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STRENGTHEN SALES PLANNING & COMMERCIAL STRATEGIES. A MANAGEMENT FRAMEWORK. LATAM SALES & DISTRIBUTION CHAIN. (For Medical & Healthcare Industries) Osvaldo Quiroz Leyton Ingeniero Comercial. Lic.Cs.Economicas Master of Business Administration email: [email protected] // [email protected]

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Page 1: Improving corporate management performance english version__osvaldo

STRENGTHEN SALES PLANNING & COMMERCIAL STRATEGIES.

A MANAGEMENT FRAMEWORK.

LATAM SALES & DISTRIBUTION CHAIN.

(For Medical & Healthcare Industries)

Osvaldo Quiroz LeytonIngeniero Comercial. Lic.Cs.EconomicasMaster of Business Administration

email: [email protected] // [email protected]

Page 2: Improving corporate management performance english version__osvaldo

TOPICS:

First section.

1. Highlighting Business Management.

Second section.

2. Putting Business Management in Action

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Sometimes Companies face the Iceberg dilemma:Sometimes Companies face the Iceberg dilemma:“Core problems are hidden under the organizational “Core problems are hidden under the organizational

surface surface ”.”.

STRATEGY AND PERFORMANCE EVALUATIONSTRATEGY AND PERFORMANCE EVALUATION

…”…” the path to disminish the operational and market risksthe path to disminish the operational and market risks…”…”

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1) First section.

Highlighting Business Management

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Key Drivers Developing Strategy:

1. Corporate Human Resources.

2. Leadership, Innovation and Management

Capabilities.

3. Management System, and efficient use of

Technology.

4. Financial Planning and Corporate

Performance Evaluation

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Thus,…..Better Results at any company are derived from 5

basic elements..:

1) Human Resources (key driver)

2) Cash Flow Management supports Growth

4) Leadership Culture /

Values & Ethics.

5) Corporate Synergies

=> 2 +2 = 5

3) Optimal IT usability

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1. Emptiness or lack of corporate Strategy Mindset.

2. Poor, lack of useful communication among the corporate teams, executives of the company.

3. Activities are not being evaluated, lack of systematic tracking.

“..Barriers that limit the firm success..”

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Why is it important to do Strategy (I)1. Addressing the sense of Direction.

Planning secure coordinated efforts.

Sharing the vision. Staff knows where the company goes,

settle commitment and value the incentives to accomplish goals.

2. Strategy diminish the uncertainty.

…so, corporate teams take into account unexpected changes, weigh up impacts and develop coordinate

answers..

Why is it important to do Strategy (II)

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Why is it important to do Strategy (II)

3. Minimize losses and avoid double work.

We deploy management skills to detect failures on-time

4. Setting dashboards, indicators for Management

Performance purpose.

Without planning, control management is not affordable.

Evaluating management performance let us foresee

issues, and take corrective actions.

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INTEGRATIVE MANAGEMENT.

A basic framework to balance

Management Functions in the

Company

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Finance.• Return over

Educational activities (NPV)

• Profits.• Income.• Cash Flow (VPN)

Business IntelligenceBusiness Intelligence

�� Competitors Competitors

analysisanalysis

�� Benchmarking.Benchmarking.

�� Relational Relational

MarketingMarketing

Operations • Purchasing• IT• HR and

Leadership.• Logistics

Objetives

Indicators

Activites(m

onth)

Objetives

Indicators

Activities (moths)Customers

• Courses, • Portfolio of

Services & Products.

• ABC. Customer efficiencies

Integral

Management

System

Objectives

Indicators

Activities (mes)

Objetives

Indicators

Activities (mes)

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Follow the steps to manage strategically Follow the steps to manage strategically and succeeds…and succeeds…

1) Targeting Customers

needs (Doctors , Patients)

2) Translating those needs into strategic actions

3) Efficient Execution3) Efficient Execution

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6) Finally we integrate :

- Cash Flow and budgeting activities.

- Allocate internal resources wisely.

- Manage the company efficiently.

