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IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
SALES AND DISTRIBUTION PROJECT Sales (Pre & Post) & Distribution’ effectiveness:
A comparative study of DAIICHI SANKYO
&
ABBOTT LABORATORIES
PREPARED BY
Name Section Group No. Signature
Pradipna lodh F-41
Ranu Parmar
Yogendar singh
tomar
Madhumita
Tripathi
Rishab Goel
IIPMIIPM TOWER,SATBARI,
CHANDANHAULA,CHATTARPUR-BHATIMINESROADNEW DELHI
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII1
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
EXECUTIVE SUMMARY
This project aims to study the distribution channels, sales network and service patterns of the
pharmaceutical sector through an analytical and comparative study of two leading companies-
DAIICHI SANKYO and Abbott Laboratories . The project also tries to bring out the shortcomings,
if any, in the present system and thus recommends suggestions to improve the same. The project
also gives insights into the various financial terms, norms of the sales and service departments as
per the guidelines of the pharmaceutical industry.
The project was designed after detailed discussion with the company officials on three parameters
i.e. distribution network, service network and sales functioning. The project also includes the
insights given by the dealers and officials of the company. “The sample size of 15 for channel
members and that for the sales people was 2, for each company”.
Firstly, the project discusses the distribution network of the two companies and the functions
carried out by the channel members. ABBOTT being the largest pharmaceutical manufacturer in
India definitely has a wider reach and more number of dealers than .
The project also covers the financial terms of the company with the dealers and that of the dealers
with the customers.
Secondly, the project discusses the sales functioning of the two companies, which includes aspects
such as the hierarchy of the sales department prevalent in the company; the responsibilities and
functions of the sales force, their performance appraisal structure etc.
Finally the project covers the service network of the two companies which deals with the after sale
services and their effectiveness provided by both the companies and various complaints and
queries are handled by them.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII2
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
ACKNOWLEDGEMENTS
We are very thankful to the entire dealer, service, and sales network of DAIICHIand Abbott
Laboratories for their cooperation, without which completion of this project would not have been
possible.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII3
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
CONTENTS
1. Executive Summary 2
2. Acknowledgement 3
3. Methodology 5
4. Indian Pharmaceutical Market 7
5. Company Background(Abbott PHARMACEUTICAL S) 12
6. Distribution Network 13
7. Selection of Dealers 15
8. Service Network 23
9. Company Background(DAIICHII PHARMACEUTICAL S) 25
10. Distribution Network 27
11. Selection Of Dealers 27
12. Service Network 31
13. Analysis 39
14. Recommendations 40
15. Annexure 43
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII4
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
METHODOLOGY
The objective of this project on sales and distribution is to do an analytical and comparative study
of the sales, service and distribution function of two players from the chosen business sector.
The business sector chosen for this purpose is the fast growing pharmaceutical sector, and the
players chosen for study from this sector are:
DAIICHI SANKYO
ABBOTT LABORATORIES
INFORMATION SOURCES
PRIMARY DATA SOURCES-
DAIICHII INDIA LIMITED- Head, Corporate Sales
DAIICHII AUTHORISED DEALERS
ABBOTT LABORATORIES – Area Sales Manager
ABBOTTAUTHORISED DEALERS
SECONDARY DATA SOURCES-
THE INTERNET
www.DAIICHII.com
www.abbott pharmaceutical s.com
www.google.com
www.askjeeves.com
www.indiainfoline.com
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII5
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
DATA COLLECTION TOOLS
Interviews & Discussions with the company officials, dealers and Sales people. Questionnaires
were used to record data.
SAMPLE SIZE USED
The sample size for the dealers was 10 in number while the sample size for sales people was 4.
ABBOTT(dealers) - 8
ABBOTT(sales people) – 1
DAIICHII India (dealers) – 10
DAIICHII India (sales people) – 1
LIMITATIONS:
It was difficult to ask for time required for a detailed discussion on the questionnaire & therefore
several aspects of the questionnaire were answered briefly.
The company officials did not divulge details about competitive sales policies, strategies & certain
financial terms with dealers as they find it to be a confidential piece of information of the
company.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII6
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Indian Pharmaceutical Market“The Indian pharmaceutical industry is a success story providing employment for millions and
ensuring that essential drugs at affordable prices are available to the vast population of this sub-
continent.”
(Richard Gerster)
The Indian pharmaceutical industry in recent years has grown in stature from an industry that
copies patent drugs and manufactures them cheAbbotty. It’s now counted among the industries
that are fueling India’s economic growth and holds vast potential. India-based pharmaceutical
companies are also predicted to gain considerable market share in the world by the end of this
decade. The industry is estimated to have generated revenue worth US$13.1 billion in FY 2011,
according to a new Research and Market’s report, “Indian Pharma Sector Forecast 2014.”
India-based companies fulfill around 70 percent of the country’s demand for bulk drugs, drug
intermediates, pharmaceutical formulations, chemicals, tablets, capsules, orals and injectibles.
Development economist, Richard Gerster, said that the Indian pharmaceutical industry is a
“success story providing employment for millions and ensuring that essential drugs at affordable
prices are available to the vast population of this sub-continent.”
“
The Indian pharmaceutical sector has come a long way, being almost non-existent before 1970 to
a prominent provider of healthcare products, meeting almost 95 per cent of the country's
pharmaceuticals needs.
The Industry today is in the front rank of India’s science-based industries with wide ranging
capabilities in the complex field of drug manufacture and technology. It ranks very high in the
third world, in terms of technology, quality and range of medicines manufactured. From simple
headache pills to sophisticated antibiotics and complex cardiac compounds, almost every type of
medicine is now made indigenously.
