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Term Paperon “Marketing Analysis of GlaxoSmithKline
Bangladesh Limited”
Submitted to:
Professor Dr. M. Mahmodul HasanMBA Program, School of Business
North South University
Submitted by:
Panel: BOOM-Al-Habibi
Course: Marketing Management (BUS 620)
Section: 03
Date of Submission: April 25, 2015
Term Paper on “Marketing Analysis ofGlaxoSmithKline Bangladesh Limited”
Submitted to:
Professor Dr. M. Mahmodul HasanMBA Program, School of Business
North South University
Submitted by:
Name IDKaniz Fatima Nourin Choudhury
1430929060
Sumaiya Murshed 1430624660Kaniz Fatema Shernaz 1431004660Umme Rabia 1430623660
Panel: BOOM-Al-Habibi
Course: Marketing Management (BUS 620)
Section: 03
Date of Submission: April 25, 2015
Letter of Transmittal
April 25, 2015
Professor Dr. M. Mahmodul Hasan
MBA Program, School of Business
North South University, Dhaka
Subject: Prayer for Submission of the Term Paper on
“GlaxoSmithKline”
Dear Sir,
We would like to inform you that we have completed our term
paper on GlaxoSmithKline Bangladesh Limited that you have
assigned us for the course BUS 620: Marketing Management. It
was a great pleasure for us to work on this report.
In writing this term paper, we have followed the instructions
that you have given us in and outside of the class, and we
have also applied relevant concepts that we have learnt
throughout the course. The contents provided in this report
are all our own, though some information and references have
been taken from sources like GlaxoSmithKline Bangladesh
Limited to facilitate our report writing.
We would like to thank you for your sincere guidance and
constant support that we have received during the course of
writing this report. It would not be possible for us to
complete the report without your kind help. We would be glad
to provide any clarification and modification if and when
required.
Yours Sincerely,
Name and ID SignatureKaniz Fatima Nourin Choudhury
ID:1430929060Sumaiya Murshed
ID: 1430624660Kaniz Fatema Shernaz
ID: 1431004660Umme Rabia
ID: 1430623660 Acknowledgement
We would first like to thank Almighty Allah for giving us this
opportunity to work and complete this term paper since
preparing this paper has been a great challenge for all of us.
We are very grateful to our honourable faculty Professor Dr.
M. Mahmodul Hasan for his generous cooperation and constant
guidance that made us really confident about the desired
outcome of our term paper on “GlaxoSmithKline Bangladesh
Limited”.
We would also like to thank our respondents from
GlaxoSmithKline Bangladesh Limited, who took out some time
from their busy schedule to help us collect information. It
was a very interesting experience for us and we tried our best
to cover all the necessary parts of the report assigned.
Finally, we would like to thank each other for the tremendous
cooperation we have shared among ourselves as group members.
Our dedication and strong teamwork has resulted in the
successful completion of this term paper.
Executive Summary
This term paper on “GlaxoSmithKline Bangladesh Limited” aims
to analyse marketing management of the company. It begins with
the definition of marketing management relating to the
company’s marketing management, followed by its mission,
vision, business plan, corporate strategy, SWOT and PESTEL
analyses, Michael Porter’s five forces, marketing strategy,
core marketing concept, market segmentation and marketing mix,
value chain model, total quality management, and quality and
control, brand and branding, brand dynamic pyramid, the five
M’s of advertising, mass communication, marketing budget and
expenditure, pricing strategies, break-even analysis,
recommendation, and finally conclusion. GlaxoSmithKline (GSK),
being a science-led global healthcare company, researches and
develops a broad range of innovative medicines, vaccines and
consumer healthcare products. Its products are used by
millions of people throughout the world, helping them to do
more, feel better and live longer. With headquarters in UK,
GSK has its operations in 115 countries with more than 100,000
people working globally. The company has three primary areas
of business in pharmaceuticals, vaccines and consumer
healthcare. As a research based company, GSK creates
innovative new products and makes them accessible to as many
people who need them. GSK Bangladesh Limited, a subsidiary of
GSK plc, started its operation in Bangladesh, the then East
Pakistan in 1949. Its activities include secondary manufacture
of pharmaceutical products and marketing of vaccines,
pharmaceutical healthcare products, nutrition and oral
healthcare products. The company’s activities are strictly
guided by “GSK values” which include showing respect for
people, being patient/customer focused and commitment to
transparency and demonstration of highest integrity in its
conduct. Embedded with these values and backed by leading edge
technology, more than 700 personnel are working all over
Bangladesh with the global mission to improve the quality of
human life by ensuring quality healthcare products. With 10
vaccine brands, GSK Bangladesh leads the market of the country
not only in terms of volume but also in terms of providing a
whole range of disease prevention for both infants and adults.
GSK has made a global commitment to re-invest 20% of the
profits it makes in developing countries to address issues
around providing healthcare services to the underserved
communities.
