Build and develop distribution system of domesco

TRUONG DAI HOC MO TP HCM HO CHI MINH CITY OPEN UNIVERSITY UNIVERSITEÙ LIBRE DE BRUXELLES SOLVAY BRUSSELS SCHOOL MBMM4 NGUYEN THI BICH THUY BUILD AND DEVELOP DISTRIBUTION SYSTEM OF DOMESCO MASTER PROJECT MASTER IN BUSINESS & MARKETING MANAGEMENT Ho Chi Minh City (2010) STUDENT DECLARATION I certificated that the attached project is my own work Materials withdraw from different sources have been acknowledged according to unit-specific requirements for reference NGUYEN THI BICH THUY Acknowledgement I would like to express my sincere thanks to professors of Solvay Business School – University of Brussels for the profound knowledge that they managed to impart to me, for the time they had to spend to answer my questions I would like to extend my gratitude to DOMESCO’s sales team as well as Ho Chi Minh city Health Department, other pharmacists in companies that help me to complete the questionnaires and all respondents who spent their value time to complete the questionnaires My deepest gratefulness goes to Prof Dr Bui Thanh Trang, lecturer of the University of Economics and also my tutor, who advises me on choosing the topic, gave his idea and enthusiastically helped me from project outline until to project finishing Last but not least, I would also like to thanks Mr Serge Bywaski and Ms Nguyen Thi Mong Thuy, our helpful coordinators, who have been with us throughout the course, for their enthusiastic connection between the class and Solvay professors CONTENTS Page Executive summary Introduction 2.1 Objective 2.2 Scope of study 2.3 Methods of research 2.4 Structure of project 3 Chapter 1: Literature overview 3.1 Concept of distribution system 3.2 Management of distribution system 3.3 Conflicts of distribution system 4 Chapter 2: Design of research 4.1 Framework of research 4.2 Information need 4.2.a Secondary data 4.2.b Primary data 4.3 Method of research 4.3.a Qualitative research 4.3.b Quantitative research Chapter 3: Analysis of distribution system of DOMESCO 5.1 Situation analysis 5.1.a Overview about DOMESCO company 5.1.b SWOT analysis 5.2 Competitor analysis 12 5.3 Finding of research 13 5.3.a Result from research 13 5.3.b Concluding from finding 17 5.4 Factors influence 18 5.4.a Product portfolio 18 5.4.b Promotion 18 5.4.c Build more branches get GDP certificate 19 5.4.d Quality of distribution: make good service 21 5.4.e The innovation of distribution system 22 Chapter 4: Conclusion and recommendation 23 6.1 Conclusion 23 6.2 Recommendation 23 6.2.a Product portfolio 23 6.2.b Right promotion 23 6.2.c Building more branches apply GDP certificate 24 6.2.d Good quality of distribution 24 6.2.e Apply the innovation of the distribution system 24 Reference Appendix 1 Executive summary: Distribution system of DOMESCO was established in 19 years ago It began to distribute in Dong Thap province where its office was there Until now, there are eight branches are presenting in national wide and they distribute to almost provinces of Vietnam from the North to the South Similar to other local pharmaceutical companies, DOMESCO is also a distributor and manufacturer His products are sold to everyone who need That has many problems about take care customer, control quality of product, and reasonable time to deliver product to pharmacy In this present way, the end-user, pharmacy, private clinic, hospital, wholesaler can buy product from DOMESCO company So that it is difficult to focus on right customer and have good service to them In addition, the quality of product is so difficult to control when there are many intermediaries Distribution still has not professional yet, that cause time delivery long to reach the customers Therefore, the number of customer and sales volume are not increase as DOMESCO expected DOMESCO want to increase the image in pharmacy industry and attract more customers, they must have to right policy to become a professional leader Vietnamese company To carry out this policy, DOMESCO should be aware of this situation and improve their distribution system more professional to be able to compete with other competitors Plan to meet the set goals: - Analysis distribution system of DOMESCO, and aim to: - Build more branches get GDP (Good distribution practice) certificate This makes the distribution system becomes a professional, delivery time to customers quickly and pharmacies will receive the best service with reasonable price - Develop right product portfolio - Have good quality of service 2 Introduction: 2.1 Objective: Objective of the project: based on the analysis of pharmaceutical market situation, competitors, DOMESCO situation as well as market research and finding problem analysis to find factors influences in order to build and develop distribution system 2.2 