Playing a key role in promoting and sustaining development in the vital field of medicines,
Indian Pharma Industry boasts of quality producers and many units approved by
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII7
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
regulatory authorities in USA and UK. International companies associated with this sector have
stimulated, assisted and spearheaded this dynamic development in the past 53 years and helped to
put India on the pharmaceutical map of the world.
The Indian Pharmaceutical sector is highly fragmented with more than 20,000 registered units with
severe price competition and government price control. It has expanded drastically in the last two
decades.
There are about 250 large units that control 70 per cent of the market with market leader holding
nearly 7 per cent of the market share and about 8000 Small Scale Units together which form the
core of the pharmaceutical industry in India (including 5 Central Public Sector Units). These units
produce the complete range of pharmaceutical formulations, i.e., medicines ready for consumption
by patients and about 350 bulk drugs, i.e., chemicals having therapeutic value and used for
production of pharmaceutical formulations.
Following the de-licensing of the pharmaceutical industry, industrial licensing for most of the
drugs and pharmaceutical products has been done away with. Manufacturers are free to produce
any drug duly approved by the Drug Control Authority. Technologically strong and totally self-
reliant, the pharmaceutical industry in India has low costs of production, low R&D costs,
innovative scientific manpower, strength of national laboratories and an increasing balance of
trade. Corporate Catalyst India India’s Pharmaceutical Industry The total Indian production
constitutes about 13 per cent of the world market in value terms and, 8 per cent in volume terms.
The per capita consumption of drugs in India, stands at US$3, is amongst the lowest in the world,
as compared to Japan- US$412, Germany- US$222 and USA- US$191.
Current Status.
India's US$ 9.4 billion pharmaceutical industry is growing at the rate of 14 percent per year. It is one of the largest and most advanced among the developing countries. The Indian pharmaceutical industry can reach a market size of US$ 11.6 billion by 2009.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII8
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
A beginning has been made with the signing of General Agreement on Tariffs and Trade in
January 2005 with which India began recognizing global patents. Soon after, the Indian pharmacy
market became a sought after destination for foreign players. Foreign direct investment into the
country’s pharmacy industry touched US$ 172 million during 2005-06 having grown at a CAGR
of 62.6 per cent during the period beginning 2002-06.
The sector recorded strong growth in the second quarter ended September 2006, driven by launch
of new generic drugs with 180 days exclusivity period in the US market. The top ten pharmacy
companies reported an impressive 57 per cent growth in consolidated net profit at US$ 314.3
million, as against US$ 200.7 million in the same quarter of the previous year, while consolidated
net sales were up 51 per cent at US$ 1.7 billion.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII9
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Provision to boost demand
The plan would have increased the demand for prescription drugs in two ways. First it would have
created have a universal entitlement to a comprehensives package of health benefits thatincluded
coverage of outpatient prescription drugs. Second it would have added an outpatient prescription
drug benift to medicare which is the primary soure of health insurance for American 65 and older
The Changing Prescription
As per WTO, from the year 2005, India granted product patent recognition to all new chemical
entities (NCEs) i.e., bulk drugs developed then onwards. This introduction of product patent
regime from January 2005 is leading into long-term growth for the future which mandated patent
protection on both products and processes for a period of 20 years.
Under this new law, India will be forced to recognize not only new patents but also any patents
filed after January 1, 1995. Under changed environment, the industry is being forced
to adapt its business model to recent changes in the operating environment.Corporate Catalyst
India India’s Pharmaceutical Industry Indian pharmaceutical industry is mounting up the value
chain. From being a pure reverse
engineering industry focused on the domestic market, the industry is moving towards basic
research driven, export oriented global presence, providing wide range of value added quality
products and services, innovation, product life cycle management and enlarging their market
reach. The old and mature categories like anti-infectives, vitamins, analgesics are de-growing
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII10
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
while, new lifestyle categories like Cardiovascular, Central Nervous System (CNS), Anti Diabetic
are expanding at double-digit growth rates.
The Indian companies are putting their act together to tap the generic drugs markets in the
regulated high margin markets of the developed countries. The US market remains to be the most
lucrative market for the Indian companies led by its market size and the intensity of blockbuster
drugs going off patent. An estimated US$45 billion of drugs expected to go off patent by 2007 in
US alone. The Indian pharmaceutical industry is also getting increasingly U.S. FDI compliant to
harness the growth opportunities in areas of contract manufacturing and research. Indian
companies such as Ranbaxy, Sun Pharma, and Dr. Reddy's are increasingly focusing on tapping
the U.S. generic market.
Outsourcing in the fields of R&D and manufacturing is the next best event in the
pharmaceutical industry. Spiraling cost, expiring patents, low R&D cost and market
dynamics are driving the MNCs to outsource both manufacturing and research activities.
India with its apt chemistry skills and low cost advantages, both in research and
manufacturing coupled with skilled manpower will attract a lot of business in the days to
come.
The Indian Government's decision to allow 100 percent foreign direct investment into the
drugs and pharmaceutical industry is expected to aid the growth of contract research in the
country.
MNCs in India is facing the problem of having a very high Drugs Price Control Order
(DPCO) coverage, weakening their bottom lines as well as hindering their growth through
the launch of new products. DPCO coverage is expected to be diluted further in the near
future benefiting the MNCs.
.
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COMPANY BACKGROUND
Abbott Laboratories
Abbott Laboratories is an American-based global, diversified (multi-division) pharmaceuticals and health
care products company. It has 90,000 employees and operates in over 130 countries.. The company
headquarters are in Abbott Park, North Chicago, Illinois. The company was founded by Chicago physician
Dr. Wallace Calvin Abbott in 1888. In 2010, Abbott had over $35 billion in revenue.
