Malaysia Pharmaceutical Society Malaysia Pharmaceutical Society SeminarSeminar

2828thth November 2004, JW MarriotNovember 2004, JW Marriot

Entrepreneurship and Management in PharmacyEntrepreneurship and Management in Pharmacy

“The Challenges of Setting Up A Pharmacy”“The Challenges of Setting Up A Pharmacy”

byby

K L ANGK L ANGB B PharmPharm RphRph MMPSMMPS

1994 ~2003 2004 ~20101994 ~2003 2004 ~2010The Paradigms Shift & SwiftThe Paradigms Shift & Swift

Existing/OldExisting/Old•• Business can be only in Business can be only in

this disciplinethis discipline•• Price WarPrice War•• Paradigm on market Paradigm on market

segments segments •• I am only a retailer?I am only a retailer?

NewNew•• Expand on the discipline of Expand on the discipline of

business segments if want to business segments if want to increase MS & profitabilityincrease MS & profitability

•• Change of thinking re the Change of thinking re the competitioncompetition

•• Focus on customers & Focus on customers & marketingmarketing

•• New services in Community New services in Community PharmacyPharmacy

Challenge ahead…Challenge ahead…•• Increased legislation, regulation & enforcementIncreased legislation, regulation & enforcement•• Competitive market (MNC & IOP)Competitive market (MNC & IOP)•• Pressure on prices & margins (supplier & consumer & Pressure on prices & margins (supplier & consumer &

doctor, peer)doctor, peer)•• Expansion of generics, price & value dropExpansion of generics, price & value drop•• Shortage of pharmacists (New Compulsory Service of Shortage of pharmacists (New Compulsory Service of

Houseman ship)Houseman ship)•• Smart consumer with demanding needs & internet access (kSmart consumer with demanding needs & internet access (k--

consumers)consumers)•• Increased operational cost (rental, overhead & promotion)Increased operational cost (rental, overhead & promotion)•• SARS, Pan SARS, Pan PharmaPharma, , VioxxVioxx recall, What’s next to hit recall, What’s next to hit

Malaysia’s retail pharmacy?Malaysia’s retail pharmacy?•• Unusual Pharmacy winding down,take over, mergerUnusual Pharmacy winding down,take over, merger--

acquisitionacquisition

Business/Marketing PlanningBusiness/Marketing Planning

There are significant challenges to the retail There are significant challenges to the retail pharmacy at present in Malaysia. In such pharmacy at present in Malaysia. In such business environmentbusiness environment~~ The marketing planning helps to decide The marketing planning helps to decide in the present what to do in the future & make in the present what to do in the future & make a profitable transitiona profitable transition~~ marketing strategies based on marketing strategies based on segmentation and product positioning offers segmentation and product positioning offers the keys to success, based on differential the keys to success, based on differential

advantage. We need to evaluate theadvantage. We need to evaluate thesignificance of these factors: significance of these factors: --

Remarks: Retail Pharmacies also need marketing nowadays

The Business planning formatThe Business planning format•• AuditAudit --where are we now?where are we now?•• SWOTSWOT --what are our priorities?what are our priorities?•• ObjectivesObjectives --where do we want to go?where do we want to go?•• StrategyStrategy --how will get there?how will get there?•• TacticsTactics --what are the steps along the way?what are the steps along the way?•• Measurement & controlMeasurement & control--how will we know we’ve arrived?how will we know we’ve arrived?

1. Executive Summary

2. Business Audit

3. SWOT Analysis

4. Assumptions

6. Vision

7. Marketing Objectives

Remarks:

It took 10 years for Caring to prepare a SMART business plan and yet unable to provide a solid business audit due to insufficient external data

8. Strategies

1. Tactical Plans & Mixes

1. Timetable & Budget

1. Measurement & Review

I.e. General Retail Market DevelopmentYear on Year % change in Retail Sales (Weighted) 2002/03

PeriodPeriod MonthMonth % growth in % growth in retail salesretail sales

RemarksRemarks

11stst Q 2002Q 2002 JanJan––Mac 2002Mac 2002 6.16.13.53.5

11stst Q 2003Q 2003 JanJan--Mac 2003Mac 2003 --0.10.1 ••Much lower than the forecasted Much lower than the forecasted 4.4%4.4%••Despite the GDP outperformed Despite the GDP outperformed retail; sales 4% in same Qretail; sales 4% in same Q••Uncertainty of warUncertainty of war

2003 (F)2003 (F) 5%5% ••Forecast beginning of 2003Forecast beginning of 2003

2003 (Rev)2003 (Rev) 2.3%2.3% ••After the poor 1After the poor 1stst & 2& 2ndnd QQ