Scope of study: This study focuses on pharmacies where products are sole to end users Pharmacies buy medicine from distributor, wholesaler, company, other pharmacies… Market analysis has been carried out in the following developed markets: Ho Chi Minh city, Dong Thap province 2.3 Methods of research: To obtain data for the research, an array of tools is structured interview of pharmacist who work on health office interview and pharmacist who work at pharmacy were utilized The primary research and secondary information serve to identify {1} Analysis distribution system of DOMESCO [2] Build distribution system get GDP certificate [3] Develop right product portfolio [4] Have good quality of service Information was also sought thought public and non-public documents as below: - www.domesco.com - www.vnr500.com.vn - www.dav.gov.vn For the study the following approach was adopted, key players include sellers and buyers The questionnaire and direct interviews to provide qualitative and quantitative information on traded volumes and values, for example, differed significantly between the contacted persons Finally, the information obtained from market operators was analyzed, processed and checked again information obtained from literature and other sources 2.4 Structure of project: - Chapter 1: Literature overview: I mention in this chapter about the concept of distribution system according to Philip Kotler and according to World Health Organization (WHO); management of distribution system and these conflicts of distribution system - Chapter 2: Design of research: I show the framework of research and information need for research: secondary data and primary data - Chapter 3: Analysis of distribution system of DOMESCO: this chapter raises distribution system presently, analysis competitor situation and market research - Chapter 4: Conclusion and Recommendation Chapter 1: Literature overview: 3.1 Concept of distribution system: - According to Philip Kotler: Distribution (or placement) is one of the four aspects (4 Ps) of marketing A distributor is the intermediary between the manufacturer and retailer After a product is manufactured, it may be warehouse or shipped to the next echelon in the supply chain, typically a distributor, retailer or consumer The other three parts of the marketing mix are product management, pricing, and promotion Frequently three parts may be a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user This process is known as the “distribution chain” Each of the elements in the chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user - About the Good Distribution Practice (GDP) according to World Health Organization: GDP deals with the guidelines for the proper distribution of medicinal products for human use GDP is a quality warranty system, which includes requirements for purchase, receiving, storage and export of drugs intended for human consumption GDP regulates the division and movement of pharmaceutical products from the premises of the manufacturer of medicinal products, or another central point, to the end user thereof, or to an intermediate point by means of various transport methods, via various storage and/or health establishments 3.2 Management of distribution system: Distribution management is overseeing the movement of goods from supplier or manufacturer to point of sale It is also an overarching term that refers to numerous activities and processes such as packaging, inventory, warehousing, supply chain and logistics It facilitates coordination of sales work and management in a best possible way, by simplify and management each phase of the distribution chain from customers, ordering, delivery, payment, inventory, and right through to services management 3.3 Conflicts of distribution system: The conflict of distribution system is a kind of conflict between distributors and manufacturers and members of distribution channels, which rise mainly from four factors including channels structural factors, communication factors, economic factors and channel design The problems between manufactures and channels partners require to give up the previous channel design ideas of shared values, then understand and operate the relationship from view of team building, value-added chain, and shared value in order to apply channel integration, vendor alliances and capital penetrations and so on Provide valuable service with communication, cooperation and win-win for channel partners Then set up a good relationship-based, collaborative model of channel relationship Thus improve the overall quality and efficiency of marketing channels and achieve win-win marketing strategy Chapter 2: Design of research 4.1 Framework of research: Identify the problem Review Literature overview Qualitative research Quantitative