VEXTEC Technology Marketing Plan

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VEXTECTechnology Marketing Plan

• Aashish Bapat, April Boldt, Jason Deaner,
  Grainger Greene, Dani Shuck

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Technology Marketing Plan

• I. Capabilities Analysis
• II. Technology Marketing Intelligence
• III. Marketing Segmentation
• IV. Leverage and Resistance Points
• V. Industry Analysis
• VI. Value Proposition
• VIII. Interviews

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Capabilities Analysis

• VEXTEC is a Product Leader
• Unique technology, patented
• Core competency is modeling the physics of failure

• VPS-VIEW with VPS-MICRO performs this
• VEXTEC also excels in Customer Intimacy
• Does not translate into Medical Device sector,
  unknown in this industry

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Technology Marketing Intelligence

• Important Questions
• What is the current method by which prosthesis
  manufacturers perform reliability analysis, if at
  all?
• How much does this method cost? Capital costs
  and recurring costs per unit? How satisfied are
  you with your current method?
• Can a virtual physical testing method possibly
  become approved by medical safety boards such as
  the FDA in the U.S. or ISO in Europe?
• How much money and time can VEXTEC save a company
  on reliability analysis, and how much can they
  improve a company's product?
• Is the prosthesis market large enough and
  interested enough to bother entering this market?
• Have you considered alternative approaches to
  reliability analysis, and what conclusions did
  you draw?

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Technology Marketing Intelligence

• Future Contacts
• Ossur
• Endolite
• Ottobock
• Medi
• Fillauer
• Freedom Innovations
• Ohio Willow Wood
• Smith-Global
• Bulldog Tools
• DAW

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Future contacts continued

• Meeting with Prof. Burcham
• Owen Business School faculty
• Health care specialist
• CEO of Paradigm Health a health care provider for
  specialty care
• Consultant to healthcare and venture firms

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Market Segmentation

• 3-Screen Technology Market Scan
• Figure 2 Importance-Advantage Map

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Three-Screen Technology-Market Scan

• Need Screen
• Economics Screen
• Time Screen

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Needs Screen

• Feasibility - Will it work in the intended
  application? (Can we deliver?)
• Criticality - How critical is this application
  to the overall mission or financial performance
  of the customer organization?

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Economic Screen

• Performance/Value Advantage
• Price
• Ease of Use
• Reliability

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Time Screen

• Readiness to solve problem
• Cognizance (shopping) vs. precognizance
• Receptiveness to new technology
• e.g, early vs. late adopters

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Time Screen (ctd)

• Compatibility with customer operations
• Word processors vs. nuclear reactors
• Dependence on other technologies
• Market Concentration/Heterogeneity
• Customer Buying Practices
• Competitive Intensity

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Importance-Advantage Map
Advantage
Importance
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The Winner
Important to Market/ Competitive Technology
Advantage
Importance
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Strategy for the Winner
GO
Advantage
Importance
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Technology Ahead of its Time
Unimportant to Market/ Competitive Technology
Advantage
Importance
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Strategy for Technology Ahead of its Time
Develop Market
Advantage
Importance
Redeploy Assets
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(No Transcript)
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Industry Analysis

• Michael Porters industry forces model

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Five Competitive Forces that Determine Industry
Profitability
Threat of new entrants
Potential Entrants
Industry Competitors
Suppliers
Buyers
Rivalry among existing firms
Bargaining power
Bargaining power
Threat of substitute products or services
Substitutes
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Analyzing Porters Forces(Strengths are on a 1-3
scale, with 3 the strongest)

• Industry Competition / Rivalry (Rating 2)
• Cutting edge technology, unique approach
• No direct competitors
• In house reliability testing methods
• Potential Entrants (Rating 3)
• Proprietary rights
• High RD costs and time
• Supplier (Rating 2)
• Device Testing Databases

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Porter forces (contd) (Strengths are on a 1-3
scale, with 3 the strongest)

• Buyer (Rating 1.5)
• Lack of confidence/ Inexperience in medical
  device industry
• Substitutes (Rating 1)
• More expensive, theoretically weaker but age-old
  proven industry norm physical testing
• Statistical analysis providers like Relex
  Reliasoft

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Industry Analysis

• Identify key competitors

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Direct Competitors Reliasoft

