Marketing Management Approach at ADMECO AG

Case Study Review

Term Paper (Advanced seminar), 2003

31 Pages, Grade: 1



i. Abstract

ii The Company - ADMECO AG

1.0 Marketing Orientation
1.1 Definition of Marketing Orientation
1.1.1 Marketing Orientation- What are the Requirements?
1.1.2 Marketing Concept - The Construct of Marketing Orientation
1.2 Market Orientation Assessment at ADMECO AG - Marketing Effectiveness Rating
1.2.1 Methodology
1.2.2 Assessment Outcomes

2.0 Marketing Audit
2.1 The Marketing Cockpit - A Strategic & Tactical Instrument
2.1.1 Marketing Analysis - Healthcare Sector
2.1.2 Marketing Objectives
2.1.3 Market Segmentation
2.1.4 Competitive Marketing Strategy
2.1.5 Channel Strategy
2.1.6 Marketing Mix
2.1.7 Marketing-Infrastructure
2.1.8 Marketing Budget
2.1.9 Marketing Controlling

3.0 General Recommendation on Marketing Activities

4.0 Specific Recommendations
4.1 Alternative Sales Channels
4.1.1 Sales by Manufacturers Representation
4.1.2 Sales Through Risk Sharing Strategies
4.2 New Communication Technology
4.2.1 Internet/Intranet/Extranet
4.2.2 Knowledge Management
4.3 Customer Relations Management (CRM) Systems

5.0 Plan of Action

6.0 Appendices
6.1 ADMECO Corporate Overview
6.1.1 Certification
6.1.2 Organizational Chart (as of July 2003)
6.1.3 Product Portfolio
6.2 Company Audit - Marketing-Effectiveness Rating
6.3 US Doctor Concentration,
6.4 Secondary Market Research Information
6.5 US Surgical Procedures
6.6 ADMECO’s world-wide OR lamp competitors
6.7 Buying behaviour - US OR customers
6.8 ADMECO-com log-on Statistic
6.9 Advertisement Schedule
6.10 The Value Chain
6.11 Plan of Action

7.0 References

i. Abstract

This paper discusses the potential benefits of marketing management for a small business operation, in this case ADMECO AG. The first part of the assignment introduces the concept of marketing orientation as a theory and critically assesses the marketing orientation in the company. In section two, a marketing audit evaluates the current situation, drawing on supporting material from primary & secondary market research sources. The potential for marketing activities in the organisation is considered in section three, while section four offers an example of a 3-part recommendation on alternative sales channels, new communication technology and relationship management as an added value for the customer and for corporate performance. Finally, the last section takes my recommendations for the company and builds a possible plan of action on them.

ii The Company - ADMECO AG

ADMECO AG1 is a small medical device company offering concepts and solutions for the hospital market, in particular, operating theatres and clean room environments. Its strategy is based on factors such as market penetration, the patent status of products , the regional location of their major customers, their financial strengths, and the resources the company can bring to bear on changing market opportunities - for further information please refer to appendix 6.1.

At present, ADMECO sells its products (ADMECO-Air, ADMECO-Air, ADMECO-Vac, ADMECO- Light, ADMECO-Lux) to 23 countries through direct and indirect sales/marketing channels. The company has a small 2 person direct sales force, with one representative for Germany & one for Switzerland. For all other export areas, the 26 employee company is too small to directly sell its product into international markets and therefore relies on independent service distributors, who sell, install and service ADMECO’s products on an exclusive basis to the hospital operating room environment in their markets.

1.0 Marketing Orientation

1.1 Definition of Marketing Orientation

Marketing orientation is best defined at the organisational cultural level of a set of shared values and beliefs that puts the customer first in business planning (Deshpande 1999i). No markets are identical, but markets share features that can be identified and targeted. The current generation of market intelligence gathering using both primary and secondary research allows future and current customer needs to be obtained, yielding important information for corporate strategies. Once market intelligence has set the parameters for potential needs, marketing orientation can take the requisite concrete steps in deciding on which selective market segments, products and programs fit the customer’s needs.

