In the sixth workshop, the participants reviewed the outcome of the intervention plan and discussed the findings. The team found it useful to employ the ROMI model throughout the process, as it helped them identify new key performance indicators that allowed them to analyse the business situation and devise a more effective action plan. The team found additional metrics to add to the previously identified ones:
1. The registration timeline, if applicable 2. Necessary regulatory approvals 3. Supply chain process
4. Distribution efficiency 5. Classification of the outlet 6. Demographic factors 7. Sales team stability
8. Listing of the products in the hospitals’ formularies
The team identified the above key metrics because it was thought that they could dramatically affect the outcome of the intervention plan, especially since the products are pharmaceuticals, which require special storage and distribution practices. The only two metrics from the above eight that actually affected the intervention plan were metrics related to the supply chain and the listing of the products in the hospitals’ formularies. There was a delay from the factory in supplying the goods to the market and that made the team unable to generate sales for the defined products for around 45 days. The delay in listing the products in the hospital formularies did not significantly affect the overall outcome.
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The revenue achieved was 15.6% below the target. This affected the goal of achieving 8% market share; only 7% market share was achieved. The main factor behind the decline in sales was the delay related to the supply of the goods to the market. The revenue achieved per segment was positive for the community pharmacies, as the team managed to achieve good coverage and hence, exceeded the set target. Revenue targets were not achieved for either the polyclinic or hospital segments, mainly due to the delay of supply of goods as well as the delay in listing the products on some key hospitals’ formularies. The gross margin/revenue ratio for all three segments was higher than the target, but was less in value than the set target due to the lower revenue achieved.
In assessing the impact on sales of consumer factors related to the indoor marketing activities, it was noted that the implementation of the activities had 97% success, with 63 out of the 65 materials being implemented successfully and the remaining 2 not being implemented due to damage to the counter-top materials. The impact on sales was significant in the community pharmacies, as the majority of the implemented POSMs were in the community pharmacies and 70% of the POSMs’ cost was invested in this segment. Thus, the impact on sales was outstanding, with the community pharmacy segment being the only segment in which the team managed to achieve its targets. Regarding the RoMI, one notable finding was with the ROMI achieved through the hospital pharmacies. Even though it was below the set target, the hospital pharmacy is the most valuable segment in terms of revenue stream compared to other segments in the private sector. The key learning outcome out of this experience was that the successful implementation of POSMs in the hospital segment would result in an extremely high RoMI. However, the challenge here is the difficulty of implementing POSMs in the hospital segment. Reasons for this difficulty include the limited number of
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hospital pharmacies, limited space availability and tough competition. Successfully implementing indoor marketing activities in hospital pharmacies was considered by the sales team to be a good achievement. A disappointing result came from the polyclinic pharmacy segment in terms of the RoMI related to the implementation of indoor activities. A significantly lower figure than the set target was achieved (8% vs. 48%). The research team justified this result as being because the pharmacies selected had low potential and none were classified as class A pharmacies.
When assessing the impact on sales as a result of the medical activities, it is fair to conclude that the impact was positive as a result of the sales achieved in the hospital pharmacy segment. It is important to note that the team made a tremendous effort to list one key product in 7 hospitals, and considering the impact of the delay in supply, the result of 12.4% under the target revenue can be seen as a positive result. The RoMIs achieved through the polyclinic and hospital pharmacy segments were interesting to note, with the polyclinic pharmacies achieving a 30% ROMI versus a target of 4%, and the hospital pharmacies achieving a -57% ROMI versus a target of 12%. The research team explained this significant variation in ROMI between segments as being due to the high attention given to listing a product and increasing prescriptions of that product in the hospital pharmacy segment. The same reason explains the low impact on sales achieved in the polyclinic pharmacy segment. It worth noting that the coverage of the medical team must have had a positive impact on sales in the community pharmacy sector and that is in line with the finding from the first component of this research, in which the pharmacists’ recommendations were considered the most influential driver of OTC product sales in pharmacies. As a result, the resulting ROMI for the community pharmacy segment was higher than the set target.
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Regarding the free-of-charge goods, the sales team decided to decrease the FOC goods supplied to the pharmacies by 5%. As a result, the gross margin exceeded the set target of 40%, with 42%, mainly in the community pharmacies and polyclinic pharmacies. The impact on sales was insignificant. The key finding here is that gradually reducing the FOC goods supplied to the market is a wise thing to do rather than enacting a sharp decrease, in order to avoid a negative impact on sales. The sales team was not able to reduce the FOC goods supplied to hospital pharmacies due to the limited number of hospital pharmacies and the low bargaining power of the team based on limited historical data.
