Glaxo Italia S.p.A.: The Zinnat Marketing Decision Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Background of case:

Glaxo Italia S.P.A is the wholly owned operating company which is the second largest pharmaceutical in term of sales. Glaxo Holdings Public Listed Company has its headquarter is in London and listed in different stock exchange worldwide that is London Stock Exchange, New York Stock Exchange, Tokyo Stock Exchange and Paris Stock Exchange. The company has a rapid investment in funds that approximately earn at the compounding rate of 50 percent in the recent eleven years from 1979 to 1990.

Glaxo Italia S.P.A is the leading pharmaceutical manufacturer of peptic ulcers, asthma and also Glaxo Italia is the world’s largest distributor of antibiotics and skin disorder treatments. The new products of the Glaxo Italia are very successful because they had conducted full research and development on the product before introducing it to market. Glaxo Italia has the world’s largest sales force and the best medical literature that guides the doctors how to diagnose the disease. The company is rapidly expanding its sales force to increase its sales to meet the target of three trillion in the recent years, having a 9 percent margin in the market and to earn 50% profit margin. Glaxo Italia launched its product with the rapid and massive distribution in the market in order to gain the market share rapidly and consistently.

Problem:

The company has to adopt two marketing strategies for their new Zinnat which is the co-marketing distribution and the direct sales in the market. The co-marketing strategy is to permit any other pharmaceutical to sell their product on their behalf with a different brand name, but this will lose some of the market share of the Glaxo Italia, but the co-marketing strategy will promote their product to inject the market share. Under the direct sale strategy, Glaxo Italia’s own sales force will sell the pharmaceutical products of the company. Direct sales marketing would not lose the market share of the Glaxo Italia but it will take too long to become stable in the market as compared to the co-marketing strategy. The Glaxo Italia has to adopt one of the marketing strategies to sell its product Zinnat in the market.

Analysis:

Advantages and Disadvantages of Co-marketing versus Direct sales

The two marketing strategies adopted for their new Zinnat is the co-marketing distribution and the direct sales in the market. The co-marketing strategy is to permit any other pharmaceutical to sell their product on their behalf with a different brand name, but this will lose some of the market share of the Glaxo Italia, but the co-marketing strategy will promote their product to inject the market share. Under the direct sale strategy, Glaxo Italia’s own sales force will sell the pharmaceutical products of the company. Direct sale marketing would not lose the market share of the Glaxo Italia but it will take long time to become stable in the market as compared to the co-marketing strategy.

Co-marketing Strategy for new Zinnat Antibiotic:

Glaxo Italia chose the strategy of Co-marketing for its Zinnat product, so that the other pharmaceutical company will promote its Zinnat product and the Glaxo Italia Company has time to expand and promote the other products and services of the company, although it results in loss of some market share of the company but the Glaxo Italia able to focus on their other products for innovation and new development. The Glaxo Italia has already a good experience of launching the product with the co-marketing strategy of their Zantac pharmaceutical product in the region of the United States.

Decision and Financial Forecast:

Glaxo Italia sales strategies are based on several qualitative and quantitative tradeoffs regarding the antibiotic overall success in the industry. The two marketing strategies of the Glaxo Italia come up with a different answer that these strategies are expected over the useful life of the product. The Glaxo Italia focus is on the initial stage sales growth of the company’s product that is Zinnat. The main and the first objective of the Glaxo Italia for its new product Zinnat is to capture the market share and attract customers at the initial stage of the product after launching the new product.

The direct selling strategy of the Glaxo Italia is to launch its new product that is Zinnat through their own sales force, this would help the company to increase the market share of the company and become more profitable as compared to the other strategy that is co-marketing strategy. Direct selling of products by the company will increase the returns of the company, but it takes time to inject the new product in the competitive market for the Glaxo Italia. The other strategy of launching the new product for the Glaxo Italia is the co-marketing strategy, which helps the company to introduce......................

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by Robert F. Bruner Source: Darden School of Business 21 pages. Publication Date: February 18, 1993. Prod. #: UV0075-PDF-ENG