research 4.2 Information need: Analysis a) Secondary data: Information of distribution system has been collected by DOMESCO company’s report and Conclusion and document solutions 21 - The sales force is around 397 (35%/ total human recourse) people now, this amount will be increasing to around 447 people (40%/total employee) from official staff department This sales force will be cover almost GPP pharmacies and some normal pharmacies The whole people in department must to work according to five standards: - The reliable: the ability to exactly - Speed: delivery medicine to everywhere need as quickly as possible - Accuracy: ability to provide accurate information and effective - Low cost: cost as low as possible - Flexible: control the ability to handle a flexible work e The innovation of distribution system: DOMESCO BRANCH HOSPITAL AGENT HEALTHCARE SERVICE PHARMACY PRIVATE CLINIC END - USER DOMESCO distribute their products to branches Each branch will sell products to agents, pharmacies, hospitals, healthcare service, and private clinic From this channel, medicine will go to end-user Chapter 4: Conclusion and recommendation 22 6.1 Conclusion: With an increasing of annual used medicine 19 USD/person and population of more than 85 millions of people, Viet Nam is attractive market for production, sales and distribution That explains why there are 800 players in this market However, distribution system of pharmaceutical market is so complex Every Vietnamese companies need to innovate themselves to survive and develop DOMESCO company has long time of operation, but distribution system has many inadequate To become a leader and expand market share, DOMESCO should build and develop its distribution system in nation wide 6.2 Recommendation: Distribution system of DOMESCO should focus on GPP pharmacy, hospital and healthcare service Recommendation on this system is that DOMESCO need to improve: a) Product portfolio: should focus on OTC and ethical product b) Right promotion: DOMESCO should have program such as: - “Special gift” take place twice a year This program will makes good relationship with the key pharmacies Medical representative will execute this program - GPP booklet will be prepared for pharmacies in 2011 This program will bring much information about GPP standard - “Lottery program” take place in the end of the year that attract more customer buy product from DOMESCO - “Special ceremony day” program push customer remember DOMESCO product It takes place in special day such as Doctor Day, Cardiovascular day, Children day, Tet holiday c) Building more branches apply GDP certificate: three more branches should be established in the North and Central in order to cover nine provinces where DOMESCO products have not present yet d) Good quality of distribution: make good service to customer Five standards should apply reliable, speed, accuracy, low cost, flexible e) Apply new channel way: 23 Each branch will distribute DOMESCO product to agent, pharmacy, hospital, healthcare service, and private clinic From this channel, medicine will go to end-user Product New channel Promotion DOMESCO Distribution System Branch Service That present integrated around business slogan: “DOMESCO- For Quality of Life” REFERENCES www.domesco.com http://www.medinet.hochiminhcity.gov.vn/tintuc/ http://www.medinet.hochiminhcity.gov.vn/qlnn/vbpq/GDP.xls http://www.dongthap.gov.vn/wps/wcm/connect/ www.dav.gov.vn] www.vnr500.com.vn APPENDIX 1) Questionnaire: Choose 10 pharmacists work on Official Healthcare QUALITATIVE RESEARCH QUESTIONNAIRE (Individual interview) What are the important factors for pharmacy buy product from company? Do you think distribution system is good for the end-users nowadays? How you feel about quality of distribution system in Viet Nam market? Does the pharmacy pay attention on GDP distribution system? When all pharmacies get GPP certificate? How many percent of GPP pharmacy buy directly product from manufacturer? Which standards is the best to become good distributor? How the pharmacy buy product directly from DOMESCO? How to build distribution system becomes professional? 10 Do you think company will comply with GDP standard? Choose 100 pharmacists who work in GPP pharmacies QUANTITATIVE RESEARCH QUESTIONNAIRE (Face to face interview at pharmacies) Dear Sir/madam, This is to invite your participation in this customer survey Your answers are kept confidential and are only to support my final project of MBMM4 course Thank you very much Your name:…………………………………………………………Age:………………………………… ……… Where to work:…………………………………………profession:…………………………………… Please tick √ on your selection Your position in pharmacy:  Owner  Seller Which kind of product is best in pharmacy?  