Business Plan

Acacia Brown, Ryan Lambe, Lucas Lambird, Consuelo Nava LARC Marketing, Inc.

701 S. Nedderman Dr. Arlington, Texas 76019 T 817. 654. 7890

LARC Marketing, Inc. 701 S. Nedderman Dr. Arlington, Texas 76019 T 817. 654. 7890

LARC Marketing, Inc. 701 S. Nedderman Dr. Arlington, Texas 76019 T 817. 654. 7890 1

1.0 Executive Summary

3

2.0 Current Marketing Situation 4

2.2 Market Description 4

2.3 Product Review 5

2.4 Competitive Review 6

2.5 Distribution Review 6

2.6 SWOT Analysis 7

3.0 Objectives and Issues 8

3.1 Marketing Strategy 9

3.2 Action Programs Metrics 11

3.3 Pro Forma Budgets/Financials 13

3.4 Additional Controls 13

1.0 Executive Summary

McKesson has done an excellent job at establishing themselves as a successful distributor of pharmaceutical, medical device technology, as well as health services. Focused on the blood glucose market, the company provides their customers with broad product line offerings available for purchase. However, as technology progresses and consumers step further into the preference of technology ease, McKesson needs to make some adjustments in order to keep up with the changing market desires. In order to gain more of a market share in the pharmaceutical and medical technology industry, the company needs to shift their focus from primarily offering self -monitoring glucose monitors to continuous glucose monitors, with paired technology of their mobile app available on Apple and Android smartphones. With foot traffic and pharmacy sales as high as they are in store, we recommend McKesson partners with CVS as well as boosting their own sales within the Health Mart Pharmacies, by creating incentives to customers buying their products online or in store.

Founded in 1833, McKesson has grown from a small pharmaceutical wholesale and distribution business into a global name, with bearings in pharmaceuticals, medical devices, and health care services. McKesson currently has a smartphone app compatible with Apple devices, to help aid in the process of refilling prescriptions, receiving, and paying for pharmacy services for customers through their Health Mart pharmacies.

McKesson has a diverse lineup of blood glucose supplies as well as a selection of their own glucose meters, in addition to plenty of other company monitors and tools McKesson sells and distributes.

In order to compete with competitors and utilize the technology McKesson has available to the fullest capacity, McKesson should partner with CVS pharmacies and offer an incentive program for customers who pair their glucose monitors bought online through McKesson or in store at one of their Health Mart or CVS pharmacies, with the Smartphone App. Through the app, customers will be able to make refill orders, initiate payments, track their blood sugar levels, get daily trend updates to their own personal health portfolio, app alerts when levels are off, and free advice or recommendations on how to stay healthy and balance levels.

2.2 Market Description

Just in the United States alone, over 100 million Americans are either pre diabetic or diabetic.[footnoteRef:1] With a number so large, the target market is virtually very wide but given the technology aspect McKesson would be offering to their market, the ideal target consumer would be pre diabetic or diabetic Millennials and Generation Y. [1: Centers for Disease Control and Prevention. (2020, February 11). National diabetes Statistics Report, 2020. Centers for Disease Control and Prevention. https://www.cdc.gov/diabetes/library/features/diabetes-stat-report.html.]

As technology progresses, consumers have a growing desire for products to be easy to understand and use. With the app provided through McKesson, continuous blood glucose systems will allow consumers ease and functionality in measuring and tracking glucose levels, while gaining incentives for purchases made through their app at one of McKesson’s partnered pharmacies.

McKesson offers seven categories of glucose meters to customers.

2.4 Competitive Review

McKesson has a number of competitors in the blood glucose industry, but the top three competitors include:

1. Walgreens Boots Alliance

Walgreens and Boots have joined in an alliance, making a successful company specializing in distribution, as well as online and wholesale product and pharmacy sales. Walgreens provides incentives to their customers using the Dexcom CGM system, making filling and paying for this product at a Walgreens pharmacy easy and convenient.

2. AmerisourceBergen

AmerisouceBergen acts as a distributor of pharmaceuticals between manufacturers and pharmacies or healthcare providers. In order to make sales easy, the company provides pharmacies with an array of diabetic tools and monitors to get customers through the doors.

