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Marketing planning for glaxosmithkline Assignment
Diploma in Business (Marketing)
Unit Number and Title
Marketing planning for glaxosmithkline
GlaxoSmithKline (GSK) is the pharmaceutical company based at UK that focuses on making researches in order to develop innovative health care products. The company is a merger of Glaxo Wellcome plc and SmithKline Beecham plc in 2000. GSK has acquired Novartis vaccine business and work in collaboration to each other in the same sector. The company works in close association with NHS and some of the health care groups and charities. The mission statement of the company suggests that GSK focuses on serving the people by providing them longer and healthier lives with their products. The company has a clear strategy to achieve the aims. GSK headquartered at Brentford, West London and the manufacturing units are located all over UK. The company practices according to the proper code of conduct framed by the same. It functions with the consideration of all the rules and regulations and concentrates on maintaining the ethical behaviour towards the employees as well as the customers. The company works in association with many third parties in order to outsource some of the operational functions.
As far as the company’s strength is considered, the company has a great and strong brand image all over the world where it serves. GSK made huge investment on the R&D department of the company as all the work of the company depends on the researches they do.
This report revolves around the marketing plan of GSK in order to introduce a new vaccine product into the market. The report focuses on all the important aspects associated with the marketing practices. It discusses about the analysis of the external as well as the internal factors of the company that affect the marketing plan of the same. It also concentrates on the importance of planning in marketing along with the ethical issues that can be raised during marketing of the product in the pharmaceutical industry.
1.1 Review changing perspective in marketing planning.
Marketing is the very broad term that consists of all the activities related to making people aware of the product’s existence. It is an action or the collection of activities that have been conducted in orderly basis to promote and sell the product or services. Planning has to be done in order to conduct the marketing activities in an organisation. Marketing planning is the blueprint or the map that consists of the orderly activities and plan of the marketing for the coming year. It involves all such activities that need to be done in the next year to raise the sales or to launch a new product.
Market is dynamic in nature and the environment of the market is very fluctuation according to the situations. Therefore, the changes in the marketing planning perspectives are expected. Changes in the marketing planning are according to the current market requirement. (Baines, 2011)
Changing perspective in marketing planning:
- Production concept: This is the first and the foremost concept applied by the manufacturers and the firms. The firms that believe in this concept focuse on producing the goods at low cost. They only have the aim to make the product available in the market at low prices.
- Product concept: According to this concept, the company believes that the consumers value the products with innovative features and quality. At the time when this concept was followed by the companies, they focus on developing new products with innovations and high quality to attract customers.
- Selling concept: According to this, the firms try to increase their sales with on or the other methods. The main aim of the companies according to this concept is to focus on selling more and more of their products to the customers.
- Marketing concept: The firms that believe in this concept try to deliver and communicate with the customers better than their competitors. They aim at attracting more and more customers by applying some of the marketing strategies to promote their product.
- Societal marketing concept:This firms with this concept believes in identifying the needs of the customers and delivering the products according to the needs.
1.2 Evaluate an organisation’s capability for planning its future marketing activity.
Marketing capability is the phenomenon that involve human assets, market assets and the organisation assets. It is the process that argues about the integration of the marketing planning activities with the other functions of the organisation. It is the ability of other functions of the organisation to participate and support the activities of marketing. As far as the GSK is concerned, the company mainly focuses on providing services to the patients by working as a team. The capability of the firm can be evaluated by analysing its financial, physical and human resource capability. (Carroll, 2009)
GSK capabilities for planning its future marketing activity are:
- Physical capability: The capability of launching new products forces the organisation to start new market campaigns every now and then. This helps the organisation to remain in the minds of the customers. The company has its own R&D department and GSK always have the innovative new products to provide for the better services. The company has the manufacturing space and laboratories to foster innovations.
