Term Paperon “Marketing Analysis of GlaxoSmithKline

Bangladesh Limited”

Submitted to:

Professor Dr. M. Mahmodul HasanMBA Program, School of Business

North South University

Submitted by:

Panel: BOOM-Al-Habibi

Course: Marketing Management (BUS 620)

Section: 03

Date of Submission: April 25, 2015

Term Paper on “Marketing Analysis ofGlaxoSmithKline Bangladesh Limited”

Submitted to:

Professor Dr. M. Mahmodul HasanMBA Program, School of Business

North South University

Submitted by:

Name IDKaniz Fatima Nourin Choudhury

1430929060

Sumaiya Murshed 1430624660Kaniz Fatema Shernaz 1431004660Umme Rabia 1430623660

Panel: BOOM-Al-Habibi

Course: Marketing Management (BUS 620)

Section: 03

Date of Submission: April 25, 2015

April 25, 2015

Professor Dr. M. Mahmodul Hasan

MBA Program, School of Business

North South University, Dhaka

Subject: Letter of Transmittal

Dear Sir,

We would like to inform you that we have completed our term

paper on GlaxoSmithKline Bangladesh Limited that you have

assigned us for the course BUS 620: Marketing Management. It

was a great pleasure for us to work on this report.

In writing this term paper, we have followed the instructions

that you have given us in and outside of the class, and we

have also applied relevant concepts that we have learnt

throughout the course. The contents provided in this report

are all our own, though some information and references have

been taken from sources like GlaxoSmithKline Bangladesh

Limited to facilitate our report writing.

We would like to thank you for your sincere guidance and

constant support that we have received during the course of

writing this report. It would not be possible for us to

complete the report without your kind help. We would be glad

to provide any clarification and modification if and when

required.

Yours Sincerely,

Name and ID SignatureKaniz Fatima Nourin Choudhury

ID:1430929060Sumaiya Murshed

ID: 1430624660Kaniz Fatema Shernaz

ID: 1431004660Umme Rabia

ID: 1430623660 Acknowledgement

We would first like to thank Almighty Allah for giving us this

opportunity to work and complete this term paper since

preparing this paper has been a great challenge for all of us.

We are very grateful to our honourable faculty Professor Dr.

M. Mahmodul Hasan for his generous cooperation and constant

guidance that made us really confident about the desired

outcome of our term paper on “GlaxoSmithKline Bangladesh

Limited”.

We would also like to thank our respondents from

GlaxoSmithKline Bangladesh Limited, who took out some time

from their busy schedule to help us collect information. It

was a very interesting experience for us and we tried our best

to cover all the necessary parts of the report assigned.

Finally, we would like to thank each other for the tremendous

cooperation we have shared among ourselves as group members.

Our dedication and strong teamwork has resulted in the

successful completion of this term paper.

Executive Summary

This term paper on “GlaxoSmithKline Bangladesh Limited” aims

to analyse marketing management of the company. It begins with

the definition of marketing management relating to the

company’s marketing management, followed by its mission,

vision, business plan, corporate strategy, SWOT and PESTEL

analyses, Michael Porter’s five forces, marketing strategy,

core marketing concept, market segmentation and marketing mix,

value chain model, total quality management, and quality and

control, brand and branding, brand dynamic pyramid, the five

M’s of advertising, mass communication, marketing budget and

expenditure, pricing strategies, break-even analysis,

recommendation, and finally conclusion. GlaxoSmithKline (GSK),

being a science-led global healthcare company, researches and

develops a broad range of innovative medicines, vaccines and

consumer healthcare products. Its products are used by

millions of people throughout the world, helping them to do

more, feel better and live longer. With headquarters in UK,

GSK has its operations in 115 countries with more than 100,000

people working globally. The company has three primary areas

of business in pharmaceuticals, vaccines and consumer

healthcare. As a research based company, GSK creates

innovative new products and makes them accessible to as many

people who need them. GSK Bangladesh Limited, a subsidiary of

GSK plc, started its operation in Bangladesh, the then East

Pakistan in 1949. Its activities include secondary manufacture

of pharmaceutical products and marketing of vaccines,

pharmaceutical healthcare products, nutrition and oral

healthcare products. The company’s activities are strictly

guided by “GSK values” which include showing respect for

people, being patient/customer focused and commitment to

transparency and demonstration of highest integrity in its

conduct. Embedded with these values and backed by leading edge

technology, more than 700 personnel are working all over

Bangladesh with the global mission to improve the quality of

human life by ensuring quality healthcare products. With 10

vaccine brands, GSK Bangladesh leads the market of the country

not only in terms of volume but also in terms of providing a

whole range of disease prevention for both infants and adults.

GSK has made a global commitment to re-invest 20% of the

profits it makes in developing countries to address issues

around providing healthcare services to the underserved

communities.