6.6 Conclusion
The main components of action research are creating the action, seeing the results and undergoing a transformation on the basis of these results. Transformation comes through thinking and acting in a particular manner. With the passage of time, the researcher can implement changes in the wider social arena, involving even more stakeholders. The research takes shape as it is performed by the people involved. Greater understanding is achieved at each point and with time, ways to improve practices are developed (Creswell, 2003).
Some important points regarding the course of action research are highlighted below: Practice and inquiry: These are done to effect a change in a given scenario by
taking into account a purposeful action. Emphasis on rigorous approaches and methodologies, which are required to validate assumptions, is maintained. Converting theory into practice: Theories are used to generate practices. This
begins with the study of human interactions, values and needs. Patterns of change are informed by social needs and demands.
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Inside and outside expertise: Inside expertise is used to develop an understanding of the problem through action research. Then, methods are employed to empower the user. Outside expertise is also called upon to guide the process of change.
Individual and group processes: Action research is a phenomenon in which the researcher explores research questions to investigate a process. At times, a group of researchers works to identify a common question and then undertakes the investigation.
Problem-based approach: In a problem-based approach, the problem is identified and progressive problem solving is undertaken. Multiple cycles of inquiry can be employed in order to remove confusion.
Transformation of identity and effecting social change: The main outcome of action research is meant to be change in a social context by influencing the processes by which people think and feel.
Shared knowledge and shared practices: After the results are obtained, action researchers share their practices and findings in a more general and applicable manner.
Regarding the action research component of this study, the entire experience was unique, not only for the research itself, but for all co-researchers (team members) who participated in the research. It was a positive learning process in which the learning outcome significantly impacted the know-how of the research team. This was a result of the positive impact on the business achieved due to the project. The team decided to extend the practice to all other potential projects managed by the organization, and that decision has already been put into place through a request that
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the business development team include the defined model in the business plan template for all potential projects. The business development team will also consider the addition of the new metrics agreed upon in the sixth workshop. Applying the defined model to new projects will increase the size of future studies, which will proportionally reduce the impact of the small study size in this study. The team also identified a new factor to be considered for other projects—the stock pressure tool of promotion. It was found in the quantitative component of this study that the influence of inventory pressure was higher than was previously found by Kotecki (2002); in Kotecki’s study, pharmacists who purchased products in bulk were less likely to recommend the product to the customer. The geographical distribution of pharmacies was not considered in this study, but the team decided to include this consideration in future studies. They will also consider retail avenues other than pharmacies, including supermarkets and grocery stores. It is also important to note that the study did not consider the classification of the pharmacies as a key metric prior to the implementation, in order to avoid a low ROMI, similar to what was found in polyclinic pharmacies after the implementation of the POSMs. As a result, the team agreed that more attention will be given to the visit plans of the medical representatives and the classes of the physicians to be visited. The team will not over-visit Class A physicians while neglecting clinics with lower potential. This action research did not consider the demographic factors of the healthcare professionals, despite the fact that the survey clearly found that medical forces influence female pharmacists to a higher degree. It was interesting that the coverage of the medical team had a positive impact on sales in the community pharmacy sector, as this is in alignment with the finding from the survey that the pharmacists’ recommendations are considered to be the most influential driver of the sales of OTC products in pharmacies. It is important to note that the expected ROMI coming from
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medical activities and indoor marketing activities in community pharmacies cannot be as high as the expected ROMI coming from the polyclinic and hospital pharmacies. The reason for this is the high number of community pharmacies versus other pharmacy settings, as well as the low average per-pharmacy revenue stream coming from the community pharmacy segment compared to the average per-pharmacy revenue stream coming from the polyclinic and hospital pharmacy segments. In conclusion, the team managed to overcome many major obstacles that caused them to consume a large amount of time, such as the difficulty in doing the ROMI and incremental revenue calculations.
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Chapter 7
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7.1 Introduction
This study aimed to assess the return on marketing investment and the impact on sales of various marketing activities for OTC pharmaceutical products. The goal was to help improve the sales and marketing decision-making process. Quantitative and action research components were used to meet the objectives of this research, test the defined hypotheses and answer the research questions. The aim was to address the gaps in the existing practice regarding the measurement of marketing’s impact on sales and return on marketing investment by executives in the pharmaceutical industry. This chapter elaborates on the overall conclusions of the study and how the findings can be taken extended through future research.