- Financial capability: It can be analysed by observing the company’s financial behaviour. The company invests more at the location with low-cost. This provides the cost advantage to the company and then the huge investment has been made in marketing the products by packaging and value packs etc. Effective R&D, sales and budget results in great earning of the company. 40% of which has been spent in emerging and developing market. (Dyer, 2006)
- Human resource capability: The Company focuses on providing training to the human resource for enhancing their skills. The skills like, general management skills, sales and marketing skills, innovation skills and team work skills of the employees results increase of sales and advertising of the company. The company has largest number of Human resource that is, around 97921 in the industry.
- Competitive advantage: The competitive advantage of the company is divided into three segments:
- Tangible:It involves physical and financial capabilities of the firm. GSK has the cash and borrowing capacity. Tangible capabilities or competitive advantage also includes the mergers and acquisition of the company. GSK has merged with ORBIS in order to attain the competitive advantage of information system over its competitors.
- Intangible: GSK enjoys the advantage in the industry as the company has the brand image. This comes under the intangible competitive advantage or the capability of the company. (Espejo, 2012)
- Judgment:As far as the capabilities of the company is considered, it has been analyzed that the company has physical capability in terms of the manufacturing space, financial capability in terms of low cost production and human resource capability in terms of skilled workers. The company needs to manage its functions in terms of brand building by using these capabilities. These capabilities of the company can help the company tp develop its marketing strategies according to the innovations they made.
1.3 Examine techniques for organisational auditing and for analyzing external factors that affect marketing planning.
Organisational auditing refers to the process of checking and analysing the organisational functions in order to find out the errors and the opportunities in the organisational processes. The auditing result of the organisation helps in making the plans for future. They form the basis for formulation of the new policies and structure by modifying the old ones that are hampering the processes before. Auditing is done on the internal as well as the external factors of the organisation. The internal factors include the suppliers, employees and the customers while the external factors include all the factors that are related to the outer environment of the organisation. Some of the techniques that are exclusively used to analyse the internal factors are ratings, strengths, IFE matrix evaluation etc.
The major methods that are used by almost all of the organisations to analyse the external factors of the organisation that affect the marketing plan are:
SWOT analysis: This analysis helps in analysing the strength, weakness, opportunities and threats of the organisation. Strength and weakness are the internal factors of the organisation while opportunities and threat can be analysed by the external environment of the company. (MBA Skool-Study.Learn.Share., 2016)
PESTEL analysis: PESTEL analysis is the process that supports the organisation to know about the political, economical, social, technological, economical and legal situation that has their impact o the functioning of the organisation as well as on the marketing plan.
Porter’s five forces: Porter’s five forces is the method given by Porter to analyse the marketing situation of the company’s environment. It involves five forces:
- Bargaining power of seller
- Bargaining power of buyer
- Threat of new entrant
- Threat of substitutes
- Threat of rivalry in the industry
The methods that have been used for organisational auditing are:
- Product life cycle: It is the method that has been used to analyse the stages a product undergoes from its introduction to its removal from the market. It provides the companies with the idea of the strategies that can be used to market the product at different stages. The following are the stages of the product:
- Introduction: It is the first stage at which the product has been launched in the market. At this stage, product takes time to incorporate in the market and thus faces less growth. The company needs to invest a lot in marketing practices.
- Growth: This is the most important stage as at this level, the product has been established in the market and has its image among the customers. The growth rate is very high at this stage.
- Maturity: After achieving a particular peak, the rate of the growth slows down at this stage. This is one of the longest stages of the product life cycle.
- Decline: Some of the product after completing the maturity stage moves to decline stage. At this stage, the level of growth is almost negligible and the graph of the product continuously moves down.
- BCG matrix: Companies can use this simple matrix as an analytical tool in portfolio analysis, marketing management, product management, and brand marketing. This tool is used to analyze the business units and the product offerings. There are four categories in BCG:
- Stars: Stars represents the businesses that are into growth stage into a growing industry. They have the capability as well as the opportunity to grow.
