Pharmaceutical Marketing COMPETITION PART 2

LECTURE 5

LECTURER: MS.ENAS ABU-QUDAIS

Porter five forces Determine the attractiveness of the market

Serve the same function as your product Place a ceiling in the prices that firms can charge

When buyers have choices, they force the industry to reduce prices. The power of the raw material

suppliers

New entrants raise the level of competition

Competitive advantage

◦ Firms can gain a competitive advantage through differentiation of their product offering which provides superior customer value .

◦ In order to be better than competition, a company must

create a competitive advantage.

Sustainable competitive advantage (SCA)

-Competitive advantage should not only be different from competition, it also should be sustainable .

-To make SCA, the factors that makes it different should be hard to be copied by the competition.

Ex: patent-protected products strong brand personality Strong R&D Close relationships with customers Innovative products Strong internal processes -Competing on low price can often be copied (short lived advantage)

Sources of competitive advantage

-Superior skills

-Superior resources

-Core competences

-Value chain

Porter’s Value chain

Value Chain The value chain is concentrating on the activities starting with raw materials

till the conversion into final goods or services.

Two categories: Primary Activities (operations, distribution, sales)

Support Activities (R&D, Human Resources)

Used to identify sources of competitive advantage Specifically:

◦ Opportunities to secure cost advantages

◦ Opportunities to create product/service differentiation

Primary activities:

Those that are involved in the creation, sale and transfer of products (including after-sales service)

Inbound logistics

Operations

Outbound logistics

Sales and marketing

Service and support

Primary activities

1.INBOUND LOGISTICS

- CONCERNED WITH RECEIVING, STORING, DISTRIBUTING INPUTS (e.g. HANDLING OF RAW MATERIALS, WAREHOUSING, INVENTORY CONTROL)

2. OPERATIONS

- COMPRISE THE TRANSFORMATION OF THE INPUTS INTO THE FINAL PRODUCT FORM

(E.G. PRODUCTION, ASSEMBLY, AND PACKAGING)

3. OUTBOUND LOGISTICS

-INVOLVE THE COLLECTING, STORING, AND DISTRIBUTING THE PRODUCT TO THE BUYERS (e.g. PROCESSING OF ORDERS, WAREHOUSING OF FINISHED GOODS, AND DELIVERY)

Primary activities 4. MARKETING AND SALES

-Identification of customer needs and generation of sales.

(e.g. ADVERTISING, PROMOTION, DISTRIBUTION)

5. SERVICE

-INVOLVES HOW TO MAINTAIN THE VALUE OF THE PRODUCT AFTER IT IS PURCHASED.

(e.g. INSTALLATION, REPAIR, MAINTENANCE, AND TRAINING)

Support Activities

Those that merely support the primary activities

Firm Infrastructure

Human Resources

Tech. development

Procurement

Support activities 1.FIRM INFRASTRUCTURE

The activities such as Organization structure, control system, company culture are categorized under firm infrastructure.

2.HUMAN RESOURCE MANAGEMENT

Involved in recruiting, hiring, training, development and compensation.

3.TECHNOLOGY DEVELOPMENT

These activities are intended to improve the product and the process, can occur in many parts of the firm.

4.PROCUREMENT

Concerned with the tasks of purchasing inputs such as raw materials, equipment, and even labor.

Marketing Mix Creating differential advantage is through marketing Mix

4 P’s: ◦ Product

◦ Price

◦ Place

◦ Promotion

Product As the company evolves, it must continually assess customer needs to know whether it’s providing the right product or product features.

Competitive advantage through the product

Performance

Reliability

Safety

Added function

Price It is important for companies to find the right price point that meets both customer and company needs.

Competitive advantage through the price

Lower price

Higher price

Insurance

Place

Competitive advantage through place

Location

Support

Delivery time

Credibility in distribution

A company can make the best product but fails to deliver it to the hands of its customers .

Promotion

Competitive advantage through promotion

Well trained sales force

Creativity

Fast accurate price quotes

Fast complaint handling

Relationships

The company’s communication tool to transmit to customers the other P’s in a manner that achieves the best possible consumer attitude and purchase interest in the company’s products.