MIP – SUMMER PROJECT REPORT

ESTIMATING MARKET POTENTIAL FOR ERP SOFTWARE IN MSME

SEGMENT OF PHARMACEUTICAL RETAIL AND WHOLESALE
INDUSTRY AND DETERMINING BUSINESS STRATEGIES FOR
DIFFERENTECH SOLUTIONS FOR EXPANSION IN SOUTH CANARA
REGION.

Differentech Solutions

Industry Guide: Mr. Kiran Sham

Submitted in partial fulfillment of the Post Graduate Diploma in Management at TAPMI,

Manipal by:

Name: Soumya Khanduri

Roll No: 17H112

Batch: 2017-19

Date: 10/7/2018

TAP MI , MANI PAL , KAR N ATA K A - 5 7 6 1 0 4

 ACKNOWLEDGMENTS

The management curriculum is designed to hone management students with the skills
required for their future endeavors. During my internship process, I was extended a warm
support by numerous people whom I would like to mention here.

Firstly, I would like to thank my project guide, Mr. Kiran SHAM, Co-founder and General
Manger Differentech Solutions for his profound mentoring and encouragement during the
project. I must say his support during the project has been a great value addition. I am also
grateful to my Co Mentor Mrs. Saumya Rao, Co-founder and Managing Director,
Differentech Solutions. I am also thankful to Prof. Shirshendu Ganguli for his constant
guidance.

I would also like to express my gratitude towards my mentors Prof. Sudeep S Kumar and
Prof. Anubhav Mishra for their guidance during course of internship and this project. In
addition, I would like to express my heartfelt gratitude to Mr. Vinay Nayak- Managing
Director of Nayak distributers, Bajpe and Mrs. Priya Rai- Ex Head Pharmacist Kasturba
Gandhi Medical College, Manipal for their valuable insights throughout project.
The role of T. A. PAI Management Institute for providing me this opportunity to learn
management by practicing is difficult to express in words.

Finally, I would like to thank all those people who have directly or indirectly provided me with
valuable insights during my project. I hope to do justice to their imparted time and
knowledge for this project.
 EXECUTIVE SUMM ARY

ESTIMATING MARKET POTENTIAL FOR ERP SOFTWARE IN MSME

SEGMENT OF PHARMACEUTICAL RETAIL AND WHOLESALE INDUSTRY AND
DETERMINING BUSINESS STRATEGIES FOR DIFFERENTECH SOLUTIONS FOR
EXPANSION IN SOUTH CANARA REGION.

Differentech Solutions

Soumya Khanduri

10/7/2018

Differentech Solutions was founded in 2012 by Mr. Kiran Sham, General Manager and Mrs.
Sowmya Rao, Managing Director in Kodialbel, Mangalore. The firm provides both
customized and plug and play Enterprise Resource Planning software to multiple business
domains like Retail Pharmacy, Retail & Wholesale – Grocery, Hardware Supplies,
Hypermarkets and Appliance Stores, Optical equipment and supplies, Apparels and
footwear, Entertainment & Recreation Clubs, Restaurants and bar under brand name
TradeAide. They also have an HRM software under brand name Paytime.

PROJECT 1- To analyse and estimate market potential of ERP software in MSME

segment in pharmaceutical retail and wholesale sector in South Canara region.

The purpose of this project is to estimate market potential of ERP software in South Canara
region in MSME segment of pharmaceutical retail and wholesale industry. This study helps
to understand the Market Differentech Solutions can capture in pharmaceutical retail
segment. This project also identifies the reasons for unwillingness to buy ERP.

The project was carried in two stages. First, Exploratory research was used to decide the
factors to evaluate the pharmaceutical retail stores and wholesalers. Secondly in Conclusive
Research Sample of 129 pharmaceutical retailers and wholesalers were collected in MSME
segment in South Canara region.

The estimated market potential for ERP software in South Canara region is approximately
30%. Then I determined the estimate budget for pharmacies willing to install local ERP and I
extrapolated this to the total number of pharmaceutical retailers and wholesalers. I found an
approximate budget of 12,240,000 for the next financial year and 21,780,000 within next 2-3
years. Cost, need not felt and low business volume emerged as top 3 reasons for not
installing ERP.

Therefore, I recommend tapping these customers who are willing to install local ERP by
designing innovative pricing like monthly subscription packages, EMI options etc. I also
recommend approaching the customers who do not feel the need for software by informing
them about benefits of ERP via brochures, pamphlets and personal interaction.

3
PROJECT 2- To develop Business strategies for Differentech Solutions in South
Canara region.

“Differentech Solutions has been catering to multiple businesses of different needs without
optimal business strategy for future expansion” Mr. Kiran Sham (Project guide)

The reason for conducting this study is to segment the customers and identify our potential
target segment. Through this project I also aim to understand our competitors in South
Canara and customers’ needs.

Project was done in 4 phases. First stage was internal analysis and external analysis.
SWOT analysis, PESTLE analysis and Porter’s 5 forces analysis were performed in this
stage. In second phase, competitors were identified and analysed by customer interaction
and extensive online research. In third phase, Customer’s analysis was performed by
qualitative technique via telephonic personal interviews with 11 customers. Finally based on
analysis, appropriate Segmentation and target population were determined.

The ERP software players are very fragmented. I identified a total of 37 players in market. I
determined 8 different factors which are crucial in buying of ERP software for customer.
Four of them have most prominent influence on buying decision. These factors are Ease of
use, speed, customization and efficient on-time service. Though this qualitative analysis, 4
customer segments were identified on 3 factors- Price, Technology and Service. Hence, I
conclude that, Differentech Solutions should target service oriented and tech-savvy
customers out of the four different segments. Firm should also position itself as high quality
on-time service provider with tailor-made ERP software customized specifically to business
needs.

As per my analysis, I made following business strategy recommendations-

1. Differentiation strategy by providing only customized solutions.

2. Related diversification in e-commerce and mobile application platforms development.

The major limitation during project was inability to communicate in Kannada and Tulu. Time
and financial resources were also constraints due to which telephonic mode of data
collection was preferred.
 TABLE OF CONTENTS

a. Acknowledgments

b. Executive Summary

c. List figures and tables

• Introduction

PROJECT 1

1. Project Objectives
2. Scope
3. Methodology
4. Analysis
5. Results
6. Limitations
7. Recommendation

PROJECT 2

1. Project Objectives
2. Scope
3. Methodology
4. Internal and External Analysis
5. Competitor Analysis
6. Competitor Analysis Recommendation
7. Customer Analysis
8. Customer Analysis Recommendation
9. Segmentation, Targeting and Positioning
10. Strategy Recommendation
11. Limitation

• Appendix
• References

5
 LIST OF FIGURES

NO. DETAIL PAGE

NU

1.1 The Taluks covered during the data collection phase. 16

1.2 Shows number wise market distribution of ERP software. 18

1.3 Shows percentage wise market distribution of ERP software. 18

1.4.1 Shows the distribution of various global ERP software as per their 20
turnover.
1.4.2 Shows the distribution of various Pan-Indian ERP software as per their 21
turnover.
1.4.3 Shows the distribution of various Local ERP software as per their turnover. 22

1.4.4 Shows the distribution of various Local ERP software as per their turnover. 23

1.5 Shows the probable time frame to install ERP 27

2.1.1 Porter’s 5 Forces Analysis for Non-Customizable solutions 41

2.1.2 Porter’s 5 Forces Analysis for Customizable solutions 41

2.2 Shows total players in the South Canara region 44

2.3 Shows market share of C-Square in total market and among Pan-Indian 45
players
 LIST OF TABLES

SN DETAIL PAGE
NU
No

1.1 The list of Pharmacies willing to install ERP with their budget and 25
probable time frame.
1.2 The pharmacies willing to install a local ERP with budget and expected 29
time frame.
2.1 SWOT Analysis of Differentech Solutions 37

2.2 PESTL Analysis of ERP, Pharmaceutical and Pharmaceutical retail and 40

wholesale industry.
2.3.1 Shows top 6 players in South Canara region. 43

2.3.2 Shows remining players in the South Canara region. 44

2.4 Shows the customer analysis 57

7
 INTRODUCTION

An Enterprise Resource Planning system is a user-interfaces information system that is

designed to support operations, material, manufacturing, sales, finance, accounting,
strategy, logistics etc. leading to better decision making for the retail stores. ERP system
integrates the functioning of all the departments in an organization or store leading to a
uniform, up-to- date, relevant and easily accessible data. Along with integrating ERP also
automates the business process from receiving the order to billing it.

