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CHAP10 Place STO. DOMINGO

This document discusses pharmaceutical distribution channels and inventory management. It defines distribution channels, their functions and levels. It also lists different pharmaceutical distribution channels and innovative practices used by drug companies. Finally, it discusses factors for selecting, motivating and evaluating channel members, as well as concepts like order processing, warehousing, inventory, transportation, stock turnovers, reordering inventory, economic order quantity, and safety stock.

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Patricia Sto. Domingo
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45 views4 pages

CHAP10 Place STO. DOMINGO

This document discusses pharmaceutical distribution channels and inventory management. It defines distribution channels, their functions and levels. It also lists different pharmaceutical distribution channels and innovative practices used by drug companies. Finally, it discusses factors for selecting, motivating and evaluating channel members, as well as concepts like order processing, warehousing, inventory, transportation, stock turnovers, reordering inventory, economic order quantity, and safety stock.

Uploaded by

Patricia Sto. Domingo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PHAR 12

CHAPTER 9
PLACE
STO. DOMINGO, PATRICIA ANGELICA S.
4A-PH

1. Discuss what is meant by Pharmaceutical Distribution Channels, its functions


and levels
 Distribution channel consists of the producer of a good, the ultimate user,
and any intermediaries through which the goods pass.
 Distribution channel moves products and related goods from the
manufacturer to the final end-users, thereby saving time, money, and effort
in readily making them available to the intended markets.
 Functions of Marketing Channel Members:
- Physical transport and storage
- Financing the distribution cost & related channel services
- Implementation of sales promotions and related marketing activities
- Building a data bank of market information iinclusive of industry and
competitors’ analysis
 Levels of Pharmaceutical Distribution Channel

o Producer –
Producers are usually the pharmaceutical companies that manufacture
drug to provide goods or services to the end users thru market
intermediaries, such as pharmacy drugstores, hospital pharmacies,
etc.
o Intermediaries – A marketing intermediary is the link in the supply
chain that links the producer or other intermediaries to the end
consumer. Wholesalers, retailers, manufacturer’s representatives,
distributors and dealers, and dispensing physician are all considered
intermediaries.
o End user— The end consumer is the person, people, organization, or
business that will use or consume the product or service and has no
intention of selling it to someone else. In a pharmaceutical distribution
channel, end users are the patients taking the medications.
PHAR 12
CHAPTER 9
PLACE

2. Enumerate the Pharmaceutical channels of distribution and the innovate


distribution practiced by many drug companies
 Pharmaceutical channels of distribution

 Innovative distribution
channels
- Groceries and Supermarkets
- Trading Stores and Sari-Sari
- Convenience Stores
- Gasoline Stations
- Boutique and Gift Shops
- Post office and Air Cargo Forwarders
- Multipurpose Hall,
Villages/Subdivisions
- Schools, Offices, Botica sa
Barrio, Botica sa Binhi
- Clinics, Home Remedy Stores

3. How do you select, motivate, and evaluate channel member?

6 Factors to consider when selecting channel members:


 Profile of Members – Years in operation, financial capability, other assets
 Overall reputation and image in the industry and community
 Future growth potential and expansion capabilities
PHAR 12
CHAPTER 9
PLACE
 Assortment of product lines from different companies – related or non-related
goods and services, product length, width, and depth of assorted goods
 Track record – sales growth, profits, market share, market leadership
 Customers and location

Ways to motivate channel members:


 Cooperative arrangements – focuses on channel member needs and
problems, conveys a clear sense of mutual benefit
 Partnership and strategic alliance – focus on a continuing and mutually
supportive relationship between the manufacturer (pharmaceutical
companies) and its channel members (retailers, wholesalers etc.
 Distribution programming – A comprehensive set of policies for the promotion
of a product through the channel.

7 ways of measuring middlemen’s performance


 Achievement of Sales Quota and Stock Transfer Movement
 Monthly Average Movement
 Average Inventory Levels
 Relationship Marketing or after Sales Services
 Support Provided In Company’s Sales Promo Activities
 Decisions Made On Damaged, Lost Or Expired Products
 Customer’s Delivery

4. Discuss the following:


A. Order processing – means customer sales order being facilitated by the
order department by ways of invoices, shipping, and billing documents using
computers.
B. Warehousing – Warehousing is when you purchase goods from a
manufacturer and store them before they are shipped to another location for
fulfillment. The main function of a warehouse is to store products or goods
before moving them to another location.
C. Inventory – Inventory is the amount of tangible goods, products or services
a company offers to its customers. 
D. Transportation – Transportation involves physical movement of goods from
one place to the other. It is the indispensable function of marketing. 

E. Stock turnovers – a ratio showing how many times a company has sold
and replaced inventory during a given period. 

F. When to reorder inventory – The reorder point for replenishment


of stock occurs when the level of inventory drops down to zero. In view of
instantaneous replenishment of stock the level of inventory jumps to the
original level from zero level.

G. How much to reorder – Economic


Order Quantity tells you how much
PHAR 12
CHAPTER 9
PLACE
you should reorder, taking into account demand and your inventory holding
costs

H. Distribution channel – A distribution channel is a chain of businesses or


intermediaries through which a good or service passes until it reaches the
final buyer or the end consumer.

I. Economic order quantity -- economic order quantity is the order quantity


that minimizes the total holding costs and ordering costs.

J. Exclusive distribution – Distribution is exclusive when only certain retailers


are given the option of carrying a product in its store.

K. Intensive distribution – Intensive distribution is when a business ignores


market segmentation and decides to supply their product to every market
available.

L. Inventory holding costs – Holding costs are those associated with


storing inventory that remains unsold.

M. Usage rate – a measure of the quantity of a product consumed by a user in


a given period; users may be subdivided as heavy, moderate and light.

N. Selective distribution – Selective Distribution involves using more than


one, but lesser than all the intermediaries and distributors who carry the
company's products on a basis of a company specific set of rules.

O. Reorder point – The reorder point (ROP) is the level of inventory which


triggers an action to replenish that particular inventory stock.

P. Safety stock – Safety stock is an additional quantity of an item held in the


inventory to reduce the risk that the item will be out of stock.

Q. Physical distribution – Physical distribution includes all the activities


associated with the supply of finished product at every step, from the
production line to the consumers. 

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