• Founded in 1992
• Product Base Weibull Software Family
• Industry standard in statistical life data
  analysis (Weibull analysis)"
• Services capabilities technology marketing
  consulting

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Direct Competitors Reliasoft

• Methods Failure Mode and Effects Analysis and
  Fault Tree
• NO physical testing
• COST Weibull 7, a single user software package
  is 995.00

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Direct Competitors RELEX

• Reliability services for 20 years
• Product base Relex Reliability Studio 2007
• Methods FMEA and Fault Tree Analysis
• No physical testing
• Support Oracle/Microsoft SQL server for
  scalability

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Direct Competitors RELEX

• Cost sequentially purchase software modules to
  build and grow with a business plan
• Services 30 day eval/money-back guarantee
• Customer Relationships
• Broad portfolio of working relationships from
  Dell to Boeing

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Leverage and Resistance Points

• What role does the product play in the customer's
  value chain?
• What concerns (leverage points and resistance
  points) might they have, and how could you
  address them?

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Ultimate Goal

• Matching of what customers want versus what
  vendors claim of their services
• Customer assessment
• Market segments
• Customer value models
• Flexible market offerings
• Competitive advantage

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Discussion QuestionCustomers Needs vs. Vendor
Claims

• What CUSTOMERS WANT for their business
• Increase sales
• Improve quality/reliability of product/process/ser
  vice
• Maintain/build reputation
• Reduce time (to develop, build, process, respond,
  etc.)
• Increase resource productivity
• Reduce costs (direct, overhead, fixed)
• Reduce uncertainty (sales, inputs, investments,
  etc.)
• Minimize disruption (customers, workforce,
  processes)
• etc.

• What VENDORS CLAIM for their products and
  services
• Performance
• Reliability
• Cost of Use
• Ease of Use
• Compatibility
• Support
• etc.

Do they match???
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Pin-pointing Customer Values

• Heath-care industry concerns
• Product quality
• Reliability and uncertainty (liability)
• Time
• Resource productivity
• Overhead fixed costs operational cost
• Financial liabilities
• Ease of use

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VEXTEC Advantage

• Embedded in automotive/aerospace brand name?
• Product advantage
• Reliability reduce physical prototype testing
• Cost advantage stronger reliability statistics
  more cost savings
• Design process
• Reduced uncertainty
• Warranty clarifications
• Recall and redesign repercussion forecasting
• Time speed FDA approval

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Resistance Points

• Common barriers technologies in infancy
• disruption of existing operations
• threat to owners of current solutions
• fear of the unknown
• Discern resistance point before adoption weapon
  against competitors

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VEXTEC Resistance Points

1. Resistance to change hesitancy to radical
   innovation in implant sector, liability of
   manufacturer brand
2. Government barrier FDA and proposed reliability
   methods
3. Health Care Industry Brand Names lack of
   specific relevance/Brand in medical device
   industry
4. Transferability of field experience proven
   success in automotive/automobile to prostheses
   manufacturers

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Value Proposition

• Develop a qualitative value position
• Simple spreadsheet model showing how a typical
  customer would benefit from the product
• How value proposition will be of value to the
  target market

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Core Competency

• Unique software reliability analysis platform
  unmatched in
• 1) its ability to accurately forecast the most
  robust product design
• 2) project modes for improvement based on outputs
  such as cost savings

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Options for Coupling Your Value Proposition to
the Market

• Assume an average buyer

• Re-engineer your offering for every buyer

• Focus on one segment
• Going vertical

• Design flexibility into the offering
• (8020 rule)

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Designing Flexibility into the Offering to
Modulate Your Value Proposition
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Pro-Forma for Manufacturer
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Value of Value Proposition

• Increase Quality of Prosthesis
• Increase Warrantee
• Decrease Unit Production Cost
• Increase Price
• Why does manufacturer care?
• Average patient changes insurance every 2-3 years
  because of company
• Therefore, focus on government employees

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Customer Interviews
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Interview with Richard Holmes

• Previous employee of Pratt Whitney
• VEXTEC capabilities that helped approach and gain
  trust in industry
• Customer intimacy
• Confidence in individual
• Relationship with industry
• Heard of VEXTEC personally
• Technology advantage

