Upload
rohan-patil
View
91
Download
0
Tags:
Embed Size (px)
DESCRIPTION
sumer internship
Citation preview
Institute of Management, Nirma University
Institute of Management, Nirma UniversityFinal Report on:The Summer Internship Programme(April10 June14)Organization: Apollo Pharmacy
Submitted byHitesh Gulati 121322(MBA Full Time: 2012-14)On July 1st, 2013Submitted to: Prof. Jayesh Aagja&Placement Office
DECLARATION
I hereby declare that my Summer Internship Project titled Performance of Private Labels" and "Pharmacy Store Insights" are original work done by me under the guidance of Mr. Atul Ahuja, Vice President- Retail at Apollo Pharmacy Div of Apollo Hospitals Enterprises Ltd., E-18/B-1, Mohan Cooperative Industrial Area, Mathura Road, New Delhi-110044.This project has been submitted to Prof. Jayesh Aagja & Mr. Neeraj Arora - Institute of Management, Nirma University in partial fulfilment of academic requirement for the Master of Business Administration (MBA) programme.I also confirm that the project has not been submitted to any other university nor has it been done by any other student earlier for an academic requirement.AUTHOR OF THE PROJECT : Hitesh Gulati
COMPANY NAME: Apollo Pharmacy, Div of Apollo Hospitals Enterprises Ltd.
ADDRESS: E18/B-1, Mohan Co-operative Industrial Area, Mathura Road, New Delhi 110044
DATE OF REPORT : 1st JULY, 2013
PURPOSE OF REPORT : Performance of Private Labels and Pharmacy Store Insights PREPARED FOR: Apollo Pharmacy, Div of Apollo Hospitals Enterprises Ltd.
SUBMITTED TO: Professor Jayesh Aagja & Mr. Neeraj Arora, Manager, Corporate Relations
Table of Contents
Executive Summary5Part A: Profile of the Organization6Apollo Hospitals6Company Vision7Mission Statement7Apollo Pharmacy7Private Label8Apollo Hospitals - Directors9MCKINSEYs 7S Model21The Seven Interdependent Elements in the Mckinsey Framework22Competitive position in the Industry (Using Porters Framework)24Part B Project Work27Private Label Growth:27Evolution Of Private Labels:27Trends In Market28Future Trends:30Private Labels at Apollo Pharmacy:31Design and Pricing Strategies Followed for PL products:34Commercial Implications Of Private Label34Price Of Private Label Products35Performance of Private Label Products (Research Based Project)37Pharmacy Store Insights (Research Based Project)49Part C Learning55
Executive Summary
Apollo Hospitalsis a majorhospital chainbased inChennai, India. It was founded by Dr.Prathap C. Reddyin 1983. Its net worth is Rs 2,300 cr. Apollo Pharmacy a unit of Apollo Hospitals is a 30 years old retail pharmacy chain having 1500 stores spread over major cities of India, which includes Delhi, Chennai, Bengaluru, Mumbai, Ahmedabad, Jaipur, Patna, Kolkata, Hyderabad and also in district level in states like Tamil Nadu, Andhra Pradesh. The closest competitor in terms of number of store is Med Plus with 1250 store. Other competitor includes Guardian (120 stores), Religare (110 stores), Dial for Health and 98.4. Apollo Pharmacy has various Private Label products ranging from Instant Energy, Health Food, Vitamin / supplements, Baby Care, Skin Care, Oral Care, Men's Grooming, Hygiene, OTC, Clinical Aid, Home Aid and Generics. PL products accounts for 5% of total sales of the store.Various projects implemented during internship period consisted of comparing PL products based on their performance using measures like Returns per Shelve. Next viability of opening up a new store was analyzed by taking Net Present Value instead of Breakeven time. Also various customer insights were collected like activities a customer go through when in store, thus finding various opportunities for cross selling.
PART A: Profile of the OrganizationApollo HospitalsApollo Hospitalsis a majorhospital chainbased inChennai, India. It was founded by Dr.Prathap C. Reddyin 1983. Its net worth is Rs 2,300 cr.Company OverviewIt is often said that nothing happens, unless there is a dream first. At the genesis of the Apollo story there was a dream. A dream so powerful, that it helped transform the medical landscape in India.The dream nurtured and grew within Dr. Prathap C Reddy, the founder Chairman of Apollo Hospitals, until the point of inflection happened in 1983. A young man succumbing to an ailing heart was what it took to ignite Dr. Reddy's vision into a reality - a vision where quality healthcare was given, where the pursuit of clinical excellence was daily endeavor, India a hub in the medical tourism map and where the Apollo family touches and enriches lives every minute, every day.Today, with over 8500 beds across 50 hospitals, and a significant presence at every touch-point of the medical value chain, Apollo Hospitals is one of Asias largest healthcare groups. Commenced as a 150 bed hospital, today the group has grown exponentially both in India and overseas. Its growth is often said to be synonymous with India emerging as a major hub in global healthcare.Apollo Hospitals is driven by a single thrust, to provide the best standards of patient care. It is this passion that has lead to the development of unique centers of excellence across medical disciplines, within the Apollo Hospitals network. Apollo Hospitals has JCI accreditations for 7 of its hospitals, the largest by any hospital group in the region.True to its founding principles, the group has made quality healthcare accessible to the people of India, and even overseas. It has become an institution of trust, and a beacon of hope to so many searching for a cure for their ailments.The legacy of touching and enriching lives stems from the pillars of the Apollo philosophy - experience, excellence, expertise and research. We pride ourselves for constantly being on the cutting edge, and going the extra mile to stay relevant and revolutionary.The Apollo Hospitals Group is the pioneer of integrated healthcare delivery in India. This vision led the group to earmark time and resources to strengthen each vital cog in the process of healthcare delivery. As a result of these efforts, the group today is in a unique position to exponentially increase its healthcare cover. This will be critical in order to meet future requirements.Apollo Hospitals Group, today, is an integrated healthcare organization with owned and managed hospitals, diagnostic clinics, dispensing pharmacies and consultancy services. In addition, the groups service offerings include healthcare at the patients doorstep, clinical & diagnostic services, medical business process outsourcing, third party administration services and health insurance. To enhance performance and service to customers, the company also makes available the services to support business, telemedicine services, education, training programs & research services and a host of other non-profit projects.Company VisionApollo's vision for the next phase of development is to 'Touch a Billion Lives'.Mission Statement"Our mission is to bring healthcare of International standards within the reach of every individual. We are committed to the achievement and maintenance of excellence in education, research and healthcare for the benefit of humanity"Apollo PharmacyApollo Pharmacy is a 30 years old retail pharmacy chain with its first outlet opened in 1983. It is spread over major cities of India, which includes Delhi, Chennai, Bengaluru, Mumbai, Ahmedabad, Jaipur, Patna, Kolkata, Hyderabad and also in district level in states like Tamil Nadu, Andhra Pradesh. Apollo Pharmacy is the largest pharmacy chain of India having 1500 stores all over India, the closest competitor in terms of number of store is Med Plus with 1250 store. Other competitor includes Guardian (120 stores), Religare (110 stores), Dial for Health and 98.4. Private Label
Apollo pharmacy provides a range of private label brands which includes Instant Energy, Health Food, Vitamin / supplements, Baby Care, Skin Care, Oral Care, Men's Grooming, Hygiene, OTC, Clinical Aid, Home Aid and Generics. PL products accounts for 5% of total sales of the store.
Apollo Hospitals - DirectorsACG Worldwide Chairman Mr. Ajit SinghChairman, Apollo Hospitals Group
Mr. Ajit Singh efforts at ACG have always been focused on creating innovative and practical solutions for the global pharmaceutical and healthcare industries. In the future, we shall continue to pioneer new technologies and products, and work towards achieving improved inclusive growth for all our stakeholders," said Mr. Singh, Chairman at ACG Worldwide (formerly Associated Capsules Group), Asia's largest pharma machinery and consumables supplier.Since 2005, Mr. Singh has served on the Board of Pharmaceutical Sciences of the International Pharmaceutical Federation (FIP) as an Expert Member. He also served as Vice-President and now continues as an Executive Committee Member of the Organization of Pharmaceutical Producers of India (OPPI). He was also nominated on the International Board of the Controlled Release Society, USA.