TABLE OF CONTENTS

Acknowledgement Executive Summary 1.0 Definition of Marketing Management 1

1.1 Defi nition of Marketing Management (Theory 2000 – 2011) 11.2 Defi nition of Marketing Management (Theory 2012 – 2016 ±) 1

2.0 Mission, Vision, Business Plan, and Corporate Strategy 22.1. Mission 22.2. Vision 22.3. Business plan 2

3.0 SWOT Analysis of GlaxoSmithKline Bangladesh 4

4.0 PESTEL Analysis of GlaxoSmithKline Bangladesh 55.0 Michael Porter’s Five Forces 66.0 Core Marketing Concept, Market Segmentation, and Marketing Strategy

7

6.1 Core Marketing Concept 76.2 Market Segmentation 76.3 Marketing Strategy 8

7.0 Marketing Mix (7P) + 4C 98.0 Value Chain Model 119.0 Total Quality Management, Loyalty, and Quality and Control

12

10.0 Brand and Branding 1411.0 Box Analysis of Brand Elements 1412.0 Brand Dynamic Pyramid 1513.0 Five M’s of Advertising 1614.0 Mass Communication 17

14.1 Advertising Budget & Campaign Cost 1814.2 Sales Promotion and Budget 1914.3 Events & Experiences/Sponsors 2014.4 Public Relation/Government Lobbying 2114.5 Corporate Social Responsibility 21

15.0 Marketing Budget & Expenditure 2216.0 Pricing Strategy 2517.0 Break-even Analysis 2818.0 Recommendation 2919.0 Conclusion 3020.0 References 31

1.0 Definition of Marketing Management:

1.1 Definition of Marketing Management (Theory 2000 – 2011)

Marketing management is the art and science of choosing target

markets and getting, keeping, and growing customers through

creating, delivering, and communicating superior customer

value. (Kotler, Keller, Koshy, Jha, 2014)

1.2 Definition of Marketing Management (Theory 2012 – 2016 ±)

Marketing management depends on the size of the business and

the industry in which the business operates. Effective

marketing management will use a company's resources to

increase its customer base, improve customer opinions of the

company's products and services, and increase the company's

perceived value.

Marketing management of GSK Bangladesh depends on the big size

of its pharmaceutical and consumer healthcare product business

and the huge pharmaceutical and consumer healthcare industry

in which the business operates. Since the size of the business

and industry is big, its marketing management involves huge

and complex activities.

Effective marketing management of GSK uses its resources to

increase its customer base, improve customer opinions of its

pharmaceutical and consumer healthcare products, and increase

GSK’s perceived value. GSK’s spirit of delivering excellence

by being the best it can be enables it to carry out effective

marketing management. GSK focuses more on quality, innovation

and research and development, and also spends hugely on

advertisement, sales promotion and public relation activities.

2.0 Mission, Vision, Business Plan, and Corporate Strategy

2.1 Mission

To improve the quality of human life by enabling people

do more, feel better, and live longer

GSK Bangladesh is confident that it can fulfill this mission

by focusing its business activities around strategic

priorities. Ensuring GSK’s values are embedded in its

culture and decision-making helps GSK better meet the

expectations of society (GSK, 2014).

2.2 Vision

GlaxoSmithKline want to become the undeniable leader in our

industry. It is the people who are at the center of all GSK

does – always, all through. The change GSK has incessantly

been striving to catalyze at a sustainable level would not

only be meaningless but also impossible, had it not directly

touched and involved those individuals’ lives. This year’s

cover page of GSK Bangladesh’s Annual Report reflects its

vision of “All for the PEOPLE” through the illustration of

GSK’s hands extending out to the innumerous people around it.

2.3 Business plan

The local pharmaceuticals part of the business grew by 12%

which is higher than the 11% market growth reported by IMS.

This was on the back of a very successful 2013.

Pharmaceuticals business exceeded its annual value and

volume budgets enabling access of close to 30 million packs

of GSK’s products to patients across the nation. Growth was

driven almost equally by all zones indicating robustness of

processes and good field engagement. Vaccines part of the

business faced unprecedented challenges on the supply front

impacting overall business growth.

In 2014, Global Manufacturing & Supply (GMS) Chittagong site

added one more year of success to the legacy of more than

four decades of glorious achievement. The end-to-end supply

chain program, which began in early 2014 continue to reform

and simplify GMS Chittagong’s supply chain to ensure more

efficient delivery of GSK’s products to patients and

consumers.

This year, the Chittagong site successfully achieved 3 STAR

rating in the recent A&A audit by EHS (Environment, Health

and Safety) and PQ (Product Quality) auditors. Operational

compliance in terms of meeting Global Engineering Standards

(GES) and FM Global assessment and TP 13 engineering audits

outcome gives us the confidence of controlled operations of

the site.

In 2014, GMS Chittagong introduced GSK Production System

(GPS). The GPS is a standard ways of working to identify and

eliminate the root cause of Accidents, Defects and Waste.

This standard ways of working will further improve GMS

Chittagong’s processes and performance in a well-structured

sustained manner.

With all these and other initiatives, GSK Bangladesh plans

to increase its market share and business span further.

