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The assignment thesis is about the current marketing strategy of GlaxoSmithKline Plc consumer healthcare products. This thesis explains the current marketing strategy of the company's consumer healthcare related products, including Over-the-counter (OTC) medicines, oral care and nutritional healthcare products. GSK is a company having robust business fundamentals. Moreover, GSK is well renowned for its R&D infrastructure. They also have very strong sales and marketing team which is their main strength and helps GSK in sales growth.
Main driving force of GSK is acquisitions, expansion of business in new global regions and exploring new emerging markets. Consequently, this assignment gives inside into the current marketing strategy of GSK and provides some suggestions to improve this marketing strategy further.
Marketing strategy of consumer health care products of GlaxoSmithKline PlcIntroduction
The given assignment thesis is on the topic "Marketing strategy of consumer health care products of GlaxoSmithKline Plc". This assignment explains all the strengths and weaknesses of the GSK's consumer healthcare products marketing strategy. However, in the end some suggestions are also given by which GSK can further improve its marketing strategy according to the consumer behaviour and market trends.Company Overview
GlaxoSmithKline Plc (GSK) is a global leader in healthcare and researched-based pharmaceutical companies. The company has always been committed to research and development. Moreover GSK always yearns for international expansion, which is one of its main driving force. GSK specialised in discovery, drug development, manufacturing and marketing of consumer healthcare-related, OTC (over the counter) medicines, nutritional healthcare, oral healthcare and pharmaceutical products. GSK has it's headquarter in Brentford, the UK. The company's products are being sold in 140 countries and GSK has its operations in 117 different countries. The UK, Germany, Spain, France, Italy and the US are major markets of GSK. The company is also targeting other emerging markets such as Japan and South Asian countries. As, per data obtained till December 2008 GSK employed more than 99,000 people.
This year according to the results announced for three months ended on 30th September 2009, GSK has shown total turnover of £m 6,758. Moreover, growth is 3 and 15 in terms of constant exchange rate (CER) % and £% respectively. Also, earnings per share for this time period are 26.3p. All these results include restructuring charges which are about £m 152. Investment and portfolio diversification in Consumer healthcare drives +8% returns to sales growth.
Furthermore for consumer healthcare products total comprehensive income for the period is £m 2,261, as compared to £m 953 in same three months of 2008. Consumer healthcare products generated sales of £m 3,971 in 2008. In this, OTC medicines, oral care and nutritional healthcare has share of £m 1,935, £m 1,240, £m 796, respectively. The company generated about 16.3% of their revenues from consumer healthcare business segment during the financial year (FY) ended in December 2008. GlaxoSmithKline's largest geographical market, according to revenues is the US. The US accounted for about 40% of total revenues. Europe comes second with 33.9% of the total revenues. Furthermore, 26.1% of total revenues are accounted by other parts of world, including Japan, Africa, Canada, Middle East, Latin America and Asia Pacific region.
History of GlaxoSmithKline Plc
GlaxoSmithKline Plc has its origins from two different companies Glaxo and SmithKline Beecham. Glaxo is formed in 1873 by Joseph Nathan. It was a common trading company. In 1924, it manufactured Ostelin, a Vitamin D preparation as its first pharmaceutical product. Glaxo acquired two companies in 1995 and 1998 and became Glaxo Wellcome.
John K. Smith started with a drug store in the year 1830 and created John K. Smith & Co. It then became Smith, Kline & Company in 1875. Meanwhile, in 1842 in England Thomas Beecham launched beecham's Pills Business. Consequently, both these companies grew by serious of acquisitions and finally merged together to form SmithKline Beecham in 1989. SmithKline Beecham first entered in healthcare solutions market in 1999. Moreover, with the acquisition of Sterling Health, in the year 1994, SmithKline Beecham became the third largest over-the-counter (OTC) medicine company in the world and also number one company in the international and European markets.
In the year 2000, Glaxo Wellcome and SmithKline Beecham merged together to form Glaxo SmithKline (GSK). They continued their growth in 2001 by acquisition of manufacturer of Sensodyne toothpaste and other oral healthcare and consumer products.