3. EMIS Group

EMIS Group specializes in technology and healthcare services to aid physicians. The company has created a system that documents patient measurements through the ease of a mobile app compatible with Apple devices, collecting information into a personal health record[footnoteRef:2] to be shared with physicians. [2: Spencer, C. (n.d.). HealthKit makes citizen health a reality. EMIS Health. https://www.emishealth.com/insights/latest-articles/healthkit-makes-citizen-health-a-reality/. ]

2.5 Distribution Review

In order to increase ease of purchasing and sales within pharmacies, McKesson will have three modes of distribution available to consumers.

1. E-Commerce through McKesson Website

2. M-Commerce through Mobile App

3. In store at select pharmacies (CVS and Health Mart)

McKesson has great products and a level of distribution to be marveled in the market. However, there are changes that should be made in order to utilize their resources to the highest capability and maintain competitiveness with companies making technological advances.

Strengths

· Brand Portfolio: As a major pharmaceutical and medical device distributor, McKesson has a multitude of products for consumers to choose from. Referencing the product table above, just the glucose monitor offerings total to 98 products available.

· Brand Image: McKesson has grown into a global healthcare company focused on providing consumers with the best possible service in order to alleviate any challenges facing the healthcare industry today.

Weaknesses

· Technology: Although McKesson has software pharmacies can use to help run a smooth operation, the company has not utilized their own technology practices to the highest degree, missing out on a large group of consumers who rely heavily on their devices for practically everything.

· Lack of growing products in the glucose market: Although McKesson has an enormous brand portfolio available, there are certain devices that are not as prevalent as others. For example, there are 87 self monitoring blood glucose meters and only two continuous blood glucose sensors available on their website for purchase. The company is missing out on a large segment of the market who prefers a CGM over an more time consuming monitor.

Opportunities

· Partner with CVS pharmacies: Although McKesson has pharmacies all over the United State called Health Mart, McKesson is missing out on another large player in the pharmacy game; CVS. With other companies partnering with large pharmacies like Walgreens, CVS could be an opportunity for McKesson to gain a larger segment of the diabetic market.

· Expand technology use: McKesson should adapt their app into a user friendly, diverse mobile application available on both android and apple products to help consumers manage their blood glucose from purchase, to tracking and uploading to their health portfolio.

Threats

· Competitive technology advances: Other companies in the healthcare industry with a focus on distribution and pharmaceutical or medical devices are taking steps forward in the technology sector, becoming increasingly attractive to patients and health care physicians.

· Growing competition: With companies gaining more funds and expanding, distribution and pharmaceutical industries are becoming increasingly populated with big and small competitors.

3.0 Objectives & Issues

Objectives

· Promote high standards in the pharmaceutical product production and quality assurance

· Build brand and product awareness among target customers by 50% within a year

· Provide a convenient system to enable customers to see current levels of glucose and trends, from their mobile device, at any time

· Increase market segment that prefer a CGM system over the traditional insulin pump alone

Issues

· CGM system safety and effectiveness could be affected by several user-related and technological issues, among those insulin pump faults. CGM sensors are required to be replaced depending on the model, for accurate reading. Errors due to calibration can affect accuracy, making it unsafe until recalibration. Implanted sensors might fail to function due to an immune response.

· Strong and well established competitors already in the market. There are currently four companies available in the United States, which are Abbott, Dexcom, Medtronic, and Senseonics Eversense. Cost of advertising and promotion could be high to gain product awareness and market share.

· Investment is possibly required to educate healthcare professionals and users. It is necessary for optimal use in the interpretation of data outputs, software issues arising, and adjusting existing pump settings.

· Such technology might turn into an additional burden of care for some users

· App and pump might not be one of the doctors top choices to recommend to their patients, prolonging the adoption and awareness in the market.

3.1 Marketing Strategy

Communication Strategy

· Informative advertising: Meet with administration,business leaders, providers, distributors, support staff to discuss the challenges, concerns and values . Obtain their buy-in and increase awareness.

· Persuasive advertising: Promotional activities through social media, stating the features and benefits of the app has to offer with the insulin pump to help grow adoption rate. Use video promotions through social media and websites to give customers understanding of the app.Offline promotion would include informative take home flyers and promotional posters displayed at CVS and other owned pharmacies. Make the app visible and available in app stores of Apple( for iphone) and Google (Android), as a vehicle of communication to potential new users.

