Market research can give medical device manufacturers valuable information about technology, materials, market trends, major players and competition, geography and general market conditions. From there, a company can determine critical insights, including device characteristics, product adoption, messaging and pricing. Depending on a company’s needs, the process can be timely and costly, but the return on investment can also be significant.
When approaching research, Robert Kaminsky, president and CEO of MedSpan Research recommends that companies first look at publicly available data (also known as syndicated research). If syndicated research studies out there, it will be at a much lower cost. If companies can’t find what they need through those channels, then they should pursue custom research.
In the following interview with MedTech Intelligence, Kaminsky discusses the cultural resistance at companies that can get in the way of conducting accurate market research.
MedTech Intelligence: What are some of the biggest hurdles in helping device companies understand the importance of a well-designed market research strategy?
Robert Kaminsky: They of course vary from company to company, but for many medical device companies, cultural resistance is one of the hurdles. Many of the companies have grown up with a culture that emphasize sales rather than marketing, and they believe perhaps to some extent that you pay sales people enough commission, they’ll get the job done. To these companies, market research is a new concept.
There’s also an outgrowth of cultural: When talking to medical device companies, there’s a common belief that feedback from the sales team is sufficient—that it will guide messaging and tell us what customers are thinking. It takes a little time to convince that there’s bias on both sides of that equation. One is you’re only talking to one sample, your customers. There’s a reason they picked you as a vendor in the first place, so you’re only talking to a sample of the market that has one perspective—how are you going to address the other market sectors unless you get feedback from them? And the people asking the questions, the sales people, definitely have a bias; they may only hear what they want to hear or share what they want to share with the marketing team. When you have your own sales team doing it there’s potential for miscommunication between from the customer to the sales person to corporate. There’s also positive side: It’s inexpensive, convenient and cheap, and therefore that’s a common direction that device companies turn.
Another hurdle is the belief that market research yields little return on investment. Part of that is driven because medical devices, especially in comparison to pharmaceuticals, tend to each have a much lower revenue stream. It’s not often that you find a device that yields a billion dollars in sales a year, but you will in pharmaceuticals. When you have more sales, you’re willing to spend more money to drive those sales.
However, in our experience, what we’ve found is that once companies try market research, they tend to like it. They like the objective insights, the advanced analytics and the tools it gives them to drive further success.
MTI: What advice can you offer to companies that may not know how much they should budget for market research?
Kaminsky: How much to spend—that question comes up for every single client. Most times clients will come to me and before they say anything, they say “I have no budget but I’d like you to do a project for me”. We’ll also share with clients that budgets should be a concern and the methodology we decide to use together will always balance outcomes of the research, and the breadth and depth they’re looking for, versus their budget considerations. Medical device companies have to keep in mind that they always have to make that tradeoff when they’re thinking about how much to budget for market research.
The second principle: You’ll spend more money on market research when there’s more revenue at stake. For example, if you spend more on a pricing study where a small error can have a big impact on how much revenue is generated or left on the table rather than a market positioning study—even if you’re off by a little bit, it doesn’t matter, you’ll still be going in the right direction. So you’ll spend more on a pricing study than you would on a positioning study.
In terms of practical matters, it’s always up to the companies to ask for different options when doing market research. Consider the partner, the different methods they use, the different sample sizes, and given those kinds of levers, what kind of budget options can be considered. In selecting the options, the client will always want to balance the breadth of data versus what they’re willing to spend on it and its potential impact on revenue.
Lastly in terms of budget, we’ve recently seen that clients will ask for an a la carte menu sometimes. They will say they want to do market research and would like the vendor to do part A, B, and C, and they’ll do the rest in house. We’ve seen clients who are likely to do all or part of the respondent recruiting in house. It’s nice and helpful for the sales team to spread invitations to the client base and then have them go through the normal independent market research study. On the other hand, you’d want an external source to recruit non-clients so you have a balanced perspective in the study. We’ve seen clients tell us to give them the raw data and then they will analyze the data in house.
MTI: Who are the key stakeholders that should be involved during market research both in development and post-launch?
Kaminsky: It’s mostly the same across the phases, but there are tweaks in the later stages. During the decision making process to conduct market research, our clients will tend to get involved and enlist the people on their team who will have input on how the study will be designed and those using the results. Then they’ll get approval from senior management to make sure that what they’re considering is in line with the way the business is going and that it’s an appropriate way to invest funds. From there more of the market research experts and end users of data will get involved. The end users [in this instance] are typically marketing, depending on the stage of the product; the product development team during the design and execution of the study; then senior management would potentially get involved again at the end (this usually happens at smaller medical device companies).