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Term Paper

on Marketing
Analysis of GlaxoSmithKline Bangladesh
Limited

Submitted to:

Professor Dr. M. Mahmodul Hasan


MBA Program, School of Business
North South University

Submitted by:

Panel: BOOM-Al-Habibi

Course: Marketing Management (BUS 620)

Section: 03
Date of Submission: April 25, 2015

Term Paper on Marketing Analysis of


GlaxoSmithKline Bangladesh Limited

Submitted to:

Professor Dr. M. Mahmodul Hasan


MBA Program, School of Business
North South University

Submitted by:

Name ID
Kaniz Fatima Nourin Choudhury 1430929060
Sumaiya Murshed 1430624660
Kaniz Fatema Shernaz 1431004660
Umme Rabia 1430623660

Panel: BOOM-Al-Habibi

Course: Marketing Management (BUS 620)

Section: 03

Date of Submission: April 25, 2015


Letter of Transmittal
April 25, 2015

Professor Dr. M. Mahmodul Hasan


MBA Program, School of Business
North South University, Dhaka

Subject: Prayer for Submission of the Term Paper on GlaxoSmithKline

Dear Sir,

We would like to inform you that we have completed our term paper on
GlaxoSmithKline Bangladesh Limited that you have assigned us for the course BUS
620: Marketing Management. It was a great pleasure for us to work on this report.

In writing this term paper, we have followed the instructions that you have given us
in and outside of the class, and we have also applied relevant concepts that we have
learnt throughout the course. The contents provided in this report are all our own,
though some information and references have been taken from sources like
GlaxoSmithKline Bangladesh Limited to facilitate our report writing.

We would like to thank you for your sincere guidance and constant support that we
have received during the course of writing this report. It would not be possible for us
to complete the report without your kind help. We would be glad to provide any
clarification and modification if and when required.

Yours Sincerely,

Name and ID Signature


Kaniz Fatima Nourin Choudhury
ID:1430929060
Sumaiya Murshed
ID: 1430624660
Kaniz Fatema Shernaz
ID: 1431004660
Umme Rabia
ID: 1430623660
Acknowledgement
We would first like to thank Almighty Allah for giving us this opportunity to work
and complete this term paper since preparing this paper has been a great challenge
for all of us.

We are very grateful to our honourable faculty Professor Dr. M. Mahmodul Hasan for
his generous cooperation and constant guidance that made us really confident about
the desired outcome of our term paper on GlaxoSmithKline Bangladesh Limited.

We would also like to thank our respondents from GlaxoSmithKline Bangladesh


Limited, who took out some time from their busy schedule to help us collect
information. It was a very interesting experience for us and we tried our best to cover
all the necessary parts of the report assigned.

Finally, we would like to thank each other for the tremendous cooperation we have
shared among ourselves as group members. Our dedication and strong teamwork has
resulted in the successful completion of this term paper.

Executive Summary
This term paper on GlaxoSmithKline Bangladesh Limited aims to analyse
marketing management of the company. It begins with the definition of marketing
management relating to the companys marketing management, followed by its
mission, vision, business plan, corporate strategy, SWOT and PESTEL analyses,
Michael Porters five forces, marketing strategy, core marketing concept, market
segmentation and marketing mix, value chain model, total quality management, and
quality and control, brand and branding, brand dynamic pyramid, the five Ms of
advertising, mass communication, marketing budget and expenditure, pricing
strategies, break-even analysis, recommendation, and finally conclusion.
GlaxoSmithKline (GSK), being a science-led global healthcare company, researches
and develops a broad range of innovative medicines, vaccines and consumer
healthcare products. Its products are used by millions of people throughout the
world, helping them to do more, feel better and live longer. With headquarters in UK,
GSK has its operations in 115 countries with more than 100,000 people working
globally. The company has three primary areas of business in pharmaceuticals,
vaccines and consumer healthcare. As a research based company, GSK creates
innovative new products and makes them accessible to as many people who need
them. GSK Bangladesh Limited, a subsidiary of GSK plc, started its operation in
Bangladesh, the then East Pakistan in 1949. Its activities include secondary
manufacture of pharmaceutical products and marketing of vaccines, pharmaceutical
healthcare products, nutrition and oral healthcare products. The companys activities
are strictly guided by GSK values which include showing respect for people, being
patient/customer focused and commitment to transparency and demonstration of
highest integrity in its conduct. Embedded with these values and backed by leading
edge technology, more than 700 personnel are working all over Bangladesh with the
global mission to improve the quality of human life by ensuring quality healthcare
products. With 10 vaccine brands, GSK Bangladesh leads the market of the country
not only in terms of volume but also in terms of providing a whole range of disease
prevention for both infants and adults. GSK has made a global commitment to re-
invest 20% of the profits it makes in developing countries to address issues around
providing healthcare services to the underserved communities.
TABLE OF CONTENTS

