OVERVIEW OF HETERO VIETNAM
The background of Hetero
Hetero, a prominent generic pharmaceutical company in India, stands as the world's largest producer of anti-retroviral drugs With over 27 years of experience in the pharmaceutical sector, Hetero specializes in various strategic business areas, including Active Pharmaceutical Ingredients, Generics, Biosimilars, Custom Pharmaceutical Services, and Branded Generics.
Hetero Representative Office Vietnam was established in 2017 in Ho Chi Minh City to support the expansion of Hetero's business in Vietnam The office supplies a wide range of therapeutic categories, including HIV/AIDS, cardiovascular, neurology, and urology, to hospitals, pharmacies, and local pharmaceutical companies.
Hetero is establishing itself as a market leader by offering high-quality products at reasonable prices, while promoting the core values of knowledge, quality focus, dynamism, and responsibility This approach aims to shift the perception of Indian products and demonstrate their excellence.
The head of Hetero Vietnam is Country Manager with Sales Forces is core human resources, organizational structure was shown in Figure (1)
The sales performance analysis distinguishes between two channels: tender and private The tender channel involves sales through hospitals via social insurance, while the private channel encompasses non-tender sales through pharmacies, clinics, or pharmaceutical companies, allowing patients to pay directly This research does not address the tender channel, as the strategy primarily emphasizes competitive pricing to secure bids, highlighting the disadvantage of imported products due to their higher costs compared to local alternatives, which hinders Hetero's competitiveness Instead, the focus will be on private channels, aligning with Hetero's goal of developing and expanding its business in this sector.
The context of problems
Hetero Vietnam, a newcomer in the market, is focused on expanding its business by shifting its attention from competitive tenders to the private market, where profit margins are higher The Vietnamese government has implemented a new Joint Circular in 2015 aimed at promoting local products and reducing reliance on imports, leading to a significant decrease in imported goods from 17.14% in 2013 to 6.51% in 2018, while local products surged from 15.61% to 33.89% during the same period In light of these developments, Hetero Vietnam is strategically prioritizing growth in the private market, particularly within the pharmacy sector, to capitalize on these favorable trends.
This research specifically examines the marketing and sales aspects of Hetero Vietnam, concentrating on the Sife-100 products, which have maintained stable stock levels compared to other products that face stock shortages.
SYMPTOMPS
The decline of customers
Since early 2020, Hetero Vietnam has concentrated on boosting sales and expanding its pharmacy network, with a significant focus on its flagship product, Sife-100, which contains 100mg of Sildenafil An initial analysis of sales data from 2019 indicates a strong performance in this sector.
2020 in Ho Chi Minh City (HCMC), the main symptom can impact to sales performance of Sife-100 is the decline of customers
In 2019, a total of 97 pharmacies purchased Sife-100, but this number dropped to 42 in 2020, despite 32 new pharmacies acquiring the product Consequently, 87 pharmacies ceased to carry Sife-100 (Table 1) The customer churn rate for Sife-100 was calculated by dividing the number of customers lost in 2020 by the total number of customers at the beginning of that year, resulting in a high churn rate of 90% This indicates significant challenges for Hetero as it attempts to establish a foothold in the market.
Table (1) Number of new pharmacy and pharmacy made one order
According to Kotler and Armstrong, customer loyalty is economically beneficial, as loyal customers not only spend more but also remain with a company longer; retaining an existing customer is five times cheaper than acquiring a new one The advantages of customer retention include increased profits, enhanced word-of-mouth referrals, easier opportunities for up-selling and cross-selling, improved communication, and a greater likelihood of forgiveness from loyal customers Consequently, despite the significant investment in acquiring customers, those who are satisfied are more likely to reorder and share positive experiences, while others may leave and forget the company.
9 to the other customers, it significantly impacts to brand equity and sales performance of organization
Hetero invests significantly in promotions and campaigns to attract new customers; however, the loss of these customers leads to substantial financial setbacks and undermines the sales team's efforts to engage them This situation resembles a leaky bucket, where new customers continuously flow in only to exit through the leaks.
Symptom Validating
In 2019 and 2020, the customer churn rate (CCR) in HCMC was notably higher compared to other regions benefiting from Sife-100, indicating a significant impact on the company's business performance.
Table (2) Customer churn rate in region
Interview Ms Loan – B2B & B2C Business Development Manager:
In 2020, we experienced a significant loss of customers compared to 2019, which is reflected in the declining number of pharmacies Despite our efforts to establish a dedicated team for brand building, we are unfortunately trending towards losing all the customers we previously acquired.