In 1985, the company developed the first HIV blood screening test. The company's drug portfolio
includes HUMIRA a drug for rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis , Crohn's
disease, moderate to severe chronic psoriasis and juvenile idiopathic arthritis; Norvir, a treatment for
HIV;Depakote, an anticonvulsant drug; and Synthroid, a synthetic thyroid hormone. Abbott also has a broad
range of medical devices, diagnostics andimmunoassay products as well as nutritional products,
including Ensure, a line of well known meal replacement shakes, and EAS, the largest producer of
performance based nutritional supplements.
Abbott's in vitro diagnostics business is a world leader in immunoassays and blood screening. Abbott's
broad range of medical tests and diagnostic instrument systems are used worldwide by hospitals,
laboratories, blood banks, and physician offices to diagnose and monitor diseases such as HIV, hepatitis,
cancer, heart failure and metabolic disorders, as well as assess other important indicators of general health.
Abbott Point-of-Care manufactures diagnostic products for blood analysis to provide health care GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII12
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
professionals critical diagnostics information accurately and immediately at the point of patient care. Abbott
also provides point-of-care cardiac assays to the emergency room.
In 2011, the company was ranked as Top 20 BioPharma employers by the Science Magazine. The
company has been on the list for 8 times
Distribution network
Channel structure, members and their selection
The reach of the channel structure of pharmacy is all over world . The channel structure is very
simple and effective. Complications are kept out in order to make the overall process very
effective and efficient.
Channel structure
ABBOTT Laboratories
Company Warehouse
Dealer/ distributor Warehouse
Dealer shops(chemist)
End customer
Product
Our diverse family of pharmaceutical, medical, and nutritional products includes a broad range of specialized medicines; medical diagnostic instruments and tests; minimally invasive surgical devices; a spectrum of nutritional supplements for infants, children and adults; and products for veterinary care.
The links below offer a few ways to browse through our product offerings. Many of the trademark names link to product Web sites, which contain more detailed information.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII13
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Products by Category
Pharmaceutical Products
Nutritional Products
Diagnostic Instruments & Tests
Medical & Surgical Devices
Animal Health
Vision Technologies
List of Products
Alitra QAlphaTRAKAluviaAvonexFoxCross .035 PTA CatheterFreeStyleMULTI-LINKMyoplex
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII14
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Selection of dealers
ABBOTT follows a strict policy in selection of the dealers, since dealers are the first impression a
customer has about the company and therefore it is necessary to fulfill the following pre- requisites
to be eligible to become a dealer:
1) The dealer should have a sound financial background. The financial capability of a dealer is
solely depended on the discretion of the company officials.
2) The dealers’ current business goodwill, measured in terms of dealer goodwill which covers
areas such as infrastructure, manpower etc. and individual goodwill i.e. the persons’ educational
qualification, social status etc.
3) The dealer should have his own infrastructure and logistics, since he is completely responsible
for the inventory and transportation of the goods to the shop from his warehouse.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII15
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GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII16
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Responsibilities and Functions of the dealers
ABBOTT believes in “Customer Loyalty” and thus ABBOTT expects that their dealers apart from
selling pharmaceutical products should perform the following functions for better customer
relations’ management:
1) Sales promotion through regular promotional schemes, road shows, campaigns etc. the
expenses incurred by the dealers is shared by the company only if these activities are for
promotion of the company and not of the dealer.
2) Recruitment- done under the guidance of certain ABBOTT officials
3) Training and development of manpower with company assistance
4) Servicing according to the size of orders
5) Customer relation management
6) Promote other products of the company
The dealer should be in regular touch with the customer, keep taking his feedback and ensure
maximum customer satisfaction. The dealer should also try and convince the customer to try newer
product’s of the company.
The dealer has to thus cater to 3 major areas:
Pre sale
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII17
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Selling
Post sale services
SALES KIT:
A dealer should carry the following in his sales kit:
All products leaflets (adequate quantities)
List of prospects with their addresses
Information about the competition in the market
Price list of ABBOTT products and corresponding prices of competitor products
Shade cards
Financial terms
The various modes of payment through which the dealer pays for the products, he has to receive
are:
1) Cash/ cheques/ DD
2) Credit cards
3) Letter of credit
Margins
The dealers collect their margins at the time of sale of the product. The margin varies according to
the type of the product.
Performance Appraisal
For the dealers-
ABBOTT appoints HR managers with various dealers, who are responsible to layout, the
company’s guidelines which the dealers are supposed to follow. Dealers have a company
appointed business development manager to advise them from time to time.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII18
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
The company through calculation of the Sales Satisfaction Index conducts the performance
appraisal for dealers.
ABBOTT. maintains a Balance Scorecard for each dealer, in which benchmarks are listed
regarding certain aspects such as shops, infrastructure, sales promotion, qualifications and
eligibility criteria of the staff recruited.
These appraisals are conducted yearly and on the basis of these results certain monetary incentives
are provided to the dealers. The dealership of any dealer can be cancelled for violation of company
norms.
