Transcript Marketing and sales

MARKETING AND SALES
What is Marketing…??
• Selling?
• Advertising?
• Promotions?
• Making products available in stores?
• Maintaining inventories?
All of the above, plus much more!
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Marketing
Marketing is the art and science of choosing target
markets and getting, keeping, and growing customers
through creating, delivering, and communicating
superior customer value.
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Simple Marketing System
Communication
Goods/services
Industry
Market
(a collection
of sellers)
(a collection
of Buyers)
Money
Information
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Selling vs. Marketing
Dimension
Selling
Marketing
Concepts
Integral part of Marketing
Broader concept, includes selling, brand, Mkt
research, distribution, promotion, strategy
Objective
Transaction
Exchange, Customer, Demand management
Target
Buyer
Needs/ wants of the customer
Focus
Product
Brand/ service
USP
Price
Value
Strategy
Sales force + promotion
Marketing mix
Period
Short term
Long term
Controls
Sales/Delivery/ Collections
Customer satisfaction, market share
Skills
Selling/ Communication
Analytical
Orientation
People
Team
Begins
When you have a product
Much before & long after a product
Difference Between - Sales & Marketing ?
Sales
trying to get the customer to want what the
company produces
Marketing
trying to get the company produce what the
customer wants
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Scope of marketing
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Goods
Services
Events
Experiences
Personalities
Place
Organizations
Properties
Information
Ideas and concepts
What can be marketed or sold ?
Anything under the sun …………
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Core Concepts of Marketing
Needs, wants
demands
Markets
Products
Marketing &
Marketers
Utility, Value &
Satisfaction
Exchange, Transaction
Relationships
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Core Concepts of Marketing
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Need – food ( is a must )
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Want – Pizza, Burger, French fry's ( translation of a need
as per our experience )
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Demand – Burger ( translation of a want as per our
willingness and ability to buy )
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Desire – Have a Burger in a Mac-D
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In order to understand Marketing let us begin with the
Marketing Triangle
Customers
Company
Competition
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Who is a Customer ??
CUSTOMER IS . . . . .
Anyone who is in the market looking at a product /
service for attention, acquisition, use or consumption
that satisfies a want or a need
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Product is . . . . .
Anything that is offered to the market for
attention, acquisition, use or consumption that
satisfies a want or a need
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Market
A Public place where buyers and sellers make transactions,
directly or via intermediaries
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Types of Products
PRODUCTS
Consumer
Products
Services
Industrial
Products
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Uniqueness of medical products marketing
• Customer and consumer are two separate entities
• Customer is more aware and informed about the products
• Marketing is regulated by various guidelines (example:
advertising not allowed for schedule H drugs)
• Medical council of india( MCI) governs the inputs provided
to medical practitioner (doctor i.e customer for pharma
companies)
• While Drugs and Magic remedies act governs the content of
advertising of the medical products
• Direct to consumer marketing is not allowed for on
prescription medical products
Uniqueness of medical products marketing
• Marketing of product and claims has to be backed by clinical
evidences for medical products
• Evidence based marketing is desirable
• For OTC ( over the counter products) marketing can be done
by advertising directly to the patient (eg: ranbaxy’s revital)
medical products selling process
products
Pharma
company
detailing
Sales
representative
Product sample
Doctors
Clinical data
Prescribes
Rx
money
Retail
chemist
Patient
medicine
Distribution
The Distribution Function
• distribution is about getting the product or service
to the customer as conveniently as possible; it deals
with access and availability
• intermediaries perform many of the distribution
functions on behalf of suppliers
• merchant intermediaries actually take title to
physical products that they distribute
• agents do not ever own the products, but they
arrange the transfer of title
• Distribution happens through various channels
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Distribution Channel
What is a Distribution Channel?
• A set of organizations (intermediaries) involved in the
process of making a product or service available for use
or consumption by the consumer or business user.
• Used to move the customer towards the product
• Selling through wholesalers and retailers usually is much
more efficient and cost effective than direct sales.
Distribution Channels
• The role of distribution entails:
• Arranging for its sale and transfer of title
• Promoting the product
• Storing the product
• Assuming some risk during distribution.
• Intermediaries often perform these activities for producer
or consumer.
All roads lead to Rome
Distribution Channel Functions
• Information: gathering and distributing marketing research and
intelligence information about the marketing environment.
• Promotion: developing and spreading persuasive communications
about an offer
• Contact: finding and communicating with prospective buyers
• Matching: shaping and fitting the offer to the buyer’s needs, including
such activities as manufacturing, grading, assembling, and packaging.
Number of Channel Levels
Channel Level - Each Layer of Marketing Intermediaries that Perform Some Work in
Bringing the Product and its Ownership Closer to the Final Buyer.
