Augustine's Medical Case Analysis
AUGUSTINE MEDICAL, INC. CASE ANALYSIS
THE BAIR HUGGER PATIENT WARMING SYSTEM
I. Factual Summary: * The United States does not currently have an established warm-air technology blanket market. * The Bair Hugger Patient Warming System product is not a consumer device. The main users of this product consist of businesses and hospitals. * Hospitals will always be provided funding necessary to prevent hypothermia and other diseases; as a result a demand will consistently be common. * Augustine Medical, Inc. is using a push strategy. They are relying on distributors to push their products on to their prospective buyers. * Approximately there are 5,500 hospitals that have operating rooms and postoperative recovery rooms. * The target market for the product is hospitals with seven or more recovery room beds. The target market makes up 80% of all surgical operations in the United States (26,155 recovery beds). * It was stated that there are 21,000,000 surgical operations per year in the United States which 60 to 80 percent of these become hypothermic. Thus, on an average, 14,700,000 patients (21,000,000*70%) suffer from postoperative hypothermia. * The firm projected that one system would be sold for every eight postoperative recovery room beds. According to the firm’s research, the market could allow around of 3,269 heater/blower units to be sold (26,155 recovery beds/8). * By subcontracting the heater/blower unit, the company drastically minimized their expenses. * Variable costs for the products were $380 per heater and $0.85 per blanket. * The total variable costs for the year associated with the heater/blower unit is around $1,242,220 (3,269 units * $380). * The heater/blower unit should be priced under the $1500 threshold to avoid hospitals going through a formal review and decision process. * The patent associated with the inflatable plastic/paper cover will allow Augustine Medical to capture the
THE BAIR HUGGER PATIENT WARMING SYSTEM
I. Factual Summary: * The United States does not currently have an established warm-air technology blanket market. * The Bair Hugger Patient Warming System product is not a consumer device. The main users of this product consist of businesses and hospitals. * Hospitals will always be provided funding necessary to prevent hypothermia and other diseases; as a result a demand will consistently be common. * Augustine Medical, Inc. is using a push strategy. They are relying on distributors to push their products on to their prospective buyers. * Approximately there are 5,500 hospitals that have operating rooms and postoperative recovery rooms. * The target market for the product is hospitals with seven or more recovery room beds. The target market makes up 80% of all surgical operations in the United States (26,155 recovery beds). * It was stated that there are 21,000,000 surgical operations per year in the United States which 60 to 80 percent of these become hypothermic. Thus, on an average, 14,700,000 patients (21,000,000*70%) suffer from postoperative hypothermia. * The firm projected that one system would be sold for every eight postoperative recovery room beds. According to the firm’s research, the market could allow around of 3,269 heater/blower units to be sold (26,155 recovery beds/8). * By subcontracting the heater/blower unit, the company drastically minimized their expenses. * Variable costs for the products were $380 per heater and $0.85 per blanket. * The total variable costs for the year associated with the heater/blower unit is around $1,242,220 (3,269 units * $380). * The heater/blower unit should be priced under the $1500 threshold to avoid hospitals going through a formal review and decision process. * The patent associated with the inflatable plastic/paper cover will allow Augustine Medical to capture the