Executive DirectorsGurmit kaur - Corporate HR at ACG WorldwideHemant Mharte- Head Sales & Marketing at ACG WorldwideSunil jha- President HR at ACG WorldwideGargi lad- Assistant Manager - Corporate Marketing V.C shaju- General Manager - Corporate HR at ACG WorldwideAnuj Kabra - Head - Global Business at ACG WorldwideNikunj Desai - GM Strategic Sourcing at ACG Worldwide (Pam,Pampac,Pam Glatt & ACG Inspection)
Stores In DelhiApollo Pharmacy have 119 stores In Delhi located at following location:S.NO.LOCATIONADDRESSPHONE NO.
1.Sarita ViharIndraprastha Apollo HospitalDelhi-Mathura Road, Sarita Vihar,New Delhi 110076011-41626200011-26825536
2.Noida, Sector - 26Indraprastha Apollo Hospitals E 2, Sector 26 Noida, Uttar Pradesh0120-43388670120-4548498
3.Vasant Kunj, IMCL ClinicBuilding No, 1, Sector- B, Pocket- 7, Nelson Mandela Road, Vasant Kunj, New Delhi 110070011-26139972011-40574262
4.Connaught Place Shop No. : G - 8, Marina Arcade, Connaught Place, New Delhi 110001011-23711838011-43631726
5.Hamdard NagarMajeedia Hospital, Jamia Hamadard, Hamdard Nagar, New Delhi 110062011-29959756011-64648710
6.Dwarka, Sector - 4G 1, Flat No.- 11, Block MLU Manish Abnav Plaza, Sector 4, Dwarka, New Delhi011-28081709011-43601961
7.Supreme Court of IndiaChamber No. 2, New Chamber Supreme Court of India, Bhagwan Das Road, New Delhi 110001011-23388582
8.Karol Bagh, Shree Jeewan HospitalShree Jeewan Hospital 67/1, New Rohtak Roat , Karol Bagh, New Delhi 110005011-23517338011-64648755
9.Laxmi NagarC-1, Aruna Park, Laxmi Nagar, New Delhi 110092011-22440313011-43601953
10.East of Kailash, The Apollo ClinicThe Apollo ClinicF- 4, East of Kailash, New Delhi011-26451002011-40576131
11.East Patel NagarShop No. -10A/31, East Patel NagarNew Delhi 110008011-25882629011-43466193
12.Kailash Colony Shop No. 2, Plot No. : HS 20, Kailash Colony Market, New Delhi011-29245612011-40574327
13.Gole MarketShop. No. - 121, Plot No.-I, Block -88, Lady Harding Road (Bangla Sahib Marg) Gole Market, New Delhi - 110001011-23363743011-64648752
14.Rohini, Sector - 9Shop No- A-16 & 23, North Ex Mall Sector - 9, Rohini, New Delhi- 85011-27552210011-43466203
15.Malviya NagarShop No. - 18, Old Market, Malviya Nagar, New Delhi 011-26672056011-40570389
16.Jang PuraShop No. 370 - 371/3, Lachman Chamber, Sahi Hospital Road, Jangpura, Bhogal, New Delhi011-24374849011-43602750
17.AlaknandaShop No-1, Building No, H-3,Shopping Centre, Kalkaji (Alaknanda) New Delhi-19.011-26030990011-64648754
18.Mayur Vihar, Phase - IIShop No-11, 12, Durga Complex, B Block, Mayur Vihar - II, New Delhi011-22727887011-43466186
19.Dwarka, Sector - 10Shop No. : G-3, Ground Floor, Manish Royal Plaza, Plot No. 20, Sector - 10, Dwarka, New Delhi011-25073491011-43089564
20.Vasundhara EnclaveShop No.G - 1 & G-4, Vardhaman Plaza, Vasundhara Enclave, Delhi - 91011-22624655011-43588223
21.R.K. Puram, Sector - 9Shop No.- 7, Sector 9, R.K. Puram, New Delhi 011-26183936011-64648748
22.Khanna MarketShop No.- 46, Khanna Market, New Delhi011-24641258011-64648751
23.Krishna NagarNo. : F-3/17, Krishna Nagar, Delhi - 51011-22099435 011-43465649
24.Rohini, Sector - 13Shop No. - 18, CSC 2, DDA Market, Sector - 13, Rohini, Delhi 85011-27550848 011- 43602391
25.Mansarovar GardenPlot No. F-296, (A - Part), Ground Floor,Mansarover Garden New Delhi - 110015011-25468193011-64648747
26.Hari NagarNo. : WZ - 409A, Janak Park, Clock Tower,Hari Nagar, New Delhi 011-25141063011-64648753
27.New Delhi Rly Station (Ginger Hotel)Rail Yatri Niwas, Jinger Hotel, Ajmeri Gate, New Delhi Railway Station, New Delhi011-23232878
28.Vishwash NagarNo. 545/1-B, (60' Road), Vishwash Nagar, Shahdara, Delhi011-22304626
29.Pandav NagarShop No.3, Pandav Nagar, Delhi - 92011-22481582011-43466202
30.Saini Enclave (Karkardooma)Shop No. G-2 & G-11, Sagar Chambers, Saini Enclave, Karkardooma, Vikas Marg Extn., Delhi011-22378543011-43601915
31.R.K. Puram, Sector - 8Shop No.21, Sector - 8 Market, R.K. Puram, New Delhi - 110022011-26176421011-64648749
32.Vikas Puri, 'H' BlockShop No.- 14, Block - H, LSCVikas Puri, New Delhi - 110018011-28541156011-43466195
33.Vijay Nagar, Kingsway CampShop No. - G/14A, Vijay Nagar, Kingsway CampDelhi - 110009011-27252600011-64648756
34.Mayur Vihar, Phase - IShop No. : A - 8, (Old No. - 392) Khasra No. - 63, Aacharya Niketan, Mayur Vihar Phase - I, Delhi - 110091011-22759780011-43631798
35.Jawahar MargShop No. - 5251, Kohlapur House - 32, Jawahar Marg,Chandrawal Road, Delhi - 110007 (Near Kamla Nagar)011-23852450
36.Kirti NagarShop No. : F-3, F Block MarketKirti Nagar, New Delhi - 110015011-25191030011-43466187
37.I.P. Extension (Patparganj)Shop No. - 16, CSC No. - 2, Zone - 13, Patparganj, Delhi - 110092011-22240089011-43464936
38.Sarita Vihar, Pocket - 'H'Shop No. -15, Plot No. - 5, Pocket - HLSC, Sarita Vihar, New Delhi - 110076011-29945961011-40571973
39.Dwarka, Sector - 7Shop No. : G-47, Vardhman Star City MallLSC-III, Sector - 7, Dwarka, New Delhi 011-25086389011-64648750
40.Mukherjee NagarShop No. : G-7, Plot No. : A 31-34, Jaina Building, Commercial Complex , Mukherjee Nagar, New Delhi - 110009011-27651396011-43466194
41.West Patel NagarShop No. - 1, Property No. - 13/2, West Patel NagarNew Delhi - 110008011-25883150011-64648757
42.West Punjabi BaghShop No. - 2, Property No. - 2, 1/45A, West Punjabi Bagh, New Delhi 011-25225484011-43464935
43.Chitranjan ParkProperty No. : D - 776, Chitranjan ParkNew Delhi - 110019011-26273151011-40574880
44.Savita ViharShop No. : G-6 & G-7, Alliance Tower - II, Plot No. - 7, LSC Rastrey Jan, Savita Vihar, Delhi - 110092011-22158358011-43631797
45.Mayur Vihar, Phase - II (Pocket - A)Shop No. - 10, Pocket - A, CSC, Trilokpuri, North of Lake (Mayur Vihar Phase - II) Delhi011-22784270011-43601941
46.South Extension, Part - IPlot No. -10, Block No. - E, D.L.F., South Extension Scheme,Part - I, New Delhi - 110049011-24654888011-40575209
47.Old Rajinder NagarPlot No.- 60/15, Old Rajinder Nagar, New Delhi - 110060011-25753151011-43466189
48.KalkajiShop No. - 1, Plot No.F - 3, KalkajiNew Delhi - 110019011-41003937011-26474792
49.Mayur Vihar, Phase -I, ExtensionShop No.-4, Plot No -4, Chetan Plaza, Near Samachar Apartment, Mayur Vihar Phase-1 Extension, Delhi- 110091011-22712301011-45152753
50.Janak Puri, Block - 'C' Shop No. - G-3 & G-4, Ashoka Tower, Block - C, Community Centre, Janak Cinema Complex, Janak Puri, New Delhi - 110058011-25515474011-25512344011-41071608
51.Lajpat NagarShop No. - 1, Plot No. -1, Block - A, Lajpat Nagar - IIINew Delhi - 110024011-29836813011-41006643
52.PitampuraShop No. - 2, 'QU' Block, CSC, PitampuraNew Delhi011-27346739011-65963889
53.Rajouri GardenC-70, Major Sudesh Kumar Marg, Opp. Madhav Park, Near Main Market Rajouri Garden, New Delhi - 110027011- 45089440
