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

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

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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 marketing activites The main problems belong to the low efficiency of current marketing activities, reflecting through the low number of customer coverage while the spent marketing budget exceed it limit In order to discover the issue that Medtronic facing with, meeting with two sales managers of the Business Unit as well as relevant sales representative has been implemented

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

ACKNOWLEDGMENT

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

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 GLOBALMEDTRONICCORPORATION 1

1.2 VIETNAMESEMEDTRONICCORPORATION 2

1.3 PINNACLEHEALTHEQUIPMENTCORPORATION 3

2 SYMPTOMS 4

3 PROBLEM IDENTIFICATION 5

3.1 POTENTIALPROBLEMS 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 PROBLEMVALIDATION 15

4 POTENTIAL CAUSES 17

4.1.SALESREPRESENTATIVESLOWCOMPETENCIES,UNABLETO CASCADETHEIMPACTSOFEVENTS 18

4.1.1 TRAINING ARE NOT PRACTICAL 18

4.1.2 LACK OF CONTENT-CASCADING MATERIALS 19

4.2.LACKORLOWFREQUENCYOFFOLLOWINGACTIVITIES– INSUFFICIENTSALESREPSTOCOVER 21

4.3.FOCUSONWRONGTYPESOFPROMOTIONALACTIVITIES 22

4.3.1 FOCUS ON WRONG CUSTOMER SEGMENTATION 22

4.3.2 NOT CLEAR INTERPRETATION ABOUT CUSTOMERS INSIGHTS 24

4.4.CAUSEVALIDATION 25

5 ALTERNATIVE SOLUTIONS 26

5.1ALTERNATIVESOLUTION1:RE-ALLOCATEEXPENDITURETOOTHER CUSTOMERS’GROUPBYDIFFERENTAPPROACH 26

5.2ALTERNATIVESOLUTION2:CONDUCTASURVEYWITHDOCTORSTO UNDERSTANDDEEPLYCUSTOMERS’INSIGHTS 28

5.3SOLUTIONJUSTIFICATION 29

6 CHANGE PLAN DESIGN 31

6.1 OBJECTIVES 31

6.2 TARGETEDOUTCOMES 31

6.3 ACTIONPLANIMPLEMENTATION 31

7 CONCLUSION 34

8 SUPPORTING INFORMATION 35

8.1 METHODOLOGY 35

8.2 INTERVIEWGUIDE 35

8.3 TRANSCRIPTS 37

REFERENCES 45

ABBREVIATION

CRHF Cardiac Rhythm and Heart Failure

EBIT Earning before Interest and Tax

MITG Minimally Invasive Therapies Group

MedEVAR Medtronic Endovascular Aneurysm Repair

MedTEVAR Medtronic Thoracic Endovascular Aneurysm Repair

T&E Training & Education

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 causes Figure 6 Medtronic marketing materials

Figure 7 Cause-and-Effect map

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

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1.1 Global Medtronic Corporation

Medtronic PLC is a medical device company that generates the majority of its sales and profits from the U.S healthcare system but is headquartered in the Republic of Ireland for tax purposes Medtronic has an operational and executive headquarters in Fridley, Minnesota in the U.S In 2015, Medtronic acquired Irish–tax registered Covidien (a U.S tax inversion to Ireland from 2007), in the largest U.S corporate tax inversion in history, which enabled Medtronic to move its legal registration from the U.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 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 were made painfully obvious following a power outage over Halloween in 1957, which affected large sections of Minnesota and western Wisconsin A pacemaker-dependent pediatric patient of Lillehei died because of the blackout The next day, Lillehei spoke with Bakken about developing some form of battery-powered pacemaker Bakken modified a design for a transistorized metronome and created the first battery-powered external artificial pacemaker

brother-in-The company expanded through the 1950s, selling equipment built by other companies but 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 the Minneapolis suburb of St Anthony, Minnesota, in 1960 and the company moved to Fridley in the 1970s Medtronic's main competitors in the cardiac rhythm field include Boston Scientific and St Jude Medical In 1998, Medtronic acquired Physio-Control for $538 million

