1 Product Launch Value Proposition May 2009

2 1.Concept Definition and Key Challenges 2.Our Focus and Value Proposition 3.Our Approach 4.Why Frost & Sullivan 5.Case Studies and Key References Table of Content

3 Additional revenue streams, reduction & diversification of risk Organic expansion Value of company, share price Opportunity for exponential and not just incremental sales Erosion of margins due to competition Changing market conditions or opportunities on growing markets Emerging markets Address changing customer needs Retaining leadership position/ be perceived as an industry shaper/ innovator Copying innovators Technology exploitation Capitalise on skills base Employee motivation and retention Value-generationCommercialOperational Typical reasons for launching new products: Generate additional revenue and margin 1. Concept Definition & Key Challenges Companies seek out new product launch opportunities for strategic, commercial and operational reasons

4 1. Concept Definition & Key Challenges Not all launches meet expectations. To be successful, 'classic' product launch pitfalls need to be avoided The product or service should be launched to address customer needs. This is obvious, but is probably the biggest cause of launch failures. In today's competitive world, there is a shortage of customers, not of products or capacity. The company launching the product should know what specific needs its product will address. Which customers (target)? What offering (position)? Why is it better (differentiate)? It's not only because it works that customers will pay for it. Companies tend to overestimate revenue forecasts for the new product. They have not fully understood the market they are addressing, their ability to deliver and provide service, and how their current situation may hinder the launch process. A product launch should be executed by a clearly defined, cross-functional Launch Team, integrating key members of Corporate Management, R&D, Sales, Service, Supply Chain. It is not just the job of Marketing. A product launch process should be supported by a clearly defined Launch Plan: objectives, goals, timelines, toll gates, tasks, responsibilities, report lines, performance measurements. A product launch is a process, not an event. External Internal

5 1. Concept Definition & Key Challenges NPL is the 2 nd step of Product Lifecycle Management and it determines the business success of the new product New Product Development New Product Launch Product Management Scope: New Product Launch in the Product Lifecycle Value Sales 0 Profit/ loss

6 1.Concept Definition and Key Challenges 2.Our Focus and Value Proposition 3.Our Approach 4.Why Frost & Sullivan 5.Case Studies and Key References Table of Content

7 2. Our Focus & Value Proposition Frost & Sullivan gives equal importance to building the fact foundation, marketing planning and implementation New Product Development New Product Launch Product Management Product Lifecycle & New Product Launch scope Capability Assessment Market Assessment Marketing Strategy Plan Marketing Operations Plan Launch Monitoring & Adjustments Value Sales 0 Profit/ loss

8 2. Our Focus & Value Proposition Frost & Sullivan focuses on fact-based and actionable analysis and recommendations Working value proposition summary Resource analysis HR Production Assets Sourcing & Suppliers Logistics Sales & Marketing Network Budget analysis Segments: Rank target markets & segments Addressable market Customers: Needs/ unmet needs Price points, elasticity External factors (regulation, etc.) Competition Pricing, Positioning Distribution Differentiation strategies Adjustment by country/ region Performance dashboards Operation monitoring Product performance tracking Post launch product fine-tuning (bugs, customisation, targeting…) Marketing plan adjustments Value proposition confirmation Distribution strategies Draft critical pathway for launch Sales and margins forecasts, KPI's Impact of new product upon existing product portfolio Product & packaging adjustments Price levels Customer value Promotion plan Support tools to effective launch (sales, logistics, provisioning, crm, management) Capability AssessmentMarket Assessment Launch Monitoring & Adjustments Marketing StrategyMarketing Operations Plan

9 1.Concept Definition and Key Challenges 2.Our Focus and Value Proposition 3.Our Approach 4.Why Frost & Sullivan 5.Case Studies and Key References Table of Content

10 Capability Assessment Conclusions & Recommendations Marketing Strategy Step 1: Create a strong fact foundation Output: Opportunity validation Output: Value proposition + business case Base case scenario GO/NO GO decision Implementation plan.. Step 2: Confirm new product launch strategyStep 3: Implement the strategy Launch Monitoring & Adjustments Output: Implementation roll out & impact measurement. Market Assessment Output: Opportunity validation. 3. Our Approach The New Product Launch best practice programme is organised in 3 complementary and successive steps Marketing Operations Output: Marketing (launch) plan Using the components of this framework, careful diagnosis of client challenges and opportunities allows a tailor-made approach to be recommended

11 3. Our Approach Capability Assessment (1) Capability Assessment Manufacturing needed Partner network, suppliers & platform needed Organisation structure & RACI Investment needed (human capital, financial, technologies, assets) Promotion resources required What are our capability & expertise gaps to target these product and customer segments? What are the required changes? What are the key success factors? Capability gap analysis: Production, Sourcing & Suppliers Sales & Marketing, other HR Cross-functional stakeholder buy-in Priorities for validation and planning Assign Launch team What expectations are common to key stakeholders? What are key challenges and opportunities? Who is on steering committee? Working version of value proposition Key driversKey questions Key financials: Revenue streams CAPEX, OPEX, margins What are ROI scenarios? How do we manage the risks? What are the key milestones? What are the critical success factors? Budget Analysis

