Sales Knowledge Management: A Tool for Improving the Effectiveness of Sales Teams of Pharmaceutical Marketing in India Name of the Author: Dr. Prashant B. Kalaskar Contact Details: Email Id s: prashantkalaskar007@gmail.com, pbkalaskar@sinhgad.edu Associated with Sinhgad Institute of Business Administration & Computer Application (SIBACA), Lonavala, Dist. Pune -410401 ABSTRACT: Knowledge Management is gaining utmost & increasing importance in product as well as services marketing. Knowledge Management is the process which allows marketers to transform knowledge collected from individuals into organizational knowledge for strategic decision making. The ever growing competition in the market place requires collecting most accurate & reliable form of information from the market. Here the marketers have to gather & update a huge amount of information related to market, customers as well as competitors. The data collected from the reliable sources are also required to be gathered in the right format for its better utilization at right time to deliver desired value in decision making. The information collected is not knowledge until we know how to extort the value out of it. This paper highlights the importance of knowledge Management in Pharmaceutical Marketing for the formulation of effective marketing strategies as well as in decision making. Keywords: Knowledge Management, Prescription, Marketing Plan, Decision Making, Performance Introduction: Knowledge is nothing but the desired information collected by the marketers by their individuals working at different levels in the market through various sources. This information collected can be through a systematic process visualized & planned the organization to collect the required information for planning & strategic decision making or it can be in the form of collected subconsciously by the employees, which companies can retrieve systematically by means of storey telling, success sharing or by means of direct interaction. But this knowledge cannot be knowledge until it is processed, codified, protected, preserved, retrieved desired information for the planning process. Definition of Knowledge Management: Knowledge Management (KM) refers to a multi-disciplined approach for achieving organizational objectives by making the best use of knowledge. KM focuses on processes such as acquiring, creating and sharing knowledge and the cultural and technical foundations that support them. ASM Group of Institute Pune, India 390
Knowledge Management may be viewed in terms of: People: how you encourage & increase ability of your people to gather related information from their market. Processes: The process defined by the company allows its employees to collect required information which varies from organization to organization. There is no limit on the number of processes Technology: It needs to be chosen only after all the requirements of a knowledge management initiative have been established. The Knowledge Management Processes Cycle: Davenport and Prusak s have suggested a 3 stage model of KM process and Ward and Aurum s have suggested an elaborative 7 stage model of KM process, in which KM cycle begins with the creation or the acquisition of knowledge to utilization of knowledge by the organization In the above figure 1, first stage shows the process of collection of knowledge by the employees of the organization, which is been collected, codified, preserved & utilized within organization & 3 rd stage shows the intermediate outcome of decision making resulting in actual performance of the organization. Figure 2 is the KM process designed by Ward and Aurum s, shows 7 stage KM process starting with creation and acquisition of knowledge, then refinement of knowledge, preserving the knowledge with IT enabled system which can be transferred & shared whenever required for its effective utilization for strategic planning and decision making. Components of KM in pharmaceutical marketing: In pharmaceutical marketing activities in India are targeted towards its main customers. Here in case of pharmaceutical marketing the patients, who are the actual consumers, are not the customers/decision maker for purchasing required products, but the physicians, who prescribes products to the patients are the actual customers, who contributes in the sales and business of pharmaceutical companies. Other than physicians, the retail chemists who dispense medicines to the patients according to the prescription given by physicians and the wholesale distributors who purchases medicines in bulk from the company or company appointed distributors are also the important customers for the pharmaceutical companies. ASM Group of Institute Pune, India 391
Knowledge in Pharmaceutical Marketing: Since the physicians, retail chemists and wholesale distributors in the territory of Medical Representatives are the important customers for the organization, Knowledge Management about these customers is important for the company for strategic planning. In Indian scenario, these 3 customers are interlinked with each others, as doctors have a retail chemists shop adjacent to the hospitals, receiving a huge deposits & rent from the retail chemists. This huge financial relationship develops a hidden commitment between the physician & chemists, related to business, controlling flow of specific brands in specific numbers on the chemists shop. Many a time these chemist retailers are in near relationships with the physicians & directly or indirectly controlled by the physicians only. Not only these 3 customers, but the knowledge about the competitors operating in those territories is equally important. The knowledge in pharmaceutical marketing can be understood as described below. Knowledge on Physicians: Since physicians are the prime customers for pharma companies, who gives business in the form of prescriptions to pharmaceutical marketers, knowledge on physicians is the most desired and required to be accurate for defining marketing plan. The knowledge important for the pharmaceutical marketers on physicians is as follows: Details of top potential doctors in the town: Since no doctors has same trust in the minds of patients & hence number of patients to each doctor varies, accordingly those doctors with large number of patients will give good number of prescriptions are categorised as potential doctors. A list of such doctors from all specialties must be available with the sales force. Such data is easily available through local physician associations or from the physician s list of competitors. Many a time the same sales person or the earlier person might fall in strategic activity related commitment with some of the potential doctors, which he must inform to his ASM Group of Institute Pune, India 392