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

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

1.2 Vietnamese Medtronic Corporation

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

be divided into small sub-groups based on Therapeutic Treatment In CVG, Medtronic has 4 sub-groups as: Aortic, Peripheral & Venous (APV), Cardiac Rhythm and Heart Failure (CRHF), Cardiac Surgery (CS) and Coronary In this thesis, we only focus on Aortic, 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 02 sales managers and 01 national sales manager (Mr Jason Dang) Total other 9 sales representative will cover national wide but mainly focus on Hanoi, Ho Chi Minh, Da Nang and Can Tho

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1.3 Pinnacle Health Equipment Corporation

According to Pharmaceutical & Medical Device Regulation, a foreign company is not allowed to join in Supply & Distributing sectors in Pharmaceutical Industry Only a Vietnamese Corporation with 100% Vietnamese Capital can participate and conduct customer’s selling Therefore, the potential market for Vietnamese Distributor is annually growing

Pinnacle Health Equipment Corporation is a young distributor established in 2013 and work in pharmaceuticals and medical device Although the time length of establishment has been a short time but the leadership teams has had over 20 years of experience in Pharmaceutical Business Operations Pinnacle Strategy for 2020-2025 and the vision to 2030 is to continue to develop as a distributor for multi-national companies and develop on two areas: Trading and Services (To supply and distribute high-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 distributors dedicated to managing the Medical Device Business in the Middle (18 Provinces) & The South (17 Provinces) of Vietnam The total workforce is 13 labors which sales team have 8 staff, focusing mainly in the South of Vietnam

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To explore the possibilities of this FPS project We conduct Intake and External exploration Base on theory, the intake meeting needs to be prepared by a comprehensive external exploration According to the internal data, the total target for this 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 from the company will have two Key Performance Indexes (KPIs) that includes The Ratio between actual Revenue versus Target (Performance) and the ratio between the actual Profit and Loss (PnL) versus the targeted one Based on the Figure 1, the result of Revenue 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, Vietnamese Leaders are allowed to control budget spending as well as the revenue, but the PnL have to meet the target, especially the Operationg Profit with Allocations Therefore, althought Vietnamse Medtronic Branch achieved its target in terms of Revenue, they actually did not get incentives due to the negative gap of Profits which reflected through the Budget overruns in the analyzed Fiscal Year (FY2020)

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

(Source: Medtronic internal structure)

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

Target Actual

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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 was not impacted by COVID 19 situation

1 and Quarter 2, the Profit and Loss is still miss 8.7K USD

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

If we deep dive into the analysis, the minus figures come mostly from Marketing expenses, such as Marketing – Training & Education and Marketing – Product related expenses For other number as Direct Overhead (Staff-related expense like Salaries, Incentives, Travelling and working expenses), it is not significant minus and does not impact 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

GAP-Y2019

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After that, we want to identify the reason why those cost is excessive than planned number, therefore, we conducted an Interview with two sales Managers of APV portfolio to identify the potential problems According to Mr Thao Pham – the northern sales manager of Medtronic APV, the reason why his team spend huge expenditure 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 at this 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 Medtronic performance, those doctors will need to be trained at least 6-12 months to get enough implanted cases and acquire license from Ministry of Health The same picture will be seen 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

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Marketing activities” that reflex in the excessive amount of allocated budget per engaged customer With those current activities, to average money for each engaged customer 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 of Marketing activities, As example, Homburg et al (4) and Workman (5) show that firms 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, low number of advocated doctors in those accounts For example, when comparing Medtronic versus competitors (Boston Diagnostic or Cook), if the number of advocated implanters in Bach Mai hospital is lower than Cook, as a result, the Market Share 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 academic requirements 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 This means that all marketing activities will address wrong client’s needs, which lead to a waste of budget