54.Greater Kailash - IIShop No. -2, Ground Floor, Property No. : S-349, Greater Kailash Part - 2, New Delhi - 110048011-29224260
55.Paschim ViharShop No. - 20, CSC, Block : GH - 13, Paschim Puri, Area G-17, New Delhi - 110087011-25259204
56.East Punjabi BaghShop No. - 4, Plot No.- 1, Road No.-5, Village Bassai DarapurEast Punjabi Bagh, New Delhi 011-28314207
57.DaryaganjDr. Shroff's Charity Eye Hospital5027, Kedarnath Road, Daryaganj, New Delhi - 110002011-23280363
58.R.K. Puram, Sector - 12Shop No. - 22, Sector - 12, R.K. Puram, New Delhi011-26174699
59.Shalimar BaghShop No. -1, Ground Floor, Mahadevi Chamber, Plot No. -5, Block - BN, CSC Shalimar Bagh, Delhi 011-27486082011-42258376
60.Pitampura, JP MarketShop No. - JP/1, JP Market, Pitampura, New Delhi 011-27324606
61.Mandavli FazalpurShop No. G - 5, Ground Floor, Manish Plaza, Plot No. -2, LSC-II, Mandavli Fazalpur (Patparganj, I.P. Extension) Delhi - 92 011-22771769
62.Vivek ViharShop No. : G-1, & G-2, Ground Floor, Vardhman's Arihant Tower, Block-D Market, Vivek Vihar, Delhi - 110095011-22143717
63.Janak Puri, Block - B Shop No. - 02, Block - B, Community Centre,Janakpuri, New Delhi - 110058011-25542172
64.Anand Vihar Shop No. - 2, Ground Floor, Block - C, L.S.C. Market , Anand Vihar, New Delhi011-22143907
65.Model TownShop/Plot No. - 12, Block F-14, Model Town, Delhi - 110009011-27241301
66.Patparganj (Madhu Vihar)Shop No. - 29, Ground Floor, New No. - 29A, CSC - I, Zone : E-13, Patparganj, Delhi - 110092011-22231012
67.Rohini, Sector - 18Shop No.- 14 & 19, C.S.C. - 2, Block - B, D.D.A. Market,Sector - 18, Rohini, New Delhi - 110089011-27299557
68.Lajpat Nagar (Krishna Market)Shop No. - 1, Krishna Market, Lajpat Nager - I,New Delhi - 110024011-29820520
69.Madhuban Chowk (Saroj Hospital)Saroj Hospital & Heart InstituteGround Floor, Plot No.-2, Institutional Area, Sector -14 Extension, Madhuban Chowk, Rohini, New Delhi - 110085011-27553088
70.Preet ViharShop No. : G5-A, Plot No.- 8, Community Center, Chopra Commercial Complex , Preet Vihar, New Delhi - 110092011-22529924
71.Kingsway CampProperty No. - 1993, Outram Lines, Kingsway Camp, Delhi 110 009011-27605728
72.Rohini, Sector - 3Shop (Property) No. - 32, Block - D, Pocket - 14, Sector - 3, Rohini, New Delhi 011-27514809
73.Laxmi Nagar (Guru Ram Das Nagar)Shop No. - 02, Property No. - 117 & 118, Khasra No.- 53/25, Guru Ram Das Nagar, (Laxmi Nagar) Harmandar Colony, Mouza Khureji Khas, Shahdara, Delhi011-22042798
74.Kotla Mubarak PurProperty No. - 1463/1, Ground Floor, Gurdwara Road Main Kotla Mubarak Pur, New Delhi - 110003011-246020888826992335
75.Pitampura "CU" BlockShop No. : G -1, Plot No.-4, Vardhman Taru Plaza, LSC, Block - CU, Pitampura, New Delhi - 110034011-273452438826992336
76.Rana Pratap BaghShop No. - 1, Property No.: D - 1/1, (Old No. D - 35)Rana Pratap Bagh, Delhi - 1100078826992337
77.Vasundhara EnclaveShop No.: G-37 & G-38, Vardhaman Sunrise Plaza Plot No. - 1, LSC, Vasundhara Enclave, Delhi - 110068826992338
78.Noida, Sector - 27Sab Mall, E- 331, M-12, Sector- 27, Noida0120-25406060120-4272860
79.Indirapuram (Amrapali Green)Shop No.UG-10, Amrapali Green, Vaibhav Khand, Indirapuram, Ghaziabad, Uttar Pradesh0120-41628300120-6498224
80.Noida, Sector - 62Shop No. : PG 2 & 27, T.O.T. Mall, C - 58/15-A, Sector 62, Noida, Uttar Pradesh 0120-24039980120-4276375
81.Raj Nagar (Ghaziabad)Shop No. - 6 & 15, Plot No. - 11/179, Raj NagarDistrict Ghaziabad, Uttar Pradesh0120-2820817
82.Vaishali, Sector - 4Shop No. - 2 & 6, Commercial Plot No. - 7,Lajwanti Plaza, Sector - 4, Vaisali, District - GhaziabadUttar Pradesh0120-41604310120-6492617
83.Noida, Sector - 29Shop No. - 33, Brahmputra Shopping Centre,Sector - 29, Noida, District - Gautam Budh Nagar,Uttar Pradesh0120-42727460120-6498223
84.Noida, Sector - 41Plot No. - 6, Block : C- 98, Sector - 41, Noida, District - Gautam Budh Nagar, Uttar Pradesh - 201301 0120-25709860120-4272760
85.Noida, Sector - 110Plot No. -7, Block : A-2, Sector -110, Noida, District - Gautam Budh Nagar, Uttar Pradesh 0120-4347894 0120-6498451
86.Noida, Sector - 25Shop No. - 8, Jalvayu Vihar Shopping Centre, Sector - 25 Noida, District Gautam Budh Nagar, Uttar Pradesh0120-45450190120-6498452
87.Indirapuram (Ashiana Arcade)Shop No. - UG-18, Ashiana Arcade, Plot No. C-1, Golden Residency Enclave, Indirapuram, Ghaziabad, UP0120-41251280120-6498453
88.Indirapuram (Abhay Khand - II)Shop No. - 2, Retailex Mall, Abhay Khand - II, Indirapuram, Ghaziabad, Uttar Pradesh0120-26076140120-42382160120-6499152
89.Vasundhara, Sector - 12Shop No. - 202, Upper Ground Floor, Plot No. - 12/513,Sector - 12, Vasundhara, Ghaziabad, Uttar Pradesh0120-43361170120-6498454
90.Gandhi Nagar, GhaziabadShop No.- 8, Near Hari Manadir, New Gandhi Nagar, Ghaziabad, Uttar Pradesh0120-4336116
91.Gamma - II, Greater NoidaShop No. GGS - 9, Gamma Shopping Complex, Sector Gamma-II, Greater Noida, Uttar Pradesh0120-42667380120-23220290120-6454117
92.Indirapuram (Regalia Heights)Shop No. MS-04, Regalia Heights, Shipra Sun City - IIndirapuram, Ghaziabad, Uttar Pradesh0120-26504650120-4108594
93.Noida, Sector - 26Shop No. - 106, Jaipuria Plaza, Commercial Plot No. - 68 ABlock - D, Sector - 26, Noida, Uttar Pradesh0120-24425740120-4251254
94.Indirapuram (Amrapali Royal)Shop No. : LGF - 06, Amrapali Royal Commercial ComplexPlot No. - 2B, Vaibhav Khand, Indirapuram, Ghaziabad, Uttar Pradesh0120-26070790120-4320282
95.Vaishali, Sector - 5Shop No. - 17, Ground Floor, Sector -5, Vaishali,Ghaziabad, Uttar Pradesh0120-64770810120-4320102
96.Noida, Sector - 53Shop No. : S-38, Bolck - S, Kanchan Junga Shopping Complex, Sector - 53, Noida, U.P.0120-4203122
97.I Gate Patni, NoidaNo. - 139-140, NSEZ, Noida, Uttar Pradesh - 2013010120-4543150
98.Indirapuram (Gyan Khand)Shop No. UG - 3, Plot No. C.S.-9, Gyankhand, Indirapuram,Ghaziabad, Uttar Pradesh0120-2605450
99.Indirapuram (Orange County)Shop No. LGF-110, Orange County, Ahinsa Khand 1st Indirapuram, Ghaziabad, Uttar Pradesh,0120-41033418826994490
100.R.D.C. Raj Nagar (Ghaziabad)Shop No. : R.D.C. - 16, Raj Nagar, Ghaziabad, Uttar Pradesh0120-4113545
101.Vasundhara, Sector - 4BShop No. : UGF -1, Plot No. : 1- D, Reliance Plaza, Sector - 4B,Vasundhara, Ghaziabad, Uttar Pradesh8826994491
102.Gurgaon, GalleriaShop No.- SG - 061, Ground Floor Galleria, DLF City, Phase - IV, Gurgaon, Haryana0124-40579780124-4117978
103.Gurgaon, South City - II(Block - F)Shop No. - GF - 21, Block -F, Shopping PlazaSouth City - II, Gurgaon, Haryana0124-42852600124-4240780
104.Gurgaon, Sector - 14The Apollo Clinic SCO - 1, Sector - 14, Gurgaon, Haryana0124-42852620124-2300502
105.Gurgaon, Sector - 56, The Apollo ClinicThe Apollo Clinic SCO : 68-69, Sector : 55-56, Gurgaon, Haryana0124-4285261