The ERP implementation process according to by Marnewick and Labuschagne [1] consist
of four important aspects named as 4Ps-
1. People- The end-user organisation and its belief about ERP
2. Product- the modules that are required by organisation
3. Performance- the flow of data in business
4. Process- it represents the change management with an ERP software

Markus et al [2] formulated a process theory for ERP implementation. This theory states four
phases of implementation-

Charting phase – This is the decision-making phase where requirements are analyzed and
approval of ERP project occurs.
Project phase – In this phase, customization, data migrations and rollout etc. are carried
out.
The Shakedown Phase- System operation and user interaction initiates in this phase.
Temporary inefficiencies are dealt with retaining, bug-fixing etc.
The Onward and Upward Phase- In this stage, the organization can reap benefits of their
investment and may opt for upgradation of their software.

INDIAN MSME INDUSTRY

Micro, Small and Medium enterprise in India has about 46 million industries. 94 % of this
industry is unorganized. It accounts for 45% of industrial output and 40 % of exports. Indian
MSME industry accounts for about 8 percent of GDP and is expected to grow to 15% by
2020. The retail/ whole sellers were classified as per Micro, small and medium (MSMED)
Act, 2006. As per the classification, an enterprise with turnover less than 5 crore is
considered as a micro enterprise. An enterprise with annual turnover between 5 to 75 crores
is regarded as a small enterprise. Similarly, an enterprise with turnover between 75 to 250
crores is classified as medium enterprise.

INDIAN PHARMACEUTICAL INDUSTRY

Indian Pharmaceutical industry initiated in 1901. It is third in volume and 13th in cost
compared to global pharmaceutical industries. Today, the Indian pharmaceutical industry
accounts for 1.1 trillion-dollar industry and is expected to reach 1.5 trillion in 2022 by
revenue.
Currently Indian pharmaceutical industry is facing threat of low growth due to stringent
compliance, price regulations and less innovation.

INDIAN PHARMACEUTICAL RETAIL AND WHOLESALE INDUSTRY

India has a thriving 6 billion pharmaceutical retail industry. It is broadly classified as

unorganized, organized and online. In 2016, unorganized pharmacy had share of 94368.6
crore (84%) growing at 9%. The organized retail formed 4 % of the sales whole highest
contribution is by unorganized retail (84%). The online pharmaceutical industry is growing
rapidly and expected to reach 55 Billion by 2020.

9
 DIFFERENTECH SOLUTIONS
Founded in 2012, Differentech solutions is a complete end-to-end, Technology Solutions
Company, providing its customers with technical solutions that cater to their business needs.
It is a group of professionals with vast industry experience across business sectors such as
Retail, Energy and Utility Services, Travel and Hospitality etc. and dedicated to meeting
customers’ demands.

The key product of the company is TRADEAIDE ERP Software. The software was first
released in June 2011(this was mainly a pilot test). Following which the software has been
updated according to requirements. The first office was set up in January 2012 in MG Road,
Mangalore, Karnataka. The latest commercial version was released for sale in May 2016.

The annual growth rate for the year 2016 -2017 is a huge 75%(approx.). But it is a very
small-time interval and involved the launch year, so a steady growth rate is yet to be
identified.

The company wants to target the local market and be a key player in providing business
solutions in the area.

* Retail – Pharmacy/Medical Stores

* Retail & Wholesale – Grocery, Hardware Supplies, Hypermarkets and Appliance Stores

* Retail & Wholesale – Optical equipment and supplies

* Retail & Wholesale – Apparels and footwear

* Entertainment & Recreation Clubs, Health Clubs, Associations and Cooperative Society

* Restaurants & bar

Apart from these verticals, Differentech solutions also has a HR management module
PAYTIME which has salary management, payroll management.
Recently the company is undertaking projects of mobile applications development and e-
commerce websites for their clients as per their requirements. Differentech solutions also
has monthly pricing model for customers who do not wish to pay a hefty amount in initial
installation itself.
 SCOPE OF THE PROJECT

• Scope was limited to only selective taluks in Udupi and Dakshin Kannada due to
availability of data and the interest of project guide to expand in selective areas.

• Uttara Kannada region had to be removed from the survey because of inability to
communicate in local language and absence of database for that region.

• Doctors and private clinics were excluded due to small scale of operation and lack of
sufficient data.

11
 PROJECT 1

To analyze and estimate market potential of ERP in MSME segment in pharmaceutical retail
and wholesale sector in South Canara region.
 OBJECTIVES

• To determine the potential for ERP software in Pharmaceutical retail and Wholesale
industry in South Canara region of Karnataka.
• To understand the readiness for ERPs in Pharmaceutical retail and wholesale sector.
• To identify the reasons for not installing ERP software by the retailers and
wholesaler.
• Market share
• To estimate the IT investment in local ERP software in pharmaceutical retail within
next 2-5 years.

13
 METHODOLOGY

PART 1- MARKETING RESEACH- ESTIMATING MARKET POTENTIAL

The phase 1 (Exploratory Research)

In the Exploratory phase, personal interviews of the knowledgeable person were conducted
to understand the various parameters for evaluating the different branded ERPs. These
interviews were also important to design the questionnaire for the research process. Factors
such as types of ERPs, types and complexity of pharmaceutical retail and wholesale
industry, motivators and reasons for purchasing the ERP and difficulties faced by the
customers were determined after these interviews. The knowledgeable concerned persons
were-
1) Mr. Kiran Sham- Managing Director Differentech Solutions, Kodialbel
2) Mrs. Sowmya Kamath- Head Accountant Manaswani Nursing home, Balmatta
3) Mr Vinay Nayak- Director of Nayak distributers and Co., Bajpe
4) Mrs Priya Rai- Ex Head Pharmacist Kasturba Gandhi Medical College, Manipal

The ERPs were then classified into 5 categories-

Global ERP: The software companies whose presence and origin is in global market. The
Indian companies with global reach were also included in the same category.

Pan-Indian ERP: companies whose origin as well as market area are restricted only to India.

Local ERPs: The regional players which have their market in specific region only. Small
companies with Indian origin but limited to 2 states were also included in this category.

In‐House ERP: Those ERPs which were developed and designed by the in-house software
Team of the Pharmacies. These are generally found in corporate retail pharmacies like
Apollo and KMC.

Some local ERP: This category included the small and outdated ERP software whose
names the customer could not recall.

The parameters identified for evaluating the pharmaceutical retailers and wholesalers that
already had a software were turnover, IT budget, IT infrastructure including number of
hardware and OS, type of pharmacies and functional areas where ERP is implemented. The
pharmaceutical retailers and wholesalers that did not had an ERP system were surveyed on
readiness to implement ERP system. The parameters were time frame, budget and type of
ERP if they are planning to implement an ERP system.

Phase 2 (Descriptive Research)

Statistical the questionnaire was structured and non-disguised.

Sampling Techniques: We chose Convenience Sampling as our sampling technique.

SELECTION OF SAMPLE

A sample size of 120 was decided in consideration with the mentor at Differentech solutions.
This was decided due to –
1. Cost and time involved in data collection process
2. To maintain accuracy of data
3. Inavaibilty of exact number of pharmacies retailers and wholesaler in the south
Canara region.

FEILDWORK
The pharmaceutical distributors and wholesellers were contacted through telephonic means
especially distant areas like Suliya, Bantwal, Puttur, Udupi, Karkal, Manipal and Moodbidri.
However, in Mangalore district, areas of Kankanady, falnir, attavar, Bunts hostel, Bajpe,
Hampankatta and Kodialbel were covered through personal visit to the retailers and
wholesalers. On average 5 sample were collected in a day.

CHOICE OF DATA COLLECTION

MODE
The reason for telephonic data collection was the cost and time benefit over the personal
mode of survey in distant areas from Mangalore. However, areas within 10 kilometer radius
were personally surveyed.

PERSON
The decision maker, head or the owner of pharmacies were chosen for the telephonic
interviews. In case of unavailability of the following, the person in charge of billing and
accounting in retail/distribution outlet were selected. In case of hospital and nursing homes,
the accountant/IT department were first point of contact. This was done primarily because in
complex organization the employers are not the primary decision makers. Also, it was
identified during the research process that accounting / IT department are major influencer
for ERP software implementation in these organization.

