Case Study:
Novel Product Valuation and Forecasting
Situation
A diagnostics company was planning to commercialize a novel, automated system for molecular identification and analysis. Although the client had detailed information about the research and genomics markets, it was unsure of the decision-making and purchasing processes for various organization types. Additionally, its multi-purpose system replaced a number of existing independent instruments, and the company did not know the perceived value its system provided compared to existing competitive technologies.
Client Need
The client's primary need was to determine the most productive economic positioning of its system in the laboratory research market, including a qualitative evaluation of available pricing ranges for both the instrument and its associated consumables. To achieve this end goal, the client needed to:- Outline the decision-making and acquisition process for analogous laboratory systems for different organization types
- Determine the types of technologies and methodologies currently used and the market-based costs for performing specified analyses for several different laboratory activities
- Assess the value perception of the client's diagnostic system compared to existing and emerging technologies within specified customer segments and applications
Putnam's Role
There were two central aspects to the project: potential customer needs analysis and competitor assessment. The customer interviews were qualitative and exploratory in nature. Discussions focused on gaining qualitative reactions to the product profile and insight into price benchmarks and perceptions rather than formulating a quantitative econometric pricing analysis. In addition, the primary focus of the interviews was on specific analysis rather than a general set of analyses. Competitive information was gathered through the formal interview process, dedicated interviews with users of selected technologies, competitor interviews, and competitive secondary research.From these detailed attribute-by-attribute discussions of the client's diagnostic system, Putnam then segmented the customer base, identified the system's greatest advantages and disadvantages, and determined the overall interest and expected use. Qualitative pricing ranges for both the instrument and consumables were created based on cost-effective analysis and the client's market penetration and short-term cash flow requirements. The client's prices were then benchmarked against competitive cost equivalent prices for each potential type of analysis that could use the diagnostic system.
Recommendations
From this work Putnam provided three strategic outputs:- We recommended price ranges for both the instrument and consumable supplies that were consistent with a broad penetration strategy, customer perceptions, and cost effectiveness
- We prioritized specific performance capabilities that should be enhanced to expand market potential and ensure product acceptance
- As for the competitive assessment, the client was entering a very complex playing field. We recommended selected categories that were most suitable for the client's technology and competitive position.
