Improving marketing cost effectiveness a study of medtronic company in ho chi minh city vietnam

In order to discover the issue that Medtronic facingwith, meeting with two sales managers of the Business Unit as well as relevant salesrepresentative has been implemented Through interv

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Luc Tuan Tu

IMPROVING MARKETING COST-EFFECTIVENESS

A STUDY OF MEDTRONIC COMPANY IN HO CHI

MINH CITY - VIETNAM

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City – Year 2020

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-Luc Tuan Tu

IMPROVING MARKETING COST-EFFECTIVENESS

A STUDY OF MEDTRONIC COMPANY IN HO CHI

MINH CITY - VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Assoc Prof Dr NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2020

EXECUTIVE SUMMARY

Recently, the profit and loss of Medtronic has experienced a decrease versus its target.This circumstance is mostly impacted by increased number and amount of marketingactivites The main problems belong to the low efficiency of current marketingactivities, reflecting through the low number of customer coverage while the spentmarketing budget exceed it limit In order to discover the issue that Medtronic facingwith, meeting with two sales managers of the Business Unit as well as relevant salesrepresentative has been implemented

Through interviewing relevent subjest, using data provided by the company and usingrelated theory, main problem was identified as low-cost effectiveness of marketingactivities Towards main problem, three potential causes have been found are Lack orLow frequency of following up activities, Low competencies of sales team in order tocascade the impacts of the marketing events or Focus on wrong types of promotionactivities After analysis, main cause that chosen to solve is Focus on wrong types ofpromotion activities This study will focus on solutions to address the cause in order tohelp the company to improve their Profits and Loss

Without the encouragement, guidance and support of Prof Nguyen Thi Mai Trang andother teachers, the entire master-level project would not be possible I would like tosend my appreciation to my advisors It has been a pleasure working with you on thisproject

I would like to thank my friends and family for greatly supporting me while I was working on my research Your Patience, understanding and respect were greatly appreciated.

TABLE OF CONTENTS

1 INTRODUCTION 1

1.1 GLOBAL MEDTRONIC CORPORATION 1

1.2 VIETNAMESE MEDTRONIC CORPORATION 2

1.3 PINNACLE HEALTH EQUIPMENT CORPORATION 3

2 SYMPTOMS 4

3 PROBLEM IDENTIFICATION 5

3.1 POTENTIAL PROBLEMS 5

3.1.1 OVER-FOCUS ON LONG-TERM ACTIVITIES 8

3.1.2 NOT SATISFY THE CUSTOMERS ACADEMIC REQUIREMENTS 9

3.1.3 INSUFFICIENT KEY HOSPITAL MANAGEMENT 10

3.1.4 LOW COST-EFFECTIVENESS OF REGULAR MARKETING ACTIVITIES 12

3.2 PROBLEM VALIDATION 15

4 POTENTIAL CAUSES 17

4.1 SALES REPRESENTATIVES LOW COMPETENCIES, UNABLE TO CASCADE THE IMPACTS OF EVENTS 18

4.1.1 TRAINING ARE NOT PRACTICAL 18

4.1.2 LACK OF CONTENT-CASCADING MATERIALS 19

4.2 LACK OR LOW FREQUENCY OF FOLLOWING ACTIVITIES – INSUFFICIENT SALES REPS TO COVER 21

4.3 FOCUS ON WRONG TYPES OF PROMOTIONAL ACTIVITIES 22

4.3.1 FOCUS ON WRONG CUSTOMER SEGMENTATION 22

4.3.2 NOT CLEAR INTERPRETATION ABOUT CUSTOMERS INSIGHTS 24

4.4 CAUSE VALIDATION 25

5 ALTERNATIVE SOLUTIONS 26

5.1 ALTERNATIVE SOLUTION 1: RE-ALLOCATE EXPENDITURE TO OTHER CUSTOMERS’ GROUP BY DIFFERENT APPROACH 26 5.2 ALTERNATIVE SOLUTION 2: CONDUCT A SURVEY WITH DOCTORS TO