SURVEY DESIGN
The survey was deigned to evaluate the pharmaceutical retailer and wholesaler industry on
the following parameters-
1. Size and type of business
2. Reasons for not implementing ERP
3. Readiness for ERP
4. Annual budget for ERP
5. IT infrastructure for ERP implementation

DATABASE
15
The database for contact was received from close acquaintance of the Managing Director of
Differentech solutions. Mr. Vinay Nayak, Head of Nayak pharmaceutical distributers was
kind enough to share his customers’ list for the project. He is one of the market leader in
pharmaceutical wholesale distribution in Canara region. Those contacts were refined
according to the area and relevance of the project.

REGION OF DATA COLLECTION

The following Taluks were targeted during the data collection process- Mangalore, Bantwal,
Sulia, Puttur, Baithangadi, Kasagrod, Udupi, Karkala, kundapur, Byndoor and moodbidri.

FIGURE 1.1: The Taluks covered during the data collection phase.

AREAS COVERED

South Canara region is comprised of Dakshina Kannada, Udupi and Kasagrod Taluks.
Dakshina Kannada has geographical region of 4859 sq. Km. Dakhsina Kannada has 5
taluks Bantwal, Belthangady, Mangaluru, Puttur and Sulya. Moodbidri is now a separate
taluk since march 2018 from karkal.

Udupi was created as a district in 1997. Three taluks from north Kannada were separated to
create Udupi. Udupi has following taluks- Udupi, Karkala, kundapur, Hebri, Byndoor,
bhrahamavar and kaup. Under this project only Manipal, Kundapur, Karkala and Udupi were
covered.
 ANALYSIS

DISTRIBUTION OF ERP SOFTWARE ACROSS THE PHARMACEUTICAL RETAIL AND

WHOLESALE ACROSS CANARA REGION (EXCEPT UTTARA KANNADA)

FIGURE 1.2: Shows number wise market distribution of ERP software.

FIGURE 1.3: Shows percentage wise market distribution of ERP software.

Almost 70% of the pharmacies and pharmaceutical wholeseller in MSME segment are
existing software while only 30% of this segment is non-ERP users. A detailed analysis of
this segment is presented later in this report.

17
PAN-INDIA BRANDS- On analysis the ERP software players in the pharmaceutical retail is.
A substantial 31 percent of market was dominated by the Pan-Indian players. These players
were Busy, Marg, MediBook, Retail Management Software, Vikas, Billbook, Softrends and
predominantly by Pharmsoft, Ecogreen and Pharmassist, which are products of C-Square.

LOCAL BRANDS- The local branded emerged as second key player in the market. These
players are unorganized with no single dominant market player. These players were small
local and regional players in Karnataka itself. Some of them were designed by family
members on outdated DOS software and served only basic billing purpose. Some of this
software were developed in Pune, Maharashtra and Chennai, Tamil Nadu. However, were
restricted to Karnataka and state of Maharashtra and Tamil Nadu. However, Majority of
these software are Bengaluru based and are gradually expanding their presence across
Karnataka, some of these local players were Softpro, Digiscifi, Appsys Infotech, My Pharma,
My Software, Prasad tech, Softrun etc.

GLOBAL BRANDS- Global Brands accounted for about 14 percent of market share.
Medisys, Indotech, Go frugal, Keystrokes, Tally and Connex were some of the players.
Surprisingly, the top global players of the world had very scarce presence in Market with
only one reported to be using SAP. The reason for this could be the cost associated with
implementation and distribution channel of the top global players in MSME Segment.

IN - HOUSE- Another interesting trend was observed among the corporate retail chains like
Manipal group and Apollo. These group have diverse offering in the healthcare sector. They
prefer their in-house ERP system developed by their IT–team. This software was more
holistic and was designed to cater to their entire healthcare business. E.g.- KMC Manipal’s
inhouse ERP has integrated IPD and OPD patient management system.

A major percentage of the sample falls within turnover of less than 5 crore, indicating the
presence of more micro and small turnover pharmacies in South Canara region as
compared to medium and large pharmaceutical retail/wholesale enterprises.

MARKET POTENTIAL

In future, the pharmacies which do not have an ERP are potential customer for the company
i.e. 29%.
 DISTRIBUTION OF GLOBAL ERP ON TURNOVER

Figure 1.4.1 shows the distribution of Global ERP on turnover of the pharmaceutical
retail/distribution. The percentages of type of ERP implementation when analyzed shows
that almost 75% of these pharmacies had turnover more than 1 crore. The small scaled
pharmacies, accounted for about 21% of the global ERPs.

This gives us a clear indication of turnover and its importance while selecting ERP software.
Reasons for this could be high price of the global ERP software. Also, with the software,
high customization charges accompanied by user training and annual maintenance cost are
the reasons for affordability by pharmacies with turnover more than 1 crore.

However, since most global ERP users fall within 1-5 crore ERP users which is micro
industries. So, we can conclude that despite being higher priced, micro and small industries
can afford the global ERPs.

FIGURE 1.4.1: Shows the distribution of various global ERP softwares as per their turnover.

19
 DISTRIBUTION OF PAN-INDIA ERP ON TURNOVER

The Pan-Indian ERPs have a presence across all the segments. On analyzing, we identify
that around 50 % of the pharmaceutical enterprise having turnover less than 1 crore and
micro pharmaceutical retail and wholesale accounted for almost 75 % of the pan-india
distribution.

The reasons for this could be the low-cost players in Pan-Indian market. Also, they have an
extensive market presence.
Some of the Pan-Indian players are also high-quality software with a reputed brand image.
This software are major market holders in small and medium pharmaceutical enterprises.

Figure 1.4.2- Shows the distribution of various Pan-Indian ERP software as per their
turnover.
 DITRIBUTION OF LOCAL ERP ON TURNOVER

From this figure we can clearly understand that the pharmaceutical enterprise with turnover
less than 50 crores are the users of local ERP software. 90% of them are micro enterprise
while 10% of them are small enterprise.

This indicates a relation between the turnovers of the pharmaceutical retail/wholesale with
the local ERP. Reasons for this could be the lower price of the software.

This can also be inferred that there is high awareness of ERP software in the
pharmaceutical retail and wholesale sector. However, cost is one of the deciding factor while
selecting the type of ERP for the business.

Figure 1.4.3- Shows the distribution of various Local ERP software as per their turnover.

21
 DISTRIBUTION OF NO ERP ON TURNOVER

Most of the pharmaceutical retailers that did not had an ERP software had turnover below 1
crore. Three of them had turnover between 1-5 crore. Thus, all of them were micro
industries. One of them had installed software before but switched to manual due to inability
of its staff to adapt to the ERP software.

Figure 1.4.4: Shows the distribution of various Local ERP software as per their turnover.
 IMMEDIATE POTENTIAL FOR ERP

Total of 40 pharmaceutical retail pharmacies that were in category of No ERP, 18 expressed

wishes to implement ERP in future out of which 3 expressed to install software within 6
months. 10 customer wishes to install the software within 1 year. 3 customers wished to
install software within next financial year while remaining 5 had long term plans for installing.

Figure 1.5: Shows the probable time frame to install ERP

A total of 3 pharmaceutical retailers expressed wish to install local ERP within 6 months
which is 2.3 % of the total pharmaceutical wholesale and retail stores surveyed. 10 of the
pharmaceutical retails which did not have an ERP, are willing to install local ERP in current
financial year. This is 25% of the pharmacies surveyed which did not had an existing ERP
software. Almost 45 % of retailers which did not had an ERP, are willing to install within next
2-5 years. This is 13 % of the sample.

All these pharmaceutical retailers can be our potential customers by regular follow-ups with
them.

NAME TIME-FRAME BUDGET (in thousands)

Pooja Medicals 6 months to a year 20-30
Pharm Plus 6 months to a year 10-20
Vinayaka Medicals More than two years 10-20
Shri Ganesh Medicals 1-2 year not decided
Balmatta Medicals Within 6 months 10-20
Shrinivas Medical 6 months to a year 10-20
Family Medicals More than two years 20-30
23
Shri Ram Krishna Medicals More than two years 10-20
Kohinoor Medicals. Within 6 months <10
Sesma Medicals 1-2 year 10-20
Gurudev Medicals More than two years 10-20
Balmatta Medicals 1-2 year <10
Mysore Medicals Store 6 months to a year 10-20
Plus One Medical 6 months to a year 10-20
New Medical Centre Within 6 months 20-30
Mahalaxmi Medical And
Gen Store 6 months to a year <10
National Medical More than two years need based
Mythri Medicals 6 months to a year 10-20

Table 1.1: The list of Pharmacies willing to install ERP with their budget and probable time
frame.
 FACTORS AFFECTING BUYING DECISION FOR ERP

Figure 1.5 shows the factors that affect the buying decision that affect the industry. Cost
emerged as the main factor that influences buying of ERP by the Pharmaceutical Retail
Industries. Another major actor is lack of need for the automated ERP system over manual
billing and filing system.

