AGENDA

1. Washtenaw County ChapterAED and Training Services Competitive AnalysisFinal ReportDecember 2002

2. AGENDA • Executive Summary 3 • Industry Mix 4 • Market Segmentation 5 • Overview of Washtenaw County Chapter 6 • Competitive Analysis • Cardiac Science (Survivalink), AED Manufacturer 7 • Medtronic, AED Manufacturer 8 • Zoll Medical Corporation, AED Manufacturer 9 • AHA, AED Distributor and AED/First Aid Training Provider 10 • National Safety Council, AED/First Aid Training Provider 11 • Zee Medical, AED Distributor (restaurant and industrial) 12 • Life Saving Resources, Inc., AED Distributor (water and public safety) 13 • Huron Valley Ambulance, Ambulatory Services 14 • Evaluating Partnerships 15 • Next Steps 16

3. Executive Summary This study revealed six major competitors for the Chapter. The primary means to increase the Chapter’s competitive position is through customer education. • Three primary training competitors for the Washtenaw County Chapter were identified: • American Heart Association • National Safety Council • Huron Valley Ambulance • Three primary AED competitors for the Washtenaw County Chapter were identified: • Cardiac Science • Medtronic • Zoll Medical • In order to improve competitive standing, the Washtenaw County Chapter should consider the following: • Improving the customer education process (hidden costs associated with competitors) • Targeting subject matter experts that refer customers (doctors, OSHA, police officers, insurance, etc.) • Ensuring alliance with AED manufacturer is designed to support the Chapter in its pursuit to place AEDs in the commercial market

4. Industry Mix The Chapter has a unique position combining service and equipment; however, to become more competitive, the Chapter will need to increase its positioning in equipment. NSC Chapter AHA HVA Service and Training Lifesaving Zee Medical Medtronic Zoll Medical Equipment

5. Legend Targeted Customers Minimal to Zero Focus on Customers Market Segmentation Virtually all customer segments are being served by one or more competitors. The AED market is growing 30% a year; the training market is continually gaining new entrants. • AED Industry • The 2002 worldwide AED market is estimated between $150-170 M. • Approximately 70,000 AEDs will be sold in 2002, 85% will be sold in the US. • Four companies represent the majority of AED sales: Medtronic, Philips, Cardiac Science, and Zoll Medical • Currently, only 5% of police vehicles, 25% of fire vehicles and 1% of corporations have AEDs. • AED market is growing at 30% a year • Training Industry • Training is a fairly easy market to enter. • AED technological developments make training less important. Mean defibrillator time for trained technicians is 67 seconds; for untrained 6th graders, 90 seconds. • Good Samaritan law increases the likelihood of non-trained AED users.

6. Washtenaw County Chapter of the American Red Cross The Washtenaw County Chapter of the American Red Cross has strong community recognition; however, AED penetration in the corporate market is relatively low. Company Description: Local chapter of internationally recognized non-profit organization. The Health and Safety division provides first aid, CPR and lifeguard training and AED placement. • Target Market: Large corporations, medical facilities, indoor and outdoor recreational areas. • Potential Threats: AED manufacturers and other organizations offering comparable devices and training programs. Chapter has access and appeal to untapped market. Opportunity to establish new, or strengthen existing, alliances with AED manufacturers.

7. Cardiac Science (Survivalink) Cardiac Science is the third largest in AED sales. However, to-date the company is unprofitable. Company Description: Cardiac Science develops defibrillators and disposable electrodes that monitor and treat patients with life-threatening heart rhythms. • Target Market: Public access, hospitals, corporations, educational institutions, hotel and leisure industry, law enforcement, and Fire Department/EMS applications. • Potential Threats: Changing FDA regulations, specifically with respect to AED home use, would pose a large threat to Cardiac Science, which is entirely dependent on how the FDA receives the Powerheart AED. Cardiac Science’s long-term growth strategies are ambiguous. Will they focus on medical channels or try to expand into the Chapter’s client territory?

8. Medtronic Medtronic is a world-renowned leader in cardiac rhythm management, #1 in AED sales; however, allocation of sales force in Michigan seems relatively weak. Company Description: Manufactures, sells and services AEDs. Positioned as the company to provide the “total solution.” • Target Market: Hospitals, emergency response and commercial businesses. • Potential Threats: With distribution relatively weak in the commercial market, Medtronic may loose market share to other manufacturers dedicated to the commercial market. A key opportunity exists for Medtronic and Red Cross to form an alliance. Medtronic can provide AEDs to Red Cross at a discount; Red Cross can provide the sales force or training services in the commercial market.