5.3 SOLUTION JUSTIFICATION 29

6 CHANGE PLAN DESIGN 31

6.1 OBJECTIVES 31

6.2 TARGETED OUTCOMES 31

6.3 ACTION PLAN IMPLEMENTATION 31

7 CONCLUSION 34

8 SUPPORTING INFORMATION 35

8.1 METHODOLOGY 35

8.2 INTERVIEW GUIDE 35

8.3 TRANSCRIPTS 37

REFERENCES 45

Cardiac Vascular GroupEarning before Interest and TaxFiscal Year

Healthcare ProfessionalsKey Opinion LeadersKey performance indexMinimally Invasive Therapies GroupMedtronic Endovascular Aneurysm RepairMedtronic Thoracic Endovascular Aneurysm RepairProfits and Loss

Quarter 3Round Table DiscussionRestorative Therapies GroupTraining & Education

Year to Date

LIST OF TABLES

Table 1: APV Profit & Loss (PnL) – Actual vs Target

Table 2: APV Profit & Loss (PnL) – Gap

Table 3: APV FY20 P&L - Marketing report

Table 4: Pinnacle Performance Report

Table 5: Quota Tender Report

Table 6: Financial Report – Spent Budget YTD Q3 FY20

Table 7 Training programs in 2019

Table 8 Quantity of customers and KOLs by portfolio

Table 9: Quantity of engaged implanters by sales rep

Table 10 Cost & benefits for alternative solution 1

Table 11 Cost & benefits for alternative solution 2

Table 12 Action plan (Author synthesis)

Table 13 Detailed description & objectives for specific tasks

LIST OF FIGURES

Figure 1: APV Organization Structure

Figure 2: Pinnacle Organization Structure

Figure 3: Training & Education Survey Report

Figure 4: Cause-and-Effect map

Figure 5 Fish bone diagram of main problems and potential causesFigure 6 Medtronic marketing materials

Figure 7 Cause-and-Effect map

Figure 8 Gantt-chart for action plan (Author synthesis)

1 INTRODUCTION

1.1 Global Medtronic Corporation

Medtronic PLC is a medical device company that generates the majority of its salesand profits from the U.S healthcare system but is headquartered in the Republic ofIreland for tax purposes Medtronic has an operational and executive headquarters inFridley, Minnesota in the U.S In 2015, Medtronic acquired Irish–tax registeredCovidien (a U.S tax inversion to Ireland from 2007), in the largest U.S corporate taxinversion in history, which enabled Medtronic to move its legal registration from theU.S to Ireland Medtronic operates in 140 countries and employs over 86,000 people

Medtronic was founded in 1949 in Minneapolis by Earl Bakken and his brother-in-law,Palmer Hermundslie, as a medical equipment repair shop Through his repair business,Bakken came to know C Walton Lillehei, a doctor of heart surgery at the University

of Minnesota Medical School The deficiencies of the pacemakers of the day weremade painfully obvious following a power outage over Halloween in 1957, whichaffected large sections of Minnesota and western Wisconsin A pacemaker-dependentpediatric patient of Lillehei died because of the blackout The next day, Lillehei spokewith Bakken about developing some form of battery-powered pacemaker Bakkenmodified a design for a transistorized metronome and created the first battery-poweredexternal artificial pacemaker

The company expanded through the 1950s, selling equipment built by other companiesbut also developing custom-made devices Bakken built a small pacemaker that could

be strapped to the body and powered by batteries Work in the new field later produced

an implanTable pacemaker in 1960 The company-built headquarters in theMinneapolis suburb of St Anthony, Minnesota, in 1960 and the company moved toFridley in the 1970s Medtronic's main competitors in the cardiac rhythm field includeBoston Scientific and St Jude Medical In 1998, Medtronic acquired Physio-Controlfor $538 million

According to a press release, the fiscal year 2019 revenue increased by 2% to $30.557billion The net earnings in the fiscal year were $4.631 billion or $3.41 per dilutedshare The non-generally accepted accounting principles (non-GAAP) earnings were

$7.089 billion or $5.22 in diluted earnings per share The cash flow from operationswas $7.007 billion The free cash flow was $5.873 billion compared with $3.616billion from the year prior, a 62% increase And Medtronic, currently, is the largestMedical Device Company in the world.

