Scandu financial analysis PDF

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Analysis of a private company...

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Executive Summary

Table of Contents 1.0

Introduction..................................................................................................................................... 3

2.0 2.1

Macro Economic Environment....................................................................................................3

2.1.1

Demographic Environment......................................................................................................3

2.1.2

Economic Environment............................................................................................................4

2.1.3

Political and Regulatory Environments...................................................................................5

2.2 3.0

Micro Economic Environment.....................................................................................................5 Consumer Behaviour Analysis.........................................................................................................6

3.1

Potential Consumer Behaviour...................................................................................................6

3.2

Potential Influencing Factors......................................................................................................6

3.3

Potential Risks............................................................................................................................ 7

4.0

Segmentation, Targeting and Positioning.........................................................................................8

4.1

Market Segmentation..................................................................................................................8

4.2

Description of Target Markets......................................................................................................9

4.3

Positioning..................................................................................................................................9

5.0

6.

Environmental Analysis...................................................................................................................3

Critical Analysis of Proposed 4P’s.................................................................................................10

5.1

Product.......................................................................................................................................10

5.2

Price........................................................................................................................................... 11

5.3

Place..........................................................................................................................................12

5.4

Promotion..................................................................................................................................12 Recommendations.........................................................................................................................13

Reference List............................................................................................................................................14 Appendix....................................................................................................................................................16

1.0

Introduction The 'Scout' Medical Tricorder developed by the private firm Scanadu 'in 2012 is a

medical diagnostics device that is intended for personal use to measure the basic vitals of a patient. By linking the 'Scout' to a smartphone, the patient can measure their heart rate, body temperature, oxygen level, oxidation rate and blood pressure, by simply placing the device on their forehead for the duration of 10 seconds (Scanadu, 2013). The results are then transmitted to the connected smartphone using Bluetooth technology where they are displayed in form of statistics (Scanadu, 2013). The intended launch of the 'Scout' Medical Tricorder in Australia in 2014 necessitates the analysis of the device’s market contingent on its application. Based on its features, the device is suitable in numerous fields and while it primarily targets doctors and nurses in the healthcare industry, it can be used by medical students, parents, teachers, athletes, nutritionists and sports scientists as well as supervisors to measure the vitals of those under their care, and can also be used by individuals for self-diagnosis. Scanadu is the market leader in developing Medical Tricorder technology, with current developments of similar products seeking to improve or compete with the 'Scout'. 2.0

Environmental Analysis

2.1

Macro Economic Environment

2.1.1 Demographic Environment Since late 2010 when the need for gluten-free products permeated into the mainstream culture, there has been an increasing need for self-diagnosis. According to a study conducted by Scanadu in 2013, the Australian market is largely concerned with blood pressure, with 21% of the respondents in the study indicating that blood pressure measurements were the most

important to them (Indiegogo, 2013). The phenomenon of self-diagnosis and treatment among customers is an emerging trend, as more individuals become conscious about their health and how their environment affects their wellbeing. While consumer self-diagnosis remains relatively new to Australia, the ‘Scout' Medical Tricorder has vast application among children below 15 years (19% of the population) and the elderly aged 65 and above (14%) which are the age groups most susceptible to ailments. The device is also applicable on adults and young adults in mitigating lifestyle diseases, considering the National Health Survey report that 61% of the population are overweight (AIWH, 2012). As a result, overweight adults have a predisposition to lifestyle diseases which can be monitored using the device. Australia has a relatively high rate of lifestyle diseases such as cardiovascular diseases, diabetes and asthma, with 17%, 4% and 10% of the population suffering from cardiovascular diseases, diabetes and asthma respectively (AIWH, 2012). According to the Australian Institute of Health and Welfare (AIHW) there has been a significant increase chronic disease since the beginning of the 20th century (AIWH, 2012). While the chronic diseases largely affect the older population, there has been increasing occurrences of chronic illness among children. Cardiovascular disease remains the main chronic illness in the population and is the leading cause of hospitalisations and mortality. The increase in chronic diseases is indicative of a direct positive correlation in demand, in deference to the ‘Scout' Medical Tricorder. 2.1.2 Economic Environment Given that the 'Scout' Medical Tricorder manufactured in the U.S, the company will need to export the products into the Australian market. Australia has low import tariffs due to trade agreements facilitated by organizations such as American Chamber of Commerce in Australia and American Australian Association, as well unilateral tariff reductions (Acton, 2013).

