Marketing Audit of Wyeth Company - Case Study Example

Marketing audit of Wyeth Company Executive summary Wyeth is a global pharmaceutical company which is involved in research and manufacture of pharmaceutical products. It develops and markets vaccines, biotechnological and pharmaceutical products. The company produces both human and animal products. The company faces several challenges both environmental and competition. To be able to grow and increase its market share and profitability, the company should employ relationship marketing strategy, multi segment strategy and competitive marketing strategy. Introduction Wyeth is a global pharmaceutical company, which is involved in research and manufacture of pharmaceutical products (Wyeth Company, 2010). It develops and markets vaccines, biotechnological and pharmaceutical products. The company produces both human and animal products. The company products are found in more than 140 countries and its manufacturing plants are located in five continents. Wyeth was initially called American Home Products (AHP) before changing to Wyeth in 2002. None of Wyeth’s products bears the company’s name (Wyeth Company, 2010). The company has enjoyed for long financial success resulting from competent management, product diversification and closely guarded expenditures. The main expenditure of the company is advertisement. Some legal problems arising from side effects of the company’s products have cost the company greatly. This is exemplified by lawsuits, which cost the company over $3.75 billions in settlement. This was because of some weight reducing drugs from this company causing heart valve damages. The company continues to invest much in research and development in infectious and antibiotic resistance. PEST analysis This is a scan of the external macro environment of the firm. This scan analyses political, economic, social and technological factors affecting the firm. PEST is the acronym of these macro environmental factors. a) Political factors These factors define formal and informal rules, which include legal issues, and government regulations under which the firm operates (Allred, et al, 2007). Some of political factors include tax policy, environmental regulations, employment laws, political stability and trade restriction. Even though the country of origin of Wyeth Company, USA, has comprehensive tax policy, employment laws, environmental regulations, limited trade restrictions and politically stable, the fact that the company operates in over 140 countries is likely to present the company with several political challenges. b) Economic factors The purchasing power of customers and cost of capital of the company are usually affected by economic factors (English, 2006; Petley, 2003). In macro economy, economical factors include economic growth, interest rates, exchange rates and inflation. The recent economic down turn hit many countries and thus the purchasing power of Wyeth’s customers dropped drastically. The interest rates also rose and this affected the company’s investment in research and development of new products. The varying exchange rates and inflation rates in the different nations present several challenges to performance of the company products in the market. In some markets due to high exchange rates and inflation rates, the prices of Wyeth’s products are usually higher than those of competing firms. c) Social factors Social factors consist of cultural aspects and demographic aspects (Allred, et al, 2007). This factors influence the customer needs and the size of the markets. They include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Many people are becoming health conscious and this present Wyeth Company an opportunity to increase its market share (Wyeth Company, 2010). The increasing world population implies that there is growth of market for the products of the company given that it supplies health related products. However, the consciousness of the population on safety is presenting challenges to the company since any unsafe product produced by the company can result in lawsuits as witnessed in some of its drugs for reducing weight. d) Technological factors Technological factors minimize efficient production levels, lower barriers to entry and influence outsourcing decisions (Allred, et al, 2007). They include research and development activity, automation, rate of technological change and technology incentives (Wyeth Company, 2010). The advent of technologies such as e marketing, Wyeth Company can utilize this tool to increase its market share and reach out to many of potential customers. Its investment in research and development is likely to reduce cost of production in addition to diversifying its products that can lead to increased market share and be able to offer products at considerable lower prices. Customer analysis All age groups of the population use pharmaceutical products. Given that Wyeth engages in the discovery and development of pharmaceuticals, biotechnology, vaccines and non-prescription medicines in addition to their manufacture and marketing, the company has a wide range of customers (Wyeth Company, 2010). Many people are faced with many illnesses and diseases and since Wyeth has vertical control over the development and marketing process, the future of the company in terms of customer base is bright. The strength of Wyeth’s management team will be advantageous in future as many companies become listed for drug manufacture. Competitor analysis The main competitors of Wyeth Company are GlaxoSmithKline, Aventis, Pfizer, Merck, Bristol Meyers Squibb, Abbot Laboratories, Eli Lilly, Schering Plough, Novartis Johnson &Johnson, AstraZeneca and Hoffmann La Roche (Wyeth Company, 2010). Of these companies, GlaxoSmithKline, Merck and Novartis have competitively positioned themselves more favourably than they have competitively positioned Wyeth. Wyeth Company has advantage over most of its competitors because of a long record of accomplishment of good management. In addition, Wyeth is involved in production of strong fundamental drugs, which