The primary marketing strategy decision that has to be made in the Becton Dickinson (BD) case is whether to go along with APG's request to brand BD products with the APG brand and distribute them through APG-selected distributors. In order to analyze this situation, the market, competition, price, and product need to be analyzed thoroughly.
The market,, as described in the case, was extremely price-conscious and had moved from purchasing made by individual decision to purchasing made by professional purchasers in multi-hospital systems. In addition, the physicians' market was growing in importance. It can be concluded that in this market companies that offer the lowest prices and are willing to work with the new professional purchaser/centralized multi-hospital buying groups would have an edge over their competitors.
Competition was fierce. BD's closest competitor was Terumo, which had increased its market share by keeping its price level while BD increased its own price and subsequently lost market share. BD's other competitor, Sherwood Medical, was primarily a U.S.-only competitor with low market share in tubes and needles.
Price was a key factor in this case. Since most labs made the bulk of their money doing blood tests, the costs of blood-testing supplies was a critical factor in their profitability. The case states that "Commercial labs compete with each other primarily on price," and with the change in government reimbursement for Medicare patients being based on diagnosis-related groups instead of actual patient costs, hospitals had an urgent need to reduce their costs (Cespedes & Rangan, 1991, p. 4). Thus, the conclusion is that price is a critical factor for BD's marketing success and must be competitive.
Product is a pivotal factor in this case. BD's patented VACUTAINER product is superior to those of its competitors because of its evacuated tube technology, which su...