22ndnd Q 2003(F)Q 2003(F) AprApr--Jun2003Jun2003 --0.20.2 ••SARSSARS

44thth Q 2002Q 2002 OctOct--Dec 2002Dec 2002

Recovered from 911Recovered from 911

Source: MRA/Retail Group Malaysia

Retail SubRetail Sub--SectorSector % Growth% Growth

Retail Sales(Overall/weighted)Retail Sales(Overall/weighted) --0.20.2

Department Store cum SupermarketDepartment Store cum Supermarket 1.81.8

Department storeDepartment store --8.58.5

Pharmacy & personal carePharmacy & personal care --7.4*7.4*

Other specialty storesOther specialty stores 1515Source:MRA/Retail Group MalaysiaSource:MRA/Retail Group Malaysia

*Despite the strong sales from masks & cleansing products, Pharmacy will not escape –ve impact of the SARS outbreak

Retail Sales Projection for 2nd Q 2003

Comment:

The data by MRA on the Pharmacy sector was not truly reflected in Caring Pharmacy performance during that quarter.

Business/Marketing AuditBusiness/Marketing AuditTo examine where are we now we need to To examine where are we now we need to

consider ;consider ;•• Business environmentBusiness environment•• Customer segmentationCustomer segmentation•• Outlets performance & positioningOutlets performance & positioning•• Competitor analysisCompetitor analysis•• Market characteristicsMarket characteristics•• Internal company resourceInternal company resource

11 BUSINESS ENVIRONMENT (PEST)BUSINESS ENVIRONMENT (PEST)

1.11.1 PoliticalPolitical

a.a. LegislationLegislation -- New Pharmacy Act New Pharmacy Act -- National Essential Drug ListNational Essential Drug List

b.b. RegulationRegulation -- Increased drug regulation by DCAIncreased drug regulation by DCA-- EnforcementEnforcement-- Medical Advertisement ActMedical Advertisement Act

c.c. LitigationLitigation -- Defensive /black mailerDefensive /black mailer--doctors, “over doctors, “over --smart “smart “consumerconsumer

d.d. Pressure groupPressure group -- Malaysia Medical AssociationMalaysia Medical Association-- Consumer AssociationConsumer Association

e.e. PricingPricing -- Pressure on margin and pricePressure on margin and price-- MPSMPS-- Drug CompanyDrug Company-- MDTCA or price /promotion control by MDTCA or price /promotion control by govgov..

f.f. GovernmentGovernment -- Dispensing separationDispensing separation-- National Health Insurance SchemeNational Health Insurance Scheme-- HousemanshipHousemanship 3 years3 years

1.21.2 EconomicalEconomical

•• GDPGDP

•• Wealth distributionWealth distribution

•• Health fundingHealth funding

•• InflationInflation

•• unemploymentunemployment

1.31.3 SociologicalSociological

••DemographicsDemographics••PsychographicsPsychographics••Preventative measuresPreventative measures••Social cultural analysisSocial cultural analysis••Local disease incidenceLocal disease incidence••attitudeattitude

1.41.4 Technological:Technological:

•• IT IT –– information age, ICTinformation age, ICT•• New therapies New therapies ––Biotech, Gene Therapy Biotech, Gene Therapy •• Retail innovationRetail innovation-- ee--pharmacy, pharmacy, ee--counsellingcounselling, ,

Market SegmentationMarket Segmentation•• Market segmentation enables us to decide on our Market segmentation enables us to decide on our

priority market segments to target. priority market segments to target. •• The benefits of market segmentation are: The benefits of market segmentation are: --

-- Design marketing mix that matches the need Design marketing mix that matches the need of of community pharmacy market.community pharmacy market.

-- Build up Professional image among Suppliers, Build up Professional image among Suppliers, health policy maker, others health care professional health policy maker, others health care professional and consumers.and consumers.

-- Reduces competition and makes entry harder for Reduces competition and makes entry harder for overseas retailoverseas retail--chain giants . The Hypermarket chain giants . The Hypermarket syndrome..syndrome..

-- Cost effective use of A & P resourceCost effective use of A & P resource

The emerging market segmentThe emerging market segment•• A pharmacy within…(counter pharmacy)A pharmacy within…(counter pharmacy)

–– Health & beauty storeHealth & beauty store–– Personal hygiene storePersonal hygiene store–– Drug store/ medical hallDrug store/ medical hall–– Clinic/medical centre/hospitalClinic/medical centre/hospital–– HypermarketHypermarket–– others: mobile shop, watch shop, optical shop etc..others: mobile shop, watch shop, optical shop etc..