GSK Bangladesh’s Internal Control Framework:

3.0 SWOT Analysis of GlaxoSmithKline Bangladesh

SWOT

Analysis

Strength

GSK is one of the largest pharmaceutical companies

Strong financial position. As they maintain profitability.

Strong R&D focuses for creativity and innovation

Winner of chemical industry manufacturing

Weakness

High price. Because they

focus on value rather than

price

Ineffective online

presence. Sometimes they

don’t update their

information

Low level of flexibility

due to the large size of

the company

Opportunity

Possible partnerships & mergers with the pharmaceutical company would increase its capabilityInvention of new drugs, especially of cancer and HIVNew diseases will create opportunities for GSK to bring new drug

Threat

Price War of competitor.A new competitor have superior access to channel of distributionIncreased cost of research Due to inflation.

4.0 PESTEL Analysis of GlaxoSmithKline Bangladesh

Strength

GSK is one of the largest pharmaceutical companies

Strong financial position. As they maintain profitability.

Strong R&D focuses for creativity and innovation

Winner of chemical industry manufacturing

Weakness

High price. Because they

focus on value rather than

price

Ineffective online

presence. Sometimes they

don’t update their

information

Low level of flexibility

due to the large size of

the company

Economical

Economic growth and increase in individual disposableincome

Increase in average growth rate of Bangladesh Pharmaceutical Market

Political

Growing political focus and pressure onhealth care

Possible changes in international trade regulation and competitive regulation

Technological

Breakthroughs in pharmaceutical industry with advanced technology

Issues associated with licensing and patentingdrug manufacturing technology

Social

Changes in customer

life style

Shift in consumer

attitude and opinion

Consumers are

becoming more health

Legal

Rules and regulations directlyand indirectly related to GSK operation such as employment law

Ecological

Climate changed and global warming

Impact to the environment of GSK activities

Reaction of stakeholders to this

5.0 Michael Porter’s Five Forces

RIVALRY

Degree of RivalryIndustry growthCompetitors offer similar and also new ideas & products. High sunk cost and exit barriers cause high degree of rivalry

Buyer PowerConsumers have no choice but have to buy what doctor says. Buyers are scattered and they as such do not use much power in the price of product

Supplier Power- Few suppliers available for supplying the ingredients- No suitable substitutes of inputs - High switching costs to change suppliers - Difficult to stick with one supplier due to emerging technology- Supervision needed for different suppliers

Threats of

Substitute

Easy for the customers

to shift to other

options as switching

cost is low

Demand for generic

against brand name

drug has increased

because of the cost

Threat of New Entrants

High barriers to entry due to huge capital investmentsStrict Government Policies for safety purposesRequire economies of scale & established brand identity

6.0 Core Marketing Concept, Market Segmentation, and Marketing

Strategy

6.1 Core Marketing Concept

Needs, Wants & Demands: GSK is a science-led global healthcare

company with a mission to help people to do more, feel better,

and live longer. They provide vaccines, medicines and consumer

healthcare products, which are always in need. People want

these products when they face health issues. That’s why every

day their scientists search for new ways to improve treatment

of diseases and illnesses, and they pioneer in providing new

solutions to make their products available to those who need

them, wherever in the world they live and whatever their

ability to pay is.

6.2 Market Segmentation

Marketing segmentation is to divide the customer base into

cluster groups with different needs and behaviors in order to

create different and appropriate marketing proposition.

GlaxoSmithKline has segments in major bases: demographic,

psychographic, and geographic.

Demographic:

Income- Income is an important factor in terms of niche market

products like Acen Aid Bar, Oilatum and Spectraban. As GSK has

targeted the Upper Middle and Upper Class people, the market

can be divided based on the income levels of people.

Psychographic:

Social Class- People of different classes have different

needs. Usually upper and upper middle class people are more

concerned about their skin and health related issues. And

GSK’s products require both health consciousness and ability.

Geographic: GlaxoSmithKline currently operates in 115

different countries. So geographically they are spread

out the whole world and they are the 1st pharmaceutical

company to sign up to all trial campaigns for research

transparency.

6.3 Marketing Strategy

GlaxoSmithKline purely follows the ‘marketing concept’. The

marketing concept holds that the key to achieving

organizational goals consists of the company being more

effective than competitors in creating, delivering, and

communicating superior customer value to its chosen target

markets. Sales and marketing is a big part of their Vaccines,

Pharmaceuticals and Consumer Healthcare businesses.

Essentially, its role is to commercialize the products.

Some significant strategies are:

The Strategic Marketing and Market Development

Programme help to develop deep customer insights,

articulate winning value propositions and robust

business strategies.

GSK focus on individual, do what is right for

patients and consumers and committed to the highest

standards of ethical medical practice and governance

in their work.

Recent acquisition of Novartis will create a new

world-leading Consumer Healthcare business bringing

together complementary portfolios with first or

second positions in core categories such as Oral

Care, Wellness and Skin Health.

Their innovative strategy of ‘RX to OTC switch’

makes their consumers’ lives easier by making

prescription medications (Rx) more easily available

to consumers through switching them to over-the-

counter (OTC) products.

