Marketing Concept: GlaxoSmithKline Company - Case Study Example

Marketing Concept: Case Study; GlaxoSmithKline Company Name Tutor Date Table of Contents Marketing Concept: Case Study; GlaxoSmithKline Company 1 Table of Contents 2 Executive summary 4 This report analyzes the marketing concept of GlaxoSmithKline Company, the largest drug maker in UK and a leading firm in the healthcare industry. The detailed analysis of the company’s marketing philosophy, its targeting strategies, its market positioning, its micro environmental as well as macro environmental aspects, and basically its marketing concept, gives a clear indication that the healthcare industry yearns for adoption of the marketing approaches effective in enhancing its competitive advantage within the global market. The company has endeavored to develop a similar approach where the company’s marketing approach and the different marketing strategies are both essential and effective. They are a result of the management policies created to enhance the company’s performance. However, with extreme competition and globalization being experienced throughout the health care industry, mainly among major drug manufacturers, the company seeks to adopt marketing approaches that are quite effective in facilitating customer base expansion. 4 Introduction 5 GlaxoSmithKline plc 6 Company Background 6 Strategic Marketing and Planning 6 Macro-environment forces 7 Micro-environmental forces 7 Enhanced scientific development 8 Brand development 8 Marketing mix 9 Product 9 Pricing 9 Promotion 10 Place 10 SWOT analysis 11 Market Segmentation 12 Marketing strategy 13 Targeting strategy 15 Positioning Strategy 15 Recommendation 16 Conclusion 16 Works Cited 17 Executive summary This report analyzes the marketing concept of GlaxoSmithKline Company, the largest drug maker in UK and a leading firm in the healthcare industry. The detailed analysis of the company’s marketing philosophy, its targeting strategies, its market positioning, its micro environmental as well as macro environmental aspects, and basically its marketing concept, gives a clear indication that the healthcare industry yearns for adoption of the marketing approaches effective in enhancing its competitive advantage within the global market. The company has endeavored to develop a similar approach where the company’s marketing approach and the different marketing strategies are both essential and effective. They are a result of the management policies created to enhance the company’s performance. However, with extreme competition and globalization being experienced throughout the health care industry, mainly among major drug manufacturers, the company seeks to adopt marketing approaches that are quite effective in facilitating customer base expansion. Introduction Marketing is unquestionably among the most essential aspects in every business. Marketing plays the greatest role in the prosperity and competitiveness of any particular firm. Therefore, the chosen marketing approach to be implemented by any firm should in essence translate in to attaining the core marketing objectives including identification of clientele, satisfaction of their needs and retention of the customers. This report seeks to conduct a detailed analysis of the marketing strategy and concept of the GlaxoSmithKline Company and evaluate its marketing approaches adopted so as to have a competitive edge over other similar companies. GlaxoSmithKline Company is one of the most competitive firms around the globe dealing with healthcare care products. The company’s philosophy of producing a wide range of products to cover health problems for total recovery has created a successful business environment for its general growth. Despite the fact that businesses dealing with health care products have been considered as having the strictest competition, the company, which has a motto of ‘committed to improving the quality of human life’, has not only managed to retain its market standing, but also expanded it. This strong competition, however, is as a result of the emerging significant trends which in effect have resulted in two correlated developments, higher competition and globalization. These developments are immensely reshaping the business strategies, including those adopted by GlaxoSmithKline Company. The strict competition forces manufacturers such as GlaxoSmithKline Company and related suppliers to participate in foreign market competitions so as to leverage on the products, production, production costs, and the general development. Such companies have to generally take on exclusive marketing approaches so as to improve their overall market position. GlaxoSmithKline plc Company Background GlaxoSmithKline plc is an international pharmaceutical, vaccines, consumer healthcare and biologics company with headquarters in London (UK). This company is the third biggest pharmaceutical company globally by revenue (from Johnson & Johnson, and the famous Pfizer). With products for control and treatment of various diseases including viral diseases, mental health problems, digestive conditions, diabetes, as well as asthma. It was a product of merger between Glaxo Wellcome and SmithKline Beecham companies in 2000. The company, with global headquarters in Brentford (UK), has over 100,000 employees worldwide, over 1000 products and 92 brands. It is not only primarily listed on the London Stock Exchange, but also secondarily listed on the New York Stock Exchange. The company’s division of consumer product has its base in Pittsburgh suburb, Moon Township. The division of