The order processing system is as follows:
Walk in
Demand
Customer requirement
Quotation
Payment
Delivery
ABBOTThas invested huge sums of money to implement and maintain state of the art materials,
inventory and stock to their correct levels in the whole process of production and right up to the
level of the point of sale. With the implementation in “i2 technologies” from the USA the
company’s capabilities to manage the supply chain has become very efficient and effective. The
overall work processes and the business units interact with each other to balance the processes and
integrate all the business units into one consolidated unit with the help of the use of a popular
enterprise resource planning software called S.A.P.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII19
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
RESPONSIBILITIES OF A SALES PERSON
PRE-SALES
Cold calling – prospect generation
Creation of customer card
Generation of prospect base
Update knowledge of company’s products and it’s competitors
Update knowledge of the company’s new business and products
Update knowledge about the entire product line and accessories
Update knowledge about warranty and service
SALES RELATED
Visit the prospect
Understand his needs and create interest
Give an appropriate solution
Give demo and offer test drive
Handle objections
Follow up with the prospect
Secure order
DELIVERY
Help customers in:
Knowledge about warranty (very specific in pharmaceutical industry- only manufacturing
defects)
Knowledge about service requirement
Complete demonstration if required in big/ bulk orders
Suggest accessories
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII20
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
POST DELIVERY
Help customers in:
On time service
Proactive problem solving
RELATIONSHIP MANAGEMENT
Keeping in touch with the customers
Wishing channel members (B2B) on special days
Proactive feedback
PERFORMANCE APPRAISAL OF SALES PERSON
The company according to the CUSTOMER SATISFACTION INDEX monitors the performance
of a sales person qualitatively and quantitatively. The incentives given to the salesperson varies
according to the price of the product he successfully sells. This report is then used by the company
to further decide the incentives to be given. The company also provides training and development
to the sales force, which is done either by the company or by a third party consulting firm.
FEEDBACK FROM CUSTOMERS
Customer feedback is obtained not only after servicing as mentioned earlier, but post sales too.
There are 2 types of feedback forms customers can fill:
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII21
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
1) Direct feedback to the sales people.
2) A feedback to company through questionnaires and cards
All these feedback cards are sent to the corporate office of the company where the required
action is taken.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII22
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Market Research:
The company undertakes Market Research activity to measure its performance in different fields, like after sales service, customer satisfaction etc. It also follows SSI and Customer Satisfaction Index (CSI) study to measure its performance.
SSI (Sales Satisfaction Index)
The J.D. Power SSI Study is a consumer-driven measure of customer satisfaction with the product
sales and delivery process. According to the study, there are six major factors impacting
satisfaction with the dealership at the time of purchase. They are Sales Experience, Explanation at
Delivery, Price Evaluation, Delivery Timing, Salesperson Knowledge and Post-Delivery Contact.
CSI (Customer Satisfaction Index)
The CSI study examines customer satisfaction with quality delivery and dealer service at 12-18
months of ownership. CSI performance factors are problems experienced, service advisor, service
performance, service timing and facility appearance.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII23
IIPM SALES & DISTRIBUTION MANAGEMENT PROJECT
Service Network
Structure:
Group Head
Service Support Field Support
On the job Training
Backend T&D Dealer CRM Day to day activities
Development Warranty
ABBOTT Closely monitors each and every aspect of the organisatisation and ensures that each
factor contributing to it’s organisations’ growth is monitored
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII24
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DAIICHII
Daiichi Sankyo Co., Ltd is a global pharmaceutical company and the second largest pharmaceutical
company in Japan. It achieved JPY 970 billion in revenue in 2010 and is currently ranked number 17 in
world sales. Its headquarter is based in Tokyo. The company also owns the American biotechnology
company Plexxikon, the German biotechnology company U3 and Ranbaxy Laboratories in India. Daiichi
Sankyo is the producer of Benicar (Olmesartan), an angiotensin II receptor antagonist and top selling drug
in the U.S. with total sales of USD 2.7 billion.
Daiichi Sankyo, Inc. (DSI) began operating in the U.S. in 2006. It is the U.S. subsidiary of Daiichi Sankyo,
Co., Ltd. and a member of the Daiichi Sankyo Group. The organization, which includes U.S. commercial
operations and global clinical development (Daiichi Sankyo Pharma Development), is headquartered
in New Jersey.
Daiichi Sankyo Europe, GmbH (DSE), the European subsidiary, is headquartered in Munich, Germany. The
organization is responsible for development and manufacturing for 12 European countries.
Daiichi Sankyo Co., Ltd. is a full member of the European Federation of Pharmaceutical Industries and
Associations (EFPIA) and of the International Federation of Pharmaceutical Manufacturers and
Associations (IFPMA).
In 2009, the highly respected magazine R&D Direction honoured Daiichi Sankyo with its "Best
Cardiovascular Pipeline Award".
Daiichi Sankyo was established in 2005 through the merger of Sankyo Co., Ltd. and Daiichi
Pharmaceutical Co., Ltd. which were century-old pharmaceutical companies based in Japan.
Acquisitions
In 2006, Daiichi Sankyo acquired Zepharma, the OTC drugs unit of Astellas Pharma.
On June 10, 2008, Daiichi Sankyo agreed to take a majority (35%) stake in Indian generic drug
maker Ranbaxy, with a deal valued at about $4.6 billion.
In June 2008, Daiichi Sankyo acquired U3 Pharma, which would contribute a therapeutic anti-
HER3 antibody to the company's anticancer portfolio.
On April 4, 2011 Daiichi Sankyo completed the acquisition of Plexxikon, a Berkeley CA-based
pharmaceutical start-up company for $805 Million and an additional $130 Million in milestone payments,
pending on the success of Vemurafenib (Plexxikon’s lead program) an oral, novel drug that targets the
oncogenic BRAF mutation present in about half of melanoma cancers and about eight percent of all solid
tumors. Daiichi Sankyo is retaining US co-promotion right of the (GSK licensed) drug.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII25
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PRODUCT OF DAIICHI SANKYO
Sankyo
Benicar (olmesartan medoxomil)
Mevalotin (pravastatin)
Loxonin (loxoprofen)
Hirudoid
Olmetec (olmesartan)
Captopril
WelChol (colesevelam HC)
Effient (Prasugrel) (co-marketed with Eli Lilly and Company)
win bp piramal (olmesartan medoxomil)
Panipenem
Daiichi Pharmaceutical
Cravit (levofloxacin)
Evoxac (cevimeline)
FloxinOtic (ofloxacin)
Gracevit (sitafloxacin, only sold in Japan)
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII26
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Distribution network
Channel structure, members and their selection
The reach of the channel structure of Daiichi sankyo is all over world . The channel structure is
very simple and effective. Complications are kept out in order to make the overall process very
effective and efficient.