Finally, the economic slowdown affecting business is another reason for customers delaying
their buying decision.

A detailed analysis of these factors was attempted to understand these factors-

HIGH COST

About 22% of the surveyed percentage reported unaffordability of these software as major
challenge to buying a software. These consumers fail to see ROI in implementing an ERP in
short run. Also, implementing an ERP has multiple costs over years-

• Instalment cost
• Annual Maintenance charges
• User training charges
• Hardware cost
• On-site Servicing charges (variable)
• Updatation charges (variable)

As per the information collected from personal interviews, the other costs involved apart
from the installation cost makes an ERP unaffordable to the customers. One of the
interviewee mentioned the high attrition rate among the pharmacist

NEED NOT FELT

Almost 20 percent of the respondent believe that they do not need an ERP in their stores.
Reason for this as stated during the personal interaction were-

• Exemption from GST filing- Since turnover of these pharmaceutical retail outlets are
less than 20 lakhs, they do not have to file tax and therefore the standard accounting
practices are not strictly followed.

• Accountant employed- Most of these stores had part-time accountant employed.

These accountants were also close acquaintances of the store-owner. These
accountant handled their billing and tax filing and therefore they never needed
software despite installing software was a cheaper alternative.

25
 • Accustomed to manual billing- Few retail store owners and their staff were
accustomed to manual billing and feels that software billing is sophisticated and
difficult.

LOW BUISNESS VOLUME

Low business volume and reduced turnover further increases unaffordability of software to
the pharmacies with a smaller turnover. GST and demonetization has affected these small-
scale businesses. Also, lot of commercial retail chains and online pharmacies are emerging
in urban areas of Mangalore leading to increase in competition among the pharmacies
leading to low business volume.

Figure 1.5: Shows reasons for not installing ERP by the respondents
 RESULTS

QUANTIFYING MARKET POTENTIAL

The data collected for quantifying the market potential for local ERP in MSME segment in
pharmaceutical retail and wholesale industry was as follows-

1. Type of software they are willing to implement. Only the retail stores that wished to
implement local ERP were considered for quantification of market potential.
2. The approximate time frame for implementation.
3. The approximate budget they have decided to install and ERP software.

An average investment of individual pharmaceutical retail stores was considered for the
pharmaceutical retail stores that wished to install a local ERP software.

The Assistant Drug Controller of Mangalore circle, Mr. Ramakant Kunte was contacted to
determine the number of pharmaceutical retail and wholesale industry in MSME sector in
south Canara region. According to him, the South Canara region except Udupi district is
divided into 2 circles-

• Mangalore Circle 1 has total of 403 registered pharmaceutical retailers and

wholesalers. 172 of these are wholesalers, 24 restricted and remaining are retailers.
• Mangalore circle 2 has total of 430 registered pharmaceutical retailing and whole
selling industries. 112 of them are wholesalers and rest are retailers.
• Udupi- district had total of 466 registered pharmaceutical and wholesalers. Further
detail could not be obtained.

Therefore, a total of approximately, 1299 registered MSME pharmaceutical retail and

wholesale industries are present in South Canara. For ease of calculation 1300 is instead
used for calculation purpose.

27
NAME TIME-FRAME BUDGET (in
thousands)
Pooja medicals 6 months to a year 20-30
Pharm Plus 6 months to a year 10-20
Balmatta medicals Within 6 months 10-20
Shrinivas medical 6 months to a year 10-20
Shri ram krishna medicals More than two years 10-20
KOHINOOR MEDICALS. Within 6 months <10
MYSORE MEDICALS STORE 6 months to a year 10-20
Sesma Medicals 1-2 year 10-20
New medical centre Within 6 months 20-30
Mahalaxmi medical and gen store 6 months to a year <10
NATIONAL MEDICAL 6 months to a year Need based
Shri Ram Krishna Medicals More than two years 10-20
TABLE 1.2: The pharmacies willing to install a local ERP with budget and expected time
frame.

Total expected investment within current financial year- 1, 35,000

Assuming this sample to be good representation of the population, potential for Differentech
solutions is within next financial year when extrapolated to population of 1300 is-

(9/129)*1300 = 12,240,000

Total expected investment within 2-5 years- 1, 80,000

Assuming this sample to be good representation of the population, potential for Differentech
solutions is within next 2-5 years when extrapolated to population of 1300 is-
(12/129) *1300= 21,780,000

Percentage of potential pharmacies for current year= 7%

Percentage of potential pharmacies for next year= 2%
 RECOMMENDATIONS

1. Almost 30 percent of market which are not currently using a software can be tapped
as future potential for the Differentech solutions by effective marketing strategies.
However, if we estimate the immediate potential, it is only 7.5 % which is very low
and only 2 percent of existing market. Within next 2-5 years pharmaceutical retail
stores that do not currently own a software but are willing to install a local ERP
software is about 30 percent. This is about 9.3 percent of existing market.
2. Cost emerged as major barrier for pharmaceutical retail stores inability to afford
software. Therefore, innovative pricing like monthly subscription packages, EMI
options and other modes of financial aids can be explored by Differentech solutions.
3. A lot of pharmaceutical retail stores do not realise the requirement for software in
their stores. These stores can be explained about the benefits of ERP software and
its advantages over manual billing. Those retailers planning to up-scale their
businesses in coming years can be regularly updated by brochures, packages
information.
4. Billing was the main functional area where customers were looking for software. This
was also evident from fact that retailer is not familiar with word ‘ERP’, however, while
surveying when the term ‘ERP’ was instead replaced with billing software, the
respondent would understand. This also gives an insight of the limited understanding
of the users of functionality of an ERP software. Therefore, Differentech should
emphasise on the billing features of the software while marketing.

29
 PROJECT 2

To determine Business strategies for Differentech solutions in South Canara region for
expansion.
 OBJECTIVES

• To establish marketing strategy for Differentech solutions based on analysis.

• To identify the key players of ERPs in Pharmaceutical retail and Wholesale in South
Canara region.
• To perform Competitor analysis and customer analysis for the competitors of
Differentech solutions in pharmaceutical retail and wholesale sector in South Canara
region.
• To perform internal and external analysis for Differentech Solutions.
• To understand the customer segments and determine the firm’s target segment.

31
 METHODOLOGY

The process of determining the potential business strategies for Differentech Solutions was
conducted in four steps.

PHASE 1- INTERNAL AND EXTERNAL ANALYSIS

These analyses were performed after discussion with Mr. Kiran Sham, Co-founder and
general manager, Differentech Solutions, Mangalore and Mrs. Sowmya Rao, Co-founder
and Managing director Differentech Solutions, Mangalore. Two employees of the firm, Ms.
Rajita Rao and Mr. Dinesh Kulal were also encouraged to express their opinion for the
matrix.

• INTERNAL ANALYSIS

The internal analysis for Differentech solutions is analyzed on two matrixes.

SWOT- A detailed analysis of strengths, weakness, opportunities and threats of Differentech

solutions is performed to identify organization’s capabilities and the disadvantages. Internal
analysis is also important to understand the areas of improvement for organization to attain
strategic fit with its objectives.

• EXTERNAL ANALYSIS

PESTLE- The political, economic, social technological and legal aspects of the
pharmaceutical industry, pharmaceutical retail and wholesale segment and the ERP industry
were analyzed. The recent trends in these industries were also analyzed. This was done to
understand the threats and opportunities that a firm faces in the external environment in
which it operates.

