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B2BMarketing Group6 FormPrintOrtho500

FormPrint plans to launch a new product, Ortho500, to increase presence in the US exoskeletal bracing market and ultimately expand globally. Ortho500 is competitively priced to attract businesses from smaller outpatient orthopedic clinics in major metropolitan areas. Ortho500 presents a promising opportunity for FormPrint, given that the health market has become more price sensitive because of the ‘Affordable Care Act’. With the introduction of Ortho500, the company’s objective is to establish.

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Pankaj Parate
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36 views3 pages

B2BMarketing Group6 FormPrintOrtho500

FormPrint plans to launch a new product, Ortho500, to increase presence in the US exoskeletal bracing market and ultimately expand globally. Ortho500 is competitively priced to attract businesses from smaller outpatient orthopedic clinics in major metropolitan areas. Ortho500 presents a promising opportunity for FormPrint, given that the health market has become more price sensitive because of the ‘Affordable Care Act’. With the introduction of Ortho500, the company’s objective is to establish.

Uploaded by

Pankaj Parate
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SUBJECT:

Business to Business
Marketing

SUBMITTED TO :

CASE ANALYSIS: Prof. Bipul Kumar

FormPrint Ortho500 –
Choosing Right Sales SUBMITTED BY (GROUP 6):

Strategy – Managerial Chirag Giri (2019B2PGPMX006)

Pankaj Parate (2019B2PGPMX015)


Dilemma
Yogesh Mahaparale (2019B2PGPMX025)

Yogesh Prabhu (2019B2PGPMX026)


FormPrint Ortho500: Choosing Right Sales Strategy – Managerial Dilemma

Introduction – Background of the case


FormPrint plans to launch a new product, Ortho500, to increase presence in the US exoskeletal bracing market and ultimately expand globally. Ortho500 is
competitively priced to attract businesses from smaller outpatient orthopedic clinics in major metropolitan areas. Ortho500 presents a promising opportunity
for FormPrint, given that the health market has become more price sensitive because of the ‘Affordable Care Act’. With the introduction of Ortho500, the
company’s objective is to establish a leading position in exoskeletal bracing in 2014. To achieve the goal, one of the most critical decisions the management
team needs to make is the distribution channel of Ortho500. The company can rely on its own sales force, hire independent sales representatives (ISRs), or
formulate a mixture of the two.

Company Background:
 FormPrint is a 3D printer manufacturer which was founded by an engineer in 1998 who discovered to construct prototypes of 3D designs using
patent protected additive manufacturing technology.
 FormPrint with its 3D printer products serve auditory, dental, and orthopedic markets focusing on healthcare market.
 Customers pay a premium price for the company's products that are high in quality and technically advanced in comparison with other competitors.
 Form Print estimated the global market for 3d printing health-care industry about $235 millions, that will be 75% of US market in 2013.
 The company’s orthopedic strategy included creating products to serve top surgeons, as well as outpatient practitioners in smaller medical facilities.
 Future products targeted in the range from $30,000 (simple prototyping products) up to $500,000 (sophisticated equipment)
 80% of FormPrint’s sales is from large hospitals (200 beds and more) while 20% is from smaller private hospitals and independent prototype
providers.

Current Market Scenario and plan for new Ortho500 product


 In the 3D printing market, companies compete on price, features, quality, and salesforce and distribution channels.
 Higher-end printing systems are similarly priced, which makes companies compete on features and quality.
 As the Affordable Care Act can offer insurance to more than 10 million people, which generates demand for health care, smaller clinics will have
incentives to purchase a system of their own instead of paying for services from third-party prototype providers.
 FormPrint projected the 2014 market for exoskeletal bracing printers would be between $8 million and $12 million which will rapidly increase
through 2018.
 Ortho500 could print an exoskeletal brace and is designed primarily for outpatient orthopedic physicians.
 Ortho500 features are less complex with less functionality than FormPrint’s existing orthopedic 3D solutions.
 Ortho500 has a competitive pricing of $68,000, compared to the premium pricing of FormPrint’s other products.
 Since the process and raw material required for Ortho500 is different than other FormPrint’s devices, cannibalization is not expected.
 Ortho 500 Strengths - ease of use and overall performance
 Weakness - Functionality
 But as per the survey for 3D printing the functionality of the system was not that important

Problem Statement
Besides advertising efforts such as a direct email campaign and targeting conferences, choosing the most effective sales and distribution channel is crucial, as
the sale of 3D printers often rely on established relationships with hospitals and will require salespeople to know the industry and the product.

FormPrint has 3 options for sales

1. In-house salesforce team


2. Hire ISRs (independent sales representatives)
3. Adopt mixture of the two

Each option has its own advantages and disadvantages which are mentioned in below table –

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FormPrint Ortho500: Choosing Right Sales Strategy – Managerial Dilemma

If FormPrint fail to gain the most market share in year 2014, then the company will be facing big downfall in its medical-care division. Hence right decision to
promote Ortho500 in right way would be crucial.

Analysis
Cost Analysis
 Sales cycle for Ortho500 is 60 days, means worst case, 1 sales person can sell max 6 devices in a year.
 Sales price is $68000 and company has to pay 2.3% of tax. Hence after tax sales revenue per piece would be $66436
 Sales revenue from 1 sales person would be = 6*66436 = $398616

1) For in house sales force


 Total cost of in house sales person = $400000
 30% is commission and 70% fixed salary. Hence fixed component = $280000 and variable component = $120000
 Hence contribution margin available = $66436 – (120000/6) = $46436
 With this contribution margin, BEP would be = 280000/46436 = 6.03 Units

2) Commission based ISR


 For ISR 23% is commission and if additional manager is hired total cost is 37%
 So variable cost for 1 ISR is 23% and hence it is = $408000 * 0.23 = $93840
 And per unit it would be = $93480/6 = $15460
 Hence contribution margin using 1 ISR = $50796
 With this contribution margin BEP = $408000*(0.37)/$50796 = 2.97
Apart from the cost analysis, there are other factors as well as mentioned in the pros and cons table

Recommendation
Though based on the cost analysis ISR seems to best option, few things needs to be found out before decision is taken
1) What is the no of units one sales person should ideally target to sell?
2) For being market leader in this segment, 30% market share would be quite good. In that case how many units needs to be sold so that maximum
market share can be captured. And for that how many sells person will be required?
3) What is the no competitor is targeting or already selling?
4) In house salesperson are motivated enough to sell.
5) Hiring freeze is there so if required how in house salesperson would be arranged to capture the market share?

So, in these circumstances, I would recommend having blended approach wherein combination of in-house sales team and ISR would be best option for
FormPrint.

Thank you

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