Hetero, as a newcomer in the market, is experiencing a decline in customers, which negatively affects their reputation and may deter potential clients This situation not only raises customer acquisition costs but also poses challenges for business expansion Therefore, addressing the customer decline in Ho Chi Minh City is a critical issue that Hetero must resolve to ensure future growth.
The analysis what is the problems cause the decline of customers will be explored in the next steps
PROBLEM IDENTIFICATION
Potential Problems
Training employees to be knowledgeable and friendly enhances customer satisfaction by effectively addressing shopping inquiries Identifying and managing the causes of customer attrition, alongside understanding competitor strategies, is essential for retaining customers Interviews with the sales team and pharmacies revealed that aggressive promotion schemes lead to stock clearance challenges for pharmacies, while competitive pressure hampers Hetero's ability to reach customers despite multiple promotions Additionally, coaching sessions highlighted weaknesses in the sales team's skills, knowledge, and customer engagement strategies Consequently, three key issues contributing to the decline in Sife-100 customers are ineffective sales promotions, a lack of competitive advantages, and underperforming sales personnel.
According to Philip Kotler and Kevin Keller, trade promotion aims to encourage retailers to stock new products, increase inventory, make advance purchases, and enhance product visibility on shelves Additionally, business promotion focuses on generating leads, boosting sales, rewarding customers, and motivating sales teams.
Sife-100 faces stiff competition in pharmacies, as many customers specifically request rival products, prompting pharmacists to prioritize these items due to their higher stock levels Established competitors dominate the market, offering a wide range of essential products, which pressures pharmacies to purchase combo deals for better pricing, leaving Sife-100 at a disadvantage Additionally, the current low stock of Sife-100 in pharmacies means there is little urgency to sell it to customers If competitors enhance their promotions, Sife-100 risks being overlooked Furthermore, there is a lack of loyalty customers in Ho Chi Minh City, contrasting with the growing numbers in other regions Building customer loyalty is crucial for business success, as it fosters a strong relationship between customers and brands, ultimately driving repeat patronage and long-term marketing effectiveness.
As interview with Mr Bao – Pharmacy:
Dai Bac Company offers a wide range of products and encourages customers to purchase combos that include both essential and new items at a better price As a result, I find myself opting for these combos, which limits my ability to support Sife-100 further.
The current decline in sales promotions is hindering pharmacies from effectively driving sales and managing inventory, which may result in losing existing customers.
3.1.2 Weak in creating the competitive advantages
In today's competitive marketplace, merely understanding customers is insufficient for survival; companies must gain competitive advantages to engage customers effectively and outperform rivals While Majera and Adagrin are recognized as the primary competitors, Sife-100 currently lacks a strategic approach to compete against them, relying solely on lower prices as its main advantage.
As interview with Ms Phu – Area Sales Manager of HCMC:
The primary competitors in the market are Majera and Adagrin, which have established a significant market presence over the years Their products are widely available in pharmacies, and customers frequently request them by name.
Effective management requires the identification, selection, and implementation of robust business strategies A failure to conduct thorough competitor analysis results in a passive market response and diminishes long-term advantages Consequently, Sife-100's inability to establish strong competitive advantages makes it vulnerable to customer attrition.
Sales representatives are vital to a company's success, particularly in the pharmaceutical industry, where they engage in prospecting, communication, selling, and relationship building Due to strict regulations on marketing medicines, pharmaceutical companies must rely heavily on their sales force to effectively promote products by directly engaging with doctors and pharmacists An ineffective sales force can significantly hinder marketing strategies and lead to failed campaigns According to Kotler and Armstrong, the success of the Salesforce app highlights the necessity for a strong sales force to effectively market and sell such innovative solutions.
A study involving 90 doctors revealed that 48.2% of them acknowledged that their prescribing decisions were influenced by visits from medical representatives While physicians recognize the impact of these interactions, they still value the engagement with medical representatives due to the benefits of receiving scientific literature and sponsorship This highlights the significance of frequent visits from sales representatives in the healthcare sector.
13 pharmacy are low, an internal report through an application showed 80-90% of two in three sales people in HCM have wrong location when do a report call at pharmacies
As interview with Ms Hoa – Pharmacy:
“I have ordered Sife-100 long time ago from a tall boy, sometimes he comes to ask for the stock and then leave”
As interview with Mr Bao – Pharmacy:
“It’s been a long time I didn’t see any medical representative come to take care and introduce the products”
A recent group interview with the sales team in Ho Chi Minh City revealed that numerous pharmacies have independently ordered Sife-100, while others placed their orders through sales representatives from the distribution network.
