Becton Dickinson
Solution to Becton Dickinson & Company, Vacutainer Systems Division
1. 1983 – BDVS resisted negotiation. Why?
In 1983, APG demanded substantial price reductions from BDVS. BDVS was not willing to these price reductions owing to its superior quality, range and service and resisted negotiation with APG HQ.
Following are some of the main reasons why BDVS resisted negotiations.
a. BDVS was a pioneer in converting the market of Blood Collection Products Market from Needle & Syringe method to Evacuated-Tube Blood collection method. BDVS had the widest range of blood collection products and this was crucial for the Hospitals, which depended on this to run various diagnostic tests for chemistry, hematology, coagulation studies, special procedures and blood banking.
Product assortment / colour coding schemes offered by BDVS were preferred by the customers.
b. Blood collection products formed only 5% of the total supplies purchased by hospitals and the BDVS products were preferred by the “bench people” in the lab (medical technicians in the lab) for its range/ quality.
c. It was not binding on the APG member hospitals to buy only from the negotiated manufacturer for the product. Based on the preferences of the “bench people”, they could buy from an alternate vendor also. Taking advantage of this route, BDVS continued selling directly to Individual hospitals through its well-developed field sales force that maintained good contacts with their existing clients and was able to sustain the market share. Wherever price was an issue it retained most of its business with individual hospitals (that were affiliated with APG) through lower prices, on a case-to-case basis. So they did not have a compelling need to approach the negotiation table.
d. For the past few years, BDVS had put in place the “Z Contract” with its large and key Accounts after negotiation for price and quantities and supplied to them through its authorized distributors.
2. 1985
1. 1983 – BDVS resisted negotiation. Why?
In 1983, APG demanded substantial price reductions from BDVS. BDVS was not willing to these price reductions owing to its superior quality, range and service and resisted negotiation with APG HQ.
Following are some of the main reasons why BDVS resisted negotiations.
a. BDVS was a pioneer in converting the market of Blood Collection Products Market from Needle & Syringe method to Evacuated-Tube Blood collection method. BDVS had the widest range of blood collection products and this was crucial for the Hospitals, which depended on this to run various diagnostic tests for chemistry, hematology, coagulation studies, special procedures and blood banking.
Product assortment / colour coding schemes offered by BDVS were preferred by the customers.
b. Blood collection products formed only 5% of the total supplies purchased by hospitals and the BDVS products were preferred by the “bench people” in the lab (medical technicians in the lab) for its range/ quality.
c. It was not binding on the APG member hospitals to buy only from the negotiated manufacturer for the product. Based on the preferences of the “bench people”, they could buy from an alternate vendor also. Taking advantage of this route, BDVS continued selling directly to Individual hospitals through its well-developed field sales force that maintained good contacts with their existing clients and was able to sustain the market share. Wherever price was an issue it retained most of its business with individual hospitals (that were affiliated with APG) through lower prices, on a case-to-case basis. So they did not have a compelling need to approach the negotiation table.
d. For the past few years, BDVS had put in place the “Z Contract” with its large and key Accounts after negotiation for price and quantities and supplied to them through its authorized distributors.
2. 1985