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Interview with Kevin Line

• Former employee of Lockheed Martin
• Integrate technologies how to model and predict
  failure in airplane parts
• ideal to continuously know the health of airplane
  electronics
• Navy funded
• VEXTEC incorporated Lockheed technology
  electronics into model
• Electronic leads in pacemakers, etc

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Orthotist (Dr. Gregory Mencio) Prosthetist (Dr.
Mark Watson)

• 1) What are the most widely used makes/models
  of above-the-knee prostheses?
• Popular makes endolite, ossur, ottobock
• Models catered to individual lifestyle
• Work with interface of socket
• Exoskeletal hard crustacean design
• Endoskeletal inside all laminated foam, internal
  pylon
• 2) What basic advantages do the most popular
  models have over others in their design and or
  materials used?
• Steel vs. carbon fiber
• Carbon fiber lighter, enhanced performance, more
  comfortable
• Steel more durable
• Endoskeletal lightweight

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Orthotist (Dr. Gregory Mencio) Prosthetist (Dr.
Mark Watson)

• 3) What is the most common source of failure in
  these prostheses? Do they differ among models?
• Breakage at knee joint inevitable, life depends
  on quality and activity of patient
• Loosening at socket atrophy causes loosening
  around the socket
• Selection of prosthetic
• Cost approx 30,000-500,000
• Activity hydraulic versus geriatric patient
• Vets from Iraq receive new prostheses about every
  2 years
• Cheaper models break down quickly, less
  comfortable, fewer bells and whistles
• 4) How common are mechanical failures in these
  prosthesis?
• Set screws often toggle and break
• Failure at knee linkage

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Orthotist (Dr. Gregory Mencio) Prosthetist (Dr.
Mark Watson)

• 5) What kind of warranties (if any) come with
  above-the-knee prostheses?
• 0-3 years
• Most often 6 months 1 year
• Warrantees improves life of product
• 6) Do the prostheses manufacturers offer any
  technical support in your practice?
• New product education
• Insight on amputation and fitting for prostheses

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Mark Watson Orthotist/Prosthetist

• 7) How much time and money to these manufacturers
  spend on reliability analysis?
• Endless process for better/more durable models
• 8) What does their process for reliability
  analysis involve?
• Cheap models break down ? insurance and
  prosthetists pay
• Engineers design durable models
• Summary Materials tested, materials combined,
  models engineered, models tested, then human
  testing following FDA approval

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Uncertainty

• Mark Watson ultimately unsure about reliability
  testing
• Will provide contacts at Otto Bock and Ossur,
  others
• Team will contact manufacturers, design engineers
  to determine specific processes

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Interview with Dr. Fitzsimmons

• Easier to get devices approved in Europe
• ISO standards less than FDA
• Perform physical tests with predetermined forces
• Warranties are mostly guesswork
• Feet 36 months
• Knee 24 to 36 months
• Medicare recommends 5 year life for prosthesis
• Ultimately depends on activity level (0-4)
• 4 level cannot expect for device to last more
  than a year
• Most failures from feet
• Below-the-knee prostheses more common than
  above-the-knee, thus more feet likely to fail
  than knees

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Interview with Dr. Fitzsimmons

• List of manufacturers
• Otto Bock
• Ossur
• Endolite
• Ohio Willowood
• Medi
• Bulldog Tools
• Jim Smith Sales
• Euro International
• Fillauer
• Otto Bock has 4-5 large facilities within U.S.
• Provided contact with Otto Bock

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Phone Call to Otto Bock

• Spoke with Scott Weber, Marketing Manager for
  Feet Units at Otto Bock Minneapolis office
• Most prostheses exempt from FDA approval, use ISO
  standards
• Microprocessor knee unit is not FDA exempt
• Physical testing is expensive and time consuming,
  lots of money wasted on testing incorrect
  prototypes
• Exo-skeletal knee prostheses are vanishing from
  market
• Feet units are more customized than Knee units,
  more failures in them also

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Phone Call to Otto Bock (contd.)

• They do use Finite Element Analysis to some
  extent in their reliability analysis
• Do not use statistical modeling, never heard of
  Relex or Reliasoft
• Otto Bock goes above and beyond ISO standards in
  their testing
• ISO would be a good resource for specific force
  loads used on prosthesis units.
• Gave contact at Salt Lake City office
• Sarah McCarviell, Head Engineer(?)
• All physical testing and design engineering done
  at Salt Lake City office

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Questions?