•• A hyperA hyper--pharmacy pharmacy •• A cyberA cyber--pharmacypharmacy•• A mobileA mobile--pharmacypharmacy•• A home base (SOHO) A home base (SOHO) teletele--pharmacy /e pharmacypharmacy /e pharmacy•• A “practicing” /dispensing pharmacyA “practicing” /dispensing pharmacy

* As long as the authority & legislation allowed.* As long as the authority & legislation allowed.

Another definition of emerging Another definition of emerging market segmentmarket segment

•• MNC Chain pharmacyMNC Chain pharmacy•• Franchise chain pharmacyFranchise chain pharmacy•• Independent chain pharmacyIndependent chain pharmacy•• Alliance chain pharmacyAlliance chain pharmacy•• Individual owned pharmacyIndividual owned pharmacy•• NonNon--pharmacist owned pharmacypharmacist owned pharmacy•• Stand alone pharmacy??Stand alone pharmacy??•• You can name yourself….a class by itselfYou can name yourself….a class by itself

22 Retail PharmacyRetail Pharmacy2.12.1 Market Definition: Market Definition: Infancy stage to defineInfancy stage to define•• Market value ??Market value ??•• Market growth ???Market growth ???•• Market value for each market segment ??Market value for each market segment ??•• Rx & self medication ratio ???Rx & self medication ratio ???•• No. transactions per day ???No. transactions per day ???•• No. Prescription per day ???No. Prescription per day ???•• How to audit and position ourselves ???How to audit and position ourselves ???•• The only facts and figures are the number of The only facts and figures are the number of

pharmacist and pharmacies against Dr ratio.pharmacist and pharmacies against Dr ratio.(MOH source)(MOH source)

Retail Pharmacy MarketRetail Pharmacy MarketPharmacy: Pharmacy: Population ratioPopulation ratio

19981998

NationalNational 1: 23,7031: 23,703

KLKL 1: 8,5311: 8,531

GombakGombak 1: 29,9221: 29,922

PenangPenang 1: 9,4001: 9,400

KlangKlang 1: 34,1071: 34,107Source: MOH, data not available since then, much focus on the Pharmacist : Doctor ratio, and no. practising pharmacist & the new graduate each year

Pharmacist /Dr market ratioPharmacist /Dr market ratioPopulation ratioPopulation ratio 19991999 20052005

PharmacistPharmacist 1: 86201: 8620(2320)(2320)

1:5,8291:5,829(4220)(4220)

DoctorDoctor 1:20001:2000(10,000)(10,000)

1:16331:1633(15,000)(15,000)

National Standard in order to achieve Dispensing right for Pharmacist

Pharmacist to DR ratio 1 : 2.4For year 2005, we need 6250 “community practice” pharmacist!

Apparently, we need to have at least 5400 pharmacy~ POTENTIAL

MANUFACTURERSMANUFACTURERS

AGENT/DISTRIBUTORAGENT/DISTRIBUTOROWN DISTRIBUTIONOWN DISTRIBUTION

45% 30% 25%

Dispensing Drs. 45%

Private Hosp.8%

Govt.Hosp22%

Pharmacy10%

Drug Store13%

Others2%

CONSUMERSCONSUMERSMarket covered by MPA: 63%

The chain that multiply & ……

MarketMarketNo. outletNo. outlet

1999*1999*No.OutletNo.Outlet

2003**2003**Value(Value(’’000)000)

Market Market Share(%)Share(%)

Growth(%)Growth(%)

GuardianGuardian 5656 150150

WatsonWatson 4141 7575

PharmacarePharmacare 3232 --

GeorgetownGeorgetown 2929 2525

APEXAPEX 2020 1818

PrimahealthPrimahealth 1515 2525

VitacareVitacare 1212 2222

City ChemistCity Chemist 1010 --

DewmaDewma 1010 --

TotalTotal 225225 315315

* source: AC Niesen Retail Management Services, 4/1999

2.22.2 Market Trends:Market Trends:•• World World Market DirectionMarket Direction

•• The US perspectiveThe US perspective“Prospering in the New Millennium the “Prospering in the New Millennium the community pharmacy way”community pharmacy way”

Updated: October 2003(unless otherwise noted, data is from 2003 NCPA-Pfizer Digest) National Community Pharmacists Association of US

