Download - Pharmaceutical industrial management
![Page 1: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/1.jpg)
PHARMACEUTICAL INDUSTRIAL MANAGEMENT
BY MOHD IRSHAD REZA
& DIVYA GOEL B PHARM (3RD YEAR)
GALGOTIAS UNIVERSITY
![Page 2: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/2.jpg)
CONTENTS• ADMINISTRATIVE MANAGEMENT• ELEMENTS OF MANAGEMENT • PLANNING• ORGANIZING • STAFFING • DIRECTING • CONTROLLING • ENTREPRENEURSHIP DEVELOPMENT• OPERATIVE MANAGEMENT• PRINCIPLE OF MANAGEMENT• SCIENTIFIC MANAGEMENT • MARKETING RESEARCH• MEASURING AND FORECASTING MARKET DEMAND
![Page 3: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/3.jpg)
ADMINISTRATIVE MANAGEMENT
• Definition-• Management is a technique using which the
purposes and the objectives of a particular group are determined, classified and effectuated.
• Management is forecasting, planning, organizing, commanding, coordinating and controlling.
![Page 4: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/4.jpg)
ELEMENTS OF MANAGEMENT• The six elements of management are as follows:• 1. Determine objectives—planning• 2. To setup an organization and assign responsibility—
organizing• 3. To interrelate and direct activities—command• 4. To set standards and effect control accordingly—controlling• 5. To motivate and socialize the employee groups—motivation• 6. To cause cooperation among various factors of production
and organized groups of personnel—• coordination
![Page 5: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/5.jpg)
PLANNING
• Definition-• It is a mental process requiring the use of
intellect, foresight, imagination and a sound judgment. Planning is deciding in advance what is to be done, when, where, how and by whom it is to be done
![Page 6: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/6.jpg)
Elements of Planning• The following are the important elements of planning:• a. Objectives-The objectives determine the goals on the basis of
which the action of an enterprise is projected
• b. Policies-Policies provide guidance to the subordinates and enlist their cooperation on the guided lines
• c. Procedure-Procedure charts out the specific manner in which the actions are to be taken and the work accomplished.
• d. Programme- Programmes are meant for assembling all plans into one in a workable form for a complete and an orderly course of action
• e. Budget-Budgets are said to be the statement of numerical facts designed to attain the desired results.
![Page 7: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/7.jpg)
Importance of Planning• 1. Improves competitive strength• 2. Improves motivation:• 3. Encourages innovations and creativity• 4. Planning off sets future uncertainty and change• 5. Planning helps in management by defining
objectives:• 6. Better coordination• 7. Economy in operation• 8. Helps in control
![Page 8: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/8.jpg)
Steps in Planning• Following are the important steps in the process of planning• 1. Determination of objectives• 2. Establishment of planning premises• 3. Determination of alternative courses• 4. Evaluation of alternatives and selection of the course of action• 5. Preparation of derivative plans• 6. Timing and sequence of operations• 7. Securing participation of employees• 8. Considering the strategy• 9. Providing follow-up to the proposed course of action
![Page 9: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/9.jpg)
Limitations of Planning
• The following are the obstacles to the process of planning
• 1. A costly proposition• 2. Planning fails with big and regular changes• 3. Inelastic administration• 4. Unreliable estimates• 5. Initiative, originality and individuality yield
to planned efforts
![Page 10: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/10.jpg)
ORGANIZING
• Definition• Organizing is a process of dividing and
combining efforts of a working group to make the joint efforts more productive and fruitful.
• Organizing establishes a pattern of relationships among the efforts to be put, jobs to be done and work to be performed.
![Page 11: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/11.jpg)
Elements of organization:• There are three important elements of an organization• 1. Division of work-An effective division of work between personnel
selected to do a particular job(s) is the foremost function of an organization
• 2. Interrelationship-Establishment of interrelationships between jobs, duties, responsibilities and authority either in a formal or in an informal way
• 3. Individual performances-Individuals do the assigned jobs. Whether an individual or a group of individuals is doing the assigned duties and carrying out the responsibilities in accordance with the instructions or not
![Page 12: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/12.jpg)
Types of Organization (Patterns)• 1. Line organization a. Pure line organization b. Departmental line organization• 2. Functional organization• Line Organization• It is also known as vertical organization or departmental
organization or scalar organization. This organization is based on the superior–subordinate relationship. When a superior delegates authority to a subordinate, he in turn does so to another subordinate thus forming a line from the top to bottom of the organizational structure.
