Service orientated approaches for medical products
Author: CIM MMG
How can medical companies develop better solutions for their customers? CIM's Medical Marketing team's, Dr Nick Hutchinson, spoke to Dr Josephine Go Jefferies of Newcastle University Business School and asked how thinking in terms of service can improve medical product marketing.
What types of problems do you see medical device firms encountering when commercializing new products?
I often see medical firms falling into the trap of developing new products that fail because healthcare providers don’t experience the value promised by the company’s marketing department. Companies that focus on products can leave innovation and commercial cycles out of harmony and lead to very unpredictable revenue streams.
We are encouraging medical firms take inspiration from other sectors and to consider a service orientation when developing their offering. For example, Rolls Royce recognised that their customers didn’t want to own and maintain jet engines but rather they wanted to power their aircraft. Responding to this insight, Rolls Royce developed a ‘power by the hour’ service contract whereby they own the engines and take responsibility for ensuring they are running so that their customers can always keep their aircraft moving.
What benefits might medical firms see from a service orientation?
A service orientation promotes closer interactions with customers. Often it implies close monitoring of the service provision. This can lead to unique insights and a deep understanding of customer needs. Firms become aware of how customers experience critical points of interaction with their offering and the behavioural and emotional impact it has on customers, how it relates to expectations and anxieties, how the exchange of effort and satisfaction are assessed, and how they consider devices from the moment they pick them up. Essentially, we find that it reveals a hidden world of ways in which value can be co-produced with stakeholders such as practice managers, health economists, GPs and patients.
How can they use a service orientation to develop superior offerings?
Firms need to understand their customer’s entire process for delivering a certain health outcome. We collaborated on a project with hospital biochemists on the problem of GPs ordering too many lab tests rather than using existing simple diagnostic tests for urinary tract infections. We realized that the solution was not to immediately focus on developing a better diagnostic test but to study the behaviours leading to use of lab tests. Our findings focused on service innovation to change the process of ordering lab tests. This resulted in ideation to bring about a change that forces GPs to include the diagnostic test results along with lab samples. This new process could reduce demand for routine lab tests and focus biochemical engineers on developing a new product to improve accuracy of urinalysis that also addresses GPs’ anxieties about knowing how to interpret the results with confidence.
Firms that adopt service orientation rather than focussing on products tend to develop supplementary services that allow them to expand into new customer segments, deepen relationships with customers and obtain customer testimonials more easily. Perhaps most excitingly, firms that can capture the contextual experiences of their customers can continuously improve their offering. They are constantly innovating and finding new ways of co-creating value with clients.
What are the challenges of applying a service-dominant logic to medical marketing?
In contrast to physical products, services are more heterogeneous because of the way they are produced and consumed simultaneously in a variety of contexts. They cannot be stored in an inventory so a firm must work hard to obtain customer insights and ensure it can deliver its service at the right time in the right place. Newcastle University Business School is keen to put into practice service-orientation theory with medical companies through knowledge transfer partnerships. This will provide us with a greater understanding of the practical implications and difficulties firms experience when transitioning to a service dominant paradigm. Companies can contact the business school to find out more at 0191 208 1500.
Event: The commercialisation of medical products, 15 February 2018
Josephine Go Jefferies will be speaking at the CIM event The commercialisation of medical products at Newcastle University Business School on 15th February 2018. Click here to book.