12 GALIA, Benjamin Jr. N.

5ACLPH

PLACE

1. Discuss what is meant by Pharmaceutical Distribution Channels, its functions and levels.
Pharmaceutical Distribution Channels are sets of interdependent organizations involved in the process of
making a product or service available for use or consumption. In pharmacy, there are channels for (1)
distributing medications, (2) financing and paying for those medications, (3) insuring risk associated with
medications, and (4) facilitating their appropriate use.

Functions of Marketing Channels in the Pharmaceutical Industry includes:

 Production and adding value
 Promotional communications
 Distribution
 Storage
 Financing and Payment
 Risk Sharing
 Regulation
 Relationship Management

Channels normally vary from two-level channels without intermediaries to five-level channels with three
intermediaries.

2. Enumerate the Pharmaceutical channels of distribution and the innovate distribution practiced
by many drug companies.
3. How do you select, motivate, and evaluate channel members?
 Analyzing consumer needs
o Cost and feasibility of meeting needs must be considered
 Setting channel objectives
o Set channel objectives in terms of targeted level of customer service
o Many factors influence channel objectives
 Nature of the company (size/financial position) and its products
 Marketing intermediaries
 Competition
 Marketing environment
 Identifying Major Alternatives
 Types of intermediaries
 Company sales force
 Manufacturer’s agency
 Industrial distributors
 Number of marketing intermediaries
 Intensive distribution
 Selective distribution
 Exclusive distribution
 Responsibilities of channel members
 Evaluating Major Alternatives
o Economic criteria
o Control issues
o Adaptive criteria
 Designing International Distribution Channels
o Global marketers usually adapt their channel strategies to structures that exist within
foreign countries
o Key challenges:
 May be complex or hard to penetrate
 May be scattered, inefficient, or totally lacking

4. Discuss the following:

A. Order processing- process or work-flow associated with the picking, packing and delivery of the
packed items to a shipping carrier and is a key element of order fulfillment. Order processing
operations or facilities are commonly called "distribution centers" or "DC's".
B. Warehousing- act of storing goods that will be sold or distributed later. While a small, home-
based business might be warehousing products in a spare room, basement, or garage, larger
businesses typically own or rent space in a building that is specifically designed for storage.
C. Inventory- a complete list of items such as property, goods in stock, or the contents of a building
D. Transportation- involves the movement of goods from the place of production to the place of
consumption
E. Stock turnovers- also known as “Inventory turnover,” is a ratio showing how many times a
company has sold and replaced inventory during a given period
F. When to reorder inventory- a reorder point is the unit quantity that triggers the purchase of a
particular stock item
G. How much to reorder- the formula for reorder quantity is the average daily usage multiplied by
the average lead time
H. Distribution channel- chain of businesses or intermediaries through which a good or service
passes until it reaches the final buyer or the end consumer
I. Economic order quantity- order quantity that minimizes the total holding costs and ordering
costs. It is one of the oldest classical production scheduling models.
J. Exclusive distribution- an agreement between a supplier and a retailer granting the retailer
exclusive rights within a specific geographical area to carry the supplier's product
K. Intensive distribution- distribution on a large-scale and displaying the product in as many ways
and places as possible so that the customer sells in high volume due to large scale distribution
L. Inventory holding costs- costs incurred while holding inventory or stock in storage or a
warehouse. It is the most quantifiable cost and can be interpreted as the main or only cost of
inventory without any regard for the other costs such as ordering and shortage costs
M. Usage rate- measure of the quantity of a product consumed by a user in a given period; users
may be subdivided as heavy, moderate and light
N. Selective distribution- strategy where a producer sells its products or services in a few
exclusively chosen retail outlets in a specific geographical area
O. Reorder point- level of inventory which triggers an action to replenish that particular inventory
stock. It is a minimum amount of an item which a firm holds in stock, such that, when stock falls to
this amount, the item must be reordered
P. Safety stock- additional quantity of an item held by a company in inventory in order to reduce the
risk that the item will be out of stock
Q. Physical distribution- set of activities concerned with efficient movement of finished goods from
the end of the production operation to the consumer. Physical distribution takes place within
numerous wholesaling and retailing distribution channels, and includes such important decision
areas as customer service, inventory control, materials handling, protective packaging, order
procession, transportation, warehouse site selection, and warehousing