1.2 Vietnamese Medtronic Corporation

Vietnamese Medtronic Corporation was established in 2016 and a subsidy of GlobalMedtronic Like global company, Vietnamese Medtronic Corporation focus on 4therapeutic Areas: Cardiovascular Group (CVG), Diabetes, Restorative TherapiesGroup (RTG) and Minimally Invasive Therapies Group (MITG) In each Group, it will

be divided into small sub-groups based on Therapeutic Treatment In CVG, Medtronichas 4 sub-groups as: Aortic, Peripheral & Venous (APV), Cardiac Rhythm and HeartFailure (CRHF), Cardiac Surgery (CS) and Coronary In this thesis, we only focus onAortic, Peripheral & Venous Group (APV)

Figure 1: APV Organization Structure

(Source: Medtronic internal structure)For the current group, as above figure, Medtronic has 12 salespeople, including 02sales managers and 01 national sales manager (Mr Jason Dang) Total other 9 salesrepresentative will cover national wide but mainly focus on Hanoi, Ho Chi Minh, DaNang and Can Tho

1.3 Pinnacle Health Equipment Corporation

According to Pharmaceutical & Medical Device Regulation, a foreign company is notallowed to join in Supply & Distributing sectors in Pharmaceutical Industry Only aVietnamese Corporation with 100% Vietnamese Capital can participate and conductcustomer’s selling Therefore, the potential market for Vietnamese Distributor isannually growing

Pinnacle Health Equipment Corporation is a young distributor established in 2013 andwork in pharmaceuticals and medical device Although the time length ofestablishment has been a short time but the leadership teams has had over 20 years ofexperience in Pharmaceutical Business Operations Pinnacle Strategy for 2020-2025and the vision to 2030 is to continue to develop as a distributor for multi-nationalcompanies and develop on two areas: Trading and Services (To supply and distributehigh-quality products with reasonable price to all Vietnamese Customers) and Imports

& Exports (Exclusive import and distribution of World-class medical equipment and Supplies)

Figure 2: Pinnacle Organization Structure

(Source: Pinnacle internal structure)

For the collaboration with Medtronic Vietnam, currently, Pinnacle is the distributorsdedicated to managing the Medical Device Business in the Middle (18 Provinces) &The South (17 Provinces) of Vietnam The total workforce is 13 labors which salesteam have 8 staff, focusing mainly in the South of Vietnam

2 SYMPTOMS

To explore the possibilities of this FPS project We conduct Intake and Externalexploration Base on theory, the intake meeting needs to be prepared by acomprehensive external exploration According to the internal data, the total target forthis Fiscal Year (FY) 2020 is 4.3 MUSD, Growth rate at 7.4% and the Profit and Loss(PnL) or Earnings Before Interest and Tax (EBIT) is 2.2MUSD The objectives fromthe company will have two Key Performance Indexes (KPIs) that includes The Ratiobetween actual Revenue versus Target (Performance) and the ratio between the actualProfit and Loss (PnL) versus the targeted one Based on the Figure 1, the result ofRevenue Performance seems to be on-track where the running rate is 117% (Quarter 1

& Quarter 2) For the second KPI, we see the reduction between the actual figures and the targeted one

The profits and loss is the most paramout importance for Medtronic APV Vietnam.Since Vietnam Company is a independent branch of Medtronic Global, VietnameseLeaders are allowed to control budget spending as well as the revenue, but the PnLhave to meet the target, especially the Operationg Profit with Allocations Therefore,althought Vietnamse Medtronic Branch achieved its target in terms of Revenue, theyactually did not get incentives due to the negative gap of Profits which reflectedthrough the Budget overruns in the analyzed Fiscal Year (FY2020)

Gross Margin 752.4 875.7 950.5 865.1 3,443.7 629.6 762.9 910.4 881.6 3,184.5

R&D 3.8 4.1 3.3 4.8 15.9 5.0 5.0 5.0 5.0 20.0 Marketing 183.3 65.0 110.7 187.8 546.9 46.2 90.4 82.2 74.8 293.7 Direct Distribution 176.0 193.9 157.0 172.4 699.3 156.4 162.3 166.2 165.2 650.0

Direct Overhead 363.1 263.0 270.9 365.0 1,262.0 207.6 257.7 253.4 245.0 963.7 Operating Income without Allocations 289.3 612.8 649.5 500.1 2,051.7 421.9 505.2 657.0 636.6 2,220.8

