Introduction
Dresding Medical Inc. (DMI) has enjoyed success designing, manufacturing, and supplying medical equipment to hospital and clinics. Through their core competency of translating different customer needs into customized products, DMI has retained a satisfied customer base. These clients have traditionally valued dependability and flexibility over speed and price. However, part of the customer base has gradually shifted away from clinics and towards direct consumers. In order to address this market, DMI has developed a new generation of “small black box” products, which are smarter and more portable than their standard offerings. However, the direct consumers desire standardized low-cost items that can be delivered more quickly than DMI’s current intervals.
Problems
Unfortunately, this shift to the consumer market does not correspond with the strengths of DMI’s manufacturing operations. Direct consumers desire low-cost products, whereas DMI has traditionally offered products that are high-cost. Expensive emerging medical technologies only compound the cost issue. DMI is also very deliberate in developing their products to the market. For example, it takes DMI over three years to develop a new base model. In order to adapt to evolving consumer demands, they’ll need to reduce those intervals to under 12 months. Another variation between the markets involves the “push vs. pull” concept. Although the clinical market tends to “pull” the customized products from DMI, the mass quantities of standardized items will need to be “pushed” to some extent towards the consumer market.
The primary dilemma DMI faces is how to satisfy the new direct consumer market without shunning their existing base market. These two markets value opposing performance metrics. ...