In this report, I will be discussing about a pharmaceutical manufacturer called ‘Advancis Medical’, its products, marketing strategy and market planning needed for the company to enter a new market abroad.
Founded in 1979 and based in Nottingham UK, Advancis Medical is a pharmaceutical manufacturer which offers a wide range of wound care products that have good clinical efficacy and are easy to use and have superior performance. Holding around 125 employees, the values and mission of Advancis Medical is to design and manufacture dressings in order to manage the wound environment and achieve optimum wound healing by: –
Minimizing bacterial burden
Creating a moist wound environment
Leaving the wound as undisturbed as possible
Achieving and acceptable cosmetic result for the healed wound
(advancis.co.uk, online resource)
Product and market character
Advancis Medical offers a wide range of dressing products which can be categorized as follows: –
Activon medical Manuka honey dressings
Activon Tube, Activon Tulle, Algivon, Actilite, Actibalm.
Silfix soft silicone dressings
Episil, Episil Absorbent, Silflex, Advazorb Border, Siltape, Advasil conform, Eclypse Adherent, Eclypse Adherent Sacral.
Advanced wound care dressing
Eclypse, Eclypse Boot, Advadraw, Advadraw Spiral, Advazorb Plus, Adva-co, Advasoft, Kikuhime.
Advancis Medical has been able to make its product famous in the market. Recently this year, the company has walked away with the innovation award in Medlink East Midlands Innovation Competition. According to the sales and marketing director of Advancis Medical, the new products have had a fantastic reception in the market.
Advancis Medical distributes its product in various countries. They are Greece, Sweden, Norway, Denmark, Republic of Ireland, Slovakia, Saudi Arabia, Iran, Jordan, United Arab Emirates, Kuwait, Qatar, Bahrain, Oman and 22 other countries as well. Advancis Medical strives for continuous improvement in the performance. The firm is committed to do something best, most complete, and most efficient and most timely way possible. Then it will try to think of ways to do it better the next time. The company measures its performance carefully, ensuring that integrity and respect for people are never compromised. It wishes to attract the highest-calibre employees, providing them with opportunities to develop to their full potential and to share in the success that comes from winning in the marketplace (advancis.co.uk).
2. International marketing planning
International marketing is set of activity where the marketing of goods and services are carried out across national border. Having look from the UK’s point of view, export activity seems to be the significant factor in international marketing activity. An international marketing planning comes from the firm’s corporate strategy and includes matters like product positioning, branding strategies, choice of target countries and methods needed to enter the new target market and so on (Lancaster G., et al., 2002).
2.1 Internal and External Analysis
It is necessary to analyze the environment around the company to expand internationally. Here, I will be discussing about BCG analysis as an internal analysis. BCG (Boston Consulting Group) analysis is used to analyze their products and business line. The BCG analysis helps the company in allocating resources and acts as an analytical tool in brand marketing, product and strategic management.
Source: (Bensoussan B.E., Fleisher C.S., 2008)
Having look at the above chart, Stars are high growth businesses or products in markets where they are strong compared with the competition. In Advancis Medical, Activon Honey product acts like a star. They have high market share as well as high growth rate. Cash cows are low-growth businesses or products which has a relatively high market share. These units are mature and successful businesses with relatively little need for investment. Products like Eclypse, Eclypse Boot of Advancis Medical are cash cows. They need to monitored and need little investment. Question marks are units or products with low market share but which operate in higher growth markets. This means that they have potential, but may require substantial investment in order to grow market share among the competing and powerful competitors. As far as I am concerned, Advancis Medical has no specific products to match this unit. Dogs refer to products or business that have low relative share in low growth markets. Silfix soft silicone dressings of Advancis Medical are the products that act as dogs.
Performing an external analysis, PEST (Political, Economic, Social and Technological) factors will be taken into account for Advancis Medical.
Political: – The industry has witnessed increased political attention due to the increased recognition of the economic importance of healthcare as a component of social welfare over the years. Political interest has also been generated because of the increasing social and financial burden of healthcare. UK’s National Health Service debate is an example.
Economic: – In the decade to 2003, the pharmaceutical industry witnessed high value mergers and acquisitions. With a projected stock value growth rate of 10.5% (2003-2010) and Health Care growth rate of 12.5% (2003-2010), the audited value of the global pharmaceutical market is estimated to reach a huge 500 billion dollars by 2004. Majority of pharmaceutical sales originate in the US, EU and Japanese markets.
Social: – Good health is an important personal and social requirement and the unique role pharmaceutical firms like Advancis Medical play in meeting society’s need. In recent times, the impact of various global epidemics e.g. SARS, AIDS etc has also attracted popular and media attention to the industry. The effect of the intense media and political attention has resulted in increasing industry efforts to create and maintain proper government-industry-society communications.