7.0 Marketing Mix (7P) + 4C

Price:

Competitive Pricing

In Least Developed Countries, GSK capped price onpatent-protected medicines. In middle-income countries, a

Physical evidence:

GSK ensure high quality products, by giving effectivehealthcare solutions. Theirtop priority is safety of the consumers,

Product:

1- Pharmaceutical Prescription

Medicines Vaccine Medicines Non- Prescription

medicines

2- Consumer Health & Food

drink category –Horlicks, Boost,Maltova, Viva

Target

Market Marketing

Mix

People:

Corporate Executive Team surrounded by talented, trained and experienced staffs around the globe.-

Process:

Automated; Information Technology, Research & Development Sectors, Scientific Programs,

Promotion:

TV commercials, Billboards, Internet, Newspapers, In-store

4C

Place:

GSK’s brands are available in more than 115 countries. They are available in all pharmacies and supermarkets

8.0 Value Chain Model

Clients:

Prescribed Medicines: Different Aged People

Healthcare Products: Mainly Young People

Costs:

Invest more on CSR Activities and Research and Development Sectors.

Convenience:

GSK’s brands are available in more than 115 countries of the world, and they provide World Wide Contact Information for their customers.

Communications:

Direct or indirect interactions with customers; World Wide Contact Information; communicating through CSR activities or

through internet

Target

Market

Primary Activities:

InboundLogistics

Operation OutboundLogistics

Marketing &sales

Services

Materialhandling

Machining Storing Advertising Installation

Warehousing Packing Distribution

Salespromotion

Commissioning

Inventorycontrol

Assembly Deliveryfinishinggoods

Quoting Training

Vehicle Maintenance - Channelselection

Support

Returns tosuppliers

- - Pricing Repairs

Support Activities:

Procurement TechnologyDevelopment

Human ResourceManagement

FirmInfrastructure

Raw materials Administration(MIS)

Recruiting Generalmanagement

Temp salespeople formarketing &

sales

Transportation Training Planningfinance

Lab equipmentfor R&D

In the productor process

Compensation Legal

9.0 Total Quality Management, Loyalty, and Quality and Control

Total Quality Management:

Total Quality Management is an enhancement to the traditional

way of doing business. It is the art of managing the whole to

achieve excellence. It is defined as both a philosophy and a

set of guiding principles that represent the foundation of a

continuously improving organization. It is the application of

quantitative methods and human resources to improve all the

processes within an organization and exceed customer needs now

and in the future. It integrates fundamental management

techniques, existing improvement efforts, and technical tools

under a disciplined approach.

GSK is working on the quality improvement strategy. It

provides frameworks that ensure quality, regulatory

compliance, and product safety. It mainly focuses on reducing

the failure costs by problem solving methods. The whole system

is centrally managed which is published on GSK internet and

implemented at sites through local standard operating

procedures of systems. This organization is basically

concerned in two departments: one is manufacturing and another

one is commercial department. Manufacturing department helps

in identifying technical descriptors i.e. materials and

process required for making a product. The commercial

department helps in identifying customer requirements and also

measures the level of GSK’s customers’ satisfaction. GSK has

developed a system for handling customer complaints called

“COMPLAINT HANDLER”.

Quality & Control:

Quality is the totality of features and characteristics of a

product or service that bear on its ability to satisfy stated

or implied needs. GSK stands on “Improving Health and Quality

of Life To Do More, Feel Better, Live Longer”. So, they

established a commercial department which identify customer

expectations and their satisfaction and constantly monitor

them. To increase their quality, GSK also reviews their

products annually. For this task, they have software called

LAB INFORMATION MANAGEMENT PERFORMANCE SYSTEM (LIMPS). This

software saves past data, so they can easily compare where

they were last year and where they stand today. This also

helps GSK to know whether their product is robust or not.

Customer Loyalty:

Competitive advantage can be achieved through customer

loyalty. This is the way to gain the best kind of customers

and repeat customers. GSK’s corporate mission is to “improve

the quality of human life”. Through consumer education and

sponsoring events, the company gets the opportunity to

communicate its message directly to consumers. It is all about

creating a range of value-adding services around services

around the product that drive customer loyalty.

GlaxoSmithKline has just completed a pitch process and

selected a vendor to develop an app for the pain-relieving

product Panodil Junior. This company is well placed to develop

an app for concerned parents with ill children because they

are targeted to children.

10.0 Brand and Branding

Branding is a major issue in product strategy. On the one

hand, developing a branded product requires a huge long-term

investment, especially for advertising, promotion, and

packaging, but when it comes to Pharmaceutical Industry, then

branding comes with a different form. GlaxoSmithKline, one of

the major players of pharmaceutical industry, has done their

branding in different innovative ways. Like- they have two

main types of product segments, one is Pharmaceuticals – where

they simply make their products and packaging in an innovative

way. They also promote their brands through different

advertisements.