Acknowledgement
Executive Summary
1.0 Definition of Marketing Management 1
1.1 Definition of Marketing Management (Theory 2000 2011) 1
1.2 Definition of Marketing Management (Theory 2012 2016 ) 1
2.0 Mission, Vision, Business Plan, and Corporate Strategy 2
2.1. Mission 2
2.2. Vision 2
2.3. Business plan 2
3.0 SWOT Analysis of GlaxoSmithKline Bangladesh 4
4.0 PESTEL Analysis of GlaxoSmithKline Bangladesh 5
5.0 Michael Porters Five Forces 6
6.0 Core Marketing Concept, Market Segmentation, and Marketing Strategy 7
6.1 Core Marketing Concept 7
6.2 Market Segmentation 7
6.3 Marketing Strategy 8
7.0 Marketing Mix (7P) + 4C 9
8.0 Value Chain Model 11
9.0 Total Quality Management, Loyalty, and Quality and Control 12
10.0 Brand and Branding 14
11.0 Box Analysis of Brand Elements 14
12.0 Brand Dynamic Pyramid 15
13.0 Five Ms of Advertising 16
14.0 Mass Communication 17
14.1 Advertising Budget & Campaign Cost 18
14.2 Sales Promotion and Budget 19
14.3 Events & Experiences/Sponsors 20
14.4 Public Relation/Government Lobbying 21
14.5 Corporate Social Responsibility 21
15.0 Marketing Budget & Expenditure 22
16.0 Pricing Strategy 25
17.0 Break-even Analysis 28
18.0 Recommendation 29
19.0 Conclusion 30
20.0 References 31
1.0 Definition of Marketing Management:

1.1 Definition of Marketing Management (Theory 2000 2011)

Marketing management is the art and science of choosing target markets and
getting, keeping, and growing customers through creating, delivering, and
communicating superior customer value. (Kotler, Keller, Koshy, Jha, 2014)

1.2 Definition of Marketing Management (Theory 2012 2016 )

Marketing management depends on the size of the business and the industry in
which the business operates. Effective marketing management will use a company's
resources to increase its customer base, improve customer opinions of the company's
products and services, and increase the company's perceived value.

Marketing management of GSK Bangladesh depends on the big size of its


pharmaceutical and consumer healthcare product business and the huge
pharmaceutical and consumer healthcare industry in which the business operates.
Since the size of the business and industry is big, its marketing management involves
huge and complex activities.

Effective marketing management of GSK uses its resources to increase its customer
base, improve customer opinions of its pharmaceutical and consumer healthcare
products, and increase GSKs perceived value. GSKs spirit of delivering excellence by
being the best it can be enables it to carry out effective marketing management. GSK
focuses more on quality, innovation and research and development, and also spends
hugely on advertisement, sales promotion and public relation activities.

2.0 Mission, Vision, Business Plan, and Corporate Strategy


2.1 Mission

To improve the quality of human life by enabling people do more,


feel better, and live longer

GSK Bangladesh is confident that it can fulfill this mission by focusing its
business activities around strategic priorities. Ensuring GSKs values are
embedded in its culture and decision-making helps GSK better meet the
expectations of society (GSK, 2014).

2.2 Vision

GlaxoSmithKline want to become the undeniable leader in our industry. It is the


people who are at the center of all GSK does always, all through. The change GSK
has incessantly been striving to catalyze at a sustainable level would not only be
meaningless but also impossible, had it not directly touched and involved those
individuals lives. This years cover page of GSK Bangladeshs Annual Report reflects
its vision of All for the PEOPLE through the illustration of GSKs hands extending
out to the innumerous people around it.

2.3 Business plan

The local pharmaceuticals part of the business grew by 12% which is higher than
the 11% market growth reported by IMS. This was on the back of a very successful
2013. Pharmaceuticals business exceeded its annual value and volume budgets
enabling access of close to 30 million packs of GSKs products to patients across
the nation. Growth was driven almost equally by all zones indicating robustness
of processes and good field engagement. Vaccines part of the business faced
unprecedented challenges on the supply front impacting overall business growth.

In 2014, Global Manufacturing & Supply (GMS) Chittagong site added one more
year of success to the legacy of more than four decades of glorious achievement.
The end-to-end supply chain program, which began in early 2014 continue to
reform and simplify GMS Chittagongs supply chain to ensure more efficient
delivery of GSKs products to patients and consumers.

This year, the Chittagong site successfully achieved 3 STAR rating in the recent
A&A audit by EHS (Environment, Health and Safety) and PQ (Product Quality)
auditors. Operational compliance in terms of meeting Global Engineering
Standards (GES) and FM Global assessment and TP 13 engineering audits
outcome gives us the confidence of controlled operations of the site.

In 2014, GMS Chittagong introduced GSK Production System (GPS). The GPS is a
standard ways of working to identify and eliminate the root cause of Accidents,
Defects and Waste. This standard ways of working will further improve GMS
Chittagongs processes and performance in a well-structured sustained manner.