The preliminary cause-effect tree
With three potential problems as above, the preliminary cause-effect tree was showed in the figure (2)
Ms Phu, Area Sales Manager in HCMC, highlights the challenges faced by pharmacies due to a significant promotion scheme that requires extended time to sell products, while they also manage other items with similar indications Customers' loyalty to brands like Majera and Adagrin complicates the transition to new products, despite price advantages The high inventory levels in pharmacies lead to slow sales, resulting in delayed reordering Additionally, competitors exert pressure on pharmacies to prioritize their products, reducing customer spending on Sife-100 Unlike the Mekong and North regions, where 33 and 26 pharmacies participated in a loyalty program in Q1 2021, HCMC lacks such incentives, further impacting sales.
Figure (2) Preliminary cause-effect tree
An interview with Mr Bao – Pharmacy:
Erectile dysfunction products have limited demand in this area, primarily serving a small group of familiar customers When approached, I recommend various options, while some clients specifically request a product they have previously used The interest in Sife-100 is notably low, requiring me to actively consult and encourage potential users to consider it.
Mr Bao emphasizes the vital role of pharmacists in recommending Sife-100 to customers, highlighting that a strong relationship with pharmacists ensures Sife-100 remains a top priority for patients.
Interviews with customers in the database revealed that at least five pharmacies had never purchased the product, indicating that the sales team may have generated fictitious orders This finding was corroborated by statements from the sales personnel.
As interview with Mr Vipul:
Not frequently go to visit customers
Weak in sales promotion to push sales in pharmacy
Low liquidation of stock in pharmacy
Marketing promotion cannot be delivered to customers
Weak in creating the competitive advantages
Pharmacy don’t have any pressure to sell product
None of pharmacies have sales commitment per quarter
Sales representatives should engage in comprehensive calls at pharmacies, not merely presenting product quotations By effectively introducing products and providing professional information, they can better persuade pharmacists to support their offerings.
Sales representatives in HCM struggled to respond when pharmacies reported that Sife-100 was ineffective for patients, highlighting a significant gap in their ability to handle objections despite prior training This lack of confidence and product knowledge was further evidenced during a joint visit with the Product Manager from the marketing department, who observed firsthand the difficulties salespeople faced in effectively communicating product information to pharmacies.
An interview with Ms Loan – B2B & B2C Business Development:
“HCMC Team’s responsibility have to develop retail business but they just only sell Sife-
100 to wholesaler with low price, I have many complaints from pharmaceutical company that our staffs offer the lower price than the price I’m offering to them”
Pharmacy revenue typically falls short of that of pharmaceutical companies, prompting sales representatives to focus on driving sales through competitive pricing to meet targets and earn incentives, rather than approaching individual pharmacies.
Problem Validating
In the pharmaceutical industry, medical representatives serve as vital links between companies and their customers, facilitating product promotion and information dissemination Their role involves not only selling medical products to healthcare professionals like doctors, nurses, and pharmacists but also gathering valuable feedback from these stakeholders By increasing product awareness, addressing inquiries, and providing consultations, medical representatives enhance customer engagement Personal selling is particularly crucial for companies with complex products, as it highlights key features and addresses customer demands When objections arise, skilled salespeople leverage their expertise to overcome resistance and persuade customers to make purchases, ultimately fostering long-term relationships.
Effective personal selling is essential for building strong customer relationships and addressing issues like weak sales promotions that lead to low stock liquidation Despite numerous promotions from the marketing department, ineffective sales personnel hinder customer engagement and persuasion Additionally, the lack of competitive advantages is a significant challenge, particularly as competitors hold substantial market shares, limiting opportunities for business growth Although Sife-100 was introduced before Hetero Vietnam's establishment in 2017, the current sales force struggles to explore and implement strategies effectively Sales representatives play a pivotal role in the relationship marketing approach, bridging the gap between the company and its customers, and are crucial for developing, maintaining, and expanding these vital customer connections.
Because of that, after discuss with the company, the main problem was chosen is
“ineffective in sales people” have significantly influenced to the decline of customers
As interview with Mr Vipul:
To effectively expand our business in the extensive HCM area, it is essential to build a strong team with diverse skills Recruiting additional sales personnel is crucial, as relying on only three individuals is insufficient to cover all territories.
The detailed analysis will be explored in the next steps to figure out this problem.