For instance, they made different ads for Sensodyne and

presented it as a doctor prescribed toothpaste, which easily

attracted consumers’ attention. Another product segment is

their Consumer Healthcare products, where they used different

brand ambassadors to promote their products, e.g. Sachin

Tendulkar as the brand ambassador of their major health food

drinks like Boost and Horlicks. Some pictures of different

types of branding of GlaxoSmithKline’s products are given

below.

11.0 Box Analysis of Brand Elements

Memorable Meaningful

Likable Transferable

Adaptable Protectable

12.0 Brand Dynamic Pyramid

Strong Relationship

Weak relationship

Presence

Relevance

Performance

Advantage

BondingGSK

13.0 Five M’s of Advertising

The Five M’s of Advertising of GlaxoSmithKline Bangladesh

Limited include the following:

Mission

To create brand awareness and knowledge of new and existing products, stimulate repeat purchase, and convince doctors andpurchasers that they made the right choice,

Money

The advertisement and sales promotion expenses were Tk 850,250,000in 2014, Tk1,059,208,000 in 2013,and Tk 835,491,000in 2012. Itcan furtherincrease its budget allocation for

Message

People are at the heart of all what GSK does. GSK wantsto help them domore, feel better, and live longer through providing quality products because healthypeople make

Media

Like other pharmaceutical companies, GSK puts fewer advertisements of pharmaceutical products in major media vehicles like TV, radio, Internet, newspaper, billboard, etc.compared to itsconsumer healthcare products like Horlicks. GSK

Measurement

The results can be measured by comparing growth of sales and market share.In 2014, GSK’s pharmaceutical business grew by 12% which is higher than the 11% market growthreported by IMS and its consumer healthcare business grewby 7%, maintaining adominant market share of 88% in thehealth food drink category. The

14.0 Mass Communication

Mass Communication Budget and Expenditure of GlaxoSmithKline

includes advertising budget and campaign cost, sales promotion

and budget, events and experiences/sponsors, public

relation/government lobbying, and corporate social

responsibility. Three years’ budgets from 2012 to 2014 have

been shown in the table below. In 2014, advertisement and

sales promotion has the highest 92% allocation amounting to Tk

850,250,000, conference and seminar 3%, physician samples 3%,

communications 1%, Health Care Organization (HCO) support

expense 1%, Health Care Professionals (HCP) expense 0% and

professional books 0%. These expenditures are usually made

more on consumer healthcare products than on pharmaceutical

products. (GSK, 2014)

Mass Communication Budget & Expenditure

Taka in '000

2014 2013 2012

Advertisement

and Sales

Promotion

850,250 1,059,208 835,491

Health Care

Organization

5,628 6,292 -

(HCO) Support

Expense

Health Care

Professionals

(HCP) Expense

1,328 64 -

Physician

Samples

28,154 21,211 22,923

Professional

Books

1,821 1,723 1,517

Communications 7,172 3,976 4,217

Conference and

Seminar

30,099 19,195 11,396

The pie chart shows percentage of GSK’s major allocations in

mass communication sector for the year 2014.

M ass Com m unication Budget & Expenditure

92%

1%0%3%0%1%

3%

Advertisem ent and SalesProm otionHealth Care Organization(HCO) Support ExpenseHealth Care Professionals(HCP) ExpensePhysician Sam ples

Professional Books

Com m unications

Conference and Sem inar

14.1 Advertising Budget & Campaign Cost

The table and pie chart below show the typical estimated

highest amount of 48% allocation for TV, followed by outdoor

(20%), newspaper (19%), magazines (10%), radio (2%), and

internet (1%). These allocations for media are usually used

more for consumer healthcare products than for pharmaceutical

products. At present, among pharmaceutical products, only

vaccines like Cervarix are advertised using celebrity

endorsements like Monalisa and Kaniz Almas to create social

awareness (GSK,personal communication, April 22, 2013).

Advertising Budget and Cam paign Cost

19%

10%

20%

48%

1%2%

NewspaperM agazinesOutdoorTVInternetRadio

Percentage of allocations for various types of mediaTypes of Media % of allocationTV 48Newspaper 19Magazines 10Radio 2Outdoor 20Internet 1

14.2 Sales Promotion and Budget

The allocation of budget for advertisement and sales promotion

was Tk 850,250,000 in 2014, Tk 1,059,208,000 in 2013, and Tk

835,491,000 in 2012.

Promotional Activities of GlaxoSmithKline:

Like other pharmaceutical companies, sales promotion system is

critical for GlaxoSmithKline’s pharmaceutical business. GSK’s

promotional activities include promotional activities for

doctors; promotional activities for chemists; and promotional

activities for ultimate consumers.

Promotional Activities for Doctors:

Promo materials like wet tissue, pen, folder, hand

wash/soap/sanitizer, nail brush, paper towel, pen drive, note

book, etc. and medical equipment like medical journal,

stethoscope protector, BP machine, needle destroyer, tongue

depressor, anatomical chart, patient dairy, disposable

mask/gown/gloves, magnifying glass, thermometer, etc. along

with names of medicines are provided to doctors free of cost.