research and development is however headquartered in Philadelphia, South eastern part of England, and in Research Triangle Park, North Carolina (Needle 165). Strategic Marketing and Planning Since the company started its operations, it has produced brands that have actually become leading brands globally. This rapid growth and market dominance has been attributed to significant market growth levels, which have been brought about by three key factors. These three factors consist of the trends of the macro-environment, micro-environment, the scientific developments, and investment in brands. Macro-environment forces According to Baines, Fill and Page, Macro-environment forces entail every environmental force that is external and which affects the operation of the company (155). By the fact that companies face a wide range of macro-environmental factors including the natural forces, social forces, cultural forces, government regulations, the economy and demographics; GlaxoSmithKline plc is no exception. Basically, the macro-environment has been significant in that in mid-90s, UK did not only experience an unmatched economic growth which also became essential in elevating the living standards of people. However, this economic growth also brought with it an influx in population and return of emigrants and immigrants, all essential in promoting the economy. The trend enormously benefited several consumer brands in the company as it created awareness of the brands internationally hence creating a significant increase in the market share. As such, the company generated revenues which elevated it to its current position (Kotler and Keller 165). Micro-environmental forces These are internal factors within the company that directly impact the company strategies. Some of these micro- environmental factors in the company include customers, workers, the stakeholders, suppliers, as well as competitors. Enhanced scientific development Enhanced scientific development has enabled the creation of products that are consumer friendly and quite effective. The company has greatly invested in quality research activities to improve the quality of its products. Research activities are a part of the company and are carried out constantly to develop products able to effectively meet the requirements of the customers. This has made the company highly competitive. Brand development GlaxoSmithKline plc invests heavily on the brand development as successful brands globally require great investments. These investments are frequently directed in research as well as development activities so as to ensure high quality. These investments, however, are also massive in a given area that is quite sensitive and very beneficial to the company. Investments are most massive in the marketing costs so as to enable complete brand awareness, but also to grow the market share. Marketing is the pillar of the success of the company and is what has enabled the company to reach the heightened levels in its brand recognition as can be proved with the great market share the company has internationally. GlaxoSmithKline Company is well updated on the market trends and has invested massively in its brands to ensure its products lead internationally. Investing in the marketing mix has enabled the company not only to effectively satisfy its consumers, but also secure a large market share (Rugman 127) . Marketing mix Product The company engages in massive production of tangible products which are basically a wide range of consumer products, including consumer healthcare, pharmaceutical, biologics, and nutritional drinks. These include aquafresh toothpaste, lucozade drink, and drugs like avandia (for type 2 diabetes). The products have a life cycle which entails growth phase and decline phase due to market saturation. To retain market competitiveness, the company engages in product differentiation like appealing packaging. Pricing The company believes in creating value for money and as such has a wide range of good products suitable for different consumer income levels. As such, the company’s pricing is quite conducive to the consumers. However, due to the increased competition experienced from various companies dealing with similar products, the company has resorted to reducing its product prices by about 45% so as to be competitive and enjoy a larger market share. This strong competition is mostly from companies producing generic drugs, which in essence, offer cheaper products in the market. The prices are also based on geographical regions and as such are flexible (Al Mubsin 56). The marketing mix of the company is complex, and largely centered on a strategy of marketing communications based on two main areas, emotional communication and rational communication. Rational communication entails ensuring that the consumers are aware of the brand benefits, while emotional communication entails sponsoring of popular heroes who are well known to endorse GlaxoSmithKline’s products, for instance Damien duff as well as Ronan O’Gara being used in endorsing lucozade. Promotion Marketing communication mix, which also offers marketers right tools for achieving success, has been extensively used, with resultant increased benefits to the company. The marketing communication mix employed by the company takes advantage of some main communication channels, including print advertising, radio and TV. There is also outdoor advertising entailing public relations, sales promotions on packs as well as in shops, and (for its drinks like lucozade) on-pitch signage and bottles place on the field(pitch). The 