CAUSE ANALYSIS
Potential Causes
4.1.1 Lack of sales force structure
The structure of the sales force significantly impacts salespeople by outlining the necessary skills and capabilities for success, determining managerial relationships, and shaping interactions between salespeople and their managers Hetero Vietnam currently offers fifteen products, as detailed in Table (4), with the sales force structure of the HCM team illustrated in Figure (3) However, the absence of a well-defined sales force structure has led to a situation where individual salespeople are responsible for all products across various channels During the growth phase, as the product portfolio expands and the customer base increases, salespeople may struggle to manage their workload effectively, often resulting in the neglect of current customers and products in favor of easier tasks The introduction of major new products can benefit from a specialized sales force, ensuring comprehensive coverage for both new offerings and the existing product line.
Salespeople tasked with responsibilities beyond their capacity struggle to achieve desired results for their companies Organizations offering complex products across diverse markets need a sales bandwidth that far exceeds what a single salesperson can handle When a salesperson must comprehend a vast and intricate product and service portfolio or juggle multiple selling tasks for various customer segments with unique needs, their effectiveness inevitably declines.
Group/Channel Number of products Tender Clinics Pharmacy Wholesalers
Figure (3) Ho Chi Minh’s Sales Force Structure
As interview with Mr Viet”
To optimize our sales strategy, I propose dividing the team into two specialized groups: the OTC team, which will concentrate solely on private channel sales, and the ETC team, dedicated to managing hospital tender channels This separation will allow each team to focus on their specific areas, enhancing overall performance and effectiveness.
“If you build an equivalent promotion for all channel, the salesperson just only sells products into the big pharmaceutical company to grab the incentive”
All that show the situation of lacking salesforce structure can create a mess of workload, unclearly objectives, and low motivation have impacted to effective sales force
4.1.2 Lack of personal selling training
An effective sales training program equips the sales force with essential knowledge about potential customers, including their needs, buying motives, and habits It also covers the complete selling process and prepares salespeople to understand and compete against rival products or services Additionally, training should align sales personnel with the company’s objectives, products, and strategies The training content can be organized into four key sessions: product knowledge, company insights, customer relationship building, and competitive analysis.
Salespeople in Human Capital Management (HCM) often struggle with a lack of understanding regarding their company's objectives and strategies, which negatively impacts their ability to assess and build relationships with potential customers This gap in knowledge leads to low motivation among sales teams Effective sales training is essential for enhancing sales force performance and fostering a customer-oriented approach.
(19), so the sales training program can significantly impact to salesperson to improve his/her performance
A successful sales training program should emphasize the importance of conducting a comprehensive sales call Salespeople must learn to evaluate potential customers effectively, approach them strategically, and build strong relationships It is essential for them to master the art of delivering a full sales call that not only conveys product information but also persuades customers beyond merely presenting a price quote.
Performance appraisal is a vital process that involves establishing work standards, evaluating employee performance, and providing feedback to enhance motivation and improvement It is essential for effective performance management, aligning with company goals, and addressing deficiencies while reinforcing strengths This process also allows for a comprehensive review of an employee's career, identifying their training and development needs Without proper performance appraisal, as seen in Hetero, sales teams may become complacent, lacking clarity on performance targets, and supervisors may struggle to provide necessary coaching and feedback Consequently, the identification of training needs to enhance employee performance is often overlooked.
20 control the result of organizational direction and drives sales team into the right objectives of the company, the lacking of performance appraisal will significantly impact to Hetero’s objectives
Ms Phu, the Area Sales Manager for HCM, notes that the sales value in the pharmacy sector is quite low Her strategy focuses on expanding into tender hospitals and partnering with wholesalers to distribute products to various pharmacies However, this approach contradicts the overall direction set by Hetero Vietnam.
Causes and effect tree
As the main problem is ineffective in sales people, the causes and effect tree was developed as the root causes in Figure (4)
Figure (4) The causes and effect tree
Causes Justification
Today's sales force must go beyond mere selling; they need to effectively assess and diagnose customer problems while proposing tailored solutions that enhance overall satisfaction and performance.
Lack of sales force structure
Lack of personal selling training
- Not focus to all of products
- Tend to skip the problem solutions
- Cannot assess and approach customers
No confident to meet customers
- Cannot identify clearly performance targets
- Cannot reinforce what salesperson is missing
21 the customer’s profitability (11) Ineffective sales people make the company face to the executed marketing effort and relationship building can fail (21)
During the start-up phase, smart companies must decide between relying on third parties for sales or investing in their own sales force As the business develops, accurately sizing the sales force becomes crucial In the maturity phase, the focus shifts to enhancing sales force efficiency by appointing key managers, reallocating resources, and optimizing costs by utilizing less expensive personnel.