106.Gurgaon, Qutub PlazaShop No. - C-3, DLF Qutub Plaza, DLF City, Phase - I, Gurgaon, Haryana0124-4240781
107.Gurgaon, Palam ViharShop No.: S-96, Palam Vyapaar Kendra, Palam Vihar, Gurgaon, Haryana0124-4073041
108.Faridabad, Sector - 15Shop No. - 145 P, Sector - 15, Faridabad, Haryana0129-22618700129-4175067
109.Gurgaon, Sector - 23Shop No. - 3, Ground Floor, Sector - 23 & 23A MarketGurgaon, Haryana - 1220170124-4258783
110.Neelam Chowk, FaridabadShop No.- 57, N.I.T. Chowk, Faridabad (Haryana)0129-24179350129-4025067
111.Gurgaon, Sector : 55 - 56Shop No. - 92, Sector : 55 - 56, Gurgaon, Haryana0124-4387325
112.Gurgaon, Sector : 31 - 32Booth No. - 158, Sector : 31, Gurgaon, Haryana0124-4387326
113.Gurgaon, Sushant LokShop No. - GF - 53, Sushant Vyapaar Kendra, Sushant Lok, Phase -1, Gurgaon, Haryana0124-4477603
114.Gurgaon, Sun CityShop No. - 23, LGF, Suncity Arcade,Suncity,Gurgaon, Haryana 0124-4233972
115.Gurgaon, South City - II(Block - B)Shop No. - 11, Shopping Plaza, Block - B, South City - II, Sohna Road, Gurgaon, Haryana.0124-4233971
116.Gurgaon, Vatika CityShop No. : GF - 05, Vatika City Market, Sector - 49Gurgaon, Haryana0124-42852638826992282
117.Gurgaon, The SapphireShop No. : G - 86, Ground Floor, The Sapphire, Sector - 49Gurgaon, Haryana0124-45104628826992281
118.Gurgaon, Sector - 14Shop / Booth No. - 118, Sector : 14, Near Huda Office Gurgaon, Haryana0124-42653768826992284
119.Gurgaon, Aryan HospitalPlot No. - 4, Ranjan Garden, Cant Area, Old Railway Road, Gurgaon, Haryana0124-45104728826992328
MCKINSEYs 7S ModelThe McKinsey 7S Framework is a management model developed by well business consultants Robert H. Waterman, Jr. and Tom Peters (who also developed the MBWAManagement by Walking Around" and authored In Search of Excellence in the 1980s. This was a strategic vision for groups, to include l and performance) the model can be used to understand how the organizational well-known businesses, business units, and teams. The 7S are structure, strategy, systems, skills, style, staff and shared values.The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment during other types of change.
The Seven S Framework first appeared in "The Art of Japanese Management" by RichardPascale and Anthony Athos in 1981. They had been looking at how Japanese industry had been so successful, at around the same time that Tom Peters and Robert Waterman were exploring what made a company excellent. The Seven S model was born at a meeting of the four authors in 1978. It went on to appear in "In Search of Excellence" by Peters and Waterman, and was taken up as a basic tool by the global management consultancy.
Objective of the Model: To analyze how well an organization is positioned to achieve its intended objective.
Use of this model: The model is most often used as a tool to assess and monitor changes in the internal situation of an organization.1. Improve the performance of a company2. Examine the likely effects of future changes within a company3. Align departments and processes during a merger or acquisition4. Determine how best to implement a proposed strategy
The Seven Interdependent Elements in the Mckinsey FrameworkThe basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful. They are categorized into 2 broad headings:1. Hard Elements Strategy Structure Systems2. Soft Elements Shared Values Skills Style Staff
HARD ELEMENTSSOFT ELEMENTS
Strategy Structure System Shared Values Skills Style Staff
"Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems."Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful.
7 Elements1. Strategy: the plan devised to maintain and build competitive advantage over the competition.2. Structure: the way the organization is structured and who reports to whom.3. Systems: the daily activities and procedures that staff members engage in to get the job done.4. Shared Values: called "super ordinate goals" when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.5. Style: the style of leadership adopt6. Staff: the employees and their general capabilities.7. Skills: the actual skills and competencies of the employees working for the company. 1. Strategy: Strategy signifies the course of action that an organization adopts in order to expand and excel its business. It reflects on all those steps and actions that an organization plans in order effectively handle its customers & competitors. Apollo Pharmacy is a leader in pharmacy retail with 1500 stores all over the country strongly capitalizing on its parent brand (Apollo Hospitals) brand name. Under the retail sector, Apollo Pharmacy aims to provide health care related products in its stores. Along with many national brands it also provides many Private Label Health Care Products.2. Structure: With 1500 stores all over country, each store is sized around 100 sq meters. The stores also provide home delivery covering a radius of 2 km around the store.3. System: Apollo Pharmacy store is a mix of convenience stores located in residential areas and hospitals and specialty stores having narrow product line confined to health care products and deep assortments. Stores are seven day open from 8 am to 11 pm in summers and 8 am to 10 pm in winters. 4. Shared Values: One of the central objectives of each employee at store is to provide best service to the customer. 5. Skills: Skills refers to the expertise of the organization in being successfully able to deliver services as per the expectations of the customer. The key attributes which could be associated with Apollo Pharmacy store are understanding the mood of customer and helping them accordingly. Being a pharmacy store many customers come with mild health problems like light fever and wants recemendations from store helpers for the possible medicine. So store employees should have basic understanding of common disease and their cure.6. Style: In the IT Services - Apollo Pharmacy practices centralized distribution system where all products national brands and private labels stock is maintained in godown and the sent to each store. Fast moving items are automatically ordered when minimum level is attained, while slow moving items are reordered on store manager's request. In ungent requirment a store can also get products from another store having excess stock. Delivery model is period based with period of two days.7. Staff: Apollo Pharmacy employs one regional store manager, one store manager and 4 helpers. Mix of male and female helpers is preferred b the company. An operational team is also present to look into the logistics of the products. For Private label products there is an Executive for each product category, with merchandising manager governing all products on whole.
