CASE SUMMARY:TenderCare Disposable Diapers

Rocky Mountain Medical Corporation

Founded in 1982, $!!!!! in 198", $2# Million in 198 e$pe%&ed $"# in 198'
To( Ca)an * +residen& and Dire%&or sin%e 198,April
Dr# Rober Morrison * -i%e.presiden& /or R0D and C1air(an o/ 2oard
3os1 2os%1. -i%e +residen& o/ Manu/a%&urin)
4a5ren%e 2enne&& * -+ Mar6e&in) 5i&1 responsibili&7 /or 8a9 TenderCare 8b9 T5o lines o/
+1o&o&1erap7
T5o o&1er -+,s /or +ersonal and Con&roller 8To&al Si$ +ersons in 2oard9
Phototherapy Products:
Trea&(en& &o &rea& in/an& 3aundi%e 51i%1 1appens &o '.1!: ne5born 6ids#
T5o line o/ produ%&s b7 RMM, ;ospi&al line * Alp1a 4i&e, ;o(e line * 2ab7 4i&e
TenderCare Marketing
Ca)an and 2enne&& appoin&ed (ar6e&in) %onsul&an& Alan Anderson /or 1is 2': in /irs& 7ear and
12: /or /ollo5in) &5o 7ears# T1e7 also e(plo7ed lo%al (ar6e&in) %onsul&an& on &1e ad<isar7
board 812 (e(bers business and (edi%al e$per&s9 51o /inalised na(e TenderCare 8re(e(ber i& is
7e& &o be laun%1ed9#
Market Characteristics
11 (illion babies in 198'# Dail7 use /ro( ! &o 1' 5i&1 a<era)e o/ '#
T5o &rends o/ (ar6e&
(a) Increase in use of disposable diapers from present 7 to !" by #!!
(b)Purchase of high$%uality disposable diapers
To&al dollar sales in 198' e$pe%&ed &o be "#! 2illion 81' billion uni&s9 =ro5&1 ra&e &1ou)1& is 1:
/or (one7 and 8: in uni&s
Forei)n (ar6e& Canada %urren&l7 !#2' billion 5i&1 e$pe%&ed )ro5&1 o/ 2!: &ill 199!
A/&er 199! (ar6e& sa&ura&es and b7 199' s&ar& de%linin)
Competition
+ro%&er 0 =a(ble 82rands +a(pers 8198 "2: 198' 28:, 4u<s 198 0 198' 2!:9
>i(ble7 Clar6 8;u))ies 198 2: 198' 28:9
?&1ers 82: in 198 0 198'9 . @e7er1aeuser 0 3o1nson 0 3o1nson. 2u& &1e7 (ade /or pri<a&e
labels and no& in &1eir o5n na(e
3o1nson 0 3o1nson %a(e 5i&1 &1eir produ%& 5i&1 pre(iu( /ea&ures in 1981 bu& no& a si)ni/i%an&
pla7er no5 al&1ou)1 &1e7 are in &1e (ar6e&#
Marketing strategies for TenderCare
4i%ensin) s&ra&e)7: 4i%ensin) desi)n &o o&1ers. alread7 dis%arded b7 2enne&&
&iaper Rash 'trategy
Tar)e& 811: (ar6e&9 &o A'!!! /a(il7 pra%&i&ioners, '!!! paedia&ri%ian and der(a&olo)is& and
29!!!! nurses 8To&al !!!!!9#
4aun%1 onl7 in Cali/ornia as &1e7 la%6 resour%es /or all %oun&r7 laun%1
E$penses 8a9 Mailin) lis& $A! per 1!!! na(es 8b9B 2'! prin& 0 pos& 8%9 $ !! per 1!!! /or
sendin) sa(ple one &o ea%1 8d9 $ A per de(ons&ra&ion b7 RMM 8d9 $ 1!!! per ad<er&ise(en& in
(edi%al Cournal redu%es &o D!! /or repe&i&i<e ads bu& a 5as&e as i& %o<er en&ire %oun&r7 8e9 $ "!!!