TABLE OF CONTENTS
Acknowledgement Executive Summary 1.0 Definition of Marketing Management 1
1.1 Defi nition of Marketing Management (Theory 2000 – 2011) 11.2 Defi nition of Marketing Management (Theory 2012 – 2016 ±) 1
2.0 Mission, Vision, Business Plan, and Corporate Strategy 2
2.1. Mission 22.2. Vision 22.3. Business plan 2
3.0 SWOT Analysis of GlaxoSmithKline Bangladesh 44.0 PESTEL Analysis of GlaxoSmithKline Bangladesh 55.0 Michael Porter’s Five Forces 66.0 Core Marketing Concept, Market Segmentation, and Marketing Strategy
7
6.1 Core Marketing Concept 76.2 Market Segmentation 76.3 Marketing Strategy 8
7.0 Marketing Mix (7P) + 4C 98.0 Value Chain Model 119.0 Total Quality Management, Loyalty, and Quality and Control
12
10.0 Brand and Branding 1411.0 Box Analysis of Brand Elements 1412.0 Brand Dynamic Pyramid 1513.0 Five M’s of Advertising 1614.0 Mass Communication 17
14.1 Advertising Budget & Campaign Cost 1814.2 Sales Promotion and Budget 1914.3 Events & Experiences/Sponsors 2014.4 Public Relation/Government Lobbying 2114.5 Corporate Social Responsibility 21
15.0 Marketing Budget & Expenditure 2216.0 Pricing Strategy 2517.0 Break-even Analysis 2818.0 Recommendation 2919.0 Conclusion 3020.0 References 31
1.0 Definition of Marketing Management:
1.1 Definition of Marketing Management (Theory 2000 – 2011)
Marketing management is the art and science of choosing target
markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer
value. (Kotler, Keller, Koshy, Jha, 2014)
1.2 Definition of Marketing Management (Theory 2012 – 2016 ±)
Marketing management depends on the size of the business and
the industry in which the business operates. Effective
marketing management will use a company's resources to
increase its customer base, improve customer opinions of the
company's products and services, and increase the company's
perceived value.
Marketing management of GSK Bangladesh depends on the big size
of its pharmaceutical and consumer healthcare product business
and the huge pharmaceutical and consumer healthcare industry
in which the business operates. Since the size of the business
and industry is big, its marketing management involves huge
and complex activities.
Effective marketing management of GSK uses its resources to
increase its customer base, improve customer opinions of its
pharmaceutical and consumer healthcare products, and increase
GSK’s perceived value. GSK’s spirit of delivering excellence
by being the best it can be enables it to carry out effective
marketing management. GSK focuses more on quality, innovation
and research and development, and also spends hugely on
advertisement, sales promotion and public relation activities.
2.0 Mission, Vision, Business Plan, and Corporate Strategy
2.1 Mission
To improve the quality of human life by enabling people
do more, feel better, and live longer
GSK Bangladesh is confident that it can fulfill this mission
by focusing its business activities around strategic
priorities. Ensuring GSK’s values are embedded in its
culture and decision-making helps GSK better meet the
expectations of society (GSK, 2014).
2.2 Vision
GlaxoSmithKline want to become the undeniable leader in our
industry. It is the people who are at the center of all GSK
does – always, all through. The change GSK has incessantly
been striving to catalyze at a sustainable level would not
only be meaningless but also impossible, had it not directly
touched and involved those individuals’ lives. This year’s
cover page of GSK Bangladesh’s Annual Report reflects its
vision of “All for the PEOPLE” through the illustration of
GSK’s hands extending out to the innumerous people around it.
2.3 Business plan
The local pharmaceuticals part of the business grew by 12%
which is higher than the 11% market growth reported by IMS.
This was on the back of a very successful 2013.
Pharmaceuticals business exceeded its annual value and
volume budgets enabling access of close to 30 million packs
of GSK’s products to patients across the nation. Growth was
driven almost equally by all zones indicating robustness of
processes and good field engagement. Vaccines part of the
business faced unprecedented challenges on the supply front
impacting overall business growth.
In 2014, Global Manufacturing & Supply (GMS) Chittagong site
added one more year of success to the legacy of more than
four decades of glorious achievement. The end-to-end supply
chain program, which began in early 2014 continue to reform
and simplify GMS Chittagong’s supply chain to ensure more
efficient delivery of GSK’s products to patients and
consumers.
This year, the Chittagong site successfully achieved 3 STAR
rating in the recent A&A audit by EHS (Environment, Health
and Safety) and PQ (Product Quality) auditors. Operational
compliance in terms of meeting Global Engineering Standards
(GES) and FM Global assessment and TP 13 engineering audits
outcome gives us the confidence of controlled operations of
the site.
In 2014, GMS Chittagong introduced GSK Production System
(GPS). The GPS is a standard ways of working to identify and
eliminate the root cause of Accidents, Defects and Waste.
This standard ways of working will further improve GMS
Chittagong’s processes and performance in a well-structured
sustained manner.