Promotional activities for Chemists:

Like other companies, GSK gives 16% permanent discount to

chemists for all its medicines. For instance, if GSK’s one

medicine price is Tk 100, chemists can sell it for Tk 133

including government VAT of Tk 17.

Promotional Activities for Ultimate Consumers:

GSK’s promotional activities for ultimate consumers include

personal selling with samples, coupons and free trials,

especially for vaccines in rural areas. Direct marketing

channels like setting up temporary kiosks are also used.

(GSK,personal communication, April 22, 2013).

14.3 Events & Experiences/Sponsors

GSK sponsored Satellite Symposia “Post menopausal

Osteoporosis & Role of Denosumb”. The symposia were

attended by eminent orthopedics of the country and the

scientific information shared by GSK was highly

appreciated.

The Derma team of GSK Bangladesh arranged a unique

scientific session with leading Dermatologists of the

country to discuss the clinical research on Acne Vulgaris

titled “Bench to Bedside: Clinical Research in Acne

Vulgaris” in January 2014.

To facilitate and update scientific information titled

“Updates on Management of Dry & Sensitive skin, a speaker

tour was held in Dhaka and Chittagong for Dermatologists.

GSK participated in the 4th Divisional Conference of

Obstetric & Gynaecological Society of Bangladesh (OGSB),

Khulna Branch by arranging a scientific seminar on “Role

of vaccination for cervical cancer prevention”.

GSK participated at the Bangladesh Pediatric

Association’s Symposium 1st SAPA & 18th BPA Conference in

April 2014.

Immunization week was celebrated in April 2014 by

focusing on success stories of vaccination (GSK, 2014)

14.4 Public Relation/Government Lobbying

Public relations (PR) of GSK involve a variety of programs

designed to promote or protect the company’s image to its

individual products. Public relations functions include press

relations, product publicity, corporate communications,

lobbying, and counseling. Major tools used in marketing PR

include publications such as professional books, events,

sponsorships, news, speeches delivered in conference and

seminars, and public service activities like immunization

campaigns (GSK, 2014).

14.5 Corporate Social Responsibility

Since the last few years, GSK has taken up several initiatives

to fulfill its corporate social responsibilities for a better

and healthier community in Bangladesh.

The key initiatives include reinvestment of 20% of profits for

healthcare infrastructure development in Bangladesh with a

vision to reach out to the hard-to-reach communities of the

country with quality health care providers. This initiative

grew efficiently since 2011 and till date runs projects with

CARE, Friendship & ICDDR, B as partners.

GSK-CARE Community Health Worker Initiatives are intended to

address health work force issues at remote areas for improving

access to essential Maternal Neonatal and Child Health (MNCH)

services in Sunamganj Haor areas through expanding the

availability of skilled health service providers at the

community level.

GSK-FRIENDSHIP m-Health project aims at equipping and

upgrading to build a sustainable healthcare system in the

inaccessible char areas of Gaibandha District, where access to

any basic healthcare is almost non existent.

GSK-ICDDR,B Health System Strengthening Program addresses the

issue of lack of knowledge and/or implementation of clinical

governance in the hospitals regarding infection control which

is one of the major reasons of morbidity and to some extent

mortality in the healthcare facilities in our country.

GSK’s continuous support for running free primary school at

Mirpur, Dhaka for slum children has enabled it to provide more

than 500 students free education from pre-school to Class 5.

As one of the Founding Trustees of The Duke of Edinburgh’s

Awards (DEA), GSK provides the new generation with life skills

and opportunity to do different extracurricular activities.

GSK supports Teach for Bangladesh (TFB) which enlists the most

promising young Bangladeshi graduates to initiate a national

movement for educational equity with excellence, beginning by

teaching for two years in an under-resourced school (GSK,

2014).

15.0 Marketing Budget & Expenditure

The table and the bar chart below show the marketing budget

and expenditure for the years 2012 to 2014. Total marketing

expenditures were Tk 1,325,952,000 in 2014, Tk 1,341,499,000

in 2013, and Tk 1,087,265,000 in 2012. The expenditure

increased from the year 2012 to 2013, and decreased slightly

from the year 2013 to 2014.

Marketing Budget & ExpenditureTaka in '000

2014 2013 2012Selling Expenses:Salaries, wages and welfare 338,753 220,745 177,629Contributions to retirement

benefit scheme 17,242 15,234 26,192Advertisement and sales

promotion 850,250

1,059,20

8 835,491Health Care Organization

(HCO) support expense 5,628 6,292 0

Health Care Professionals

(HCP) expense 1,328 64 0Travelling & training 69,200 49,435 46,764Physician samples 28,154 21,211 22,923Professional books 1,821 1,723 1,517Communications 7,172 3,976 4,217Conference and seminar 30,099 19,195 11,396Motor running expenses 16,432 7,270 8,204Depreciation 32,626 24,035 24,376Office expenses 9,047 8,520 9,101Insurance 2,317 2,269 2,195Computer expenses 8,129 7,020 0Repairs and maintenance 0 0 2,975Other expenses 1,625 5,799 6,096Promotional allowance -114,329 -123,915 -113,176