Technological: – Latest scientific and technological advances in science are forcing industry players to adapt ever faster to the evolving environments in which they participate. Scientific advancements have also increased the need for increased spending on research and development in order to encourage innovation (Johnson G, Scholes K, 2002)
2.2 SWOT Analysis of Advancis Medical
Advancis Medical listens to the issues and problems raised by clinicians and its customers and response accordingly by developing the correct and suitable products.
Good marketing strength in major geographical areas.
Recently, the company won an innovation award which reflects its strength in sales and marketing sector.
Discontinuation of products in the latter stages of development leading to customer dissatisfaction.
Pricing strategy which turns out to be comparatively expensive.
Emergence of integrated global markets and globalization for new products
Increasing demand of anti-bacterial honey products like Activon medical manuka honey.
Individual brand positioning that makes their product different in the market.
Increased competition in markets and cheaper alternative methods found in the markets can be a possible threat to Advancis Medical.
Rising raw material and transportation costs which might increase the production cost of the company.
(Petryna A., et.al., 2006)
2.3 Marketing goals and objectives
Besides increasing sales and profit as a marketing goal, Advancis Medical has other marketing objectives. The company highly focuses on these following marketing objectives: –
Gaining preference on brands and services
Customer retention by giving quick response to their queries and requests.
Complying with the rules and regulations set by government.
Some major reasons for Advancis Medical to look up for the market internationally are listed as follows: –
The company needs a larger customer base to gain economies of scale.
Advancis Medical wants to reduce its dependence on any single market.
Due to the high competition in the home market, it’s profitable for the company to go global and sell their products.
Because of the economic recession, some other foreign markets have higher profit opportunities than the domestic market.
2.4 Marketing Strategy
Here, Ansoff Matrix will be focused as a marketing strategy for Advancis Medical. Ansoff matrix is a tool which helps the business to decide their product and market growth strategies.
Market Penetration is a growth strategy where the business focuses on selling existing product in existing markets. IT helps in maintain or increasing the market share of current product. Product development is the strategy where a business aims to introduce new products into existing markets. Market development is growth strategy for a business where a company looks for a new market to sell its existing products. Here, Advancis Medical will be choosing this strategy, as the company is seeking to sell its product at an international market. Under this strategy, Advancis Medical can perform various activities to support the strategy by: –
Increasing the global market share by distributing its product to more geographical areas and centralized logistics.
Expanding and or distributing products to china and other emerging markets.
Improving international brand status and positioning through effective international marketing campaigns (Bennett R., Blythe J., 2002).
Diversification is a growth strategy where a business launches and markets new product in new market. This is comparatively risky because the business is moving into markets in which it has little or no experience (tutor2u.net, online resource)
2.5 Market analysis and Market choice
Advancis Medical as a pharmaceutical company can segment the market and plan its market analysis by categorizing its customer into walk in customer (who physically visit the distribution centre) and mail order customer (who order the product). Now once the market has been segmented, it is necessary to analyze which market to go. Basically market analysis involves matters like: –
Demographics such as age structure, religious groupings, average household size of that target market.
Macroeconomic influences like fluctuation in GDP, unemployment rate, etc.
Consumer behaviour on cultural attitudes, educational levels, average income and living standards.
Market choice is a main strategic decision. This report is based on selling the product abroad and not in European countries, thus I will be focusing on Asian countries/market. China, India, Pakistan and Philippines are the four countries that will be taken into account. Out of four countries, one will be chosen for Advancis Medical to sell and distribute their products.
Political and Economic
The above values are considered out of 10 points. And having looked at the table, India is the target country for Advancis Medical to sell and distribute its product because it has the best factors out of these four countries.
Source: – (china-window.com; online resource accessed at 9th November 2010), (buyusa.gov; online resource accessed at 9th November 2010)
(Ernst & Young Private Limited, 2008)
(Hahn N., 2008)
(Gorrill J.R., 2007)
3. Market Entry Strategy
Basically, market entry strategy is a planned method to deliver and or distribute the products in the target market.
As it has been discussed earlier about market entry strategy, there are various methods to penetrate and enter a new market. The market entry strategy methods available to Advancis Medical are as follows: –
The traditional, normal and easy way to enter a foreign market is exporting which includes indirect and direct exporting. In indirect exporting, the company works through independent intermediaries. Indirect exporting has two advantages. It involves less investment and less risk because the company doesn’t have to develop department for exporting, overseas sales force or any international contacts. Direct exporting includes exporting of products and its distribution through the channel of export agent. It is done in different ways: Domestic-based export division, overseas sales branch, travelling export sales division and foreign-based agents.