Competitive position in the Industry (Using Porters Framework)The five force framework reputedly known as the Porters Five forces Model has been developed by Michael Porter Professor, Harvard Business School and has been published in his book Competitive Strategy: Techniques for Analyzing Industries and Competitors in the year 1980. Since then, the model is considered as a significant tool for analyzing an organizations industry structure in terms of strategy.Porters Five Force model is institutionalised on the concept that a corporate strategy should be able to capitalize on the opportunities and safeguard the organisation from the potential threats of the external environment. Porters Five Forces are briefly classified into Horizontal & Vertical competition which includes: Competitive Rivalry (Horizontal) Bargaining Power of Suppliers (Vertical) Threat of New Entrant (Horizontal) Bargaining Power of buyers (Vertical) Threat of Substitution (Horizontal) Porter's Five Forces
Horizontal Competition:Competitive Rivalry: In pharmacy retail chain Apollo Pharmacy is leader with 1500 stores country wide and closest competetior Med Plus having 1250 stores. Main threat for Apollo is from unorganized sector as they are present for long time and haave built relations with local customer. Also they are able to provide additional discount by not providing the bill of purchase.Threat of Substitution: Health care products being a vary basic necesity wont decline in near future. As the concept require the have wide assortments other stores are reluctant of keep its inventory. So threat of substitution is of less magnitude. Threat of New Entry: Retail stores having high operational cost and high fixed costs reuire business to run on loss for initial time. Apollo has 1500 stores country wide and thus enjoys superior position. Although threat of new entrant is there but it will be gradual.Vertical Competition:Supplier Power: National Brands supplier enjoys the supplier power and can dictate their terms but private labels are effective way to reduce the power. Apollo Pharmacy outsource the manufacturing of private label products to regional players and thus enjoys less or no supplier power.Buyer Power: Generally there are more than one pharmacy stores present in one locality and customers are not loyal to any one store specially to organized store the customer have buying power. But here again private label products helps company to hold the customers as those private label products are avaliable only on their stores. Stores also provides services like Loyalty Membership cards and Home Delivery to hold their customers.
Part B Project Work
PRIVATE LABEL GROWTH:
Growth in private label sales at retail stores is basically owing to the consumers perception of the brand image of that particular store. The name Apollo has become synonymous with trust and values that it has imbibed over the years and the same are reflected in each transaction at Apollo Pharmacy. Consumers think that any in house product being offered by Apollo would be certainly good in terms of quality and offer value for money, a name that they can always rely uponEVOLUTION OF PRIVATE LABELS:PHASE 1: IMPORTIn the late 19th century,cooperative retailers in particular imported exotic products that were sold loose or were pre packed under the traders logoPHASE 2: VALUE ALTERNATIVESIn the 20th century retailers began to evaluate value alternatives to established brands especiallly in categories as paper products with lower levels of brand loyalty. PHASE 3: SEGMENTATION BY PRICEWhile economy lines have been used to defeat price aggressive retailers such as discount stores,standard lines,sold mostly under the retailers banner name,have offered brand like quality at lower price while premium priced lines have been developed to expand the price and quality spectrum.PHASE 4: SEGMENTATION BY CATEGORIES(SUB BRANDING)Many retailers have started to develop special interest brands catering for specific consumer segment.Depending on the ranges concerned,sub brands have been either used or totally new fantasy labels.PHASE 5: SEGMENTATION BY BRAND ATTRIBUTES,ETHICAL CREDENTIALSThe development of private labels satisfying consumer demand for products thst embrace ethical credentials.
TRENDS IN MARKET(1) PRIVATE LABEL SHARE TRENDSOver the past several years, private label has consistently accounted for about 16% of CPG spending and one-fifth of products purchased. Though not remarkable, the growth trend has been slightly positive each of the past four years. This past year has seen escalating growth rates as consumers increasingly turn to private label in order to save money on packaged goods. Private label share growth has accelerated across all income segments over the past year as consumers struggle under intense economic pressures.
(2) CHANNEL SHARE
Private label share varies across retail channels, and is highest among grocery retailers. Share growth, however, is strongest among retailers in the drug channel. Over the past year, private label share of drug sales (dollar and unit) climbed one full point. The catalyst behind this growth is likely multi-pronged.As illustrated in IRIs Transforming Economy: Shoppers in Crisis drug channel basket rings have grown as consumers increasingly turn to the channel for local fill-in trips. At the same time, self-care behavior is up sharply, reflective of consumer efforts to limit expenditures wherever possible, including efforts to reduce trips to the doctor.
(3) DEPARTMENT SHAREPrivate label offerings of OTC products have grown significantly over the past year, lifted by growing numbers of prescription products moving to OTC, and retailer efforts to capitalize on functional and customized product features to create a unique private label offering (e.g. fast-melt variations, slowrelease, etc).Across channels, private label now represents one-third of healthcare department units and one-quarter of department sales. Private label unit growth within the healthcare department has significantly outpaced growth in any other department. This is good news for drug retailers. As a destination location for healthcare products, the channel is well-positioned to compete
(4) PRIVATE LABEL PURCHASE SEGMENTThe concentrated nature of private label extends beyond the number of categories offered, also describing the number of habitual private label purchasers in CPG today.Though nearly everyone purchases some private label products at some point- private label penetration remains firm at 100%- a notable 33% of shoppers are considered heavy buyers of private label goods. This valuable private label consumer segment actually accounts for nearly two-thirds of private label sales.
(5) CONSUMER SPENDING BY SEGMENTPrivate label penetration and share of spending is strongly impacted by demographics. Transforming Economy: Shoppers in Crisis report reveals, though, that in these tough economic times, wealthier consumers have stepped up private label purchase activity as they seek value through substitution rather than opting out of a category completely.Another key indicator of private label spending is household size. Private label penetration increases sharply with household size. Particularly in todays economy, larger households are looking to stretch their CPG dollars as far as possible. Private label products go a long way to answering this need for value. To compete effectively, retailers must strictly adhere to segmented private label strategies. Multi-tiered offerings will bring broader appeal, and those retailers that successfully establish a halo brand will reap sizable private label share increases.