With all these and other initiatives, GSK Bangladesh plans
to increase its market share and business span further.
GSK Bangladesh’s Internal Control Framework:
3.0 SWOT Analysis of GlaxoSmithKline Bangladesh
SWOT
Analysis
Strength
GSK is one of the largest pharmaceutical companies
Strong financial position. As they maintain profitability.
Strong R&D focuses for creativity and innovation
Winner of chemical industry manufacturing
Weakness
High price. Because they
focus on value rather than
price
Ineffective online
presence. Sometimes they
don’t update their
information
Low level of flexibility
due to the large size of
the company
Opportunity
Possible partnerships & mergers with the pharmaceutical company would increase its capabilityInvention of new drugs, especially of cancer and HIVNew diseases will create opportunities for GSK to bring new drug
Threat
Price War of competitor.A new competitor have superior access to channel of distributionIncreased cost of research Due to inflation.
4.0 PESTEL Analysis of GlaxoSmithKline Bangladesh
Strength
GSK is one of the largest pharmaceutical companies
Strong financial position. As they maintain profitability.
Strong R&D focuses for creativity and innovation
Winner of chemical industry manufacturing
Weakness
High price. Because they
focus on value rather than
price
Ineffective online
presence. Sometimes they
don’t update their
information
Low level of flexibility
due to the large size of
the company
Economical
Economic growth and increase in individual disposableincome
Increase in average growth rate of Bangladesh Pharmaceutical Market
Political
Growing political focus and pressure onhealth care
Possible changes in international trade regulation and competitive regulation
Technological
Breakthroughs in pharmaceutical industry with advanced technology
Issues associated with licensing and patentingdrug manufacturing technology
Social
Changes in customer
life style
Shift in consumer
attitude and opinion
Consumers are
becoming more health
Legal
Rules and regulations directlyand indirectly related to GSK operation such as employment law
Ecological
Climate changed and global warming
Impact to the environment of GSK activities
Reaction of stakeholders to this
5.0 Michael Porter’s Five Forces
RIVALRY
Degree of RivalryIndustry growthCompetitors offer similar and also new ideas & products. High sunk cost and exit barriers cause high degree of rivalry
Buyer PowerConsumers have no choice but have to buy what doctor says. Buyers are scattered and they as such do not use much power in the price of product
Supplier Power- Few suppliers available for supplying the ingredients- No suitable substitutes of inputs - High switching costs to change suppliers - Difficult to stick with one supplier due to emerging technology- Supervision needed for different suppliers
Threats of
Substitute
Easy for the customers
to shift to other
options as switching
cost is low
Demand for generic
against brand name
drug has increased
because of the cost
Threat of New Entrants
High barriers to entry due to huge capital investmentsStrict Government Policies for safety purposesRequire economies of scale & established brand identity
6.0 Core Marketing Concept, Market Segmentation, and Marketing
Strategy
6.1 Core Marketing Concept
Needs, Wants & Demands: GSK is a science-led global healthcare
company with a mission to help people to do more, feel better,
and live longer. They provide vaccines, medicines and consumer
healthcare products, which are always in need. People want
these products when they face health issues. That’s why every
day their scientists search for new ways to improve treatment
of diseases and illnesses, and they pioneer in providing new
solutions to make their products available to those who need
them, wherever in the world they live and whatever their
ability to pay is.
6.2 Market Segmentation
Marketing segmentation is to divide the customer base into
cluster groups with different needs and behaviors in order to
create different and appropriate marketing proposition.
GlaxoSmithKline has segments in major bases: demographic,
psychographic, and geographic.
Demographic:
Income- Income is an important factor in terms of niche market
products like Acen Aid Bar, Oilatum and Spectraban. As GSK has
targeted the Upper Middle and Upper Class people, the market
can be divided based on the income levels of people.
Psychographic:
Social Class- People of different classes have different
needs. Usually upper and upper middle class people are more
concerned about their skin and health related issues. And
GSK’s products require both health consciousness and ability.
Geographic: GlaxoSmithKline currently operates in 115
different countries. So geographically they are spread
out the whole world and they are the 1st pharmaceutical
company to sign up to all trial campaigns for research
transparency.
6.3 Marketing Strategy
GlaxoSmithKline purely follows the ‘marketing concept’. The
marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than competitors in creating, delivering, and
communicating superior customer value to its chosen target
markets. Sales and marketing is a big part of their Vaccines,
Pharmaceuticals and Consumer Healthcare businesses.
Essentially, its role is to commercialize the products.
Some significant strategies are:
The Strategic Marketing and Market Development
Programme help to develop deep customer insights,
articulate winning value propositions and robust
business strategies.
GSK focus on individual, do what is right for
patients and consumers and committed to the highest
standards of ethical medical practice and governance
in their work.
Recent acquisition of Novartis will create a new
world-leading Consumer Healthcare business bringing
together complementary portfolios with first or
second positions in core categories such as Oral
Care, Wellness and Skin Health.
