product management case study ciba vision

CIBA VISION : THE DAILY DISOSABLE LENS PROJECT

PRODUCT MANAGEMENT CASE STUDY -2

PRESENTED BY GROUP-ADITYA M. KARWA

NAGESH KONDALWADE ANUJ SHANDILYAMANISH PRASAD

MAJOR PLAYER IN CONTACT LENS MARKET

CASE FACTS

ON AUGUST 2, 1992, TOP MANAGEMENT MEETING AT CORPORATE HEDQUARTER

“BALUCH”

MAJOR AND RAGED DISCUSSION ABOUT PROPOSED PRJECT TO DEVELOP

“DAILY DISPOSABLE “CONTACT LENS

MANI COMPETITOR AND CIBA WERE OFFERING A SAME PRODUCT NOW 7 DAY

DISPOSABLE

SOME PEOPLE CONSIDERED HUGE POTENTIAL

AS IT OFFERS MANY CONSUMER BENEFITS AND HASTLEFREE USSAGE

MAJOR QUESTION WAS??

WILL IT BE CIBA OR COMPETITION TAKE LEAD???

PRODUCT IDEA WAS ACCEPTED UNIVERSALLY IN ORGANIZATION, FROM R & D TO

MARKETING

SOME PEOPLE WANTED TO CONDUCT A EXTENSIVE MARKET RESARCH BEFORE

LAUNCHING

SOME PEOPLE WERE HAVING DOUBT ON COMPANY’S CAPABILITY TO COMPETE IN THIS

SEGMENT

RICAHARD FRANCIS,MARKETING HEAD,US. SAID-

OUR CORE COMPETENCY IS DIFFRENCIATION

“IN THIS SEGMENT WE NEED TO FIGHT ON COST AND WE WILL NOT BE ABLE COMPETE

WITH J & J ON HIGH VOLUME “

MAJOR CHALLENGES/ PROBLEMS IN CASE-

• LACK TECHNOLOGY UPGRADATION AT R & D• LACK OF NECESSORY COMPETENCIES• LACK OF COMMITMENT FOR THE IDEA• CONFLICT ON - PROPOSAL TO CREATE

ISOLATED TEAM FOR PROJECT• DOMINANT MARKET SHARE ERODED BY J & J• CONVETIONAL MARKET SEGMENT’S WERE

ERODING

FINAL DECISION TO TAKE ON ALL THE

QUESTION’SON THE SAME DAY!!

COMPANY INDUSTRY BACKGROUND-

SUBSIDARY OF CIBA GEIGY ESTB. 1980 1994 SALE WAS 22 BILLION

UNDER LICENSING AGREEMENT WITH GERMAN CO. TITMUS EUROCON

THEN SERIES OF ACQUISITION IN US AND ALL OVER THE WORLD MARKET

SHARE GLOBALLY WAS 15%

INDUSTRY AND COMPETITORS

8 COMPANIES DOMINATED MARKET• COMBINED BY REVENUE 75%• BAUCH AND LAUMB- 18%• J & J 16%• CIBA VISION- 15%• MENICON- 8%

NOTE- J & J DOMINATED HIGH VOLUME SHARE WITH 85% MARKET SHARE

CIBA COMPANY DETAILS-

• LOCATION- HEADQUARTER –BULACH• LARGEST R AND D ATLANTA• SMALLER UNITS- GERMANY• CONTACT LENSE SOLUTION PLANT- CANADA,

GERMANY,ENGLAND• EVERY PLANT WERE PLAYING THE ROLE OF GLOBAL AND

DOMESTIC SUPPLIER WITH DOMESTIC MARKETING TEAM

LENS MARKET TRENDS-

• INNOVATION• HIGH TECHNOLOGY INVOLVED• CIBA WERE HAVING 20 LINES OF PRODCUTS• 2LACK SKU GIVING MAJOR SALES• J AND J WERE OFEERING 2 PRODUCT LINES