FUTURE TRENDS:(1) Multiple Availability of private labels in co-operation with other retailers: This goes hand in hand with decreasing brand availability. Safeway in the US launched the Better Living Brands Alliance in a bid to expand its organic and healthy eating private labels via third parties Waitrose, UK, sells its private label products via Indian Retailer K Raheja in its Hyper CITY stores(2) Channel Blurring: Foodservice companies bring their products on retailers shelves and vice versa. McDonalds tomato ketchup is available from supermarkets, for instance in Germany Wal-Mart sells chilled drinks under its private labels(3) Co-branding and tailor-made solutions as a result from co-operation with manufacturer brands to tailor their offers to their target groups French Fromagerie Bels cheese brand Babybel with Aldis Be light healthy eating private label.Private Labels at Apollo Pharmacy:CategoryProducts
Instant Energy DrinksGlucose D
ORS
Herbal JuiceAloe Vera Juice
Amla Juice
Karela Juice
Noni Juice
Honey
Green Tea
Diet Green Tea
Sweetner
Breakfast Cereals
Granola Bar
Oil
Digestive HealthAntacid
Triphala
Sat-Isabgol
Vitamin/ SupplementsMulti Vitamin
Dietry Supplement
Chawanprash
Protein Supplement
Baby CareHygiene
Bibs
Matt
Feeding Bottle
Diapers
Wipes
Skin CareMoisturisers
Lotions
Rose Water
Scrubs
Shampoo
Soaps
Face Wash
Shower Gel
Oral CareToothbrush Adult
Toothbrush Kids
Toothpaste
Mouthwash
Men's GroomingShave Gel
Shave Cream
After Shave Lotion
Deodrant Soap
Hair Gel
Deodrant Spray
Shaving Brush
Shaving Razor
HygieneRefreshing Wipes
Soft Tissues
Nail Clippers
Cotton Buds
Cotton Balls
Adult Diapers
Sanitary Pad
Hand Sanitizers
Hand Wash
OTCCondoms
Talcum Powders
Air Fresheners
Lozenges
Cough Syrup
Cough Drops
Candies
Vapour Rub
Vapour Inhaler
Pain Balm
Lip Balm
Petroleum Jelly
Anti Fungal Cream
Clinical AidPovidone Iodine Solution
Povidone Iodine Ointment
Disinfectant
Crepe Bandage
Medical Support
Microporous Surgical Tape
Home AidNebulizer
Blood Pressure Moniter
Vapourizer
Thermometer
Pregnancy
Test Card
Hot Water Bottle
Pain Relief
Adhesive Bandage
Antiseptic Liquid
First Aid Kit
Design and Pricing Strategies Followed for PL products:1. Price Competetion: The Prices of PL products are less than their National Brand counter part, thus giving consumers benefit of low price.2. Me-Too: The design of PL products are similar to their national brands counter part thus conveying the message of what products it substitutes.COMMERCIAL IMPLICATIONS OF PRIVATE LABELRetailers are focusing on Private Label as a means to delivering gross margin and Brand Enhancement objectives. Higher and unavoidable overhead costs are driving the need for improving Gross MarginsPrivate label allow Retailers to design for their specific target marketIncreased channel control allows Retailers flexibly to be responsive to trend cyclesIncreased product differentiation protects the Retailers market shareThe commercial implications of Private label are: Improve Profitability Build and maintain consumer loyalty. Reinforce Market Position Increase Consumer Choice Match Products more precisely to Retailers Customers
Some other factors include: Enhancement of Store Image Better control of Supply Chain and Product quality Differentiation from competitors
PRICE OF PRIVATE LABEL PRODUCTSPrivate Label products may be cheaper to produce for a number of reasons:(i) Where private label uses the manufacturer brands as the benchmark it might be seen as capitalizing upon some of the original product development and marketing;(ii) Manufacturers may produce private label at prices that reflect only the direct manufacturing costs in order to fill excess production capacity;(iii) If the manufacturers sales force and distribution channels are not used, the retailers buying price can be reduced;(iv) If the retailer has enough (marginal) buying power, it might be able to negotiate a reduction in the manufacturers profit marginAn Example of the Costs Avoided with Private Label
SNCOMPONENTMANUFACTURED BRANDPRIVATE LABEL
1.Raw Materials3535
2.Packaging Material1212
3.Manufactured CostsVariableFixed959--
4.Research & Development3--
5.Sales Force4--
6.Advertising & Promotion 95
7.Transport & Distribution52
8.Other Costs1010
9.Operating Profit82
10.Retailer Buying Price10075
In the above mentioned example, all costs are an approximate prediction. The actual costs may actually vary across different product categories. PRICE
Pricing by Private Brand may either be: Premium Pricing Value for money pricingBoth of them contribute towardsStore Image Store LoyaltyCustomer FootfallsStores Bargaining PowerStore marginStore Profits
In sum, the benefits to a retailer from the introduction of store brands are (i) Higher unit margin on national brands (ii) Expansion of the category sales and (iii) Higher category margin from sales volume
Performance of Private Label Products (Research Based Project)Central Problem:Apollo having variety of PL products of different sizes and different prices it complicated to compare their performances.Objectives Summer Internship Programme To compare the performance of PL products in most appropiate way.Action Plan:To compare the performance interview was conducted with merchandising manager and executive of all product categories. In all three methids were used to eveluate the performance of PL products quantitatevily.1. Average sales per month: This method gives clear picture about cash flow due to the product and its movement. But as different product had different margins comparing based on sales itself is not enough.2. Average returns per month: This method being more closely related to margin is prefered over Average sales per month.3. Returns per Shelve: In a small retail store of size 200-250 sq ft, physical space is also a matter of concern. There are only limited shelves where products can be displayed. So products of small size have advantage over products acquring more space. In this method a hypothetical shelve is considered which is filled only with one type of pruduct. The returns (returns=sales-cost) of this shelve will denote much accurate performance measure as it include store's operational cost.A basket of products was chosen as adviced by the merchandising manager. Following products was considered for the pilot study.ITEM NAMECategoryMRP
AP THERMOMETER DIGITALHome Aid195
AP AMLA JUICE 1 LTR.Health Food205
AP SENSITIVE TOOTH BRUSH 12SOral care35
AP COUGH DROPS 300S JAROTC1
AP BP MONITORHome Aid1999
AP AMLA JUICE 500MLHealth Food130
AP GREEN TEA 25'SHealth Food85
AP NONI JUICE 500MLHealth Food550
AP ALOE VERA JUICE 500 MLHealth Food160
AP ALOEVERA JUICE 1 LTRHealth Food245
AP HAND SANITIZER 100MLHygeine55
AP HAND SANITIZER 250 MLHygeine99
AP HAND SANITIZER 50MLHygeine35
AP PREMIUM TOOTHBRUSHOral care28
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care35
AP POPULAR TOOTHBRUSHOral care18
AP SUPER CLEAN TOOTH BRUSHOral care10
AP PREMIUM SERIES TOOTH BRUSHOral care22
AP TOOTHPASTE MENTHOL 80GMOral care33
AP TOOTHPASTE RED GEL 80GMOral care33
Now the sales figure of all products were collected for past year from April '12 to March '13. Problems faced at this step was that some products was released only 6 months back, some products were out of stock due to operational problems and thus suffered sales drop. To avoid this average quantity sold per month was calculated ignoring period of out of stock. Also the prices were inflated during past year quite a few times and for almost all products. As described by the merchandising manager prices were inflated not to affect sales but due to increased manufacturing cost and to maintain constant margin. Thus in order to measure their performance their quantity sold was multiplied by current price to calculate hypothetical average sales per month.ITEM NAMECategoryMRPAverage quantity sold per monthAverage Sales per month
