The pharmaceutical business
The pharmaceutical business earned revenue of over two billion dollars in sales of the previous year, over thirty percent of total company income, and it was rank among the top twenty pharmaceutical companies and top ten among the Biotechnology Company. The pharmaceutical industry contributed to over five percent growth in the 1st quarter of twenty eleven. The immense growth helped by the introduction of new products by the sector, and significant brands provided reliable performance. To witness this growth in revenue pharmaceutical industry employed a discipline control approach to improve its efficiency for it to put more resources in the pipeline and invest in new products.
The pharmaceutical industry in previous years refurbished its portfolio through the expansion of leadership in immunization and investing more expertise in oncology. The pharmaceutical business plans to launch new products to the market by the beginning of 2009 and 2011 and others in several areas. The company explained two of their six products have pending regulatory review issues in the European Union, and the other two of the essential commodities already registered in an important market. They believe that these products represent a significant development compared to current standards care.
With the strengthening of geographical presence, the pharmaceutical business will develop its geographic advances and increase the level of investment in a new emerging market, asses’ market suitable business strategies and portfolios.it remains to be an essential key focus on already developed markets. The pharmaceutical businesses have launched seven plans for 2011 in Japan, which is the second-largest pharmaceutical market in the world.
Pharmaceutical businesses put a lot of priority investments in local R&D planned license measures, partnership, and select acquirement continued to build significant vigorous pipeline for long-term investments. They were estimating that the pharmaceutical business will have more than ten products and over thirty crucial pipeline extension from 2011 to 2015.
More of pharmaceutical business has invested in talents and organization strength. The company is doing it through the strengthening of leadership capabilities within internal workers regional wise and internationally. The crucial components involve rotating key talents into critical roles to facilitate faster development to help address developing and sophisticated commercial setting. The pharmaceutical business is building capabilities in new technological areas and upcoming markets.
Cost leadership is part of the marketing strategy. Although it is highly effective in accessing market shares as well as capturing the attention of consumers, it is hard to implement. The business administration group has to work continuously to cut the cost of not just one product but the entire product range in the business portfolio. Cost leadership does not mean that the business produces goods that are of inferior quality at comparatively low prices. In the end, the plan would lead to a loss. A company has to come up with goods that are of an acceptable standard and particular to a set of customers at a price that is much cheaper or competitive than other businesses that produce the same goods for the strategy to be deployed.
The current business world is a very sophisticated one, where customers are conscious of the choices they can make. Competitive pricing is one-way companies distinguish themselves. Companies with lower production costs can offer the same standard of product quality at a much lower price relative to their competitors. Customers are continuously looking to escalate their purchasing power, and if that cannot accomplish through an increase in income, then the next best option is to purchase more at a lower price.
A cost leadership approach, over and above current rivals, often provides advantages compared to potential new entrants. In particular, a cost leader’s position in a market appears to discourage new companies from joining the sector because a new business will fail to capture customers by lowering the prices of cost leaders. Therefore the cost leadership approach helps to create entry barriers that will protect the organization and its current competitors from new competition.
Cost leadership gains enormous market share since a large proportion of potential clients find it very enticing to pay low prices for goods and services of acceptable quality. The need for productivity ensures that the profit margins of cost leaders are often slimmer than those other companies enjoy. Nevertheless, the willingness of cost leaders to benefit a little from each of a large number of customers means that the total cost leader’s profits can be high.
It becomes possible to acquire higher profit margins by cutting down development and production costs. If competitive pricing is reasonable, with increasing margins, then it can be obtained by other firms, so you win more companies as you give your consumers a better value proposition. Companies employing cost leadership styles not only attain a higher profit margin, but they are also able to realize increased market share with time. When expenses for a company are smaller, then there are fewer financial risks that could bring the company out of operation.
One of the first changes to the cost leadership styles that always tend to occur is in research and innovation. R&D seems to be an inessential expense to many of team leaders. The result of cutting funding here is fewer new products or services coming onto the market. Resulting in fewer changes in innovation; alternatively, this leadership style promotes selling just the same product at lower prices. If leaders focus mainly on the amount of the given goods or services, then it becomes easy to miss how the market changes with time. Consumer’s preferences and taste for certain products also varies. If the sole focus is on improving a service or product and merely reducing the cost, you will realize that some customers will pay more to go with a competitive product since it can satisfy their needs.
