Itcorp Sensorium Healthcare IT Marketing Plan

Company Background and Mission

This marketing plan details Itcorp's business model. It addresses the company's mission, policies, strategies, and objectives for achieving profitability. Itcorp's integrated software and hardware solutions for healthcare providers are described at length, along with long-term objectives.

Itcorp plans to begin operations in January 2006. What is unique about Itcorp is how it got its start. In 1988, two partners, Max Renfield and C.L. Rotwang, decided to start Jetson's, a business offering IT solutions to small- and medium-sized companies. In those days, the market was segmented mainly according to company size. In the early 1990s, many of the companies Jetson's had been serving had grown to the point that the company's IT solutions were no longer adequate, and so Jetson's had to expand its product line to continue serving those customers and prevent them from switching to competitors.

By 1996, it became obvious to both partners that the market was changing. Long-standing customers who had been satisfied with generalized solutions had become more tech-savvy and began to insist upon customized solutions based on the specific needs of their particular industry. For instance, law firms do not have the same database requirements that grocery stores and hospitals do. Further, many of the healthcare facilities that had been loyal Jetson's customers were being bought up by large medical services management corporations and were no longer free to choose local vendors for their IT solutions.

Ms. Rotwang chose to start a new company dedicated solely to serving hospitals, clinics, and other patient-oriented facilities, and sold her interest to Mr. Renfield, who was confident Jetson's could remain profitable with some careful adjustment of its business model.

Flush with cash from selling her interest in Jetson's, Ms. Rotwang formed a strategic partnership with a minor computer and remote-sensing company called Velocitrex and started her own IT software firm, "Itcorp." Velocitrex was looking to expand its market share in what appeared to be a nearly saturated market and was receptive when Ms. Rotwang approached them with her offer.

The arrangement between Itcorp and Velocitrex is entirely contractual; neither company owns any portion of the other. Both firms remain independent, but Velocitrex agrees to let Itcorp perform all marketing functions for the integrated hardware and software solutions it plans to offer the healthcare services segment. All product specifications are determined by Itcorp; Velocitrex only manufactures and delivers the hardware.

Itcorp will emerge from its start-up phase in January 2006 and simultaneously begin manufacturing and selling its integrated IT solutions to hospitals, clinics, nursing homes, and similar facilities throughout the United States.

Our mission is to fulfill the information technology needs of the healthcare provider community by maximizing the value healthcare providers derive from their integrated information technology systems. When it comes to information technology, Itcorp is It.

Itcorp markets integrated software and hardware solutions to the healthcare provider community.

SWOT Analysis

Our primary key to success is our innovativeness in supplying high-value products that maximize each client's budgeted IT dollars. We have skillfully integrated custom software and hardware with existing software and hardware platforms to achieve a highly marketable synthesis.

Itcorp operates in a market densely populated with IT companies in general, as well as those that specifically serve the needs of the healthcare provider community. A few large IT solutions providers — such as Microsoft — offer proprietary systems to some healthcare providers, along with more generalized database solutions such as Microsoft Access, which healthcare providers can adapt to develop their own IT solutions. There are also more specialized IT solution providers, such as Allscripts Healthcare Solutions, among others.

The market also includes healthcare providers, some of whom outsource their major information technology needs, some of whom develop their own in-house solutions, and the vast majority who acquire licensed software solutions from specialized IT solution providers. Pharmaceutical companies and their intermediaries, who wish to supply goods and services to healthcare providers, are another important presence. Healthcare patients are, of course, a critical component of this universe. Finally, especially in the United States, government agencies represent a continuing presence in healthcare, and some consideration must be made for government involvement in most aspects of the industry.

Among Itcorp's strengths are its managerial and research expertise. When Ms. Rotwang formed Itcorp in 2005, several key members of Jetson's highly effective software development team, along with some of its more forward-looking managers, joined her and assisted in starting up the new company. Itcorp is also characterized by innovativeness, as evidenced by its highly advanced, patented technologies — specifically the patents relating to the Sensorium system, described in detail below. Because some of our technology is proprietary and represents fundamental patents in the healthcare IT space, it is extremely difficult for competitors to duplicate our integrated IT hardware and software solutions.

