Executive Summary: As Ohmeda divests its supplies and gas businesses to focus exclusively on medical equipment, we recommend restructuring the distribution system to phase out the majority of dealers and develop a highly knowledgeable direct sales force with additional representatives. As Ohmeda concentrates on high-tech medical devices, its target customer will increasingly be hospital-based medical practitioners responsible for sophisticated, specialized procedures and who seek products that are precise, reliable, and safe. This decision maker will best be approached by a highly knowledgeable sales force that can speak to the technological benefits and cutting-edge research supporting each of Ohmeda’s three key product categories Anesthesia, Critical Care and Architectural Products. The company’s current generalist dealer network is not only expensive but also lacks the technical expertise to educate potential customers about the benefits of Ohmeda's high-tech products. Dealers are, instead, best suited to sell the company’s remaining low-tech products such as suction devices, which require broad coverage, fast fulfillment and limited technical knowledge. The majority of the company’s sales efforts going forward, will be through direct sales representatives who, through improved efficiency and effectiveness, will enable the company to gain market share and meet its aggressive 5 year revenue targets.
MARKET ANALYSIS: A typical hospital divides its purchase of gases, medical supplies, and capital equipment between a range of stakeholders. Purchases are highly regulated and require approval above a certain price level and for specific categories. For gases and medical supplies, for example, a hospital purchasing agent typically awards contracts based on price. Given that Ohmeda is divesting both its gas and supplies businesses, these price-sensitive purchasing agents are no longer their target audience. Instead, Ohmeda’s clients will increasingly be medical...
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