AP BP MONITORHome Aid1999592.57142861184550.29
AP THERMOMETER DIGITALHome Aid1955228.751019606.25
AP AMLA JUICE 1 LTR.Health Food2054549.333333932613.33
AP GREEN TEA 25'SHealth Food8510699.77778909481.11
AP NONI JUICE 500MLHealth Food5501388.9763895.00
AP SENSITIVE TOOTH BRUSH 12SOral care3521558.41667754544.58
AP COUGH DROPS 300S JAROTC1697278.1667697278.17
AP AMLA JUICE 500MLHealth Food1305297.5688675.00
AP ALOE VERA JUICE 500 MLHealth Food1603383.916667541426.67
AP ALOEVERA JUICE 1 LTRHealth Food2452204539980.00
AP HAND SANITIZER 100MLHygeine557109.5391022.50
AP PREMIUM TOOTHBRUSHOral care287625.416667213511.67
AP PREMIUM SERIES TOOTH BRUSHOral care228536.166667187795.67
AP HAND SANITIZER 50MLHygeine354659.416667163079.58
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care354364.333333152751.67
AP POPULAR TOOTHBRUSHOral care188470.333333152466.00
AP HAND SANITIZER 250 MLHygeine991487.166667147229.50
AP SUPER CLEAN TOOTH BRUSHOral care1011617.66667116176.67
AP TOOTHPASTE MENTHOL 80GMOral care333164.166667104417.50
AP TOOTHPASTE RED GEL 80GMOral care33851.571428628101.86
Thus at this stage we got products ranked based on average sales per month. To get returns by each product costing of each product was considered. The cost included following :1. Manufactures Price2. Excise3. Freight Charges4. Logistics5. Sales TaxA list was complied with cost of each product and its margin percent was calculated.ITEM NAMECategoryMRPCostMarginMargin Percent
AP THERMOMETER DIGITALHome Aid19560.544134.45668.95%
AP AMLA JUICE 1 LTR.Health Food20582.28122.7259.86%
AP SENSITIVE TOOTH BRUSH 12SOral care3513.11221.88862.54%
AP COUGH DROPS 300S JAROTC300136.29163.7154.57%
AP BP MONITORHome Aid1999926107353.68%
AP AMLA JUICE 500MLHealth Food13045.80484.19664.77%
AP GREEN TEA 25'SHealth Food8528.2756.7366.74%
AP NONI JUICE 500MLHealth Food550288.2261.847.60%
AP ALOE VERA JUICE 500 MLHealth Food16072.13887.86254.91%
AP ALOEVERA JUICE 1 LTRHealth Food245135.124109.87644.85%
AP HAND SANITIZER 100MLHygeine5519.43735.56364.66%
AP HAND SANITIZER 250 MLHygeine9949.87449.12649.62%
AP HAND SANITIZER 50MLHygeine3514.320.759.14%
AP PREMIUM TOOTHBRUSHOral care2814.21213.78849.24%
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care3518.45816.54247.26%
AP POPULAR TOOTHBRUSHOral care189.7248.27645.98%
AP SUPER CLEAN TOOTH BRUSHOral care105.4344.56645.66%
AP PREMIUM SERIES TOOTH BRUSHOral care2212.1449.85644.80%
AP TOOTHPASTE MENTHOL 80GMOral care3319.99813.00239.40%
AP TOOTHPASTE RED GEL 80GMOral care3322.42910.57132.03%
The margin percent when multiplied by sales gives the returns per month for the product.ITEM NAMECategoryMRPMargin PercentSalesReturns
AP THERMOMETER DIGITALHome Aid19568.95%1019606.25703036.81
AP BP MONITORHome Aid199953.68%1184550.29635829.14
AP GREEN TEA 25'SHealth Food8566.74%909481.11606998.39
AP AMLA JUICE 1 LTR.Health Food20559.86%932613.33558294.19
AP SENSITIVE TOOTH BRUSH 12SOral care3562.54%754544.58471870.62
AP AMLA JUICE 500MLHealth Food13064.77%688675.00446028.31
AP COUGH DROPS 300S JAROTC154.57%697278.17380504.70
AP NONI JUICE 500MLHealth Food55047.60%763895.00363614.02
AP ALOE VERA JUICE 500 MLHealth Food16054.91%541426.67297317.69
AP HAND SANITIZER 100MLHygeine5564.66%391022.50252835.15
AP ALOEVERA JUICE 1 LTRHealth Food24544.85%539980.00242166.70
AP PREMIUM TOOTHBRUSHOral care2849.24%213511.67105139.25
AP HAND SANITIZER 50MLHygeine3559.14%163079.5896449.93
AP PREMIUM SERIES TOOTH BRUSHOral care2244.80%187795.6784132.46
AP HAND SANITIZER 250 MLHygeine9949.62%147229.5073058.55
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care3547.26%152751.6772194.80
AP POPULAR TOOTHBRUSHOral care1845.98%152466.0070100.48
AP SUPER CLEAN TOOTH BRUSHOral care1045.66%116176.6753046.27
AP TOOTHPASTE MENTHOL 80GMOral care3339.40%104417.5041140.50
AP TOOTHPASTE RED GEL 80GMOral care3332.03%28101.869001.96
In above table products are arranged according to returns per month.Next to calculate returns per shelve, a typical shelf was cleared and then fully filled by each product. The number of products that can be accommodated on each shelve was noted.ITEM NAMECategoryMRPSelf Use typeBox SizeCapacity in one Shelf Total Units in one shelf
AP THERMOMETER DIGITALHome Aid195Box10880
AP AMLA JUICE 1 LTR.Health Food205Individual Units13232
AP SENSITIVE TOOTH BRUSH 12SOral care35Box11999
AP COUGH DROPS 300S JAROTC1Box300103000
AP BP MONITORHome Aid1999Individual Units177
AP AMLA JUICE 500MLHealth Food130Individual Units13232
AP GREEN TEA 25'SHealth Food85Individual Units14040
AP NONI JUICE 500MLHealth Food550Individual Units13232
AP ALOE VERA JUICE 500 MLHealth Food160Individual Units13232
AP ALOEVERA JUICE 1 LTRHealth Food245Individual Units13232
AP HAND SANITIZER 100MLHygeine55Individual Units15050
AP HAND SANITIZER 250 MLHygeine99Individual Units14040
AP HAND SANITIZER 50MLHygeine35Individual Units17575
AP PREMIUM TOOTHBRUSHOral care28Box11999
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care35Box11999
AP POPULAR TOOTHBRUSHOral care18Box11999
AP SUPER CLEAN TOOTH BRUSHOral care10Box11999
AP PREMIUM SERIES TOOTH BRUSHOral care22Box11999
AP TOOTHPASTE MENTHOL 80GMOral care33Individual Units1119119
AP TOOTHPASTE RED GEL 80GMOral care33Individual Units1119119
To calculate returns per shelve number of shelves were calculated to store one month's inventory.
ITEM NAMECategoryMRPTotal Units in one shelfAverage Monthly SalesTotal Shelves
AP THERMOMETER DIGITALHome Aid195805228.7565.36
AP AMLA JUICE 1 LTR.Health Food205324549.33142.17
AP SENSITIVE TOOTH BRUSH 12SOral care359921558.42217.76
AP COUGH DROPS 300S JAROTC13000697278.17232.43
AP BP MONITORHome Aid19997592.5784.65
AP AMLA JUICE 500MLHealth Food130325297.50165.55
AP GREEN TEA 25'SHealth Food854010699.78267.49
AP NONI JUICE 500MLHealth Food550321388.9043.40
AP ALOE VERA JUICE 500 MLHealth Food160323383.92105.75
AP ALOEVERA JUICE 1 LTRHealth Food245322204.0068.88
AP HAND SANITIZER 100MLHygiene55507109.50142.19
AP HAND SANITIZER 250 MLHygiene99401487.1737.18
AP HAND SANITIZER 50MLHygiene35754659.4262.13
AP PREMIUM TOOTHBRUSHOral care28997625.4277.02
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care35994364.3344.08
AP POPULAR TOOTHBRUSHOral care18998470.3385.56
AP SUPER CLEAN TOOTH BRUSHOral care109911617.67117.35
AP PREMIUM SERIES TOOTH BRUSHOral care22998536.1786.22
AP TOOTHPASTE MENTHOL 80GMOral care331193164.1726.59
AP TOOTHPASTE RED GEL 80GMOral care33119851.577.16
Now monthly margin was divided by number of shelves to get returns per shelve.ITEM NAMECategoryMRPTotal ShelvesAverage Monthly MarginReturns per shelve
AP COUGH DROPS 300S JAROTC123380504.7016371.00
AP THERMOMETER DIGITALHome Aid19565.36703036.8110756.48
AP NONI JUICE 500MLHealth Food55043.40363614.028377.60
AP BP MONITORHome Aid199984.65635829.147511.00
AP AMLA JUICE 1 LTR.Health Food205142.17558294.193927.04
AP ALOEVERA JUICE 1 LTRHealth Food24568.88242166.703516.03
AP ALOE VERA JUICE 500 MLHealth Food160105.75297317.692811.58
AP AMLA JUICE 500MLHealth Food130165.55446028.312694.27
AP GREEN TEA 25'SHealth Food85267.49606998.392269.20
AP SENSITIVE TOOTH BRUSH 12SOral care35217.76471870.622166.91
AP HAND SANITIZER 250 MLHygiene9937.1873058.551965.04
AP HAND SANITIZER 100MLHygiene55142.19252835.151778.15
AP DAILY FRESH TOOTHBRUSH TWIN PACKOral care3544.0872194.801637.66
AP HAND SANITIZER 50MLHygiene3562.1396449.931552.50
AP TOOTHPASTE MENTHOL 80GMOral care3326.5941140.501547.24
AP PREMIUM TOOTHBRUSHOral care2877.02105139.251365.01
AP TOOTHPASTE RED GEL 80GMOral care337.169001.961257.95
AP PREMIUM SERIES TOOTH BRUSHOral care2286.2284132.46975.74
AP POPULAR TOOTHBRUSHOral care1885.5670100.48819.32
AP SUPER CLEAN TOOTH BRUSHOral care10117.3553046.27452.03
Thus the products were ranked according to returns per shelve.
