If the founders had done research before the actual launch of the VIH they would have known this. If you had been acting as a pre-project marketing consultant to Mr. Lee what might you have done by way of data collection to ascertain the nature of the market? (Remember, this is a developing-world country, and oftentimes consumers have little conceptualization of the product you envision.) would have taken a very systematic approach to building a research methodology that would have taken the following steps. First and foremost I would have decided this would be an expat hospital only, as the extreme pricing pressures in the Vietnamese market on medical services should have been obvious from just observing the market in action. To verify pricing dynamics nonetheless I would have included focus groups on pricing alone with middle class and wealthy Vietnamese. Here is the methodology I would have undertaken:

1. Define the total universe of expat companies in the areas with senior managers who had incomes and age levels where preium medical services would appeal to them. The younger (less than 40) managers, without children, would not see the value of this service. Conversely expat families would be willing to pay for this service to ensure their children received the best car. In completing this first step I would do a census of all companies in the Hanoi area and grade each on a scale of 1 to 10 in terms of their long-term commitment to the region with 1 being no commitment (they could leave tomorrow and 10 being in-country for decades).

2. Next I would take the total number of managers with families (a rough approximation) and those over 40 and put them into a table, next to the "commitment score" from step 1. I would then multiply them against one another to build a rough index of how many expats would likely be in Hanoi for several years. Any company with a score of 7 or more would constitute part of the relevant market. Any score of less than 7 on the company commitment score (from step 1) would signal a very transitory nature of the market. Transitory employees would burn an inordinate amount of time serving and managing their records only to have them leave in a year or two.

3. Based on multiplying the company commitment score by the number of employees who fit the profile (families with children and those over 40) then the total available market would be defined.

4. Next, I would start a primary research methodology to find out what mattered most to these people in terms of unmet needs. This would start with focus groups and progress to questionnaires that measure their relative level of price sensitivity to these services as well.

5. From this research I would next extrapolate the findings to the entire region and see if making such a premium hospital made sense from a business perspective. I would not consider offering services to the wealthy Vietnamese, because in general they have attained their wealth through strong negotiation skills and by being very focused on controlling costs. Vietnamese as a culture would find it difficult to grasp why such premium pricing would need to be paid for what their country's government delivers free in the form of socialized medicine.

To build volume for the Hospital among Vietnamese, it appears that VIH not only needs to build brand awareness, but must also create need awareness in its market. How would you suggest VIH go about creating in the Vietnamese community recognition of the need for higher quality medical care without offending the government and its state-sponsored health care system?

The best strategy to accomplish this is to select a specific area of treatment and focus on being the best in that region of the world. To be a general practitioner hospital, VIH would need to match the pricing of the state-run facilities, and there is no viable business case in taking that strategy. For the Vietnamese population of Hanoi to accept the VIH, it would need to focus on earning a reputation in one of several areas including pediatrics, cardiology or facial reconstruction and cleft lip surgery for example. All of these areas that are very deficient in the Vietnamese medical system today for example and need greater focus, and in those unmet needs is a major market opportunity.

Take pediatrics for example. While the wealthier Vietnamese do not spend for their own healthcare as adults,...

Specifically the areas of cardiology and heart surgery for children, nutritional supplements, and cures for the more advanced forms of disease in the area would support this very specific market positioning.
Further supporting the pediatric specialist approach is the need for better prenatal care and birthing facilities. The bottom line that adults in societies where healthcare is provided by the state will not be willing to pay for their own care, but will support their children's health with much higher levels of spending.

In addition to the steps already taken by Ms. Anh and Mr. Nguyen, what other measures could you suggest to expand the business volume at VIH?

After deciding to not take the positioning of trying to be all things to all people in Hanoi and focusing on just the expat population, then completing the analysis provided earlier in this paper, the strategy of being the best in one specific area of treatment in the entire region is the one I would undertake. What is missing today from the VIH is the alignment of services more precisely with the unmet needs of both the Vietnamese and the expats and the pricing dynamics of the Vietnamese population is unfavorable for a premium service hospital.

I would transform the hospital to a specialty center on pediatrics and look to provide valuable social service to the Vietnamese population for little or no cost by underwriting this public service from the higher prices to expats. This would bring the stature of the VIH way up in the Vietnamese population but also bring in more expats looking to having their children receive the best possible treatment possible.

Expanding on this positioning of premium pediatric and family care, the next step would be to look at partnering with regional medical evacuation companies in Cambodia, Laos and southern China where there is virtually no level of medical service. The goal would be to airlift in clients from these regions for treatment of their children and families.

Finally, I'd completely redefine services programs to make them more aligned with a very specialized area of medical practice and look to subsidize service to Vietnamese families with the profits from premium services. The focus on specialization in the region and being the best pediatrics hospital would bring in more expats with families and also provide a very valuable service to the region.

What risks, if any, do you see in trying to market to expatriates and Vietnamese at the same time?

There are many risks associated with this strategy and the biggest one of all is not having a definitive position in the markets the hospital intends to serve. The primary reason that many businesses fail isn't lack of financial capital, it's lack of focus when it comes to market positioning. Additional risks include the following:

The candid comment from one prospect of being able to afford 50 dancing nurses for the service fee strikes to the core of where VIH has failed in its market positioning; it's seen as elitist today by the majority of Vietnamese, even the wealthiest who can afford their fees.

Lack of credibility in terms of treating Vietnamese due to the expat focus at the launch of the hospital. This has been further exacerbated by the value proposition at the launch of the VIH as being an alternative to medical evacuation services. Inadvertently this competitive position furthered the elitist image of VIH, as it is $5,000 to $6,000 to get medical evacuation if the patient can sit up or between $10,000 to $15,000 if the patient needs to be taken on a gurney on the flight. Just the $5,000 price point is many times the annual salary of a typical Vietnamese worker. Positioning against a service only the wealthiest and more senior members of the Communist Party could gain access to further gives VIH an elitist image.

For many expats, including the one who is defined his ordeal in Exhibit 6.1 of the case, Vietnamese care is something they are looking to escape. Taking the positioning towards the Vietnamese has required VIH to take the pricing down significantly. The trouble with this from an expat perspective is that in many of their minds, there is a definite price/quality relationship in terms of quality of medical care in Vietnam. Expats…