5) We improve financial & 5) We improve financial & commercial performancecommercial performance

4) Follow-up, Tracking, evaluating commercial activities

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Therefore, a better organization Therefore, a better organization manages Key Organizational Drivers manages Key Organizational Drivers

Organization Excellence

Improving & Learning

Flexible Structure

Creative Human ResourceManagement

Egalitarian Internal Climate

Technology Smart Support

Customer Oriented

Innovation at work

Adaptable to changes

Strategic tool

Create strong teams

Settle company’s growth

Listen the voice

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1.1. Set clear and measurable objectives.Set clear and measurable objectives.

2.2. Identify alternative actions over the time.Identify alternative actions over the time.

3.3. Build Organization of Excellence. Build Organization of Excellence.

4. Strategy means …..

Keeping competitiveness through Leadership, Quality and

Effective Service.

Summarizing this message toward Summarizing this message toward building Strategy :building Strategy :

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2th section.2th section.Putting Business Management in Putting Business Management in

Action.Action.

1. The Salesman Mindset

2. Product Portfolio Management

3. Customer Focus

4. Pricing

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The Salesman Mindset

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Selling with powerful ideas

“…“…A product is expensive when its price is A product is expensive when its price is

higher than its value...higher than its value...””

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� Be PROACTIVE:

� Goes one step ahead the customer, deploy helpful initiative.

� Be OPTIMIST:

� Always believes can do better this or the next visit.

� Be SELF-CONFIDENT:

� Strongly beliefs, he/she provides the best products.

� Increase KNOWLEDGE:

� Knows the products and its competitors.

� Be POSITIVE:

� Shows assertiveness, never losing attitudes.

“…“… Attitudes to construct the path for Attitudes to construct the path for selling effectively selling effectively ....””

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Pitfalls to avoid in the selling activity:

• Selling without first training on “the System/Solutions”.

• Assuming client understands the philosophy and its

benefits.

1. Clients must be taken through the entire “adoption process of the System”.

2. Clients have to be driven in educational programs, courses and workshops to let us evaluate further improvements (Post -Selling).

3. We take into account commercial risks, because, a Client who buys products without enough education, could misuse the system, this could be a risky investment.

4. Exercise Permanent Customer retention.

Therefore:

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So,…….More than products , we sell:So,…….More than products , we sell:

2. Innovative System2. Innovative System

Summary : Leading with Creative IdeasSummary : Leading with Creative Ideas

1. Higher Quality in Product 1. Higher Quality in Product TechnologyTechnology

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VectorTAS-Intelligent DesignVectorTASVectorTAS--Intelligent DesignIntelligent Design

Product Portfolio ManagementProduct Portfolio Management

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Why do we need to build product portfolios?: Because we need to improve the Pareto Sales

Distribution

20% Products80% of Income($)

Product Sales (units) Sales Income ($)

EXPLAIN…

Growing Sales profits our Commercial Operations!!!Growing Sales profits our Commercial Operations!!!

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Product Portfolio Logic.

1. We diversify commercial risk.

2. We complement selling activity

……Offsetting the Pareto LawOffsetting the Pareto Law

Bundling Products:

Means, we always tide products as a integrative system:

1. Core products.

2. Complements

•Regional Workshops / courses / Monthly

Meetings / Educational Workflows.

3. Strongly specialized Educational Supply

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..“Optimizing a diversified Product Portfolio, is p ossible to ..“Optimizing a diversified Product Portfolio, is p ossible to cover a wider Demand and get Profits from different cover a wider Demand and get Profits from different

source of Sales “..source of Sales “..

MxMx

ORTHOS

MINI 2010

1,000

10

PricePrice

QuantityQuantity15500

ICE

MINI X

OTHERS

500

100

“…“… When managing the complete Supply curve, it is When managing the complete Supply curve, it is

advisable to follow Economics Selling Logic according to advisable to follow Economics Selling Logic according to

Technological Learning curve..Technological Learning curve..””

VECTORVECTOR

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So, What do we sell? :

1. Products & Systems as a highly technology development.

2. Cost-Effective, Efficient & High Quality solutions.

3. Integral packages of Product and Services: The product & System and Systematic Educational activities for Customers

4. Long-Term profitable solutions.

5. Regarding the global economic environment, wider competitive labor market, we provide solutions that increase the labor productivity (TIME IS MONEY).

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CUSTOMER FOCUS.

