Marketing Plan

Medical Research Laboratories

Automated External Defibrillator

International Marketing

Team 2

Jessica Haines, Gretchen Flynn-Morris, David Bussa, Carl Kistler

March 11, 2002

Table of Contents

Executive Summary

Situation Analysis

Market Analysis

Market Demographics

Market Needs

Market Trends

Market Growth

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Competition

Medical Equipment Industry & Trends

Environmental Factors

National Economic Health

Cultural and Social Implications

Marketing Strategy

Pricing

Promotion

Service

Distribution

Conclusion

References

Executive Summary

Medical Research Laboratories, Inc. (MRL) specializes in portable defibrillation and cardiac monitoring systems and specifically the LifeQuest Automated External Defibrillator (AED). This marketing plan analyzes the potential for MRL to expand its international marketing efforts by exporting the LifeQuest to the United Kingdom.

The United Kingdom is an ideal market for the LifeQuest. Market demographics and market needs, such as an aging population, high cardiac disease rates and mobile society, are all indicative of the potential for LifeQuest’s success. The political, social, cultural and legal environments are all somewhat similar to the United States and therefore also conducive the success of LifeQuest. The SWOT analysis and competition profile demonstrate that while, the market is competitive, MRL’s reputation and positioning of the LifeQuest as a premium high quality life saving device will allow the product to do well in the British market.

Since the British government has made availability of AEDs in public places a priority, MRL will target the government directly and other major AED manufacturers for the possibility of second sourcing. Additionally, MRL will target large private facility manufacturers as the second major target market. MRL will approach its expansion into the UK with the use of a proven direct distributor who has significant knowledge of the United Kingdom and the medical device market. It appears the combination of these factors make the United Kingdom an ideal potential market for MRL’s international expansion.

Situation Analysis

Medical Research Laboratories, Inc. (MRL) specializes in portable defibrillation and cardiac monitoring systems. With the MRL LifeQuest, the most flexible Automated External Defibrillator (AED) available, MRL is the first choice in resuscitation and rescue solutions. The AED is a device that automatically detects when a heart is in arrest or beating abnormally. It then selects the number of electrical Joules needed to shock the heart back to a normal beat and informs the user to press one button, thus saving a life. The process is so easy and so safe that schoolteachers, police officers, firemen, mall security guards, and airline stewardesses have all saved lives with the use of an AED and proper training. Additionally, the AED’s portability allows for quick response time, thus reducing the chance of long-term side effects associated with cardiac arrests.

MRL has specialized in defibrillation and cardiac monitoring systems for the past 30 years, during which time defibrillators have been manufactured for the military, clinical and pre-hospital/EMS field use. MRL must concentrate on marketing and innovative product offerings if it is to maintain its leadership position as the standard for portable cardiac resuscitation equipment.

Market Analysis

This study seeks to evaluate the United Kingdom as part of MRL’s international market expansion and subsequent marketing plan. The United Kingdom represents a strong potential market for MRL’s LifeQuest for the following reasons: first, the United Kingdom has one of the highest cardiac arrest rates in the world; secondly, the elderly suffer the most from cardiac arrest and the percentage of elderly in the British population is rising; and thirdly, MRL’s product offering is a life saving device. Moreover, the UK plans to install such devices in all major government run public facilities, such as airports and railway stations, in the near future. Finally, there are many private large facilities in the United Kingdom, which provide an ideal marketing opportunity as the country is becoming more privatized in the health sector.

Market Demographics

The population of the United Kingdom registered slightly over 59 million in 1997. Of that, 49.3 million live in England, 5.1 million live in Scotland, 2.9 million live in Wales, and 1.7 million live in Northern Ireland (Euromonitor, 2000). Overall, the population growth is expected to slow from 0.3% to 0.2% by the year 2021 when the population will reach approximately 62 million. The UK is densely populated with an average of 243 persons per k2. However, there is a large population difference between the countries. England is the most densely populated countries with 223 p/k2 and Scotland the least with 65 p/k2. Over 90% of the population lives in urban areas over 100,000 (Euromonitor, 2000).

In order to further analyze the market demographics for the AED product offering, it is important to consider population factors that indicate the prevalence of heart attacks in the country. The most obvious factor is the rate of circulatory disease amongst the population. In 2000, Circulatory disease related deaths accounted for 255.0 of deaths per 100,000 inhabitants. In 1997 this represented 41% of all deaths in the United Kingdom. This rate does not seem to be falling as quickly as other industrialized nations. In fact the UK has a higher average mortality rate particularly for coronary heart disease than other OECD nations (Euromonitor, 2000). Another main demographic factor is age. In 1997, 16% of the population was over the age of 65 and 7% of the population was over 75 years old. This elderly segment of the population is expected to continue to grow exponentially. By the year 2021, 20% of the population is expected to increase to 20% and 9% respectively. Cardiac arrest is most common amongst this age group (Euromonitor, 2000). In effect, cardiac arrest was the leading cause of death in this age group, thus demonstrating a market need.

