Business Plan for a Pharmaceutical Retail Company

Alima Pharmacy will sell prescription medications in the United States. The company will be based in downtown Dallas and will serve Texas as its primary market. The company will offer its products at significantly reduced prices than most of its competitors. This will be achieved by maintaining high levels of efficiency in business operations and by targeting specific market segments (those customers that pay for the medications themselves). The company will succeed in the market by employing knowledgeable staff, which along with the reduced prices will drive repeat businesses. The company expects to reach profitability and breakeven by the start of the second year of business and to open a second store by the fifth year.
Section Two: Branding and Idea Context
Corporate mission and how the new product or service aligns with it
Alima Pharmacy’s corporate mission is to contribute to the overall improvement of patients’ healthcare by delivering high quality and competitively priced prescription medications. The company will achieve this mission objective by embracing convenience and customer service excellence. The company’s long-term goal is to be a leader in the distribution of prescription medication in the city of Dallas and neighboring suburbs. To that end, and as part of the company’s corporate strategy, it will put appropriate measures in place to satisfy the expectations of all stakeholders including suppliers, customers, business partners, and employees. To surpass the diverse expectations of all these stakeholders, Alima Pharmacy will leverage technology and efficiency in the marketing and distribution of its products.

Integrity, strategic relationships, sustainability, innovation and quality will be Alima’s core values and guiding principles. Due to the sensitive nature of the company’s products, it will remain uncompromising in matters relating to product quality, fairness and business ethics. Most importantly, the company will embrace highest possible standards of safety and health to advance the wellbeing of its customers (Krafft & Mantrala, 2006). The company aspires to nurture mutual and long lasting relationships with other players in the industry including drug manufacturers and hospitals. Through these partnerships, the company hopes to benefit from knowledge about industry trends, market dynamics, and collaborative research projects.
To ensure alignment of the company’s products with its corporate mission, employees will be trained in all areas of product knowledge and customers service. This will enable the employees to effectively handle the wide range of customers that the company is positioned to serve (Watkins, 2009). The store will operate throughout the day and night for seven days a week. There will be options for mail order customers and walk-in customers. The company will use customer relationship management software to manage its management with the customer more effectively no matter how big its customer base grows.
It is expected that the company will be able to meet its business objectives because the pharmaceutical industry in the United States has been performing well. Alima Pharmacy takes cognizance of the fact that the pharmaceutical industry is highly regulated because of the devastating effects of counterfeit drugs. As a matter of fact, the United States has enacted several regulations and laws that govern the retailing and distribution of pharmaceutical products. The Food and Drug Administration is the federal body that regulates pharmaceutical products in the United States. Alima Pharmacy will comply with all applicable laws and regulations as specified by the Food and Drug Administration.
Defining Features of the Product
Alima pharmacy will be involved in the retailing of a wide range of prescription medications from different manufacturers within and outside the United States. The company will also sell related products such as convenience foods, cosmetic and beauty products and small-scale medical equipment. The retail store will be located in one of the busiest streets in Dallas. A facility will be leased initially for five years with the option of extending the lease after the fifth year. The store will be well positioned to match the ideal image of a community retail drug store. The company’s products will only be marketed to patients who self-pay, meaning that those with insurance schemes will not be targeted. The self-pay patients will be attracted to Alima Pharmacy because of its reduced prices. For many residents of the United States who do not have insurance plans, Alima Pharmacy’s drug discount is welcome.
Alima Pharmacy will adopt a high-value positioning strategy to market its products internally and externally. This strategy entails delivery of high-quality products at reduced prices. To this end, the company will focus on consistency when communicating key product messages to its potential customers (Stark, 2006). All marketing communications will focus on personalizing the Alima brand to enable customers to view the brand not just as any other pharmaceutical company but as a critical life partner that they can identify with. Owing to the intense competition in the pharmaceutical retail industry, a high-value marketing strategy will allow Alima to realize and maintain healthy profit margins. In turn, sustained profits will enable the company to commit more resources to marketing efforts so as to stimulate growing demand for its products. Alima pharmacy hopes that by embracing quality and value, it will expand its market share quickly and develop strong competitive advantages within the first two years of business. To support its marketing efforts, the company will employ a combination of different promotional strategies including advertising, personal selling, and publicity.
