Market Penetration Strategy

Empire's long-term marketing objective is to gain leadership of the total medical diagnostic software market. Empire will be positioned as the leader in three-dimensional, interactive analysis and treatment planning software, recognized by international researchers as capable of best depicting anatomic truth. The primary consumer target group is early adopters looking for technology enhancements to current methods. Secondary emphasis will be placed against those users who are interested in lowering costs and improving efficiency.

To realize the marketing objective in the near-term, Empire plans to establish market position within a segment of the overall medical software industry by first penetrating the orthodontic category. Empire plans to grow the relative size of this market segment by providing technology advantages (see figure 1). There are a few competitors currently offering basic versions of diagnostic & treatment planning software in the orthodontic market and users are ready for product refinements such as three-dimensional digital tools. This strategy for increasing market size will also apply to other categories in the medical industry. Even in medical markets that have embraced 3D technologies, such as CAT scans, none offer interactive tools at a low cost and radiation.

In addition to growing the market category size by offering new technology, Empire's business model paves the way for new consumers to use diagnostic and treatment planning software. Currently users must pay $4,000-$10,000 up front for this capability and wait several years to realize a return on investment by using it to treat patients. With the Empire system, the start-up price is eliminated and the doctor is able to assign the costs directly to the patient. By removing price barriers, Empire increases the overall available user base by marketing to doctors who are reluctant to buy expensive systems.

Since orthodontic treatment is not normally covered by insurance, most Doctors are price sensitive, which requires Empire to launch services using standard pricing structures instead of charging inflated costs at service inception to cover introductory costs. Market size and the potential for competition combined with the fact that typical users will be unaware of innovations in three-dimensional tools require high promotional costs when service is launched. With these factors in mind, a "rapid market penetration strategy" makes the most sense. This strategy is proven to bring about the fastest penetration and largest market share.

A rapid penetration is essential to establish Empire's position as a pioneer in three-dimensional medical technology. Firms that pioneer new markets typically develop sustainable competitive advantages including long-term market shares of 29%. By serving as the industry pioneer, Empire also gains a brand name advantage associated with the technology, akin to Campbell's, Coca-Cola, Eastman Kodak, Hallmark and Xerox. This forerunner position will allow Empire to offer higher product quality than competitors and broaden product lines before the competition into other medical industry segments (see figure 2). Empire already has plans and research into expanding into other skull-based (Cranial) products for addressing oral surgery, endodontics and facial surgery markets as well as developing orthopedic based products for the spine.

Empire's marketing plan also mitigates traditional introduction stage factors that might detract from a strong service launch. The orthodontic market sees highest volumes seasonally during the summer months. Starting to offer products in the fall and servicing test markets initially will allow the Company to solve any technical problems that may arise. Production availability and training logistics problems associated with new technology are alleviated by initially offering three-dimensional products only to doctors using certified imaging labs. Labs already employ technicians familiar with digital technology making them easier to train.

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