Another strength is the esprit de corps that exists within our firm. Employees and managers do not have the adversarial relationship common at other firms. The fact that the employees' labor union is entirely sponsored by management contributes to this, but a more important factor is that everyone at the firm is expected to contribute to its long-range success. If a package handler in the mailroom thinks up a new way to improve productivity, the hours spent sorting packages in no way discount the value of the idea. Management is pleased to consider every new idea and embrace those that hold promise for furthering the firm's long-term goals, regardless of source, rewarding contributors in proportion to the value of the idea. Essentially, even the most junior employee feels valued and recognized as contributing more to the firm than what their wages alone reflect; the relationship between management and labor is far more collaborative than at most competitor firms.

Regarding our employees in general — from the custodial staff to the sales force and every level of management — we regard labor as a resource to be maximized, not a cost to be minimized. This distinguishes us from most, if not all, of our competitors.

There are a few difficulties we must acknowledge. Because so much of our proprietary software is designed to integrate with others' software and hardware — such as Microsoft's specialized healthcare IT application packages — it can take some time to respond to sudden changes in either market expectations or the specifications of the third-party software and hardware we utilize. The lag time in responding to sudden environmental changes is an area requiring improvement. It is partly attributable to the fact that tens of millions of lines of code are typically involved in our software applications, and adjusting for sudden changes that affect integration with third-party packages can require thousands of labor-hours.

Opportunities abound for Itcorp. As healthcare providers move toward paperless record-keeping, their need for IT solutions is growing considerably. This trend is most advanced in North America and Europe, and is also growing rapidly in industrialized Asian countries such as Japan and Taiwan. China lags due to infrastructure and economic constraints, though that will change over time. The same is true for developing countries in general: as they become more technologically dependent, they will require more information technology solutions. The level of record-keeping detail necessary for diagnosing and treating conditions such as HIV/AIDS is substantial, and this is a powerful disincentive to continuing the use of traditional paper-based record-keeping.

As quality of life improves around the world due to the green revolution and rapid industrialization, life expectancy is also rising globally. In many countries, average life expectancy can be expected to double within the next fifty years. As a result, the incidence of age-related medical conditions that were relatively rare only a generation ago creates a logistical challenge for healthcare providers and their government regulators. In many developing countries, life expectancy was once under forty years due to malnutrition and poor sanitary conditions. As governments remedy those conditions, people live into their seventies and eighties, and the causes of death shift from poor sanitation and malnutrition to cancers and heart disease. Alzheimer's Disease, for example, is not a condition requiring significant healthcare resources when few people live past sixty, but it becomes a major concern when the majority live into their eighties.

The fact that life expectancy is rising around the world in response to improving economic and political conditions means there is an ever-increasing need for healthcare-oriented information technology solutions. We cannot say with certainty how much our competitors have awakened to this reality, but we are well-positioned to take advantage when these countries come online with their healthcare IT needs. We will already have our IT solutions configured to serve Swahili and Nahuatl speakers the moment those markets are ready.

The threats Itcorp faces are somewhat vague and difficult to define precisely. However, we have carefully observed the behavior of other firms facing changes in volatile environments and are aware that real dangers exist. We are particularly sensitive to the possibility that a competitor may find a way to leapfrog our entire product line and render it obsolete. A useful historical precedent is the displacement of mechanical adding machines by electronic calculators. When the first electronic calculators were commercialized, they were not introduced by the companies that made mechanical adding machines — which seems counterintuitive. Nevertheless, very few of those adding machine companies remain in business today, precisely because they missed the electronic calculator transition.

Something similar could happen in the volatile, technology-driven environment in which Itcorp operates. It is difficult to plan for such a contingency, just as adding machine companies could not have foreseen the sudden commercialization of transistor-based calculators. The only viable response is to strive to be the innovator — to try to leapfrog over oneself — and never become the "also-ran."