PORTER’S 5 FORCES ANALYSIS

This tool was used to identify the threats faced by firms. The Porter’s 5 forces model the
following variables were examined in the ERP industry.
1. Threat of new entrant- threat of new entrant depends on the cost of entry into the
industry. This in turn is dependent on the barriers to entry. There are four different
types of barriers to entry a) economies of scale b) product differentiation c) cost
advantages and d) government regulations.
2. Threat of substitute- substitute are those products that satisfy the customers need as
our products. It reduces profit of industry as customers replace the product with
substitute.
3. Bargaining power of supplier- suppliers provide critical assets required for
manufacturing of the product. It can become a threat if the supplier’s industry has
small firms within. It is also a threat if what they supply is unique, differentiated and
not replaceable by substitutes.
 4. Bargaining power of buyer- Buyer’s power is influential if there are limited number of
buyers. It also increases if the product is undifferentiated and of standard quality.
5. Internal rivalry- greater competition in market signifies reduction in profit by the
industries. It also faces threat of intense advertising and rapid reactions such as
price-cuts.

PHASE 2- COMPETITOR ANALYSIS

IDENTIFYING COMPETITORS- The competitors were identified in the project 1. The

competitors whose ERP software was installed in more than 3 pharmaceuticals were the
major competitors.

EVALUATING THE COMPETITORS- Strengths and weakness of competitors- direct

interaction with the users. Website visit. Distributers were also contacted.
Following questions were asked to the users of the software to analyze the competitor.
These questions were asked during the initial data collection process.

What are features of your existing software that you like the most?
What are the difficulties are you facing with the software?
What is the annual cost you are paying for the software?
Are you planning to switch to another software? If yes, why?

PHASE 3- CUSTOMER ANALYSIYS

A detailed qualitative customer analysis was done with sample of 12 respondents to

understand the hidden motivators, segments, unmet needs and the pain-points of the
customers with the existing software. The questionnaire was subjective and open-ended
where the respondents could express themselves. Following questions were asked to
analyze the information

Why do you need an ERP?

What are the most important factors you look for when buying an ERP?
How much important are following factors for you- Price, Technology and Service?
Which ERP ARE YOU USING RIGHT NOW?
What are some issues you are facing with the software?
Were you using any software before?
If yes, why did you changed?
How much price are you willing to pay for an ERP?

SELECTION OF RESPONDENTS

Respondents were selected on basis of their responsibility in the firm. The decision maker
for the buying of software or the user of the software were contacted as they could provide
detailed insights of the software. Following persons were contacted-
33
PHASE 4- DESIGNING BUSINESS STRATEGY BASED ON ANALYSIS

Market Segmentation divides the customers in market in well-defined parameters. Based on

the personal interviews conducted in Project 1, following 3 variables were identified
important to customers-
• Price
• Technology
• Service

The respondents were asked following questions-to understand their buying behavior. 11
respondents were selected through persona contacts and customers of Mr. Kiran Sham.

The questions asked to the respondents were as followed

What are the most important factors you look for when buying an ERP?
How much important are following factors for you- Price, Technology and Service?
 INTERNAL AND EXTERNAL ANALYSIS
SWOT- Differentech Solutions
STRENGTHS
1. Organisational structure and culture –
horizontal structure. This makes
organization Flexible and Quick to
adapt to the external environment.
The lag between decision making and
its implementation is less as
compared to large organization.
2. Existing Customers base- Differentech
has very reputed customers including
Mr. Nayak, market leader in
pharmaceutical distribution and Mr.
Riyaaz, Owner Burkha fashion, one of
the leading fashion retail store in
Mangalore. The customers are also
loyal since attrition rate is zero.
3. Human resources- Experienced and
skilled employees.
4. Customization on demand- The firm
has established itself as Software
Company that provides customised
features on demand on customers on
the existing modules. Some features
were extensively designed for the
customers
5. Local support- Differentech solutions
is known for delivering its local
support in Kannada since most of the
customers in the region are not either
Hindi or English speaking. Whereas,
the Pan-Indian firms do not
necessarily deliver its services in
Kannada for South Canara.
6. Perceived as easy to use software-
The software is relatively simple and
so not have complicated features like
the global brands. Therefore, the
customers who are digitally illiterate
can also use the software.
35
WEAKNESS
1. Workforce- the workforce is less both
developing team and support staff.
Due to lack of development team
workforce, company has delayed
projects leading to losing the customer
and dissatisfaction. This also leads to
customer questioning commitment to
deliver on-time service by company.
2. Distribution channel is not well-
developed- Currently the distribution
channel is mostly by word of mouth
through existing customers. Other
distribution channels like direct selling,
distributer model is not well
developed.
3. Experience in Marketing and brand
building- Marketing Team dedicated
for marketing and selling is not yet
established in the company.
Therefore, the marketing strategy is
explicitly outlined.
4. Lack of brand image- The firm despite
6 years of its functioning, is not a well-
known brand name in Mangalore with
poor band awareness among the
clients.
5. Priced in mid- priced segment- The
price of software by company is not
fixed. Also, the pricing is more than
low-cost players but less as compared
to our pan-Indian competitors.
.
 OPPORTUNITY THREATS
1. Mangalore growth- Mangalore is the 1. Mangalore location- Tier 2 city-
fastest growing IT hub It has access to Mangalore is developing due to
ports which are primary drivers of Industrial development but the
import and export in the area. The talukas around, Suliya, Bantwal,
industrial and SEZ areas around Puttur, Moodbidri are slow to develop.
Mangalore are expected to boost 2. Bangalore is a more preferred area of
economy of region in longer run. investment by the capitalist
Mangalore is ranked as 13th best city 3. Economy slowdown- Post GST and
to do business and 2nd best in demonetization lot of pharmaceutical
Karnataka. retail and wholesale industries had
2. Educational Hub- It is emerging as incurred losses.
Educational Hub especially Udupi and 4. Stringent pharmaceutical regulations-
Manipal. Drug manufacturing has to undergo
3. Promotion of digital India by the compliance in US and Europe. In
government will promote ERP India, Central Drugs Standard Control
software- Organization (CDSCO) and National
4. E- commerce - Online Pharmaceutical Pricing Authority
pharmaceuticals. (NPPA) and other regulatory bodies
5. GST - During the survey collection keeps check on pharmaceutical retail
GST, tax e-filing compliance emerged and wholesales
as one of the reason for the clients to
install software.
6. Pharmaceutical sector growth in India

TABLE 2.1- SWOT Analysis of Differentech Solutions

 EXTERNAL ANALYSIS

Indian Pharmaceutical industry is about 2.5% of global pharmaceutical industry. It is

expected to reach USD 55 billion by 2020. Indian pharmaceutical industry is driven by
generics sharing almost 70 percent of Indian pharmaceutical and 20 percent of world
pharmaceutical market. The global retail pharmaceutical market is estimated to be 683
billion out of which 280 billion is the rest of world except USA, Europe and Japan
(report:2015). Pharmaceutical wholesale and distribution is expected to be USD 1292 billion
by 2019.

POLITICAL • JAN – AUSHDHI KENDRA- this was UPA government’s

scheme which was relaunched by Modi government as
Pradhan Mantri Jan Aushadhi Pariyojna. Under this scheme,
600+generic medicines and 154 surgical and consumables are
available at affordable prices. So far more than 3000 such
retail outlets are present in India. The pharmacist is
incentivized from 1.5 lakh to 2.5 lakhs for setting up these retail
stores. Therefore, the number of pharmaceutical retail stores
are expected to increase in few years.

• FDI- Modi government has approved 100% FDI in

pharmaceutical green field project and 74 % in brownfield
project.

• There is pressure on government for universal health coverage

across the globe. This will increase the global expenditure on
pharmaceutical making it accessible to middle and lower
income population as well.

ECONOMICAL • GST and demonetization led to an impeding effect

on pharmaceutical retail and distribution industry. The reason
for this this is destocking of stock by the pharmacist who were
sceptical of selling drugs post GST. Although, businesses
recovered but some micro and small retailers are still affected
by the economic and cash slowdown post GST.

• As per ICRA report, long term prospect of growth

are healthy and about 7-10 percent of growth is expected by
2020 over 2018 due to ramped up R&D and opportunities in
developed market.
• There is slowdown in the R & D in discovery of new drug
molecule. Also, there is pressure on developed countries to
reduce expenditure on health further decreasing cost of

37
 pharma.

SOCIAL • Ageing population in developed countries and chronic

diseases like hypertension, cancer and diabetes will continue
to create need for pharmaceutical drugs. Due to changing
lifestyle, anti-diabetic and cardiac drugs will drive growth.
• Increase in awareness about health in people is leading to
increase in expenditure in pharmaceutical industries.

TECHNOLOGICAL • SAAS based software. The current traditional desktop based

software are predicted to be archaic in coming few years with
technological advancement. SAP, ORACLE, MICROSOFT and
other major global players have already switched to Cloud
based ERP software.