Alima Pharmacy will use different strategies to differentiate its services from those of competitors. One of these strategies is offering niche services. The company will identify and leverage specialized medical services targeted at specific consumer groups. In particular, the company will deliver medications for consumers with unique health concerns and also those with preventive care options. These specialized services will include fertility treatments, wellness testing, travel vaccines and hospital discharges. The company will also distinguish its services through corporate social responsibility initiatives. For example, the company will sponsor health awareness campaigns in the society. During these campaigns, the company will inform the public about ways of maintaining health habits as well as the various treatments that are available for different ailments. Through these free campaigns, Alima pharmacy hopes to cultivate strong brand equity, which will be its core source of competitive advantages (Yu-Jia, 2012).
To ensure that Alima’s brand is well aligned with its corporate mission and market position, the company will conduct extensive market intelligence to understand prevailing pricing mechanism in its target market. The company will then structure its pricing to be considerably lower at the same time more competitive than its competitors. Overall, Alima Pharmacy will be a strong and very effective brand because it will pursue a differentiation strategy based on edging out competitors.
Section Three: Defining Product or Service Need
Alima Pharmacy will market its products to customers based in Dallas and neighboring suburbs. The company will use behavioral segmentation strategy to tailor its products and target the customers. Under this strategy, the company will have two major market segments: mail order customers and walk-in customers. The latter will be targeted through special advertisements in the print and electronic media. The advertisements will be carefully designed to raise the desired level of visibility for Alima Pharmacy. As the prices of prescription medications continue to skyrocket, Alima Pharmacy will appeal to local walk-in customers as a way of containing the rising medical costs. The company will market to mail order customers by making adverts in magazines. Most of the mail order customers will be older people (above 55 years) who need regular medications and who know what medications they need in advance (Knapp, Okamoto & Black, 2005).
While Alima Pharmacy seeks to fulfill a variety of unsatisfied needs, it will focus on providing best services and low prices for prescription drugs. Across the United States, prescription drugs are highly priced and beyond the reach of most patients who do not have drug plans. In fact, there are very few pharmacists who offer tailored services for this group of customers. By focusing on fulfilling this need, Alima Pharmacy will attain immense competitive advantages considering a large number of patients who cannot afford highly priced drugs. The company will be guided by its philosophy of exiting to attract and maintain customers in long-term mutual relationships. It will adhere to this maxima by offering services that exceed the expectations of customers in different product categories (Stark, 2006).
In the healthcare industry, buyers seek information to fulfill their needs by making consultations with doctors. They also consult with pharmacists in certain cases without necessarily going to the doctors. Given this, Alima Pharmacy will hire knowledgeable employees to offer consultation services to our clients to help them determine what they need. Through consultation, the company will be able to explain to the customers the various medications available and their benefits as well as pricing. The company will also print brochures and fliers which will be distributed to the public and its customers. These will contain pertinent information that will help potential customers to make informed decisions when in need of medications (Ireland, Hoskisson & Hitt, 2008). Alima will also seek to cultivate strategic partnerships with local health care providers, especially physicians to get referrals. Through these partnerships, the company will grow its pool of customers which will be critical for long-term growth and survival in the otherwise competitive market. All products will be purchased directly from the company’s stores. Customers will have the option of either paying cash or using a credit card.
Alima’s chosen target market is the best choice for various reasons. First, Dallas has a large population comprising of young, middle-aged and elderly people. The elderly are more likely to be in need of prescription drugs owing to the frequent illnesses. As such, this market will be our main focus. Secondly, most people in many parts of the United States including Texas are not adequately covered by health insurance schemes. For these people, their best option is self-buying of prescription and over the counter drugs. Offering quality products targeted at the self-paying customers will be critical to Alima Pharmacy’s survival and growth.

