M8 Flashcards
set of activities and decision ensuring right products to right customers in right time and price at right place in a right manner
Place Mix
moves drug products and related goods from the drug manufacturer to the final end user
Distribution channel
includes all the activities associated with the supply of finished products at every step, from the production line to the consumers
Physical distribution
include customer service, order processing, inventory control, transportation and logistics, and packaging and materials
Physical distribution
means distribution channels and physical distribution
Place
It is a very vital element of the total marketing mix that ensures the adequate availability and visibility of the right products.
Place
The last element of the marketing mix
Place mix
this is the process and methods used to bring the product or service to the consumer
Place Mix
Place mix is also known as
placement or distribution
process of moving products from the producer to the intended user
Place
This refers to the set of pharmaceutical firms and individuals that take title or assist in transferring title to a drug product or service as it moves from the drug manufacturer to the final consumer.
Pharmaceutical Distribution Channel
the route along which the right pharmaceutical products flow from the drug manufacturer’s production to final consumption
Distribution channel
The customers or end-users in the pharmaceutical industry basically want drug products that satisfy the following criteria:
○ Right standards and quality
○ Right specifications
○ Right commercial stocks levels at all times
○ Right savings
○ Right service warranties
Five Basic Channel Decision
◉ Do we use direct or indirect channels?
◉ Single or multiple channels
◉ Cumulative length of the multiple channels
◉ Types of intermediary
◉ Number of intermediaries at each level
Consists of a drug manufacturer selling directly to the Department of Health (DOH) or government Health Units and Hospitals who will in turn make the medicines available to the end-users practically for free.
Channel 1
Contains two middlemen level. A representative sales of a drug manufacturer selling to dispensing physicians who in turn sells the medicines to the patients (end-users) charging the latter consultation fees and medicines given.
Channel 2
Contains only one middlemen level, either an independent distributor or retailer, who in turn sells the drug products to end-users.
Channel 3
Contains two middlemen level, namely the wholesaler and retailer drugstore outlets who in turn sell to the end-users.
Channel 4
Contains three middlemen level, reflecting jobbers who sell to the smaller retailers who generally are not served by the large wholesaler drugstores.
Channel 5
Channels 2 and 4 contain how many middlemen?
2
Channel 3 contains how many middlemen?
1
Channel 3 contains how many middlemen?
1
Channel 5 contains how many middlemen?
3
Channel 1 contains how many middlemen?
None (0)
Channels of Distribution (Middlemen)
- Wholesaler
- Retailers
- Jobbers
- Manufacturer’s Representatives
- Manufacturers Branches and Franchises
- Distributors and Dealers
- Dispensing Physician
8.,Department of Health - Industrial Clinics NGO
Three strategies:
- Intensive Distribution
- Exclusive Distribution
- Selective Distribution
where drug companies stock up their product lines in as many sales outlet as possible, in both the traditional and non-traditional market
Intensive Distribution
where the drug manufacturer requires the sales outlets such as hospitals and industrial clinics not to carry competing lines in exchange for higher discounts, promotion support and other service amenities
Exclusive Distribution
where the drug manufacturer does not have to spread its efforts over many sales outlets in order to develop long-lasting working relationships fast. Many small and medium-sized drug companies prefer selective middlemen.
Selective Distribution
In this channel, the manufacturer directly provides the product to the consumer.
Direct
In this instance, the business may own all elements of its distribution channel or sell through a specific retail location.
Direct
In this channel, a company will use an intermediary to sell a product to the consumer.
Indirect
The company may sell to a wholesaler who further distributes to retail outlets.
Indirect
This channel may become necessary for large producers who sell through hundreds of small retailers.
Indirect
ways to sell directly to the consumer
Internet sales and one-on-one meetings
In this type of channel, a company may use a combination of direct and indirect selling.
Dual Distribution
The product may be sold directly to a consumer, while in other cases it may be sold through intermediaries
Dual Distribution
This type of channel may help reach more consumers but there may be the danger of channel conflict.
Dual Distribution
most non tradition channel allows for the consumer to send a product to the producer
Reverse Channels
An example of this is when a consumer recycles and makes money from this activity.
Reverse Channels
Possible channel drawbacks and conflicts
◉ Lost Revenue
◉ Lost Communication Control
◉ Lost Product Importance
middlemen who play a crucial role in the distribution process
Distribution channel intermediaries
There are four main types of intermediaries
Agents, Wholesalers, Distributors, Retailers
an independent entity who acts as an extension of the producer by representing them to the user
Agent
never actually gains ownership of the product and usually make money from commissions and fees paid for their services
Agent
are also independent entities, but they actually purchase goods from a producer in bulk and store them in warehouses
Wholesalers
may have a close relationship with the producer
Distributor
only carry products from a single brand or company
Distributors
carry a variety of competition brands and product types
Wholesalers
stock the goods and sell them to the ultimate end user at a profit
Retailers
Drug companies, when selecting channel members, strongly consider the ff:
- Profile of middlemen
- Product lines carried
- Overall reputation and image of drug company
- Track Record
- Future growth potential
- Store’s customers and locations
In many ways, drug companies provide monetary and non-monetary incentive rewards such as:
- Product deals
- Higher discounts
- Liberal credit terms
- Display allowances
- Cooperative advertising allowances
- Sales promo contests
- Pin money and rebates
- Priority in stock deliveries and allocation of new products
- Sales training
- Free travel and hotel accommodations
- Personalized services
Physical Distribution System
-Order Processing
-Warehousing
-Inventory
-Transportation
receive, identify, and sort merchandise such as drugs, cosmetics, skin care lines, and toiletries
Warehouses
owned and operated by the company which stores and distributes their own drug products
Private Warehouses
provide storage and related physical distribution services to any interested individual or firm on a rental basis
Public Warehouses
In the former, imported or taxable merchandise is stored and can be released for sale after the appropriate taxes are paid.
Bonded Warehousing
Mortgage arrangement in which a lender secures its loan with lien on items stored in a warehouse. Access to these items is controlled by the lender who releases goods as they are paid for by the borrower.
Field Warehousing
Two major concerns
○ When to order
○ How much to order
There are four aspects of Inventory Management
- Stock turnovers
- When to order
- How much to order
- Warehousing
The balance between sales and inventory on hand.
Stock turnovers
period from the date a sales order is placed until the date goods are ready for sales
Order Lead Time
average sales in units per day
Usage rates
extra merchandise kept on hand to protect against out of stock
Safety stocks
(Order Lead Time x usage rate) + Safety stock
REORDER POINT
Four transportation Modes
○ Railroads
○ Motor Carries
○ Waterways
○ Airways
It is a very vital element of the total marketing mix that ensures the adequate availability and visibility of the right products in the right target market.
Place