Consequently, the Scanadu 'Scout' will be treated similar to Australian products. Australia has a highly transparent regulatory environment which facilitates efficiency and will allow for the rapid market penetration of the 'Scout'. Since 1992, there has been continued average growth of 3.5% in the Australian economy while the country maintains low inflation and stable financial systems (Acton, 2013). Reforms driven by the Institute of Public Affairs (IPA) have also reduced the government's mandate in price controls (Acton, 2013). 2.1.3 Political and Regulatory Environments The Australian medical industry is regulated by two key bodies namely Therapeutic Goods Administration (TGA) and Australian Health Practitioner Regulation Agency (AHPRA). AHPRA's core mandate is to public protection by setting standards and policies for registered health practitioners in accordance to the Health Practitioner Regulation National Law of 2010 (Acton, 2013). The TGA regulates therapeutic products including medical devices and technology as per the requirements of the Therapeutic Goods Act of 1989 (Acton, 2013). The body is responsible for evaluating and examining the use of therapeutic goods in Australia in order to ensure they meet required standards and are accessible in an appropriate manner (Katelaris, 2012). The TGA has however been accused by the Medical Journal of Australia (MJA) for lack of oversight in the safety of medical devices. According to the MJA, TGA has failed to systematically compile clinical data on devices to provide adequate demographic data on patients, effectiveness and/or safety of devices already in clinical use (Katelaris, 2012). 2.2

Micro Economic Environment Considering the Scanadu 'Scout' Medical Tricorder is a new technology that is entering

into the Australian market, there are currently no devices that can compete against it. The lack of competitors effectively renders Scanadu a market leader in medical tricorder technology.

3.0

Consumer Behaviour Analysis

3.1

Potential Consumer Behaviour The introduction of the Scanadu 'Scout' Medical Tricorder in the Australian market is

expected to generate positive consumer responses, with anticipated consumers ranging in backgrounds. The primary consumers of the product will be healthcare practitioners who are expected to use it in their respective fields to expedite patient diagnosis during emergencies. Parents are also expected to purchase the product in order to monitor the health of their children in a simplified manner. For instance parents can establish baseline vitals which they may then compare to current readings to determine if a child is feigning illness to skip school. In addition, adults seeking to maintain good health, improve eating habits, exercise or monitor ailments will find the device as an effective tool in achieving their goal. For instance individuals going to the gym may include oxidation and heart rate readings to their regimen to establish the efficacy of their exercise in deference to their daily goals. The product is therefore likely to revolutionize self-monitoring by enabling individuals to effectively monitor their fundamental vitals. This will also improve the efficiency of healthcare services by enabling practitioners to identify irregularities in their patients’ vitals and administering preventive measures to offset further progression of the condition. Early diagnosis of conditions such as strokes and other cardiovascular diseases is essential in saving the lives of the patients and therefore the device may be the primary tool in early detection of diseases thereby reducing mortality rates and healthcare costs (Thrassoua et al, 2012). 3.2

Potential Influencing Factors Alcohol and tobacco consumption are inherent components of Australian culture with

consumption trends dating back to 1808(WHO & AIWH, 2012). AIHW asserts that smoking of

tobacco smoking is the kernel of preventable diseases and mortality in Australia, attributed to 8% of the reported cases of disease in 2011. 15% of the population above the age of 14 smoke daily although the rate has been declining (AIWH, 2012). 7.2% of Australians over 12 years consume alcohol daily, with AIHW data indicating that 26% of males and 9% of females are chronic consumers of alcohol (WHO & AIWH, 2012). Such data underscores the need for the device to monitor lifestyle diseases in the population, while also being used as a sensitization tool to educate the public on the negative effects of such vices. Considering the device is not intrusive and involves simply placing it on the forehead, there should be minimal resistance from consumers on personal or social grounds (Thrassoua et al, 2012). Elderly consumers and individuals unfamiliar with mobile applications may find using the device challenging since it requires one to install an application on their phone that will display the data. Such individuals may find learning to use the device problematic but can still be able to use it if assistance is provided (Barczak, Sultan & Hultink, 2007). Australia has an average ICT literacy rate of 65% and since the device has a moderate learning curve, it remains highly marketable despite the ICT literacy being lower in rural areas and among indigenous populations (Ming, 2012). 3.3

Potential Risks The most outstanding risk with the device is the potential for malfunction given the

amount of data collected within 10 seconds. If placed in an unregulated environment and exposed to high temperatures or physical damage, the device can generate inaccurate results causing erroneous diagnosis by the patient or practitioner. The variations in vitals between individuals may also be misinterpreted when compared, causing unnecessary anxiety among patients. To mitigate such risks, customers should be advised on the most appropriate way to use, clean and store the device (Thrassoua et al, 2012). Customers should also be educated on the

differences in body vitals and the threshold change levels that should necessitate medical advice or intervention. 4.0

