Group 5

Akash Jain PGP07058

Jatin Gupta PGP07074
Anirban Sinha PGP07062
Mitesh Mohapatra PGP07079
Shubham Agrawal PGP07097
Yuvraj Gaur PGP07052

Case: FormPrint Ortho500

Q.1 What factors are affecting competition, product development, and marketing requirements in
the 3D printing market?

Industry Size in 2012: $2.25 Billion

Industry Size in 2014: $3 Billion

Markets: Automobiles, Aerospace, Medical/dental

Competition

 Price
 Salesforce
 Product Portfolio
 Market Segment (High End/ Low End)

Product Development

 Market Potential
 Price
 Ease of Use
 Reliability
 Performance
 Functionality

Marketing Requirement

 Percentage of Sales
 Sales Period/Process
 Size of Equipment
 Sales Force Commission
 Type of product
 Relations with hospitals
 Profitability to hospitals
Q.2 Should FormPrint, a leader in high-end 3D medical printing systems, enter the low-end
segment of the market with the Ortho500? What is the role of this product in FormPrint’s product
portfolio and marketing strategy?

Yes, FormPrint should enter the low-end segment because of following reasons:

 Market of dental and hearing-aid markets were saturated

 Management added Ortho500 to target small hospitals and outpatients’ orthopaedic clinics
 Company’s strategy was to create products to serve top surgeons, as well as outpatient
practitioners (20% revenue)
 Affordable Care Act
 Market expected to be price sensitive
 Importance of lower-priced product would increase
 Expected entrance of largest personal computer printer manufacturers in consumer market

Q.3 How should the Ortho500 go to market: through the ortho division’s sales force, through
independent sales reps (ISRs), or through a hybrid effort that involves both?

In order to decide through which alternative FormPrint should move forward, we must first analyse
the pros and cons of both the alternatives:

Ortho Division’s Sales force:

Pros:

 Invaluable relationships with hospitals which can be leveraged as nearly one third of
orthopaedists at large hospitals run smaller outpatient clinics, our target segment
 Develop selling skills for non-hospital market which will be beneficial in longer run
 Loyalty of the sales force towards FormPrint
 Better and quicker demonstration of the product with persistent follow up

Cons:

 Price of the product is not compelling for salespeople who earn commissions on dollar-
volume basis, they will always want to upsell (can be resolved by appropriate changes in
compensation structure)
 Inexperience in price and financing negotiations

Independent Sales Reps (ISRs)

Pros:

 Experience in price and financing negotiations

 Better coverage to fragmented outpatient market (negated by the fact that 65% of target
clinics in three large metropolitan cities)
 Limited risk because of 60-day termination clause if sales target is not met

Cons:

 High ISR turnover (competitors using ISRs moved to in house salesforce)

 High training cost, shallow product knowledge (nature of industry requires this) and
transaction based relationship
  Unwillingness to focus on complex products and whose sales cycle is as long as 60-days

Hybrid approach will lead to channel conflict which cannot be easily resolved as most of the
physicians in the target segment are associated with large hospitals.

Therefore, on the basis of above analysis it can be substantiated that FormPrint should go with its
own in-house salesforce. This will reap benefits for them even in long run.

Q.4 Work out cost of product sold through direct sales vs. ISRs. What are the implications of this
decision? What are the organizational implications?

Cost associated with Direct sales:

No. of Salesperson 6
Cost for one orthopaedic salesperson
(carrying complete product portfolio) $ 4,00,000.00
Cost for one orthopaedic salesperson
(carrying Ortho500 only) $ 1,00,000.00
Total Cost $ 6,00,000.00

Cost Associated with ISRs:

Price of Ortho500 $ 68,000.00

Number of
units sold for
cost equal to
Commission Cost per unit that of direct
based cost sold salesforce
According to
Wittenburg 28% $ 87,040.00 7
According to
Wittenburg With
Manager 37% $ 93,160.00 6
According to
Sophia 23% $ 83,640.00 7

The implications of going with in-house direct salesforce are as follows:

 Complete control and monitoring of the sales channel along with feedback on the product,
important for product managers
 Clear message to competitors that they value this product equally and have faith in their
salesforce
 Might lose on distribution in certain markets, thereby leaving opportunities for competitors
 Sending a positive message within the organization that they trust their in-house salesforce,
which can be a stepping stone in developing cordial relationship between sales team and
corporate division
Q.5 Besides efficient and effective distribution channels, what other factors are important for
successful marketing of this product?

 Work to build loyalty among customers. The most valuable customers are loyal and in turn
profitable because they are not costly to serve. Loyal customers buy more, cost of serving
them declines, and they are less expensive than acquiring new customers. The way to do this
is build a close relationship with the orthopaedist based on trust. If the orthopaedist trusts
the FormPrint seller they will have complete confidence in their purchase of the Ortho500
and network effect will come into play leading to higher sales.
 Adjust commission percentages for the Ortho500. This would be done in order to motivate
the sales team to meet their quotas and maximize commission compensation because
Ortho1300, 2000, and 700, are much pricier meaning more commission made if their sale is
done.
 Identification of influencers in the decision-making process like physicians given the
uncertainty around reimbursement rate holds high importance and others decision units will
not be willing to pay heed to such large ticket items as overall clinic spending is down.