• Also, e-commerce portal, website development, mobile

application and other means to enhance the web presence will
be the focus of the future pharmaceutical retail and wholesale
outlets. So, a software that can provide with them these
features might be preferred over traditional software.

• There is a trend towards automation in industry to make the

process of stock, inventory, vendor management more
automated than manual.

• Retail pharmacy start-ups- 60 new online pharmaceutical start-

ups have emerged in last 2 years. This is 18-billion-dollar
market right now and is expected to reach 55 billion by 2020.
These retail start-ups will reduce the dependence on brick and
mortar pharmacies.

LEGAL • The new GST taxation regime has simplified the taxation for
the pharmaceutical industry for both state and national Tax.
However, there are volatile changes in the Tax structure and e-
filing. This will promote ERP software.

• The domestic pharmaceutical industry is facing heat of price

control due to changing regulations, increasing usage of
generics, increased competition and lack of R & D in new drug
development.

• Increased regulatory measures in USA on pharmaceutical

increasing pricing pressure for Indian pharmaceutical
companies.
 • Indian exports of bulk drugs are growing at CAGR of 13%. This
segment’s growth is accounted by 43% export growth and 17%
in domestic market as per Crisil report.

• Patent expiry will lead to 300bn generic market.

TABLE 2.2- PESTL Analysis of ERP, Pharmaceutical and Pharmaceutical retail and
wholesale industry.

39
 PORTER’S 5 FORCES ANALYSIS

Porter’s 5 forces analysis was performed for two types of software based on customization-

1. NON-CUSTOMIZABLE SOFTWARE
THREAT OF NEW ENTRANT
5

BARGAINING POWER OF 2
THREAT OF SUBSTITUTE
BUYER
1

BARGAINING POWER OF
INTERNAL RIVALRY
SUPPLIER

FIGURE 2.1.1 – Porter’s 5 Forces Analysis for Non-Customizable solutions

2. CUSTOMIZED SOFTWARE

FIGURE 2.1.2 – Porter’s 5 Forces analysis for customizable solutions

The bargaining power of supplier increases and bargaining power of buyer decreases in ac
customizable software due to high level of technological skill requirement and a strong
technical team required to develop the customized software. Internal rivalry also decreases
because there are limited players who can deliver the customizes solutions in the market.
 COMPETITOR ANALYSIS

A total of 37 players were identified in the market after the survey as shown in figure 2.2.
TOP 6 PLAYERS in the South Canara region- the players who had market share above 3.5
% percent were assumed to be the top players because of fragmented market share among
the players.

BRAND NAME COMPANY CLASSIFICATION MARKET SHARE

Pharmsoft C-Square Pan- India 7%
Busy Busy infotech Pan-India 4.5%
Pharmassist C- square Pan-India 4.5%
Softech Softech Erp solutions pvt. Ltd. Pan-India 3.8%
Eco green C-square Pan-India 3.8%
Indotech Indotech K.K Global 3.8%
TABLE 2.3.1: Shows top 6 players in South Canara region.

These top 6 players have 41% of the market share. Company C-square is major player with
its 3 brands Pharms soft, Pharm assist and Eco green.

OTHER PLAYERS

BRAND NAME COMPANY CLASSIFICATION

Adisap SAP Global
Apsys Infotech Apsys Global Technologies Global
Backbone Asota Software Technologies Global
Bharthi Bharathi Software Pvt Ltd Local
Billbook Billbook Global
Connex NSG Medicare Global
Digiscifi Digiscifi Technologies Local
Go Frugal Go Frugal Technologies Pan-Indian
Indomain Indomain Technologies Pvt Limited Pan –Indian
Keystroke Specialized business solutions Global
Marg 9+ Marg Pan-India
Medibook Medibook Global
Medisys Medisys Global
Meditech Meditech Global
My Pharma Some local Local
My Software Some local Local
Nodes Unidentified Local
Pharma-Needs Unidentified Local
Pharmatrade Spine Software System Pan-Indian
41
 Prasad Tech Software Unidentified Local
Retail Management Ginesys Technologies Pan-Indian
Software
Robo Unidentified Local
Softpro Softpro India Pan-India
Softrends Softrends solutions Pan-India
Softrun Unidentified Local
Tally Tally Solutions Global
Tradeaide Differentech Solutions Local
Vikas Hospital ERP Systems Pan-India
Wipro Wipro Technologies Global
TABLE 2.3.2: Shows remining players in the South Canara region.

FIGURE 2.2: Shows total players in the South Canara region

 DETAILED ANALYSIS OF SOME SOFTWARE COMPANIES

C-SQUARE- (PHARMASSIST and PHARMSOFT, Eco green)

It is a Bangalore based company. It has extensive Pan-Indian presence with over 35000
customers and 1200+ features. It has 8 software solutions tailor-made for the
pharmaceutical sector.

BUISNESS STRATEGY- FOCUSED

C-SQUARE has its products focused only on the pharmaceutical industry. It has software for
almost all the verticals of Pharmaceutical industry.

SFA 360O – drug marketing companies, GO4PLUS- C&F – operations in drug

manufacturing unit, Pharm Assist- distributors, Eco green- retail chains, Pharm
soft- single retail stores and Touch store- online retail business.

FIGURE 2.3: Shows market share of C-Square in total market and among Pan-Indian
players

STRENGHTS
• Relatively high market presence- C-
square comprises of 23.60 % of the
surveyed pharmaceutical wholesalers
and retailers. Among Pan-Indian players
C-square as a firm has more than half of
the market share.
• Brand Image- Perceived as having a
high-quality brand image
• Loyal and reputed customer base-
Radha medicals and Ganesh medicals,
the market leaders in the
WEAKNESS
•
• Slow to adapt to external changes like
GST.
• Expensive software- starts at 29500,
affordable to high end customers only
• Customization is expensive and time
consuming.
• Despite their emphasis on customer
service, customers are unsatisfied with
their service pace and quality.
• In case of hardware crash, the software
fails to maintain a backup leading to loss

43
 pharmaceutical retail in Dakshin
Kannada and Udupi region are their
clients. Also Nayak distributer the
market leader in pharmaceutical
distribution in this region is one of their
clients. Their clientele also includes
AIIMS, Alkem, FrankRoss, Practo,
Punjab Sindh, Narayana Hridualaya etc.
• Innovative and a step-ahead features -
direct purchase through software, home
delivery and direct download features.
• Emphasis on customer service – online
ticket raises and service within 46 hours.
• Business knowledge and excellent
technical skills
of data.
• No synchronization b/w pharm assist
and Eco green (Mr. Shetty- Radha
medicals). Example- buy in bulks from
pharm assist but while selling difficult to
disintegrate in strips. Also, system
sometimes shows different prices for
same product.
• It has lot of unwanted additional features
which customer should buy as part of
the entire package.

KEYSTROKE

U.S.A/Canada based company. Its parent company is Specialized Business Solutions. It has
3 software modules-

Keystroke Express POS Software - basic, entry-level point of sale software (can be
upgraded to Keystroke Advanced POS anytime).

Keystroke Advanced POS Software - high-end point of sale software with all the bells &
whistles.

Digital Sign Controller - full featured digital signage software (compatible with both
Express POS and Advanced POS).

BUSINESS STRATEGY- Dealer cum service model.

STRENGTHS
• Established Market name and
brand
• Local authorized Dealership model
of distribution- training and
customer service by dealers
• Easy download feature from
website.
• Easy and simple to use and
WEAKNESS
• Expensive software – minimum
starts from 52,000 INR and offers
discount for renewal next year
• Works only on windows
• Pay per call charges in case of
customer support requirement.
• As per website- On site consulting
 understand and training- The standard rate for
• Online updates from websites SBS on-site services is $1000 per
day also the cost of transportation
is borne by the customers
• Difficult to sell directly apart from
dealer
• Non- customizable solutions

BUSY

Busy Infotech is sister organization of Digitronic InfoSolutions. It was established in 1997 in

New Delhi. BUSY has about 2,00,000 installation all over India and sold widely though its
channel partners.