- Cash cows: These are the business units having the large market share in the industry wit slow growth.
- Questions marks: The businesses that fall under this category are those that have low market share in the high growth industry.
- Dogs: Dogs are the companies that operated with low market share under the industry with low growth.
1.4 Carry out organisational auditing and analysis of external factors that affect marketing planning in a given situation.
SWOT analysis of GSK:
- The company has various competitive advantages over other competitors in the industry like competitive advantage of largest number human resource.
- The company has a very strong R&D department that focuses on innovation.
- The company has skilled labor as it focuses on training and development of the people.
- Brand image of the company is the major strength of the company that supports its sales.
- As the company is into drug business, many controversies regarding the safety and health may affect the image of the company.
- Expiry of the patents of bulk-buster products.
- More and more mergers and acquisitions for global penetration of the business.
- Increasing awareness about the healthcare needs.
- Development of R&D department to maintain the innovative practices by the company. (Gsk.com, 2016)
- Failure of innovations.
- Threat from the competitors like Novartis.
- Safety of the people using the medicines and vaccines.
- Political factors: UK government supports pharmaceutical industry in one or the other way. This supports GSK to enhance its business and creates opportunities for the company. The reforms of NHS UK also affect the launching of the new product by GSK in the market.
- Economical factors: These factors always create the situation of threat for the companies who have their business in multiple nations. This is because their business gets affected by the change in the economy of all those countries. As far as UK and USA is considered, the strong position of US dollar may affect GSK business because of the exchange rates.
- Social factors: GSK is the company having its businesses in developing as well as developed countries. GSK found to be adaptive with the social and cultural aspects of all the countries, so never has any problem or issues regarding this.
- Technological factors: It involves the adaptation of the changes prevailing in the updated technology. GSK has mergers with the many software companies in order to have competitive advantage in IT area.
- Ecological factors: Ecological factors involves the factors related to the atmosphere and natural environment like any natural disasters, global warning etc. these factors affect the company’s business any day. (Milligan, 2012)
- Legal factors: GSK is a pharmaceutical company that has to follow all the laws related to the same. The laws related to this industry in UK are very strict as it involves the consideration f the health and safety of the population.
Porter’s five forces
- Threat of new entrant: Pharmaceutical industry is the type of industry that has high entry barriers because there is huge capital required to enter the industry. They need to get patents and cost advantage over others. It is also necessary for the companies to develop the R&D department in order to come up with innovations.
- Threat of substitutes: The threat of substitutes in very high for GSK. This is because the cost of switching the product is very low. People can switch to the generic products or the products by the rivals companies like Novartis etc.
- Bargaining power of buyer: As far as UK is concerned, NHS is the biggest customer for the pharmaceutical industry. Therefore the bargaining power remains in the hand of NHS, as it has so many options available. Therefore GSK faces a high threat of bargaining power of buyers.
- Bargaining power of sellers: There is low bargaining owner of suppliers as in the case of pharmaceutical industry, most of the companies like GSK manufacture the products on their own. (Poon, 2012)
- Threat of rivalry: GSK faces a high threat of rivalry by its rival companies like Novartis, Johnson and Johnson, Roche etc. This is because of the high sunk cost and the magnitude of transparency in the industry.
Organisation audit of GSK by BCG matrix:
According to the analysis of the external factors of the company that affects GSK marketing planning, it has been identified that the company has lot more competitive advantages over the other competitors of the industry thus the company is in growth stage and earning much revenue. Another concern is about the industry, as discussed earlier that the government is supporting the pharmaceutical industry in UK so the industry also have high growth rate resulting in provision of lot more opportunities for the companies operating in this industry. Thus GSK falls under the category of “STAR” in BCG matrix.