World World Market DirectionMarket Direction……continuecontinue•• Independent pharmacy: Independent pharmacy: $67 billion$67 billion marketplacemarketplace•• Independent pharmacy prescription sales: Independent pharmacy prescription sales: $60 billion$60 billion•• Independents dispense Independents dispense 1.3 billion prescriptions1.3 billion prescriptions annually: annually: •• 41%41% of the retail prescription market of the retail prescription market Prescription medicines are our Prescription medicines are our

business: business: •• 90%90% of annual sales are Rx medicinesof annual sales are Rx medicines•• Average independent pharmacy sales: Average independent pharmacy sales: $2.855 million$2.855 million

up up 15%15% over 2001 over 2001 •• Average number of prescriptions per pharmacy: Average number of prescriptions per pharmacy: 54,427 annually, 174 per 54,427 annually, 174 per

day ,up 6% over 2001day ,up 6% over 2001•• There are There are 23,55223,552 singlesingle--store independent pharmacies, store independent pharmacies,

independent chains, independent franchises, and independent independent chains, independent franchises, and independent pharmacistpharmacist--owned supermarket pharmacies owned supermarket pharmacies 43%43% of the nation's of the nation's 55,20055,200 drugstores drugstores

•• Generic drug utilization Generic drug utilization 48.6%48.6% of drugs dispensed by independent pharmacies are genericsof drugs dispensed by independent pharmacies are generics

•• Independent pharmacies offer a wide range of patient services Independent pharmacies offer a wide range of patient services The top services offered in 2002 were: delivery (88%), charge acThe top services offered in 2002 were: delivery (88%), charge accounts counts (87%), compounding (82%), nutritional (74%), durable medical (87%), compounding (82%), nutritional (74%), durable medical equipment (68%), and health screenings (37%) equipment (68%), and health screenings (37%)

•• More and more independents are receiving payment for the diseaseMore and more independents are receiving payment for the disease management management services they provide: services they provide: Immunizations (85%), lipid monitoring (86%), and osteoporosis scImmunizations (85%), lipid monitoring (86%), and osteoporosis screening (56%)reening (56%)

•• Independents are well connected Independents are well connected EE--mail access in the pharmacy: 88% mail access in the pharmacy: 88% Internet access in the pharmacy: 93% Internet access in the pharmacy: 93%

•• Independents utilize technology Independents utilize technology Pharmacy website: 49% Pharmacy website: 49% Offer refills via website: 71% Offer refills via website: 71% Sell OTC products via website: 40%Sell OTC products via website: 40%

•• Staffing in independent pharmacies Staffing in independent pharmacies Average independent employs 2.6 pharmacists (including owner) Average independent employs 2.6 pharmacists (including owner) Average independent employs 3.3 techniciansAverage independent employs 3.3 technicians

•• Independent Ownership Independent Ownership 29% of independent owners own two or more pharmacies 29% of independent owners own two or more pharmacies The average multiThe average multi--store owner owns 2.6 pharmacies store owner owns 2.6 pharmacies Overall, the average independent owns 1.5 pharmaciesOverall, the average independent owns 1.5 pharmacies

33 THE PRODUCT/SERVICE AUDITTHE PRODUCT/SERVICE AUDIT•• 3.1 3.1 CARiNGCARiNG merchandise/ Service lines:merchandise/ Service lines:

3.2 Retail innovation

YearYear Pharmacy Breakthrough chapter by Pharmacy Breakthrough chapter by CARiNGCARiNG

20012001 C Rx was the first to introduce Quasi Franchise ProgrammeC Rx was the first to introduce Quasi Franchise Programme

3.3 Retail Features and Benefits3.3 Retail Features and Benefits

FeaturesFeatures BenefitsBenefits

Highly efficient & Caring PharmacistHighly efficient & Caring Pharmacist

Attractive price/performance ratioAttractive price/performance ratio

Streamlined range of products (NP)Streamlined range of products (NP)

Customer care Customer care

Complete merchandise for medicineComplete merchandise for medicine

Staffs as assetStaffs as asset

Ethical & compliance to regulationEthical & compliance to regulation

Customer record & History of Customer record & History of MediMedi

Community image & serviceCommunity image & service

Effective Loyalty ProgrammeEffective Loyalty Programme

4.Brand Positioning4.Brand Positioning

•• 4.14.1 COMPETITOR ANALYSIS COMPETITOR ANALYSIS (Merchandise)(Merchandise)

•• 4.2Competitor Price Analysis4.2Competitor Price Analysis

4.44.4 Brand Mapping:Brand Mapping:

•• We compare We compare CARiNGCARiNG with the competitor over a range of with the competitor over a range of parameters to identify differential advantages.parameters to identify differential advantages.

Prescription/(20%)Prescription/(20%) Health & Beauty (80%)Health & Beauty (80%)

<30<30⊕⊕ GTGT

⊕⊕ WW

>30>30

⊕⊕ PP⊕⊕ VV⊕⊕ AA

⊕⊕CARINGCARING

⊕⊕ GG

Prescription (60%)Prescription (60%) Health & Beauty (40%)Health & Beauty (40%)

Sales by Department:

Sales Volume (RMSales Volume (RM’’000)000)DptDpt NameName

20012001 20022002 20032003

PoisonPoison

DispensingDispensing

OTCOTC

VitaminsVitamins

Rehab.Rehab.

