Essay on Ohmeda
Ohmeda, a wholly owned subsidiary of the BOC Group, operated historically in three key areas: medical equipment, gases, and supplies. In 1985, Ohmeda’s president, W. Dekle Rountree, was planning to exit gases and supplies in order to focus solely on high-tech medical equipment. Through this shift in strategy, Rountree was hoping to grow equipment revenues from $95M in 1985 to $158.5M in 1990.
In order to execute successfully on his growth plan, Rountree would need to re-assess Ohmeda’s marketing channel strategy. In 1985, 43% of equipment sales ($41M out of $95M) were booked through dealers. Dealers provided increased coverage, but also carried significant …show more content…
Ohmeda segmented the market into six categories based on population density (urban vs. rural) and hospital bed size. Within these categories, the specific decision maker varied by product, ranging from the head nurse to an anesthesiologist, respiratory therapist, or hospital engineer.
Ohmeda did not appear to have a specific strategy in place in terms of how best to sell to various decision makers. As a result, sales effectiveness was inconsistent across segments. For example, while small urban hospitals (<200 beds) typically only required 15 hours of selling time for anesthesia systems, large urban hospitals (>700 beds) required 36 hours. Although larger hospitals may have a more complex decision process, it is unlikely that extra bureaucracy alone would account 21 additional hours of selling time.
Ohmeda’s ineffective sales strategy for large urban hospitals was a serious problem. Market share for anesthesia equipment among urban hospitals with >700 beds) was just 22.7%, significantly lower than all other segments. At 39.8%, market share for urban hospitals with 500 – 699
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