Training and development enhance sales performance and productivity by providing management, selling, and mentoring training These initiatives reduce employee turnover, foster a positive company culture, and align with organizational objectives Additionally, they address employee weaknesses, leading to greater job satisfaction, while learning programs facilitate the development of essential skills.
Performance appraisals significantly enhance salesperson productivity and benefit the entire company by clarifying each salesperson's role and contributions They facilitate the development of sales staff through constructive feedback, enabling individuals to recognize their strengths and weaknesses in customer interactions and career progression Additionally, performance appraisals serve as a motivational tool by offering rewards for high performance Furthermore, they assist organizations in determining the best fit for each salesperson's position, identifying those who require improvement, may need job transfers, or, in some cases, face termination.
In a competitive market, Hetero must establish a robust sales force to effectively address market demands The absence of a structured sales force has led to an overload, preventing focus on specific products and customer segments Furthermore, the lack of performance appraisal and training hinders the ability to assess and identify areas for improvement, which negatively impacts Hetero's business performance While the disorganization of the sales force is a primary concern, enhancing performance appraisal and personal selling training is essential for driving growth and addressing these challenges.
Hetero Vietnam recognizes that the development of its current and future staff, particularly within its sales force structure, is crucial to organizational success The company is currently facing challenges due to ineffective sales personnel, which can be attributed to deficiencies in the sales force structure To address these issues, it is essential to enhance personal selling training and performance appraisal processes simultaneously.
Ms Loan, a representative in B2B and B2C Business Development, announced that the company is expanding its sales team in Ho Chi Minh City by hiring more salespeople, who will be assigned to smaller territories and specialized customer categories This strategic shift aims to enhance focus on specific customer needs Additionally, Ms Loan highlighted the absence of a performance appraisal system, which currently hinders the evaluation and assessment of sales staff performance.
Mr Vipul, the Country Manager, announced plans to recruit additional salespeople to drive business growth; however, challenges in selecting the right candidates persist To enhance sales skills and product knowledge, it is essential to implement monthly or quarterly personal selling training sessions that address the current deficiencies of the sales team.
Lack of sales force structure
The decline of pharmacies in HCMC
Customers don’t feel satisfy with company
Cannot expand business by cross- selling the other products
Cannot handle competitors The marketing promotion cannot be delivered to customers
ALTERNATIVE SOLUTIONS
The solution for lack of sales force structure: Restructuring sales force
Sales force management involves the comprehensive processes of analyzing, planning, implementing, and controlling sales activities This includes developing effective strategies and structures for the sales force, along with essential tasks such as recruiting, selecting, training, compensating, monitoring, and evaluating sales personnel within the organization.
The success of a company hinges on its capability to attract and maintain customers, guided by a well-defined sales strategy that targets specific customer segments and tailors product offerings accordingly Key elements in designing an effective sales force include its structure, size, and deployment, all of which must align with the overall business strategy shaped by customer needs and competitive dynamics.
For companies with a diverse range of complex products and various customer types, implementing a product and customer sales force structure is essential This approach allows the sales team to specialize in specific product lines and customer segments, utilizing a workload strategy to determine the optimal size of the sales force.
The sales force structure in Ho Chi Minh City can be effectively designed by considering the unique features of each channel, the categories of products, the targeted products, and the various types of customers.
(5) While tender and clinics channel will focus on doctors with complex products, pharmacy and wholesaler will focus on pharmacists with popular products
After design the sales force structure, Hetero can implement the plan as managing the sales force with these steps (3):
- Recruiting and selecting sales representatives
Figure (5) New sales force structure
The solution for lack of personal selling training: Organize training course
Employee training and development is a crucial motivator that helps individuals and organizations achieve both short-term and long-term goals It enhances knowledge, skills, and attitudes while offering significant benefits such as increased employee morale, confidence, and motivation Additionally, effective training reduces production costs by minimizing waste, promotes a safer work environment, and decreases employee turnover and absenteeism It also fosters greater employee involvement in change processes by equipping them with the necessary competencies to adapt to new challenges Furthermore, training opens opportunities for salary increases and promotions, while simultaneously improving the overall capacity and quality of the organization's human resources Ultimately, targeted training can significantly boost staff performance and productivity.
1 PS Tender + Clinics Main product:
1 PS Pharmacy + Wholesaler Main products: Sife, Antihistamine, Antibiotic
1 PS Pharmacy + Wholesaler Main products: Sife, Antihistamine, Antibiotic
1 PS Tender + Clinics Main product:
B2B & B2C Business Development National Sales Manager
25 and ensure that they have relevant skills (27) The employer should use a rational training process: analysis – design – develop – implement –evaluate (ADDIE), the process as follows (24):
- Design the overall training program
- Develop the course (actually assembling/ creating the training materials)
- Implement training, by actually training the targeted employee group using methods such as on-the-job or online training
Conducting a training needs survey is essential for identifying skills gaps and ensuring that employee competencies align with organizational updates and performance evaluations Companies should develop a comprehensive training program that outlines clear objectives, effective delivery methods, and robust evaluation processes to enhance employee skills and overall performance.