With all these and other initiatives, GSK Bangladesh plans to increase its market
share and business span further.

GSK Bangladeshs Internal Control Framework:

Opportunity
Opportunity Threat
Possible partnerships &
Possible
mergers partnerships
with the & Price War of
mergers with company
pharmaceutical the competitor.
pharmaceutical
would increase its company A new competitor
would increase its
capability have superior access
Strength
3.0 SWOT Analysis of GlaxoSmithKline Bangladesh
capability Weakness to channel of
Invention of new drugs,
Invention
especially of new drugs, distribution
GSK is one ofof
thecancer
largestand
HIVespecially of cancer and High price.Increased
Because they focus
cost of on
pharmaceutical companies
HIV research
value rather Due to
than price
New diseases will create
New
Strong diseases
financial
opportunities forwill
position.
GSK create
Asto
they inflation.
opportunities
bring
maintain new drug for GSK to
profitability. Ineffective online presence.
bring new drug
Sometimes they dont update their
Strong R&D focuses for creativity SWOT
and innovation information
Analysis
Winner of chemical industry Low level of flexibility due to the
4.0 PESTEL Analysis of GlaxoSmithKline Bangladesh

Political Economical
Growing political focus and Economic growth and
pressure on health care increase in individual
Possible changes in disposable income
international trade Increase in average growth
regulation and competitive rate of Bangladesh
regulation Pharmaceutical Market from
8% to 11% in 2014

Social Technological
Changes in customer life Breakthroughs in
style pharmaceutical industry
Shift in consumer attitude with advanced technology
Issues associated with licensing
and opinion and patenting drug
Consumers are becoming manufacturing technology
more health conscious

Ecological Legal
Climate changed and global Rules and regulations
warming directly and indirectly
Impact to the environment related to GSK operation
of GSK activities such as employment law
Reaction of stakeholders to
this impact

Supplier Power
- Few suppliersSupplier Power
available for supplying the
5.0 Michael Porters- Five
Few suppliers
ingredientsForces available for supplying the
ingredients
- No suitable substitutes of inputs
- No suitable substitutes
- High switching of inputs
costs to change suppliers
- Difficult to stick with one suppliersuppliers
- High switching costs to change due to emerging
- Difficult
technology to stick with one supplier due to emerging
technology needed for different suppliers
- Supervision
- Supervision needed for different suppliers
Threat of New Threats of
Threat of New
Entrants
Threats of
Substitute
Entrants Substitute
High barriers to entry due to Easy for the customers to
High
huge barriers
capital to entry due to
investments Easy for the customers to
huge capital investments shift to other options as
Strict Government Policies shift to other options as
forStrict
safetyGovernment
purposes Policies switching cost is low
for safety purposes switching cost is low
Require economies of scale Demand for generic against
Require economies
& established of scale
brand identity Demand for generic against
brand name drug has
& established brand identity brand name drug has
increased because of the cost
increased because of the cost
RIVALRY

Buyer Power Degree of Rivalry


Industry growth
Consumers have no choice but have to
Competitors offer similar and also new
buy what doctor says.
ideas & products.
Buyers are scattered and they as such do
High sunk cost and exit barriers cause high
not use much power in the price of
degree of rivalry
product
6.0 Core Marketing Concept, Market Segmentation, and Marketing
Strategy

6.1 Core Marketing Concept

Needs, Wants & Demands: GSK is a science-led global healthcare company with
a mission to help people to do more, feel better, and live longer. They provide
vaccines, medicines and consumer healthcare products, which are always in need.
People want these products when they face health issues. Thats why every day their
scientists search for new ways to improve treatment of diseases and illnesses, and
they pioneer in providing new solutions to make their products available to those
who need them, wherever in the world they live and whatever their ability to pay is.

6.2 Market Segmentation

Marketing segmentation is to divide the customer base into cluster groups with
different needs and behaviors in order to create different and appropriate marketing
proposition. GlaxoSmithKline has segments in major bases: demographic,
psychographic, and geographic.

Demographic:

Income- Income is an important factor in terms of niche market products like Acen
Aid Bar, Oilatum and Spectraban. As GSK has targeted the Upper Middle and Upper
Class people, the market can be divided based on the income levels of people.

Psychographic:

Social Class- People of different classes have different needs. Usually upper and
upper middle class people are more concerned about their skin and health related
issues. And GSKs products require both health consciousness and ability.
Geographic: GlaxoSmithKline currently operates in 115 different countries.
So geographically they are spread out the whole world and they are the 1 st
pharmaceutical company to sign up to all trial campaigns for research
transparency.

6.3 Marketing Strategy

GlaxoSmithKline purely follows the marketing concept. The marketing concept


holds that the key to achieving organizational goals consists of the company being
more effective than competitors in creating, delivering, and communicating superior
customer value to its chosen target markets. Sales and marketing is a big part of their
Vaccines, Pharmaceuticals and Consumer Healthcare businesses. Essentially, its role
is to commercialize the products.

