Design+Notes

Content for Station 4 – Calculating Market Size Content to be input || Info for SL Team || Note card 1 – Introductory note card at kiosk Welcome to the Calculating Market Size Station The purpose of this station is to provide a process you can use to estimate the size of the market, in dollars, for a medical device. In this section you will identify the primary markets for an ear thermometer, the percentage of the market an ear thermometer captures, and finally decide whether or not this product uses disposables. This data will be used to calculate the total market size, the sum of the device sales and disposables, for an ear thermometer. Remember, although you will complete this activity as if you were the developer of the ear thermometer; keep your potential product in mind as you will need to complete a similar process for the product in your proposal. Begin your process by stepping forward and clicking on the “Select Valid Markets” board that appears on the wall. Visual at Beginning After the user accepts their first introductory note card, they will be prompted to look on to the wall where we will have the first board labeled “Potential Medical Markets”. Somewhere on the board we need a prompt for them to click on to receive another explanatory note card. The list of Potential markets is as follows: Correct answers for the next section · Urgent Care Center · Emergency Room · Intensive Care Unit · Surgical Suite · <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: red none repeat scroll 0% 0%;">Home Use <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: red none repeat scroll 0% 0%; font-family: Symbol;">·<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: red none repeat scroll 0% 0%;">EMT ·<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Pharmacy ·<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Long Term Care Facilities <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 2 – Choosing Potential Markets Note card Your first step when calculating market size is to select the primary markets where you can expect your product to be used. First select the primary markets for all medical thermometers. Choose the primary markets you can expect a medical thermometer to be used in out of the seven choices on the board in front of you. Simply click on the box to select the market. If our expert panel does not concur with your selection, a small note will appear in the lower left hand of your screen (can change). Once you have made your choices, click on the “cue” to continue the activity <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Actions after market selection When the user clicks on a correct market I would like the box to move to the board next to it. If the user clicks on a box that is not a primary location I’d like a simple text box to appear stating “Although thermometers may be used here, it is not a primary location” After they click on the “cue” for the first time a message would appear saying “Before we move on, are there any other medical markets you believe might be primary markets for a thermometer? If not move to the next board for more information.” We would then signal the user to walk to the second board where we would have all of the markets they selected along with any markets they missed that we thought were primary. These boxes need to be labeled with their specific title. The first time the user clicks the “cue” they will receive a note card about the number of locations of each market around the country. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 3 – Number of locations in the U.S. In order to calculate the total number of ear thermometers needed, we first need to find the total number of each location across the United States. We will provide you with this information directly below each label on the boxes in front of you. After reviewing these statistics, click on the “cue” again to move to the next board where you will estimate the percentage of each market that ear thermometers will capture. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Next After the user accepts the note card, the numbers of each location will appear on the blocks in front of them Again we will need a “cue” ideally looking the same is the first board for the user to click on to receive a note card with explanatory information. The blocks will then move to the next board or the selecting Market Percentage board. Here, they will estimate the percentage of the market they plan to capture. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 4 – Selecting percentage of market captured Now that you have narrowed down the primary markets of medical thermometers, it’s time to estimate the percentage of each of these markets you expect the ear thermometers to capture. Click on each market individually to receive a set of choices in the form of a blue box in the upper right hand portion of your screen. Click the most appropriate percentage range to reveal whether you were correct or incorrect in your estimate. If your selection does not match the correct answer, you will be able to make another guess. Once you have a suitable range you will be able to move to the next market and repeat the previous steps. At the completion of this station you will have defined your total market size or rather the estimated number of ear thermometers needed in the United States. Begin this process by stepping forward to the first market, ER. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Steps for Section 2 The user will step to the first market, and after they click on the block, the blue dialog box will appear in the upper right hand portion of their screen. Each dialog box will contain the same set of choices or ranges. The data for that is as below: Number in the U.S. -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> ER – 5,810 -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Urgent Care – 8,000 -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Home Use – 105,480,101 -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> EMT – 48,000 Ranges to use: -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 0-25% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 25% - 50% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 50% - 75% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> 75% - 100% Correct Range -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> ER – 75% - 100% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Urgent Care – 75% - 100% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Home Use – 0% - 25% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> EMT – 50% - 75% The order will be ER, Urgent Care, home use, and EMT. If they click any other range besides the one labeled above, they should receive either a dialog or chat box at the bottom stating “You’re close but this is not the correct percentage range” If they are correct we need to say “Correct! To give you a more precise answer, we have estimated that ear thermometers capture (percentage below) of the total thermometer market in (whatever the location is)’s across the United States” -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> ER – 90% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Urgent Care – 95% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Home Use – 15% -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> EMT – 70% <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 4 – Total Market Size Captured It is now time to combine the total numbers in each market with the excepted percentage of market captured. To calculate the total number of devices needed we need to multiply the number of each market by the expected percent captured. This calculation is shown below: __Market: Quantity of each market * % of market captured = Total number of devices needed__ ER: 5,810 * 0.9 = 5,229 Urgent Care: 8,000 * 0.95 = 7,600 Home Use: 105,480,101 * 0.15 = 15,822,015 EMT: 48,000 * 0.7 = 33,600 Total: 15,868,444 The figure above represents the total number of ear thermometers needed in the United States. The next piece of information necessary to calculate market revenue is the price of each product. In Station 3 you saw that the price of an ear thermometer is approximately $39.99 per unit, so we will use this figure in our calculation. __Number of Units * Price per Unit = Total Device Revenue__ 15,868,444 * $39.99 = $634,579,082 This number is the estimated revenue of an ear thermometer. This figure will be used later to calculate the total annual revenue of the device. The next step in your process pertains to disposable products. Look to your right and click on the “cue” to learn more. