In early 2005 T.C. Chung, the departmental head of 3M Taiwan healthcare division was facing a decision whether to launch a product called Acne Dressing in Taiwan. The Taiwanese subsidiary had been transformed from a petty sales office in 1969 to one of 3M’s most extensive and successful subsidiaries in the 2000’s. The development project has a couple of major problems that need to be solved before Acne Dressing can be kicked off in Taiwan. Chung had the product go through 3M’s evaluation system and now he’s facing a big question – what to do with the product and how to make rational decisions about the future. In this case answer we analyze the problems that need to be solved if the launch is to be done. We address these problems and offer concrete recommendations for Chung and his team on how to continue with the project. Although Chung seems to be quite inexperienced and in need of support, the powerful 3M resources for product development and the knowledgeable project team consisting of different departments in 3M will provide him with all the resources he needs.
As the development of Acne Dressing is a strongly technology-based project, the company HQ was heavily involved in the NPIS review that the product ultimately passed. Some aspects of the final form on the product however, still remain not clear enough. During the review process the local financial and technical divisions took part in finding ways to transform Hydrocolloid Dressing into a marketable product which costs were reasonable. The extent of this analysis seems not to have been adequate, as in the final stage of the review the HQ raised the issue of the potentially very costly product development. As this was the main concern raised by 3M HQ, it should be carefully looked into and further analysis done. There were two additional concerns, these raised by the local project team. Firstly, according to the teams review, the potential customer group for acne treatment products in Taiwan seemed to be used to traditional methods for acne treatment.
However, 3M had already noted that especially teenagers were using other kinds of products to help with acne – e.g. 3M’s Micropore Surgical Tape. Another thing to note relates to the fact that at this point nurses were the primary consumers of 3M hydrocolloid dressings. The case states that nurses had a tendency to cut the product into small pieces and use those pieces for superficial skin blemishes. This shows 3M that well-educated users of the product had already started using it for their planned purpose and in an innovative way – even without 3M asking them to do so. Secondly the team concluded that there are no similar products as Acne Dressing in the taiwanese market.
As this was the case, the information on customer behaviour and potential sales was limited. This strongly suggested that customers would need to be educated to realize the potential of the new product. During the time there was an ongoing hype for do-it-yourself health care in TW during the time, and people were actively looking for new ways to look healthy. This fact suggests that the target groups of Acne Dressing could well be very receptive for the marketing of never-seen-before products.
Chung has multiple options concerning the product. With help from HQ, he should analyze the process costs of transforming the high-end hydrocolloid materials into customer-size Acne Dressing. The team should calculate if the material could be reworked into a usable size with the designs made by technical service department, and specifically focus on the costs of manufacturing. If the process is costly, the retail price of the product might be too high for the average 15-35 years old customer. A layman’s idea would be to cut down the size of the package and redesign it so it would be used like a plaster, of which one can cut suitable sized pieces for use. Also, the project team should have the HQ laboratories conduct a proper research on the dressing’s effectiveness against acne. This would be crucial in marketing efforts especially as the customer group is used to ‘traditional’ scientifically proven acne-treatment methods. A thorough research for all health effects is not needed with this position innovation because the material has already proved its value in hospitals around the world.
This would follow the position innovation strategy through product upgrading (John Wiley & Sons, 2009). As 3M’s marketing department sees an opportunity in the new product, this would be a great possibility for a nation wide marketing campaign around the new product. With the risk that the price might be too high for some consumers, it should be sold in three different varieties of packages. Small, medium and large. The small package would be aimed at a segment that could not afford to constantly use the product. It could be used for the absolute worst kinds of acne induced blisters. Also the small package would work as an low risk purchase for the customers.
After the product proved its excellency, the consumer would gradually move on to the medium and large packages. As the product would be quite new and require consumers to change the way they purchase health-care, it is important to emphasize two aspects: sampling and user experiences. This would be achieved by letting consumers test the product and see its effectiveness. Then it would be important for the user experiences to be distributed in nation-wide campaigns in the largest media platforms.
The Acne Dressing is a great product for the current market situation. It has gone through 3M’s organization-wide evaluation system, NPIS, without too many challenges. The product should be launched if the financial and technical service approve of the costs of manufacturing and deem the product positive. Chung must trust his local team and their advice, and abandon HQ’s advice in this matter. Should Acne Dressing prove to be a tremendous success in Taiwan, the possibilities for expanding are huge. As 3M Taiwan already has expanded to China, bringing in a new product to the market of a billion people could be business transforming. The whole acne market in the world is estimated to reach revenues of over $3 billion by 2016 (Wood, 2010). Chung must remain firmly behind the decision and trust the local team in Taiwan. The pessimism of the headquarters are not to be taken into wider consideration as long as necessary additional analysis is done.
Wood, L. 2010. Research and Markets: The Global Acne Market Is Estimated To Reach Revenues of $3.02 Billion by 2016 at a Compound Annual Growth Rate (CAGR) Of 0.7%. [online] Available at: http://www.reuters.com/article/2010/05/07/idUS223712+07-May-2010+BW20100507 [Accessed: 30 Sep 2013]. John Wiley & Sons Ltd., 2009, Managing Innovation (Lecture slides)