Some significant strategies are:

The Strategic Marketing and Market Development Programme help to


develop deep customer insights, articulate winning value propositions
and robust business strategies.

GSK focus on individual, do what is right for patients and consumers


and committed to the highest standards of ethical medical practice and
governance in their work.

Recent acquisition of Novartis will create a new world-leading


Consumer Healthcare business bringing together complementary
portfolios with first or second positions in core categories such as Oral
Care, Wellness and Skin Health.

Their innovative strategy of RX to OTC switch makes their consumers


lives easier by making prescription medications (Rx) more easily
available to consumers through switching them to over-the-counter
(OTC) products.

7.0 Marketing Mix (7P) + 4C


Product:
1- Pharmaceutical People:
Prescription Medicines
Target Corporate Executive
Vaccine Medicines
Team surrounded by
Non- Prescription Market
talented, trained and
medicines
experienced staffs
around the globe.-
2- Consumer
Excellent Leadership;
Health & Food drink
Qualified Scientists.
category Horlicks,
Boost, Maltova, Viva
Oral healthcare-
Sensodyne Marketing
Mix
Process:
Automated;
Information
Technology,
Price: Research &
Development
Competitive Sectors, Scientific
Pricing Programs, Biotech,
Nanotechnology
In Least Developed
Countries, GSK
capped price on Place:
patent-protected
GSKs brands are Physical evidence:
medicines. In
available in more
middle-income GSK ensure high
Promotion: than 115 countries.
countries, a flexible quality products, by
They are available in
pricing approach TV commercials, giving effective
all pharmacies and
had to be adopted. Billboards, healthcare solutions.
supermarkets
Internet, Their top priority is
located in different
Newspapers, In- safety of the
regions of
store displays, CSR consumers, thats why
Bangladesh.
Activities. they provide highest
standards of medical
governance.

4C
Clients:
Costs:
Prescribed
Invest more on CSR
Medicines: Different
Activities and Research
Aged People
and Development
Healthcare Sectors.
Products: Mainly
Young People

Target
Market

Communications:
Convenience:
Direct or indirect
GSKs brands are interactions with
available in more than customers; World Wide
115 countries of the Contact Information;
world, and they provide communicating through
World Wide Contact CSR activities or
Information for their through internet
customers.

8.0 Value Chain Model


Primary Activities:

Inbound Operation Outbound Marketing & Services


Logistics Logistics sales

Material Machining Storing Advertising Installation


handling

Warehousing Packing Distribution Sales Commissioning


promotion

Inventory Assembly Delivery Quoting Training


control finishing goods

Vehicle Maintenance - Channel Support


selection

Returns to - - Pricing Repairs


suppliers

Support Activities:
Procurement Technology Human Firm
Development Resource Infrastructure
Management
Raw materials Administration Recruiting General
(MIS) management
Temp sales Transportation Training Planning finance
people for
marketing &
sales
Lab equipment In the product or Compensation Legal
for R&D process

9.0 Total Quality Management, Loyalty, and Quality and Control

Total Quality Management:

Total Quality Management is an enhancement to the traditional way of doing


business. It is the art of managing the whole to achieve excellence. It is defined as
both a philosophy and a set of guiding principles that represent the foundation of a
continuously improving organization. It is the application of quantitative methods
and human resources to improve all the processes within an organization and exceed
customer needs now and in the future. It integrates fundamental management
techniques, existing improvement efforts, and technical tools under a disciplined
approach.

GSK is working on the quality improvement strategy. It provides frameworks that


ensure quality, regulatory compliance, and product safety. It mainly focuses on
reducing the failure costs by problem solving methods. The whole system is centrally
managed which is published on GSK internet and implemented at sites through local
standard operating procedures of systems. This organization is basically concerned
in two departments: one is manufacturing and another one is commercial
department. Manufacturing department helps in identifying technical descriptors i.e.
materials and process required for making a product. The commercial department
helps in identifying customer requirements and also measures the level of GSKs
customers satisfaction. GSK has developed a system for handling customer
complaints called COMPLAINT HANDLER.

Quality & Control:

Quality is the totality of features and characteristics of a product or service that bear
on its ability to satisfy stated or implied needs. GSK stands on Improving Health
and Quality of Life To Do More, Feel Better, Live Longer. So, they
established a commercial department which identify customer expectations and their
satisfaction and constantly monitor them. To increase their quality, GSK also reviews
their products annually. For this task, they have software called LAB
INFORMATION MANAGEMENT PERFORMANCE SYSTEM (LIMPS). This
software saves past data, so they can easily compare where they were last year and
where they stand today. This also helps GSK to know whether their product is robust
or not.

Customer Loyalty:

Competitive advantage can be achieved through customer loyalty. This is the way to
gain the best kind of customers and repeat customers. GSKs corporate mission is to
improve the quality of human life. Through consumer education and
sponsoring events, the company gets the opportunity to communicate its message
directly to consumers. It is all about creating a range of value-adding services around
services around the product that drive customer loyalty.