![Page 13: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/13.jpg)
Pure line organization
• Pure line organization is simple in form and seen in small units that produce only one item and where activities can be grouped according to their nature.
Departmental line organization• In departmental line organization, the
business unit is divided into departments that are headed by department heads
![Page 14: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/14.jpg)
Advantages of Line Organization
• Line organization is easy to establish and very simple for the employees.
• It leads to better coordination and stability. • It ensures strong discipline because of the
unity of command. • The authorities of various personnel are well-
defined hence, noconflict in their powers and authority.
![Page 15: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/15.jpg)
Disadvantages of Line Organization
• All the decisions are taken by the single boss and the success and growth of the whole department depends on his abilities only.
• The boss is overloaded with work and he may not direct the efforts of his subordinates properly
![Page 16: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/16.jpg)
Functional Organization
• In functional organization, the whole task of management is classified according to the type of work involved. The normal operations performed in a business house are production, research, personnel, purchasing, finance, etc.
![Page 17: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/17.jpg)
Advantages of Functional Organization
• It ensures higher degree of efficiency as the workers get instructions from experts they
• have to perform a limited number of tasks. • It ensures a greater division of labourDisadvantages of Functional Organization• Conflict in authority• Discipline is slackened• Lack of coordination• Complication procedure
![Page 18: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/18.jpg)
STAFFING
• Definition• Staffing is the procurement of efficient people
for the organization. It is a process of matching the jobs with the individuals.
• by means of staffing, the management recruits, selects and trains the employees
![Page 19: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/19.jpg)
Staffing is related to the following functions-
• 1. Forecasting the manpower requirements• 2. Establishing job specifications and job descriptions• 3. Determining the sources of recruitment• 4. Recruitment• 5. Selection and placement• 6. Training and educating the employees• 7. Coordinating, promotions, transfers etc.• 8. Maintenance of necessary records for the
efficient manpower management
![Page 20: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/20.jpg)
Importance of Staffing
• Staffing injects life into the organization by providing the right person for every job.
• The effectiveness of directing and the control functions also depend on staffing.
• Employees in the organization are the most valuable asset of an organization.
• Staffing helps to build a healthy organization where the job performance and satisfaction for every employee is high.
![Page 21: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/21.jpg)
DIRECTING
• Definition• Directing consists of the processes and
techniques utilized in issuing instructions and making certain that operations are carried out as originally planned. In simple words, directing is guiding the subordinates in their work.
![Page 22: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/22.jpg)
The function of direction has three essential components
• 1. Function of command: It is the issuing of instructions and orders.
• 2. Guiding the people: It is the responsibility of a manager to guide and teach the subordinates the proper methods of work.
• 3. Supervising the people: The management has to supervise the subordinates to ensure that their performance conforms to the plans.
![Page 23: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/23.jpg)
Principles of Direction
• principles can be divided into two parts• 1. Order• 2. Supervision• Order- An order is a command by a superior
requiring a subordinate to act or refrain from acting in a given circumstance. It is usually an instruction given by a superior to his subordinate
![Page 24: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/24.jpg)
Characteristics of a Good Order
• A good order has the following characteristics:• 1. The order must be reasonable• 2. The order must be compatible with the purposes
and the objectives of the enterprise.• 3. The order should be intelligible, complete and clear.• 4. The tone of the order should be appropriate. It
should stimulate ready acceptance.• 5. It must specify the deadline of completing the
instruction.
![Page 25: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/25.jpg)
Techniques of Orders
• Following are the important techniques of issuing orders-
• General or specific orders• Written or oral orders• Conformality• Timing• Follow-up orders
![Page 26: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/26.jpg)
SUPERVISING• Supervision is overseeing the subordinates at work. It is
an important part of direction for every manager. Functions of a supervisor-• 1. To schedule work for its even and steady flow• 2. To assign work to different workers according to their
abilities.• 3. To provide proper working environment to the workers• 4. To provide leadership to the workers• 5. To elicit their willingness to work for the achievement
of the group objectives• 6. To control the performance of the workers
![Page 27: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/27.jpg)
CONTROLLING
• Control is checking the current performance against the predetermined standards contained in the plans with a view to ensure adequate progress and satisfactory performance.