2.1 Assess the main barriers to marketing planning.
According to the case, GSK wants to introduce a new product vaccine into the market. Therefore, it is very necessary for the management to know about the barriers in the marketing plan so that they can be overcome during the process of marketing planning. Some of the barriers have been discussed below:
- Confusion between marketing tactics and strategy: This is the first and foremost barrier to marketing plan. Most of the managers get confuse between the tactics and the marketing strategy. They used the tactics to sell the new launched product on short term basis and then expand it. This may result in chaos of the activities as the tactics that work for short term not necessarily work for long term sale. (Roderick, 2016)
- Isolating marketing function from other operations: Keeping the marketing function away from other operational functions cat as the barrier to the framing of marketing plan. It is very necessary for the marketing person to know about all the aspects of the vaccine that GSK is launching and this information can only be discussed when all departments work in close associations.
- Organisational barriers: Organisational barriers to the marketing plan consist of the culture and the structure of the organisation. GSK is the company that depends on the third party work for some of its functions like HRM. The dependence on third party for the operational functions somehow affects the marketing planning on a way that there may be communication barrier between the company and the third arty and it leads to consumption of more time than usual. (Rollins and Perri, 2014)
- Competitor’s strategy: Novartis is one of the biggest competitors of GSK. Introducing a new product or framing the marketing strategies may fail if any of the competitors comes up with the more innovative strategy to market its product.
There are some other barriers that need to be assessed at the time marketing planning:
- Weak support from top management: If the management of the company do not support than marketing department may not be able to develop the effective plan.
- Poorly managed communication: It is very important for the companies to properly communicate the plans to each and every department of the company.
- Failure to understand the customer: If the company like GSK fails to understand the need of the customers than the company fails in making the effective marketing plan and strategies.
- Inability to predict the environmental reaction:Before implementing the marketing plan, it is very essential for the company to predict the reaction of their actions. It this step is not being done correctly than the efforts cannot results in the direction they have practiced for.
2.2 Examine how organizations may overcome barriers to marketing planning.
GSK has to concentrate on overcoming the above barriers at the time of framing the marketing plan. The company needs to come up with some of the strategies so that the marketing team can work in association with the other operational departments. This will facilitate the team to have all the information that has been required to frame the marketing plan. Another consideration that should be kept in mind by the manager of GSK is that they should have the proper knowledge about differentiating between the short term marketing tactics with the long term marketing strategies. They need to adopt the tactics and the strategies according to the plan that has been discussed. Some of the organisational barriers like dependency of the organisation on third party may restrict the process of marketing planning. To overcome this barrier management should maintain the records and data of the company processes that are outsourced. This will help the marketing team to access data effectively and timely. The strategies of the competitors are the most common and the critical part that needs to be taken care of. The management of the company should be aware of the strategies of the competitors at the time of development and introduction of the new product. (Baines, 2011)
GSK is the company with many competitive advantages over other competitors in the industry. The company doing very well in overcoming its barriers for the successful implementation of the marketing strategies. GSK has increased investment in digital communications and has a specific digital marketing team to support brand managers. The company believes allowing consumers to engage with the brand at their convenience is where the future of healthcare marketing lies, and it hopes the focus on digital innovation will change young marketers’ perceptions of the industry
3.1 write a marketing plan for a product or service.
Marketing plan for introducing a new product vaccine by GSK has been discussed below:
According to the case, the objective of GSK is to launch a new product vaccine that reaches up to most of the health care centers in order to protect people. It takes 5-6 months to attain this objective.
Marketing audit is done in order to find out the current situations of the market. This suggests that market is full of competition.
Strength: The company has a great brand image.
Weakness: Prior controversies regarding ethical marketing and introduction of the new product is risky
Threat: failure of the innovation.
Opportunity: Expansion of the market area to be served.
The market is very much competitive
Product: The product that GSK is launching is the new vaccine for the disease.
Price: The price of the product is 1 pound sterling. The strategy that has been used to decide the price of the product is penetrating pricing strategy. This is because the company focuses on producing low cost product for the customer and need to keep the price low so as to penetrate the new product into the market.
