Question
The assignment requires careful analysis regarding marketing strategy. Carefully review each part of the question below and provide an in-depth assessment of the question, using key concepts and terminology learned in the textbook and through your research. Your assignment should be 3-5 pages with a minimum of 3 references. APA formatting should be used (title and references pages should not be part of the total page count)
Your response should be based on the following scenario:
You are the marketing manager for a generic products division of a major pharmaceutical manufacturer. Your division uses the corporations’ excess manufacturing capacity to produce generic prescription drugs—drugs whose patents have expired and can thus be manufactured by any company that wishes to produce them. Your division is a low-cost defender that maintains its position in the generic drug market by holding down its cost and selling generic products to distributors and pharmacies at very low prices.
Question:
*(In marketing, the 4Ps include Product, Place, Price and Promotion). *Address each P in a separate heading so that your answer is easy to read and follow.
Answer
Business Strategy for Each of the 4 Ps in Strategic Marketing Program
Contents
Introduction
One of the emerging trends in the pharmaceutical industry involves the production of generic prescription drugs by taking advantage of excess manufacturing capacity of the corporations that hold patents for the drugs in question (Hudson, 2000). In most cases, this strategy is effected through a division of a large pharmaceutical company that is assigned the task of producing unpatented generic drugs at a very low cost. For such a company to succeed in its low-cost strategy, it should embrace the concept of 4Ps in its strategic marketing program. In this paper, the discussion is modeled around the implications of such a pharmaceutical company’s business strategy on each of the 4Ps.
Product
The pharmaceutical company’s product is generic prescription drugs. Generic prescription drugs are those whose patents have already expired, meaning that any company is free to manufacture and sell them. This choice of product significantly affects the manufacturer’s overall operations because it must meet all health standards established by regulatory agencies in the medical world (Frank, 2007). For instance, the nature of products on offer means that the company’s managers must possess the requisite expertise on how to obtain raw materials as well as industry best practices in terms of production and distribution.
Similarly, the issue of product offering constitutes a major implication for this aspect of marketing strategy. Customers expect the manufacturer to stay abreast of changes in the medical world, for example, the emergence of new conditions, new cases of drug resistance, and changes in demand in order to be able to offer the best experience. Similarly, the manufacturer must be ready to harness the efficiency of existing business-to-business relationships. For example, pharmaceutical companies typically supply products first and foremost to medical facilities, healthcare organizations, pharmacies and nursing homes, who in turn dispense the products to patients.
Place
To benefit from economies of scale and compete effectively with other generic prescription drug companies, this firm needs to spread its operations worldwide. The need to reach out to the mass market is especially imperative for this company because of its resolve to offer drugs at very low prices. Using economies of scale achieved through global market reach, the manufacturer will be able to succeed in terms of its low-cost strategy.
The component of place also brings into perspective the importance of establishing manufacturing facilities in different parts of the world, particularly those with ease of access to low-cost labor. For the same reason, some of the division’s facilities should be dedicated to R&D (Research and Development) aimed at leveraging the company’s position in terms of innovation (Regan, 2008). The choice of place and the production activities that occur there will greatly influence the generic prescription drugs company’s prospects for a successful long-term low-cost strategy.
Price
To maintain low prices for its products, the company needs to ensure optimal efficiency in terms of keeping all its operational costs at their barest minimum. It should be noted that consumers are increasingly becoming price-sensitive even when it comes to drugs, and this may influence other pharmaceutical companies to follow suit in the adoption of a low-cost pricing strategy. To maintain these prices, the company will have to widen its market reach in order to increase sales volume, preferably on a global scale. Again, this move may be replicated by competitors, meaning that this generic prescription drug company may be venturing into an already crowded global market. To create leverage, it should differentiate itself in terms of cost leadership by retaining an overly aggressive approach in terms of efforts to stream all production, distribution, and customer service functions.
Promotion
The best way to maintain a competitive edge in a highly crowded global market where every company is trying to offer products at the lowest prices is to adopt an innovative approach to promotion. Strong promotional activities are an integral component of a marketing strategy for any contemporary business, a pharmaceutical company more so. To begin with, the company’s tagline should effectively declare its intention, which entails offering generic prescription drugs at very low prices. At the same time, strategic positioning of adverts in print and electronic media will go a long way in building a strong brand that both existing and potential customers can easily recognize.
One effective promotional approach geared towards brand building may entail the development of adverts that stress on niche segments as a way of increases the chances of success in targeted markets. One of the best ways of evaluating the success of such a promotional campaign is by monitoring resulting changes in sales volume and revenue. However, it is imperative for other factors to be put into consideration. For instance, it may be wrong to attribute revenue increase to advertising only at a time when the company has recently made breakthrough development in the introduction of a new range of products, has recently ventured into a new market, or has contracted new agents and distributors. The most objective appraisal of the impact of promotion on the overall marketing strategy may be realized if all confounding factors have been addressed.
Conclusion
Overall, the use of the 4Ps approach offers numerous insights for the pharmaceutical company’s business strategy and prospects for success. Each of the steps that managers of the company take will have far-reaching implications for aspects of product, promotion, price, and place. For instance, in terms of product, focus will undoubtedly be on how to maintain high quality of product at a low cost. Regarding promotion, a lot of attention would undoubtedly shift towards aggressive advertising campaigns that reflect the pursuit of a low-cost strategy directed at the mass market. On the other hand, the price factor is a priority issue because producing drugs at a low cost is a challenge that is attributed majorly to the stringent standards requirements as well as difficulties in keeping operational costs low without triggering quality trade-offs. Lastly, the place factors matters a lot because of the need for economies of scale, meaning that this division of the pharmaceutical company will need to keep widening its market reach and maintain cost leadership at a global scale.
References
Regan, T. (2008). Generic entry, price competition, and market segmentationin the prescription drug market. International Journal of Industrial Organization, 26, 930–948.
Hudson, J. (2000). Generic take-up in the pharmaceutical market following patent expiry: A multi-country study.International Review of Law and Economics, 20, 205–221.
Frank, R. (2007).The Ongoing Regulation of Generic Drugs. The New England Journal of Medicine, 357(20), 1993-1996.