Total Other Operating (Inc)/Exp 6.0 2.0 3.0 4.0 15.0

Operating Profit without Allocations 283.3 610.7 649.5 496.1 2,039.6 421.9 505.2 657.0 636.6 2,220.8 Indirect Distribution 30.8 19.2 39.5 40.8 130.3 38.5 35.9 35.9 38.3 148.7 Operating Profit with Allocations 252.5 591.6 610.1 455.3 1,909.4 383.4 469.2 621.1 598.3 2,072.1

Table 1: APV Profit & Loss (PnL) – Actual vs Target

(Source: Medtronic internal structure)

Table 2: APV Profit & Loss (PnL) – Gap

(Source: Medtronic internal structure)The number of this table belongs to FY20 (Feb 2019-Jan2020), therefore, the data wasnot impacted by COVID 19 situation

Table 1 shows the data in Q3 &Q4 when the Operating Profit with Allocations stillwent down to minus 11K and minus 143K respectively Therefore, the total PnLlanded at minus 162.7KUSD

If we deep dive into the analysis, the minus figures come mostly from Marketingexpenses, such as Marketing – Training & Education and Marketing – Product relatedexpenses For other number as Direct Overhead (Staff-related expense like Salaries,Incentives, Travelling and working expenses), it is not significant minus and does notimpact critically in the PnL Therefore, this is one of some points we need to analyze

to find out what can Medtronic do to improve this KPI

After that, we want to identify the reason why those cost is excessive than plannednumber, therefore, we conducted an Interview with two sales Managers of APVportfolio to identify the potential problems According to Mr Thao Pham – thenorthern sales manager of Medtronic APV, the reason why his team spend hugeexpenditure on Marketing activities:

We need have many aspects to concentrate in order to drive the APV performance in Hanoi, especially Aortic Franchise, currently, we have only 10-

15 Key Opinion Leaders in Aortic Therapy and most of them required continuously update of knowledge For short-term activities, we mostly engage them by conducting series Educating Activities for Thoracic Endovascular Aneurysm Repair (TEVAR) or Endovascular Abdominal Aneurysm Repair (EVAR) and in those activities, those KOLs will share their experience as speakers, which help to enhance their reputation The cost of engaging those KOLs are significant.

For the southern part of Vietnam, Mr Khai – Sales managers have a similar idea but adding more point for the excessive expense of operating

The reason why we need to spend lots of budget into marketing activities is about Peripheral & Venous therapy, in those activities, since most of doctors are newbie with the techniques, and in Vietnam, we do not have any proctors who can train back Vietnamese Doctors, therefore, we need to send them to other foreign centers in Singapore, Malaysia or Thailand, which enhance and burden the cost of Marketing.

Based on two sales managers, there are 02 potential problems that APV could bear atthis moment, and one of them is “Over-focus on Long-Term activities as Training &Education” because training new doctors at this moment but cannot give sales returns

in some upcoming quarters In order to become an implanter to support Medtronicperformance, those doctors will need to be trained at least 6-12 months to get enoughimplanted cases and acquire license from Ministry of Health The same picture will beseen in Aortic Therapy since new doctors will need to take at least 6 months to become

a licensed implanter Another potential problem is “Low cost-effectiveness of regular

Marketing activities” that reflex in the excessive amount of allocated budget perengaged customer With those current activities, to average money for each engagedcustomer will exceed $3000 per time.

Besides, according to Sharma A (1), there has been considerable research on success

of key account management which correlates to the success and cost-effectiveness ofMarketing activities, As example, Homburg et al (4) and Workman (5) show thatfirms that implement effective key account programs demonstrate better performance

in pharmaceutical industry Key accounts are defined as big customers, such as Demand Hospitals or Clinics, where their myriad of patients come to get treatment.Low management in Key accounts reflexes through low Quota in Insurance, lownumber of advocated doctors in those accounts For example, when comparingMedtronic versus competitors (Boston Diagnostic or Cook), if the number ofadvocated implanters in Bach Mai hospital is lower than Cook, as a result, the MarketShare in Bach Mai hospital will suffer a decrease in short-term period Moreover, John(2) discuss a potential problem could be Not satisfy the customers academicrequirements It could be ubiquitous in International Marketing since Marketers seems

High-to be misled by many other concerns instead of deep diving cusHigh-tomers’ insight Thismeans that all marketing activities will address wrong client’s needs, which lead to awaste of budget

Initially, It seems to have conflicts between those above problems However, when weconducts in-dept interviews with sales leaders and sales rep, the gaps between thoseproblems are obvious For example, between “Over-Focus on long-term activities” and