superiors in the form of activity conducted and expected amount of business, business received and business pending, so that this knowledge will help sales team of that company to have a good follow up of business. Brands prescribing/stopped prescribing own & competitors: The sales force must aware of which brands the physician is prescribing for the competitors as well to own company, accordingly brands to be promoted can be identified. A right brand targeted to the right potential physician will give a right amount of prescriptions or else all efforts goes futile. Contribution to own company/competitor Company: Out of total prescription potential of physician, what amount of brands does the physician is prescribing for own company and competitor companies are important to be known, accordingly brands can be targeted to the physicians to get prescriptions for desired brands and planned amount of business. The sales force can get this information by doing detailed RCPA (Retails Chemists Prescription Audit) of adjacent retail chemists. A well structured format designed by the company allows sales force to collect the information which can be accessed and preserved at company s data base. Profile of physicians (interests): Profile of physicians includes the areas of interests; accordingly the inputs from the company can be efficiently planned. Many of the physicians are interested more in academic knowledge, interested in sports or physical activities, politics etc., so that the sales force can have a better preparation before meeting such physicians for next brand reminder calls. Some physicians are more interested in promotional inputs, while others may be interested to get large quantity of free drug samples for the use of their poor and needy patients. If such information is available with the sales force, companies can target right promotional inputs to these doctors to influence prescription behavior of these potential physicians to get good amount of business. Figure 2: Conceptual Diagram of Km in Pharmaceutical Industry Contact details: Contact details including location(s) of practice, contact numbers, other information like date of birth, wedding anniversary etc. so that these information can be ASM Group of Institute Pune, India 393
preserved for developing long run relationship. Any change in the location of practice will allow a regular contact with targeted physicians to get consistent business. Knowledge on Retail Chemists: Since retail chemists are dispensing medicines on prescriptions received from the physicians, retail chemists are also equally important customers for pharmaceutical industry for immediate availability of medicines and business accounting. Profile of Retails chemists with contact details: Profile of retail chemist includes his attitude towards sales people, interest in doing business, behavior with patients, qualification etc. This profile allows sales people to understand the way of communicating with retail chemists for developing a good rapport, which helps to get required information on RCPA. Demands/Expectations: Even though retail chemists receives margin (10-17% on MRP) for sales of medicines, but to manage to overhead expenses & other expenses, like a businessman, they also like to get some extra earning. This extra earning could be earned through sales of extra bonus/schemes product from some companies. If such additional margins (profits) are expected by the chemists, knowing this will help to those companies sales force, which provides such extra schemes on bulk purchases. Relationship with the Physician: As discussed earlier, now a day, many physicians prefer to have own chemists shops, or managed by their closed relatives. The purpose behind this relationship is to have bulk purchasing of those brands which will give extra margins & higher earnings. Therefore only those brands will be preferred, which will allow them to earn higher profit margins. If such knowledge is available with sales force, the communication can be directly done with that physician as well as chemists, who will allow pushing bulk stocks to ensure confirm business. Purchasing Capacity: If purchasing capacity is known, in case for a strategic activity is to be done with potential physician, retail chemists can be pushed to purchase extra stocks to get good business from the physician. In case of need, by giving extra margins/schemes, such chemists can be helpful to get emergency sales. Knowledge on Wholesale Distributors: Wholesale distributors, who purchases in bulk directly from companies & distribute in smaller quantities to retail chemists. Managing these wholesale distributors for availability of products in the market is also important. Financial Capacity: Like that of retail chemists, knowing purchasing capacity of wholesale distributor matters a lot. If a whole distributor is having a good purchase capacity, sales people can put a good effort to induce sales from such distributors, which will allow getting bulk orders from these doctors. Business Attitude: If the wholesale distributors are having a sole business in pharmaceutical distribution, then his attitude remains in development of that business, which allows its cooperation in better distribution. But if the distributor is having some other businesses, then his interest in pharmaceutical distribution will be non cooperative. Such knowledge allows ASM Group of Institute Pune, India 394