![Page 28: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/28.jpg)
Salient features (characteristics) of controlling
• 1. An end itself: Control is an end function of the process of management
• 2. A forward looking process: Even though it lives in the present, it is related to the future
• 3. A dynamic process: Control is a dynamic process. And the management functions are flexible
• 4. A continuous process: Control is a continuous activity. It does not stop
• 5. Operation at all levels: Controlling is done at all the levels of management.
![Page 29: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/29.jpg)
Steps in the Process of Control
• 1. Well-defined objectives and goals• 2. Determination of strategic point of control• 3. A predetermined criterion• 4. Determination of controllable cost and control
period• 5. Strengthening the organization• 6. Measurement of performance• 7. Comparison of actual performance with standards• 8. Correction of deviations
![Page 30: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/30.jpg)
Entrepreneurship development
Definition Entrepreneurship is neither a science nor a art. It is
a practice. It is not just about making money. It is all about imagination, flexibility, creativity, willingness to think conceptually, readiness to take risk.
• The word is derived from the French word ‘entreprendre’ which means ‘undertakers’.
• The word referred to those who undertook the risk of starting a new enterprise
![Page 31: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/31.jpg)
STAGES OF ENTREPRENEURSHIPFundamentally there are five (often overlapping) stages:1. Discovery: In which the entrepreneur generates ideas, recognizes
opportunities, and determines the feasibility of ideas, markets, and ventures;
2. Concept development: In which the entrepreneur plans the venture, identifies needed resources using a business plan, and identifies strategies for penetrating markets or protecting intellectual property;
3. Resourcing: In which the entrepreneur identifies and acquires the financial, human, and capital resources needed for the venture start-up,
4. Actualization: In which the entrepreneur operates the venture and utilizes resources to achieve its goals and objectives
5. Harvesting: In which the entrepreneur decides on the venture’s growth, development, or even demise.
![Page 32: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/32.jpg)
BENEFITS OF ENTREPRENEURSHIP
• Opportunity of huge personal financial gain.• Scope of high order of Job satisfaction, sense of
achievement, self employment.• Generation of employment / income for others.• Contribution to overall growth in the region/
nation /world• Encourages higher quality products.• Development of new products and markets.
![Page 33: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/33.jpg)
OPERTIVE MANAGEMENT
• Operations management is defined as the, and improvement of the system design, operations that create and deliver the firm’s primary products and services
![Page 34: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/34.jpg)
Importance of management
OperationsManagement
Business Education/Career Opportunities
Systematic Approachto Org. Processes
Increase Competitive Advantage/Survival
Cross-FunctionalApplications
3
![Page 35: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/35.jpg)
QualityManagement
StatisticalProcess Control
Just in Time
Materials Requirement Planning
Inventory Control
AggregatePlanning
Operations Management - Overview
ProjectManagement
Supply Chain Management
Process Analysisand Design
Process Controland Improvement
Waiting Line Analysis and Simulation
Services
Manufacturing
OperationsStrategy
Facility Layout
Consulting andReengineering
Process Analysis
Job Design
Capacity Management
Planning for Production
Supply ChainStrategy
![Page 36: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/36.jpg)
Operations Strategy
Customer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes and Infrastructure
ExampleStrategy Process
More Product
Increase Org. Size
Increase Production Capacity
Build New Factory
![Page 37: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/37.jpg)
PRINCIPLE OF MANAGEMENT
• Management is a science. Management has to perform a number of functions, such as planning, organizing, coordinating, directing, control ling, etc., for the purpose of achieving its objectives
• The principles of management are statements of fundamental facts. These principles serve as guidelines for decisions and actions of managers
![Page 38: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/38.jpg)
Need of principle of management
• 1. To increase efficiency• 2. To highlight the true nature of management• 3. To aid in the training of managers• 4. To improve research• 5. To attain social goals
![Page 39: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/39.jpg)
SCIENTIFIC MANAGEMENT
• Various thinkers have contributed to the development of modern management. F.W. Taylor and Henry Fayol are two outstanding names in the field of management.
• According to F.W. Taylor, ‘Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and the cheapest way’.
