Boc Ohmeda Channel Strategy

In order to achieve its target of 11% annual growth in a much lower industry environment, for the next 5 years Ohmeda has to aggressively gain market share of its high-tech products, some of which have recently not been successful in the market. Ohmeda must shift its channel strategy to a primarily specialized, direct sales force that can effectively communicate the value of high tech products to opinion leaders.

As evidenced by recent failed product launches, Ohmeda’s current sales organization is not well suited to implement Rountree’s new business strategy of being a provider of high tech equipment. Sales generalists and dealers are clearly unable to articulate the value and educate the end user of new innovations, even though these new products are uniquely targeted at the key concerns of precision, reliability, and safety. Two important indications are the recent disappointing rollouts of the respiratory product, CPU-1, and the infant care product, the Intensive Care Incubator (ICI). These state of the art technologies provide valuable patient information and clinical efficiencies, but the sales force is unable to gain traction with the clinical staff for purchases despite price and technical advantages. These technical advances represent a change in how therapists provide health care, so Ohmeda must be able to educate and support clinical staff throughout the sales and implementation. Education of the sales force for high tech equipment is certainly a gap, and Ohmeda can look to recent success of a competitor, Drager, to find an additional one. In the Anesthesia market, Drager has been able to acquire (at Ohmeda's expense) a 35% market share from scratch in a 10 year period by positioning its products at teaching institutions. These institutions are the "opinion leaders" of the industry and provide a cascading sales effect as users advance through programs and become familiar with the technology.

There were also several issues with dealers that would...