GSK signed several marketing and licensing agreements in 2005, such as a promotion agreement with pharmaceutical giant Roche in the US for the Xenical (orlistat), a prescription weight loss medication. The company also received marketing license for Wellbutrin XR (a bupropion hydrochloride modified-released tablet) in the Netherlands. In November, 2008 GSK acquired a large number of leading over-the-counter (OTC) medicines such as, Alvedon, sold in Sweden by entering into an agreement with their competitor AstraZeneca. The main purpose of entering into this agreement was to strengthen OTC analgesic business. GSK acquired Stiefel Laboratories for $3.6 billion, which is a privately held dermatology product company. However, for going under this acquisition GSK has to agree upon some terms, such as they have to combine Stiefel Laboratories' product with their dermatological products and the new global business would operate under the identity of Stiefel within the parent GSK group. In Europe in the same month, GSK launched their new OTC medicine, alli (orlistat 60 mg) a non-prescription product for weight loss.Current Marketing Strategy for Consumer Healthcare products
Sales and marketing has always been a strongest part of the company and hence it is renowned as a "very good marketing company". The company thinks beyond the principle "launch it and leave it". There marketing strength lies in these three philosophies. Firstly, GSK believe in producing and has produced in past some of the best examples for pharmaceutical marketing. Secondly, in a consumer oriented business environment one thing is constant, i.e. "change". There GSK is employing new marketing strategies, as per conditions and also monitoring them for getting maximum possible results. Therefore they have pretty adaptive culture which is flexible, non hierarchical, modifies itself as per new challenges in new markets and as per business requirements. Thirdly, GSK consumer healthcare is constantly looking for opportunities in terms of developing new products, using stakeholder's views about their operations and also tapping new emerging markets.
Its origin lay in New Zealand, where baby food was made and marketed by the original firm. The main strength of GSK's marketing is the teamwork, willpower and proper utilisation of all the available sources in the right direction.
The main goals and objectives of GlaxoSmithKline Plc's marketing strategy are to make GSK more successful the years to come and finally to able to meet patients' and healthcare providers' needs into the future. GSK is now focussing on consumer and healthcare market insight, digital marketing, strategy, brand and communications planning.
About 5 years back very little was organised in GSK consumer and healthcare marketing strategy and their marketing teams works according to the geographic and regions. Since then they have changed their focus from their geographies to establishing themselves around their global brands. Consequently, GSK consumer healthcare has shown aggressive growth in their business from 3% to 14% in the year ending on December, 2008. So, now they are working according to a new operating model where their global brands are in lead and continuously been developed and managed internationally.
In this new operating model the responsibility of these global brands are put on "Future Teams". These teams contain a balanced mix of market expertise and brands. In this model the research and development teams works in a more co-ordinated way with marketing teams unlike before. These Future Teams are operating on two main principles, firstly, innovation need to be more correlated with the marketing. If this happens, then all the country managers will become more comfortable with the new products and hence can promote them with much more ease in the new markets. Secondly, if a company is taking out a brand or product from a local market and launching in a new international environment then the product should be very tangible and very quick. This is because a strategy drawn on a paper will work according to our desire, if principles mentioned in it are applied actively on field and in real environment.
At present, GSK consumer healthcare has made their global brand teams much more accountable for total equity, together with overall communication. Moreover, they are becoming clearer about recognising and celebrating the respective roles of local and global marketing teams. This is done so as to obtain best possible results from both fronts. Marketing teams and management of GSK are now working closely to drive the real changes and also motivating the local marketing colleagues to achieve a more holistic marketing mix to drive growth.
To achieve marketing goals specialist teams are formed within GSK, such as, a group called "Marketing Strategy and Excellence group". This group mainly contains specialist resources for all the international brands. GSK is also emphasising on marketing ethics. In this sales teams are provided with full information about the potential side-effects of the consumer healthcare products, therefore patients and consumers using them will have all the relevant information about the product.
According to the latest reports published in November 2009, GSK is entering in price reduction deals in emerging markets such as Brazil and it is also undergoing marketing and promotional deal with Indian pharmaceutical company Dr. Reddy's for its marketing operations in India.
One of the most important strength of GSK is the tie-ups, primarily with their main competitors. In past GSK has shown this property of making tie-up with their different competitors in different global markets in marketing of both pharmaceutical and consumer healthcare products. Some of the competitors with which GSK had co-marketing/co-promotion deals are, AstraZeneca, Bayer, Yamanouchi, Roche and Dr. Reddy's.
Top Competitors of GSK consumer healthcare are:
- Mc Neil Consumer Healthcare
- The Procter & Gamble Company
- Abott Laboratories
- Merck &Co., Inc
- Pfizer-Wyeth group
- Johnson &Johnson
- AstraZeneca Plc
- Novartis AG
- Bristol-Myers Squibb Company
PEST AnalysisLegal Factors
- Medicines and healthcare products regulatory agency (MHRA) rules and regulations. Due to the strict rules and regulations, according to the company, the product are taking much more time before reaching the shelves and therefore affecting the profits of the company.
