Retail Marketing Assignment 1 v0.0

7/29/2019 Retail Marketing Assignment 1 v0.0

1/5

Defining a Retail Strategy

Traditional Medical storeVs MedPlus

Submitted To:

Dr. Ranjan Chaudhuri

Project Submitted By :

Name Roll No.

John Augustine EPGP-04A-040

Navin Mundada EPGP-04A-057

Satish Ramaswamy EPGP-04A-088Satyanarayana Nalluri EPGP-04A-089

Vikas Dhawan EPGP-04A-110

Retail Management : Assignment 1

Indian Institute of ManagementKozhikode


2/5

Intorodcution

Pharmaceutical industry in India is highly fragmented with majority of it being handled by the

unorganised sector. There are around 5.5 lakh retailers for $6 billion market. Though the numbers

look huge, the overall reach is still very restricted to urban and semi urban areas with rural areas

contributing to just 10 %. As such in India, the pharmaceutical retailers have been enjoying relatively

strong margins of around 20%. While there can be around 10-15 thousand SKUs at a pharmacy,

less than 5% of pharmacies have used the computerized billing/inventory systems. There is

shortage of training staff and the lack of regulatory oversight. Counterfeits are estimated to be in the

range of 5-30% and therefore getting customer to trust on the integrity of the medicines can be

tough. There is expected to be an annual growth of 15% in the industry and therefore the size of it

will be doubled in the next 5 years. This will be driven by disease profiling, increasing restriction on

freedom to choose pricing and rural penetration. All the above factors provide excellent opportunity

for the organized retail to gain in the market and make its mark. Organised sector, though small, has

been growing at the rate of around 25% and is expected to grow at 35-40% in the next decade.Currently there are 15 players in organized sector and have around 2000 stores. Increasing

consciousness and disposable income are going to be key factors driving the organized retail sector

in pharma. Looking into the future, there will be entry of multiple formats like pharmacy, hospital

pharmacy, clinic cum path lab pharmacy, wellness centres and one-stop-shops for all medical

sciences. Growth potential will also give popularity to franchisees model.

Customers Point of View

Traditional Medical store

Conveniently placed at the location of hospitals, it is routine for patients to get an

appointment with doctors, do medical tests, consult doctors and buy prescribed

medicines.

Usually prescribed medicines are available at store. Even if it is not available doctors

prescribed different brands.

Long queues at the counter during hospital timings.

No additional service is provided.

Usually no proper bills are issued unless insisted. Price of the medicine is written on

back of prescription or on a piece of paper for calculation purpose.

Does not accept credit cards

Shopkeeper tries to maintain good personal relationship if they are not busy.

Sometimes sold drugs without prescription. There were incidents where customers

bought drugs asking a medicine for cold, cough , loose-motions and light fever.

Medplus

Located conveniently in residential areas. No need to go near hospitals to buy drugs

when they are over.

Offered 5-10% discounts or credit points on which customers can buy more products.

Professional service, did not suggest different brand drugs during out of stock. Theypromptly delivered out-of-stock during at home in few hours.

Always provided original bills with batch number and expiry date written.

Customers felt they are buying genuine drugs


3/5

Good ambiance, air-conditioned shop, and polite shopkeepers.

There were no queues. There are small queues during rush-hours.

Drugs are not sold without prescription Except over the counter drugs like crocin,

saridon, vicks etc..

Cheaper Medplus brand medical instruments and protein supplements are available.

Hospital and Doctors Point of View


Complementary service to the hospital business, co-operate with each other

Provides convenience to the patient

Handy during emergencies, hospital also buy medicines during operations and for in-

patients.

Get goodies and discounts from the medical shop. Some places they share profits.

Good relationship between Medical Representatives from Pharma companies,

Doctors and medical shop owners.

Medplus

Offered discounts to the customers but did not offer any benefits to the doctors or

hospitals.

Mostly located at residential locations and market areas, need not be close to

hospitals.

Did not maintain good relationship with Doctors, Hospitals and Medical

representatives.

Some patients did not buy drugs at hospital medical stores as Medplus was offering

discounts.

Pharma companies were by-passing doctors and directly selling medicine on bulk to

MedPlus.

Core Competency


Core competency is the close relationships with Doctors and Pharma company

dealers and distributors

Medplus

Core competency is bulk sourcing, distribution and retail shop network.

They capture customer data, analyse and thrive to meet customers demands.


4/5

Differences:

Traditional Medical store MedPlus

Location Near hospitals and clinics Mostly Nearer to Residentialplaces

Pricing No Discounts 5-10% discount on bills toMembers

Sourcing Through Dealers of company Centralized sourcing anddistribution

Supply chain Depends on Dealers andDistributors or company agents

Own supply chain maintained

Ownership Family owned FranchiseSales promotion Through Tieups with Doctors and

Clinics/HospitalsDirectly targeting end users

Stock Mostly what Doctors prefer andprescribeDuring stock out storesrecommend different brands or

ask doctors to prescribe availablebrand

Most of the medicines are keptat storeStock outs are met throughcentral distribution centre.

Medicines are delivered at homesame day or next day.

Medicine assortment Only sell company distributedproducts

They have their own brandmedical equipment likeGlucometers and BP meters.

Customer tracking No customer data is maitained Customers are issuedmembership cards. Allpurchases are tracked used toimprove service

Infrastructure Normal shop near hospital withlow rental

Air conditioned shop inresidential area. Well maintainedshop

Medicine storage Only one small refrigerator tostore sensitive medicines.

Well maintained, Enoughrefrigeration and storage racksto store medicine


5/5

Potters 5 Forces Analysis:

Easy in the un-

organized sector

though getting into

organized sector can

be tricky with high

infrastructure cost

Customer bargaining

power is low as they

have to go with what

doctors/chemist would

recommend

Switching cost is not

very high as lot of

pharma companies are

present

Alternate medical

treatments (ayurvedic,

homeopathy)

Highly competitive,

huge number of un-

organized and rising

number of organized

players

PORTERs FIVE FORCE MODEL

Documents

Retail Marketing Assignment 1 v0.0