Marketing strategy of Hemoq Mom in the Hospital channel

Accordingly, the purpose of this project is to provide marketing strategy of HemoQ mom to Merap in order to solve sales issues and have a famous brand as well in this crowded market.. RE

TR NG I H C M TP.HCM UNIVERSITÉ LIBRE DE BRUXELLES

MBAVB4

PHAN THI THANH THUY

MARKETING STRATEGY OF HEMOQ MOM IN

THE HOSPITAL CHANNEL

MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION

(PART-TIME)

Tutor’s Name: Dr HOANG THI PHUONG THAO

Ho Chi Minh City

(2011)

UNDERTAKING

I undertake that the project “Marketing strategy of HemoQ mom in the hospital channel” is

my own work and it has not been submitted anywhere for any degree or qualification

I also certify that, to the best of my knowledge, any help received in preparing this thesis, all used sources have been acknowledged

Ho Chi Minh, 27th February, 2012

PHAN THI THANH THUY

ACKNOWLEDGEMENT

I would like to express my deep gratitude to those who provided me with professional and personal support during my years of postgraduate study as well as work on this thesis First and foremost, the deepest and most sincere gratitude goes to my tutor, Dr Hoang Thi Phuong Thao, who spent her countless hours guiding me to do the research and sharing her knowledge and experience

Secondly, I would like to sincerely acknowledge to professors of Vietnam-Belgium master program who gave me not only valuable knowledge but also the professional method of studying

I owe my deepest gratitude to my Boss, Mr Phan Thanh Binh, Vice general director of Merap, who gave me valuable support and usefull information for this thesis

I am also indebted to my colleagues in Merap who helped me to interview doctors and collect data for my research

I would like to express my thanks to all coordinators of this MBA program and all friends

at MBAVB4 who cooperated and accompanied me in two year period of this program Last but not least, it is also an honor for me to thank to my family members, especially my beloved husband, Mr Nguyen Truong Khoi, for their boundless support, abundant love and encouragement throughout my journey of this MBA program

TUTOR’S COMMENT

I am writing to confirm that the project entitled:

MARKETING STRATEGY OF HEMOQ MOM IN THE HOSPITAL CHANNEL

Prepared by

Ms Phan Thi Thanh Thuy

has satisfied the requirement for a Master’s project in Business Administration

The author of the project shows her very good ability to identify problem, select a appropriate research method, analyze the collected data and then recommend a justifiable marketing strategy

I, therefore, recommend that the project will be presented to the Examination Board

Tutor,

Dr Hoang Thi Phuong Thao

ABSTRACT

HemoQ mom is an iron drug for iron deficient anemia treatment of Daewoong Korean pharmaceutical manufacturer It has been exclusively distributing in Vietnam by Merap since January of 2011 without any support from the marketing In an extremely competitive environment with over two hundred of competitors, HemoQ mom did not achieve the sales target Besides, long-term strategy of Merap is build brand for some good ethical brands and HemoQ mom is one option Accordingly, the purpose of this project is

to provide marketing strategy of HemoQ mom to Merap in order to solve sales issues and have a famous brand as well in this crowded market

The combination of exploratory and descriptive research is an appropriate methodology for this research Three methods of collecting data are used in this study: secondary data, qualitative and survey method

The result of environment analysis shows that its competitive advantage is high bioavailability thanks to its new iron form- complex iron After customer analysing and evaluating different market segments, HemoQ mom chooses two segments to target Primary target market is doctors of obstetric, renal, hematology and gastroenterology departments of grade 1 and 2 hospitals and secondary target market is doctors of these departments of grade 3 hospitals

To satisfy the needs of these target markets, HemoQ mom should be positioned as the leader of iron drug in terms of extremely safety profile as well as high bioavailability thanks to its new iron form- complex iron However, its core competency is extremely safety profile, the slogan of HemoQ mom, therefore, should focus on this competitive

advantage: “Complex iron, nonionic iron, safe iron”

An appropriate marketing mix strategy is also proposed to influence the demand of HemoQ mom

Finally, evaluation and control is the ending of this project to measure the result of the marketing strategy and have a timely decision in case of occurred problems