GlaxoSmithKline has just completed a pitch process and selected a vendor to develop
an app for the pain-relieving product Panodil Junior. This company is well placed to
develop an app for concerned parents with ill children because they are targeted to
children.

10.0 Brand and Branding

Branding is a major issue in product strategy. On the one hand, developing a


branded product requires a huge long-term investment, especially for advertising,
promotion, and packaging, but when it comes to Pharmaceutical Industry, then
branding comes with a different form. GlaxoSmithKline, one of the major players of
pharmaceutical industry, has done their branding in different innovative ways. Like-
they have two main types of product segments, one is Pharmaceuticals where they
simply make their products and packaging in an innovative way. They also promote
their brands through different advertisements.

For instance, they made different ads for Sensodyne and presented it as a doctor
prescribed toothpaste, which easily attracted consumers attention. Another product
segment is their Consumer Healthcare products, where they used different brand
ambassadors to promote their products, e.g. Sachin Tendulkar as the brand
ambassador of their major health food drinks like Boost and Horlicks. Some pictures
of different types of branding of GlaxoSmithKlines products are given below.

11.0 Box Analysis of Brand Elements

Bonding
Memorable Meaningful

Advantage
Likable Transferable

Adaptable Protectable

Performance

12.0 Brand Dynamic Pyramid


Relevance
Strong Relationship

Presence
GSK

Measurement
The results can
be measured by
comparing
growth of sales
and market
share. In 2014,
GSKs
pharmaceutical
business grew by
12% which is
higher than the
11% market
growth reported
Weak
by IMSrelationship
and its
consumer
Message healthcare
business grew by
13.0 Five Ms of Advertising People are at the heart 7%, maintaining
of all what GSK does. a dominant
GSK wants to help market share of
them do more, feel 88%
The Five Ms of Advertising of GlaxoSmithKline Bangladesh Limited in thethe
include health
better, and live longer food drink
following: through providing category. The
quality products company can
because healthy people strive to increase
make healthy its sales and
communities, and market share
further,
healthy communities
especially in the
are at the heart of
pharmaceutical
strong society. business.
Money
Mission The
advertisement
To create brand
and sales
awareness and
promotion
knowledge of new
expenses were Tk
and existing
850,250,000 in
products,
2014, Tk
stimulate repeat Media
1,059,208,000 in
purchase, and
2013, and Tk Like other
convince doctors
835,491,000 in pharmaceutical
and purchasers
2012. It can companies, GSK
that they made the
further increase puts fewer
right choice, thus
its budget advertisements of
increasing sales
allocation for pharmaceutical
and market share,
advertisement products in major
especially in
and sales media vehicles like
pharmaceutical
promotion. TV, radio, Internet,
products
newspaper,
billboard, etc.
compared to its
consumer healthcare
products like
Horlicks. GSK can
try to increase its
advertisements for
pharmaceutical
products in such
14.0 Mass Communication major media
vehicles.
Mass Communication Budget and Expenditure of GlaxoSmithKline includes
advertising budget and campaign cost, sales promotion and budget, events and
experiences/sponsors, public relation/government lobbying, and corporate social
responsibility. Three years budgets from 2012 to 2014 have been shown in the table
below. In 2014, advertisement and sales promotion has the highest 92% allocation
amounting to Tk 850,250,000, conference and seminar 3%, physician samples 3%,
communications 1%, Health Care Organization (HCO) support expense 1%, Health
Care Professionals (HCP) expense 0% and professional books 0%. These
expenditures are usually made more on consumer healthcare products than on
pharmaceutical products. (GSK, 2014)

Mass Communication Budget & Expenditure


Taka in '000
2014 2013 2012
Advertisement 850,250 1,059,208 835,491
and Sales
Promotion
Health Care 5,628 6,292 -
Organization
(HCO) Support
Expense
Health Care 1,328 64 -
Professionals
(HCP) Expense
Physician 28,154 21,211 22,923
Samples
Professional 1,821 1,723 1,517
Books
Communications 7,172 3,976 4,217
Conference and 30,099 19,195 11,396
Seminar
The pie chart shows percentage of GSKs major allocations in mass communication
sector for the year 2014.
14.1 Advertising Budget & Campaign Cost

The table and pie chart below show the typical estimated highest amount of 48%
allocation for TV, followed by outdoor (20%), newspaper (19%), magazines (10%),
radio (2%), and internet (1%). These allocations for media are usually used more for
consumer healthcare products than for pharmaceutical products. At present, among
pharmaceutical products, only vaccines like Cervarix are advertised using celebrity
endorsements like Monalisa and Kaniz Almas to create social awareness
(GSK,personal communication, April 22, 2013).
Percentage of allocations for various types of media
Types of Media % of allocation
TV 48
Newspaper 19
Magazines 10
Radio 2
Outdoor 20
Internet 1

14.2 Sales Promotion and Budget

The allocation of budget for advertisement and sales promotion was Tk 850,250,000
in 2014, Tk 1,059,208,000 in 2013, and Tk 835,491,000 in 2012.