AND 1000 SKU • HIGH TECHNOLOGY AND QUALITY MATTERED

AND RECCOMENDATION BY SPECIALIST DOCTORES

MAJOR PRODUCT IN MARKET LASTLY-

7-DAY DISPOSABLE LENSIT CAN BE WORN CONTINEOUSLY FOR 7DAYS AND

DISCARDED

BEFORE LAUNCHING THIS GREAT R & D WORK TOOK PLACE AND J & J PATENDED PROCESS TO IT

AT LOW COST

BUYING BEHAVIOUR

CIBA VISION LAUNCHED THEIR PRODUCT IN 1988 “ACUVE” IN SAME CATEGORY

CIBA VISION STRUGGLED AT INITIAL LEVEL AT PRODUCTION DUE TO EXCLUSIVE CONTRACT OF

J AND J

LATER THIS SEGMENT WAS GOING FOR PRICE WAR

CIBA VISION TO REDUCE PRODUCTION COST STARTED A PROJECT GODZILLA

PROBLEMS IN PROJECT-• CONFLICT IN R & D AND PRODUCTION TEAMS• RESOURCE SCARCITY• CHANGING TEAMS• TOO MUCH OVERLOAD • TOO MANY PROJECT AT THE SAME TIME• RESEARCH CHEMIST AWAY FROM GROUND

REALITY • IN 3 YEARS TALKS AND TALKS NO RESULT

• CEO WAS FRUSTETED DONE INVESTMENT IN NEW PLANT AT INDONESIA DUE TO CERTAN ADVANTAGES

• MORE PROBLEMS AT GERMANY PLANT COST OF PRODUCTION WAS THRICE THAN ATLANTA

• ANALYSIS SHOWED TO TRANSFER MANUFACTURING OF PRODUCTS TO ATLANTA AND IN INDONESIS

PRODUCT DEVELOPMENT

DIFFRENTIATION STRATEGY OF CIBA- VISION WAS GETTING AFFECTED

DEVELOPMENT OF MANY PROJECTS WERE STALLED

LONG TERM CONCERNS AS COMPANY WAS LOOSING THEIR INNOVATIVE EDGE

TWO INTERNAL REVIEWS WERE CONDUCTED ON NEW PRODUCT LAUNCH PROCESS OF NEW PRODUCT

“EXCELENS”

FIRST SOFT LENS IN 20YEARS IT WAS VERY HIGH QUALITY PRODUCT , HIGH EXPECTATIONS FROM IT

AFTER CLINICAL TRIALS

BIG FALIURE IN FACTORY 0% YIELD

FACTORY WAS UNABLE TO REPLICATE R & D

PROCESS DUE TO 0% INTEGRATION BETWEEN 2 DEPARTMENTS

LATER PULLED OUT FROM THE MARKET

THE COST WHICH WAS DECIDED TO BE $5/LENSIT CAME TO AROUND

$15/LENS

ONE YEAR MORE IN R & D STILL LOW YIELD AND COST WAS HIGH SO IN 1992 EACH EXELENS SOLD

CONTRIBUTED –VE TOWARDS MARGINS

IT WAS REAL EYE OPENER FOR CO AS 20 R & D PROJECT WERE WORKING ON INCREMENTAL REFINEMENTS OF

EXISTING PRODUCTS IN MARKET

WHICH WERE BASICLY ME2 PRODUCTS

ADVANCED DEVELOPMENT INITIATIVES

THE EXTENDED WEAR PROJECT

IT WAS A VERY AMBITIOUS PROJECT AND HAD MANY ADVANTAGES FOR USER CONVINIENCE

USER DON’T NEED TO REOMOVE IN THE NIGHT BEFORE SLEEPING, HE CAN WEAR IT FOR SEVERAL WEEKS

IN SENIOR MANAGEMENT MEETING AT BULACH UNIVERSALLY AGREED TO CARRY OUT THE PROJECT

CONSIDERING EARLIER FAILED ATTEMPTS SPECIAL TEAM WAS APPOINTED BUDGET WAS $5MILLION FOR 2 YEARS

IF VIABLE THEN BUDGET WOULD ESCALATE DRATICALLY

IT WOULD BE DONE BY COLLABORATING WITH CIBA GIEGY CENTRAL RESEARCH IN ,BASEL “AND CRCER” ONE OF THE MOST LEADING CONTACT LENS RESEARCH FIRM