Personal habits that contribute to heart disease also offer additional useful demographic information. Accordingly, tobacco and alcohol use are high in the UK as both hold cultural and traditional value. In 2000, the British purchased 44.8 liters of alcoholic drinks per capita, 28.1 of which was beer (Euromonitor, 2000). Additionally, they purchased 1,319.0 units of cigarettes per capita and spent $359.8(USD) on tobacco products per capita, all of which contribute significantly to a high risk of heart disease and subsequent cardiac arrest. High cholesterol is also a contributing factor to heart disease. Approximately 25% of all adults in the United Kingdom have moderate to high cholesterol levels (Euromonitor, 2000).

Market Needs

There are a number of factors that contribute to the United Kingdom’s market need for AEDs and specifically MRL’s LifeQuest. As previously mentioned, the first is the statistically high rate of cardiac arrest in the United Kingdom. The second is the need for quick access to defibrillation. According to Yvette Cooper, the UK’s Public Health Minister, “Only three in every hundred people survive a cardiac arrest in England” (Livni, 2002). The British Heart Foundation states that coronary heart disease is Great Britain’s leading cause of death and kills 140,000 people each year. Automatic external defibrillators provide an effective way to combat such statistics by providing an electric shock to the heart to regulate the heartbeat. Effectively, the key to survival is administering the shock early in the cardiac arrest. “Heart attack survival chances fall by 7 to 10 percent for every minute between collapse and defibrillation.” (Flores & Livni, 2002) Therefore, it is essential to provide public access to the life saving AED in order to have quick access, thereby increasing survival rates. According to the British Heart Foundation, “70 percent of heart attacks, including cardiac arrest occur in public places.” (Livni, 2002) The United Kingdom’s expansive transportation system adds to the number of “public places” that cardiac arrests occur and the potential that sufferers will not be close to medical facilities. With 16,900 kilometers of operating railways and 35,135 million passengers per kilometer ( train stations and railroad cars are prime places for AEDs. Additionally, AEDs could save lives if placed in large shopping malls, department stores and sports facilities around the country. Therefore, we seek to fulfill this need with the MRL LifeQuest.

Market Trends

The medical systems industry, which is comprised of products used for diagnosis and treatment of ailments including the following: medical, surgical, and dental equipment; furniture; supplies and consumables; orthopedic appliances; prosthetics; electromedical equipment; as well as diagnostic kits, reagents and equipment, accounts for 50% of trade relations in 1995 and 0.8% of total manufacturing output for the UK (Competitiveness Profiling, 1997). Furthermore, the American industry supplied 25 percent of imports and accounted for 12 percent of the total $3.4 billion medical equipment market in Britain for 2001. Current market growth has been slow, and the lack of domestic investment in new product development in recent years has created a demand for imported high-tech equipment (UK Country Commercial Guide, 2002). Thus, the industry is expected to realize a steady increase over the next few years.

As previously mentioned in the Demographics section, Britain’s population is becoming more elderly and this represents another major market trend. In effect, the proportion of elderly people to working people (who pay the taxes that fund the NHS), is increasing. This will create issues regarding the provision of long-term care, and additional demands on the healthcare system in general. Moves to address this issue have already been taken by introducing means testing for people needing nursing home care, where local government is only obliged to pay for those with the least resources.

In addition, the medical system market continues to grow with technology emerging as the key driver of change, thus impacting the medical systems industries in a number of key areas including developments in telecommunications and information technology, material science, and medical science. In addition to these developments, advancing technology in related sectors will also act as an important driver of change for the industry as a whole (Competitiveness Profiling, 2002). However, the risk of technological obsolescence is relatively low for the AED itself. As such, the technology for the AED and specifically, MRL’s LifeQuest, has proven to have tremendous staying power in the market as it is both user friendly and considered to be a relatively long-term health care investment.

Market Growth

In addition to its participation with the European Union, the United Kingdom is the fourth largest economy in the industrialized world. The imperial record reveals a heavy emphasis on privatization and lowering of taxes within the last twenty years, which points to our secondary market, the private sector.