Channel structure
DAIICHI SANKYO
Dealer/ distributor Warehouse
Dealer shops (Chemist)
End customer
Selection of dealers
DAIICHI India as well as out of india follows a strict policy in selection of the dealers, since
dealers are the first impression a customer has about the company and therefore it is necessary to
fulfill the following pre- requisites to be eligible to become a dealer:
1) The dealers’ shop should be centrally located. The proximity to another DAIICHI dealer should
be taken into consideration. An already authorized dealer is taken into consideration when
providing a newer dealer registration.
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII27
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2) The dealers’ goodwill, measured in terms of areas such as infrastructure, manpower etc. and
individual goodwill i.e. the persons’ investment capability etc.
3) The dealer should have his own infrastructure and logistics, since he is completely responsible
for the inventory and transportation of the goods to the shop from his warehouse.
The company communicates with the dealers on a regular basis. All the strategies and plans are
formulated at the corporate office of DAIICHI SANKYO ., which are then communicated to the
dealers online through the extranet of the company. DAIICHI SANKYO has a DEALERSHIP
MANAGEMENT SYSTEM through which all the regional offices, dealers etc. all over the country
are connected. Any important notice, schemes or policies that needs to be implemented across all
the offices and dealer network of the country, are updated through this system and in a matter of
few seconds, all the dealers are informed about it.
4) The visibility of the shop and the shop area, shelf area, numbers of counter personnel are taken
into account. The warehouse and the warehouse space and location from the actual shop is taken
into account.
Responsibilities and Functions of the dealers
DAIICHI SANKYO . believes in “Customer Loyalty” and thus expects that their dealers apart
from selling pharmaceutical products should perform the following functions for better customer
relations’ management:
1) Sales promotion through regular promotional schemes, road shows, campaigns etc. the
expenses incurred by the dealers is shared by the company only if these activities are for
promotion of the company and not of the dealer.
2) Training and development of manpower with company assistance
GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII28
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3) Servicing according to the size of orders
4) Customer relation management
5) Promote other products of the company
6) Create goodwill for the company
The dealer should be in regular touch with the customers, pharmaceutical ers and architects keep
taking their feedback and ensure maximum customer satisfaction. The dealer should also try and
convince the customer to try newer products of the company.
The dealer has to thus cater to 3 major areas:
Pre sale
Selling
Post sale services
SALES KIT:
A dealer should carry the following in his sales kit:
All products leaflets (adequate quantities)
List of prospects with their addresses
Information about the competition in the market
Price list of ABBOTT products and corresponding prices of competitor products
Shade cards
Financial terms
The various modes of payment through which the dealer pays for the products, he has to receive
are:
1) Cash/ Cheques/ Demand drafts
2) Credit cards
3) Letter of credit
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Margins
The dealers collect their margins at the time of sale of the product. The margin varies according to
the type of the product.
Performance Appraisal
For the dealers-
DAIICHI SANKYO appoints HR managers with various dealers, who are responsible to layout,
the company’s guidelines which the dealers are supposed to follow. Dealers have a company
appointed business development manager (BDM) to advise them from time to time.
The company through calculation of the Sales Index conducts the performance appraisal for
dealers. The company appoints a third party research firm who is actually responsible for the
market surveys, research, analysis and interpretation of the figures
DAIICHI SANKYO . maintains a Scorecard for each dealer, in which guidelines are listed
regarding certain aspects such as shops, infrastructure, sales promotion, qualifications and
eligibility criteria of the staff recruited.
These appraisals are conducted yearly and on the basis of these results certain monetary incentives
or trips to various destinations, gifts, vouchers etc. are provided to the dealers. The dealership of
any dealer can be cancelled for violation of company norms.
The order processing system is as follows:
Walk in
Demand
Customer requirement
Quotation
Payment
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DAIICHII India uses various materials management software to improve the efficiency of the
overall process, right from the beginning of the inputs of the raw materials to the final product
which reaches the dealer. The process uses “push and pull technology to achieve excellence. This
technology actually uses the pull protocol to pull in the raw materials in the manufacturing process
and the order management process. The push protocol is used to push the finished products to the
warehouses. Similarly the pull protocol is used to pull the finished products to the shops and dealer
networks by the dealer.
RESPONSIBILITIES OF A SALES PERSON
PRE-SALES
Cold calling – prospect generation
Creation of customer card
Generation of prospect base
Update knowledge of company’s products and it’s competitors
Update knowledge of the company’s new business and products
Update knowledge about the entire product line and accessories
Update knowledge about warranty and service
SALES RELATED
Visit the prospect
Understand his needs and create interest
Give an appropriate solution
Give demo and offer test drive
Handle objections
Follow up with the prospect
Secure order
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DELIVERY
Help customers in:
Knowledge about warranty (very specific in pharmaceutical industry- only manufacturing
defects)
Knowledge about service requirement
Complete demonstration if required in big/ bulk orders
Suggest accessories
POST DELIVERY
Help customers in:
On time service
Proactive problem solving
RELATIONSHIP MANAGEMENT
Keeping in touch with the customers
Wishing channel members (B2B) on special days
Proactive feedback
PERFORMANCE APPRAISAL OF SALES PERSON
The company according to the Sales satisfaction index monitors the performance of a sales person
qualitatively and quantitatively. The incentives given to the salesperson varies according to the
price of the product he successfully sells. This report is then used by the company to further decide
the incentives to be given. The company also provides training and development to the sales force,
which is done either by the company or by a third party consulting firm.