Another threat relates to our manufacturing arrangement. We do not manufacture the hardware ourselves; Velocitrex manufactures it under license from us. However, Velocitrex is only a medium-sized company and is potentially subject to a hostile takeover. Business history offers many examples of companies acquired by competitors not to utilize the firm's resources, but specifically to neutralize a smaller competitor with superior growth potential. This strategy does not inherently grow the acquirer's business, but when pursued by multiple large incumbents it can stifle competition and innovation. The very innovativeness of our IT solutions makes us attractive for this kind of acquisition, making it a real, if as yet unrealized, threat to both Itcorp and our alliance partner Velocitrex.

Marketing Strategies and Objectives

We employ a number of strategies to gain market share and keep competitors at bay. First, we utilize the marketing concept to facilitate growth. As we define it, the marketing concept can be operationalized as follows: (a) determine what the market wants, and (b) determine how to make a profit by delivering it. This differs considerably from the practices of many competitors, who typically invest heavily in researching and developing products and then try to persuade the market to accept them — relying on some combination of the product concept and the selling concept. Many competitors' IT solutions contain features that are rarely, if ever, used by the markets they claim to serve. This is not the case with Itcorp. Instead, we conduct market research to determine the needs of the healthcare industry and then design integrated hardware and software solutions to meet those needs. If we do our job correctly, the process generates profits for us.

Other firms concern themselves primarily with serving the interests of their owners and investors, treating customer needs as almost a secondary concern. Our approach differs considerably: we believe the whole purpose of business is to acquire and keep customers. If we excel at this, profits come naturally and all stakeholders' needs are met, essentially automatically. By staying focused on customers and potential customers, we not only cover our stakeholders' needs but also avoid the cost of concentrating separately on each stakeholder group, yielding a considerable organizational saving.

Our strategy can be summarized simply: do a better job than our competitors at discovering and fulfilling customers' actual needs, rather than assumed ones.

Our marketing objectives can be expressed simply: the sky is the limit. Our current product line represents a considerable technological leap over competitors' offerings — increasing functionality while eliminating unnecessary complexity. Given this, our target market is the entire healthcare provider industry. Any provider using a database, or wishing to use one, to manage its healthcare practice is a potential customer.

More specifically, we plan to enter the healthcare provider market worldwide in a series of discrete steps. First, we will undertake a geographic market penetration strategy in which innovators in a few major cities are targeted through advertising and personal selling to demonstrate how effectively our product line solves their IT problems. To encourage initial trial, we are willing to sell at or below cost. Once a few users in a few large cities are using our product line, favorable product reviews will appear in the trade press and other publications serving the healthcare provider market. Others will then follow, with diminishing need for advertising pressure or personal selling on our part.

We expect word of mouth to contribute significantly to diffusion. Patients and doctors who have experienced the added value of our product line will be dissatisfied with anything less in the future. Healthcare providers offering Itcorp's product line will become patients' preferred providers in any given geographic region. Clinics and hospitals that have not adopted our product line will begin to notice declining patient volumes, and it will not be long before this push-pull dynamic adds momentum to the line's diffusion.

Once momentum has been established in a few large cities, we plan to systematically extend the product line into every major U.S. city with a population over one million. We expect to reach breakeven within two years of commercializing the product, at which point we will move into overseas markets — entering the European and Pacific-Asian markets (Japan and Taiwan) simultaneously, as these two regional markets represent the most developed and technology-receptive segments. In these markets we will repeat our advertising and personal selling approach, adapting it for cultural differences.

We have planned on the expectation that the product line will operate at a loss for the first two years of commercialization. With this in mind, Velocitrex has agreed to cover expenses not covered by Ms. Rotwang's personal investment during this introductory period, with repayment beginning within the second fiscal quarter after the product line reaches its breakeven point.

The product line represents a considerable investment for clinics and hospitals, averaging approximately $7,000 per bed. We expect that only the largest hospitals will be willing to accept the financial risk of early adoption, and even then only on a limited basis. Consequently, we also expect that the first installations will be in critical care areas such as Intensive Care Units. A typical ICU of a client hospital has 20–30 beds; at $7,000 each, this represents $140,000–$210,000, or roughly 1% of our development and manufacturing costs.