Marketing orientation should be seen as a mode of operation running throughout the organisation, rather than solely as the responsibility of the marketing department. The pertinent literature suggests a market-oriented organisation is likely to generate higher returns in the following areas2:

- Customer satisfaction and repeat business
- Job satisfaction and employee commitment
- Business performance

Jobberii offers an example of flow within a customer-oriented company:

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Table 1: Marketing Orientation (Jobber, 1999)

1.1.1 Marketing Orientation- What are the Requirements?

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Table 2: Key Dimension of market-driven Management (Jobber,2001, p9)

The starting point in market orientation is information gathering from primary and secondary sources throughout the organisation and not just exclusively via the marketing department. A customer focus implies;

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1.1.2 Marketing Concept - The Construct of Marketing Orientation

The marketing concept is a belief - some might say a philosophy - about the proper way to run a business3. The concept is a crucial element in marketing a concept of business management based on a company wide acceptance of a customer and profit orientation, recognising the central role marketing has in communicating the needs of the markets to all corporate departments. It also can be viewed as the key to achieving organisational goals in determining the needs and wants of target markets4, with the overall goal of meeting and exceeding customers needs in a way that is better than the competition. Table 3 below shows the four key components of a marketing concept:

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Table 3: Flow of a Marketing Concept (Kotler, 1988)

Crucially, contrary to the traditionally “inside-out’ perspective inherent in the selling concept, the marketing concept adopts an “outside-in” viewpoint, which can be expressed in the well-known phrase as providing the right product to the right people at the right price, in the right place and at the right time (Desai,Fletcher 2001iii).

1.2 Market Orientation Assessment at ADMECO AG - Marketing Effectiveness Rating

In essence, ADMECO implements its marketing concept via marketing orientation. Yet although the marketing concept represents a cornerstone of the company approach, very little attention has been given to its implementation. In order to assess the Marketing-Effectiveness Rating, I applied Kotler’s instrument5 - see appendix 6.2 - taking the five attributes of market orientation as customer philosophy, integrated marketing organisation, adequate marketing information, strategic orientation, and operational effectiveness.

1.2.1 Methodology

In this case, the results are taken from a self-audited assessment using a pragmatic, systematic approach in ADMECO AG, discussed and filled-in with the co-operation of company CEO Mr. Van den Wildenberg6. The rating scale was set as follows:

1.2.2 Assessment Outcomes

The rating obtained gave the company an aggregated score of 12 out of a total of 30 points, indicating a fair level of marketing effectiveness, on Kotler’s scale. The scoring revealed weaknesses in operational effectiveness, customer philosophy and marketing information. Naturally, we need to bear in mind that self-audited assessments lack a certain degree of objectivity and independence, but they can be a useful initial tool when conducted by a group of experienced staff with an insight into the company situation and strategy, offering a practical alternative to a comprehensive marketing audit; in our case, the assessment team included the head of marketing to ensure direct day-to-day experience was also incorporated into the findings.

In conclusion, the marketing orientation assessment reveals ADMECO as having a fair level of adherence to its customer philosophy, but clear deficiencies in the area of operational efficiency due to the lack of highly skilled technical and in-offi]ce labour force. Furthermore, it appears that the initiatives derived from these strategies are not always fully implemented since they are not understood or not really implemented - here, communication channels need to entail more than just posting a note on the bulletin board. Furthermore, the implementation of new initiatives are slowed down or discouraged by specific issues and constraints relating to the corporate culture in ADMECO. The benefits ADMECO enjoys from a fair strategic oriented framework are at risk of being lost through the inadequate communication structure to inform the organisation of its strategy. In setting out to achieve the new set of goals, namely to have a “good to very good” marketing orientation,

ADMECO would need to implement an improved market-oriented focus, embodied in a culture where every employee is not only customer orientated but pro-actively customer oriented, and every employee feels responsible for marketing, and is encouraged to perceive marketing as the work of every employee. In such a situation, the marketing department might even disappear! In other words: Every ADMECO employee needs to “Think Strategically”!