First AidFirst Aid

ToiletriesToiletries

OthersOthers

TotalTotal

ContributionContribution%%

GrowthGrowth%%

Market CharacteristicMarket Characteristic•• 55 SWOT ANALYSISSWOT ANALYSIS

internalinternal externalexternal

StrengthsStrengths

WeaknessesWeaknesses

OpportunitiesOpportunities

ThreatsThreats

5.55.5 Critical Success Factor:Critical Success Factor:

5.65.6 Critical Path:Critical Path:•• Right StrategyRight Strategy ::

•• Right PositioningRight Positioning ::

•• Right TargetingRight Targeting ::

•• Right TimingRight Timing ::

•• Right PricingRight Pricing ::

•• Right AttitudeRight Attitude ::

5.7 Mission Statement5.7 Mission Statementwhy we existwhy we exist

5.8 Values

Guilding principles

5.9 Vision Statement5.9 Vision Statement

•• A A company with a clear vision finds it is able to set objectives company with a clear vision finds it is able to set objectives and goals which are understood by its employees and enhances and goals which are understood by its employees and enhances their commitment to achieving themtheir commitment to achieving them

•• What What CARiNGCARiNG wants to become in the future?wants to become in the future?

Mission StatementMission Statement20052005--20102010

To provide integrated To provide integrated healthcare service of utmost healthcare service of utmost

quality and promotion of quality and promotion of healthy lifestyles to the healthy lifestyles to the

communitycommunity

VISIONVISION•• We aim to become the most progressive and We aim to become the most progressive and

efficient independent retail pharmacy in efficient independent retail pharmacy in Malaysia.Malaysia.

•• Continuously improving our quality service Continuously improving our quality service level.level.

•• CostCost--effective innovation merchandisingeffective innovation merchandising•• Dynamic and cohesive teamworkDynamic and cohesive teamwork

Develop our people through empowerment, Develop our people through empowerment, intrapreneurshipintrapreneurship and meritocracy.and meritocracy.

VISIONVISION•• Reward our people through meaningful Reward our people through meaningful

compensation, and incentive programs compensation, and incentive programs designed to provide the basis for its designed to provide the basis for its employees to prosper and for Caring to growemployees to prosper and for Caring to grow

•• Foster a continuous learning environment Foster a continuous learning environment by encouraging our people to upgrade their by encouraging our people to upgrade their skills and knowledge through training, skills and knowledge through training, seminars and talksseminars and talks

•• Responsive to market and be a responsible Responsive to market and be a responsible corporate citizencorporate citizen

Double Double CARiNGCARiNG valuesvalues

Commitment to Community

Attitude with Action

Respect and Responsive

integrity towards innovative services

Natural in Networking

Growth by Governance

CCommitment to ommitment to CCommunityommunityWe toil endlessly to commit the goal of providing quality healthWe toil endlessly to commit the goal of providing quality healthcare service to the communitycare service to the community

AAttitude with ttitude with AActionctionWe earn dignity by Caring attitude with action in all our endeavWe earn dignity by Caring attitude with action in all our endeavorsors

RRespect and espect and RResponsiveesponsiveWe respect everybody and value all feedback responsivelyWe respect everybody and value all feedback responsively

iintegrity towards ntegrity towards iinnovative servicesnnovative servicesWe believe in cultivating an environment of trust among our coWe believe in cultivating an environment of trust among our co--workers where one workers where one must be honest and have a good code of ethics. We want to see omust be honest and have a good code of ethics. We want to see our commercial integrity ur commercial integrity continuing to be a source of innovative services.continuing to be a source of innovative services.

NNaturally in aturally in NNetworkingetworkingWe believe in natural piece of networking with anybody to generaWe believe in natural piece of networking with anybody to generate a higher level of te a higher level of professionalism through sharing and exchanging of resources and professionalism through sharing and exchanging of resources and experiences.experiences.

GGrowth by rowth by GGovernanceovernanceWe strive to grow our business ethically by proper governance atWe strive to grow our business ethically by proper governance at all times.all times.