- Global recession is affecting consumers' behaviour and their buying pattern and hence influencing the purchasing power of consumers. In 2008, GSK has cut about 1000 jobs in US, this is primarily due to economic recession in the US.
- Downturn causes the loss of jobs. According to the latest reports in October 2009, the company is about to cut 2,200 sales position in the US, the UK and other European markets as they shifting focus towards the emerging markets.
- Ageing population, change in eating, drinking habits and living style of people mainly youngsters, hence rise in obesity, dental, skin, hair and many other problems.
- Mature products portfolio and increasing generic competition. Since previous products are increasingly going to be mature and new products are in pipeline, therefore GSK is finding it difficult to maintain its position as a leading research based pharmaceutical company.
- Robust marketing and sales infrastructure, especially in a profitable market like the US. Extensive network of suppliers, distributers,
- Outstanding research and development infrastructure. Establishment of seven Centers of Excellence in Drug Development (CEDD) which helps GSK in product development. Due to these CEDD, GSK is the largest entry in mid-stage research and development pipeline.
- Joint venture, early-stage drug discovery partnerships, licensing deals with world's leading pharmaceutical companies to increase drug development.
- Co-promotion/co- marketing agreements with different companies including core competitors in different regions around the world.
- Strong business fundamentals, marketing ethics, acquisitions and robust balance sheet. This robust balance sheet gives the indication that company has enough money for acquisitions, which is GSK's main driving force.
- Mature portfolio of consumer healthcare products and increasing exposure to the generic competition.
- The increasing lack of block buster drugs.
- Poor R&D productivity causing failure to deliver desired initial results.
- Seven CEDD are likely to deliver strong growth beyond 2013.
- Strong collaboration between management and marketing teams, also cooperation between R&D departments and marketing teams.
- New acquisitions.
- Emerging markets.
- Robust balance sheet
- Elimination of surplus cost in accordance with economic environment.
As the marketing manager for consumer healthcare products of GSK, I would like to give some suggestions to improve the current marketing strategy for this category of products.
- Separate R&D for consumer healthcare products. Consumer healthcare products are different from pharmaceutical products, therefore they require a different approach. Presently, GSK has a single R&D which performs the entire R&D and after discovering a chemical, it is decided whether it can be used for pharmaceutical products or chemical products.
- Change in marketing approach as customer healthcare products are different from pharmaceutical products. Separate Marketing operations for consumer healthcare products. The main target consumer for marketing of consumer healthcare products is general public and not doctors. Therefore, consumer healthcare products should be marketed by marketing executives and marketing teams who are specially trained for these products and who can explain every potential side effect of these products to the consumer.
- The company should be consumer oriented in their approach and not profit generation oriented. This can help them in generation of trust among their consumers. They can do that by organising promotional events in addition to media advertising. Overall, consumer satisfaction should be their first priority.
- Due to economic downturn in regions such as, the US, which is GSK's main profit generating region, there is a decrease in sales growth. Therefore, company should put proper emphasis on creating awareness about the products which are already present in market and which are about to launch within short span of time. So, curiosity among consumers can help them in increasing their sales and in turn make them achieve their sales targets.
- Finally, the company should collect the proper feedback from the consumers. So, that company can modify their marketing strategy accordingly.
In the conclusion, GlaxoSmithKline Plc is world's largest research and development based pharmaceutical company having a large number of consumer health care products. GSK's consumer health care products include Over-the-counter (OTC) medicines, oral care and nutritional healthcare products. The company also has a strong and active sales and marketing team. Moreover, the main driving force of the company's growth is acquisition and expansion to new emerging regions.
However, GSK should focus more on its consumer healthcare products. Furthermore, there should be more co-relation between their marketing-management teams and marketing- research and development teams.
- Annual Report available from: http://www.gsk.com/financial/reports/ar/report/descrip_of_bus/market_distrib/market_dis.html (Accessed December 1st 2009)
- Annual Report available from: http://www.gsk.com/financial/reports/ar/report/descrip_of_bus/intro/intro.html (Accessed December 1st 2009)
- GSK marketing ethics available from: http://www.gsk.com/responsibility/marketing-ethics.htm (Accessed December 1st 2009)
- Times Online available from: http://business.timesonline.co.uk/tol/business/industry_sectors/health/article5092943.ece (Accessed December 1st 2009)
- Global marketing effectiveness available from: http://globalmarketingeffectiveness.blogspot.com/2008/05/gsk-consumer-healthcare-putting-global.html (Accessed December 1st 2009)
- GSK consumer healthcare business review available from: http://www.gsk.com/investors/presentations/2009/JC-Consumer-Healthcare-Briefing_29May09.pdf (Accessed December 1st 2009)