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FEEDBACK FROM CUSTOMERS
Customer feedback is obtained not only after servicing as mentioned earlier, but post sales too.
There are 2 types of feedback forms customers can fill:
1) Direct feedback to the sales people.
3) A feedback to company through questionnaires and cards
All these feedback cards are sent to the corporate office of the company where the required
action is taken.
Corporate organization
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Corporate (the global corporate office and Japan Company Administration Division) will be
integrated and divided by category based on function into the Corporate Strategy Division, the
Corporate Management Division, the General Affairs & Human Resources Division and the
Legal Affairs & CSR Division to consolidate organizational functions and enhance closer
cooperation. By increasing coordination of local/global and short/mid to long-term, Daiichi
Sankyo seeks to ensure high-level linkage among the four divisions and realize the full
application of Corporate’s resources.
1) Corporate Strategy Division
The Corporate Strategy Division will be created to consolidate mid to long-term business
planning and the strategic planning and promotion functions. The division will comprise
the Corporate Strategy Department (new), the Business Development & Licensing
Department, the Global Brand Strategy Department (new), and the Intellectual Property
Department.
① Creation of the Corporate Strategy Department
This department will plan Group management and business strategy and provide
unified strategic support for corporate heads to improve coordination within the Group.
② Creation of the Global Brand Strategy Department
This department will integrate product strategy and the function of the current Global
Marketing Department. It will seek to optimize the value of global products with a
wide-ranging business plan that includes strategic planning and promotion beyond
marketing. With the creation of this new department, the current Global Marketing
Department will be phased out.
2) Corporate Management Division
The Corporate Management Division will consolidate the functions, centered around
annual corporate planning and business strategy, which promote effective management of
the challenges faced by the Group in addition to effective utilization of Group resources .
The unit will comprise the Corporate Business Management Department (reorganized), the
Finance & Accounting Department, the Corporate Communications Department and the IT
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Strategy Department (reorganized).
① Reorganization of the Corporate Business Management Department
The current Business Management Staff and Japan Company Administration Division
functions will be reorganized with the aim of controlling budget and performance
management for each business in and outside of Japan and ensuring comprehensive
management of Group companies in and outside of Japan.
② Reorganization of the IT Strategy Department
The current IT Strategy Staff and Japan Company IT Strategy Department functions
will be integrated and reorganized into the IT Strategy Department.
3) General Affairs & Human Resources Division
The General Affairs & Human Resources Division will be set up to consolidate promotion
of personnel management to support implementation of corporate planning and business
strategy, and organizational functions dealing with planning facilities and sourcing. The
division will comprise the Human Resources Department (reorganized), the General
Affairs & Procurement Department (reorganized), and the Secretariat Department.
① Reorganization of the Human Resources Department
This department will integrate and reorganize the current Human Resources Strategy
Staff function and Japan Company’s Human Resources Department.
② Reorganization of the General Affairs & Procurement
This department will integrate and reorganize the current Corporate Business
Management Staff function and Japan Company’s Administration Division
Procurement Planning Group.
3) Legal Affairs & CSR Division
The Legal Affairs & CSR Division will be created to consolidate the functions of legal,
contracting, internal control, compliance and CSR implementation. The new division
consists of the Legal Affairs Department and the CSR Department. The Internal Audit
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Department, which is directly supervised by the CEO, will coordinate as necessary with this
department in order to ensure information sharing for smooth business operations.
① Creation of the CSR Department
The CSR Department will integrate the functions of the current CSR Staff, CSR
Management Group of the General Affairs Department, and the Legal & Compliance
Group of the Legal Affairs Department to enhance total management of CSR.
II. Japan Company
Japan Company is specialized for sales of innovative pharmaceuticals in Japan. The sales
structure will include domestic pharmaceuticals, established drugs (DSEP) and the vaccine
businesses.
1) Creation of the Japan Business Management Department
With the integration of the global corporate office and Japan Company’s Corporate
Management Division, this department will be created as a staff organization for the
company president to perform operations planning, budget procurement and management
2) Business Intelligence Division
① Restructuring of the Post Marketing Studies Management Department
The function of the Product Lifecycle Management Department will be transferred to
the Post Marketing Studies Management Department, and the Product Lifecycle
Management will be phased out.
3) Sales and Marketing Division
The current functions of the Sales Planning Department, Product Marketing Department
and Promotion Management Department will be organized into the Sales Planning
Department and the Marketing Department. Also, the Training & Information Department
will be created to enhance the corporate function which carries out advanced promotion of
MR activities and deal with increasing regulations on sales.
① Creation of the Training & Information Department
The Training & Information Department will handle human resources training,
product-related training, and media communications.
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4) Creation of the Vaccine Business Development Office
The Vaccine Business Development Office will be created to handle planning and
promotion for the growing vaccine business.
5) Creation of the Vaccine Business Strategy Department
The Vaccine Business Strategy Department will be created to coordinate the growing
vaccine business with Group companies.
① Name change for Vaccine Business Strategy Department
The Vaccine Business Planning Department will be transferred from the Business
Intelligence Division and renamed the Vaccine Business Strategy Department.