TABLE OF CONTENT

UNDERTAKING ii

ACKNOWLEDGEMENT iii

TUTOR’S COMMENT iv

ABSTRACT v

TABLE OF CONTENT vi

LIST OF ABBREVIATIONS ix

LIST OF FIGURES x

LIST OF TABLES xii

CHAPTER 1: INTRODUCTION 1

1.1 PROBLEM STATEMENT 1

1.2 RESEARCH OBJECTIVE 2

1.3 RESEARCH QUESTIONS 2

1.4 RESEARCH METHODOLOGY 2

1.4.1 Desk research (secondary research) 2

1.4.2 Qualitative research (primary research) 3

1.4.3 Quantitative research (primary research) 4

1.5 SCOPE OF THE STUDY 5

1.6 SIGNIFICANCE OF THE STUDY 5

1.7 STRUCTURE OF THE STUDY 6

CHAPTER 2: LITERATURE REVIEW 7

2.1 MARKETING STRATEGY 7

2.1.1 Concept of marketing strategy 7

2.1.2 Market segmentation 8

2.1.3 Market targeting 9

2.1.4 Positioning 9

2.1.5 Marketing mix 10

2.2 SITUATION ENVIRONMENT ANALYSIS 12

2.2.1 Internal environment analysis 13

2.2.2 Customer environment analysis 13

2.2.3 External environment analysis 15

2.3 SWOT ANALYSIS 17

2.4 CHAPTER SUMMARY 19

CHAPTER 3: INTERNAL & CUSTOMER ENVIRONMENT ANALYSIS 20

3.1 INTERNAL ENVIRONMENT ANALYSIS 20

3.1.1 Introduction to Merap 20

3.1.2 HemoQ mom business overview 22

3.1.3 Marketing mix 24

3.2 CUSTOMER ENVIRONMENT ANALYSIS 27

3.2.1 Customer identification 27

3.2.2 Customer satisfaction 30

3.2.3 Reasons for non-purchase 34

3.3 CHAPTER SUMMARY 35

CHAPTER 4: EXTERNAL ENVIRONMENT ANALYSIS 36

4.1 OVERVIEW OF IRON SUPPLEMENT DRUGS MARKET 36

4.1.1 Iron deficiency anemia treatment agents 36

4.1.2 Market size 37

4.1.3 Market share 38

4.1.4 Market trend 39

4.2 COMPETITORS ANALYSIS 40

4.2.1 Competitor identification 40

4.2.2 Key competitors assessment 43

4.3 POLITICAL ENVIRONMENT 50

4.4 ECONOMIC ENVIRONMENT 51

4.5 SOCIAL ENVIRONMENT 53

4.6 TECHNICAL ENVIRONMENT 53

4.7 CHAPTER SUMMARY 53

CHAPTER 5: RECOMMENDED MARKETING STRATEGY & CONCLUSION 55

5.1 SWOT ANALYSIS AND DEVELOPING COMPETITIVE ADVANTAGES 55

5.1.1 SWOT analysis 55

5.1.2 Developing competitivie advantages 56

5.2 MARKETING OBJECTIVES 56

5.3 MARKET TARGETING 57

5.4 POSITIONING 58

5.5 MARKETING MIX 58

5.6 EVALUATION & CONTROL 63

5.7 CONCLUSION 64

5.7.1 Conclusion 64

5.7.2 Study limitation and recommendation for further study 65

REFERENCES 66

APPENDIX 68

1 Polysaccharide iron complex produces fewer adverse effects than ferrous sulfate 68

2 Polysaccharide iron complex reduces toxicity relative to other forms of iron 69

3 Questionnaire 70

4 Interviewees’ information of qualitative research 74

5 Interviewees’ information of quantitative research 75

LIST OF ABBREVIATIONS

DAV : Drug Administration of Vietnam

GDP : Gross domestic product

MOH : Ministry of health

OTC : Over the counter

PIC : Polysaccharide iron complex

SPSS : Statistical Package for the Social Sciences

USD : United States Dollar

VND : Vietnam dong

WHO : World health organization

WTO : World Trade Organization

LIST OF FIGURES

Figure 1.1: Interviewee category 5

Figure 2.1: The interconnectedness of the internal, customer, and external environments 12 Figure 2.2: SWOT matrix 18

Figure 3.1: Merap’s organization structure 20

Figure 3.2: Merap’s organisation structure 21

Figure 3.3: Merap’s distribution system 22

Figure 3.4: HemoQ mom’s sales review by value in 2011 24

Figure 3.5: Agreement level of HemoQ mom’s proposed concepts 25

Figure 3.6: Reasonable price 26

Figure 3.7: Key decision factors of end-users’ in iron suplement selection 28

Figure 3.8: Vietnamese monthly income per capita by urban and rural areas 29

Figure 3.9: “Very important level” of factors in the selection of iron supplements 29

Figure 3.10: Interest level of purchase KPIs 31

Figure 3.11: The most common side effects of current iron drugs 32

Figure 3.12: Patient feedbacks about HemoQ mom 33

Figure 3.13: Reasons for new purchase / continue purchase 33

Figure 3.14: Reasons for not or rarely purchase 34

Figure 4.1: Vietnamese pharmaceutical market size 37

Figure 4.2: Therapy classes’ performance 37

Figure 4.3: Iron drugs market share in 2010 (by value) 38

Figure 4.4: Vietnamese pharmaceutical market growth 39

Figure 4.5: Pricing segmentation 41

Figure 4.6: Top 10 well-appreciated products 42

Figure 4.7: Top 5 iron drugs in terms of sales by value in 2010 (USD) 42

Figure 4.8: Vietnam’s GDP growth rate 51

Figure 4.9: Annual drug consumption per capita (USD/Cap/Year) 52

Figure 5.1: Necessary level of proposed marketing activities for HemoQ mom 60

LIST OF TABLES

Table 2.1: Summary of Product Life Cycle Characteristics, Objectives, and Strategies 8