360 degrees marketing, also referred to as the integrated marketing communications, is widely employed by the company. This implies that the marketers in the company use a variety of channels to communicate the very message to their clients. As such, these marketing managers have ensured that the consumers get a clear message of the company product being advertised while also understanding the benefits received from the use of such a product (Hulbert, Capon and Piercy 156). Place The company ensures that a variety of products are available in the appropriate markets adequately. The company’s website allows the users registration and ordering of GlaxoSmithKline’s product from numerous brand varieties, including NiQuitin, Aquafresh and Beechams. Therefore, since delivery is being offered freely the next day the client orders before 12.30 pm, the element of ‘Place’ in the company’s marketing mix has greatly been altered by selling directly to consumers. This is also done with inexistence of traditional intermediaries related to the traditional channels of distribution. Direct selling has benefits to the company in that there is a direct public relations’ use of the site. The competitive advantage may be used to reduce prices while retaining profit margins, maximization of profit margins is enabled, and effective research studies may be conducted (Weber, 2009; pp 279). SWOT analysis Strength GlaxoSmithKline plc, as a company, has effectively utilized opportunities using its marketing techniques. The enhanced sales as well as marketing infrastructure have positioned GlaxoSmithKline plc as the choice marketing partner among several companies, considering that it has led a number of competitors thereby having a competitive edge and a larger market share. This company, which is also a leading player in the implementation of the life-cycle strategies of management, has also forecasted increase in its sales growth. The business operations and performance, entailing strong fundamentals of business, the robust balance sheet, as well as the demonstrated ability for driving cost elimination, are all strong characteristics of this successful company. Opportunities The company is presented with great opportunities in shifting to a worldwide market with high growth, enhancing its product offering based on the already established historical identity presence, increasing sales in the emerging markets, developing persistent disease vaccines and continuing to eliminate the costs (Brennan, Canning and McDowell 302). Weaknesses Despite all these, the company is faced with some weaknesses especially the failure of delivery systems in delivering the main commercial expectations, the marketed products facing great exposure to competitions from generic products, safety concerns related to some products like Avandia, and dependence on the products having a highly competitive and low growth markets, for instance CNS markets. Threats The company is also encountering great threats in the markets, for instance from the companies producing cheaper generic products, patent expiry for drugs generating high income, as well as threats from increased development setback. Market Segmentation Market segmentation is an activity involving market subdivision into small homogenous groups able to be effectively satisfied by an organization, as indicated in Armstrong and Kotler 245) The variables of market segmentation entail geographic, demographic, psychographic as well as behavioral segmentation. Geographic segmentation entails the division of the market into various geographic units such as states, countries, cities, as well as neighborhoods. Geographic segmentation is useful to the company basically since it has aided in positioning the company products in locations having appropriate conditions, as well as recognizing the needs of consumers in these locations. The prices are also dictated by the geographical region. Demographic segmentation, also undertaken by the company, entails dividing the market into various groups according to demographic variables such as, age, the family lifecycle, earnings, gender, religious conviction, race, education and profession, according to Griseri and Seppala (219). For instance, the company, after realizing a potential market among the African-Americans for its drug called Avandia, focused on the market and received a marked recognition followed by a boom of its sales. The company also employs behavioral segmentation to segment their consumers according to their readiness, rate of use, loyalty, attitude, and occupation. For instance lucozade is actively marketed to active individuals and sports people (Cohen, 2005; pp 198). Marketing strategy An effective and cost-efficient marketing strategy is essential in connecting with a wide range of potential consumers. The company’s marketing strategy is founded on Segmentation, Targeting, and Positioning where the company identifies various needs as well as groups in a market place, targets those it can superiorly satisfy, and finally positions the offering in a way which enables the target market realize the company’s unique offering as well as image (Kotler & Keller (a), 2009; chapter 17.2). This marketing strategy employed by the company aims at identifying the company’s “brand touch points” effectively with consumers. As such, they are not only opportunities, but occasions to have a direct connection with the consumers (Doyle & Stern, 2006; pp154). The brand touch points, enabling marketers to locate appropriate target markets for GlaxoSmithKline’s products, are as a result of