogue with market experts.
The qualitative evaluation integrates all knowledge about the potential product as well as success factors and commercial expectations in order to be able to decide on starting up product development and then market introduction. The result leads to goals and a launch strategy.
Different scoring methods are used for this purpose. The models combine country-specific conditions, opportunities and risks (for example, local rules and competition) and assessments of the company’s strengths and weaknesses (such as rapid research and development capabilities or existing technological knowledge).
This is a transleted and curated article from Devicemed.de.