9. Zoll Medical Zoll Medical focuses on the production and distribution of resuscitation equipment including its first AED unit released this year; however, it lacks training offerings. Company Description: Designs, manufactures and markets a full line of cardiac resuscitation devices, disposable electrodes, mobile ECG systems, and EMS data management solutions. Mainly focuses on health care professionals to provide both pacing and defibrillation. • Target Market: Zoll Medical targets a wide customer base, and has experience selling to fire and police departments. Zoll plans to increase its direct sales force to promote its product in addition to leveraging its current distribution channels and website. • Potential Threats: Zoll Medical is a late entrant to the AED market and may be severely disadvantaged by the significant momentum that its competitors already have. Zoll has a strong reputation in the defibrillator market and poses a significant threat to the Chapter because of its expanding sales force; however, Zoll still lacks training component.

10. American Heart Association The AHA is the industry leader in cardiac management research and guidelines. However, customers are indifferent to receiving training from the AHA or the Red Cross. Company Description: The American Heart Association is a national voluntary health agency. It provides CPR/AED training through a network of independent Community Training Centers. AHA does not sell or endorse any medical equipment, but the local training center in Ann Arbor, Life Support Services, Inc., sells AEDs as a secondary business. • Target Market: Primarily focuses onEmergency Response; the AHA also targets public venues and businesses (Fortune 500 companies). • Potential Threats: Increasing competition as more organizations are entering this market. AHA, with its local training center, has become an indirect competitor for AED sales.

11. National Safety Council The National Safety Council provides extensive training services to its members, but must also rely on certified centers to meet its mission. Company Description: Non-profit with mission “to educate and influence society to adopt safety, health and environmental policies, practices and procedures that prevent and mitigate human suffering and economic losses arising from preventable causes.” • Target Market: Offices, homes, community centers and environmental organizations. • Potential Threats: Organizations offering both AED units and related training. Members cannot purchase an AED directly from the National Safety Council. However, AEDs may be available for sale through certified training centers.

12. Zee Medical Zee Medical is a subsidiary of McKesson Corporation, a Fortune 35 company, but the local affiliate does not appear to be a major force in Ann Arbor. Company Description: Van-based provider of occupational first-aid and safety products, training and services. • Target Market: Restaurants, hotels, manufacturing plants, construction sites and companies with multiple office locations. • Potential Threats: Better perceived value of non-profits selling AEDs and first aid training. Products and services appeal to companies with multiple locations and those in need of standardized safety procedures and routine restocking of first aid products due to nature of operations.

13. Life Saving Resources, Inc. Life Saving Resources, Inc. focuses primarily on providing safety training and products for the water and ice rescue market. Company Description: Lifesaving Resources, Inc. is a private corporation providing training, consulting services and equipment for the fields of aquatics safety, water rescue, and ice rescue. • Target Market: Public safety and rescue, aquatic recreation. • Potential Threats: Not significant. Because of its size and location, Life Saving Resources, Inc. is not a significant competitor to the Chapter.

14. Huron Valley Ambulance Huron Valley Ambulance is dedicated to providing medical transport and other training services; however, it is limited in its ability to partner with suppliers and customers. Company Description: Emergency paramedic and transport for 675,000 local residents and transport services to other urgent care facilities. Offers paramedic-based call centers and outbound disease management. HVA provides EMS education services in three counties. • Target Market: Hospitals, education institutions and households. • Potential Threats: With increasing competition and because HVA is a small, local, specialized organization with low customer awareness, it will have difficulty distributing AEDs to a large portion of the AED market. Huron Valley Ambulance has a local monopoly in emergency medical transport. It can compete with the Chapter on training and has a potential distribution channel into households and hospitals.

15. Evaluating Partnerships The chapter needs to evaluate partnership opportunities, paying specific attention to market prospects and synergies. Why a Partnership? • Marketing - Distribution - Service synergy • Favorable price • Technical and informational support • Exclusivity in local market • Bundled sales opportunity Issues to Consider • What value-added does AED/Red Cross have to consumer? • What is the relative size of potential consumer markets? • What are the costs and benefits of each market? • Are there legal restrictions in the market? • How attractive is each market segment? (i.e., is there a relative lack of competition in a segment?) X X ? ? X X

16. 2 3 4 5 1 Consider Options Market Analysis Development and Testing Budgeting and Planning Execution Next Steps Developing the appropriate market approach can be accomplished in five phases. This study has completed phase one. Immediate Next Steps • Survey non-customers to understand areas of improvement in the AED marketing and selling process. • Analyze benefits and costs of Philips alliance; compare with proposed Medtronic alliance. • Determine marketing approach, based on competitive and market research findings. • Customer • Competitor • Company • Context • New market? • New partnership? • Expansion of product/service? • Dropping product/service? • Concept testing (surveys, focus groups, etc.) • Develop detailed marketing plan • Test marketing • Setting objectives • Budgeting • Monitoring • Plan revision