“Low cost-effectiveness of Marketing activities” The Long-term activities are crucialwith Medtronic Vietnam and they are totally aligned with Vietnamese Strategies,which support Medtronic to develop long-term relationships with Hospitals, Doctors inorder to retain the sustanable development for Medtronic down the road However, thequestion was raised is How many expenditure can Medtronic spend on the type ofactivities? Are they excessively spending on the activities? For the another problem as

“Low cost-effectiveness of Marketing activities”, we will discuss and review about the

comtemporary approaches of Medtronic, are those approaches proper? Do they focus

on right target customers? Or do they deliver right key messages?

In conclusion, after doing all research and explore the reality though in-dept interview,there are some key problems leading to the phenomenon, including: Over-focus onLong-Term activities as Training & Education, Low cost-effectiveness of regularMarketing activities, Low management in Key accounts, Not satisfy the customersacademic requirements

3.1.1 Over-focus on long-term activities

Obviously, the Long-term activities (according to the KPI of the company) are ofparamount importance for the sustainability of the company since their objectives is toremain the momentum of revenue in the long term The two main sources that we canrefer is from the Empirical analysis of the business problem and the Literature review

In terms of Empirical analysis, we analyze the ratio between the Long-Term and Term Impact Activities

Short-Long-Term activities is defined as educational activities, in Medtronic, Educationalactivities include Medtronic Endovascular Aneurysm Repair (MedEVAR), MedtronicThoracic Endovascular Aneurysm Repair (MedTEVAR), Medtronic Peripheral ArteryDisease (MedPAD), Medtronic EndoVenous (MedVenous) which focus on specifictherapy of treatment By attending those Training & Educating Program (T&EProgram), newcomers will have chance to learn from basic anatomy, physiology tocurrent guideline and current treatment methods of those disorders New doctors willalso be trained to know about the product knowledges and have chances to practice theproducts in Simulator System For example, for a stent graft, newcomers will use thesimulator systems to simulate the patient vascular systems, and they will have demoproducts – which is in the real size of the real products to use in the simulators Bydoing and attending those workshops, new commers will get the certificates or licensesand are allowed to do the procedures in your hospitals

Short-term activities are defined as activities that address an urgent objections orrequirements from sales team or customers, for example Round Table Discussionwhere a representative can introduce a new therapy for customers or Expert sharing

symposium where proctors can share experiences for others In those activities, livecases with Medtronic products can be utilized to enhance the experiences of doctorswith Medtronic’s products.

Aortic and Peripheral Vascular (APV)

Marketing 183.3 65.0 110.7 187.8 546.9 46.2 90.4 82.2 74.8 293.7 Marketing - T&E Program 55.0 20.8 38.8 67.6 182.2 14.3 28.0 25.5 23.2 91.0 Marketing - Product related programs 128.3 44.2 72.0 120.2 364.7 31.9 62.4 56.7 51.6 202.6

Table 3: APV FY20 P&L - Marketing report

(Source: Medtronic internal data)

So as you can see, total planned budget spending to Training & Education contributes31% in total Marketing Budget Besides, the actual spent budgets for Training &

Education – Long Term impacted activities was just only excessive in the 1st quarter

In the Second Quarter, the number is reduced significantly because in some tophospitals, they prefer to conduct those activities from Apr to Jun

3.1.2 Not satisfy the customers academic requirements.

Figure 3: Training & Education Survey Report

(Source: Medtronic internal data)Another resource that we can check is the feedback from the customers for theTraining & Education programs In every program, thanks to the electronic feedback

form in which we scale from 1-5 (Very Bad, Bad, AccepTable, Good, Very Good) Bydoing this, we can have another view of how the Customers behave/observe and assessthe program Hence, as you can see in the above graphs, the feedback from Customersmostly are at Level 4, and 5 So, it also proves that those marketing activities bringbenefits for Medtronic, get a high level of satisfaction from target doctors, which fulfillthose insights about being educated (for new doctors) and enhance the reputation (forspeakers), therefore, they are required to be continued.