Appraisal methods to evaluate

Commercial Events and Educational

Activities

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Identify and Segment CUSTOMERS:

1. System Adopters

2. Irregulars or Dabbler Users.

3. Rejecters

4. Conservative or Later Adopters

Distinguish System Adopters among:

Beginners

Medium Level Users

Advanced Users.

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Measure the Market and Demand.Measure the Market and Demand.

Measure and Segment the Market

Quantity of Clients

Quantity of Dealers

Sales Forecast

Income = f [ Doc demand (Customer (demand) ]Income = f [ Doc demand (Customer (demand) ]

This is a Derived Demand. Sales depends of the This is a Derived Demand. Sales depends of the

customer located at the end of distribution channel.customer located at the end of distribution channel.

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Customer segment.Placing marketing ideas.

MACRO VARIABLES� TARGETING LIFE CYCLE

Dr. Gjerset says. "As teeth and jaws come into alignment, self-

esteem increases too. Patients can look forward to a lifetime of

improved dental health."

“Today more adults are having orthodontic treatment because of

greater awareness of the health benefits of a proper bite and the

increased self-esteem that comes with an attractive smile. Given

today's technological advances and the affordability of

treatment, patients of all ages are improving their smiles.“

..While orthodontic treatment can be successful at almost any

age, early detection of orthodontic problems may prevent

complications in the long run. Early guidance of jaw growth, in

some cases, may decrease a patient's need for more involved

procedures later on. ..

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Selling and the Multiplicative Effect:

Doc-Champion

Customer A B C

1. Reinforce Loyalties and Network of Customers.

2. Strength permanent Practice supported by mentoring and Regional Champions.

3. Build the Study Club jointly with practice.

4. “Learning by doing” policy let the company create loyal links with clients who support the market share growth. (products and commercial system).

5. Friendship. Relationship among dealers supported by the company representatives creates lastly links.

Transmission of Knowledge

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Selling and the Multiplicative Effect:

Knowing: number of practitioners in the country :

• Sizing # customers at marketplace.

• Forecasting annual target : (4-5%?)

ACTIONS :

1. RETENTION

2. CONVERTION

3. MOTIVATION

Identify segments:

1. Clients using core products:

2. Clients buying other products:

3. Clients buying products and services

from competitors:

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Q: What it would be the impact of Event’s Investments over Financial Cash Flows ?

A: Managing an Appraisal Model of Events, Clinical Courses and Workshops

Monthly Event Calendar

Keeping Database of Doctors Keeping Database of Doctors

attending Eventsattending Events

Budget-Event

Expenses

Systematic Tracking of Doctor’s

participation

Event’s Return Over Investment

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Scheduling Local Events

December

November

October

September

Agost

July

June

May

April

March

Febreary

January

Week 4Week 3Week 2Week 1

Monthly Calendar 2008

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When Scheduling Events, Courses : …Do not forget to segment doctors under its learning curve, past experience and knowledge.

User Profiles.

1. Adopters

2. Irregulars or Dabbler Users.

3. Rejecters

4. Conservative or Later Adopters

Page 36: Improving corporate management performance english version__osvaldo

RELATIONAL MARKETING.CUSTOMER-ORIENTED

CUSTOMER

Retention

Profitability

References

Re-activation

Recover

Relationship

Keep purchasing records. Track monthly the

sales by doctor. Also track the courses and

improvements at doctor practice.

It is less difficult to place more orders and

different products to current doctors

Improve profits regarding the product mix,

sales frequency.

We need to make customer cost-effective and

profitable at long-run

Viral Marketing. If we overpass customer expectation, it

comes epidemics. Other customers adopt our ideas and

products. (This is a positive virus)

Bringing back past costumers, could be

less difficult to bring back the company.

We know each other. We can offer

something different (services, etc)

Former Costumers. Lower customer

research Cost. Customer had already

bought. Put other products.

Customer Data-warehouse: measuring

monthly consumption, products mix. Statistic

of participation in Event, courses.

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Managing a Database of Doctors at Events, Courses or any Educational

Service

.

Dr.N

.

.

Dr.G

.