Table 2.2: The Four Ps of marketing mix 11

Table 2.3: The sellers’ four Ps to the customers’ four Cs 12

Table 3.1: Top 10 pharmaceutical manufacturers in Korea 31

Table 4.1: The new iron medicaments in Vietnam market 39

Table 5.1: Marketing objectives of HemoQ mom 56

CHAPTER 1: INTRODUCTION

1.1 PROBLEM STATEMENT

Vietnam’s pharmaceutical market has strongly grown in recent years Two important factors contribute to high growth of Vietnam's pharmaceutical market is economic growth, although slowing in 2010 but is still high at 13%, and large population (world ranked 13th

in 2010) The total value of Vietnam's drug use has increased steadily and at high levels of 13-25%/year for 5 years, much higher than average growth rate of the global pharmaceutical industry (6.2%) (Source: Drug Administration of Vietnam data)

To capture this market demand, Vietnam market becomes more interesting to attract pharmaceutical companies Hence, the number of medicaments in general and iron drugs in particular also greatly increases There are currently around 200 pharmaceutical products containing iron for anemia prevention and treatment, including HemoQ mom of Merap Although Merap is one of three companies having the best distribution system & service in Vietnam, HemoQ mom has achieved sales of around only 3.5 billion Vietnam dong / year Quarterly growth rate is still low and Merap did not reach yearly sales goal according to distribution contract between Merap and manufacturers; Merap suffered, therefore, large quantities of inventory as well as low turnover In case that Merap continues selling the product without any marketing investments, Merap will have to face with huge amount of inventory, which will be out of date in one and a half years later

Moreover, despite having some mega brands leading in over-the-counter (OTC) market like Osla, Xisat, and Biobaby… Merap has not yet any famous brands in ethical (ETC) market because Merap invest marketing activities for OTC brands only, not for any of ethical brands In long-term strategy, Merap will build brand for some of good ethical brands HemoQ mom is one of the good brands that be selected

Thus, developing an appropriate marketing strategy for HemoQ mom is necessary in order

to reach the sales objectives in short term as well as going along with Merap’s long-term strategy in building brand for some good ethical brands

1.2 RESEARCH OBJECTIVE

In order to answer the mentioned research problems, this study is designed to discover customer’s perception about HemoQ mom as well as its competitors; exploring doctors’ expectations on an iron supplement agent, competitive advantages of HemoQ mom and developing finally marketing strategy for HemoQ mom

1.3 RESEARCH QUESTIONS

To attain these above objectives, the research questions are:

 How customer perceive about HemoQ mom?

 What they expect on an iron supplement agent?

 What are strengths and weaknesses of key competitors of HemoQ mom?

 Which are competitive advantages of HemoQ mom?

 What is marketing strategy for HemoQ mom?

1.4 RESEARCH METHODOLOGY

This study is designed to discover customer’s perception about HemoQ mom and its key competitors; exploring doctors’ expectations on an iron supplement agent; discovering HemoQ mom’s competitive advantages and developing finally marketing strategy for HemoQ mom Accordingly, the combination of exploratory and descriptive research is an appropriate methodology for this research

There are three methods of collecting data used in this study: secondary data, qualitative and quantitative method

1.4.1 Desk research (secondary research)

Since HemoQ mom is the first iron supplement medicine as polysaccharide iron complex

in Vietnam, there are not any market data for this kind of product In this research, secondary data are collected from Merap’s information as well as secondary data from

FTA1 market research company about consumers’ usages and attitudes toward iron supplement agents:

 HemoQ mom’s sales data from sales department of Merap

 Customer’s feedbacks from HemoQ mom’s medical representatives sales reports as well as Merap’s customer services reports

 Qualitative as well as quantitative research from FTA’s research about end-users’ usage and attitudes toward iron supplement agents

 IMS 2 data

 Clinical studies published in famous medical journals in the world

 Data from World health organization (WHO), Drug Administration of Vietnam (DAV), General statistic office of Vietnam …

1.4.2 Qualitative research (primary research)

Qualitative research is conducted by the in-depth interview technique and face-to-face method with 20 doctors who are HemoQ mom’s current customers

In this step of research, one of the main objectives is to explore customers’ key factors of choosing an iron supplement agent, their expectations about it, strengths and weaknesses of key players in this sector, and competitive advantages of HemoQ mom Another one is to discover their perceptions about HemoQ mom

The result of this qualitative research is used to establish the questionnaire for quantitative research

Hereafter is some useful information gained from the qualitative research:

 All of iron supplement agents did not mentioned about their iron categories (ferrous salt, ferric salt of complex iron), except HemoQ mom

 Doctors realized the new concept of iron complex through HemoQ mom’s medical representatives but did not deeply know their advantages

 Obstetric doctors prefer HemoQ mom especially in the first three-month because it does not bring uncomfortable feelings like other drugs to such kind of sensitive women

 All therapeutic periods of iron supplement take some months, so daily cost of drugs are is an important factor to consider when choosing

 All competitors did not mentioned about their class of iron like HemoQ mom as well as benefits of their active ingredient

 Strengths and weaknesses of top five iron drugs in terms of sale value according to IMS data

1.4.3 Quantitative research (primary research)

The research scope targets to doctors who are already HemoQ mom’s customers or not yet but belongs to special departments for iron deficiency anemia treatment with the sample size of one hundred and fifty seven