On the interview of two sales managers, they all have a belief that T&E programs play

a vital role for the success of Medtronic in this market:

I think that the foremost difference between Medtronic and its rivals is about T&E programs and Doctors are well aware about that Whenever they want to learn new things or want to travel to other nations to attend necessary conferences, the first option that they have in their minds will be Medtronic since they are all acknowledged that Medtronic will sponsor for them to help them to enhance their knowledge and skills Undoubtedly, it is of paramount importance for us.

According to Mr, Quang – Sales representative, that is clear that for most of survey orthe result from interviews, the marketing activities has been received good feedbackfrom key customers in terms of giving them benefits for short and long terms

3.1.3 Insufficient key hospital management

Regarding the Key Hospital Management, since doctors, including hospital principals,contribute to Medtronic revenue through decision making processes in terms of usingmedical products or bidding With a good hospital management, Medtronic can utilizethe cost and gain better PnL Moreover, Medtronic is a Business-to-Business firm.Because of Vietnamese regulations, Medtronic cannot directly sell products toHospitals or Patients and is required to go with a local distributor In a medical deviceindustry, a distributor plays a crucial role because they have a separate sales team topromote those APV products Therefore, if Medtronic cannot well manage theDistributors, Marketing activities will be in vein if there is no following up people.According to the internal data where Medtronic follow up with the distributor The

total sales in and Sales out for Pinnacle seems to be on-track at this moment for whole APV portfolio They have recruited more 2 staffs for APV portfolio to cover Da Nang

& Khanh Hoa (two new territories) Medtronic has no more data to show but the customers seem to have high satisfactions for distributor generally

Table 4: Pinnacle Performance Report

(Source: Medtronic internal data)When going in the main figure, the total quota number in Tender of some bigaccounts, which indicates how effectiveness the distributor’s work is? And it is the keyKPI that we are working with all distributors

No Hospital Potential (USD)-2019 Medtronic Quota (USD) MS%

Internal Data - Distributor Analysis FY19

Table 5: Quota Tender Report

As the result, for main key southern accounts in Ho Chi Minh, Danang, Hue, Can Tho,the total quota of Medtronic contributes around 60% to 70% of all market, includingother competitors in Aortic, Peripheral & Venous market Only in Hoan My CL andCan Tho City, Pinnacle has not worked well but the contribution of two hospitals isquite small comparing to total number In summary, Pinnacle has been successful tolist APV products into tender list and get market share of quota being around 67% that

is accepTable number for Medtronic

3.1.4 Low cost-effectiveness of regular marketing activities

It goes without saying that the role of effectiveness impacts both the Revenue and PnL

of the company Coming to the regular short-term marketing activities, according tothe internal data, currently, Medtronic APV team conducted series activities with theKPI as below Table:

No Activity Spent budget Quantity of engaged $ per customer

customers

546,900

Internal Data - Budget report Dec 2019

Table 6: Financial Report – Spent Budget YTD Q3 FY20

(Source: Medtronic internal data)

As you can see, the current structure for Marketing Activities is allocated mostly for

3rd party congress The 3rd party congresses are events organized by a governmental congress in Vietnam or South East Asia in which Medtronic will invite doctors to joinand sponsor for all event-related expenses such as Accommodation, Transportation, Honorarium, ect In Q2 &Q3, Medtronic spent 158K for this type of event and

engaged only 20 doctors to join, the average fee for each doctor is the highest at 8.2K.For proctorship, Medtronic spent 85K to engage 43 proctors who are speakers in local

or regional activities, followed by other types as Workshops, Referral programs and Round Table Discussion

We interviewed and seek opinions from Mr Quang Vien (Sales representative) aboutthis point:

The effectiveness of inviting customers to join 3 rd party congresses is extremely good in terms of educating them about new therapy and sharing experience However, I think that some of those benefits could be achieved through local congresses instead of regional ones For example, for Aortic, since we have developed the therapy in Vietnam for almost 10 years, some Vietnamese proctors, currently, have sufficient experience and knowledge to teach others As

a result, some events can be replaced by other local ones to reduce cost but still achieve the objectives.

