Prof. S. Garimella
Dated: 18th July 2010
IMI| INTERSCIENCE, B.V.: SEEKING A NEW MARKET FOR GAS CHROMATOGRAPH|
2.Markets for gas chromatograph3
3.Players in the contract laboratory market and the price war4
4.Business Model of Agilent and Varian4
5.Business Model of Thermo-Finnigan5
Q1.What are the tradeoffs for Interscience in using geography versus application as a basis for market segmentation?6
Q2. What is the value of the TRACE GC versus the Varian 3800 for the contract laboratory market in Benelux?7
Q2B.What is the incremental value of the proposed One-Day Emergency Response Guarantee for the Trace GC?11
Question 3: Which Market should Interscience target and what should its positioning of the Trace GC be? What, specifically, is the value proposition for the Trace GC in the selected market?14
The case pertains to Interscience B.V, Netherlands-based, 25 year-old, scientific equipment reseller company. Interscience is an exclusive marketer of gas chromatographs manufactured by US firm Thermo Finnigan. Gas chromatographs are used for testing chemical contamination by the contract laboratories. The equipment has other high end usage in the R&D laboratories particularly for new product development. The contract laboratories perform various tests such as water, soil and air for companies, institutions and government. Recent environmental legislations across Europe have propelled the demand for such testing and in effect the contract laboratories are growing very fast. However, when it comes to purchasing gas chromatographs, contract labs are extremely price sensitive.
2. Markets for gas chromatograph
Gas chromatograph is purchased by the following two kinds
3. Players in the contract laboratory market and the price war S.No.| Company| Country of origin| Operations in Europe| Strategy| Average Selling Price | price bandwidth| 1| Agilent| North America| Company has an office| Produce and sell basic models to contract laboratories| Euro 40,000| (+_3%)| 2| Varian| North America| Company has an office| Produce and sell basic models to contract laboratories| Euro 40,000| (+_3%)| 3| Thermo Finnigan| North America| Market through trading company eg Interscience| | Euro 45,000| |
4. Business Model of Agilent and Varian
5. Business Model of Thermo-Finnigan
VAS provided by Interscience
Interscience is planning to enter the contract laboratory market in the Belgium-Netherlands-Luxembourg (Benelux) region for growth in the sales of gas chromatographs.
Q1.What are the tradeoffs for Interscience in using geography versus application as a basis for market segmentation?
There is intense competition in the contract laboratory market. The product has been reduced to commodity. Price is the main determinant of sealing a deal with the customers
As per fact given in the case the different geographical locations targeted were: a) Belgium – Netherlands- Luxembourg (Benelux) region of Europe for Contact Lab b) Ruhr-Rhine Region in Germany for R&D
In Benelux region Gas Chromatographs was more treated as Commodity products thus selling in this market will require Interscience to craft a persuasive value proposition. This region was dominated by two North American firms i.e. Agilent (a spin-0ff of Hewlett Packard) and Varian which used to sell no frills equipment at low prices and thrived on customer preferences. The current price of Gas chromatographs was € 40000 ( + 3%) whereas the lowest price model of Interscience was € 45000 which is 10% more than the available gas chromatographs. Though Interscience...