BUSINESS STRATEGY- Low Cost Player

STRENGTHS WEAKNESS
• Low cost player (basic-6400, • Customizable features and
standard-12,000 and 17,600 for packages- third party vendor
single user) customization is bit expensive
• First mover advantage after GST • Not exclusively designed for
• Competitive features like- Import to pharmaceutical industry.
excel feature and download trail. • Multi user expensive (30,000
• Web Based Reporting Through Your standard and 44,000 enterprise)
PC / Mobile / Tablet • Support quality and time is very poor
• Partnership model for distribution- since they have a decentralized
these channel partner are software distribution model.
firms which provide implementation, • It is still new and inexperienced to the
training and support to users. southern Market however, substantial
• Boost of local customer support by presence is in north India.
the partner which is free.
• Office in Mangalore and local support
in Karnataka
• Immediately download, no charges
• Like tally they have busy academy,
where they provide certified busy
accountant training.

45
 MARG

The company was established in 1992 and has established itself in around 500 cities in
India. It has software for about 21 different business verticals and about 800+support staff.

BUSINESS STRATEGY- Low-cost player

STRENGTHS
• Has software for eRetail Application
• Integrated SMS and email alerts
• Extensive social media presence
• Constant updating of software
• Online download and ordering
feature-
• Festive and group discounts
• Margcare- emphasis on 24*7 service
• Ticket management system- you can
raise ticket online and track the
status of your ticket and Claims to
have 800+ sales and support system
WEAKNESS
• LOW cost player
• Diversified business
• Quick to adapt
• Poor service quality
• Less knowledge of southern market
• Non- customizable and unwanted
features
 SOFTECH

It is a Kolkata based IT company that promises to provide one-stop solutions for all IT needs
of the customers. It was established in 2013 and serving Pan- India. It has diversified
services in IT industry. It provides services like website designing and maintenance, SEO,
Web Hosting, Graphic design and e-commerce.

BUSINESS STRATEGY- Related diversification

STRENGHTS
• Customizable solutions
• Pan-India market reach
• Diversified IT services
• Exploring market Opportunity and
trends
• Market Growth
WEAKNESS
• Customer base is unknown
• Base Pricing is not transparent –
reasons could be level of
customization. As not packages are
fixed packages provides. Some
customers have reported paying
16,000 AMC while some as low as
2,000.

47
 RECOMMENDATION

1. Dealership/ partnership model- Dealer satisfaction.

2. Target geographies that are developing at fast pace or look for areas where a
hospital or medical college is being established. In these areas, the pharmacies tend
to cluster quickly. Here, a software dealer or trained partner channel can be set-up
for these areas.
3. E-commerce development- C-square touch store already focusing on the e-
commerce development.
4. Mobile application development- Marg has already ventured into space of mobile
retail application.
5. Service quality and time of delivery- Busy and Marg are unpopular for their delay in
service and quality of service since their expansion is through third party distributers.
6. Quick in Customization- C-Square lost much of its market share due to delay in
delivering the GST module and charging hefty for it.
7. Online download features- A trail based e-downloading feature can be provided on
website so that users can get familiar with the software. However, this pose a
challenge of competitor screening our features.
 CUSTOMER ANALYSIS

In-depth interviews were directed at determining the user motivation and the unmet needs of
the customers of ERP software.

CUSTOMER MOTIVATIONS

By the detailed analysis of customer motivation insights on following were obtained-

Which feature or service customer value the most was determined.

Understanding customer objectives and the reason for buying
What are different segments of customers?
And, what are key drivers of their motivation to buy software?

Following insights were determined

1. Easy to use software- A portion of Healthcare workers in Karnataka are not computer
illiterate. Also, in traditional pharmacies and stores where the older generation is still
employed, are not comfortable with the software. So, the software should be easy to
understand and use. The process should not be complex and should be completed
in 2-3 steps.

2. Patient/ customer satisfaction- Ms. Priya, Ex head pharmacist, KMC manipal,

mentioned that price is always secondary in healthcare business. So, the primary
focus of software should be to reduce the turnaround time. Also, as per NABH
guidelines in hospitals, 5 min of TAT is desirable. The entire experience of buying a
medicine is very frustrating for patient and their relatives as this is the last stop after
the entire process. Similarly, for diseased person buying medicine can be a
depressing process. So, the entire process should be standardized and systematic
for the ease of patient.

3. Regular updates and new features- Few local emerging competitors are updating
their features constantly as per the changes. Also, few global and Pan-Indian
companies lost their market due to delay in adapting to the changes in External
environment like GST. Few ERP companies were quick to update and captured the
market.

4. On demand customization- every customer has specific needs and the software
should be tailor-made to cater to their needs. For example, a customer wanted a
customer loyalty points system to boost their sales. The software which delivered this
feature to them was their preference for the ERP.

5. Software should be fast and accurate- During peak hours many patients are to be
addressed by a pharmacist at same time. So, software should be fast to enable them
49
 to bill with least number of steps. Loading issues and hanging of system are other
issues faced by the pharmacist. Pharmacies along with billing need accurate
accounting of the stock, inventory, vendor delivery, and taxation. The software
should be reliable to ensure, they don’t have to hire accountant to maintain their
monthly ledgers.

6. Government regulations and taxation- Government has stringent regulation on

medicine distribution. To comply with those regulation in a large-scale operation in
not possible without a ERP software. Also, the tax calculation on large scale
operation is easier with a software.

7. Save time and money- Along with easier business process, ERP software reduces
the dependence on accountant for accounting purpose.

UNMET NEEDS

This analysis was done to understand the reasons for dissatisfaction among the users of
software. It also aimed at understanding the unmet needs of the users that they are aware
of.

1. SUPPORT- support should be real-time. Absence of timely and unsatisfactory

support was one of the major reason for the interviewed persons to switch their
existing software. Also, the implementation post-support should be within a week’s
duration.

2. Only tailor- made features- Few software tends to provide unnecessary features to
the customers as part of package and had to pay extra for those features.

3. Customized Features should be profitable to them- The Customizable features

should provide immediate benefit to the business. Also, the cost involved for that
additional features should be realised in short-term itself. (Mr. Chetan Shenoy)

4. Remembering shortcuts- One of the interviewed person pointed out problem faced
by her in learning the codes for processing quickly. As per her, it took her time and
practice to memorise them.

5. Accounting standards- different pharmacies follow different accounting standards.

FiFo is one important feature where, the medicines which are expiring first should be
billed first.

6. Tracking of product and employees- Reduce misuse by employees in large

organisation in absence of the employer.
7. Customer centric services- There is disconnect between the IT developers and the
service team. The solutions designed should be customer oriented and not as per
service team.

8. Price sensitive- Customers on lower end of the turnover spectrum tend to be highly
sensitive than rest.

51
 RECOMMENDATIONS

1. Quick and easy to use software- Market TradeAide as fast and quick software with
easy to remember shortcuts. We can handout a shortcut pamphlet or sickies to make
it easier for people to remember.
2. Customized solutions- provide only tailormade necessary features as specifies by
customer and price software as per that requirement only.
3. Excellent Support Service- Differentech solutions can increase its manpower or
outsource the service staff so that the support is delivered on time.
4. Brand as cost and time saver- Differentech branding should specifically mention that
their software, TradeAide saves time as it is quick and had added advantages over
manual billing. It also saves cost of accountant and the Bribery the pharmacies the
government officials demanded for discrepancies in the accounting.
5. Package software with advance features- Features like ecommerce and mobile
application features should be marketed by Differentech as their competencies.
Employees can be trained for these skills. Additionally, tracking of stocks, inventory,
SMS integration etc. can also be included
PHASE 4- DETERMING BUSINESS STRATEGY BASED ON ANALYSIS

SEGMENTATION

The segmentation was done based on personal interviews that were conducted during
customer analysis. The respondents were asked which factors were most important to them
for buying an ERP software. Then, they were asked to express importance of following for
buying a software-

1. Price
2. Service
3. Technological orientation

These parameters were then analyzed on a qualitative scale of high, medium and low i.e.
highly important, moderately important and least important.