Total Selling Expenses: 1,305,494

1,328,08

1

1,065,90

0

Distribution ExpensesSalaries, wages and welfare 6,115 5,345 4,763Contributions to retirement

benefit scheme 634 522 572Handling, freight and

transport 114 179 165Repairs and maintenance 2,223 483 31Motor running expenses 339 307 187Depreciation 1,907 1,348 1,214Stock keeping charges 6,601 4,810 13,873Communications 57 42 37

Select the price objective

0

200000

400000

600000

800000

1000000

1200000

1400000

1 2 3

M arketing Budget & Expenditure for the year 2012 to 2014

Total M arketing Expenses

Insurance 28 34 31Office expenses 2,115 214 317Other expenses 325 134 175Total Distribution Expenses 20,458 13,418 21,365

Total Marketing Expenses 1,325,952

1,341,49

9

1,087,26

5

16.0 Pricing Strategy

Steps in Setting Price

Determine demandEstimate costsAnalyze competitor price mixSelect pricing methodSelect final price

Step 1: Selecting the Pricing Objective

GSK first decides where it wants to position its market

offering. It becomes easier for the firm to set price when its

objectives are clear. The company pursues product-quality

leadership pricing objective aiming to be the product quality

leader in the market. Many of its brands strive to be

“affordable luxuries”—products characterised by high levels of

perceived quality, taste, and status with a price just high

enough not to be out of consumer’s reach (Kotler, Keller,

Koshy, Jha, 2014).

Step 2: Determining Demand

Price Sensitivity

GSK’s demand curve shows the market’s probable purchase

quantity at alternative prices. The first step in estimating

demand is to understand what affects price sensitivity.

Estimating Demand Curves

GSK attempts to measure their demand curves using statistical

analysis of past prices, quantities sold, and other factors

that reveal their relationships. In measuring the price-demand

relationship, the company strives to control various factors

influencing demand. However, the competitor’s response will

make a difference.

Price Elasticity of Demand

GSK attempts to know how responsive or elastic demand would be

to a change in price. The demand of GSK’s pharmaceutical

products is inelastic because demand hardly changes with a

small change in price. Dermatology and respiratory businesses,

for instance, have been GSK’s strengths, contributing

enormously to the total business. These medicines are

frequently prescribed as more effective remedy for such kinds

of diseases; and consumers generally buy medicines if

prescribed by doctors. So, buyers do not readily notice a

higher price, thinking the higher prices are justified.

Demand is slightly elastic for its consumer healthcare

products because price changes can affect the demand since

there are substitutes or competitors in the market and buyers

readily notice a higher price (Kotler, Keller, Koshy, Jha,

2014).

Step3: Estimating Costs

While estimating cost, GSK considers the average cost which is

the cost per unit at any level of production and variable cost

that must be covered. Total costs are also considered to

determine profits. Costs generally change with production

scale and experience. However, though GSK has declining

average cost with accumulated production experience called

experience curve or learning curve; it does not use

experience-curve pricing/aggressive pricing that gives

products cheap images. Moreover, its competitors are not weak

followers. GSK seems to use target costing where costs change

as a result of a concentrated effort to reduce them for

bringing the final cost projections into the target cost range

(Kotler, Keller, Koshy, Jha, 2014).

Step4: Analyzing Competitors’ Costs, Prices, and Offers

GSK determines its range of possible prices by considering

market demand and the company’s costs. The company also has to

take into account its competitors’ costs, prices, and possible

price reactions. It must first consider the nearest

competitors’ price (Kotler, Keller, Koshy, Jha, 2014).

Step 5: Selecting a Pricing Method

Considering the customers’ demand schedule, the cost function,

and competitors’ prices, GSK selects a possible price with

costs setting the floor to the price, competitors’ prices and

the price of substitutes providing an orienting point, and

customers’ assessment of unique features establishing the

price ceiling. GSK uses perceived-value pricing where it bases

its price based on the customers’ perceived value. Perceived

value consists of inputs such as the buyers’ image of the

product performance, the channel deliverables, the warranty

quality, customer support, and softer attributes such as the

suppliers’ reputation, trustworthiness, and esteem. Companies

like GSK must deliver the value promised by their value

proposition, and the customer must perceive this value. The

firms can use the other marketing program elements such as

advertising, sales force, and the Internet, to communicate and

enhance perceived value in buyers’ minds. Ensuring that

customers appreciate the total value of a product or service

offering is crucial. The company can try to determine the

value of its offering in several ways: managerial judgements

within the company, value of similar products, focus groups,

surveys, experimentation, analysis of historical data, and

conjoint analysis (Kotler, Keller, Koshy, Jha, 2014).

Step 6: Selecting the Final Price

In selecting the final price, GSK considers the following

factors:

Impact of other marketing activities: The final price

must take into account the brand’s quality and

advertising relative to the competition. Farris and

Reibstein’s findings suggest that price is not as

important as quality and other benefits in the market

offering.