Hetero aims to enhance the professionalism of its salespeople by focusing on product knowledge, objection handling, and aligning with the firm's goals, ultimately improving their attitudes Effective salespeople possess a broader understanding of customer types and selling strategies compared to their less effective counterparts To ensure success, each salesperson must undergo practice before engaging with real customers, as lack of preparation can lead to significant issues This practice can incorporate behavior modeling, a training technique that involves showing trainees effective management techniques through video demonstrations, role-playing in simulated scenarios, and receiving constructive feedback and praise from supervisors.
The solution for lack of the performance appraisal: Establish and develop
The performance appraisal contains three steps: (i) setting work standards, (ii) assessing the employee’s actual performance relative to those standards, (iii) and providing feedback
Formal performance appraisals serve three essential purposes: establishing a judgment system for salary increments, promotions, transfers, demotions, or terminations; informing employees about their performance and guiding improvements in behaviors, attitudes, knowledge, or skills to align with company objectives; and providing a foundation for employee training and development Developing a goal-oriented appraisal system begins with assessing organizational goals, which allows for the identification of compatible appraisal features The process culminates in designing and implementing an appraisal system that aligns with the key objectives of all stakeholders The initial step in performance management involves setting performance standards based on goals, job dimensions or traits, and competencies Research suggests four guidelines for effective goal-setting: assigning specific, measurable, challenging yet achievable goals, and encouraging employee participation Job dimensions may include quality, quantity, communication, and teamwork, while competencies are assessed through employees' skills, knowledge, and personal behaviors.
Alternative solutions
5.4.1 Set solution 1: Personal selling training every quarter combine with establishing and developing performance appraisal
Personal selling training and performance appraisal are essential tools for evaluating and enhancing salesperson effectiveness By integrating these approaches, organizations can boost employees' understanding of job and organizational objectives, refine customer interaction skills, and identify areas for improvement This synergy not only helps in pinpointing training needs but also enables organizations to align their goals, enhance overall performance, and drive success.
Implementing this solution can enhance productivity and lower employee turnover rates without affecting the financial plan or organizational structure Additionally, it offers cost-saving advantages by allowing the company to conduct online training and manage performance appraisals internally.
5.4.2 Set solution 2: Restructuring sales force combine with personal selling training associate with establish and develop performance appraisal
To enhance the performance appraisal system at Hetero Vietnam, it is essential to implement training courses that assess and develop both current and future employees This comprehensive approach is crucial for evaluating employee performance and aligning it with the company's objectives Additionally, improving the sales force structure is vital for positively impacting the overall business, as it supports the company's strategy, which is shaped by customer needs and influenced by competitors and the business environment Therefore, all proposed solutions must be executed simultaneously to address the underlying issues effectively.
Evaluating solutions
To evaluate the solutions, based on theories and context of company, there are advantages and disadvantages are shown as below:
- Maximize the human resource to increase productivity
- Make salesperson more confident with strong product knowledge
- Equip for salesperson the skills to develop career’s path
- Helping salesperson to fulfill their deficiencies
- Reduce the employee turnover rate
- Building the training program to meet the training needs
- It’s hard to provide positive influence to listeners
- Helping organization drive sales forces in the right direction
- Identify the strengths and weaknesses need to be improved
- Providing the feedback for employees to improve themselves
- Evaluate the organizational objectives are on the right direction or not
- Improve employee capability and develop them more
- Make employees satisfy and motivate with their job through admit their efforts by having a plan for promotion or increasing salary
- To identify weaknesses and training needs
- Providing the objective scale to evaluate employees
- Allocate employees in right position
- It’s hard to design the clearly performance objective
- Some indicators cannot be measured
- The same advantaged as set solution 1 and;
- More focus on categories of product
- More concentrate to particular customers
- More concentrate to particular channel
- Easy to control the sales performance
- Increase the employee’s capabilities through particular customers or products
- Align small sales team’s objectives to organizational objectives
- Build strong relationship with customers
- The same as set solution 1 and;
- Increase bias when dividing products (potential and moderate products)
- Increase the wages and salaries
- Difficult to recruit suitable person
- Need time to fulfill salesperson
Solution Justification
After consideration some advantages and disadvantages with organizational key stakeholders, Hetero with strong financial capability can apply three solutions including
To enhance the effectiveness of sales personnel, Hetero will implement a comprehensive action plan that includes restructuring the sales force, organizing quarterly training courses, and developing a robust performance appraisal system These initiatives are crucial for improving organizational performance, as the restructuring of the sales force will have a significant impact on business outcomes By focusing on personal selling training and performance evaluation, Hetero aims to address the current challenges faced by its sales team and drive overall success.