The advantages of the cost leadership are mostly temporary. When one business starts to see the benefits of cost reduction to generate a higher profit margin, everybody else starts copying the strategies used to reduce their prices as well. With money invested in research and development to combat this issue, in a few years, new technologies will become obsolete. That means cost leadership must be active at all times so that it can be successful.
Differentiation strategy is a method that a company takes in the development of a unique product or service that customers find better than or otherwise unique from the products or services offered by rivals. If successful, it will permit the business to charge the best for the good or service. However, the company also faces higher costs in distributing a particular product or service and therefore needs to be efficient in attracting customers to cover the extra expense. Thus, by charging higher rates, the company that adopts a differentiation strategy will increase profits and outshines its business rivals.
The differentiation strategy has three basic.
Product basis-To have an advantage over the competition, and business offers its clients new products and services which best meet their needs. It entails tremendous cost in research and innovation, production, and distribution. The rate of return will be more than the price involved, as the company becomes the market leader in selling the commodity.
Organization basis-Differentiation can also be organizational in which a business achieves popularity through its brand name, position advantage, and goodwill and customer trustworthiness.
Pricing basis-The price of the product is determined by supply and demand, though it appears to vary and is greatly affected by the value of the product to the customer. Either a firm should charge the lowest price for its product or gain dominance by charging maximum prices to gain distinction through pricing.
For a business to attain differentiation, it must incorporate some of the following measures
- Provide customer service through a product that suits their needs and desires perfectly.
- Encourage goods and services innovation.
- Improve the level of product efficiency
- Put prices on goods and services basing on the quality and purchasing power of the customers.
- Develop a good brand by ensuring the quality of goods and services.
For differentiation strategy to be applied successfully, all a business requires to do is carefully examine the requirements and desires of the customer to determine the possibility of combining various differentiation features into a unique product containing desired attributes. The firm will price the product higher than its rivals on the successful implementation of the plan and gain customer loyalty because customers get attracted to the unique features.
Focus strategy is a marketing strategy in which business focuses its resources on the expansion of a narrow market or industry sector. Usually used when the business segment and has goods and services to fulfill its needs competitively. Focus strategy does well to business in several ways. When you concentrate your products and marketing on a particular audience, you are getting to know them in a way that allows you to understand their needs better. It facilitates and builds a good relationship with your intended market. Simply because you are listening to their needs and concerns and coming up with products that fully satisfy those needs and interests, customers will have a strong affinity for your brand and will be loyal to you.
It implies that you are creating a relationship with your customer who will support and buy your product for a more extended period and will mostly tell his or her friends and family members about your brand too. By focusing your efforts, you can typically outshine a rival who is not targeting a specific group as well as you are. If correctly done, customers will perceive you as the leader in a particular category of product and turn to you before focusing on a product with a broader niche.
You have pleased customers when you distinguish yourself and effectively solve a problem or fulfill their needs. You are overcoming particular challenges by differentiating yourself from the competition. You are often delighted when people have specific issues to see them fixed so that they can educate everyone about them.
A negative aspect of differentiation occurs when it is pushed too far by business leaders. That means you have built something off the wall, and either customer doesn’t believe it is accurate or they don’t understand the value.
For the company to be more successful in the future, there are several recommendations that it should consider.
- The company should invest more resources in research and innovation. When a business focuses on research and change, it will enable them to come up with new products and new methods of solving problems that might have prevented them from experiencing development in the previous years.
- More focus should be the shift to encouraging the development of talents and skills within their internal workers; the business should try to see they bring out the best expertise and abilities from their works to facilitate ease of working and increase in production levels.
- Companies should employ the use of modern technologies to ensure a product of quality goods that will help to create the right brand image. It will attract more customers and make their products and services more marketable.
- The business should invest in researching market trends and changing customer preferences and choices. It will enable the company to produce goods and services that meet market trends and satisfies its customer needs.
- To witness growth in the future company should try to cut on the cost of production and increasing profit margin. Achieving is by employing modern technologies that produce quality products that fetch high prices and a lower production cost.