12 Benefits of the proposed changes will come from six areas and initial forecasts suggest they are significant: 1. Increased stand alone Solution XYZ sales 2. Increased XYZ sales to current customers 3. Increased XYZ and technology sales to high-end customers 4. Increased XYZ and technology sales to following market by developing a targeted proposition 5. Improved margin 6. Protection from business erosion Incremental revenue p.a. by year 5 $800k-$1m $480k-$600k $5m-$7.5m (IT $1m-$1.5m) $5-$6m (IT $500k-$600k) Currently unquantified $1.24m in lost IT share Return on Investment Year 1Year 2Year 3Year 4 Year 5 -$5m 0 $5m $10m $15m $20m $25m $30m $35m Highest negative in investment cycle $2.6m Cumulative Revenue Quarterly Revenue An estimate of implementation costs suggests payback could begin after 24 months Key Assumptions -Transitional costs tail off after 24 months -Ongoing costs after change remain the same as now. Any cost savings taken as benefit, any new staff taken on through restructuring -Average total cost to employ project team is $1,200 per day during implementation 3. Our Approach Capability Assessment (2) - Budget Analysis, illustrative Question: What levels of ROI can be expected and when?

13 3. Our Approach Market Assessment Market AssessmentKey driversKey issues and questions Regulatory & certifications Characteristics (intrinsic environment) Features/ technologies required Existing technologies & limits Decision making Usage trends; sensitivity Key players, offering Distinctive advantages, barriers Best practices Economics Go-to market routes Segmentation Size & growth; forecast Market penetration Product switch What are the trends/ behaviours/ expectations? Interests in new approach? What are the opportunities? What are the key success factors? How is the market segmented? What are the opportunities? Which ones should be captured? What share can be reached? Key competitors SWOT Most likely scenarios for supply/demand balance, implications Transferable best practices? Features Segments Distribution Does the product need to be adjusted to local specificities? What’s the impact? Adjustment by country/ region Competition Pricing, Positioning Distribution Differentiation strategies Customers: Needs/ unmet needs Price points, elasticity External factors (regulation, etc.) Segments: Rank target markets & segments Addressable market

14 Revenue from segment (000's) Revenue growth Company G Company C Company F Company H Company E Company D Company B Company A (US only) Size of the bubble: relative breadth of portfolio 3. Our Approach Market Assessment (2) - Competitive Analysis, Illustrative Question: How does breadth of portfolio translate into revenues and revenue growth?

15 3. Our Approach Marketing Strategy Marketing Strategy Plan Fit with current strategy, objectives and projects? Impact on existing projects? Sales scenarios Margin scenarios KPIs relevant to the business (NPV) Roadmap (short, mid, long term) Action plan (quarterly plan for the first year) Key driversKey questions Segment to be targeted Product characteristics Unmet needs to be covered by the new product Distinctive advantage Strategic fit with portfolio How is the market segmented? What is the proposition to customers? What is the unique selling point? How can the product best complement the portfolio? Distribution and channel model What is most effective way to reach, sell to and retain customers? What adjustments are needed to current model? What are the pitfalls to avoid? What are the key actions to be launched? What is the business scenario? What are the key assumptions? What are the key success indicators to monitor? Cannibalisation/ substitution Existing product/ project lifecycle Impact over current investments Draft critical pathway for launch Distribution strategy Validation of value proposition Impact of new product on existing product portfolio Sales and margins forecasts, KPI's

16 Top long term complications Top short term side effects Top target values Middle long term complications Middle short term side effects Top cost of disposables Standard size Top learning time Top staffing time Middle learning time Middle machine purchase cost Small size Top integration Q C E E E C C Question: what set of features and benefits are most likely to lead to purchase? Conjoint Analysis of Customer Priorities, Medical Technologies Q Quality C Cost E Ease of Use Top machine purchase cost Middle cost of disposables Quality of Treatment Total Cost Ease of Use/Ergonomics Category Utility/Score ! Q Customers overwhelmingly traded Cost and Ease of Use for Quality of Treatment. The ranking of sub- levels showed meaningful variations per country. Conjoint analysis tests the criteria buyers use to make purchase decisions by forcing them to make trade-offs between different features/benefits. E 3. Our Approach Marketing Strategy (2) - Value Proposition, Illustrative CategoryUtility/Score