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Next Step We need another cue, probably in the corner between the “boards” and the wall that will have the disposables section. This will give them the note card below explaining disposables and the upcoming station. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 5 – Disposables Directions Now that you have a rough estimate of the annual number of devices needed in the US market, it’s time to consider the market for device disposables. First, you must determine if the product (ear thermometer) uses disposables. What do you think?...well in fact they DO require a disposable. Ear thermometers use probe covers for sanitation purposes. One cover is used every patient use. To estimate the number of disposables used, look at the number annual procedures at each location. For some devices, the number of procedures may be well known, for others you may only be able to find a rough estimate. In this station we have provided procedure numbers that are for example purposes only. Behind the curtain to your right you will see four scenes correlating to the four primary markets of thermometers. Click on the curtain to reveal the four scenes. As you make your way down the row, first estimate the number of annual procedures in each setting, in other words, you would be estimating the number of annual procedures in one house hold, one emergency room, etc. Next, click on the patient whose temperature is being taken, to reveal the actual number of annual procedures. When completing your own proposal, remember to always cite any statistics or information that will be included. The more evidence you can give, the more realistic your figures will look to a reviewer. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Instructions for disposable scene This scene will be set up along the actual wall of the building. I would like four different scenes (not full scenes just maybe a nurse and a patient or a mother and her child, each one of them taking a temperature using the ear thermometer) each of the four small scenes will also need to be labeled. Either as they go or all at once, after they accept their disposable note card, a curtain needs to reveal to the user the four scenes. They need to be covered so the user cannot see the four markets we’ve selected before they guess on their own. As the user clicks on each of the scenes (they can click on either the actual dummies we use, or possibly a podium in front with some sort of label) the number of procedures per year needs to be presented, either through some sort of physical visual or something, I’d prefer not to use note cards because it’s such a small amount of information. The user will go down the row and reveal all four of the markets annual procedure numbers. Numbers are labeled below. -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> ER – 110.2 million -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Urgent Care – 2.5 million -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> Home Use – 3 billion (30 uses per year in an average house hold) -<span style="font-family: "Times New Roman"; font-size-adjust: none; font-size: 7pt; font-stretch: normal; font-style: normal; font-variant: normal; font-weight: normal; line-height: normal;"> EMT – 16 million <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Directions for percentage of yearly procedures At the end of the disposables section, the user will need to receive another note card that summarizes and describes what they’ve learned. At the end of the line of markets will need to be the “cue” that will allow the user to receive their final disposable note card. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 6 - Disposables summary note card You now have an estimation of the number of temperatures taken per year, but that is not the final step. In the previous station we calculated the percentage of the market that ear thermometers would capture. That percentage also correlates to the number of procedures performed in each market. The next step is to multiply each market’s total number of procedures, by the estimated percentage of the market ear thermometers planned to capture. This calculation is shown below: __Market: Number of Annual Procedures * % of Market Captured__ ER: 110,200,000 * 0.9 = 99,180,000 units Urgent Care: 2,500,000 * 0.95 = 2,375,000 units Home Use: 3,000,000,000 * 0.15 = 450,000,000 units EMT: 16,000,000 * .70 = 11,200,000 units Total of Annual Disposables Needed = 562,755,000 From these calculations approximately 562,755,000 ear probe covers will needed to be produced every year. The next piece of information vital to calculate market size is the price of each disposable. The most effective way to evaluate pricing your disposables is to observe and consult with similar products. For this example you will use an already existing product that sells a package of 40 cover probes for %7.99. If you divide your total number of probes needed annually by 40: 562,755,000 / 40 = 14,068,875 You can see that a total of 14,068,875 packages of 40 will be sold throughout a year. If we now multiply that total by the estimated price of $7.99: 14,068,875 * 7.99 = $112,410,311 The figure calculated above represents our total annual disposable revenue. This value will be used later to calculate our overall annual revenue for the entire product. <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: lime none repeat scroll 0% 0%;">Calculation Step The next and final step is to show the user exactly how much money he will plan to make in one year with his ear thermometer. Explanations will be in a note card, but I would like a visualization, (maybe on a chalk board) whatever works easiest for you. The calculations that I would like to show are below. Total Device Revenue = $634,579,082 __+ Total Disposable Revenue = $112,410,311__ Total Revenue = $746,989,393 <span style="-moz-background-clip: border; -moz-background-inline-policy: continuous; -moz-background-origin: padding; background: yellow none repeat scroll 0% 0%;">Note card 7 – Final Note Card Now that you have calculated individual revenue for your device as well as disposables, it is time to combine that two in order to find our total market revenue. These calculations are rough and do not take many factors into account such as the number of ear thermometers needed at each of the locations as well as the competition within the ear thermometer market. When completing the activity on your CPDF remember to be specific as possible within your market. This example used ear thermometers overall to help simplify the process. There are obviously multiple types and brands of ear thermometers which we did not take into account. Now that you have completed “Station 4 – Calculating Market Size”, it is now time for you to complete Calculating market size portion of your CPDF. After completion of this section, you may move on to Station 5 – Market Entry Strategy.
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