MOTTOMOTTO

PUNCH/TAG LINEPUNCH/TAG LINE

Our Pharmacist is always on duty Through out business hours

Definition of Terms Used & core ValuesDefinition of Terms Used & core Values

ConceptsConcepts illustrationillustration ContentsContentsObjectivesObjectives DestinationDestination What we need to achieve, Which must be:What we need to achieve, Which must be:

••QuantifiedQuantified••MeasurableMeasurable••DesirableDesirable••realisticrealistic

StrategiesStrategies RouteRoute A description of how we intend to achieve A description of how we intend to achieve objective:objective:••Target Audience/segmentTarget Audience/segment••Key departments/products features/benefitKey departments/products features/benefit

TacticsTactics TransportTransport A description of the actions you will take or A description of the actions you will take or the methods you will use to achieve the the methods you will use to achieve the strategy i.e. promotion policystrategy i.e. promotion policy

MeasuresMeasures BalancedBalancedScorecardScorecard

How strategic success is measured and How strategic success is measured and trackedtracked

Marketing MixMarketing Mix

•• 88 OPERATIONAL PLAN (the 5 P’s)OPERATIONAL PLAN (the 5 P’s)

•• 8.18.1 Product Mix/Merchandise:Product Mix/Merchandise:

Product Portfolio StrategyProduct Portfolio Strategy

We have to allocate our marketing resources We have to allocate our marketing resources appropriately appropriately between products and departmentsbetween products and departments

a. Boston Matrix1.1. PoisonPoison•• (Cash Cow)(Cash Cow)

••High market share in mature & exclusive market.High market share in mature & exclusive market.••No competition from medical hall,No competition from medical hall,••Market growth rapidly in value & unit as new product w high Market growth rapidly in value & unit as new product w high price take place.price take place.••With maintenance strategy are able to generate a surplus cash With maintenance strategy are able to generate a surplus cash flow.flow.

2.2. DispensingDispensing

•• (Star)(Star)

••Cash Cash frfr poison goes to support stars, poison goes to support stars, ••High potential products in rapid growth markets due to High potential products in rapid growth markets due to govgov. . policy to encourage self medication & possibility of policy to encourage self medication & possibility of DEREGULATION of certain medicines classDEREGULATION of certain medicines class••High investment needed and they will break even or be modest High investment needed and they will break even or be modest cash absorberscash absorbers

3.3. Health Health SupplementSupplement

•• (Star)(Star)

••High potential stars due increased awareness in health & diseaseHigh potential stars due increased awareness in health & diseaseprevention.prevention.••Segmented in rapid growth markets especially new Segmented in rapid growth markets especially new biotecbiotec & & functional food supplementfunctional food supplement••High investment needed for A&P activities(Advert/Promoter).High investment needed for A&P activities(Advert/Promoter).••Will be a cash absorber at the beginning.Will be a cash absorber at the beginning.

Boston MatrixBoston Matrix4.4. OTCOTC -- is potential stars in high growth markets butis potential stars in high growth markets but……•• (Problem Child)(Problem Child) -- High potential product but diluted market share to High potential product but diluted market share to

Medical hallMedical hall-- Better alternative in Pharmacy converted to group CBetter alternative in Pharmacy converted to group C-- Will be modest cash absorbers.Will be modest cash absorbers.

5.5. Rehab.Rehab.•• (problem child)(problem child) --Potential has not been realised fully although can Potential has not been realised fully although can

obtaining high loyalty .obtaining high loyalty .--Own Packaging & variety should be fully explored.Own Packaging & variety should be fully explored.--Sufficient investment is needed.Sufficient investment is needed.

6.6. ToiletriesToiletries•• (Dog)(Dog) -- No differential advantage over the open market. No differential advantage over the open market.

-- Overtaken by cheaper in Hypermarket.Overtaken by cheaper in Hypermarket.--Investment should be minimised due to low potential.Investment should be minimised due to low potential.--Can fully capitalise in private label(OEM).Can fully capitalise in private label(OEM).

Boston MatrixIdeal product/merchandise development

Internal flow of funds

Relative contributionRelative contribution

HighHigh LowLow

StarStariiHealth Supplement.Health Supplement.iiDispensingDispensing(may be cash generator or (may be cash generator or

cash absorber)cash absorber)

Problem ChildProblem ChildiiOTC, Rehab, OTC, Rehab, (cash absorber)(cash absorber)

Cash CowCash Cowii PoisonPoison(large cash generator)(large cash generator)

DogDogii ToiletriesToiletries(modest cash generator or (modest cash generator or absorber)absorber)

Hig

hLo

w

Mar

ket G

row

th

b.b. The Composite ApproachThe Composite Approach

•• We looks at our product category in terms of We looks at our product category in terms of embryonic, growth, mature and ageing markets embryonic, growth, mature and ageing markets and looks at and looks at CARiNGCARiNG relative position in terms relative position in terms of dominant, strong, favourable, tenable and of dominant, strong, favourable, tenable and weakweak