Their innovative strategy of ‘RX to OTC switch’
makes their consumers’ lives easier by making
prescription medications (Rx) more easily available
to consumers through switching them to over-the-
counter (OTC) products.
7.0 Marketing Mix (7P) + 4C
Price:
Competitive Pricing
In Least Developed Countries, GSK capped price onpatent-protected medicines. In middle-income countries, a
Physical evidence:
GSK ensure high quality products, by giving effectivehealthcare solutions. Theirtop priority is safety of the consumers,
Product:
1- Pharmaceutical Prescription
Medicines Vaccine Medicines Non- Prescription
medicines
2- Consumer Health & Food
drink category –Horlicks, Boost,Maltova, Viva
Target
Market Marketing
Mix
People:
Corporate Executive Team surrounded by talented, trained and experienced staffs around the globe.-
Process:
Automated; Information Technology, Research & Development Sectors, Scientific Programs,
Promotion:
TV commercials, Billboards, Internet, Newspapers, In-store
4C
Place:
GSK’s brands are available in more than 115 countries. They are available in all pharmacies and supermarkets
8.0 Value Chain Model
Clients:
Prescribed Medicines: Different Aged People
Healthcare Products: Mainly Young People
Costs:
Invest more on CSR Activities and Research and Development Sectors.
Convenience:
GSK’s brands are available in more than 115 countries of the world, and they provide World Wide Contact Information for their customers.
Communications:
Direct or indirect interactions with customers; World Wide Contact Information; communicating through CSR activities or
through internet
Target
Market
Primary Activities:
InboundLogistics
Operation OutboundLogistics
Marketing &sales
Services
Materialhandling
Machining Storing Advertising Installation
Warehousing Packing Distribution
Salespromotion
Commissioning
Inventorycontrol
Assembly Deliveryfinishinggoods
Quoting Training
Vehicle Maintenance - Channelselection
Support
Returns tosuppliers
- - Pricing Repairs
Support Activities:
Procurement TechnologyDevelopment
Human ResourceManagement
FirmInfrastructure
Raw materials Administration(MIS)
Recruiting Generalmanagement
Temp salespeople formarketing &
sales
Transportation Training Planningfinance
Lab equipmentfor R&D
In the productor process
Compensation Legal
9.0 Total Quality Management, Loyalty, and Quality and Control
Total Quality Management:
Total Quality Management is an enhancement to the traditional
way of doing business. It is the art of managing the whole to
achieve excellence. It is defined as both a philosophy and a
set of guiding principles that represent the foundation of a
continuously improving organization. It is the application of
quantitative methods and human resources to improve all the
processes within an organization and exceed customer needs now
and in the future. It integrates fundamental management
techniques, existing improvement efforts, and technical tools
under a disciplined approach.
GSK is working on the quality improvement strategy. It
provides frameworks that ensure quality, regulatory
compliance, and product safety. It mainly focuses on reducing
the failure costs by problem solving methods. The whole system
is centrally managed which is published on GSK internet and
implemented at sites through local standard operating
procedures of systems. This organization is basically
concerned in two departments: one is manufacturing and another
one is commercial department. Manufacturing department helps
in identifying technical descriptors i.e. materials and
process required for making a product. The commercial
department helps in identifying customer requirements and also
measures the level of GSK’s customers’ satisfaction. GSK has
developed a system for handling customer complaints called
“COMPLAINT HANDLER”.
Quality & Control:
Quality is the totality of features and characteristics of a
product or service that bear on its ability to satisfy stated
or implied needs. GSK stands on “Improving Health and Quality
of Life To Do More, Feel Better, Live Longer”. So, they
established a commercial department which identify customer
expectations and their satisfaction and constantly monitor
them. To increase their quality, GSK also reviews their
products annually. For this task, they have software called
LAB INFORMATION MANAGEMENT PERFORMANCE SYSTEM (LIMPS). This
software saves past data, so they can easily compare where
they were last year and where they stand today. This also
helps GSK to know whether their product is robust or not.
Customer Loyalty:
Competitive advantage can be achieved through customer
loyalty. This is the way to gain the best kind of customers
and repeat customers. GSK’s corporate mission is to “improve
the quality of human life”. Through consumer education and
sponsoring events, the company gets the opportunity to
communicate its message directly to consumers. It is all about
creating a range of value-adding services around services
around the product that drive customer loyalty.
GlaxoSmithKline has just completed a pitch process and
selected a vendor to develop an app for the pain-relieving
product Panodil Junior. This company is well placed to develop
an app for concerned parents with ill children because they
are targeted to children.
10.0 Brand and Branding
Branding is a major issue in product strategy. On the one
hand, developing a branded product requires a huge long-term
investment, especially for advertising, promotion, and
packaging, but when it comes to Pharmaceutical Industry, then
branding comes with a different form. GlaxoSmithKline, one of
the major players of pharmaceutical industry, has done their
branding in different innovative ways. Like- they have two
main types of product segments, one is Pharmaceuticals – where
they simply make their products and packaging in an innovative
way. They also promote their brands through different
advertisements.
