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Prize winner
Case
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Reference no. 597-039-1
Subject category: Marketing
Authors: Marika Taishoff (Imperial College London); Sandra Vandermerwe (Imperial College London)
Published in: 1997

Abstract

This is the first of a three-case series. The overriding aim of the series is to demonstrate how a company must change from the traditional transactional product approach to one more suited to the new world. The old model is based on selling more products at certain margins using conventional marketing tools, whereas the new approach is about the lifelong value of customers and how to achieve that so that everyone in the system gains. The cases discuss the dilemma facing Baxter Renal Division, in the UK specifically, and in Europe generally. Their main product is the bag and solution for dialysis treatment for kidney disorder. Although Baxter had 80% market share by the mid-1990s two major threats had emerged: (1) a competing treatment, cheaper on a bag-for-bag basis, was increasingly being favoured by new economic buyers who had become the more powerful decision makers and; (2) Baxter's dominance in its product market was being challenged by low-cost competitors. When case (A) opens in January 1997, an unprecedented crisis confronted Peter Leyland, recently appointed UK Business Director: five key hospital accounts had been lost. Moreover, the key success factors in the business - the number of patients treated, the kind of treatment received, the number of bags sold, and the proportion or market share of those cared for with their treatment - were all going downhill. Leyland was convinced that the only route to long term growth and profitability was not by trying to beat the competition at the same old game, but rather by taking the lead and changing the way the industry operated. Part of his challenge was getting various customers - buyers, users and influencers - to think and behave differently. Leyland and his team embark on a customer-focused strategy starting with end users and working backwards.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Time period

The events covered by this case took place in 1996-1997.

Geographical setting

Region:
Europe

Featured company

Baxter Renal Division
Employees:
10000+
Turnover:
USD 100 Million
Industry:
Medical

Featured protagonist

  • Peter Leyland (male), UK Business Unit Directior

About

Abstract

This is the first of a three-case series. The overriding aim of the series is to demonstrate how a company must change from the traditional transactional product approach to one more suited to the new world. The old model is based on selling more products at certain margins using conventional marketing tools, whereas the new approach is about the lifelong value of customers and how to achieve that so that everyone in the system gains. The cases discuss the dilemma facing Baxter Renal Division, in the UK specifically, and in Europe generally. Their main product is the bag and solution for dialysis treatment for kidney disorder. Although Baxter had 80% market share by the mid-1990s two major threats had emerged: (1) a competing treatment, cheaper on a bag-for-bag basis, was increasingly being favoured by new economic buyers who had become the more powerful decision makers and; (2) Baxter's dominance in its product market was being challenged by low-cost competitors. When case (A) opens in January 1997, an unprecedented crisis confronted Peter Leyland, recently appointed UK Business Director: five key hospital accounts had been lost. Moreover, the key success factors in the business - the number of patients treated, the kind of treatment received, the number of bags sold, and the proportion or market share of those cared for with their treatment - were all going downhill. Leyland was convinced that the only route to long term growth and profitability was not by trying to beat the competition at the same old game, but rather by taking the lead and changing the way the industry operated. Part of his challenge was getting various customers - buyers, users and influencers - to think and behave differently. Leyland and his team embark on a customer-focused strategy starting with end users and working backwards.

Teaching and learning

This item is suitable for undergraduate, postgraduate and executive education courses.

Settings

Time period

The events covered by this case took place in 1996-1997.

Geographical setting

Region:
Europe

Featured company

Baxter Renal Division
Employees:
10000+
Turnover:
USD 100 Million
Industry:
Medical

Featured protagonist

  • Peter Leyland (male), UK Business Unit Directior

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