![Page 40: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/40.jpg)
• His philosophy of scientific management is based upon the following principles:
• 1. Development of true science for each element of work
• 2. Scientific selection, training and development of workers
• 3. Close cooperation between workers and management
• 4. Equal division of work and responsibility• 5. Maximum prosperity for both the employers and the
employees• 6. Mental revolution
![Page 41: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/41.jpg)
HENRY FAYOL’S PRINCIPLES OF MANAGEMENT
• Henry Fayol was a French industrialist. He classified all business activities into six categories.
• 1. Technical (production or manufacturing)• 2. Commercial (buying, selling and exchange)• 3. Financial (search for optimum use of capital)• 4. Security (protection of property and people)• 5. Accounting• 6. Managerial
![Page 42: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/42.jpg)
• According to Fayol, the first five groups of activities are quite well known and therefore, he concentrated his attention on the analysis of the sixth group, i.e. managerial activities. Fayol suggested the following 14 principles of management in order to make the job of managing more effective:
• 1. Division of work• 2. Authority and responsibility• 3. Discipline• 4. Unity of command
![Page 43: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/43.jpg)
• 5. Unity of direction• 6. Subordination of individual interest to general
interest• 7. Remuneration of personnel• 8. Centralization and decentralization• 9. Scalar chain• 10. Order• 11. Equity• 12. Stability of tenure of personnel• 13. Initiative• 14. Esprit de corps
![Page 44: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/44.jpg)
MARKETING RESEARCH
• Definition-• Marketing research is the collection, summary
and analysis of the data regarding the goods and services so that the behaviour of the consumers may be understood and maximum satisfaction may be provided to them.
![Page 45: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/45.jpg)
SCOPE OF MARKETING RESEARCH
• The scope of marketing research is very wide.• The scope of marketing research may be
explained as follows:• 1. Research of products and services• 2. Research on markets• 3. Research on sales methods and policies• 4. Advertising research• 5. Research on miscellaneous activities
![Page 46: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/46.jpg)
ADVANTAGES OR IMPORTANCE OF MARKETING RESEARCH
• Production of New Products• New Uses of Products• Important Information About Customers• Selection of the Channels of Distribution• Existence in Competitive Situation• Knowledge of Demand• Planned Production• Improvement in the Quality of Products• Discovery of Potential Markets
![Page 47: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/47.jpg)
TYPES OF MARKETING RESEARCH• Product Analysis-Product analysis is a detailed and a
thorough study of the popularity of products among consumers of an enterprise
• Market Analysis-Market analysis is the study of markets available for a particular product of an enterprise.
• Distribution Analysis-Distribution analysis is related with the analysis of different problems related to the physical distribution of goods and services, such as storage, transportation, advertisement, sales promotion, pricing policy, etc.
![Page 48: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/48.jpg)
• Competition Analysis-Competition analysis is the analysis of the competitive situations prevailing in the market.
• Consumer Research-Consumer research is the research on the present and the potential consumer of the enterprise.
• Sales Analysis-Sales analysis is an important tool to measure the effectiveness of the sales organization of an enterprise.
• Motivational Research-Motivational research is the study of the reaction of consumers or society towards the products of an enterprise or the enterprise itself.
![Page 49: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/49.jpg)
• Advertisement Research-The evaluation of the effectiveness of advertising programmes and sales promotion campaign is much more important. Advertising research undertakes this responsibility.
![Page 50: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/50.jpg)
NEED OF MARKETING RESEARCH• Marketing research is not only desirable but has become
a necessity of all the business and industrial enterprises of today.
• Market research is necessary in the following conditions:• 1. When a new product is to be launched into the market• 2. When adequate data are not available with respect to
the demand of a product• 3. When there are fast changes in the habits, tastes and
attitudes of the consumers• 4. When there are fast changes in fashion
![Page 51: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/51.jpg)
• 5. When the sale of a particular enterprise goes on declining
• 6. When adequate data is not available about the consumers of a particular group
• 7. When adequate data is not available about a particular market segment
• 8. When the data of consumer reactions to the packing or utility or price of a product are to be collected
• 9. When the effectiveness of an advertising campaign is to be evaluated
• 10. When the possibilities of developing a new products are to be explored
![Page 52: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/52.jpg)
MEASURING AND FORECASTING MARKET DEMAND
• Market measuring and forecasting requires an analysis of the market with an aim of expressing it in quantitative (numeric) quantities both present and in the future
![Page 53: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/53.jpg)
Measuring Current Market Demand
• Marketers will want to estimate three different aspects of current market demando Total market demando Area market demando Actual sales and market shares
![Page 54: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/54.jpg)
Estimating Total market demand
• The total market demand for a product or service is the total volume that would be bought by a defined consumer group in a defined geographic area in a defined time period in a defined marketing environment under a defined level and mix of industry marketing effort
![Page 55: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/55.jpg)
![Page 56: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/56.jpg)
• Q = n x q x p Where,
Q = total market demand n = number of buyers in the market q = quantity purchased by an average buyer per
year p = price of an average unit
A common way to estimate total market demand is as follows:
![Page 57: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/57.jpg)
Estimating Area Market Demand
• Two major methods are availableoMarket buildup method – used primarily by
business goods firmsoMarket-factor index method – used primarily by
consumer goods firms.