Promotional Activities of GlaxoSmithKline:


Like other pharmaceutical companies, sales promotion system is critical for
GlaxoSmithKlines pharmaceutical business. GSKs promotional activities include
promotional activities for doctors; promotional activities for chemists; and
promotional activities for ultimate consumers.
Promotional Activities for Doctors:
Promo materials like wet tissue, pen, folder, hand wash/soap/sanitizer, nail brush,
paper towel, pen drive, note book, etc. and medical equipment like medical journal,
stethoscope protector, BP machine, needle destroyer, tongue depressor, anatomical
chart, patient dairy, disposable mask/gown/gloves, magnifying glass, thermometer,
etc. along with names of medicines are provided to doctors free of cost.

Promotional activities for Chemists:

Like other companies, GSK gives 16% permanent discount to chemists for all its
medicines. For instance, if GSKs one medicine price is Tk 100, chemists can sell it
for Tk 133 including government VAT of Tk 17.

Promotional Activities for Ultimate Consumers:

GSKs promotional activities for ultimate consumers include personal selling with
samples, coupons and free trials, especially for vaccines in rural areas. Direct
marketing channels like setting up temporary kiosks are also used. (GSK,personal
communication, April 22, 2013).

14.3 Events & Experiences/Sponsors

GSK sponsored Satellite Symposia Post menopausal Osteoporosis & Role of


Denosumb. The symposia were attended by eminent orthopedics of the
country and the scientific information shared by GSK was highly appreciated.

The Derma team of GSK Bangladesh arranged a unique scientific session with
leading Dermatologists of the country to discuss the clinical research on Acne
Vulgaris titled Bench to Bedside: Clinical Research in Acne Vulgaris in
January 2014.

To facilitate and update scientific information titled Updates on Management


of Dry & Sensitive skin, a speaker tour was held in Dhaka and Chittagong for
Dermatologists.
GSK participated in the 4th Divisional Conference of Obstetric &
Gynaecological Society of Bangladesh (OGSB), Khulna Branch by arranging a
scientific seminar on Role of vaccination for cervical cancer prevention.

GSK participated at the Bangladesh Pediatric Associations Symposium 1st


SAPA & 18th BPA Conference in April 2014.

Immunization week was celebrated in April 2014 by focusing on success


stories of vaccination (GSK, 2014)

14.4 Public Relation/Government Lobbying

Public relations (PR) of GSK involve a variety of programs designed to promote or


protect the companys image to its individual products. Public relations functions
include press relations, product publicity, corporate communications, lobbying, and
counseling. Major tools used in marketing PR include publications such as
professional books, events, sponsorships, news, speeches delivered in conference and
seminars, and public service activities like immunization campaigns (GSK, 2014).

14.5 Corporate Social Responsibility

Since the last few years, GSK has taken up several initiatives to fulfill its corporate
social responsibilities for a better and healthier community in Bangladesh.
The key initiatives include reinvestment of 20% of profits for healthcare
infrastructure development in Bangladesh with a vision to reach out to the hard-to-
reach communities of the country with quality health care providers. This initiative
grew efficiently since 2011 and till date runs projects with CARE, Friendship &
ICDDR, B as partners.

GSK-CARE Community Health Worker Initiatives are intended to address health


work force issues at remote areas for improving access to essential Maternal
Neonatal and Child Health (MNCH) services in Sunamganj Haor areas through
expanding the availability of skilled health service providers at the community level.
GSK-FRIENDSHIP m-Health project aims at equipping and upgrading to build a
sustainable healthcare system in the inaccessible char areas of Gaibandha District,
where access to any basic healthcare is almost non existent.

GSK-ICDDR,B Health System Strengthening Program addresses the issue of lack of


knowledge and/or implementation of clinical governance in the hospitals regarding
infection control which is one of the major reasons of morbidity and to some extent
mortality in the healthcare facilities in our country.

GSKs continuous support for running free primary school at Mirpur, Dhaka for slum
children has enabled it to provide more than 500 students free education from pre-
school to Class 5.

As one of the Founding Trustees of The Duke of Edinburghs Awards (DEA), GSK
provides the new generation with life skills and opportunity to do different
extracurricular activities.

GSK supports Teach for Bangladesh (TFB) which enlists the most promising young
Bangladeshi graduates to initiate a national movement for educational equity with
excellence, beginning by teaching for two years in an under-resourced school (GSK,
2014).

15.0 Marketing Budget & Expenditure

The table and the bar chart below show the marketing budget and expenditure for
the years 2012 to 2014. Total marketing expenditures were Tk 1,325,952,000 in
2014, Tk 1,341,499,000 in 2013, and Tk 1,087,265,000 in 2012. The expenditure
increased from the year 2012 to 2013, and decreased slightly from the year 2013 to
2014.