For instance, they made different ads for Sensodyne and
presented it as a doctor prescribed toothpaste, which easily
attracted consumers’ attention. Another product segment is
their Consumer Healthcare products, where they used different
brand ambassadors to promote their products, e.g. Sachin
Tendulkar as the brand ambassador of their major health food
drinks like Boost and Horlicks. Some pictures of different
types of branding of GlaxoSmithKline’s products are given
below.
11.0 Box Analysis of Brand Elements
Memorable Meaningful
Likable Transferable
Adaptable Protectable
12.0 Brand Dynamic Pyramid
Strong Relationship
Weak relationship
Presence
Relevance
Performance
Advantage
BondingGSK
13.0 Five M’s of Advertising
The Five M’s of Advertising of GlaxoSmithKline Bangladesh
Limited include the following:
Mission
To create brand awareness and knowledge of new and existing products, stimulate repeat purchase, and convince doctors andpurchasers that they made the right choice,
Money
The advertisement and sales promotion expenses were Tk 850,250,000in 2014, Tk1,059,208,000 in 2013,and Tk 835,491,000in 2012. Itcan furtherincrease its budget allocation for
Message
People are at the heart of all what GSK does. GSK wantsto help them domore, feel better, and live longer through providing quality products because healthypeople make
Media
Like other pharmaceutical companies, GSK puts fewer advertisements of pharmaceutical products in major media vehicles like TV, radio, Internet, newspaper, billboard, etc.compared to itsconsumer healthcare products like Horlicks. GSK
Measurement
The results can be measured by comparing growth of sales and market share.In 2014, GSK’s pharmaceutical business grew by 12% which is higher than the 11% market growthreported by IMS and its consumer healthcare business grewby 7%, maintaining adominant market share of 88% in thehealth food drink category. The
14.0 Mass Communication
Mass Communication Budget and Expenditure of GlaxoSmithKline
includes advertising budget and campaign cost, sales promotion
and budget, events and experiences/sponsors, public
relation/government lobbying, and corporate social
responsibility. Three years’ budgets from 2012 to 2014 have
been shown in the table below. In 2014, advertisement and
sales promotion has the highest 92% allocation amounting to Tk
850,250,000, conference and seminar 3%, physician samples 3%,
communications 1%, Health Care Organization (HCO) support
expense 1%, Health Care Professionals (HCP) expense 0% and
professional books 0%. These expenditures are usually made
more on consumer healthcare products than on pharmaceutical
products. (GSK, 2014)
Mass Communication Budget & Expenditure
Taka in '000
2014 2013 2012
Advertisement
and Sales
Promotion
850,250 1,059,208 835,491
Health Care
Organization
5,628 6,292 -
(HCO) Support
Expense
Health Care
Professionals
(HCP) Expense
1,328 64 -
Physician
Samples
28,154 21,211 22,923
Professional
Books
1,821 1,723 1,517
Communications 7,172 3,976 4,217
Conference and
Seminar
30,099 19,195 11,396
The pie chart shows percentage of GSK’s major allocations in
mass communication sector for the year 2014.
M ass Com m unication Budget & Expenditure
92%
1%0%3%0%1%
3%
Advertisem ent and SalesProm otionHealth Care Organization(HCO) Support ExpenseHealth Care Professionals(HCP) ExpensePhysician Sam ples
Professional Books
Com m unications
Conference and Sem inar
14.1 Advertising Budget & Campaign Cost
The table and pie chart below show the typical estimated
highest amount of 48% allocation for TV, followed by outdoor
(20%), newspaper (19%), magazines (10%), radio (2%), and
internet (1%). These allocations for media are usually used
more for consumer healthcare products than for pharmaceutical
products. At present, among pharmaceutical products, only
vaccines like Cervarix are advertised using celebrity
endorsements like Monalisa and Kaniz Almas to create social
awareness (GSK,personal communication, April 22, 2013).
Advertising Budget and Cam paign Cost
19%
10%
20%
48%
1%2%
NewspaperM agazinesOutdoorTVInternetRadio
Percentage of allocations for various types of mediaTypes of Media % of allocationTV 48Newspaper 19Magazines 10Radio 2Outdoor 20Internet 1
14.2 Sales Promotion and Budget
The allocation of budget for advertisement and sales promotion
was Tk 850,250,000 in 2014, Tk 1,059,208,000 in 2013, and Tk
835,491,000 in 2012.
Promotional Activities of GlaxoSmithKline:
Like other pharmaceutical companies, sales promotion system is
critical for GlaxoSmithKline’s pharmaceutical business. GSK’s
promotional activities include promotional activities for
doctors; promotional activities for chemists; and promotional
activities for ultimate consumers.