![Page 58: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/58.jpg)
Market-Buildup Method
• Calls for identifying all the potential buyers in each market and estimating their potential purchases.
• Mining instruments that test the actual proportion of gold content in gold-bearing ores.
• Price of instrument $1,000. The company wants to determine the market potential.
• To estimate the market potential the manufacturer can consult the Standard Industrial Classification (SIC).
![Page 59: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/59.jpg)
SIC (1)Number of employee
s
(2)Number of mines
(3)Potential
Number of instruments
per size class
(4)Unit
market potentia
l(2 x 3)
(5)Dollar market
potential (at $1,000
each)1042(lode deposits)
Under 1010 to 50Over 50
805020
150
124
8010080
260 $260,000
1043(placer deposits)
Under 1010 to 50Over 50
40201070
123
404030
110 110,000$370,000
![Page 60: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/60.jpg)
Market-Factor Index Method
• Identifies market factors that correlate with market potential and combines them into weighted index.
• A manufacturer of men’s dress shirts wishes to evaluate its sales performance relative to market potential in several major market areas
![Page 61: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/61.jpg)
ESTIMATING ACTUAL SALES AND MARKET SHARES
• Besides estimating total and area demand, a company will want to know the actual industry sales in its market. Thus, it must identify its competitors and estimate their sales.
• Industry’s trade associations often collect and publish total industry sales,
• although not individual company sales. In this way, each company can evaluate its performance against the industry as a whole. Suppose the company’s sales are increasing at a rate of five percent a year and industry sales are increasing at 10 percent. This company actually is losing its relative standing in the industry.
![Page 62: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/62.jpg)
FORECASTING FUTURE DEMAND
• Forecasting is the art of estimating future demand by anticipating what buyers are likely to do under a given set of future conditions.
• Companies commonly use a three-stage procedure to arrive at a sales forecast. First they make an environmental forecast, followed by an industry forecast, followed by a company sales forecast.
![Page 63: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/63.jpg)
• Companies use several specific techniques to forecast their sales.
• All forecasts are built on one of three information bases-
1- What people say2 -What people do3 -What people have done
![Page 64: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/64.jpg)
What people say• Surveys of buyers’ • intentions Composite sales force opinions • Expert opinion
What people do• Test markets
What people have done• Time-series analysis• Leading indicators• Statistical demand analysis
![Page 65: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/65.jpg)
SURVEY OF BUYERS’ INTENTIONS
• One way to forecast what buyers will do is to ask them directly. This suggests that the forecaster should survey buyers.
COMPOSITE OF SALES-FORCE OPINIONS• When buyer interviewing is impractical, the
company may base its sales forecasts on information provided by the sales force.
![Page 66: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/66.jpg)
EXPERT OPINION• Companies can also obtain forecasts by turning
to experts. Experts include dealers, distributors, suppliers, marketing consultants, and trade associations.
TEST MARKETING• A direct test market is especially useful in
forecasting new-product sales or established product sales in a new distribution channel or territory
![Page 67: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/67.jpg)
Time-series analysis• Time-series analysis consists of breaking down
past time series into four components (trend, cycle, seasonal, and erratic) and projecting these components into the future
LEADING INDICATORS• Many companies try to forecast their sales by
finding one or more leading indicators other time series that change in the same direction but in advance of company sales.
![Page 68: Pharmaceutical industrial management](https://reader036.vdocuments.us/reader036/viewer/2022081604/58a5203e1a28ab143f8b5a13/html5/thumbnails/68.jpg)