III. ASCA Company
1) Name change for the Business Planning Department
The name of the current Japanese Business Management Department will be changed to
the Business Planning Department in line with added focus on ASCA regional business
Market Research:
R&D Division
The current research head and Japan development head will be reorganized as the
Research Oversight Function and the Japan Development Oversight Function to separate
and clarify the responsibilities of the research and development fields in the R&D Division
while boosting autonomy and ability to respond quickly.
2. DAIICHI SANKYO ESPHA CO., LTD.
1) Dissolution of the Sales & Marketing Division With the strengthened authority of corporate,
the Sales & Marketing Division will be phased out to speed up decision making, flatten out the
organizational hierarchy and strengthen upper management.
2) Creation of the Corporate Management Department
The Japanese Business Management Department and Sales Administration Department
will be combined to form the Corporate Management Department to remove overlap in
responsibilities, boost efficiency, and ensure functional enhancement. GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII37
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3. DAIICHI SANKYO HEALTHCARE CO., LTD.
1) Creation of Direct Marketing Office
With the start of the direct marketing business, the Direct Marketing Office will be created
with different functions from the retail marketing business to ensure rapid strategy
formulation and implementation.
Service Network
Structure:
Group Head
Service Support Field Support
On the job Training
Backend T&D Dealer CRM Day to day activities
Development Warranty
DAIICHI world closely monitors each and every aspect of the entire process in the business
organization. The service network is similar to that of ABBOTTbut the CRN and training and
development is not that developed. The technical support in the business units is different as we
have already discussed earlier that ABBOTTuses SAP and i2 technologies while DAIICHI uses
push and pull protocol.
ANALYSIS
The total size of the sample used was 15 each for ABBOTTand that for DAIICHI India. For the
sales people the total size of the sample was 2 for each company. GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII38
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The parameters that were taken to check the effectiveness and the rating scale are as follows:
Scale 1
Very satisfied- 4
Satisfied- 3
Not satisfied- 2
Not at all satisfied- 1
Scale 2
Excellent- 4
Good- 3
Average- 2
Poor- 1
Scale 3
Weekly- 4
Bi- monthly- 3
Quarterly- 2
Others- 1
Scale 4
Strongly agree- 4
Agree- 3
Neutral- 2
Disagree- 1
Scale 5
Always- 4 Sometimes- 3 Rarely- 2 Never- 1
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Recommendations ON DAIICHI SANKYO and ABBOTT
Daiichi Sankyo:
Just two days after Takeda Pharmaceutical Co. Ltd. unveiled more details about the global
expansion of its new vaccine business – which it expects to become the top vaccine supplier in
Japan - Daiichi Sankyo announced March a vaccines joint venture with GSK that would create the
number one vaccines business in Japan. The 50-50 joint venture Japan Vaccine Co., Ltd. will be
led by co-CEO representatives from each company. The JV’s stated goal is to join GSK's extensive
vaccine pipeline with Daiichi Sankyo's domestic manufacturing, sales and development presence.
Keeping all things equal, the companies will sell their prophylactic vaccines into the JV, and will
earn for 50-50 profits. Daiichi Sankyo and GSK will also split the ¥100 million start-up capital for
the venture, and each will send three executives to sit on the six-member board. Each company
will be responsible for their own research, preclinical and pre-proof-of-concept and ultimately
manufacturing of their own products. Japan Vaccine will step in for development after proof-of-
concept. GSK has been vocal about growth opportunities in Japan. The firm's Japan business grew
30% from 2010 to 2011, largely on the back of the human papillomavirus vaccine Cervarix
(human papillomavirus types 16,18), which was added to a government reimbursement program
for vaccines in 2010. Since then, Japan has leapfrogged to become Cervarix' largest market. The
joint venture will begin operations July 2.—Dan Poppy
ABBOTT
Abbott is readying for two major steps in its evolution. Most prominently, it’s preparing to split its
pharma division from its diversified medical products business this year, creating two public
companies from one. But it’s also preparing for December 2016, when its best-selling drug loses
patent protection. Abbott’s injectableHumira (adalimumab) for rheumatoid arthritis and other GROUP-SS 10-12 PHARMACEUTICAL SECTOR- ABBOTT& DAIICHII40
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autoimmune diseases is currently among the world’s top sellers, with $7.9 billion in 2011 sales,
representing more than 46% of Abbott’s global sales of proprietary drugs. With less than five
years’ time left on the clock, not to mention a looming threat of competition from oral drugs or
lower-priced alternatives, Abbott is already looking for a successor.
With that evolution in mind, Abbott made like the HMS Beagle and set sail for the Galapagos this
week – specificially Galapagos NV of Belgium, where among the tortoises and finches lay the
crown jewel GLPG0634, a selective JAK1 inhibitor that’s already shown promising data in a
Phase IIa study in rheumatoid arthritis, and is expected to enter a Phase IIb dose-range-finding
study soon. In an extremely rich deal for a mid-stage candidate, Abbott paid $150 million up-front
to claim worldwide rights to the drug, and will pay a second $200 million licensing fee if the Phase
IIb study yields data that satisfy a set of pre-determined but undisclosed criteria. Additional
milestone payments could add $1 billion more to the deal, while Abbott remains on the hook for
double-digit royalty payments if GLPG0634 is ever commercialized.
For Abbott, it’s a way to make doubly sure that its autoimmune franchise is extended. Last
summer, the company paid $85 million up-front to license German biotech Biotest’s BT-061, a
Phase II antibody that binds to the CD4 protein and slows overreactions of the immune system.
That gives it two potential successors to the same blockbuster drug, providing insurance that its
sales force will have something else to sell once Humira begins to fade. And it gives Abbott
another promising molecule to talk up on its current road shows, in anticipation of the looming
split and the public offering that will accompany it.