The effects of those activities, currently, is good, which reflects in the good

momentum of sales revenue However, there are some potential activities that we can

13

do to reduce the cost but increase the Reach rate of customers as well as the Frequency

of engagement

Based on (5), the low-cast marketing strategies have unique benefits in terms of Return

of Investment And there are myriad methods being able to maintain the effectiveness

of business without burdening the budgets The key point is to satisfy the customersacademic requirements and improve the cost-effectiveness of marketing mix inPharmaceutical industry By managing the budget with an eye on what the competition

is doing Budgeting must be push-pull, with the aim allocating or reallocatingresources based on knowledge of which plans ware working and which aren’t Moreimportant, the partnership with clients is crucial to maintain in order to reduce theengagement

By (6), most of enterprises’ current revenues comes from existing customers instead ofnew ones Focusing budget on predisposed prospective clients is a effective way todevelop new business without overfunding, therefore in order to increase theproductivity, company need to concentrate on predisposed customers with appropriatestrategies to shooting in the dark with costly mass marketing Another ideas, according

to (7), increase selling skills for sales team in order to increase the effectiveness ofeach call could be considered By facilitating internal training program for associatesand presents contact information for great many external resources available forpurchase, which perfectly can be used in Medtronic since the current allocated budgetfor Round Table Discussion is still low But in case that the company can increase thenumber of Round Table Discussion, Medtronic, certainly, engage more customers withlower engaging costs

In summary, the Cause and Effect map is below:

Figure 4 Cause-and-Effect map

After idenfifying possible problems as mentioned above such as Over-focused on longterm activities; Not satisfy the customers academic requirements, Poor key hospitalmanagement or Low cost-effectiveness of regular marketing activities The nextinterview with Mr Khai & Mr Thao was organized in order to check whether theliteratures applied in the case of Medtronic and deeply explored for further detail aboutpotential problems which were found in the first interview Based on literatures,previous researches have mentionsed the impact of Low cost-effectveness ofmarketing activities since the low concentration on some key Key Opinion Leaders.New part will support to validate the problems

3.2 Problem validation

As a matter of fact, one of the main of marketing objectives is to achieve the Profit andLoss And currently, as showne in Table 6, there are many kinds of sponsorship tovarious practice groups, which can brings more of the firm’s resources to reach clientswhile still offering strong returns, setting aside marketing funds for specific practicegroups and target on key segmentation can be considered as a effective way (13).Moreover, according to Table 6, the coverage rate of doctor in Medtronic is,

obviously, can be enriched The engaged budget per customer of 3rd party congressesand Proctorships are extremely higher than other activities, which raise a questionabout the real effectiveness of those activities compared to others Therefore, it isacutally one factor that we can change to rectify the issue and improve profits.Moreover, beside literature, based on inteviews, the sale representative and two salesmanagers all concur on the low cost-effectiveness of current engaging activities,reflecting in the high amount of spent money but low reachable number of doctors.This means that the problem as “Low cost – effectiveness of marketing activities” has

a high of potential chance to improve and would be considered to be the main one.For other problem like “Over-focused on long term activities, according to Table 3,It’s clear that the total allocated budgets for T&E activites has accounted for onlyaround 25% of total markeing expenditure Moreover, considering the impact ofTraining & Education activities in terms of Market Access, it should still be beneficialfor APV portfolio at this moment, especially to enhance the reputation of currentimplanters as well as expanding market to new accounts In fact, long-term activities,especially in developing new customers, are crucial for any business as the long-termresults of marketing activities is invaluable chain, which facilitates companies tomaintain customers’ engagement Over focusing on short-term ones potentiallybecome negative later on Any marketing campaing, regardless of its timing, develops

in a certain pattern need to be drived toward sustainable results that means long-termviews (08) Besides, T&E activities are solely ones that can create harmany betweenlong-term strategies and Short-term objectives, they mostly can satisfy the short-termdemands (achieve sales performance) as well as long-term development (youngdoctors development) This means that they will help to avoid being disrupted, givemore effective innovations and enhance branding of Medtronic, embrace change formedtronic in ther future (09) Therfore, this problem cannot be the main one

Moving to “Not satisfy the customers academic requirements”, the total results ofcustomers’s feedback are excellent on all assessed programs It is obvious that thefeedbacks of customer are of paramount importance (10) And measuring customersatisfaction is very challenging Their overall satisfaction of the product, the likelihood

of repeat business and recommending their business to other customers The reviewand testimonials received are always positive telling that the overall quality of theproduct, reliability and fulfilling my customer’s needs are all met (11) With aboutpoints, this seems to be a good field that Medtronic need to maintain the result.