Dr.C

Dr.B

Dr.A

AbrilMarzoFebreroEnero

Calendario de Eventos 2008

Page 38: Improving corporate management performance english version__osvaldo

Budgeting- Events

TOTAL EVENT COSTS

OTHERO MATERIALS

OFFICE MATERIALS

TRANSPORT

MEALS

REPRESENTATION EXPENSES:

INSTRUMENTS

BRACKETS

INPUTS:

TICKET AIRLINE

HONORARIES

INT’L

EVENT

NACIONAL EVENT

COURSEWORKSHOP

COSTS (US$)

Page 39: Improving corporate management performance english version__osvaldo

Calculating Return over Investment by Event

50%

8,500

17,000

Total

50%50%50%50%MontlyOperational Margin

5,00020001000500Costs

10,0004,0002,0001,000Sales (Docs)

Q4Q3Q2Q1

Quarterly Performance Evaluation

Page 40: Improving corporate management performance english version__osvaldo

EVENT SCHEDULE (Coordination Table)

Domestic y Regional

Nov

Peru

Dic

Oct

Sep

Ago

Jul

Jun

May

Abr

Mar

Feb

Ene

VenezuelaUruguayEcuadorChileColombiaBoliviaBrazilArgentina2008

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PricingPricing

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1. Brand Positioning.

2. Market Share.

3. Return over Commercial & Sales

Operations.

We have to analyze impacts expected from

the Pricing Policy which explains financial

outcomes..

Basics to analyze price settings are:

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Do both model get the same outcomes?

(1) Income = P xQ =

10($) x 1,000 = $10,000

(2) Income =P x Q =

1,000($) x 10 = $10,000

Low Price ModelHigh Price Model

Targeting Different Markets :

1. High Price Model meets the needs of customer

segment which looks for Quality. Differentiable

Products.

2. Lower Price Model meets the needs of customer

segment which looks for Price more than Quality.

Commodities, Homogeneous Products.

No!No!Return over Return over

COMMERCIAL & SALES COMMERCIAL & SALES

OPERATIONS!!OPERATIONS!!

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..Remembering any corporate financial structure :

The financial corporate goal is to Maximize the earning equation:

We look to get the optimum combination of price and quantity under financial restrictions, the Fixed and Variable Costs.

Max Π = PQ – CV – CF.

Not an easy dynamic solution:ϕΠ = ϕϕϕϕPQ – ϕϕϕϕCV – ϕϕϕϕCF.

Come Back to Strategy again…

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Analyze the mix of Expenses, specially the items th at let you generate new Income, some of them are Variable Costs :Variable Costs :

1. Working Capital Flows

2. HR costs (it could be our best investment)

3. Education and Workshops. We could see those items as a dynamic investments over the time; If we have a Management System to evaluate them as Return over Investment parameters.

Do not Stress if….!!!

and what is happening with other and what is happening with other Economic costs?Economic costs?

Do planning to: Do planning to:

• Investment in Capacity for growing.

• Operational Risks…Watch out!!

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International Pricing Structure…,Why Discounts??....

CIF Price

Competitive Discounts %

International in-house Prices

(Duties, Tariffs, taxes)

Dealer Price

B2C- Customer Price

• Price discounts criteria look

to target potential Demand,

and to make room for further

increases at the market

share.

Page 47: Improving corporate management performance english version__osvaldo

Economic Parameters affecting Pricing Policy.

Level and Variations of :

1. Rate Exchange : (∆ E)

2. Taxes, Duties, Tariffs : (∆ T)

3. Incoming productivity efficiencies : (∆ Q)

4. Market condition Changes : (∆ P)

5. Demand Price Elasticity ( How Customers respond against Price Changes ) : ∆% Q / ∆% P

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Rate Exchange Variations : ( ∆ E)

If Rate Exchange Decrease : (-∆ E)

If Rate Exchange Increase (+∆ E)

There will be enough room to

take advantage when getting

new Inventory, because, Imports

are less expensive now:

We should leverage inventory to

prevent the skinny cows season!

Imports are more expensive now.

So, it makes more sense to deploy a

Management System to track

purchasing and market strategies!

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Taxes, Duties, Tariffs : ( ∆ T)

Well, you and every importer face Taxes as

Inevitable Costs!.

So, Tracking internal Demand, Programming

Purchase let us work for gaining more inventory

efficiencies.