  • According to a 1998 report, there is a projected 7 percent growth in the world market for medical technology (to US$147 billion) as well as a projected steady growth for the industry for the next several years CIBS
  • American industry supplied 25 percent of imports and accounted for 12 percent of the total $3.4 billion medical equipment market in Britain last year. Current market growth has been slow, and the lack of domestic investment in new product development in recent years has created a demand for imported high-tech equipment. (UK Country Commercial Guide, 2002 and UK Corporate Information, 2002).
  • Market systems industry growth expectationsfrom a 1997 report suggests that of all the companies surveyed, growth is mainly expected to occur in existing overseas markets, such as Western Europe (cited as a growth market by 71% of companies), USA (52%), Middle East (45%) and Asia (45%). Eastern Europe was also mentioned as a key growth area by around 45% of companies surveyed. Over 65% of companies surveyed expect to increase their market share in existing markets, as opposed to 35% which expected only to grow in line with current markets. Around 60% of companies are expected to enter new markets within the next five years. Only 6% of companies are planning to pull out of existing markets. Nearly 80% of those surveyed expected their workforces to increase (as a result of the expected growth) over the next five years, although larger companies are less optimistic, with a third of expecting their workforce to stay the same (Competitiveness Profiling, 2002).

Products Offered

As previously mentioned, MRL has been in the defibrillator business for 25 years. It has three products: the MRL LifeQuest, MRL PIC System, and the MRL Lite. Its sole AED product offering, the LifeQuest is a high-end unit with a large built in display, which sets it apart from competitors in user friendliness and usability. The MRL LifeQuest is rugged and flexible. It is designed to accommodate both basic and advanced life support personnel. The most innovative addition to this new AED is the manual override and data exchange capability. It has a significant amount of non-volatile memory and a data export facility to allow medical experts to examine the patient's heart rhythm before and after defibrillation. Moreover, LifeQuest has multilingual capability and a five year warranty while competitors only offer a one or three year warrantee.

SWOT Analysis

The following analysis captures the key strengths and weaknesses for importing the MRL Life Quest AED. The opportunities and threats facing MRL’s expansion into the UK are also highlighted in this section.

Strengths

  • MRL has been a developer and manufacturer of defibrillation technology for over 25 years.
  • The LifeQuest unit has the largest display of any AED in the market, which allows medical personnel arriving on the scene to make a faster and more accurate assessment of the patient’s current condition in comparison to the smaller displays offered by the competition (
  • The LifeQuest has the largest memory capacity of any AED on the market and has optional data export options, which allow medical professionals to examine the rhythms of the patient’s heart before and after defibrillation (
  • LifeQuest is available in English, Spanish, French, German, Italian and Portuguese languages.
  • A 5-year warranty accompanies each LifeQuest, whereas most competitors offer warranty periods of 1 or 3 years (
  • The LifeQuest unit is easy to operate as it utilizes voice as well as visual instructions and prompts. Moreover, first time users are trained and certified with LifeQuest upon completion of a three-hour course.

Weaknesses

  • Due to the fact that the display is a standard inclusion, the LifeQuest’s individual unit sales are 5-10% more expensive than competition. Most competitors offer the display as an option, which allows for a reduction in cost and price for the end user (Gregg Laycock, personal communication, 2/8/02).
  • MRL currently offers one AED model (high end), whereas much of the competition has at least two product offerings (high and low end).
  • The MRL name is not well known in the UK and consequently customer loyalty and repeat purchases do not currently exist (Gregg Laycock, personal communication, 2/8/02).
  • MRL’s lack of brand recognition in the UK will also make it difficult to compete in government bids and tenders. A great deal of effort will be required to make the MRL name commonplace.

Opportunities

  • The FAA is set to pass a law that will require all American airline companies to have at least one AED on board every domestic and overseas flight. Foreign airlines are likely to follow. British Airways and Virgin Atlantic have already begun to equip some of their planes (
  • In the UK and mainland Europe, MRL will be able to benefit from the fact that trains are still one of the chief methods of transportation and the future need to equip each train with an AED is promising.
  • In the United States, federal business buildings, private businesses, shopping malls, golf courses, athletic clubs, stadiums, casinos and charter bus companies are beginning to understand the importance of having an AED on-sight. The UK and mainland Europe have similar needs and settings, thus the importance of having an AED on hand is assumed to be equally important.
  • In the UK the NHS is becoming more privatized thus expanding the medical equipment market to the private sector.
  • Good Samaritan Laws protect trained CPR/AED civilians in the USA from being prosecuted/ held responsible for death of heart attack victims. The British Cardiac Society has enacted similar laws in the UK (

Threats

  • Larger competitors such as Medtronic and Zoll have strong financial backing and larger work forces. These advantages make it less difficult for much of the competition to promote, manufacture, discount and create new products.
  • The larger competitors also have direct sales offices in the UK and mainland Europe while MRL does not (Gregg Laycock, personal interview, 2/8/02). A direct sales office provides a feeling of support to customers in their respective countries.

Risks of flight, poor motivation and ineptitude are potential pitfalls when utilizing distributors to sell your products. These risks can be found in a direct sales office but the parent company always reserves the right to make any necessary changes. In addition, contracts and local laws often protect distributors.