Place: The place of the product involves the place of availability. The vaccine is available in most of the hospitals and health care centers and should be accessed by the people after the permission of the government.
Promotion: GSK has used the methods of promotion such as advertising through Radio and television so that it can reach to the general people and another method of personal selling has been used so that they can convince the health care owners to buy the vaccine by providing them the full information about the contents. (Beamish, 2006)
As far as the consumers of the product are considered, the vaccine is for the children and the company believes in serving the people of all caste, race and religion.
The end consumer of the vaccine is the general public in marketing sense the target of GSK to launch the vaccine is the government health care centers like NHS.
The company believes in serving all the people in the world. The marketing strategy of the company is to use the promotional tools like advertising to make all the people aware about the vaccine. The strategy of the company to target NHS results in broader reach of the product.
3.2 Explain why marketing planning is essential in the strategic planning process for an organisation.
Marketing plan act as the blueprint to follow all the activities of marketing for a product in orderly basis. It is very essential for the organisation to plan for the marketing activities. The discussion below suggests the importance of framing the marketing plan:
- To link the strategies with the objectives: It is very essential for the organisation to link the objectives with the strategies. Marketing planning allow the management of the company to align the strategies that has been framed with the objectives so that the marketing process can be conducted accordingly.
- Setting goals and objectives: Marketing plan is necessary to conduct the process of marketing properly and timely. It helps the marketing team to know about the objectives and goals of marketing of the product. It acts as the facilitator to conduct the activities. (Carroll, 2009)
- Evaluation and monitoring:It is the last process that needs to be conducted. Marketing plan makes it very easier to evaluate the effectiveness of the marketing strategies by matching or measuring the gap between the set objectives and the results.
3.3 Examine the techniques for new product development:
New product development is the process of developing a new product by the organisation in order to enhance its business. Ansoff matrix is the technique that suggests the different methods growth of the organisation.
According to the matrix, new product development is the technique that can be used by GSK to grow. This is because the company already has market penetration and market development. GSK serves the customers all over the world hence there is no scope of market development. The different techniques that can be used by GSK for new product development are:
- Modification of the product: As the company has a great and strong R&D department, the first method that can be used by the company to develop in new product is by making improved modification in the already existing products. In pharmaceutical industry, research forms the foundation of the companies and GSK can make use of it. (Dyer, 2006)
- Market testing:It is the technique that can help the company to know about the requirement of the market. Market testing suggests the need that has been prevailing in the market. The company like GSK can fulfil those requirements by launching a new product that satisfies the requirement of the market.
- Product and market match:It is the technique of matching the market products with the company’s product. It helps in letting the company know about the area where company is lacking. This motivates the company to launch a new product to fill that gap or deviation.
3.4 Justify recommendations for pricing policy, distribution and communication mix.
Pricing policy: Pricing is the process of associating the price with the product. The price of the product can be affected by many internal and external factors. In the above case, GSK is price taker as the bargaining power remains in the hands of the big buyers like NHS.
Different pricing policies:
The different pricing policies have been mentioned in the figure. According to the figure, the pricing policies that have been used by GSK would be penetration. It is because the company is launching a new product. It is necessary for them to reach the broader market. Another reason of choosing this strategy is that the company believes in serving the people of all kinds so, it cannot mark the prices so high. (Espejo, 2012)
Distribution: Distribution refers to the methods that have been used by company to supply the product to the customers. GSK has been recommended to use the multiple channel strategy in order to reach the customers as the company serves at global level. The strategy is known as indirect strategy. The distribution or the transport method used should be safe. Hub method can be suggested. This method allows the company to transport its product to a single hub, from where further distribution takes place. (Milligan, 2012)
Communication mix: Communication mix involves all the elements that associates with the communication of the product to the market. Following are some of the elements:
- Personal selling
- Public relations
- Direct marketing
- Sales promotion
According to the case, GSK should go for personal selling and advertising as the techniques to communicate about the product. Personal selling allows the company to make contacts with the health care centres and advertising help the company to create awareness about the vaccine to the general people.