It’s also just the latest in a series of deals in which Abbott has outbid and outspent its peers for
assets that still carry plenty of risk. The company has twice paid Reata Pharmaceuticals top dollar
for its compounds, buying ex-U.S. rights to chronic kidney disease treatment bardoxolone for $450
million in 2010 and nabbing a group of pre-clinical antioxidant inflammation modulators for $400
million late last year. If it’s going to be an independent company, Abbott’s pharma division would
do well to be better-balanced, with a diverse group of revenue-generating products. Without the
diversified medical products business to balance things out, its weaker quarters on the pharma side
may be all the more obvious – and damaging.
That’s one reason why Galapagos’s drug seemed like a natural selection for Abbott and why we
hope you’ll join us on another pun-filled voyage of…
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ANNEXURE
Questionnaire for Channel Members
Name : Phone no :
Address: Organization:
1) What are the expectations of the channel members from the company?
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2) What is the distribution network of the company?
3) What do you think about the distribution network of the company? Excellent Good Average Poor
4) Whether the company is able to provide material in time or not?
Excellent Good Average Poor
Reasons-
5) What is the credit policy of company to its channel members?
6) What is the attitude of company sales representatives?
Very satisfied Satisfied Not satisfied Not at all satisfied
7) Whether company’s sales representatives are really help them in getting big orders?
8) What is the frequency of sales people visit to its channel members?
Weekly Bi monthly Quarterly Others (please specify)
9) What kind of promotion company is doing to increase their sales?
10) What percent of margin they are getting for selling the product?
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2% - 5% 5%- 10% 10%- 15% Above15%
11) What kind of reward company is providing to you, if they achieved their target?
12) Which product lines from major companies are you distributing?
13) Who bears the cost of transportation/?
14) What is your storage Capacity?
15) Did the company meet the expectations of delivering the product on time?
Always Sometimes Rarely Never
16) Are you satisfied with the availability of product at warehouses of company?
Very satisfied Satisfied Not satisfied Not at all satisfied
17) What is the condition of product at the time of delivery?
Excellent Good Average Poor
18) How do you relate the behaviour of transporters?
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Very satisfied Satisfied Not satisfied Not at all satisfied
19) Does the company show flexibility in its delivery and quantity operations?
Always Sometimes Rarely Never
20) Whether company’s sales people are able to explain product features clearly or not?
Always Sometimes Rarely Never
21) Whether company’s sales people able to explain company policies to you?
Always Sometimes Rarely Never
22) Whether salespeople able to handle the complaints efficiently?
Always Sometimes Rarely Never
23) What is the response time of salespeople?
24) How frequently does the company take the feedback from you?
Very Frequently Frequently Sometimes Never
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Questionnaire for Company’s Sales People
Name : Phone :
Address: Organization:
1) What is the sales hierarchy of the Sales Department?
2) What are the expectations of company from its channel members?
3) What are the objectives of company sales’s people?
4) What is the distribution network of company?
5) How they are able to make co-ordination between channel members?
6) What criterion they used for the selection of channel members?
7) How they maintain performance appraisal system for Sales People?
8) Who does the performance appraisal for the sales people?
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9) What is the frequency of the performance appraisal?
10) What format that is used for the performance appraisal?
11) What are the criterions of performance appraisal of salespeople?
12) What kind of rewards they generally give to their channel members for achieving the target?
13) What is the frequency of visits to channel members?
Very Frequently Frequently Sometimes Rarely
14) What kind of relation they maintain with their channel members?
15) How they are able to motivate their channel members for achieving the target?
16) How company is motivating the sales people for achieving the objectives of business?
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17) Which of your IT infrastructure do you share with your distributions?
18) Do you have your own distribution network?
19) Which trade shows you generally participate in?
20) How empowered are salespeople to solve the problems of channel members?
Strongly Agree Agree Disagree Strongly Disagree
21) Are you satisfied with numbers of promotion activities undertaken by the company?
Very satisfied Satisfied Not satisfied Not at all satisfied
22) Who bears the cost of transportation?
23) What are the modes of transportation?
24) What are the various cost involved in transportation?
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25) What type of market research being carried out by the organizations with respect to customers?
26) What type of targets company sets for it’s sales people?
27) What factors are taken into account while finalizing and assigning targets?
28) What factors are taken into account while assigning territories to salespeople?
29) What are the payment terms for the sales people?
30) What percentage of discount are you authorized to give to the company channel members?
1% - 5% 5%- 10% 10%- 15% Above15%
31) What percentage of margin the sales people get for selling the product?
1% - 5% 5%- 10% 10%- 15% Above15%
32) Do you think your company is providing you with the best infrastructure?
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Very satisfied Satisfied Not satisfied Not at all satisfied
34) How frequently does the company take feedback from you?
Very Frequently Frequently Sometimes Rarely
35) How often does company respond to the customers view?
Always Often Sometimes Never
36) How do you rate the company’s customer orientation process?
Excellent Good Average Poor
37) How do you relate the behaviour of transporters?
Very satisfied Satisfied Not satisfied Not at all satisfied
38) What is the condition of product at the time of delivery?
Excellent Good Average Poor
39) Does the company show flexibility in its delivery and quantity operations?
Always Sometimes Rarely Never
40) What is the frequency of sales people visit to its channel members?
Weekly Bi monthly Quarterly Others (please specify)
41) Are you satisfied with the quality and quantity of promotions?
Very satisfied Satisfied Not satisfied Not at all satisfied
42) Do you agree with timing of promotions and distribution?
Strongly Agree Agree Neutral Disagree
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