Section Six: Pricing
Alima Pharmacy will incur two types of costs: fixed cost and variable cost. The main difference between these two types of costs is that while variable cost will change depending on several factors such as sales volume, fixed cost will remain constant (Shane, 2012). The main fixed costs for the company will include rent, utilities (water and electricity), insurance and salaries. The company’s variable costs will include commissions paid to sales executives, transportation charges for products into the company’s premises and packaging costs. The following table presents the company’s projected variable and fixed cost calculations:
Fixed Costs
Cost Item Value
Salaries $ 135, 000 per month
Rent $ 3,000 per month
Utilities $, 1000 per month
Insurance $ 1600 per month
Variable Cost
Cost of drugs To vary depending on volume
Transportation To vary depending on volume
Packaging To vary depending on volume
Alima’s competitors use different strategies to price their products. In the industry, effective negotiation is key to obtaining optimal prices. Most of the competitors rely on the original prices set by drug manufacturers to set their launch prices. Most pharmaceutical retailers do not incur research and development costs. Therefore, the products’ economic value and brand positioning have a major influence on the pricing of pharmaceutical products. For certain drugs, target pricing is used to ensure that customers get the best value for their resources. This strategy helps pharmaceuticals to minimize deleterious effects of launching products outside the allowed retail price limits. Overall, the pharmaceutical retail industry in the US is very profitable due to the large size of the country’s middle class population and high urbanization rate. The steady rise in disposable incomes among Americans is driving the growth of the pharmaceutical sector such that even rural areas have begun to witnesses tremendous shifts in consumer lifestyles and preferences. Analysis of the macro-environment reveals that the United States is poised to maintain its competitive lead in the pharmaceutical industry. Alima pharmacy will leverage on this attractiveness to position itself as an innovative business seeking to fulfill underserved market segments within the pharmaceutical retail industry.
Based on analysis of competitors pricing strategies and the level of competition in the market, Alima Pharmacy will adopt the penetration pricing strategy. This strategy refers to the practice of setting a lower price to attract customers to a new business (Snyman & Kruger, 2004). The aim of this strategy is to lure customers away from exiting market players. The strategy is based on the idea that offering low retail prices is critical in making customers aware of a newly launched product and in influencing their buying decisions. In Dallas (and many parts of Texas) there are hundreds of retail establishments selling pharmaceutical products. Essentially, these establishments are the direct competitors of Alima pharmacy. For Alima to take roots in this industry, the company will focus on price reduction but at the same time insist on high quality. Among other benefits, this pricing strategy will allow the company to quickly grow its market share in the industry. It is expected that target customers will be willing to pay lower prices for quality medicines.
References
Ireland, D., Hoskisson, R. and Hitt, M. (2008). Understanding business strategy: Concepts and cases. Boston: Cengage Learning.
Knapp, K., Okamoto, M. and Black, B. L. (2005). ASHP survey of ambulatory care pharmacy practice in health systems–2004. American Journal of Health-System Pharmacy. 62 (3), 274–284.
Krafft, M. and Mantrala, M. (2006). Retailing in the 21st Century: Current and Future Trends. New York: Springer Verlag.
Shane, R. R. (2012). Translating health care imperatives and evidence into practice: the “Institute of Pharmacy” report.”. American Journal of Health-System Pharmacy, 69(16): 1373–1383.
Snyman, R. and Kruger, C. (2004). The interdependency between strategic management and strategic knowledge management. Journal of Knowledge Management 8(1), 5–19.
Stark, J. (2006). Global Product: Strategy, Product Lifecycle Management and the Billion Customer Question. Adelaide: Springer.
Watkins, E. (2009). From History of Pharmacy to Pharmaceutical History. Pharmacy in History. 51 (1), 3–13.
Yu-Jia, H. (2012). The Moderating Effect of Brand Equity and the Mediating Effect of Marketing Mix Strategy on the Relationship between Service Quality and Customer Loyalty. International Journal for Organizational Innovation, 26, 155-162.