17 3. Our Approach Marketing Operations Marketing Operations Plan Key driversKey questions Local Product usage & preferences Product features specific to targeted local market Packaging specific to targeted local market What product adjustments are required to adapt locally? Any certification required? What are local regulatory requirements? Product & packaging adjustments Competitor price Churn rate Production costs Customer price acceptance How price sensitive are customers? What’s the price elasticity? Do we target premium position? Price levels Brand Product features & quality level Warranty Packaging What is our unique selling point? What are the priorities of our target customer? Do we target premium position? Customer value Promotional mix: advertising, sales, promotions, PR Budget Program & targeted impact CRM model Which message will resonate best with the customer segment? Which media provide optimal access to our target? How do we roll it out over time? Promotion plan Sales force, tools & training Distribution & logistics CRM tools Product management tools & KPIs Who will sell/ distribute and how? What are the tangible/ intangible assets needed? What are the projected results & boundaries? Support tools for effective launch

18 3. Our Approach Launch Monitoring & Adjustments Launch Monitoring & Adjustments Key driversKey questions Product features & quality level Packaging Is product delivering as expected? What adjustments are required? Post-launch product fine-tuning Market penetration Customer satisfaction Actual sales, costs & margin Is product delivering as expected? Are we progressing according to plan? Which KPIs need strengthening? Post-launch product tracking Promotion Distribution Price levels Is performance in line with forecasts? Have unforeseen external factors impacted progression? What adjustment are required? Post-launch product operation monitoring Sales, costs and margin forecast Targeted customer segment Promotion Distribution Price levels What evidence is available to support marketing and promotional efficacy? How do we address the weakest links? Any adjustment required to our forecast plan as a result? Post-launch product marketing plan adjustment

19 1.Concept Definition and Key Challenges 2.Our Focus and Value Proposition 3.Our Approach 4.Why Frost & Sullivan 5.Case Studies and Key References Table of Content

20 Why Frost & Sullivan? Dedicated focus on growth and how new product launches contribute to growth. Track record of successful new product launch consulting projects over 45 years.  Frost & Sullivan combines both Consulting and Research expertise  Frost & Sullivan offers both global and local perspectives  Frost & Sullivan generates synergies across different sectors and markets  Frost & Sullivan is the Growth strategy consulting firm International organisation with 32 offices across all key regional markets Strong understanding of the local issues which underpin the success of new product launch strategies and roll-out Industry expertise supported by an international pool of functional experts Best-in-class consulting methodologies proven to be effective through experience in multiple new product launch projects Experience gained across a complete range of industries and services used to advantage in product launch projects Capability to identify new product launch opportunities across different industries and markets Frost & Sullivan assets for a successful new product launch project :

21 1.Concept Definition and Key Challenges 2.Our Focus and Value Proposition 3.Our Approach 4.Why Frost & Sullivan 5.Case Studies and Key References Table of Content

22 The client: A global medical technology and healthcare company with leading positions in renal care markets The challenge Steady decline in market share of a core revenue-generator Product perceived as less reliable than competition Gaps in their product line and pipeline Hence a need to redefine the product portfolio and establish the value proposition for new products due for launch mid-term. The Objectives Develop a market-entry/ development roadmap Undertake end-user analysis to support the value proposition Complement its business planning with a robust business case Outcome & business impact Clear value proposition to focus all pre-launch initiatives Shift in focus from product to market Market-driven business case for Board Investment in key product features to support the value proposition 5. Case Studies & Key References Develop Value Proposition - Medical Technology Our approach & work Stage 1 - Validate the existing processes and assumptions Stage 2 - Define the Value Proposition by understanding user requirements and perceptions (Conjoint & Qualitative Analyses). Stage3 - Develop a business case to define the product mix, generate addressable market plan, identify risks and generate input for making business plan. Cross-functional team alignment around market needs and client value proposition ‘Best practice’ precedent for ongoing product portfolio assessments

23 The Client Our client was created in 2005 by ultrasound medical imaging experts. Funded by venture capital firms, our client had already performed early-stage clinical studies which demonstrated significant improvements in diagnostic specificity. The Challenge They were about to launch their first system for use in breast cancer diagnosis. To support further investment decisions and attract further investors, the client and their key VC partner needed to validate both the price premium for the new technology and their corresponding business case for launch. The Objectives Validate key points of client’s business case for EU and US: Validate price points for novel system across 6 countries Validate volume and value market potential and estimate five-year adoption curve Identify distributor remuneration models Outcome & business impact Key success factors were identified for our client and price premium ranges were validated. The detailed market scenarios highlighted the impact of validated clinical evidence short-term and of price pressures long- term. The improved understanding of regional variants helped validate go-to-market strategy. The client will use the assessment as objective, third-party validation when raising further capital and during marketing launch at the RSNA annual congress. 5. Case Studies & Key References International launch, innovative ultrasound system, market potential assessment Our approach & work Supported with secondary research, markets were modelled based on information gathered from key opinion leaders in leading breast centres, ultrasound manufacturers and distributors. Market models were drafted for multifunction, breast-dedicated and the client ultrasound system. Market penetration scenarios were drafted based on weighted competitive, quantitative and qualitative factors