NAME PHARMACY/ IMPORTANT ISSUES RELATIVE

ORG FEATURES IMPORTANCE
PRICE SERVICE TECH

MR. Nayak Convenient Staff training

Vinaya Distributers Customization Computer Low high
Nayak Time to knowledge in high
customize employee
Mr. Shri support support High high low
Surya Bhagwthi regular updates
Shetty medicals e.g. GST
Easy billing
Payment
details
Mr. Radha Update Billing mismatch Low high high
Jairam Medicals Avoid misuse No
Rai by employee synchronization
Inventory b/w two different
maintenance software
Cash handling Bulk breaking
Customer oriented
services

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 Mr Alfa Cost-effective Time for complaint High low low
Sanvo Pharmacy Complaint resolution
resolution
Different billing
guidelines

Mrs. Manasawani Easy to use Complex process medium high low

Sowmya Medicals software for And user interface
Kamath computer- Slow systems
Remark illiterate
(Ease of employee
use) cost

Ms. Jan Fast Poor service medium high low

Leona Sanjeevni Convenient to Hanging of system
D’souza Generic drug use Losing data due to
store system crash

Mrs. KMC Patient Remembering Low high high

Priya Manipal satisfaction shortcuts
(ex- FIFO (Remark-
pharmacist) accounting Price is secondary
Reduce TAT in H.C.)
Easy data
access
Maintain
patient
confidentiality

Mrs. Easy bazaar Simple and - Low medium high

Varsha supermarket easy
Kamath Smooth
handling
Customize-
customer point
system
Catalogue
Features
 Mr. Ganesh Taxation rules Slow to deliver High low low
Vinay medical Employee customization
Rai monitor in
absence
No need of
accountant
Calculation
ease

Mr. Prathana Service- no Software Took high high low

Pawan enterprise extra charges time
Shenoy Customization To be friendly
HSN code

Mr. Deepa Ease of GST upgradation High low Low

Chetan Super shop operation
Shenoy Stock
management
Accuracy
Track product
barcode
Mr Burkha Online Employee use High High Low
Riyaaz Fashion presence
Management of
6 warehouses

TABLE 2.4: Shows the customer analysis

NOTE:
• Customers who have rated high in both service and technology are classified as
tech-savvy customers
• Relative high importance to price means customer do not want to invest in ERP
software.

The following customer segments can be derived from the following analysis-

Segment 1 Segment 2 Segment 3 Segment 4

ECONOMY BARGAINER SERVICE TECH- SAVY

ORIENTED
Price High High Medium Low
Service Low High High Medium/high
Technology low low Low/medium High
TABLE 2.5: Shows customer segment from analysis in Table 2.4.

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ECONOMY CUSTOMER- These are price sensitive customers and are seeking only basic
billing and accounting features. These customers consider price as most important factor for
their buying behavior.

BARGAINERS- This segment are sensitive to price and demand high level of service. In
case the service provided by the company is unacceptable to them, they’ll switch to another
software. They have a general complaint about poor quality of service.

SERVICE ORIENTED CUSTOMERS- this customer segment is willing to pay extra price for
timely service and support. They are moderately technologically oriented and seek some
customization for features of their choice.

TECHNO-SAVY CUSTOMERS- These are customers that are seeking exclusively tailor-
made software. Next generation of educated businessmen who are taking over businesses
from family. They are updated with the technology and watch out for new innovations &
trends for their business.
 TARGET SEGMENT

SERVICE ORIENTED CUSTOMERS

GOLD and STANDARD plans of Differentech Solutions are software with basic features.
These features are already available with Differentech Solutions and hence with few module
addition and subtraction can be delivered to customer as per their needs. The main
emphasis of these module is to deliver real time service. This can be delivered directly by
the company or by the distributer channel.

TECHNO-SAVY CUSTOMERS

ULTIMATE and ENTERPRISE plans are highly customized plans. These plans are highly
customized and tailor-made plans. They should be delivered after IT consultation of
company and understanding its specific requirements.

POSITIONING

After analyzing the customer and competitors, it would be beneficial to position ourselves as
an ERP firm that provides customized tailored- made solutions and best in class service at
competitive prices.

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 STRATEGY RECOMMENDED

STRATEGY 1- DIFFERENCIATION

Customized business consulting for ERP software. Providing the solutions which are highly
customized after understanding the requirements of company. These services will be
expensive than the standard services with in-depth detailing and client interaction.

GENERATE CUSTOMER VALUE

Position ourselves as not just a Software company but someone adding value to their
business.
Important touchpoints to focus on- word of mouth, advertising, service and delivery and an
efficient customer support.

Dealership and partnership model of expansion- provide dealers with commission and
incentives to promote our software. Ideal locations would be Udupi, Manipal, Puttur and
Moodbidri.

Periodic customer insights and visits

PROVIDE PERCIEVED VALUE

Really quick in providing customization- partnership with software firms where we can
outsource our customization at a share from the revenue generated.

Service within promised time- Outsource services for distant locations.

Train Partner firms to deliver services
Distributers to also provide services which can be incentivized by Differentech solutions.

Regular monthly follow ups with existing customer to deliver post purchase experience.
Periodic feedbacks can also be taken by the company to reduce customer attrition and
deliver better experience.

UNIQUE SOLUTIONS

Easy and simple processing

Only tailor-made solutions which are specific to the requirements of clients

STRATEGY 2- RELATED DIVERSIFICATION

Differentech has trained and skilled developer team and established as software developers
in Mangalore. There is trend towards E-commerce and technology upgradation by
consumers.
Therefore, I recommend Diversification into customized E-commerce portal, website
development and mobile application development services apart from ERP software.
To achieve this specific employee training can be provided by the Differentech solutions.
Also, it can outsource it to a IT firm well-established in this area

59
 LIMITATIONS

• Inability to communicate in Kannada and Tulu were drawbacks during data

collection.

• Scope was limited to only selective taluks in Udupi and Dakshin Kannada due to
availability of data and the interest of project guide to expand in selective areas only

• The competitor analysis is only done for few competitors to attain in-depth
knowledge.

• Due to time and financial constraints data was collected via phone than physical
mode.
 ANNEXURE

QUESTIONNARE FOR MARKETING POTENTIAL

COMPANY INFORMATION

Q1) Name of Pharma retail/wholesale store

Q2) turnover of pharma retail store/ company?

Q3) what type of pharmacy is it?

Indoor pharmacy in hospital

Outdoor pharmacy in hospital

Retail pharmacy

Wholesale pharmacy

Industrial pharmacy

Q4) which type of retail store is it?

Franchise

Independent

Chain

IT infrastructure of Pharmacy

Q5) What all hardwares are you using?

1. Personal Computers 2. Servers

Numbers- Numbers-

Configuration- Configuration-

Any other details-

61
Q6) Operating system in use?

DOS/LINUX/WINDOWS- /any other-

ERP STATUS

Q7) Are you using any software for your pharmacy store?

Yes- No-

Q4(IF YES) What software application (ERP) are you currently using?

Name-

Global/Pan-Indian/Local/Inhouse

Q6) since how many years/months are you using this software?

1-6 months 6 months- 1 year 1 year- 2years

2-5 years More than 5 years

NO ERP QUESTIONNARE

Q1) Do you plan to implement ERP in near future?

Yes No

Q2) In what time frame are you planning to implement?

Within 6 months 6 months to a year

1-2 years More than two years (why?)

Never

Q3) Reasons for not using ERP? (TICK ALL POSSIBLE)

a. No Computer in the store b. Not aware about it.

c. Do not trust computer billing d. Technology illiterate

e. Additional Cost f. need not felt g. Other

Q4) approximate budget to allocate to ERP? It cost

<10k

10-20k

20-30k

30-40k

>40k

Q6) What type of ERP are you planning to install?

Global

Pan-Indian

Local

Inhouse

Not sure

MARKET INFORMATION

COMPETITORS- MARKET LEADER-

CONTACT PERSON- DESIGNATION-

PHONE NUMBER-

63
 CUSTOMER ANALYSIS QUESTIONNARE

Why do you need an ERP?

What are the most important factors you look for when buying an ERP?
How much important are following factors for you- Price, Technology and Service?
Which ERP are you using now?
What are some issues you are facing with the software?
Were you using any software before?
If yes, why did you changed?
How much price are you willing to pay for an ERP?
 REFRENCES

1. Carl Marnewick1, Les Labuschagne2. (April 2005). A conceptual model for enterprise
resource planning (ERP). Retrieved from: https://www.researchgate.net
2. M. L Markus. (December 2000). Learning from Adopters' Experiences with ERP:
Problems Encountered and Success Achieved. Retrieved from:
https://www.researchgate.net.
3. Rana Basu, Manik Das, Pranab Dan, Parijat Upadhyay. (2012). An approach to
identify issues affecting ERP implementation in Indian SMES, Retrieved from:
Journal of Industrial Engineering and Management.
4. Jay B. Barney, William S. Hesterly. (2005). Strategic Management and Competitive
Advantage 4 edition.
5. Satyabhushan Dash, Naresh K. Malhotra. (2005). Marketing Research: An Applied
Orientation 7th Edition.

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