Medical Supplies Company Introduces Higher Value Offerings through Segmentation and Pricing Strategy
Challenge: A global medical supplies company was seeking to obtain sustainable bottom line growth by changing health care perceptions and introducing higher value offerings to the marketplace. To achieve this goal, the company needed to choose the optimal product portfolio, select which customer segments to target, understand how to deliver the value proposition, and determine the pricing strategy for the new product portfolio. The company required a segmentation and pricing strategy that was both actionable and bold.
Assessment: Blue Canyon performed in-depth interviews, both internally and externally, and conducted a quantitative survey with over 300 health care professionals to understand the purchase decision process, value drivers, evaluation methods, pricing considerations, and pricing tolerance, as well as to define and quantify customer segments. Blue Canyon tailored previous methodologies and frameworks to define who was the champion within the hospital value analysis team and how their specific goals aligned with the new higher value product portfolio.
Strategic Solution: Blue Canyon identified four main customer segments, each with varying levels of resources dedicated to analyzing value within a hospital. Next, we sized the segments based on triangulating survey results with market figures and determined the strategic fit with the new portfolio. Finally, we determined the willingness to pay for the new portfolio of each segment, then calculated the optimal price point for each product across the entire market.
Result: The engagement provided the client with clarity and realistic expectations regarding the business case for implementing the new product portfolio. With this clarity, the client was more confident in their decision and made additional investments to quickly penetrate the market. The client is expected to completely change the game by increasing adoption of the higher value offerings from 1% to 30% over the next 3 years.