The main method of this quantitative research is face-to-face interview Interviewees were directly interviewed by Merap’s medical representatives Finally, data was analyzed by SPSS version 19

Sample

One hundred and seventy questionnaires were distributed directly to doctors of departments where iron deficiency anemia treatment agents are used There were one hundred and fifty seven (92%) returned with valid answers In which, there are one half of doctors from Ho Chi Minh city and another half from other cities and provinces In terms

of department category, there are 66% of interviewees belong to obstetrical department, the remaining belong to other departments like Haematology and Blood transfusion Department, Renal Department, Gynaecology Department, Gastroenterology Department…

Figure 1.1: Interviewee category

(Source: Survey for this project, 2011)

Questionnaire

The questionnaire comprises three parts of information:

 Part 1: iron supplement usage behaviors that focus on brand awareness, usage, key decision factors, reasons for non-purchase…

 Part 2: HemoQ mom’s concept test, user’s opinions about quality, price, proposed promotional activities of HemoQ mom

 Part 3: interviewees’ personal information such as the hospital, department

1.5 SCOPE OF THE STUDY

Iron supplement drugs in general and HemoQ mom in particular are used in the whole country The study was conducted among Southern customers only where the approximately four of five sales of Merap comes from

1.6 SIGNIFICANCE OF THE STUDY

The study brings a practical significance to Merap It will provide a marketing strategy to improve sales volume as well as market share of HemoQ mom, and especially help to build HemoQ mom as a big brand in hospital channel, maintain the top positions of Merap in Vietnamese pharmaceutical market

1.7 STRUCTURE OF THE STUDY

The study is structured into five chapters as following: introduction, literature review, internal and customer environment analysis, external environment analysis and recommendations & conclusion

 Chapter 1 introduces the research including problem statement, research objective and question, research method, scope of the study, structure of the study and significance of the study

 Chapter 2 presents literature review of marketing strategy, marketing environment and SWOT analysis

 Chapter 3 analyses internal environment as well as customer environment

 Chapter 4 analyses external environment

 Finally, chapter 5 proposes marketing strategy and conclusion of the project basing

on the situation analysis and summarizes in the previous chapters

CHAPTER 2: LITERATURE REVIEW

2.1 MARKETING STRATEGY

2.1.1 Concept of marketing strategy

According to Kotler (2005), marketing strategy is the marketing logic by which a business unit hoped to achieve its marketing objectives It shows how strategies for the target market and positioning build upon the firm’s differential advantages It should detail the market segments on which the company will focus These segments differ in their needs and wants, responses to marketing, and profitability The company should put its effort into those market segments it can best serve from a competitive point of view It should develop a marketing strategy for each targeted segment

Target consumers are at the centre of the marketing strategy The company identifies the total market, divides it into smaller segments, selects the most promising segments and focuses on serving them It designs a marketing mix using mechanisms under its control: product, price, place and promotion The company engages in marketing analysis, planning, implementation and control to find the best marketing mix and to take action The company uses these activities to enable it to watch and adapt to the marketing environment

In addition, according to O.C.Ferrell (2008), marketing strategy involves selecting and analyzing target market, creating, and maintaining an appropriate marketing program (product distribution, promotion, and price) to satisfy the needs of those target markets It

is at this level where the firm will detail how it will gain a competitive advantage by doing something better than the competition It is also important that the firm attempt to make these advantages sustainable Thus, in its broadest sense, marketing strategy refers to how the firm will manage its relationships with the customers in a manner that gives an advantage over the competition

The strategies of a product need to change with each of these life-cycle phases The table below shows a few examples of how this might work:

Table 2.1: Summary of Product Life Cycle Characteristics, Objectives, and

Strategies

Characteristics

Sales Low sales Rapidly rising sales Peak sales Declining sales

Costs High cost per

Customers Innovators Early adopters Middle majority Laggards

beginning to decline

Declining number

Marketing

Objectives

awareness and trial

Maximize market share

Maximize profit while defending market share

Reduce expenditure and milk the brand

Strategies

Product Offer a basic

product

Offer product extensions, service, warranty

Diversify brands and items

Phase out weak models

Price Charge cost-plus Price to penetrate

Build more intensive distribution

Go selective phase out unprofitable outlets Advertising Build product

awareness among early adopters and dealers

Build awareness and interest in the mass market

Stress brand differences and benefits

Reduce to level needed to retain hard-core loyal

Sales

promotion

Use heavy sales promotion to entice trial

Reduce to take advantage of heavy customer demand

Increase to encourage brand switching

Reduce to minimal level

(Source: Philip Kotler, 2001, p.172)

2.1.2 Market segmentation

According to Kotler (2012), market segmentation divides a market into well-defined slices

A market segment consists of a group of customers who share a similar set of needs and

wants The marketer’s task is to identify the appropriate number and nature of market segments and decide which one(s) to target

We use two broad groups of variables to segment consumer markets Some researchers try

to define segments by looking at descriptive characteristics: geographic (countries, regions, cities), demographic (sex, age, income, education), and psychographic (social classes, lifestyles) Then they examine whether these customer segments exhibit different needs or product responses Other researchers try to define segments by looking at behavioral considerations, such as consumer responses to benefits, usage occasions, or brands The researcher then sees whether different characteristics are associated with each consumer-response segment The process of dividing a market into groups of buyers with different needs, characteristics or behavior, who might require separate products or marketing mixes, is market segmentation