per (edi%al %on<en&ion
+ri%e $ "#8 per pa%6 o/ 12 88 &o 1!: 1i)1er &1an 18 pa%6 o/ o&1ers9 5ill )i<e 9: (ar)in &o RMM
and "!: 1i)1er (ar)in &o re&ailers
Assu(p&ion: 8a9 E/ do%&or pres%ribes, %os& is no (a&&er 8b9 +ro(inen& s1el/ pla%e(en&
2ud)e& : Fo& 7e& de%ided
'pecial (ccasion strategy
Tra<el, Da7 %are %en&res * 11 (illion uni&s 2ed&i(e 9 (illion uni&s, Tar)e&: 2ed&i(e
Color Ad<er&ise(en& $2!!!! %oun&r7 and $1!!!! /or lo%al edi&ion, 20 @ Ad< G D':
Dire%& (ail lis& $'! per 1!!! 8&o&al 1 &o " (illion na(es9 o&1er %os& sa(e 8$2'!, $!!9
2ud)e& $2'!!!! /or ad<# And be&5een "!!!!!.D!!!!! /or dire%& (ail
Superior pa%6a)in) di(ensionall7 sa(e 5i&1 12 uni&s in %o(parison &o o&1er,s 18 uni&s# Seller
(ar)in !: %o(pan7 (ar)in A: 8Redu%ed /ro( 9: in /irs& %ase9
)ead on 'trategy (*rontal attack strategy)
Mass ad<er&isin), En.s&ore de(ons&ra&ions 5i&1 H&ou%1 &es&s,
2ud)e& A!:"!:1! /or Tele<ision, Ma)aIine and ?&1er 8To&al bud)e& no& 7e& de%ided9
+a%6a)in) op&ions 8a91A uni&s 5i&1 sa(e pri%e o/ 18 pa%6s o/ o&1ers 8b9 18 pa%6 5i&1 9: 1i)1er
pri%e
Co(pe&i&i<e pri%e s&ra&e)7 as 2enne&& beli<ies &1a& e<en i/ 5e )i<e 1i)1er (ar)in as earlier &1e7
5ill no& pass on &o %onsu(ers# T1is s&ra&e)7 5ill 1a<e pre.dealer 9: 1i)1er pri%es be%ause
(anu/a%&urin) %os& o/ TenderCare is 1i)1er# En bo&1 &1e %ases RMM 1as (ar)in o/ " %en&s per
pa%6 81A uni& or 18 uni&, sa(e (ar)in9
'ummary
En %ase o/ /irs& op&ion FDA appro<al is reJuired# E/ FDA %onsiders e$peri(en&s %ondu%&ed b7 Dr#
Morrison appro<al 5ill be /as&er# E/ no&, i& 5ill &a6e &i(e al&1ou)1 %1an%es o/ )e&&in) appro<al are
1i)1# FDA appro<al is no& reJuired i/ in pla%e o/ &rea&(en& o/ diaper ras1es 7ou Cus& sa7 8a9More
Dr7 8b9 Dr7ness 1elp &rea& ras1es
E<er7 (on&1 o/ dela7 (eans los& re<enue, speed 5as o/ essen%e#
*inancial implication
For Cali/ornia en&r7 RMM 5ould reJuire &o brin) s&o%6 issue and %ould )enera&e 1." 2illion
dollars dependin) on o//er pri%e and no# o/ s1ares# @i&1 &1is in<es&(en& RMM e$pe%&s &o )enera&e
pro/i& a/&er 1 7ear and use pro/i&s /or R0D and e$&ension &o o&1er (ar6e&s# Dr# Morrison e$pe%&s
adul& diaper (ar6e& %urren&l7 a& $"!! (illion and underpeds /or beds a& $'! (illion (ar6e&
8annual9# Finall7 1i)1er &e%1nolo)7 %an be applied in an7 (ar6e& in%ludin) sani&ar7 pad (ar6e&
51i%1 is <er7 bi)#
The +uestions in order of asking
Do you agree with the management decision not going through licensing route even though
having finance shortage for launching the product?
,ns-er: Yes 5e a)ree be%ause li%ensee 5ill %on&rol e<er7&1in) /ro( (ar6e&in), pri%in),
pa%6a)in) and RMM 5ill re%ei<e onl7 ne)o&ia&ed ro7al&7#
Should RMM go without FDA Clearance route and drops the claim Treating diaper rash
!ecause on failure of the test it has to !e dropped" #r wait for approval of FDA which is most
li$ely !ut may ta$e time"
,ns-er: @ai& /or one (on&1 period 8as )i<en in %ase on pa)e D' /irs& %olu(n, si$&1 ro5 /ro(
bo&&o(9 and FDA,s posi&ion %ould be 6no5n# T1an a%%ordin) laun%1 5i&1 or 5i&1ou& %lai(s#
%hat strategy should !e adopted !y RMM for mar$eting the TenderCare and %hy
A& The Diaper Rash Strategy
'& The Social #ccasion Strategy
C& The (ead)on Strategy
,ns-er: Al&1ou)1 speed is essen%e, s&ill 5ai& /or (on&1 /or FDA,s 1in& and &1en pro%eed 5i&1ou&
FDA on Dr7ness and Dr7ness 1elp %on%ep&# So%ial o%%asion s&ra&e)7 1as li(i&ed (ar6e& and
;ead.on s&ra&e)7 is <er7 %o(pe&i&i<e 5i&1 less pro/i&s#
%hat should !e*
Pricing Policy: +re(iu( pri%in) 81i)1er pri%in) 5i&1 12 uni& pa%69
Packaging Policy: Di(ensionall7 sa(e o/ 12 uni&s 8o&1er,s 18 uni&9 5i&1 be&&er pa%6a)in) &1an
o&1ers
Placement Position: +ro(inen& S1el/ 5i&1 1i)1er (ar)in &o seller#