•• This is more flexible than the Boston approach, This is more flexible than the Boston approach, but can lend itself to subjectivitybut can lend itself to subjectivity

The Composite PortfolioMarketMarket

CARiNGCARiNGPositionPosition

EmbryonicEmbryonic GrowthGrowth MatureMature AgeingAgeing

DominantDominant

StrongStrongHealth Health

supplementsupplement PoisonPoison

FavourableFavourable DispensingDispensing RehabRehab

TenableTenableFirst aidFirst aid

Wound careWound careSkin CareSkin Care ToiletriesToiletries

WeakWeak CTCT confectioneryconfectionery(A.D. Little)

c.c. Product Life Cycle Product Life Cycle

•• Having decided which products put resources Having decided which products put resources behind, it is vital to choose the correct strategy behind, it is vital to choose the correct strategy and priority. Dividing our 5 products category and priority. Dividing our 5 products category up into their introduction, growth, maturity, up into their introduction, growth, maturity, saturation and decline phase. Each phase saturation and decline phase. Each phase characteristics and strategy options are shown.characteristics and strategy options are shown.

Development PhaseTimeRM -

Profit Curve

Sales Revenue Curve

The Product Life Cycle

RM+

PRODUCT LIFEPRODUCT LIFE--CYCLECYCLE INTRODUCTIONINTRODUCTION GROWTHGROWTH MATURITYMATURITY DECLINEDECLINE

Characteristics:Characteristics:

SALESSALESPROFITSPROFITSCASH FLOWCASH FLOWCUSTOMERSCUSTOMERSCOMPETITORSCOMPETITORS

LowLowNegligibleNegligibleNegativeNegativeEarly adoptersEarly adoptersFewFew

FastFastPeak levelsPeak levelsModerateModerateMass marketMass marketGrowingGrowing

Slow to declineSlow to declineBegin to declineBegin to declineHighHighMass marketMass marketMany Many ‘‘me toome too’’ rivalsrivals

DecliningDecliningDeclining or zeroDeclining or zeroLowLowLaggardsLaggardsTaking marketTaking market

Key actions:Key actions:

STRATEGYSTRATEGYMARKETING COSTSMARKETING COSTSMARKETING EMPHASISMARKETING EMPHASISPRICINGPRICINGDISTRIBUTIONDISTRIBUTIONPRODUCTPRODUCT

Expand marketExpand marketHighHighProduct awarenessProduct awarenessHighHighPatchyPatchyBasicBasic

Market penetrationMarket penetrationHigh (declining %)High (declining %)Brand preferenceBrand preferenceMaintainMaintainIntensiveIntensiveImprovedImproved

Defend shareDefend shareBrand loyaltyBrand loyaltyMaintain/increaseMaintain/increaseIntensiveIntensiveBroaden positionBroaden positionProduct developmentProduct developmentResegmentResegment

ProductivityProductivityLowLowImage maintenanceImage maintenanceRisingRisingSelectiveSelectiveRationaliseRationalise

�� BRAND LIFE BRAND LIFE �� GENERIC LIFE GENERIC LIFE ��

d.d. Growth StrategiesGrowth StrategiesAnsoffAnsoff MatrixMatrix

•• We will want, wherever possible to increase our sales We will want, wherever possible to increase our sales and Department share and choose appropriate and Department share and choose appropriate strategiesstrategies

•• Market PenetrationMarket Penetration :Increase sales from existing :Increase sales from existing customers.customers.

•• Market Development Market Development :finding new customers:finding new customers•• Product DevelopmentProduct Development :introducing new products to :introducing new products to

existing customersexisting customers•• DiversificationDiversification :New products to new :New products to new

customerscustomers

Growth StrategiesGrowth StrategiesCustomersCustomers

ExistingExisting NewNew

penetrationpenetration Market developmentMarket development

Merchandise Merchandise developmentdevelopment

DiversificationDiversification

Exi

stin

gN

EWMer

chan

disi

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terr

itoria

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8.28.2 Price Mix:Price Mix:StrategyStrategy MethodMethod Dept.Dept. Specific Specific Cost plusCost plus Cost plus a fixed marginCost plus a fixed margin

Low cost to achieve Market Low cost to achieve Market shareshare

High price to be profitable High price to be profitable with small sharewith small share

Indexing off the market leaderIndexing off the market leader

Setting the market leaderSetting the market leader

An affordable price for a life An affordable price for a life saving exclusivesaving exclusive