Regardless of which type of segmentation scheme we use, the key is adjusting the marketing program to recognize customer differences

2.1.3 Market targeting

Kotler (2005) mentioned that after a company has defined market segments, it could enter one or many segments of a given market Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter A company should target segments in which it has a differential advantage over its competitors; where it can generate the greatest customer value and sustain it over time A company with limited resources might decide to serve only one or a few special segments; this strategy limits sales, but can be very profitable Alternatively, a company might choose to serve several related segments - perhaps those with different kinds of customer, but with the same basic wants Alternatively, perhaps a large company might decide to offer a complete range of products to serve all market segments Most companies enter a new market by serving a single segment, and if this proves successful, they add segments Large companies eventually seek full market coverage The leading company normally has different products designed to meet the special needs of each segment

2.1.4 Positioning

After a company has decided which market segments to enter, it must decide what 'position' it wants to occupy in those segments A product's position is the place the product occupies in consumers' minds If a product were perceived to be exactly like another product on the market, consumers would have no reason to buy it (Kotler 2005)

Market positioning gives a product a clear, distinctive and desirable place in the minds of target consumers compared with competing products Marketers plan positions that distinguish their products from competing brands and give them the greatest strategic advantage in their target markets Such simple statements are the backbone of a product's marketing strategy In positioning its product, the company first identifies possible competitive advantages upon which to build the position To gain competitive advantage, the company must offer greater value to chosen target segments, either by charging lower prices than competitors or by offering more benefits to justify higher prices

However, if the company positions the product as offering greater value, it must deliver greater value Effective positioning begins with actually differentiating the company's marketing offer so that it gives consumers more value than is offered by the competition The company can position a product on only one important differentiating factor or on several However, positioning on too many factors can result in consumer confusion or disbelief Once the company has chosen a desired position, it must take steps to deliver and communicate that position to target consumers

2.1.5 Marketing mix

According to Kotler (2005): Marketing mix is the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market The marketing mix consists of everything the firm can do to influence the demand for its product The many possibilities gather into four groups of variables known as the 'four Ps': product, price, place and promotion

 Product means the totality of 'goods and services' that the company offers the target market Kotler (2005) defined that product was anything which was offered to a market for attention, acquisition, use or consumption and that might satisfy a want

or need of people It included physical good features, quality level, packaging, product line, branding, etc…

 Price is what customers pay to get the product Kotler (2005) mentioned that all product and services have a price, just as they have a value In the narrowest sense, price is the amount of money charged for a product or service More broadly, price

is the sum of all the values that consumers exchanged for the benefit of having or using the product or service Companies set prices by selecting a general pricing approach that concludes one or more these three sets of factors-cost, consumer perception and competitors’ price Furthermore, the price comprises many factors

as flexibility, price level, discounts, allowances, etc…

 Place includes company activities that make the product available to target consumers, defined by Kotler (2005)

 Promotion means activities that communicate the merits of the product and persuade target customers to buy it The function of promotion in the marketing mix is to achieve various communications objectives with each audience There are many promotion tools; each promotion tool has unique characteristics and costs Promotion mix is the specific mix of advertising, personal selling, sales promotions and public relations that the company uses to pursue its advertising and marketing objectives (Kotler, 2005)

Table 2.2: The Four Ps of marketing mix

List price Discounts Allowances Payement period Credit terms

Channels Coverage Assortments Locations Inventory Transport

Target market

(Source: Philip Kotler, 2005, p 34)

The four Ps represent the sellers' view of the marketing tools available for influencing buyers From a consumer viewpoint, each marketing tool must deliver a customer benefit Robert Lauterborn suggested that the sellers’ four Ps correspond to the customers’ four Cs

Table 2.3: The sellers’ four Ps to the customers’ four Cs

(Source: Philip Kotler, 2006, p 20)

2.2 SITUATION ENVIRONMENT ANALYSIS

According to O.C.Ferrell (2008), situation analysis summarized all pertinent information about three key environments: the internal environment, the customer environment and the external environment

Figure 2.1: The interconnectedness of the internal, customer, and external

Who

Internal environment

Economy

When What

Technology Why

Politics

Where

2.2.1 Internal environment analysis

According to O.C Ferrell (2008), the first aspect of a situation analysis involves the critical evaluation of the firm’s internal environment The internal environment analysis considers issues such as the availability and deployment of human resources, the age and capacity of equipment or technology, the availability of financial resources and the power and political struggles within the firm’s structure In addition, this section summarized the firm’s current marketing objective and performance (O.C.Ferrell, 2008)

Internal factors include department objectives and resources, as well as organizational strengths and weaknesses as identified by the SWOT analysis The marketing manager must consider all of these in assessing the future (E.N.Berkowitz et al, 2011)