Pharmacy Store Insights (Research Based Project)Analyzing the business model of the pharmacy retail chains to understand the potential margins and return ratios that the business can generate. These analyses have been done at store level based on discussions with the operational team.Sales mix - Typically in a pharmacy store, prescription drugs account for 70-75% of the total sales, followed by 20-25% sale from OTC products and 5-7% from private label goods.Margin Gross margin on prescription drugs is 20-22%, 8-10% on the OTC products and 35- 40% on private label goods.Fixed costs A store with 250-300 sq ft of area has fixed cost of 1 mn per year, including rentals, electricity expenses, staff costs and other incidental expenses.Investments and working capital Initial investment per store is 2 mn which includes security deposits to the lessor, interiors and pre-operative expenses. Working capital requirements would be negligible as inventory requirements of 30-35 days are offset by credit period of 30-35 for the goods purchased.Various financials reports were collected of the firm of past five years to calculate the Beta for the firm (Apollo pharmacy is not a separately listed company so financials reports of Apollo Hospitals were considered).
DESCRIPTIONMar-12Mar-11Mar-10Mar-09Mar-08
Shareholder's Funds2352.271772.161541.781370.861238.04
Long-Term Borrowings
Secured Loans368.51484.17471.43436.55292.20
Unsecured Loans53.1674.46218.5612.9313.44
Total Debt421.67558.63689.99449.48305.64
Interest63.6055.1537.7522.3219.90
Interest rate debt15.084%9.871%5.471%4.965%6.510%
Average Intrest Rate8.380%
from paper risk freemarket raterisk premium
9.510%22.960%13.450%
Tax Rate(%)31.562%32.528%31.599%31.450%29.878%
Average Tax Rate31.403%
Total Debt/Equity(x)0.2670.4340.4480.3300.250
D/V0.2105549790.3028698980.3091681740.2479785220.199918716
E/V0.7894450210.6971301020.6908318260.7520214780.800081284
Average D/V0.254098058
Average E/V0.745901942
Beta for Apollo Hospitals0.329330466
Cost of Equity13.939%
Cost Of Debt8.380%
WACC11.858%
Thus WACC (Weighted Average Cost of Capital) for Apollo Hospital comes out to be 11.858%. Using this WACC we can compute Net Present Value (NPV) for a store, which will help in taking decision of opening a store.Assuming a new store generates average of 50 bills per day with average value of Rs 150. Thus daily sales will be Rs 7500. Now with the following details yearly analyses will be:Revenue per day7500
Growth15%
Growth Period3
Inflation0.08
WACC11.86%
Gross Margin22.20%
Fixed Cost1000000
Initial Investment2000000
Depreciation100000
Interest200000
Tax Rate31.403%
Year012345 and Onwards
Initial Investment2000000.00
Revenue2737500.003148125.003620343.754163395.314496466.94
Expenses607725.00698883.75803716.31924273.76998215.66
Operating Profit2129775.002449241.252816627.443239121.553498251.28
Fixed Cost1000000.001080000.001166400.001259712.001360488.96
EBITDA1129775.001369241.251650227.441979409.552137762.32
Depreciation100000.00108000.00116640.00125971.20136048.90
Interest200000.00200000.00200000.00200000.00200000.00
PBT829775.001061241.251333587.441653438.351801713.42
Tax260576.52333264.50418790.12519233.77565797.00
PAT569198.48727976.75914797.321134204.581235916.42
Net Cash Flow-2000000.00569198.48727976.75914797.321134204.5810422479.85
Net Present Value468752.82
Initially a growth of 15% is considered for a period of 4 years from 5th year onwards growth is taken as inflation rate.Here we can see NPV of around 4.5 Lacs. But if we slightly alter our assumption of 50 bills per day to 40 bills, analyses will be as follows:
Revenue per day6000
Growth15%
Growth Period3
Inflation0.08
WACC11.86%
Gross Margin22.20%
Fixed Cost1000000
Initial Investment2000000
Depriciation100000
Intrest200000
Tax Rate31.403%
Year012345 and Onwards
Initial Investment2000000.00
Revenue2190000.002518500.002896275.003330716.253597173.55
Expenses486180.00559107.00642973.05739419.01798572.53
Operating Profit1703820.001959393.002253301.952591297.242798601.02
Fixed Cost1000000.001080000.001166400.001259712.001360488.96
EBITDA703820.00879393.001086901.951331585.241438112.06
Depriciation100000.00108000.00116640.00125971.20136048.90
Intrest200000.00200000.00200000.00200000.00200000.00
PBT403820.00571393.00770261.951005614.041102063.17
Tax126812.70179436.11241887.47315795.73346083.91
PAT277007.30391956.89528374.48689818.31755979.25
Net Cash Flow-2000000.00277007.30391956.89528374.48689818.316375170.99
Net Present Value-620961.71
Here we can see although the store has positive cash flow since year one but NPV is less than one. So financially this is not a good option to consider.But again in retail chain increasing number of store is considered as a good option if one can financially support it as in future one can leverage its presence to drive more sales.Measures to drive more sales can be:1. Upselling: This option is viable for prescription-based customers, as they require specific product of specific quantity.2. Cross Selling: This option is best suited for pharmacy stores as customer can be persuaded for supplement products to their prescription. To properly implement Cross selling one needs to know Customer Insights.Typically customers are of three types:1. Prescription-Based customer: This customer has a doctors prescription and requires specific prescription drugs of specific quantity.2. Prescription Drugs on Advice: These customers have minor sickness and buy prescription drugs based on advice given by the store incharge.3. Product Seeking: These customers are in store to buy products other than prescription drugs. These customers can be most valuable as they can be influenced to buy PL products that have highest margin.An observational research was conducted across five different store with cumulative sample size of 100 customers. This study revealed that all customers out of the sample can with a specific purpose and belong to one of three categories but while observing the displayed products made impulsive decision to buy additional products. Thus the time a customer spends in a store is also crucial. The time spent by a customer can be broken down into three parts:1. Entry to order: When customer enters they informs the store in charge about their demands, customer is busy during this time period. According to study customer spent around 11sec in this period.2. Waiting: While the store in charge collects the order of customer the customer is waiting and this is the crucial time when they can be influenced to cross sell by other in charge. Study revealed that customer spent around 1 min and 41 seconds in during this period.3. Billing: While customer is not busy during this stage but none was willing to buy more products as billing was already in progress. Customer spent around 29 seconds in this period. PART C LearningThe Internship was extremely helpful for me to understand workings of a big corporate. Various tolls, which were helpful to me included: Research Methodology: I took two projects and both were experiment based. While I got data from secondary sources of from one of the project an in store observational study was conducted with the help of store manager. Financial Investment: At Apollo Pharmacy while opening a new store breakeven point is estimated and if it is somewhere below 18 months it is considered a good investment. I tried to apply the method of Net Present Value to estimate value of a new store taking the cost of capital into account. I also picked up various new skills, which included: Returns itself is not important for any business. There are many constraints to which business has to stick. Like at store physical space is a constraint, so returns per shelve is a better valuation than monthly margin. I learned how a customer behave while in a store and what all activities he go through before leaving the store. Due to this one can find opportunities of increasing sales per bill by cross selling. I also learned about how PL products are able to get good margin and maintaining to quality by enhancing the value chain.
10