The detailed action plan including timelines, estimated cost, how to action and department who are in charge will be implemented step by step and listed in the next part.
ACTION PLAN
Objective
To effectively implement the solution, a comprehensive action plan will be created, detailing timelines, estimated costs, and responsible individuals The restructuring of the sales force focuses on recruiting and selecting salespeople, a process expected to take three months from June to September Training for the new recruits will commence in September, alongside the reallocation of sales personnel Additionally, the analysis of personal selling training and the establishment of performance appraisals will begin in early June and continue throughout the organization These strategic activities aim to enhance Hetero's operations and significantly boost the capability and productivity of its sales team.
Timelines and estimated cost
Solution Activities Person in charge
Recruiting: Workforce planning and forecasting
Selecting sales representative HR, NSM x x x
Define training's needs CM, NSM,
Design the training program Marketing,
Develop the course (training materials) Marketing,
Establish and develop performance appraisal
Setting work standard CM, NSM, HR, Marketing x x None
Assessing the performance relative to standard
The objective of recruiting is selecting one Area Sales Manager and two Sales
To establish an effective sales force structure, companies should begin with workforce planning to identify and fill key positions This involves forecasting the availability of external candidates through various channels such as online platforms, advertising, and recruitment agencies Utilizing screening tools like interviews and tests is essential for selecting the right employees, as careful selection enhances organizational performance, minimizes dysfunctional behaviors, and lowers employee turnover rates, ultimately leading to significant cost savings.
Organizing personal selling training with these steps (24,40):
- Analyzing training needs: what are the skills, knowledge, or attitude that employee need to improve or adapt the job’s requirement
Effective training course planning and design involves several key steps: defining clear training objectives, selecting the most appropriate delivery method, and determining necessary staffing and support Additionally, it is essential to choose suitable media, develop relevant content, and identify evaluation tools to assess learner progress Preparing learners for the course and organizing the training sequence are also crucial to ensure a successful learning experience.
- Developing the training: assembling course outlines, session plans, learner materials, audio-visual aids, evaluation sheets
- Delivering the training: Facilitating, motivating, inspiring, leading, coordinating, managing and evaluating
Establishing and developing performance appraisal include (24):
- Setting work’s standard: defining goals, job dimension or traits, competencies
Evaluating an employee's performance against established standards involves selecting appropriate appraisers, such as peers, rating committees, or subordinates, and utilizing various appraisal methods These methods include the graphic rating scale, alternation ranking, paired comparison, forced distribution, critical incident, behaviorally anchored rating scale, and management by objectives Each approach offers unique insights into employee performance, ensuring a comprehensive assessment process.
CONCLUSION
In Ho Chi Minh City, the customer base for Sife-100 has drastically decreased from 97 pharmacies in 2019 to just 42 in 2020, resulting in a staggering customer churn rate of 90% An analysis combining both theoretical and practical perspectives was performed to identify the underlying issues, revealing that the primary problem lies in the ineffectiveness of current strategies.
Hetero, a new player in the pharmaceutical market, is grappling with challenges stemming from ineffective salespeople, which jeopardize brand equity and increase customer acquisition costs Key issues include a lack of sales force structure, insufficient personal selling training, and inadequate performance appraisal systems To address these deficiencies and enhance business performance, Hetero aims to restructure its sales force, implement comprehensive personal training programs, and establish robust performance appraisal mechanisms These strategic solutions are designed to foster a more professional environment and strengthen the company’s resources for future growth.
SUPPORTING INFORMATION
The analysis employed qualitative methods, including in-depth interviews and desk research, alongside quantitative research to gather both primary and secondary data for a comprehensive exploration of the issues and their underlying causes Theories related to key stakeholder perspectives were also utilized to validate the identified symptoms, problems, causes, and potential alternative solutions.