According to Kotler (2000), internal environment analysis is one thing to discern attractive opportunities and another to have the competencies to succeed in these opportunities Thus, each business needs to evaluate periodically its internal strengths and weaknesses in marketing, financial, manufacturing, and organizational competencies Clearly, the business does not have to correct all of its weaknesses, nor should it gloat about all of its strengths The big question is whether the business should limit itself to those opportunities

in which it possesses the required strengths or consider better opportunities to acquire or develop certain strengths

2.2.2 Customer environment analysis

O.C.Ferrell (2008) claimed that the analysis of the customer environment examines the current and future situation with respect to customers in the firm’s target markets During this analysis, information should be collected that identifies (1) the firm’s current and potential customers, (2) the prevailing needs of current and potential customers, (3) the basic features of the firm’s and competitors’ products perceived by customers as meeting their needs and (4) anticipated changes in customers’ needs

In assessing the firm’s target markets, the marketing manager must attempt to understand all relevant buyer behavior and product usage characteristics One method that the marketing manager can use to collect this information is the 5W model: Who, What, Where, When and Why:

 Who are our current and potential customers?

 What do customers do with our products?

 Where do customers purchase our products?

 When do customers purchase our products?

 Why (and how) do customers select our products?

 Why do potential customers not purchase our products?

Once the marketing manager has analyzed the firm’s current and potential customers, the information can be used to identify and select specific target markets for the revised marketing strategy The firm should target those customer segments where it can create and maintain a sustainable advantage over its competitors

According to Kotler (2005), customer satisfaction depended on a product’s perceived performance in delivering value relating to a buyer’s expectations If the product’s performance matched expectations, the buyer was satisfied If the performance exceeded expectations, the buyer was delighted Satisfied customers made repeat purchases and they told others about their good experiences with the product The key was to match customer expectations with company performance

However, in is Business to Business, the customers are not the end-users It is necessary to explain more about “derived demand” to understand deeply the demand of customers According to C escu, S.C (2011), the concept of derived demand is the most important concept that must be understood by a marketing manager on the business to business market What is meant by the term derived demand is based on the fact that an organizational buyer does not purchase goods and services based on his/her own needs as

in the case of consumer goods where the demand is determined by the final consumer’s personal needs On the business market, the organization is purchasing a product in order

to be able to produce other goods and services to meet the final demand on the consumer goods market In conclusion, the demand for productive goods is determined by the demand for consumer goods that is why it is a “derived” demand

Particularly in pharmaceutical sector, Guindy, S.I.E (2011) mentioned that the pharmaceutical industry is a large and important industry worldwide, where its practices have direct impact on the welfare of patients in specific and the society in general The pharmaceutical market is characterized by the phenomena of derived demand, where the end consumer of the product is not necessarily the decision maker in the purchase process The process is controlled by the patients physicians, where physicians act as gatekeepers

or intermediaries who decide whether or not a purchase will be made and if so, which drug will be purchased through prescriptions Thus, the pharmaceutical industry is characterized

by multiplicity of market players including physicians, medical representatives, patients, insurance companies, government, health organizations etc Moreover, the industry is highly regulated and monitored by various institutions including health organizations on a national and international level

2.2.3 External environment analysis

The analysis of the external environment includes relevant external factors: competitive, economic, socio-cultural, political/legal and technological, that can exert considerable direct and indirect pressures on the firm’s marketing activities (O.C.Ferrell, 2008)

 Competitive

According to O.C Ferrell (2008), competitive analysis has received greater attention recently for several reasons: more intense competition from sophisticated competitors, increased competition from foreign firms, shorter product life cycles, and dynamic environments, particularly in the area of technological innovation

Competitive analysis should progress through the following stages:

1) Identification: identify all current and potential brands, products, generics and total budget competitors

2) Characteristics: focus on key competitors by assessing the size, growth, profitability, objectives, strategies, and target markets of each one

3) Assessment: assess each key competitor’s strengths and weaknesses, including the major capabilities and vulnerabilities that each processes within its functional areas (marketing, research and development, production, human and resources …)

4) Capabilities: focus the analysis on each key competitor’s marketing capabilities in terms of its products, distribution, promotion and pricing

5) Response: estimate each key competitor’s most likely strategies and responses under different environmental situations as well as reactions to the firm’s own marketing efforts

 Economic

Economic factors concern the nature and direction of the economy in which a company operates On both the national and international levels, managers must consider the general availability of credit the level of disposable income, and the propensity of people to spend Prime interest rates, inflation rates, and trends in growth of the gross national product are other economic factors they should monitor

In short, the economic environment consists of factors that affect consumer purchasing power and spending patterns

 Demographic

Demography is the study of human populations in terms of size, density, location, age, gentler, race, occupation and other statistics The demographic environment is of considerable interest to marketers because it involves people, and people make up markets

 Politic

The political environment consists of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society Political factors define the legal and regulatory parameters within company must operate

 Culture

The cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, preferences and behaviors The cultural characteristics can affect marketing decision-making Marketers must be aware of these cultural influences and how they vary across societies within the markets served by the firm

 Technology

The technological environment revealed rapid technological change, unlimited innovation opportunities, concentration on minor improvements rather than big discoveries and growing regulation of technological change When old industries found or ignored new technologies, their business would decline New technologies create new market and opportunities, so the marketer should watch the trends in technologies