sales force to manage their efforts in increasing sales and distribution of interested distributors, which in turn help to get good sales orders. Number of Years in Business: If the distributor is new in his business, he will be more interested to develop their market, newer retail chemists and increase business; hence their cooperation is equally helpful for the sales force. But if the distributor is old and having its presence from many years, his own market experience and situation in pharmaceutical business may affect his interest in business, therefore his cooperation might goes down. Association in any other business: Sole pharmaceutical distribution business makes the distributor more interested rather than those who are having other businesses. This knowledge allows sales force to define action plans in business development. Credibility in the Market with Retail chemists: Behavior of wholesale distributor and support in retail business affects the level of credibility of distributor in the market. Credibility of distributors in the market depends upon the speed of service, availability of stocks, replacement of slow/non moving products, settling credit notes, and expiry etc. If a distributor is having poor credibility, retailers prefer to purchase from those distributors, who are having good credibility. Knowledge of such distributors helps to understand good distributors and getting sales orders from the retail market and supplying to good credibility distributors. Contact Details: Contact details of distributors for providing necessary information from the company and also to have a communication in need. If possible, getting information on date of birth and wedding anniversary will help to develop good rapport with these distributors. Personal assistance in Business: Many a time these distributors have good rapport with the retail chemists as well some of the physicians of that town, who can help by asking some of these physicians to take up brands to prescribe for particular company as well can also help in availability of products at retail chemists, who otherwise was not cooperating for availability. This knowledge of distributors will allow sales force to take advantage for initial rapport building as well as start of business, which further required to be developed on its own by the sales force. Knowledge on Competitors: Since competitors are operating in the same market and promoting similar brands to similar set of physicians, knowing on competitors is most important aspect from pharmaceutical markets. Even though the knowledge can be received at corporate level, but the potential of market varies from area to area, hence pharma companies implements some related local strategies in association with the major marketing plans. Such knowledge varies from market to market, which will help top management to take necessary actions at local levels to manage competition. Top performing companies in the defined market: Since the sales person working in a particular territory knows, which are the companies having top performance, which of their brands are doing well, what activities these companies are implementing in promoting their brands, which physicians are specifically targeted for a particular brand, any change in distribution strategy to influence purchase at retail chemists level, any new brand if launched, ASM Group of Institute Pune, India 395
promotional plans for launching that new brand, price of that brand etc. Such information if changing day by day and varies from market to market, therefore this information must be collected at company level from individual sales person. This knowledge might help company to take up some emergency actions if required or at least for development of future plans. Presence of local companies if any in the market: Other than standard operating large size pharma companies, a good number of local companies also operates in different market which are promoting similar brands to that of top companies with lower prices and better benefits to retail chemists in terms of margins and also benefiting to physicians in the form of honorarium or gifts etc. which actually affects sales of standard pharmaceutical companies at physicians as well at distribution level. If in that market such local companies are having presence in large number and are strong in its operation, such knowledge to sales force help to find fair practicing doctors, who believes in standard products and accordingly promoting products and investing promotional activities. Top brands in the market: Every market has some top national brands doing well in that market, while some brands which might not be doing good at national level, but tops at that local market. Such information allows company and sales team to understand the buying behavior of the market as well as preferences of that market. Competitor s top brands in the market: Different market will have different competitor s brands doing well. If such knowledge is there with sales team, companies can specifically support local sales team to counteract those top brands and to get good business in that market. Strategic activities of competitors in that market: The difference in the performances of competitor s brands in different market depends on the differences in the level of implementation of strategic activities as well as level of acceptance of strategic activities at physician level, which actually influences prescription behavior of those physicians. Such knowledge allows company to formulate strategies which will be acceptable at national level, resulting in equivalent success at all the market areas. This knowledge must be specifically collected and inform to company by sales team. Information on Sales team of Competitors: Depending upon the size of company and strategic decision, in similar market some companies have larger number of sales team promoting their brands to wide range of physicians. Large the number of size of sales team, equally large will be the coverage of market and equally larger will be the promotional inputs utilized, resulting into better sales. Such knowledge helps companies to change their strategic decision. When we go through all these perspectives of Knowledge Management in pharmaceutical marketing, it can be clearly understood that, all these knowledge collected by the company through their sales teams from different markets, allows them to develop effective strategic plans, resulting in achieving of their strategic objectives. Research Methodology: This is an empirical research carried out by the researcher in Pune city (India). For quantitative and qualitative hypothesis testing, a structured questionnaire was used to collect the required information from the sales person working for different pharmaceutical companies in Pune city (n=156). Stratified sampling method was adopted for selection of respondents. Questions related to organizational perspectives of knowledge, IT support provided by the organization for knowledge management, effective utilization of knowledge by the organization for planning of effective marketing plans resulting in ASM Group of Institute Pune, India 396