Case to case with flexibilityCase to case with flexibility

PenetrationPenetration

SkimmingSkimming

Competition Competition basedbased

Price leaderPrice leader

MoralMoral

NegotiatedNegotiated

Jaya Jusco launch of its “Cheaper than The Cheaper price nearby

Present Gross ProfitPresent Gross ProfitPrice CutPrice Cut

10%10% 20%20% 30%30%

1%1% 11.111.1 5.35.3 3.43.4

2%2% 25.025.0 11.111.1 7.17.1

3%3% 42.842.8 17.617.6 11.111.1

4%4% 66.666.6 25.025.0 15.415.4

5%5% 100.0100.0 33.333.3 20.020.0

10%10% 100.0100.0 50.050.0

RequiredRequiredSalesSalesVolume Volume increaseincreaseTo stand To stand stillstill

Jaya Jusco price reduction strategy launched in Mac will cost them RM 4 mil in the financial year ending next Feb. (MD Soichi okazaki)

The price cut, implemented across all departments, were in addition to 10%-20% for supermarket products in effect since 10/2001

8.38.3 Place/LocationPlace/Location

•• The criteria that we are qualifiedThe criteria that we are qualified•• ConvenienceConvenience•• Pharmacist availabilityPharmacist availability•• AccessibilityAccessibility•• ExposureExposure•• ComfortableComfortable•• What else>>What else>>

8.48.4 PromotionPromotion•• FlyersFlyers•• “Regular”“Regular” card loyalty program & frequent mailingcard loyalty program & frequent mailing•• Media advertisingMedia advertising•• Community healthy lifestyle programCommunity healthy lifestyle program•• Sales promotionSales promotion•• Can be more and targeted!!Can be more and targeted!!•• ExhibitionExhibition•• Give awayGive away•• Think what we can capitalize our goodwillThink what we can capitalize our goodwill

not only saving for customers!!not only saving for customers!!

8.58.5 PeoplePeopleBOD

ChiefAccountant

SCC

ChiefAccountant

SCC

Shop fitting & Design

AKL

Shop fitting & Design

AKL

Maintenance Executive

AKK

Maintenance Executive

AKK

GeneralMaintenance

ManagerAKK

GeneralMaintenance

ManagerAKK

HR DirectorAKL

Operation DirectorCYS

Merger &Acquisition Negotiator

AKL

ArchitectCK

ResearcherAssessor

StatisticianALL

2010 CARING VIRTUAL ORGANIZATION CHART

Business Dev. DirectorAKL

Financial DirectorTLB

Managing DirectorAKL

Managing DirectorAKL

Marketing DirectorCK

Marketing DirectorCK

Branch Manager18

Pharmacist20

BranchSupervisor

10

Branch OpeningManager

AKK

Branch OpeningManager

AKK

ShopAssistants

90

Company Secretary

SCC

Company Secretary

SCC

AccountsExecutives

VC

AccountsExecutives

VC

Fund Manager

TLB

Fund Manager

TLB

Account Clerks

2

Area ManagerNSS/TLE

Area ManagerNSS/TLE

Legal OfficerSCC

Legal OfficerSCC

OfficeManager

VC

OfficeManager

VC

PropertyManager

TLB

PropertyManager

TLB

Admin.Clerks

2

IS/IT DirectorSCC

IS/IT DirectorSCC

IS/ITManager

OCB

IS/ITManager

OCB

Systems support

OCB

Systems support

OCB

SystemstrainingOCB

SystemstrainingOCB

EDPClerks

2

Drug ISManager

SCC

Drug ISManager

SCC

MerchandisingManager

CK

MerchandisingManager

CK

CDCManager

CK

CDCManager

CK

Chief Buyer

CK

Chief Buyer

CK

Buyer 1(Poison)CK/TLB

Buyer 1(Poison)CK/TLB

MerchandiserML

MerchandiserML

A&PManager

CYS

A&PManager

CYS

Buyer 2(non-poison)

TLB

Buyer 2(non-poison)

TLB

CDCsupervisor

NN/AP

CDCsupervisor

NN/AP

CDCAssistants

8

DeliveryOperators

2

TrainingManager

AKL

TrainingManager

AKL

PRManager

AKL

PRManager

AKL

PersonnelManager

CYS

PersonnelManager

CYS

The LAST “P”The LAST “P”•• PHARMACISTPHARMACIST

–– Owner/Employee/PartOwner/Employee/Part--timer’s attitude are differenttimer’s attitude are different

•• The Role of the Pharmacist The Role of the Pharmacist by WHO consultative group 1997: by WHO consultative group 1997:

“the Seven“the Seven--Star Pharmacist”Star Pharmacist”1.1. CareCare--givergiver2.2. Decision MakerDecision Maker3.3. CommunicatorCommunicator4.4. LeaderLeader5.5. ManagerManager6.6. Life long learnerLife long learner7.7. TeacherTeacher