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

“Low cost-effectiveness of Marketing activities” The Long-term activities are crucial with Medtronic Vietnam and they are totally aligned with Vietnamese Strategies, which support Medtronic to develop long-term relationships with Hospitals, Doctors in order to retain the sustanable development for Medtronic down the road However, the question was raised is How many expenditure can Medtronic spend on the type of activities? 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

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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 on Long-Term activities as Training & Education, Low cost-effectiveness of regular Marketing activities, Low management in Key accounts, Not satisfy the customers academic requirements

3.1.1 Over-focus on long-term activities

Obviously, the Long-term activities (according to the KPI of the company) are of paramount importance for the sustainability of the company since their objectives is to remain the momentum of revenue in the long term The two main sources that we can refer 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 Short-Term Impact Activities

Long-Term activities is defined as educational activities, in Medtronic, Educational activities include Medtronic Endovascular Aneurysm Repair (MedEVAR), Medtronic Thoracic Endovascular Aneurysm Repair (MedTEVAR), Medtronic Peripheral Artery Disease (MedPAD), Medtronic EndoVenous (MedVenous) which focus on specific therapy of treatment By attending those Training & Educating Program (T&E Program), newcomers will have chance to learn from basic anatomy, physiology to current guideline and current treatment methods of those disorders New doctors will also be trained to know about the product knowledges and have chances to practice the products in Simulator System For example, for a stent graft, newcomers will use the simulator systems to simulate the patient vascular systems, and they will have demo products – which is in the real size of the real products to use in the simulators By doing and attending those workshops, new commers will get the certificates or licenses and are allowed to do the procedures in your hospitals

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

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symposium where proctors can share experiences for others In those activities, live cases with Medtronic products can be utilized to enhance the experiences of doctors with Medtronic’s products

Table 3: APV FY20 P&L - Marketing report

(Source: Medtronic internal data)

So as you can see, total planned budget spending to Training & Education contributes 31% 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 top hospitals, 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 the Training & Education programs In every program, thanks to the electronic feedback

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form in which we scale from 1-5 (Very Bad, Bad, AccepTable, Good, Very Good) By doing this, we can have another view of how the Customers behave/observe and assess the program Hence, as you can see in the above graphs, the feedback from Customers mostly are at Level 4, and 5 So, it also proves that those marketing activities bring benefits for Medtronic, get a high level of satisfaction from target doctors, which fulfill those insights about being educated (for new doctors) and enhance the reputation (for speakers), 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 or the result from interviews, the marketing activities has been received good feedback from 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 using medical products or bidding With a good hospital management, Medtronic can utilize the cost and gain better PnL Moreover, Medtronic is a Business-to-Business firm Because of Vietnamese regulations, Medtronic cannot directly sell products to Hospitals or Patients and is required to go with a local distributor In a medical device industry, a distributor plays a crucial role because they have a separate sales team to promote those APV products Therefore, if Medtronic cannot well manage the Distributors, 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

Table 4: Pinnacle Performance Report

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

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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, including other competitors in Aortic, Peripheral & Venous market Only in Hoan My CL and Can Tho City, Pinnacle has not worked well but the contribution of two hospitals is quite small comparing to total number In summary, Pinnacle has been successful to list 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 to the internal data, currently, Medtronic APV team conducted series activities with the KPI as below Table:

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

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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 join and 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) about this 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

1 3rd party congress 241,938 29 8,351

2 Proctorship (Honorium for Speaker) 130,117 66 1,984

4 Referal program (Market Access) 21,347 23 933

5 Round Table Discussion 26,430 189 140

546,900

Internal Data - Budget report Dec 2019

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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 customers academic requirements and improve the cost-effectiveness of marketing mix in Pharmaceutical industry By managing the budget with an eye on what the competition

