TSM Case Study 1

TSM Case Study- B2B Marketing

What is the worth of the Integrated Stock Management (ISM) program to pharmacists
relative to the incumbent card-based system? Build a customer value model to demonstrate
this.
The ISM program would involve a 3-person member team visit to subscribe pharmacy. Team
members would examine the pharmacys database, install software programs that contained
inventory planning model and a re-order system, link the system to TSMs EDI network and
train pharmacy personnel on its use. They would also audit the system and implement it. After
three months the team would return to site, audit the turnover. Assess performance and
recalibrate the models. The cost benefits are about 4600 Euros. Thus this system is more
efficient and procedural and looks at the problem by considering all aspects of the business and
comes up with recommendations to streamline the process and reduce redundant efforts and
costs.
Customer Value Based model:
A customer value model (CVM) is a data-driven representation of the worth, in monetary terms,
of what a company is doing or could do for its customers
Customer value is defined as Value = Benefits Price

System
Ordering Cost
(Lines)
Time to process Order
(Seconds)
Time taken for mistakes per
order
Manual Card System 72 120 2880
ISM 62 12 720
Difference in Cost 10 108 2160

Total Value Benefit: 18400-13800 Euros



TSM Case Study 2
What price should TSM Pharmaceuticals decide upon for offering its ISM program to
pharmacists? Provide a brief supporting rationale.

Cost Price 2500
Price Band 4000 <> 7500
Price Saving by ISM
adoption 4600

The inventory is around 12% of the weighted average cost of capital. So the most important
value to the pharmacy is reduction of inventory. Moreover the cost saved due to the
operational efficiency cannot be standardizing across all the pharmacies. So the money saved
by better operation is an add on. So the price is kept at 4600 euro.
Price
ism
< Value
ism
So the perceived value is more than the price paid. The company wants the consumer to buy
this service and latter on they will go for up gradation. Plus the cost price is 2500 euros and the
industry price range is between 4000 7000 euros thus the price is justified.

What pricing tactics should TSM employ in its market introduction of the ISM program?
Briefly describe each tactic and provide a supporting rationale.
Loss leader
This involves selling a product at a low or even loss-making price. Although you may not make a
profit selling this product, you could attract customers who will also buy other, more profitable
products. TSMs cutting-edge ISM Program would enable the pharmacists their administrative
costs by up to 60%. Since this would be a one-of-kind initiative and might face resistance from
retailers in terms of its adaptation, pricing at a low amount might help this product take off and
eventually become a standardized technology in every pharmacists management software
system.
The research points out that 70% of pharmacists today use the stock management subroutines
that are available on their companys computer systems; however finding the buried functions
embedded in the system to better channelize technology for their day-to-day functions. This
indicates that majority of the market is not averse to technology but is in need of a more
complete end-to-end, quality-driven, user-friendly system that would eliminate the hassle of
arcane technology analysis and open new avenues to an advanced and effective system


TSM Case Study 3
Penetration
This is the opposite of skimming - starting at a low price and gaining market share before
competitors catch up with you. Once you have a loyal customer base, you should be able to find
ways to raise prices later.
Considering the fact that TSM serves 1000 out of 1600 pharmacies in Netherlands, it has a large
customer base which is a potential market for the new software. Software utilization process
works in a trail based procedure. A user needs to have hands-on experience in terms of usage
to enable him to become a permanent user. Here is where the concept of penetration can be
deployed. The 160 pharmacies who participate in the ISM program should be given a demo of
the program and a trial license of the software. Here, only one aspect of the entire business
model would be focused on and solutions will be implemented. As for the rest of TSM potential
market, the ISM program must be made available to them at a very nominal cost analyzing only
one aspect of business. In case of the 20% of all pharmacists who are the traditional users,
intense training and awareness programs must be conducted to help them switch to a
technological driven system.