Marketing Budget & Expenditure


Taka in '000
2014 2013 2012
Selling Expenses:
Salaries, wages and welfare 338,753 220,745 177,629
Contributions to retirement benefit 17,242 15,234 26,192
scheme
Advertisement and sales promotion 850,250 1,059,208 835,491
Health Care Organization (HCO)
support expense 5,628 6,292 0
Health Care Professionals (HCP)
expense 1,328 64 0
Travelling & training 69,200 49,435 46,764
Physician samples 28,154 21,211 22,923
Professional books 1,821 1,723 1,517
Communications 7,172 3,976 4,217
Conference and seminar 30,099 19,195 11,396
Motor running expenses 16,432 7,270 8,204
Depreciation 32,626 24,035 24,376
Office expenses 9,047 8,520 9,101
Insurance 2,317 2,269 2,195
Computer expenses 8,129 7,020 0
Repairs and maintenance 0 0 2,975
Other expenses 1,625 5,799 6,096
Promotional allowance -114,329 -123,915 -113,176
Total Selling Expenses: 1,305,494 1,328,081 1,065,900

Distribution Expenses
Salaries, wages and welfare 6,115 5,345 4,763
Contributions to retirement benefit
scheme 634 522 572
Handling, freight and transport 114 179 165
Repairs and maintenance 2,223 483 31
Motor running expenses 339 307 187
Depreciation 1,907 1,348 1,214
Stock keeping charges 6,601 4,810 13,873
Communications 57 42 37
Insurance 28 34 31
Office expenses 2,115 214 317
Other expenses 325 134 175
Total Distribution Expenses 20,458 13,418 21,365

Total Marketing Expenses 1,325,952 1,341,499 1,087,265


16.0 Pricing Strategy

Steps in Setting Price

Select the price objective

Determine demand

Estimate costs

Analyze competitor price mix

Select pricing method

Select final price

Step 1: Selecting the Pricing Objective

GSK first decides where it wants to position its market offering. It becomes easier for
the firm to set price when its objectives are clear. The company pursues product-
quality leadership pricing objective aiming to be the product quality leader in the
market. Many of its brands strive to be affordable luxuriesproducts characterised
by high levels of perceived quality, taste, and status with a price just high enough not
to be out of consumers reach (Kotler, Keller, Koshy, Jha, 2014).

Step 2: Determining Demand

Price Sensitivity

GSKs demand curve shows the markets probable purchase quantity at alternative
prices. The first step in estimating demand is to understand what affects price
sensitivity.

Estimating Demand Curves


GSK attempts to measure their demand curves using statistical analysis of past
prices, quantities sold, and other factors that reveal their relationships. In measuring
the price-demand relationship, the company strives to control various factors
influencing demand. However, the competitors response will make a difference.

Price Elasticity of Demand

GSK attempts to know how responsive or elastic demand would be to a change in


price. The demand of GSKs pharmaceutical products is inelastic because demand
hardly changes with a small change in price. Dermatology and respiratory
businesses, for instance, have been GSKs strengths, contributing enormously to the
total business. These medicines are frequently prescribed as more effective remedy
for such kinds of diseases; and consumers generally buy medicines if prescribed by
doctors. So, buyers do not readily notice a higher price, thinking the higher prices
are justified.

Demand is slightly elastic for its consumer healthcare products because price
changes can affect the demand since there are substitutes or competitors in the
market and buyers readily notice a higher price (Kotler, Keller, Koshy, Jha, 2014).

Step3: Estimating Costs

While estimating cost, GSK considers the average cost which is the cost per unit at
any level of production and variable cost that must be covered. Total costs are also
considered to determine profits. Costs generally change with production scale and
experience. However, though GSK has declining average cost with accumulated
production experience called experience curve or learning curve; it does not use
experience-curve pricing/aggressive pricing that gives products cheap images.
Moreover, its competitors are not weak followers. GSK seems to use target costing
where costs change as a result of a concentrated effort to reduce them for bringing
the final cost projections into the target cost range (Kotler, Keller, Koshy, Jha, 2014).

Step4: Analyzing Competitors Costs, Prices, and Offers


GSK determines its range of possible prices by considering market demand and the
companys costs. The company also has to take into account its competitors costs,
prices, and possible price reactions. It must first consider the nearest competitors
price (Kotler, Keller, Koshy, Jha, 2014).

Step 5: Selecting a Pricing Method

Considering the customers demand schedule, the cost function, and competitors
prices, GSK selects a possible price with costs setting the floor to the price,
competitors prices and the price of substitutes providing an orienting point, and
customers assessment of unique features establishing the price ceiling. GSK uses
perceived-value pricing where it bases its price based on the customers perceived
value. Perceived value consists of inputs such as the buyers image of the product
performance, the channel deliverables, the warranty quality, customer support, and
softer attributes such as the suppliers reputation, trustworthiness, and esteem.
Companies like GSK must deliver the value promised by their value proposition, and
the customer must perceive this value. The firms can use the other marketing
program elements such as advertising, sales force, and the Internet, to communicate
and enhance perceived value in buyers minds. Ensuring that customers appreciate
the total value of a product or service offering is crucial. The company can try to
determine the value of its offering in several ways: managerial judgements within the
company, value of similar products, focus groups, surveys, experimentation, analysis
of historical data, and conjoint analysis (Kotler, Keller, Koshy, Jha, 2014).