IN AUSTRALIA

FIRST TIM EIN THE HISTORY OF CIBA- VISION ENTIRE RESPONSIBILITY OF PROJECT WAS GIVEN TO ONE MAN

IT WAS GIVEN TO MR. NICK LEONARD THAT WAS WIN OR LOSE GAME FOR HIM

THE DAILY DISPOSABLE PROJECT PROPOSAL

CHALLENGES-

• FINACIAL ASPECT IT INVOLVED HUGE INVESTMENT• CHANGING PERCEPTION ABOUT DISPOSABILITY• CONVINCING INTERNAL TEAM TO GET FULL

COMMITMENT• ISSUE OF CANNIBALIZATION – 50% REVENUE FROM

CIBA VISION LENS CARE SOLUTION WILL BE EATEN UP

• TECHNICAL ASPECTS MAKING IT AT LOWEST COSTNO MORE THA $0.20/LENS CANNOT BE SOLD MORE

THAN $0.30/LENS• J $J WAS PODUCING 7 DAY DISPOSABLE AT 0.85$• TO DEVELOP ENTIRELY NEW BREAKTHROUGH

PROCESS• BIGGEST IS COMPETITOR’S THREAT J AND J MAY

COME UP WITH THIS PRODUCT • SO HAVE TO DEVELOP BEFORE THEM• AS HUGE FIRST MOVER ADVANTAGE IS THEIR • AS USERS AND DOCTORS DON’T SWITCH THEIR

BRANDS UNLESS THERE IS PROBLEM

PROPOSALS GIVEN

A.CREATING A AUTONOMOUS PROJECT TEAM UNDER ONE LEADER AND TAKING EXTERNAL SUPPORT AND

THEIR PACKAGES WILL BE TIED UP WITH SUCCES OF THE PROJECT

2ND WAS LOCATING A TEAM IN GERMANY TO AVOID INFLUENCE OF R AND D TEAM IN ATLANTA THIS WAY

“DDL” TEAM WILL BE PHYSICALLY AND ORGANIZATIONALLY SAPERATE

ARGUMENTS BY EXECUTIVE MEMBERS

NO POINT IN SETTING UP A NEW SAPEARTE PROJECT TEAM LIKE ANOTHER COMPANY WHICH WILL REPORT

TO ONE PERSON ONLY WE HAVE NOT DONE IT BEFORE

NO POINT IN SETTING UP A PLANT IN GERMANY AS GERMANY IS 3 TIME COSTLIER THAN ATLANTA AND

TARGET MARKET IS IN USA

RECOMMENDATION’S

SET UP SAPERATE CROSSFUNCTIONAL PROJECT TEAMUNDER ONE PROJECT MANAGER WHICH WILL REPORT

DIRECTLY TO CEO AND GIVE THEM EXTERNAL TECHNICAL SUPPORT

SET UP PLANT IN ATLANTA ONLY BUT COMPLETELY DIFFERENT TEAM OF R AND D SCIENTIST’S THEY WILL BE 101% COMMITED TO THIS PROJECT NO SHUFFLING

SAPERATE RESOURCES FOR THIS PROJECT

GERMANY IS NOT RECOMMENDED AS COST IN 3 PERCENT HIGH AND INVESTMENT WILL BE MUCH

HIGHER PROFITS WILL BE REDUCED

COST OF PRODUCTION IN $3.23 ATLANTA $ 7.32 IN GERMANY

NEED TO WORK ON IT VERY FAST WITH EXTERNAL AND INTERNAL SUPPORT NEED TO DEVELOP IT BEFORE J & J

AS REGISTERING IT WILL GIVE EXCLUSIVE RIGHT TO CIBA VISION

WHILE LAUNCHING INTRODUCING THE PRODUCT WITH EXTENSIVE MARKETING CAMPAIGN SHOWING

CONVINIENCE AS BENEFIT FOR CERONSU

CIBA’S DAILY DISPOSABLE LENS IN MARKET

FEEDBACK….WRITE US TO ON …

Aditya.karwa@ubs.org.inNagesh.kondalwade@ubs.org.in

THANK YOU….