2.3 SWOT ANALYSIS

The SWOT analysis section draws from the market audit It is a brief list of the critical success factors in the market, and rates strengths and weaknesses against the competition The SWOT analysis should include costs and other non- marketing variables The outstanding opportunities and threats should he given (Kotler, 2005)

If plans depend upon assumptions about the market, the economy or the competition, they need to be explicit

A SWOT analysis summarizes the main elements of this audit into a statement of the company's strengths and weaknesses and the chief threats and opportunities that exist According to Kotler (2005), the overall evaluation of a business’s strengths, weaknesses, opportunities, and threats is called SWOT analysis SWOT analysis consists of an analysis

of the external and internal environments

O.C.Ferrell (2008) mentioned SWOT analysis focused on the internal factors (strengths and weaknesses) and the external factors (opportunities and threats) that give the firm certain advantages and disadvantages in satisfying the needs of its target market(s) These strengths, weaknesses, opportunities and threats should be analyzed relative to market needs and competition This analysis helps the company determine what it does well and where it needs to make improvement

To utilize SWOT analysis successfully, the marketing manager must be cognizant of four issues:

- The assessment of strengths and weaknesses must look beyond the firm’s resources and product offering to examine processes that are key to meeting customers’ needs this often entails offering “solutions” to customers’ problems, rather than specific product

- The achievement of the firm’s goal and objectives depends on its ability to create capabilities by matching its strengths with market opportunities Capabilities become competitive advantages if they provide better value to customers than competing offerings

- Firm can often convert weaknesses into strengths or even capabilities by investing strategically in key areas (for example, customer support, research and development, supply chain efficiency, and employee training) Likewise, threats can be converted into opportunities if the right resources are available

- Weaknesses that cannot convert into strengths become the firm’s limitations Limitations that are obvious and meaningful to customers or other stakeholders must be minimized through effective strategic choices

Figure 2.2: SWOT matrix

Match Match

2.4 CHAPTER SUMMARY

This chapter introduces all fundamental theories that support for developing the following chapters They cover the internal environment analysis, customer environment analysis, external environment analysis as well as marketing strategy component of HemoQ mom, including SWOT analysis, STP3 model and marketing mix

3

STP is the formula of Segmentation, Targeting, Positioning which is the essence of strategic marketing

CHAPTER 3: INTERNAL & CUSTOMER ENVIRONMENT

Organizational structure

Merap has four subsidiary companies located at four big cities: Ho Chi Minh City, Ha Noi,

Da Nang and Dong Nai with 350 employees

Figure 3.1: Merap’s organization structure

(Source: Merap’s profile, 2011)

Featuring of a distributor, employees in the company is divided into two main groups:

 The direct group is the group of all sales departments (including OTC4 sales department and ETC5 sales department)

 The indirect group is the group of other departments not directly involved in sales like Human Resource department, Finance department, Training department, Marketing department, Planning & Supplying department,

Figure 3.2: Merap’s organisation structure

(Source: Merap’s profile, 2011)

Admin dept Sale dept

Merap HN

Sale dept

Admin dept

Merap Dong Nai

Sale dept

Admin dept

General director

Ha Noi office

OTC sale dept

ETC sale dept

Accounting dept

Logistic dept

HR & admin dept

Distribution system

Merap has a wide distribution system to 58 provinces over Vietnam Up to now, Merap has about 1,400 pharmacies, 50 agencies and 320 hospitals or clinics They are Merap’s customers at medium to big cities or provinces and some rural area Since Merap can not distributed directly to all pharmacies or hospitals at many rural provinces, 2 wholesales and

50 agencies are in charged of distributing to all small customers located at their provinces

Figure 3.3: Merap’s distribution system

(Source: Merap’s profile, 2011)

Basing on structure of Merap, this distribution channel is divided into 2 channels They are OTC channel which is in charge of distributing for pharmacies and ETC channel which is

in charge of distributing for hospitals and clinics

Providing not only “the most quickly services” but also “the unique services” for all above customers, Merap became one of three companies having the best distribution system & service in Vietnam (Source: IMS 2008)

3.1.2 HemoQ mom business overview

HemoQ mom product

Each HemoQ mom capsule contains three active ingredients:

 Polysaccharide iron complex: 326.1 mg

 Folic acid: 1 mg

 Cyanocobalamin 0.1%: 25 mg

The main active ingredient is polysaccharide iron complex that is a new form of available iron supplements in Vietnam It is prescribed for prevention and treatment iron deficiencies and iron deficiency anemia

HemoQ mom is manufactured by Daewoong pharma group that is one of the top five pharmaceutical manufacturers in Korea (Source IMS, 2010) It has been exclusively distributed in Vietnam by Merap since January 2011

HemoQ mom has been produced and put up for sale since 2007 by Daewoong pharma After about 5 years of releasing on the Korea market, HemoQ mom is good appreciate by Korea doctors and being one of the first choice in prevention or treatment of iron deficiency anemia

Business overview

Daewoong and Merap signed a distribution agrement for HemoQ mom as a contractual product One of conditions is that Merap has to take minimum 6 orders in the first two years with minimum 15,000 boxes per order That means Merap has to reach the target of 90,000 boxes of HemoQ mom in 2 years

