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FACULTY OF ENGINEERING & COMPUTING

Case Study , Rumack Pharmaceuticals

User : Davis D Parakal


SID : 3357394
Module : Engineering Strategy
Module Leader : Richard Anderson
Case Study, Rumack Pharmaceuticals

Introduction

This report analyzes the case study on Rumack pharmaceuticals and suggesting
marketing, manufacturing strategies for the future improvement of business.

Marketing Strategy

Marketing is one of the key factors that drive business into success. It delivers the
information of the product and services of the company into public or specifically
customers. “Marketing strategy is defined for our purposes as the total sum of the
integration of segmentation, targeting, differentiation, and positioning strategies
designed to create, communicate, and deliver an offer to a target market”.( Adel I.
El-Ansary,2006)

In the Rumack pharmaceutical case, they mainly used two marketing approaches.

 Branding
 Product line extension and derivation

Recognizing the level of acceptance of the product, Restolvic as a successful


indigestion reliever, company started strengthening the brand name of that
product. This is the basic principle in which a successful brand name can reach
more heights that a new brand in the market. The customer acceptance level of
branded products always makes industries to seek ways to brand the product or
services as much as they can. “Branding is defined for our purposes as naming the
offer to gain an identity, evolve meaning, and project an image conducive to
building brand equity” ( Adel I. El-Ansary,2006). Rumack pharmaceutical was very
much successful in branding Restolvic and gained the market place.

Keeping the Restolvic brand they stared extending the product line with
derivatives and similar products Restolvic A, Restolvic E etc.. This marketing
strategy gained the market and customer demand increased for the company
products. Keeping same line with the successful product always makes success.
But the disadvantage of this marketing strategy is negative impact on new
product will effect brand image of successful product. So the product
development of new one should give extreme care and planning when they
advertise it will successful brand.

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Case Study, Rumack Pharmaceuticals

Manufacturing Implications

Fig 1

The attachment 1 represents the annual quantity distribution (in 000’s bottles or
kilo bottles) for a number of representative products packed on lines 1, 2 and 3
over the last 7 years.

The above table give the exact idea about the production trends and its variety in
Rumack. It is very clear from the data set that production increase steady with in
6 years. The quantity less than 500 kept on increasing for 6 years and it is evident
from this product line increased in such a great way. In the beginning there was
no production more than 1500 on a specific medicine. But it started expanding
from second year and ended with three products with above 2000 numbers in the
end of 6th year. So the demand from the customer kept increasing all these years.

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Case Study, Rumack Pharmaceuticals

From the percentage it is clear that less than 500 keep the majority of the
production. The strategy behind this one aims in increasing product line and
successful products. Small test medicines below 500 are introduced every year
and some of they will highly accepted by the customer in the coming years. This
testing and deploying strategy found successful when we see the high production
above 2000 for such products in the last five years of ‘% sample products’ data
set.

Fig 2

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Case Study, Rumack Pharmaceuticals

The attachment 2 represents the annual quantity distribution (in 000’s bottles or
kilo bottles) for a number of representative products packed on lines 1, 2 and 3 in
terms of the year of introduction and the 2 years following introduction.

The first row in the table, that explains the 6 year before shows the product
volume increased in that particular time. They introduced 6 different varieties
apart from the successfully running product. But after that initial year of case
study we can’t see a drastic increase in the product variety but they keep a steady
line on introduction like one or two product per year. But the noticeable and
applicable thing was steady increase in production of previously introduced
products. This assure as the success of each product in the market. Keeping an
eye on customer demand this strategy of production was making profit to the
company.

The chart 1 represents the average run size (000’s bottles) on line 1 over the last
6 years.

[0 = Current Year] [-6 = 6 year before] Fig 3

We can see a steady decrease in the average run size of the production. It started
the production before 6 year with an average of 141.9 and drastically reduced to
86 in the following year. Then it started decreasing and ended with 60’s in the last
two year. This problem mainly involved dude to the production line increment in

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Case Study, Rumack Pharmaceuticals

those years. Rumack was struggling to manage the production in a proper order
when they increased the production variety.

After analysing the above two tables and chart, it is clear that the marketing
strategy was quiet good enough to make sure the information in properly
reaching the customers. So that the demand on production keep on increased
from the market. Even though Rumack had enough capacity to meet the customer
requirement but the allocation of the production line was complex. The line 1 was
dedicated to Restolvic and Hedanol products and it had an added befit in
production with same bottle size. But in the other end line 4 was much complex
which deals 12 different products with 5 different bottle size. This inequality in
the process arrangement create problem not only on Rumack but in any
manufacturing company that deal with wide range of products. . As production
manager Jim Lawson said, the company does not have any capacity problems. But
problems are with packing this wide range of products. As I mentioned earlier the
marketing approach from the company was not in the right track and the
implication of that approaches didn’t bother much on manufacturing
implications. That relationship must be maintained properly for in industries in
the future when they increase the batch size, product variety and product mix
volume.

Source of problem Facing the Company

These are the key factors that affected Rumack and started making problems with
the business.