0-level channel
Producer
Consumer
1-level channel
Producer
Retailer
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Consumer
Retailer
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Consumer
Retailer
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Consumer
2-level channel
Producer
 Wholesaler
3-level channel
Producer
 Wholesaler 
In Pharma
Jobber
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Factory
Branch/C & F Agent
HUB
Distributor
Chemist
All India organization of Chemists & Druggists Association (AIOCD)
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Evaluation of Domestic Pharmaceutical Distribution
1970
National
distributors
1980
Own Branches
Early 1990’s
CFAs
Mid 90’s
Hubs, CFAs,
Consignment Agent
2000 to2006
Hubs, CFAs
Rs.650 Cr
Rs.2,750- Rs.3,000cr
Rs.8,000-Rs.8,500 cr
Rs.14,000- 14,500cr
Rs 23,500cr
(8% & 10%)
(8% & 10%)
(16% & 20%)
(16% & 20%)
Increase in Institutional
sales
Entry of
government
Pharmacy chains
(2002 onwards)
28,500
4 lakhs
55,000
5 lakhs
Stockist margins
(4% & 6%)
(6% & 8%)
(8% & 10%)
Retailer margins
(8% & 12%)
(12% & 16%)
(16% & 20%)
Entry of Sub- stockists
Stockists- 18,000
Retailers- 1,25 lakhs
20,700
2 lakhs
23,500
3 lakhs
Stockists
Chemists
Price Control
8%
16%
Out of Price control
10%
20%
Source: EY research & trade bodies
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Pharma distribution channel
Pharma company
Cental govt or
state govt
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CFA
2
Distributor ( stockist)
Selected Institutes
(hospitals)
Sub Distributor ( sub
stockist)
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Retailer ( chemist)
3-level channel of distribution
Patient
(consumer)
Role of carrying and forwarding agent (CFA)
• A extended part of pharma company ( single pharma company)
• CFA can also be a manufacturer owned warehouse or an
independent service provider paid a certain commission per unit
handled
• They help in the routinization of transactions
• adjustment of assortment discrepancy and sorting-breaking down a
heterogeneous supply into separate stocks that are relatively
homogeneous
• ALLOCATION- breaking down a homogeneous supply into smaller
slots & ASSORTING-Building assortments that are readily consumable
• Accumulation-BRINGING SIMILAR STOCKS from different suppliers
• Does not have a fixed margin for doing that but operates on share of
revenue on the volumes that it trades ( 1.5 to 2% commission)
• Appointed at a state level ( at max 2-3 CFA’s per state)
Role of a stockist ( distributor)
• Keep stock of multiple pharma companies to distribute it to the
retail chemist
• They get fix margins for selling the medicines from the pharma
companies ( 10% for the product out of price order and 8% for
the product within price order)
• They are appointed by the pharma company and have to
operate to distribute products for a particular region (territory)
• Pharma company appoints minimum1 and max 3 distributers
for one region)
• Order stock at every month end from the respective CFA’S
(termed as closing 28th to 31st or 1st week of every month)
• Is take a permission from All India Organisation of Chemist and
Druggist ( AIOCD)
Role of a sub-stockist
• They share the stock with stockist to distribute it to the area not
covered by the stockist
• Shares the margins with the stockist
• Act as mediator between stockist and retailer
• Have a limited existence in pharma supply chain
• For rural and extra urban regions a pharma company appoints a
sub-stockist to increase their reach in those areas
Role of a retail chemist
• Is a point of purchase for the patient
• Operates on fixed margins(20% for products not under price
order and 16% for products under price order)
• Order stock from stockist as and when required and do not
have a fixed ordering schedule
• Keeps stock of all the companies and sells to the patients at
maximum retail price (MRP)
• They are registered with state FDA authorities
Retail chains
Patterns of Distribution
• Determines the intensity of the distribution
• Intensity decides the service level provided
• Types of distribution intensity:
• Intensive
• Selective
• Exclusive
Distribution Intensity
• Intensive: distribution through every reasonable outlet
available – FMCG
• Selective: multiple, but not all outlets in the market –
pharma, frozen food
• Exclusive: may be only one outlet in a market - car dealers
Intensive Distribution
• Strategy is to make sure that the product is available in as
many outlets as possible
• Preferred for consumer, pharmaceutical products and
automobile spares
Selective Distribution
• A few select outlets will be permitted to keep the products
• Outlets selected in line with the image the company wants
to project
• Preferred for high value products
• Tanishque jewelry
• Keeps distribution costs lower
Exclusive Distribution
• Highly selective choice of outlets – may be even one outlet
in an entire market
• Could include outlets set up by companies – Titan, Bata
• Producer wants a close watch and control on the distribution
of his products.
THANK YOU
-PHARMA STREET