Page 50: Improving corporate management performance english version__osvaldo

Incoming productivity efficiencies : ( ∆ Q)

Company.

Productive improvements

transmitted to Customers.

High Quality Manufactured

Products.

Highly Management support

Distributors.

Improvements supported by

the Management System

Dealers Strategic-Oriented

Dealers Customer-focused

Page 51: Improving corporate management performance english version__osvaldo

Market condition Changes : ( ∆ P)

If we compete by Price, add more services.

Advisable to keep a diversified offer;

Wider spectrum in product portfolio which mix different quality products and prices.

In we compete by Differentiated Products, strengthen branding efforts.

Keep the message to customers, we hold the best quality. “cheap is expensive”.

Focus the sales effort in Relational Marketing.

Page 52: Improving corporate management performance english version__osvaldo

Price Demand Elasticity :

∆% Q / ∆% P.

(Sensibility against price changes )

Inelastic Demand.

Price Variations relatively do not change the consumption rates:

Specialized products.

No closer substitutes

Elastic Demand.

Price Variations relatively change consumption rates:

Homogeneous products.

Commodities

closer substitutes.

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Concluding……

Page 54: Improving corporate management performance english version__osvaldo

So if we manage strategically our Firms:

… We build and let competitive

Advantages last..Differentiable FactorsDifferentiable Factors

Sustainable over the timeSustainable over the time

Must be keptMust be kept

Page 55: Improving corporate management performance english version__osvaldo

MarketMarket

Resources to compete:

1. Human Capital (our people, customers).

Creating a competitive advantage.

2. Leadership, Innovation y Management

capabilities.

3. Inventory Management and Cash Flow.

4. Investment to support corporate growth.

Competitors are on the Competitors are on the

same hunting toosame hunting too

Making room to compete and Making room to compete and

increase market share.increase market share.

Current

Demand (+)

Potential Demand

(e)

“ Focusing on the Economic and Organizational Dynamics “

Page 56: Improving corporate management performance english version__osvaldo

Strengthen Distributors Management System ……..Means: WIN-WIN

DISTRIBUTORS/DEALERS

..Your Growth.. Means

earnings & profits….

.. Then, If you get returns,

all of us win.

..If you Grow… We Grow..

HEADQUARTERS

Page 57: Improving corporate management performance english version__osvaldo

Actions to improve Management System:

1. Education

2. Commercial Strategy

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Then, two core focus of corporate management:

Education.

1. Boosting and strengthen Education to attract more adopters.

2. Improving coordination at educational activities in the Region.

3. Planning events, courses, workshops, practices with System .

4. Better coordination of customers, Insiders in the territory.

5. Creating value added to bring into more Adopters.

Commercial Strategy.

1. Building Management System with Dealers.

2. Pricing Policy regarding Potential Demand, Growth and Market Share.

3. Get a Visible presence of regional Manager, more than emails, being in the Business Battlefield.

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Reinforcing Ideas:a) Protect our current accomplishments, but do not forget there are

more doctors in the marketplace.

• Increasing physical and valuable sales.

• Strengthen sales regarding current Doctors as customers, so , expand quantity of products in the same customer.

• Add more Damon Adopters.

b) Monitor if current customers are improving their practice.

• More patients means better practice, reputation, return over investment, more sales. (cause-effects)

c) Strengthen Distributor Management Capabilities

• Building-up the competitive Advantage.

• We need to think strategically; Improve management and produce effective coordination.

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Finally:…

1. We Set procedures and formalizations to follow-up Commercial Performance in the Region. The What’s, How’s and When’s.

2. We manage business under a formal Regional Management Network.

3. We Gain “coordination” regarding the Regional events.

4. Strengthen clinical courses, training, participation of more doctors at every regional event

5. The Pricing Policy (Discounts) follows Growth, Market Share criteria.

PLANNING / ORGANIZATIONAL OBJECTIVES/ ALSO FINANCIAL GOALS

Page 61: Improving corporate management performance english version__osvaldo

Email: [email protected]// [email protected]

Osvaldo Quiroz Osvaldo Quiroz LeytonLeyton.MBA. Eng. Business & Economics. MBA. Eng. Business & Economics.

THANK YOU!