3.5. Explain how factors affecting the effective implementation of the marketing plan have been taken into account.
The factors that affect the effective implementation of the marketing plan have been discussed below:
- Timing: It is the most important factor that needs to be considered at the time of implementation. Favorable timing should be adopted to launch a marketing campaign. As far as the above case is considered, the time of marketing about the new vaccine should before the relative disease affect the people adversely.
- Performance measures: Performance measure like financial, non-financial, qualitative and quantitative measures can be used for effective implementation.
- Determining marketing budgets: Determining marketing budget allow the marketing team to allocate the resources with the different marketing activities according to the budget specified. (Mulinari, 2016)
- Evaluation and monitoring: Evaluation and monitoring of the marketing plan results in the identification of the deviation of the actual performance with the planned activities.
4.1 Explain how ethical issues influence marketing planning.
Ethical issues refer to the unethical practices that have been done by some of the companies in order to enhance the business or harm the public. It is essential for all the companies in pharmaceutical industry to follow some of the rules and regulations in marketing of the product as their product may severely affect the person if communicated wrongly. (Poon, 2012)
Some of the issues that can be raised during the marketing of the product are:
Invasion of privacy: At the time of market research, Companies come in contact with many professional and private information that need not to be leaked. The companies should make use of that information in an ethical manner.
Targeting the vulnerable: It is also unethical on the part of the pharmaceutical companies to target a particular vulnerable class of people such as children and women. The companies should not target these vulnerable at the time of marketing a product.
Price fixing: It is another important and severe ethical issue. Some of the competitors mutually decide the price of the product that may affect the market and the people.
Misleading advertisements: IT is very unethical to mislead the audience by advertising and claiming such things that are not true.
4.2: Analyze examples of how organizations respond to ethical issues.
GSK is the company that focuses on maintaining the ethical behavior in the market. The values and beliefs of the company suggest that it believes in providing services to the people with integrity and commitment. The company has a proper code of conduct even for the global level to maintain the ethical practices in advertising and marketing. The global code of practices for promotion and customer interaction outlines the company’s rules and policies regarding the ethical marketing practices. (Gsk.com, 2016)
Whistle blowing mechanisms in the company allow all the employees to get advice or report on the suspected ethical practice by anyone in the organisation.
The company also plays a proper role in marinating the ethical relationship with the supplier and the third parties. Other than this, the company’s anti-bribery and labor rights standard have been written. These standards need to be followed by the third party working with GSK.
The company is committed with the upholding rights of the humans under OECD guidelines. The company also acts as the signatory with the UN global compact, a voluntary global standard on human rights, labor, environment and anti-corruption.
Overall, it can be said that the company is very much committed to the lateral code of conduct and works with integrity in terms of responding to ethical issues.
4.3 Analyze examples of consumer ethics and the effect it has on marketing planning.
- False insurance claim: False insurance claim by the customers for the products is a very unethical practice that can affect the marketing plan of the people. This is because it somehow affect planning budget of the company.
- Warranty deception: Some of the consumers as well as the sellers make wrong use of the warranty schemes. Consumers deliberately break the things to get the product replaced. This should not be practices by the consumers as it is unethical behavior. (Poon, 2012)
- Mis-redemption of vouchers: Some of the customers try to fool the retailers by redeem the voucher multiple times. This is also an unethical practice to be done.
Marketing planning is very essential for the organisations. GSK is the company that have the great brand image with strong marketing strategies. In order to launch a new product like vaccine, company needs to generate a full marketing plan as it help the company to match the objectives with the actual performance. Before framing a marketing plan, it is necessary for the company to study all the external as well as the internal factors that may have their impact on the same. some of the ethical issues need to be considered at the time of making the marketing plan. GSK responds to these issues in positive manner. The company considers and follows the strict code of conduct in its practices of marketing.
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