2.0 Marketing Audit

The marketing audit represents a more through review of the marketing-effectiveness rating and is used to examine a company’s objectives, strategies and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance. To be effective, a marketing audit should be comprehensive, systematic, independent and periodic7. As Kotler suggests, the marketing audit ought to follow a six-step approach taking the elements of environment, strategy, organisation, systems, productivity and function - all of which can be found in Bauer’s marketing cockpit layout (7/2003iv).

2.1 The Marketing Cockpit - A Strategic & Tactical Instrument

The marketing cockpit (Bauer, 20038 ) is a concise easy-to-follow overview to link the strategic instrument (product, price, promotion, place) with the tactical side of the operation, encompassing all 7 P’s (probing, partitioning, prioritising, positioning, people, process, physical) - an excellent tool for the marketing audit in ADMECO AG.

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Table 5: Marketing Cockpit (Bauer, 2003)

2.1.1 Marketing Analysis - Healthcare Sector

There is probably no segment of the medical device industry that has been more affected by managed care than the worldwide market for hospital equipment and services. The overall market is estimated at sFr. 77.6 Billion Operating room environment worldwide and the total world consumption for medical devices is estimated at sFr. 240 billion9 (see appendix: 6.3 & 6.4).

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Table 6: Worldwide medical Equipment Market (Medistat, 2001v) - 11%,33% & 55% represents ADMECO’s total sale per market

SWOT Analysis

The SWOT analysis10 looks at the different aspects in marketing. It uses both the forward-looking elements of macro- and microenvironment scanning, and elements related to the internal environment. While the former elements are categorised as opportunities and threats, elements of the latter are categorised as strengths and weaknesses.

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Table 7: SWOT Analysisvi

2.1.2 Marketing Objectives

The goal of marketing objectives consists in guiding the subsequent search for strategies and action programs11. ADMECO utilises a limited mixture of classical methods (advertisements in magazines) & electronic / interactive marketing (Internet, no banner or buttons) to make its products known. Publicity has been used sparsely in the following areas, but the audit on marketing objectives have shown that:

- ADMECO is not positioned at the cutting edge of providing highly sophisticated solutions for OR clean room environment,
- It has no proper name recognition except in Switzerland and Germany,

In Europe, where ADMECO plans to continue to build up the expansion efforts, sales of products have been successful and show signs of further development. However, the US market has hundreds of


1 ADMECO AG ( est. in 1981, headquarter in Hochdorf, Switzerland, employees 26 people

2 Deshpande, 1999, ch1, p8

3 Bauer, P., University of Strathclyde, Linking Marketing Strategy & Marketing Tactics, 7/2003, PP presentation, slide 8

4 Kotler, part I, p17

5 Kotler, Part VI, table 25-6, p745

6 Mr. Pierre van den Wildenberg is the Head of Marketing/CEO & owner of ADMECO AG.

7 Kotler, part VI, p747

8 Bauer, P., University of Strathclyde, Linking Marketing Strategy & Marketing Tactics, 7/2003, PP presentation, slide 9

9 MDI/IHS, Medical Data Internationa, Market Research Firm, Irvine, CA, USA

10 Rao, V.R., et. al., ch 7, pp221

11 Kotler, part 1, pp81

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Marketing Management Approach at ADMECO AG
Case Study Review
University of Strathclyde
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This paper discusses the potential benefits of marketing management for a small business operation, in this case ADMECO AG.
marketing, management, approach, admeco, case, study, review
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MBA Andreas Keller (Author), 2003, Marketing Management Approach at ADMECO AG, Munich, GRIN Verlag,


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