Promotional Activities for Doctors:
Promo materials like wet tissue, pen, folder, hand
wash/soap/sanitizer, nail brush, paper towel, pen drive, note
book, etc. and medical equipment like medical journal,
stethoscope protector, BP machine, needle destroyer, tongue
depressor, anatomical chart, patient dairy, disposable
mask/gown/gloves, magnifying glass, thermometer, etc. along
with names of medicines are provided to doctors free of cost.
Promotional activities for Chemists:
Like other companies, GSK gives 16% permanent discount to
chemists for all its medicines. For instance, if GSK’s one
medicine price is Tk 100, chemists can sell it for Tk 133
including government VAT of Tk 17.
Promotional Activities for Ultimate Consumers:
GSK’s promotional activities for ultimate consumers include
personal selling with samples, coupons and free trials,
especially for vaccines in rural areas. Direct marketing
channels like setting up temporary kiosks are also used.
(GSK,personal communication, April 22, 2013).
14.3 Events & Experiences/Sponsors
GSK sponsored Satellite Symposia “Post menopausal
Osteoporosis & Role of Denosumb”. The symposia were
attended by eminent orthopedics of the country and the
scientific information shared by GSK was highly
appreciated.
The Derma team of GSK Bangladesh arranged a unique
scientific session with leading Dermatologists of the
country to discuss the clinical research on Acne Vulgaris
titled “Bench to Bedside: Clinical Research in Acne
Vulgaris” in January 2014.
To facilitate and update scientific information titled
“Updates on Management of Dry & Sensitive skin, a speaker
tour was held in Dhaka and Chittagong for Dermatologists.
GSK participated in the 4th Divisional Conference of
Obstetric & Gynaecological Society of Bangladesh (OGSB),
Khulna Branch by arranging a scientific seminar on “Role
of vaccination for cervical cancer prevention”.
GSK participated at the Bangladesh Pediatric
Association’s Symposium 1st SAPA & 18th BPA Conference in
April 2014.
Immunization week was celebrated in April 2014 by
focusing on success stories of vaccination (GSK, 2014)
14.4 Public Relation/Government Lobbying
Public relations (PR) of GSK involve a variety of programs
designed to promote or protect the company’s image to its
individual products. Public relations functions include press
relations, product publicity, corporate communications,
lobbying, and counseling. Major tools used in marketing PR
include publications such as professional books, events,
sponsorships, news, speeches delivered in conference and
seminars, and public service activities like immunization
campaigns (GSK, 2014).
14.5 Corporate Social Responsibility
Since the last few years, GSK has taken up several initiatives
to fulfill its corporate social responsibilities for a better
and healthier community in Bangladesh.
The key initiatives include reinvestment of 20% of profits for
healthcare infrastructure development in Bangladesh with a
vision to reach out to the hard-to-reach communities of the
country with quality health care providers. This initiative
grew efficiently since 2011 and till date runs projects with
CARE, Friendship & ICDDR, B as partners.
GSK-CARE Community Health Worker Initiatives are intended to
address health work force issues at remote areas for improving
access to essential Maternal Neonatal and Child Health (MNCH)
services in Sunamganj Haor areas through expanding the
availability of skilled health service providers at the
community level.
GSK-FRIENDSHIP m-Health project aims at equipping and
upgrading to build a sustainable healthcare system in the
inaccessible char areas of Gaibandha District, where access to
any basic healthcare is almost non existent.
GSK-ICDDR,B Health System Strengthening Program addresses the
issue of lack of knowledge and/or implementation of clinical
governance in the hospitals regarding infection control which
is one of the major reasons of morbidity and to some extent
mortality in the healthcare facilities in our country.
GSK’s continuous support for running free primary school at
Mirpur, Dhaka for slum children has enabled it to provide more
than 500 students free education from pre-school to Class 5.
As one of the Founding Trustees of The Duke of Edinburgh’s
Awards (DEA), GSK provides the new generation with life skills
and opportunity to do different extracurricular activities.
GSK supports Teach for Bangladesh (TFB) which enlists the most
promising young Bangladeshi graduates to initiate a national
movement for educational equity with excellence, beginning by
teaching for two years in an under-resourced school (GSK,
2014).
15.0 Marketing Budget & Expenditure
The table and the bar chart below show the marketing budget
and expenditure for the years 2012 to 2014. Total marketing
expenditures were Tk 1,325,952,000 in 2014, Tk 1,341,499,000
in 2013, and Tk 1,087,265,000 in 2012. The expenditure
increased from the year 2012 to 2013, and decreased slightly
from the year 2013 to 2014.
