Planet Health- ratail marketing case

J.S patel was the founder (1956) of Sagar group of industries SGI

Located in Ahmedabad Growth Rs 40 lakh turn over in 1970 to

Rs 75 crore in 2000 Increase of 600 percent in net worth In 2001 SGH had 10 companies(Table

5.6) Major customers are quality conscious

Export to Europe, south east asia, and US

Follows ethical practicesReceived various awards(5.1) Involved in social and professional

activities

Change in competitive situationTwo choice software and retailingSoftware was dropped due to rapid

technology change and high attrition rate, huge investment

International investment might not be recoverable if the business did not perform as expected

Retail sector showing strong signs of modernization

Size was 90,000 crores in the year 2000

Organized sector only 20 crores In pharmaceutical retailing,

prescription drugs accounted for around 14 crore, while non prescription drugs accounted for about 2 crore

• Margin 40%• No change even after implementation of

WTO agreement• Only traditional retailers• Organized retailing has started to develop

example Health and Glow, Apollo.• Many are health conscious• Change in behavior from curative to

preventive• No effect of recession and macro-

economic factors

• Family-run and small in size• No equipment to preserve the

medicine properly• Few stores are air conditioned• Three categories- attached to

hospitals, area around chambers of consulting doctors, residential or market area

• Fraught with irregularities in adhering to laws & other malpractices

• No progress in retailing when compared to other healthcare disciplines

• Retailers are united and resistant to change

• Customers want change• Franchisee model can be used• Discount sales can be followed, if the

venture did not perform well• Request for feasibility report and

detailed strategy by Rohit patel

US well organizedNo price control due to IPR, so 15 to

20 times higher price than IndiaLimited new product introduction

due to FDA approvalSwitching of medicine is limitedCustomers have limited influence on

selection of medicine

• Pharmacists link doctor and the patient • They were licensed to make drug

compounds• They had knowledge regarding drugs

available in the market• They know about their properties

mechanism of action , adverse effect, interaction with other drugs & food items and their administration & compliance

• In Europe Pharmacies referred to as apothecaries

• Chennai, Delhi and Mumbai retail were studied.

• Chennai is the pioneer of drug store chain in the country.

• Apollo, Muthu pharma, Health & Glow, Subhiksha and Truvalue were studied.

• In Mumbai & Vadodara - medicine shoppe, a franchisee based retail drug store chain promoted by Cardial Health care Inc, USA was studied.

• Private final consumption expenditure of Indian consumers has gone up from Rs.14698cr in 1990-91 to Rs.98168cr in 2000-01

• Apollo follow central purchasing, medicine Shoppe had authorized its franchisee’s to source locally.

• Life spring in Delhi planning to attach a Gymnasium & Spa to the store.

• The concept was similar to the pharmacies in Europe where the pharmacists played the role of advisers in the purchase and consumption of medicine.

• In India, Drug consumption is based on cure than on prevention.

• Persons at the counter not necessarily a pharmacist was unusually not able to provide the information sought – this lead to higher death because of negligence in the administration of drugs

• Decided to fill the gap

60 Pharmacies under 4 categories Hospital pharmacy Clinic pharmacy IOC pharmacy Stand-alone day & night pharmacy

Purchasing : Centralized Storage & distribution: Located at

Chennai, Hyderabad and Bangalore

• Promoted by RPG Guardian Ltd,. 50-50 joint venture with Dairy Farm International

• Dairy farm International retailer – based in Hong Kong

• First store in February 1997 in Anna nagar.• The store stock over 4500 products.• Currently 10 outlet in chennai & 3 in

Bangalore • Size 400-800 sq.ft , daily sale – Rs.20000 to

Rs.40000 / per day ; Employees – 100• 10% discount on singe RX purchase over

1000.

• 14 stores in chennai• Location – Purasaiwalkam; Turnover –

Rs.65000/day.• 70% RX products & 30% non-Rx products• Largest Pharmacy outlet in South-India• Stock – 8000 Pharmaceutical.• Offers counseling & door delivery facility• No discount – belives in quick delivery

and availability of genuine product

Promoted by Tamil nadu Dadha products Ltd.

Company taken over by Sun pharma Ltd, Mumbai

15 outlet in chennai It offered 10% discount and hence ran

with trouble with local traders, they stopped supplies through its members and the chain was forced to close down.