market segmentation. Van Tulder & Van der Zwart (2006; pp 287) state that in the current competitive markets, the marketing managers of GlaxoSmithKline Company are forced to effectively dispense consumer messages that are not only captivating, but also highly effective in drawing consumer attention to the company products while also reminding the consumers of the product benefits. GlaxoSmithKline plc is currently aiming at reducing prices of the products facing strict competition, considering that price competition often results in retaliation even though it may rapidly degenerate in to price wars. The company is also divesting, where it cuts all the research as well as promotional expenses once a given brand faces strict competition and redirecting the same funds towards brands with little competition and those which still enjoy market preference. This is in addition to the fact that the company has a transformation of its operation model so as to improve efficiencies, reduce cost and reduce complexities, indicated by removal of costs totaling £1.7 billion (since 2008) to deliver a targeted £2.2 billion annual savings in 2012 (Armstrong & Kotler, 2006; pp 175). Target Market A target market can be termed as the group consumers that any given business has opted to put more emphasis on through marketing efforts and products. Since this is an international company dealing with a wide range of health products that are suitable to all ages, sex and nationality, the company targets mass market to continue enjoying its current financial position. Targeting strategy One of the targeting strategies, as employed in the company, is differentiated marketing. Differentiated marketing involves targeting the products of a business to various segments through utilizing a range of marketing mixes. Often, the product characteristics are usually different within the different segments. Positioning Strategy Positioning is an activity involving making the company services or products fit into a given market. As such, effective positioning requires consideration of the needs of consumers, according to Peter & Donnelly (2010, pp 170). Positioning strategies are derived from the product. One of the strategies is positioning by attribute, which involves associating the product with its attribute, a customer benefit or a product feature. GlaxoSmithKline puts emphasis on the product reliability and effectiveness. The positioning strategy in the company is based on the product pricing and quality, where the company seeks to produce cheaper products for markets having strict competition, especially from generic competitors. The company also does positioning based on competitors, since companies often position their products referencing to their major competitors, establishing the competitor image before entering a particular market (Needle, 2010; pp 254). Recommendation The paper has evaluated GlaxoSmithKline plc and its product's position in the marketing. It has also determined the competitive advantages and weaknesses in comparison to other competitors. It suggests various improvements as well the implementation ways. In order to improve quality and being competitive, the company should seek cheaper and effective alternatives to costly production methods and materials. The company will enjoy an increase in market share if it decides to invest in advanced technology and cost effective marketing options. The competition from the generic products can only be scaled down by increased research, while also educating the public on the value of using original products and the impacts of the generic products. Conclusion It is quite inevitable that competitions from other products serving the same purpose as those produced by a company have a potential of not only eroding the profits earned by the company, but also depriving the company’s expected performance in the market. As demonstrated in the case of GlaxoSmithKline plc, the companies desiring a competitive age must be prepared to struggle. The entry of great competitors, like generic competitors, have radically changed GlaxoSmithKline’s landscape of competitiveness hence has called for necessary radical responses. Continuous investments mainly in brand-building, altogether with price cuts that are well-publicized have assisted the GlaxoSmithKline brands to dominate the world market while also generating significant amount of profit. Therefore, any given company having strict competition from other companies should keenly review its marketing strategies in order to be competitive. It might as well be quite profitable and less risky to prolong the market dominance of a company’s products by increasingly investing in the products rather than allowing other competitors to reduce the market share of the products. Works Cited Armstrong, Gary & Kotler, Philip. Marketing: An Introduction. Pearson Prentice Hall. 2008. Kotler, Philip & Armstrong, Gary. Principles of Marketing. New Jersey: Pearson Prentice Hall. 2006. Weber, Larry. Marketing to the social web: how digital customer communities build your business. John Wiley and Sons. 2009. Needle, David. Business in Context: An Introduction to Business and Its Environment. Cengage Learning. 2010. Kotler, Philip and Keller, Kevin (a). Marketing Management, 13th edition. Prentice Hall, NJ. 2009. Chapter 9-26. Doyle, Peter and Stern, Phillip. Marketing Management & Strategy, 4th edition. Prentice Hall, NJ. 2006. Kotler, Phillip and Keller, Kevin. A Framework for Marketing Management. Prentice Hall, NJ. 2009. 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