Licensing is another simple way to do international marketing and penetrate the market. It is the method of foreign operation where a firm in one country gives permission to company of another country to use the manufacturing, processing, trademark and other skills provided by the licensor. Joint ventures can be defined as an enterprise where foreign investors may join with local investors and share ownership and control over the rights, operation and property. The ultimate way of getting involved in foreign market is direct investment which involves direct ownership of foreign-based manufacturing facilities (Kotler P., Keller K.L., 2006)
As it has been discussed earlier on heading 2.5 of this report, India has been chosen as the target country. India is a natural subcontinent covered by the Himalayas in the north, the Arabian Sea in the west, the Bay of Bengal in the east and the Indian Ocean in the south. It has a land frontier of 15,200km and a coastline of 7,517km. India is the second most populous country in the world with 1,130 million people in July 2008 (estimated).The literacy rate is 65% with a great degree of regional variation. Hindi is the official language of the country and English is used almost everywhere in India acting as an associate official language in business sector. India has a parliamentary system of government with two legislative bodies; the central government and the state government. The country’s currency is Indian rupee (INR). The country’s banking system is controlled and monitored by the Reserve Bank of India. India’s economy is rapidly rising in the global economy. So, it is very fruitful for organizations to export, invest or do joint venture in India (Ernst & Young Private Limited, 2008).
Analysis of market entry strategy and making choice
Market entry methods
– Manufacturing is home based, so it’s less risky.
– Provides an opportunity to learn foreign market before investing.
– Less or lose control over the foreign sales
– Less possibility of knowing who the customers are and hence failure to offer what they really want.
– It is a good way to start in foreign business and a door to comparatively low risk relationship
-Any of the both companies get most out of the effort they do.
– Capital won’t be tied up in foreign operation
– The participation remains limited to specific product, process or length of agreement.
– The Licensor has less control over the licensee than it does over its own production and sales facilities.
– Potential returns from manufacturing and marketing might be lost.
-This strategy requires considerable planning, findings of fact, investigation and translation.
– Sharing of risk as it is partner with foreign company
– Joint financial strength
– Good strategy for firm’s that lack physical, financial or managerial resources to undertake the venture alone.
– The partners might not agree over policies, marketing and investments.
– It may be impossible to recover capital if needed.
– This kind of strategy might prevent MNCs from carrying out manufacturing and marketing policies globally.
– The firm can minimize its cost economies by cheap labour or raw materials, freight savings and incentives by foreign government.
– The company will have good image because it creates job opportunity in the host country.
– The firm can have full control over its investment and hence can develop marketing and manufacturing polices.
– The primary disadvantage of this strategy is the firm exposes itself to the risk like worsening markets and devalued currencies.
– Secondly, the firm might find it really expensive to reduce or close down its operations, because the host country needs substantial severance pay to the staffs.
(Kotler P., Keller K.L., 2006)
Every market entry strategy has certain pros and cons, and looking at the above table I personally would suggest Exporting strategy as a market entry method for Advancis Medical. Having considered exporting as a better strategy for the company, Advancis Medical can avoid much risk and maximize the profit. With this strategy, the company could get a better chance to know and analyze the market and if it looks favourable the firm can switch to other strategy accordingly.
It has been considered that Advancis Medical is going for exporting strategy, now it needs to look for a reliable distributor in India to sell and distribute its product. Advancis Medical needs to point out which product to distribute in India. The product named ‘Activon Tube’ from ‘Activon Medical Manuka Honey Dressing’ category is the best product that matches the needs of market. According to (Kotler P., Keller K.L., 2006), it has been argued that many manufacturing companies think that their job is done once the product leaves the factory. But they need to pay attention to how the product moves within the foreign market. They should be focused on the potential problem that might arise during the distribution of products to final users. The theory can be illustrated by the following diagram:
Source: (Kotler P., Keller K.L., 2006)
There is a potential distributor in India named AK Pharma Pharmaceutical Distributor. It is situated in a town called Karnataka and is a leading pharmaceutical distributor all over India. The company does more than 13000 products from 250 of Indian and Multinational companies and have a client base of over 1500 customers including hospitals, medical & dental colleges, chemist & druggist and doctors (akp.in; online resource).
The strategy adopted by the company will follow the 4Ps of marketing in following way: –
Product: – Medical product/medicine is a pharmaceutical product offered by all the pharmaceutical oil companies. It is difficult to offer customers a point of difference with medicine. However, Advancis medical does so by selling medicine as well as the bandages that is better and faster for wound healing.
Price: – With common products in pharmaceutical industry, prices between competitors are easily matched, which means it’s difficult to differentiate the product based on price. Advancis medical is constantly monitoring the price and if possible cut costs and make the price reasonable to compete in the market.
Place: – Advancis medical distributes its product in more than 30 countries. And is expanding globally which is a vital strength in the firm’s marketing strategy. Talking about Advancis medical in India, I believe it’s a perfect location for the company due to the country’s demographic factors which ensures the right number and qualities of products are supplied to various places.
Promotion: – This might include the company to do advertising, marketing through radios or carrying out loyalty programmes to drive sales volume and retain the customers (Bennett R., Blythe J., 2002).
Hence, having an overall analysis in the report, it can be seen that Advancis Medical needs to follow an exporting strategy to India and sell and distribute the product to that targeted market.
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