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

By (6), most of enterprises’ current revenues comes from existing customers instead of new ones Focusing budget on predisposed prospective clients is a effective way to develop new business without overfunding, therefore in order to increase the productivity, company need to concentrate on predisposed customers with appropriate strategies 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 of each call could be considered By facilitating internal training program for associates and presents contact information for great many external resources available for purchase, which perfectly can be used in Medtronic since the current allocated budget for Round Table Discussion is still low But in case that the company can increase the number of Round Table Discussion, Medtronic, certainly, engage more customers with lower engaging costs

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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 long term activities; Not satisfy the customers academic requirements, Poor key hospital management or Low cost-effectiveness of regular marketing activities The next interview with Mr Khai & Mr Thao was organized in order to check whether the literatures applied in the case of Medtronic and deeply explored for further detail about potential problems which were found in the first interview Based on literatures, previous researches have mentionsed the impact of Low cost-effectveness of marketing 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 and Loss And currently, as showne in Table 6, there are many kinds of sponsorship to various practice groups, which can brings more of the firm’s resources to reach clients while still offering strong returns, setting aside marketing funds for specific practice groups 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,

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obviously, can be enriched The engaged budget per customer of 3rd party congresses and Proctorships are extremely higher than other activities, which raise a question about the real effectiveness of those activities compared to others Therefore, it is acutally one factor that we can change to rectify the issue and improve profits Moreover, beside literature, based on inteviews, the sale representative and two sales managers 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 only around 25% of total markeing expenditure Moreover, considering the impact of Training & Education activities in terms of Market Access, it should still be beneficial for APV portfolio at this moment, especially to enhance the reputation of current implanters 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-term results of marketing activities is invaluable chain, which facilitates companies to maintain customers’ engagement Over focusing on short-term ones potentially become 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-term views (08) Besides, T&E activities are solely ones that can create harmany between long-term strategies and Short-term objectives, they mostly can satisfy the short-term demands (achieve sales performance) as well as long-term development (young doctors development) This means that they will help to avoid being disrupted, give more effective innovations and enhance branding of Medtronic, embrace change for medtronic in ther future (09) Therfore, this problem cannot be the main one

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

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

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

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

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

cost-Figure 5 Fish bone diagram of main problems and potential causes

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As identified in aforesaid part, the main problem is Low cost-effectiveness of marketing activities which couse higher ratio between Renenue versus PnL Thus in order 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:

Table 7: Training programs in 2019

We found out that, with those trainings, the skills that Sales Reps were trained are just only technical skills, which directly support them to come to the Cath Lap and do the Aortic Intervention or Peripheral Intervention with doctors No subject is nominated to enhance 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 activities follow 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

Internal Data - Customer Report 2019

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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 support sales team to be confident in terms of selling skills and understanding customers’s insight 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 thi nk 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 team just receive 1 training course – comes from regional team (singaporean team) in English, which caused some challenges for them to understanding the training

According to literature (13), sale rep visits are always of paramount importance in order to transmit information or product’s branding Following the call and the content also belongs to the sales reps responsibilities (14), especially in Medical device and Pharmaceutical 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 any events, such as Workshop or 3rd Party Congress, there are myriad of speeches If the sales team leave the events alone, the effects of the events only last for few months after the events

The current materials that Medtronic have are demonstrated below:

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Figure 6 Medtronic marketing materials

Beside those materials, there are no other ones which can help to support to cascade the content of a specific events All of materials are just products-based and are designed to support sales reps to discuss with customers about product knowledge Content-cascading materials, such as leaflets or emails, after the occasions will help to remind doctors about what is the main contents of the event For example, in a workshop, when Medtronic invest $5000 in order to invite a foreign doctors to share about their experience in a complicated procedure in human aorta If the sales team have 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 are highlighted as a tool to cascade the content of any event Certainly, in order to use the material effectively, the sales team are required to absorb the comprehensive knowledge of the event and have sufficient selling skills to deliver That is the reason why 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