OTC  Ethical product  Oriental medicine  Functional food Which ethical product you sell in your pharmacy? No Ethical product Not yet Little Average Moderately good Many Brand name Import product Local product DOMESCO product Do you sell DOMESCO product?  Yes  No What you think about quality of DOMESCO product compare to other local one’s:  Not good  Normal  Good  Excellence What you think about the price of DOMESCO product?  Expensive  Reasonable  Cheap What you think about quality of distribution system of DOMESCO?  Not good  Normal  Good  Excellence How does the promotion of DOMESCO distribution? No Promotion Cost of call to order Discount in order Service Quality of this promotion Don’t care Not Average important Important Very important Do you know DOMESCO get GDP (Good Distribution practices) certificate?  Yes  No 10 Importance factors for buying products from company: No Factors Famous company Price of product Convenient of delivery Promotion Don’t care Not Average important Important Very important Profession Good service FINDINGS FROM QUANTITATIVE RESEARCH QUESTIONNAIRE GPP PHARMACY 1.Average age: 26 to 68 years old  Owner Quantity of response 92 Percentage 92%  Seller 8% Which kind of product is best in pharmacy? Product OTC Ethical Oriental Functional Best Sale 89% medicine 1% 10% Food 0% Kind of Ethical product sold in pharmacy: No Product Not yet Little Average Brand name Import product - generic Local product DOMESCO product 0% 4% 0% 0% 18% 44% 48% 52% 10% 18% 30% 32% Moderately good 42% 26% 22% 16% Many Moderately good 32% 8% 32% 30% Many 34% 8% 0% 0% Kind of OTC product sold in pharmacy: No Product Not yet Little Average Brand name Import product - generic Local product DOMESCO product 0% 0% 0% 6% 6% 28% 8% 16% 26% 48% 14% 36% 36% 16% 46% 12% What you think about quality of DOMESCO product compare to other local ones?  Excellent  Good  Normal  Not good  No idea Quantity of respondent Percentage 64 10 22 4% 64% 10% 0% 22% What you think about the price of DOMESCO product?  Expensive  Reasonable  Cheap Quantity of response Percentage 14 80 14% 80% 6% What you think about distribution system of DOMESCO?  Excellent  Good  Normal  Not good  No idea Quantity of response Percentage 16 60 12 12 0% 16% 60% 12% 12% How does promotion of DOMESCO distribution? No Promotion Don’t Not Averag care important e Cost of call to order 14% Discount in order 2% 14% 36% Service 0% 18% 34% After-sales 2% 8% 38% Important Very important 30% 28% 30% 18% 20% 22% Do you know DOMESCO get GDP (Good Distribution practices) certificate?  Yes  No Quantity of response Percentage 92 92% 8% 10 Importance factors for buying products from company: No Factors Famous company Price of product Convenient of delivery Promotion Profession Good service Don’t care 4% 0% 0% 2% 0% 0% Not good 8% 0% 4% 10% 8% 8% Normal Good Excellence 10% 8% 20% 26% 46% 30% 38% 34% 24% 32% 26% 34% 40% 58% 52% 30% 20% 28% 2) Map of distribution system of DOMESCO Vietnam map 3) Source of General Statistics Office of Vietnam –Ministry of Planning and Investment http://www.gso.gov.vn/default.aspx?tabid=395&idmid=3&ItemID=10034 Number of Health care Facilities 2007 2008 Facilities 13438 13460 956 974 829 781 51 40 10851 10917 710 710 41 38 Total Hospital Clinic Hospital nursing and rehabilitation Health station Health service in enterprise Others 2009 13450 1002 682 43 10979 710 34 Development indicators (%) compare to last year 101.6 100.2 99.9 105.9 101.9 102.9 97.9 94.2 87.3 100.0 78.4 107.5 101.7 100.6 100.6 100.0 100.0 100.0 83.7 92.7 89.5 Total Hospital Clinic Hospital nursing and rehabilitation Health station Health service in enterprise Others 4) Vietnam pharmaceuticals market 2005 to 2009 [USD 000] MAT Q3/05 MAT Q3/06 MAT Q3/07 MAT Q3/08 MAT Q3/09 439,323 CAGR: 17.8% 530,741 670,330 827,155 998,439 MAT: Movement Annual Total CAGR: Compound Annual Growth Rate Source: IMS report Q3-2009 5) Sources of Viet Nam General Statistics Office and Drug Administration of Viet Nam P1- Drug expenditure per capita and total amount used drugs P2- Drugs price increases over the previous month Total amount used drugs- USD Drug expenditure per capita (USD/person) Source: Drug Administration of Viet Nam 6) DOMESCO company: Source: General Statistics Office ... survive and develop DOMESCO company has long time of operation, but distribution system has many inadequate To become a leader and expand market share, DOMESCO should build and develop its distribution. .. inventory, and right through to services management 3.3 Conflicts of distribution system: The conflict of distribution system is a kind of conflict between distributors and manufacturers and members of. .. Scope of study 2.3 Methods of research 2.4 Structure of project 3 Chapter 1: Literature overview 3.1 Concept of distribution system 3.2 Management of distribution system 3.3 Conflicts of distribution