Company pricing policies: The price must be consistent

with company pricing policies. Many companies like GSK

can set up a pricing department to develop policies and

establish or approve pricing decisions, aiming to ensure

that salespeople quote prices that are reasonable to

customers and profitable to the company.

Gain-and-risk sharing pricing: Buyers may resist

accepting a seller‘s proposal because of a high-perceived

level of risk. The seller has the option of offering to

absorb part or all of the risk if he/she does not deliver

the full promised value.

Impact of price on other parties: Management must also

consider the reactions of other parties to the

contemplated price (Kotler, Keller, Koshy, Jha, 2014).

17.0 Break-even Analysis

Break-even analysis of GSK is done to determine the point at

which revenue received equals the costs associated with

receiving the revenue. For a simple break-even analysis of

GSK, the formula is given below:

Break-even Sales = Fixed Costs / (1 – Variable Cost % of Sales)

 

2014

Tk.

2013

Tk.

2012

Total

in ‘000 in ‘000 Tk. in ‘000 Tk. in ‘000

Fixed Cost 18,84,192 17,11,918 13,44,945 49,41,055Variable Cost 44,76,255 45,16,705 39,64,900 1,29,57,860Sales 71,87,225 67,74,872 55,53,812 1,95,15,909

Break-even Sales = 49, 41,055/1-(1, 29, 57,860/1, 95, 15,909)

= 1, 47, 03,943 Tk. in ‘000

18.0 Recommendation

GlaxoSmithKline Bangladesh should continue to invest on

Research & Development in order to come up with new and

innovative products.

1, 47, 03,943

Tk.

1, 29, 57,860

Tk. in

49, 41, 055

Tk.

It should close any plant that is not used by the company

for its operations because it increases the company’s

overhead costs.

GSK should also keep a check on its activities more

closely to outset those activities that are only

increasing costs of the company.

In order to gain market share, the company can try to

reduce the selling price of its products slightly as this

would allow more consumers to buy its products and

encourage the retailers to have its products on their

shelves.

Stronger alliances should be created with greater numbers

of physicians and chemists through sending more medical

representatives, holding conferences and seminars, giving

physician samples, maintaining communications, providing

Health Care Organization (HCO) support and Health Care

Professionals (HCP) expenses, and publishing

professional books.

19.0 Conclusion

GlaxoSmithKline (GSK) is one of the world’s largest research-

based pharmaceutical companies that invents, develops,

manufactures and markets health related products. It is an

innovative company that produces and markets branded products

only.

Pharmaceutical business exceeded its annual value and volume

budgets enabling access of close to 30 million packs of GSK’s

products to patients across the nation. Growth was driven

almost equally by all zones indicating robustness of processes

and good field engagement. To be successful, the company has

taken many steps such as going for mergers and acquisitions

and cutting its excess and redundant costs. 

As a socially responsible multinational healthcare company,

GSK is securing wellness and providing quality products to its

customers. Their primary focus is to touch the lives of

millions of people every day. So, they are committed to

creating a strong ethical culture, where people are their main

target. As a result, they develop a legacy and deliver

breakthrough products of value that enable the customers to do

more, feel better, and live longer.

20.0 References

Kotler, P., Keller, K. L., Koshy, A. and Jha, M. (2014),

‘Marketing Management – A South Asian Perspective’, 14th edn, Pearson

Prentice Hall.

GlaxoSmithKline Bangladesh Limited. (2012).Annual Report 2014.

GlaxoSmithKline Bangladesh

GlaxoSmithKline Bangladesh Limited. (2013).Annual Report 2013.

GlaxoSmithKline Bangladesh

GlaxoSmithKline Bangladesh Limited. (2014).Annual Report 2014.

GlaxoSmithKline Bangladesh

Brocka, B., &Brocka, M.S.(1992). Quality Management: Implementing the Best Ideas

of the Masters, Richard D. Irwin, Homewood, IL.

Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take

account of political processes. Total Quality Management, 4(1), 47-55.

Khan M.A, (2009), Total Quality Management perspective of cellular mobile

telephone operators in Pakistan, National University of Modern Languages,

Islamabad.

Wilkinson, A., &Witcher, B. (1993). Holistic Total Quality Management must take

account of political processes. Total Quality Management, 4(1), 47-55.

Website of gsk. http://www.gsk.com/

Retrieved from http://www.gsk.com.bd/

Retrieved from

http://faculty.insead.edu/chandon/personal_page/Documents/Arti

cle-Innovative%20Marketing%20Strategies%20after%20Patent

%20Expiry%20The%20case%20of%20Gsk-s%20Antibiotic%20Clamoxyl

%20in%20France.pdf

Retrieved from

https://www.facebook.com/l.php?u=https%3A%2F%2Fwww.blogger.com

%2Fblogger.g%3FblogID%3D8229085196302787405%23editor%2Ftarget%3Dpost

%3BpostID%3D3140399308425760633%3BonPublishedMenu%3Dallposts

%3BonClosedMenu%3Dallposts%3BpostNum%3D0%3Bsrc

%3Dpostname&h=WAQH3ztvo