Real Business # 14 - Scientifica

  • Real Business is a series of posts that analyses the marketing opportunities and challenges of real businesses in the South East. The interviews are undertaken by Keith Lewis of The Courier.

    SCIENTIFICA occupies a highly specialised area within the medical technology sector. Formed in 1997, the company manufactures and distributes Electrophysiology equipment  - the stimulation of cells with electrodes to help scientists better understand human diseases. The application that most people can relate to occurs in the world of neuroscience, where Scientifica equipment is used to study degenerative diseases of the brain such as Alzheimer's.

    Electrophysiology has only been around as a defined area of activity for approximately 40 years - the number of physiologists worldwide is estimated to be only 200,000. America - Scientifica's second largest market outside the UK with annual sales of around £1 million - accounts for one third of all the world's physiologists. 

     The equipment manufactured by Scientifica tends to fall into two main categories: high power microscopes and patch clamps (the machines that deliver electric charges to cells under very precise laboratory conditions).  There are only 4-6 manufacturers in the world capable of producing such high specification products. Scientifica, the newest in the market, is the sole manufacturer in theUK.

    Equipment sells on quality and ability to deliver to specification. Price is seldom the deciding issue and customers are often universities whose funding is provided by Government grant. There are some standard products in the mix, but each order received by Scientifica is a "one-off", depending on the specific area of research (e.g. which animal and which part of the body) and the extent of the research facility to be fitted out. As a result, there is no typical size of order. The outfitting of a Russian laboratory recently cost in the region of £50,000. A single item of equipment usually costs upwards of £5,000 and an amplifier, for example, costs in excess of £12,000.

    The company exports to 33 countries, including North America, Canada, Japan, China, Korea, India, Australia and New Zealand. According to Adrian Corbin, sales support manager, "the only continent missing is Africa".  Exports account for 55 per cent of annual turnover, which topped £4.5 million in the financial year 2010-11. The company - described as being "highly profitable" - does not disclose exact figures for commercial reasons.

    Scientifica has enjoyed huge success and the only real concerns appear to be how to structure the business for future growth. Because of the high standard required in the first place, the products tend not to wear out and so, in theory at least, the market could eventually become saturated.  The search is therefore constantly on for new products and new markets. In the light of cutbacks in spending budgets in the UK, the future looks to be increasingly dependent on foreign orders, which explains why Adrian Corbin sees the setting up of overseas subsidiaries or sales offices as a next logical step.

    If the website is any indication, there appears to be no shortage of orders in the immediate term - the website attracts between 800 and 1,000 ‘hits' a week, many requesting quotes.  Mr Corbin is predicting that "turnover could easily double to £10 million in the next three or four years".

    The Marketing Eye manThe Marketing Eye says:

    Scientifica is a pristine example of the benefits to be gained from successfully identifying and exploiting a niche.

    The perfect niche might be described as one where there is no price competition and Scientifca, being one of only six manufacturers in the world in a relatively new, but highly valuable market, looks to have almost achieved this ideal position: customers are queuing at the door of the website, price is not discussed, debtors are government institutions - are we looking at the perfect business? 

    Well, almost!

    One has to look at the future ambitions of the business to find the marketing challenges: the growth target; the search for new products and markets to fuel the growth; and the need to all the time maintain the quality and efficiency of delivery.  Evaluating and maximising the channels to new markets will, therefore, be a crucial part of the growth plan.

    Channels serve several different functions, including raising awareness amongst potential customers, helping customers evaluate the proposition and allowing customers to purchase.  As new markets are considered, Scientifica should be asking itself how the various customer segments want to be reached and serviced, how the channels are integrated and, ultimately, which ones work best.

    Finding the right mix of channels is essential.  These could be owned channels, such as an employed sales force and localisation of the website; or partner channels, such as wholesale distribution or partner-owned websites.  The latter choices naturally have lower margins, but might allow Scientifica to expand its reach more quickly by leveraging the partners' strengths and local knowledge.

    There will surely be several business owners reading this and thinking ‘nice problem to have'!

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