· Reminder advertising: Pricing and promotion changes, offer discounts, and trials. Another way is messaging push notifications to “push out” information from the company's app and creating engagement from the user side.

· Doctor Segments: A user is able to order a CGM system through a pharmacy, but needs a doctor's prescription. Physicians, endocrinologists, and diabetes educators will educate and influence user adoption of CGM. Doctors discuss the pros and the cons of various choices with their patient.

Marketing Research

· Identify users problems: Receive feedback from popular platforms that are directly related to the app.

· Identify doctors preferences: Identify why do they recommend one CGM system over another

· Conduct a competitor analysis: Know the weaknesses and strengths of competitors. Research the number of downloads the apps are receiving, ranks, and pricing.

· Secondary data analysis: Observation of market trends and growth rates.

· Primary data analysis: Conduct surveys, which will provide valuable information over immediate needs and wants of the target market.

· Create a value proposition: Make a connection between the app and precise user problems by describing the advantages in detail that would address those issues.

Marketing Organization

· Develop a mobile app team: It is important to have a team that’s knowledgeable of the latest mobile app development trends.

· Application managers: Ensures smooth flow of information between members. Ensures coordination within the team during app development. Manager’s input will provide value in the planning, marketing and offering service.

· Mobile Application Designer: In charge of designing the application and branding of the software. Ensures that features are incorporated into the app such as the logo, marketing components and website.

· Developers: In charge of programming and specifying the actual operations of the app.

Positioning

· This product is being positioned as mainly appealing to millennials and generation Y

· One of the main marketing points of this product is being able to access your glucose/sugar levels straight from an app on a cellular device, so naturally that positions this market towards the younger crowd

· By attracting the younger crowd and creating a user friendly app and technology, we are setting this up to only grow and grow in the future

Product Strategy

· Customers will buy a glucose monitor through CVS in person, online, or through the app

· When they get this glucose monitor from McKesson, they can monitor all of their health levels, make refill orders, get daily health tips, etc

· After purchase of the app customers get all of these incentives which will build brand loyalty

Pricing Strategy

· This is going to be a very nice, highly technological monitor that is being sold, with that being said it will not be cheap to purchase, but it is not going to be anything outrageous. As seen above, not only are you just monitoring your glucose levels but there are so many more incentives that come along with it as well. As seen below, our meter market price is 4,000$. Down below in the action metrics will go into specifics.

Distribution Strategy

· This meter will be available in every medium

· It can be purchased in store at CVS

· It can be purchased online

· It can also be purchased mobily on an M-Commerce mobile app

3.2 Action Programs Metrics

Disclosure: McKesson will pay $20 million annually to app developers to keep the app updated and running smoothly.

Meter Production Cost

$1,500 per meter

Year 1

· $1,500 x 120,000 Meters Ordered

· $20,000,000 App Development and Maintenance

o Total Budget: $200,000,000

Year 2

· $1,500 x 280,000 Meters Ordered

· $20,000,000 App Development and Maintenance

o Total Budget: $440,000,000

Year 3

· $1,500 x 600,000 Meters Ordered

· $20,000,000 App Development and Maintenance

o Total Budget: $920,000,000

Year 4

· $1,500 x 1,200,000 Meters Ordered

· $20,000,000 App Development and Maintenance

o Total Budget: $1,820,000,000

Disclosure: CVS Health will receive 20% revenue of every meter sale for marketing the product.

Meter Market Price

$4,000 per meter

McKesson Sales Revenue (after production cost & CVS’s percentage)

$2,000 per meter

Year 1 - Rollout year, some success.

· Target Meter Sales: 100,000 x $2,000

o Total Revenue: $200,000,000

Year 2 - Marketing campaign kicks in, more success.

· Target Meter Sales: 250,000 x $2,000

o Total Revenue: $500,000,000

Year 3 - More customers through word of mouth.

· Target Meter Sales: 500,000 x $2,000

o Total Revenue: $1,000,000,000

Year 4 - McKesson reaches our goal of 1,000,000 units sold.

· Target Meter Sales: 1,000,000 x $2,000

o Total Revenue: $2,000,000,000

3.3 Pro Forma Budgets/Financials

3.4 Additional Controls

CVS Health will take on a majority of the marketing campaign, but McKesson will also rely on Medical Doctors to inform their patients of the product when they are asked about McKesson’s Meter by their clientele.