Looking at Insufficient key hospital management, the tender quota and theperformance by hospitals from Pinnacle are the strongest evidence for thecontemporary situation Certainly, positioning the key hospital management role in theorganization will broaden its boundary-spanning role and the need for a fast reportingroute to top management In practice, while it may ne argued that the origins of KeyHospital Management lie in the sales function, there is mounting evidence to questionwhether the Management activities should be retained under sales or set up as aseparate entity at general management level (12) Briefully, the exellent hospitalmanagement relects through sale-related relationships and results

In conclusion, the main problem is identified as “Low cost-effectiveness of marketing activities”

4 POTENTIAL CAUSES

Based on the information collected from inteview, the main problem as “Low effectiveness of marketing activities”, main ideas from literature are summarized in

cost-the following fish bone diagram

Figure 5 Fish bone diagram of main problems and potential causes

As identified in aforesaid part, the main problem is Low cost-effectiveness ofmarketing activities which couse higher ratio between Renenue versus PnL Thus inorder to find out the factors that possible affect the figure, we continue to conduct in-depth interview with Mr Khai, Mr Thao and other sales reps.

4.1 Sales representatives low competencies, unable to cascade the impacts

of events

4.1.1 Training are not practical

Currently, the trainings in Medtronic mostly have focused only in product-related topic

as demonstrating below:

Internal Data - Customer Report 2019

Table 7: Training programs in 2019

We found out that, with those trainings, the skills that Sales Reps were trained are justonly technical skills, which directly support them to come to the Cath Lap and do theAortic Intervention or Peripheral Intervention with doctors No subject is nominated toenhance selling skills, social skills or dealing skills for those sales reps, therefore, they

do not know or have no awareness about how to discuss about marketing activitiesfollow up

Moreover, as Mr Khai mentioned in the interview:

At currently, I think that one of the main cause that our sales tem do not follow

up the activities that we do as they do not know how to do it Initially, we have not had trainings in order to focus on selling skills since I did not think that it

was suiTable at this company, the number of doctors are quite limited and the sales reps are just required to excel in product knowledge and the distributor’s rep will do the follow up.

As response from Mr Khai, due to the total number of customers are limited (around

400 healthcare professionals), he did not build up a system training which supportsales team to be confident in terms of selling skills and understanding customers’sinsight properly

We mostly have trainings about product knowledge, product specifications and sharing case studies in which we can discuss with overseas sales reps, especially for some touching cases or complicated anatomy To follow up the content of the event, mostly, I think the reponsibility belongs to the distributors’ rep since we focus more on givign consultancy to doctors

From the responses from Mr Quang – sales representative, in one year, the sales teamjust receive 1 training course – comes from regional team (singaporean team) inEnglish, which caused some challenges for them to understanding the training

According to literature (13), sale rep visits are always of paramount importance inorder to transmit information or product’s branding Following the call and the contentalso belongs to the sales reps responsibilities (14), especially in Medical device andPharmaceutical companies Distributors should always be alternative solutions and not

be the main one

4.1.2 Lack of content-cascading materials

Another sub-cause could be the lack of following up marketing materials After anyevents, such as Workshop or 3rd Party Congress, there are myriad of speeches If thesales team leave the events alone, the effects of the events only last for few monthsafter the events

The current materials that Medtronic have are demonstrated below:

Figure 6 Medtronic marketing materials

Beside those materials, there are no other ones which can help to support to cascadethe content of a specific events All of materials are just products-based and aredesigned to support sales reps to discuss with customers about product knowledge.Content-cascading materials, such as leaflets or emails, after the occasions will help toremind doctors about what is the main contents of the event For example, in aworkshop, when Medtronic invest $5000 in order to invite a foreign doctors to shareabout their experience in a complicated procedure in human aorta If the sales teamhave the material right after the event, they can utilize to remind those doctors about it,increasing the frequency and effectiveness of the event without extra budgets

Based on literature (15), once again, the importance of event-related materials arehighlighted as a tool to cascade the content of any event Certainly, in order to use thematerial effectively, the sales team are required to absorb the comprehensiveknowledge of the event and have sufficient selling skills to deliver That is the reasonwhy Medtronic staff seems to avoid the task

One of my perennial memory was that, after the National Heart Congress in Hanoi, we engaged total 6 speakers, all of them are our main KOLs, such as

Dr Nguyen Manh Hung, Dr Le Ngoc Quang, and we also invited Dr Alex