Marketing Budget & ExpenditureTaka in '000
2014 2013 2012Selling Expenses:Salaries, wages and welfare 338,753 220,745 177,629Contributions to retirement
benefit scheme 17,242 15,234 26,192Advertisement and sales
promotion 850,250
1,059,20
8 835,491Health Care Organization
(HCO) support expense 5,628 6,292 0
Health Care Professionals
(HCP) expense 1,328 64 0Travelling & training 69,200 49,435 46,764Physician samples 28,154 21,211 22,923Professional books 1,821 1,723 1,517Communications 7,172 3,976 4,217Conference and seminar 30,099 19,195 11,396Motor running expenses 16,432 7,270 8,204Depreciation 32,626 24,035 24,376Office expenses 9,047 8,520 9,101Insurance 2,317 2,269 2,195Computer expenses 8,129 7,020 0Repairs and maintenance 0 0 2,975Other expenses 1,625 5,799 6,096Promotional allowance -114,329 -123,915 -113,176
Total Selling Expenses: 1,305,494
1,328,08
1
1,065,90
0
Distribution ExpensesSalaries, wages and welfare 6,115 5,345 4,763Contributions to retirement
benefit scheme 634 522 572Handling, freight and
transport 114 179 165Repairs and maintenance 2,223 483 31Motor running expenses 339 307 187Depreciation 1,907 1,348 1,214Stock keeping charges 6,601 4,810 13,873Communications 57 42 37
Select the price objective
0
200000
400000
600000
800000
1000000
1200000
1400000
1 2 3
M arketing Budget & Expenditure for the year 2012 to 2014
Total M arketing Expenses
Insurance 28 34 31Office expenses 2,115 214 317Other expenses 325 134 175Total Distribution Expenses 20,458 13,418 21,365
Total Marketing Expenses 1,325,952
1,341,49
9
1,087,26
5
16.0 Pricing Strategy
Steps in Setting Price
Determine demandEstimate costsAnalyze competitor price mixSelect pricing methodSelect final price
Step 1: Selecting the Pricing Objective
GSK first decides where it wants to position its market
offering. It becomes easier for the firm to set price when its
objectives are clear. The company pursues product-quality
leadership pricing objective aiming to be the product quality
leader in the market. Many of its brands strive to be
“affordable luxuries”—products characterised by high levels of
perceived quality, taste, and status with a price just high
enough not to be out of consumer’s reach (Kotler, Keller,
Koshy, Jha, 2014).
Step 2: Determining Demand
Price Sensitivity
GSK’s demand curve shows the market’s probable purchase
quantity at alternative prices. The first step in estimating
demand is to understand what affects price sensitivity.
Estimating Demand Curves
GSK attempts to measure their demand curves using statistical
analysis of past prices, quantities sold, and other factors
that reveal their relationships. In measuring the price-demand
relationship, the company strives to control various factors
influencing demand. However, the competitor’s response will
make a difference.
Price Elasticity of Demand
GSK attempts to know how responsive or elastic demand would be
to a change in price. The demand of GSK’s pharmaceutical
products is inelastic because demand hardly changes with a
small change in price. Dermatology and respiratory businesses,
for instance, have been GSK’s strengths, contributing
enormously to the total business. These medicines are
frequently prescribed as more effective remedy for such kinds
of diseases; and consumers generally buy medicines if
prescribed by doctors. So, buyers do not readily notice a
higher price, thinking the higher prices are justified.
Demand is slightly elastic for its consumer healthcare
products because price changes can affect the demand since
there are substitutes or competitors in the market and buyers
readily notice a higher price (Kotler, Keller, Koshy, Jha,
2014).
Step3: Estimating Costs
While estimating cost, GSK considers the average cost which is
the cost per unit at any level of production and variable cost
that must be covered. Total costs are also considered to
determine profits. Costs generally change with production
scale and experience. However, though GSK has declining
average cost with accumulated production experience called
experience curve or learning curve; it does not use
experience-curve pricing/aggressive pricing that gives
products cheap images. Moreover, its competitors are not weak
followers. GSK seems to use target costing where costs change
as a result of a concentrated effort to reduce them for
bringing the final cost projections into the target cost range
(Kotler, Keller, Koshy, Jha, 2014).
Step4: Analyzing Competitors’ Costs, Prices, and Offers
GSK determines its range of possible prices by considering
market demand and the company’s costs. The company also has to
take into account its competitors’ costs, prices, and possible
price reactions. It must first consider the nearest
competitors’ price (Kotler, Keller, Koshy, Jha, 2014).
Step 5: Selecting a Pricing Method
Considering the customers’ demand schedule, the cost function,
and competitors’ prices, GSK selects a possible price with
costs setting the floor to the price, competitors’ prices and
the price of substitutes providing an orienting point, and
customers’ assessment of unique features establishing the
price ceiling. GSK uses perceived-value pricing where it bases
its price based on the customers’ perceived value. Perceived
value consists of inputs such as the buyers’ image of the
product performance, the channel deliverables, the warranty
quality, customer support, and softer attributes such as the
suppliers’ reputation, trustworthiness, and esteem. Companies
like GSK must deliver the value promised by their value
proposition, and the customer must perceive this value. The
firms can use the other marketing program elements such as
advertising, sales force, and the Internet, to communicate and
enhance perceived value in buyers’ minds. Ensuring that
customers appreciate the total value of a product or service
offering is crucial. The company can try to determine the
value of its offering in several ways: managerial judgements
within the company, value of similar products, focus groups,
surveys, experimentation, analysis of historical data, and
conjoint analysis (Kotler, Keller, Koshy, Jha, 2014).