To catch with this agreement, the objectives of this business are set as below:

 Sales objective: reach the sales target of 35,000 boxes in 2011 and 55,000 boxes in

2012

 Coverage: cover at least 80% grade 1 hospitals in Ho Chi Minh city and one Grade

1 hospital at each province or city after one year

Although Merap is one of three companies having the best distribution system & service in Vietnam; having a talented and experienced medical representatives team; Merap did not reach yearly sales target Figure 3.4 shows the gap between sales performance and sales target

Figure 3.4: HemoQ mom’s sales review by value in 2011

(Source: Merap’s sales report, 2011)

Total sales of HemoQ mom in 2011 is 21,290 boxes, equivalent to 175,624 USD, accounted for 61% of the target

In terms of coverage, Merap has gone much faster than many others competitors when being listed of 68 hospitals nationwide after only one year penetrating in Vietnam market, including 21 ones of Ho Chi Minh city and the remain ones of other cities and provinces Another success that Merap has acheived is that HemoQ mom was accepted in many speciality hospitals like Tu Du hospital, Hung Vuong hospital, Hematology and blood transfusion hospital of Ho Chi Minh city, International hospital of obstetrics and gynecology

In conclusion, iron medicaments market is a very strictly competitive one with huge number of competitors Eventhough Merap has many advantages, the business objectives could not be acheived without marketing investments

 Core product

Each HemoQ mom capsule contains 326.1mg of Polysaccharide Iron complex, 2.5 mg of Cyanocobalamin and 1.0mg of Folic acid It is indicated for prevention and treatment iron deficiencies and iron deficiency anemia With high content of iron as well as folic acid, HemoQ mom proves a good efficacy in this indication Furthermore, in combination with Cyanocobalamin, a hematopoietic vitamin, these three ingredients give a synergic hematopoietic effect

 Extended product

Not only ensuring an effective treatment of anemia, HemoQ mom has the following values considered to meet the needs of customers, for instance, high bioavailability, reducing the common side effects of other iron drugs and eliminating the common drug interactions help to bring the convenience for patients

According to the survey for this project, 62% of doctors choose the “high bioavailability”

of our four proposed concepts The second choice is extremely safety, that means eliminating the most common side effects of other competitors

Figure 3.5: Agreement level of HemoQ mom’s proposed concepts

(Source: survey for this project, 2011)

According to this result, high bioavailability and extremely safety can be considered as competitive advantages of HemoQ mom to develop the competitive satrategy for this product

Price

Current price of HemoQ mom is 5,500 VND per capsule In fact, sales reports of medical representatives often contains doctors’ complaints about its high price The result of this survey also shows that 57% of potential doctors agree high price is the second reason for nonpurchase (Figure 4.12)

However, the result of this survey in terms of reasonable price, 87% of doctors choose

“<6,000 VND” is the reasonable price HemoQ mom belongs to this group, though it is in the upper limit

Figure 3.6: Reasonable price

(Source: survey for this project, 2011)

Moreover, among 5 key competitors of HemoQ mom, there are 2 products having higher price than current price of HemoQ mom Owning the unique competitive advantages as a new kind of iron (polysaccharide iron) with higher bioavailability and extremely safety, HemoQ mom’s price is perceived as a reasonable price thanks to high quality among most

of current users

In conclusion, in terms of customers’ perceived value, the current price of HemoQ mom is acceptable However, it is necessary to show to customers the unique benefit of product and its reasonable cost-benefit ratio

In addition, HemoQ mom is now covering 70% of Grade 1 hospitals in Ho Chi Minh and 70% of hospitals in big province as well with total of 58 hospitals, including 19 hospitals

in Ho Chi Minh City and 39 hospitals in provinces However, there are many provincial hospitals as well as most of district ones are not covered Merap should invest more to enlist HemoQ mom in these hospitals out-patient drug formulaties to get the its coverage objective

In addition, although there is not any marketing program for HemoQ mom but the achieved sales of HemoQ mom at 2.3 billion on the first year and the average growth rate

of 13% per month showed the skills of medical representatives of HemoQ mom is pretty good

Thus, besides quite good at personal selling, Merap should invest more in other marketing communication activities to build brand for HemoQ mom as a mega brand of Merap in

prescribed drugs, around 93% patients strictly follow the prescription of doctors (Source: FTA’s survey about consumer’s usage and attitude on using iron supplements, 2009)

Figure 3.7: Key decision factors of end-users’ in iron suplement selection

(Source: FTA’s survey, 2009)

Thus, all doctors, regardless of gender, age as well as income, have chance to prescribe HemoQ mom In other words, the segmentation of HemoQ mom does not depend on demographic characteristics of customers

Geographic characteristics:

According to General statistic office, there a big gap between urban areas and rural areas in terms of income per capita HemoQ mom is a drug with rather high price, so income per capita is one of the factors affect in choosing it Thus, doctors in most of rural areas have few chances to prescribe HemoQ mom for their patient due to their low income and limited budget for medicaments This means big cities and centre of provinces are considered the attractive market for HemoQ mom