Step 6: Selecting the Final Price

In selecting the final price, GSK considers the following factors:

Impact of other marketing activities: The final price must take into account
the brands quality and advertising relative to the competition. Farris and
Reibsteins findings suggest that price is not as important as quality and other
benefits in the market offering.

Company pricing policies: The price must be consistent with company pricing
policies. Many companies like GSK can set up a pricing department to develop
policies and establish or approve pricing decisions, aiming to ensure that
salespeople quote prices that are reasonable to customers and profitable to the
company.

Gain-and-risk sharing pricing: Buyers may resist accepting a sellers proposal


because of a high-perceived level of risk. The seller has the option of offering
to absorb part or all of the risk if he/she does not deliver the full promised
value.

Impact of price on other parties: Management must also consider the


reactions of other parties to the contemplated price (Kotler, Keller, Koshy,
Jha, 2014).

17.0 Break-even Analysis

Break-even analysis of GSK is done to determine the point at which revenue received
equals the costs associated with receiving the revenue. For a simple break-even
analysis of GSK, the formula is given below:

Break-even Sales = Fixed Costs / (1 Variable Cost % of Sales)

2014 2013 2012 Total


Tk. in Tk. in Tk. in Tk. in
000 000 000 000
Fixed Cost 18,84,192 17,11,918 13,44,945 49,41,055
Variable Cost 44,76,255 45,16,705 39,64,900 1,29,57,860
Sales 71,87,225 67,74,872 55,53,812 1,95,15,909
Break-even Sales = 49, 41,055/1-(1, 29, 57,860/1, 95, 15,909)

= 1, 47, 03,943 Tk. in 000


1, 29, 57,860
1, 47, 03,943 Tk. in 000
Tk. in 000

49, 41, 055

Tk. in 000

18.0 Recommendation

GlaxoSmithKline Bangladesh should continue to invest on Research &


Development in order to come up with new and innovative products.
It should close any plant that is not used by the company for its operations
because it increases the companys overhead costs.
GSK should also keep a check on its activities more closely to outset those
activities that are only increasing costs of the company.
In order to gain market share, the company can try to reduce the selling price
of its products slightly as this would allow more consumers to buy its products
and encourage the retailers to have its products on their shelves.
Stronger alliances should be created with greater numbers of physicians and
chemists through sending more medical representatives, holding conferences
and seminars, giving physician samples, maintaining communications,
providing Health Care Organization (HCO) support and Health Care
Professionals (HCP) expenses, and publishing professional books.

19.0 Conclusion
GlaxoSmithKline (GSK) is one of the worlds largest research-based pharmaceutical
companies that invents, develops, manufactures and markets health related
products. It is an innovative company that produces and markets branded products
only.

Pharmaceutical business exceeded its annual value and volume budgets enabling
access of close to 30 million packs of GSKs products to patients across the nation.
Growth was driven almost equally by all zones indicating robustness of processes and
good field engagement. To be successful, the company has taken many steps such as
going for mergers and acquisitions and cutting its excess and redundant costs.

As a socially responsible multinational healthcare company, GSK is securing wellness


and providing quality products to its customers. Their primary focus is to touch the
lives of millions of people every day. So, they are committed to creating a strong
ethical culture, where people are their main target. As a result, they develop a legacy
and deliver breakthrough products of value that enable the customers to do more,
feel better, and live longer.

20.0 References

Kotler, P., Keller, K. L., Koshy, A. and Jha, M. (2014), Marketing Management A
South Asian Perspective, 14th edn, Pearson Prentice Hall.
GlaxoSmithKline Bangladesh Limited. (2012).Annual Report 2014. GlaxoSmithKline
Bangladesh
GlaxoSmithKline Bangladesh Limited. (2013).Annual Report 2013. GlaxoSmithKline
Bangladesh
GlaxoSmithKline Bangladesh Limited. (2014).Annual Report 2014. GlaxoSmithKline
Bangladesh
Brocka, B., &Brocka, M.S.(1992). Quality Management: Implementing the Best
Ideas of the Masters, Richard D. Irwin, Homewood, IL.
Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take
account of political processes. Total Quality Management, 4(1), 47-55.
Khan M.A, (2009), Total Quality Management perspective of cellular mobile
telephone operators in Pakistan, National University of Modern Languages,
Islamabad.
Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take
account of political processes. Total Quality Management, 4(1), 47-55.
Website of gsk. http://www.gsk.com/

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