Segmentation, Targeting and Positioning

4.1

Market Segmentation Based on the vast application of the Scanadu 'Scout' Medical Tricorder in the market,

several market segments can effectively absorb the applications and benefits of the device. Primary care providers, first responders, parents, companies and individual users are the main segments that can derive the benefits of the device through different circumstances. Primary care providers such as physicians, general practitioners, doctors and nurses will have the capacity to use the device to measure their patients’ vital signs prior to recommending further examination. This segment is the vanguard of the healthcare industry and will employ the device to buffer resource allocation across the industry (Aaker 2008). First responders are individuals who address health emergencies and the device has the potential to simplify their work by identifying affected vitals in a patient. The parents segment is distinct in that the primary use of the device will be to monitor the health of children given that the young are highly predisposed to illnesses. Companies on the other hand may use the device to monitor the wellbeing of their employees particularly individuals working in hazardous environments. If an employee does not reach the threshold vital levels, the company may temporarily prevent the employee from working in order to mitigate injury, death and subsequent litigation (Thrassoua et al, 2012). The broadest segment is individual users which may consist of health-conscious users, athletes and chronically ill individuals who will primarily use the device to monitor their vitals and seek medical consultation in the event of irregularities. 4.2

Description of Target Markets.

The Primary care providers, first responders and parents’ market segments are the most attractive markets to serve, contingent on the idiosyncrasies and demographics of each market that will sustain demand. According to a 2012 World Health Organization (WHO) report, Australia has 7,151 primary care firms that serve 46% of the population (WHO & AIWH, 2012). The country also has 296 publicly funded long-term facilities and 2464 privately operated longterm facilities which provide primary care to the elderly (WHO & AIWH, 2012). The primary care and GPs and long-term facilities thereby provide healthcare services to 56% of the total population, indicating that the demand for the ‘Scout’ would be high since it would be use as a patient evaluation tool in these facilities. The WHO asserts that primary care and emergency departments are the main entry points into hospital care in Australia, with the country reporting 1.2 million emergency cases and 8.9 million inpatient episodes in 2012 (WHO & AIWH, 2012). The statistics underscore the need for the Scanadu 'Scout' Medical Tricorder in patient examination and monitoring in emergency and inpatient services. According to the Australian Bureau of Statistics (ABS), children below the age of 15 years constitute 19% of the population, and 2011 census data indicates that the country had 5.68 million families (ABS, 2012). With the need for the ‘Scout’ to monitor child health highlights the potential demand for the device assuming each household only requires a single device. 4.3

Positioning Considering that there no competing brands against the Scanadu 'Scout' Medical

Tricorder, the barriers of entry into the Australian market are significantly low. The lack of competitors also implies that Scanadu as a market leader has the potential to define its own positioning contingent on potential developments in the market in terms of price and efficiency (Hallbäck & Gabrielsson, 2013). By projecting the anticipated entry of competing brands, it is

possible to hypothesize the positioning map of the scout given that several other firms such as BioscanR, Alpha Lab and Visualant are in the development stages of products similar to the 'Scout'. The scout is projected to retail at approximately $200-$300 in Australia and is already known to measure 5 vital signs with 99% accuracy allowing for the development of a positioning map (Fig.1 Appendix) 5.0

Critical Analysis of Proposed 4P’s To effectively implement the Scanadu 'Scout' marketing strategy, it is essential to

examine the 4P's marketing mix tools with respect to the target markets. 5.1

Product The core product is the Scanadu 'Scout' which is basic level product that consumers will

seek to buy from the producer in order to measure their vital signs. The actual product is the benefits offered by the product including efficiency, simplicity and low cost measurement of one’s vital signs through the combined use of the device and a smartphone. The augmented product consists of the other intangible benefits that the product will offer. These products will be built through after sales service, warranties, customer education, and free deliveries (Baker, 2008). Rapid market adoption will ensure the market success of the product and given that the product was initially conceptualized in 2012 and is expected to retail in March 2014, it evident that the ‘Scout’ has relatively short time to market and time to revenue periods. As a new and innovative product in Australian market, the firm has maintained consistency in the product’s sales and development cycles (Rhodes, 2009). This has been achieved through simplicity of the product allowing for rapid integration thereby overcoming integration and organization barriers. Simplicity of the device and the integration with existing mobile technology will also mitigate

any information barriers allowing for the simple provision of information of the device during the sales cycle (Rhodes, 2009). Given that using the device does not require customers to change their behaviour in order to use it, there are no behavioural barriers enabling the product to meet the threshold of rapid market adoption. 5.2

Price The Scanadu 'Scout' is will be a new and innovative product in the Australian market and

therefore a penetration pricing strategy will be essential in raising awareness of the product through low pricing in order to capture and retain a significant market share (Aaker 2008). However, the product should be able to meet production costs and target profit margins while increasing necessitating pricing ...