Step 6: Selecting the Final Price
In selecting the final price, GSK considers the following
factors:
Impact of other marketing activities: The final price
must take into account the brand’s quality and
advertising relative to the competition. Farris and
Reibstein’s findings suggest that price is not as
important as quality and other benefits in the market
offering.
Company pricing policies: The price must be consistent
with company pricing policies. Many companies like GSK
can set up a pricing department to develop policies and
establish or approve pricing decisions, aiming to ensure
that salespeople quote prices that are reasonable to
customers and profitable to the company.
Gain-and-risk sharing pricing: Buyers may resist
accepting a seller‘s proposal because of a high-perceived
level of risk. The seller has the option of offering to
absorb part or all of the risk if he/she does not deliver
the full promised value.
Impact of price on other parties: Management must also
consider the reactions of other parties to the
contemplated price (Kotler, Keller, Koshy, Jha, 2014).
17.0 Break-even Analysis
Break-even analysis of GSK is done to determine the point at
which revenue received equals the costs associated with
receiving the revenue. For a simple break-even analysis of
GSK, the formula is given below:
Break-even Sales = Fixed Costs / (1 – Variable Cost % of Sales)
2014
Tk.
2013
Tk.
2012
Total
in ‘000 in ‘000 Tk. in ‘000 Tk. in ‘000
Fixed Cost 18,84,192 17,11,918 13,44,945 49,41,055Variable Cost 44,76,255 45,16,705 39,64,900 1,29,57,860Sales 71,87,225 67,74,872 55,53,812 1,95,15,909
Break-even Sales = 49, 41,055/1-(1, 29, 57,860/1, 95, 15,909)
= 1, 47, 03,943 Tk. in ‘000
18.0 Recommendation
GlaxoSmithKline Bangladesh should continue to invest on
Research & Development in order to come up with new and
innovative products.
1, 47,03,943
Tk. in
1, 29,57,860
Tk. in ‘000
49, 41,055
Tk. in
It should close any plant that is not used by the company
for its operations because it increases the company’s
overhead costs.
GSK should also keep a check on its activities more
closely to outset those activities that are only
increasing costs of the company.
In order to gain market share, the company can try to
reduce the selling price of its products slightly as this
would allow more consumers to buy its products and
encourage the retailers to have its products on their
shelves.
Stronger alliances should be created with greater numbers
of physicians and chemists through sending more medical
representatives, holding conferences and seminars, giving
physician samples, maintaining communications, providing
Health Care Organization (HCO) support and Health Care
Professionals (HCP) expenses, and publishing
professional books.
19.0 Conclusion
GlaxoSmithKline (GSK) is one of the world’s largest research-
based pharmaceutical companies that invents, develops,
manufactures and markets health related products. It is an
innovative company that produces and markets branded products
only.
Pharmaceutical business exceeded its annual value and volume
budgets enabling access of close to 30 million packs of GSK’s
products to patients across the nation. Growth was driven
almost equally by all zones indicating robustness of processes
and good field engagement. To be successful, the company has
taken many steps such as going for mergers and acquisitions
and cutting its excess and redundant costs.
As a socially responsible multinational healthcare company,
GSK is securing wellness and providing quality products to its
customers. Their primary focus is to touch the lives of
millions of people every day. So, they are committed to
creating a strong ethical culture, where people are their main
target. As a result, they develop a legacy and deliver
breakthrough products of value that enable the customers to do
more, feel better, and live longer.
20.0 References
Kotler, P., Keller, K. L., Koshy, A. and Jha, M. (2014),
‘Marketing Management – A South Asian Perspective’, 14th edn, Pearson
Prentice Hall.
GlaxoSmithKline Bangladesh Limited. (2012).Annual Report 2014.
GlaxoSmithKline Bangladesh
GlaxoSmithKline Bangladesh Limited. (2013).Annual Report 2013.
GlaxoSmithKline Bangladesh
GlaxoSmithKline Bangladesh Limited. (2014).Annual Report 2014.
GlaxoSmithKline Bangladesh
Brocka, B., &Brocka, M.S.(1992). Quality Management: Implementing the Best Ideas
of the Masters, Richard D. Irwin, Homewood, IL.
Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take
account of political processes. Total Quality Management, 4(1), 47-55.
Khan M.A, (2009), Total Quality Management perspective of cellular mobile
telephone operators in Pakistan, National University of Modern Languages,
Islamabad.
Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take
account of political processes. Total Quality Management, 4(1), 47-55.
Website of gsk. http://www.gsk.com/
Retrieved from http://www.gsk.com.bd/
Retrieved from
http://faculty.insead.edu/chandon/personal_page/Documents/Arti
cle-Innovative%20Marketing%20Strategies%20after%20Patent
%20Expiry%20The%20case%20of%20Gsk-s%20Antibiotic%20Clamoxyl
%20in%20France.pdf
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