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Case Study For Marketing Analytics Simulation

2479 words - 10 pages

APRIL 25, 2012

The Orthopedic Motor Market: Minnesota Micromotors, Inc. and
Brushless Motor Technology
Minnesota Micromotors, Inc. (MM), based in Minneapolis, was a manufacturer of brushless, direct
current (BLDC)1 motors used in orthopedic medical devices. Devices utilizing MM’s motors were
typically used by orthopedic surgeons in large bone surgery, reconstructive surgery, trauma surgery,
and sports medicine procedures. MM sold approximately 97,000 motors a year and had a 9% share of
the $137 million U.S. medical motor market for orthopedic and neurosurgery devices. (See Exhibit
1A.)
MM was a division of privately held Fractional Motors Limited, which had revenues of $350
...view middle of the document...

The segment of the motor industry in which MM operated was highly competitive, with over 100
participants. Manufacturers were divided into three tiers: vertically integrated, multinational tier 1
companies that produced many types of motors; tier 2 companies that specialized in either brushed
DC, BLDC, or universal motors technology; and small, privately held tier 3 companies that were
niche providers like MM and that produced only BLDC motors for orthopedic uses. Smaller motor
manufacturers like MM sought to distinguish themselves from their competitors by offering original
equipment manufacturer (OEM) customers domain knowledge, customer service, product
functionality, and compatibility with other automation products. In 2009, one of MM’s major tier 3
competitors introduced a high torque, BLDC motor line. These multilayer coil BLDC motors were
precision-engineered to reach higher temperatures without compromising motor function. The
industry average net price of the competitors’ motors was $118.

Orthopedic OEM Market and Purchasing Criteria
1 MM produced fractional horsepower motors, which had a power (machine strength) rating between 1/200 and one

horsepower (1 HP). The fractional horsepower DC motor market was divided into brushed and brushless DC motors. Brushed
DC motors used a mechanical system of stationary metallic contacts (“brushes”) to transfer electrical energy. By contrast,
brushless DC motors used an electronically controlled commutation system.
________________________________________________________________________________________________________________
Professor Das Narayandas of Harvard Business School and Heide Abelli (MBA 1993) prepared this reading for use with the Marketing Simulation:
Managing Segments and Customers (HBP No. 7018).
Copyright © 2009 Harvard Business School Publishing. No part of this publication may be reproduced, stored in a retrieval system, used in a
spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the
permission of Harvard Business Publishing.
Harvard Business Publishing is an affiliate of Harvard Business School.

Simulation Foreground Reading—The Business-to-Business Orthopedic Motor Market

Orthopedic devices, used to treat musculoskeletal disorders of the human body, constituted the
third largest global medical equipment market and were forecast to grow to over $20 billion by 2012.
Among the 1,300 U.S. orthopedic OEMs, Zelting, Di Preto, and Stemper Corporation were the leaders
in joint reconstruction, with a combined market share of 64%; Syphone and Stemper Corporation
were the leading OEMs in trauma fixation, with a combined market share of 57%.
The selection of motors for use as components in medical devices such as orthopedic products
was an involved process, usually requiring electrical engineers at the OEM to consult with
application engineers from the motor manufacturer in...

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