 Marketing Approaches missed Manufacturing Implications


 Packing rather than capacity
 Process arrangements
 Set-up time vs. product variety

The production figures show us the high demand from the customers and it
implies the success of marketing approaches individually. But for the overall gain,
we need a organise each department in the way it benefit other in the best way.
Rumack was lacking such organization in the strategies from marketing. Even
though it was good at customer demand increase it failed to flow with
manufacturing approaches. The increase the customer demand forced company
to increase the production and this end up in the decision that closed plant at

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Case Study, Rumack Pharmaceuticals

California and move to another production Unit. Even this decision increased the
capacity of production it introduced packing problem to the company.

Company identified this problem in packing and did productive measures to


reduce this. They invested more into the packing area and increased the capacity
on that process. This decision was well defined and forecasted the business from
increasing demand from the customer. But the difference in the approaches of
marketing and manufacturing still troubled.

Exhibit 7 shows the set-up and change-over arrangements within the production
process. We can see that product/packaging changes take 4 hours. Bottle size
changes are a bit longer as they can take 5 or 8 hours. This long times lead to high
set-ups which are not good for the productivity.

Average output(bottles/hour)
8000

7000

6000

5000

4000
Average output(bottles/hour)
3000

2000

1000

0
0 50000 100000 150000 200000 250000 300000 350000

Fig 4

The chart 2 below shows the correlation between run size and output per hour
based on the representative sample of products packed on line 1

The run sizes are high when the average numbers of bottles produced per hour
are big. That is batch size increases with production of bottle increases. So when
high volumes are produced with high variety proper time schedule must keep in
order maintaining consistent run size. The best way to do this is reducing the

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Case Study, Rumack Pharmaceuticals

change in production type frequently. The same batches must produce


continuously and it can avoid the set-up times and increase the production.

The general market trend shows the acceptance of wide variety of Rumack
product under the successful brand Restolvic. So that, introducing new brand
which satisfy the customer demand will gain more business for Rumack. The key
order winners and qualifiers are product variety, Satisfaction of customers,
quality of the product, and availability according to the demand and delivery
speed

The mail two terms used in business is company profile and product/ service
profile. Product profile explains the characteristics of the product, its existing
market and manufacturing details. I briefly explain,

(T hill, 1998)

• Features. List the key features of your product that

• Benefits. Express them in terms of time or money savings

• Value Type. Decide whether the benefits are perceived or measurable.

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Case Study, Rumack Pharmaceuticals

• Focus, Determine if the benefits have an internal or external focus or both.

• Unique Strengths and features

• Value Rating: comparison with competitors

(patricia terrone,2006)

This tool can be useful as the market of Rumack Pharmaceutical has evolved, and
the company had to react to these changes. Product profiling should allow seeing
if improvements are possible.

Suggestions and Advices

The strategic options that can be considered in the future are:

 Process and product management


 Customer involvement
 New marketing approach
 Coordinating Marketing and Manufacturing strategies
 Continuous Improvement method

Product management is a full life cycle that starts from new product
development to customer support after sales. In each step in between this cycle
have significant role in success of the business. Rumack pharmaceuticals having a
current strategy of introducing new product every month. This should be
modified with proper planning and research and it should begin from the
customer and end with the customer. In the middle region it must involve all the
production process and coordinate with manufacturing process.

In the case of Rumack, the new product introduction can be re-written with
customer survey. They can research on customer need and introduce medicines
according to that result. This is Help Company to select the new product that is
apt for the market rather than testing each medicine in market after launch. Also
constant feedback system after the sales will improve in the new product
development. A strong R&D division can coordinate with the marketing team to
keep up the goals.

The marketing approaches can modify accordingly. Rumack is completely


depending on the brand image of successful product Restolvic. The branding can
be widen into new product and try to keep multiple key brand products. They can

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Case Study, Rumack Pharmaceuticals

highlight other factors like quality, delivery time, availably in their sales
marketing. They can also adopt model marketing platforms like internet and
electronic media’s to boost the business. In the case of manufacturing strategies,
Rumack can first keep an eye on process arrangement. They need to analysis the
market demand and produced medicine in priority level. Proper work shift
should deploy for different type of products. The large volumes should
manufacture in single shifts so that we can reduce the setup time. Then long term
investment in machinery is good in the case of rumack because the demand curse
is steadily increasing for their product. For long term strategies like investing
machinery and expanding production process need to be decided after the market
trend analysing. They can use marketing trend analysers to forecast the upcoming
trend and demand of customers.

Conclusion

From the analysis of Rumack, the major point evolved is the relationship between
marketing and manufacturing strategies and their importance in the overall
business.

References
Adel I. El-Ansary, (2006) Marketing strategy: taxonomy and frameworks, European Business
Review Vol. 18 No. 4, 2006 pp. 266-293 q Emerald Group Publishing Limited

Brassington, F & Pettitt, S. (2002) Principles of Marketing, Prentice Hall London. [online] Source:
http://books.google.com/books?id=dBurtHQ-
iEC&lpg=PA1&ots=JcsQBOfTaz&dq=Principles%20of%20Marketing%203rd%20Edition&lr&pg=P
P6#v=onepage&q=Principles%20of%20Marketing%203rd%20Edition&f=false

Hill H Hill, (2009) Manufacturing operation, Palgrave Macmilan 3rd edition

Hill H Hill, (2009) Manufacturing operation, 1rd edition


Nigel Slack, (2007), Operations management, Pearson Education Limited, 5th edition.

Patricia terrone, (December 2006), the product profile sheet, Source: http://e-
articles.info/e/a/title/The-Product-Profile-Sheet/

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