performance of the organization, which can be related to its sales performance in previous 5 years were included. For data analysis was done by using various statistical tools using SPSS 19. Objectives of the Study: The main objective behind conducting this study was to understand the process and techniques used by pharmaceutical industry in gathering and utilizing the knowledge for performance management through building competitive strategies. Objectives of the study are as stated under; 1) To understand the various perspectives of knowledge in pharmaceutical industry. 2) To study the awareness of Knowledge Management to the pharmaceutical sales teams. 3) To study the utilization of Knowledge in by the pharmaceutical sales teams in routine sales activities 4) To study the impact of knowledge management on performance of the pharmaceutical companies. Hypotheses of the study: H 1 : Irrespective of size of the organization, pharmaceutical sales teams collect knowledge on various aspects of sales activities. H 2 : There is positive relationship between Knowledge Management & satisfaction of the pharmaceutical sales teams. H 3 : There is positive relationship between Knowledge Management & improved performance of the pharmaceutical sales teams. Discussion: The study included 156 pharmaceutical sales representative from various national (124) & multinational pharmaceutical companies (32) operating in Pune city, which includes 147 males (94%) & 9 female (6%) sales representatives, working from a period of ranging from 9 months to 8 years. Data collected through pretested structured questionnaire from the selected responded tested for the reliability & which had a reliability score of 0.88. While testing hypothesis 1, researcher asked the respondents, whether & how frequently the knowledge on various aspects of sales activities are been collected by their end, the t value obtained was 49.652 with 155 of degree of freedom & the corresponding p value at 5% level of significances accepts that, irrespective of size of company, the pharmaceutical sales teams collect knowledge on various aspects of sales activities Table: One Sample t test on Knowledge Collection on various aspects of Sales Activities While testing Hypothesis 2, whether there is any relationship between knowledge management & satisfaction level of the pharmaceutical sales team, according to results of the correlation test, (r = 0.61, P < 0.000*), it supports that there is positive relationship between knowledge management & satisfaction of the pharmaceutical sales teams as it helps in easy customer breakthrough & sales planning. In case of hypothesis 3, to test the relationship of Knowledge Management & performance of the sales teams, (r = 0.49, P < 0.000*), supports ASM Group of Institute Pune, India 397
the positive relationship, as Knowledge obtained allows to plan & implement actions to influence prescription behaviors of the prescribing physicians which allows to achieve the sales objectives of the working organization. Conclusion: Knowledge Management is based on the argument that, human brains are not able to draw on the full potential in retrieving the knowledge collected consciously or subconsciously & organizations are generally not able to fully utilize the knowledge that is possessed by their sales teams. Through Knowledge Management process, organizations seek to acquire or create potentially useful knowledge and in order to positively influence organizational performance by formulation of effective strategic decisions. The sales teams working in the field, meets different people, may be the competitor s sales people, retailers, wholesalers as well the their customers (physicians) and has formal or informal kind of information exchange, which actually can be looked strategically as source of knowledge, which can be collected, noted, preserved, validated & shared with their organization as well utilized for formulation of local strategies for improved selling activities. Knowledge supports satisfaction due to achievement of sales objectives. References: 1) Aladwani, A. M., & Palvia, P. C. (2002). Developing and validating an instrument for measuring userperceived web quality. Information and Management, 39(6), 467 476. 2) Birkinshaw, J., & Sheehan, T. (2002). Managing the knowledge life cycle. Sloan Management Review, 44(1), 75 83. 3) Duffy, J. (2001b). Knowledge management finally becomes mainstream. The Information Management Journal, 35(4), 62 65. 4) Holsapple, C. W., & Winston, A. (1987). Knowledge-based organizations. The Information Society, 5(2), 77 90. 5) Palvia, P. C. (1996). A model and instrument for measuring small business user satisfaction with information technology. Information and Management, 31(3), 151 163. 6) Rowley, J. (2002). Eight questions for customer knowledge management in e- business. Journal of Knowledge Management, 6(5), 500 511. 7) Ruggles, R. (1998). The state of notion: knowledge management in practice. California Management Review, 40(3), 80 89. 8) Saarinen, T. (1996). An expanded instrument for evaluating information system success. Information and Management, 31(2), 103 118. 9) Swanson, E. B. (1974). Management information systems: appreciation and involvement. Management Science, 21(2), 178 188. 10) Vail, E. F. III, (1999). Knowledge mapping: getting started with knowledge management. Information Systems Management, 16(4), 16 23. 11) Venkatesh, V., & Davis, F. D. (1996). A model of the antecedents of perceived ease of use: development and test. Decision Sciences, 27(3), 451 481. 12) Zack, M. H. (1999). Managing codified knowledge. Sloan Management Review, 40(4), 45 58. ****** ASM Group of Institute Pune, India 398