Meaning – Prosperity (in Sanskrit)80 stores in chennai, 20 stores in

rest of Tamil naduDaily sale – Rs.40000/outlet

including grocery and pharmacyPrivate medical stores look neater,

cleaner and more well present than Subhiksha

• Commissioned in April 2000.• Operates 24*7• Daily sale have grown from 15000 to

26000 in May 2001.• Size – 600 sq ft & additional area of

100sq ft for counseling• Inventory Rs.10 to 12 Lakhs• 14 Pharmacists employed• RX Covers 85% of total sale, Cosmetic

& other FMCG covers balance 15% of total sale

• Pharmacy doesn’t dispenses medicine without prescription.

• Exceptions are there.• Use of Custom Software• Inventory – uses Alphabetical

classification • Procurement and purchase through local

distributors• License for whole sale as well as retail• Promotional offers also carried out

Franchising based retail – promoted by Cardinal Health care Inc, USA.

14000 stores in 10 countriesStarted in 1998 – 11 medicine shop

at presentPlaned to expand 65 franchisee

during 2001-02, ambitious plan to set up 500 medicine shop by 2005

Average opening day sale Rs.16000

• Six Marketing programs offered• Loyal customer program• Referral program• Display shelves hire scheme• Promotional scheme• Free check up , counseling• Corporate tie up with ITC at Calcutta• 5 days training to the owners and

pharmacist of medicine Shoppe franchisees

Pharmacists would be employed Duties and responsibilities of

pharmacists were developed based on international pharmaceutical federation (Netherlands)

The role of pharmacist for the proposed pharmacy was adapted to Indian condition

Requirement of shift from current practices of pharmaceutical retailing

Follow ethical practices and business excellence

Huge investment in human resource and material

Hire qualified pharmacist provide air conditioning and refrigeration facilities arrange stand by storages and power supply equipment

Current retailers had names of owners, family members, god/goddesses, or something that did not have any meaning

Foreign sounding name might help in making positive impression

Should reflect a range of encompassed health activity

It should help in expanding operations outside india

Provide the best service and world class ambiance and shopping experience

Genuine on property stored products Health related merchandise including

monitoring devices Multiple products and brands

including ayurvedic products Counseling for shopping, Home

delivery, 24*7 service Tie up with doctors

All product should have a bearing on health care

Satisfy largest number of customers in their first visit

Alternative medicines, nutra ceuticals, health food & health supplements, personal care, baby care and mother care products, pet care products, surgical & rehabilitation products and health monitors and devices

Procurement locally to avoid double taxation

Not to have any dealing with unethical suppliers

Bar codes was proposedSeparate information technology was

developed Investment cost around Rs 20 lakh

Visit to pharmacy is a forced visitTo provide good shopping

experience Decided to locate the store in the

residential areaPresence of doctor or hospital would

be an added advantageTarget customers are educated

middle and upper case household

Residential location having many high rise buildings where preferred.

Should have enough parking space and attract shoppers who would walk in at leisure.

Mother and daughter combination was to be adopted.

Mothers stores measuring about 2000 sq.ft and dealing all health related products.

Daughter stores were located in sub-urban.

All stores where to have similar identity. To build trust among the shoppers through

purity, transparency and openness. Separate entry and exit. The look should be reach and elegant

without being opulent like a lifestyle store. Design should be in such a way that

shopper spend more time buying and browsing before reaching the bill counter.

Information kiosk.

Ahmadabad was selected.Six stores were planned(five

daughter and one mother store)TV and local newspaper- costlyTeaser advertisement in city

supplement of the largest English daily was preferred.

Reach was estimated to be one lakh house holds

Customer loyalty is the only option to handle competition.

Personal canvassing of households was to be followed.

Doctors and hospitals were approached to attract customers.

Cost of promotion was estimated to be 10 lakhs.

Six general managers – Procurement, finance, sales, marketing, franchisee and regular affairs.

Drugs were stocked in alphabetical order.

Recruitment of suitable pharmacist and training of front room and back room staffs were critical for success.

Proper uniform to the employees for enhancing image of the store.

A detailed feasibility report was submitted to Rohit Patel by Sureka and presentation was done about the project.

Rohit patel reflected about the higher investment and operating cost as compared to competing retail format.

He concerned that whether the revenue would come right.

Find out the profitability of each of the format discussed in the chapter and suggest which one planet health should adopt?

What values does planet health want to deliver? How does each formats stand with regard to delivering these values?

How does each format relate to the location of stores?

What changes are required for each of the format with regard to categories, layout and brand decision