are essential for competition (Wyeth Company, 2010). Stakeholder analysis The company personnel have been able to maintain a twelve-year profit margin of 20%. The company revenue has been growing at a rate of 10% quarterly and its earnings have been growing at a rate close to 17%. The sales of the company have also been growing consistently over the time. These make the company to stand out from its competitors. This is good news for its stakeholders since the returns on investment is higher and thus they are willing to continue investing for the growth of the company. The P/E ratio of the company is also highly praised. This is important for the purchase of the company stock by investors (stakeholders). SWOT analysis SWOT analysis involves the analysis of the strengths, weaknesses, opportunities and threats of a company. a) Strengths of Wyeth Company The strengths of the company include highly diverse product lines, quality products, brand equity, innovative products, closely guarded expenditure, strong product brands, competent management and prolonged patent rights. b) Weaknesses of Wyeth Company The company faces two main weaknesses. These are diet drug liability and side effects of some of its products. c) Opportunities of Wyeth Company The company has several opportunities that it can exploit (Isenberg, 1987; Simkin, 2002). First, the products of the company have a high market growth especially in Japan. The company also has increased market growth for its formulation products. Finally, due to growing world population and given that the company products are used by all age groups of the population this presents opportunity to the company products. d) Threats to Wyeth Company The company is threatened by pending expiry of patents for its products, pipeline formulation risks and competition from large companies. Marketing objectives 1. To maximize market share for Wyeth’s products 2. To maximize profits from Wyeth’s products 3. To maximize sales from Wyeth’s products Strategy statement To be able to formulate an appropriate marketing strategy, there should be an organizational opportunity for the product or service being considered (Davids and Newcomb, 2006; Sutherland & Sylvester, 2000). The products of Wyeth Company have considerable market size, strong customer need, the firm has the ability to attain market factors, and thus a strategy can be formulated. To be able to maximize its profits, Wyeth will have to employ relationship-marketing strategy (Wyeth Company, 2010). This is because good relationship will help it to produce quality products leading to good customer satisfaction, which will in turn increase customer base and sales volumes. The company should also employ a multi segment strategy to attract customers in several market segments by providing multiple marketing mixes (Weinreich, 2001). This will enable the company to appeal to more parts of the total market. This strategy will also enable Wyeth Company to increase its market share by responding to different needs of various segments. This will in turn increase sales volume which will offset the cost increase resulting from multiple marketing mixes offering. To improve long-term performance of Wyeth Company, the company should employ competitive marketing strategy. The company should also consider a customized marketing mix (Baker, 2003). This should involve customization of the 4Ps marketing mix (McDonald, 1992). The company should continue investing in the innovation, release of new product lines and improvement of its products in addition to repositioning its products and cost reduction. The firm should put more focus on efficiency that lowers costs to be able to offer competitive prices for its products in the market. The firm needs to enhance its promotional activities to communicate the benefits and features of its products to the target market. Wyeth Company should employ physical distribution to move its products to various places. This will ensure that its products to be at the right place in the right quantities at the right time and in cost efficient manner. Recommendations To attain market objectives outlined above, the management of Wyeth Company will have to employ three marketing strategies: relationship marketing strategy, multi segment strategy and competitive marketing strategy. Conclusion The target market for Wyeth products is all ages of people since it is involved in production of vaccines, biotechnological and pharmaceutical products. The company faces a considerable competition from other pharmaceutical companies. To be able to grow and increase its market share and profitability, the company should employ relationship marketing strategy, multi segment strategy and competitive marketing strategy. References Allred, A., Addams, H.L., and Chakraborty, G. 2007. Is informal planning the key to success of the inc. 500? Journal of Small Business Strategy, 18(1): 95-104. Baker, M. 2003. The Marketing Book, 5th Ed. London: Butterworth-Heinemann Publishers. Davids, M., and Newcomb, K. 2006. Planning for marketing success: Turning the “Wheel”. Debt 3, 21(4): 22-25. English, J. 2006. How to Organise & Operate a Small Business in Australia: How to Turn Ideas Into Success, 10th Ed. Sydney: Allen & Unwin Publishers. Isenberg, D.J. 1987. The tactics of strategic opportunism. Harvard Business Review, 65(2): 92-97. McDonald, M.H.B. 1992. Ten barriers to marketing planning. The journal of Business and Industrial Marketing, 7(1): 5-18. Petley, J. 2003. Advertising. London: Black Rabbit Books. Simkin, L. 2002. Barriers impeding effective implementation of marketing plans - a training agenda. The Journal of Business and Industrial Marketing, 17(1): 8-22. Sutherland, M. & Sylvester, A. 2000. Advertising and the Mind of the Consumer: What Works, What Doesn’t and Why, 2nd Ed. New York: Allen & Unwin Publishers. Weinreich, L. 2001. 11 Steps to Brand Heaven: the Ultimate Guide to Buying an Advertising Campaign. New York: Kogan Page Publishers. Wyeth Company. 2010. Home. Available at http://www.pfizer.com/welcome/ [Accessed 22 September 2010] Read More