Ms Loan Nguyen – B2B & B2C Business Development
Ms Phu Pham – Area Sales Manager HCMC
Interview 1: Mr Vipul – Country Manager
1 Could you please introduce about yourself?
Hi, I’m Vipul, I’m in charge of whole Hetero’s business in Vietnam, both sales and marketing
2 Could you please to tell me about the company?
Hetero, a branded-generic pharmaceutical company founded in India in 1992, established its presence in Vietnam in late 2017 Despite being relatively new in the market, Hetero has achieved significant success and emerged as a leader in supplying anti-retroviral medications globally The company offers a diverse range of high-quality products at competitive prices As Hetero continues to expand its operations in Vietnam, it is committed to delivering value to patients and enhancing healthcare access.
3 With the head office’s objective is expanding business in private channel, what do you think about the private’s performance right now?
Hetero Vietnam is prioritizing B2C operations over B2B, with the representative office tasked primarily with developing a robust B2C business, particularly through private channels, as tender processes become increasingly challenging I will oversee the B2B sector, but our main focus must be on enhancing B2C sales, as current sales achievements are not meeting expectations.
In the 34th quarter, sales performance among representatives has been notably low, with the sales team primarily concentrating on tenders and pharmaceutical companies, neglecting private channels This lack of focus has resulted in stagnant growth for 2020, both in terms of sales value and quantity.
4 What do you think about the Sife-100’s performance?
In 2020, sales performance in Vietnam fell short of both my expectations and headquarters' targets, showing no growth compared to 2019 Additionally, the performance of Sife-100 declined even further after transferring distribution to another supplier, despite the establishment of a representative office aimed at business development and expansion.
In the preliminary data analysis of Sife-100 in Ho Chi Minh City, sales performance remained stable in 2020 compared to 2019 Despite Hetero's significant efforts to capture market share, there was no growth observed What are your thoughts on this situation?
The sales team primarily concentrates on securing large orders at low prices from pharmaceutical companies, neglecting the pharmacies and clinics that require their attention but are underperforming Established in early 2020, the HCMC team was intended to prioritize these pharmacies and clinics, yet their efforts have diverged from my initial objectives.
6 What do you think about the decline of customers in 2020 compare to 2019 in HCMC?
To boost revenue, we focus not only on acquiring new customers but also on retaining our existing ones, encouraging them to become key clients By fostering strong relationships, we aim to increase sales daily and leverage cross-selling opportunities as we introduce a range of new products in the future.
7 Which factors do you think lead to the decline of customers in 2020?
In a competitive market with established players, it is crucial to closely follow up with acquired customers to foster their growth Last year, we revamped our entire HCM team, resulting in sales revenue predominantly sourced from pharmaceutical companies However, I aim to expand our focus to include pharmacies and clinics, as our lack of attention to these sectors led to the loss of numerous pharmacies last year Therefore, I need the team to concentrate more on these vital areas.
Many pharmacies and clinics are missing out on business expansion opportunities by neglecting to engage effectively with sales channels During joint visits, sales representatives often only provide product quotations without actively promoting or persuading pharmacists to support their products Additionally, when customers provide feedback, there is a lack of response and resolution Some pharmacies are also unaware of the marketing promotions currently being offered, highlighting a significant gap in communication and support.
8 In your opinion, what are the root causes?
The HCM Team currently consists of three salespeople and one Area Sales Manager, which is insufficient to effectively cover all customer segments, including hospitals, clinics, pharmacies, and wholesalers This limitation hinders the sales team's ability to focus on pharmacies, impacting both their product knowledge and motivation.
9 Could you please to share the solution you think that can solve this causes?
To enhance our sales strategy, we will recruit additional salespeople and assign them smaller territories focused on key customers, particularly in pharmacies and clinics rather than wholesalers Implementing an incentive scheme will motivate our team to prioritize these areas Comprehensive training will be essential, equipping sales staff with skills to effectively engage customers, prepare for meetings, communicate product information, and solve problems Our training program will emphasize the importance of making a “full call,” which includes assessing potential customers, building relationships, and effectively conveying product benefits beyond just price quotes We plan to conduct quarterly training courses to strengthen our team's capabilities as we expand our product offerings and grow our business.
Interview 2: Ms Loan Nguyen – B2B & B2C Business Development
1 The number of pharmacies using Sife-100 declined in HCMC in 2020 compare to
2019, what do you think about it?
In 2020, we experienced a significant loss of customers compared to 2019, which is evident in the declining number of pharmacies Despite our efforts to establish a dedicated team for brand development, we are currently on track to lose the customer base we worked hard to build.
2 What reason do you think lead to the decline of number of pharmacies?
HCMC Team’s responsibility have to develop retail business but they just only sell Sife-
Our wholesale prices are highly competitive at 100, but we have received numerous complaints from pharmaceutical companies regarding our staff offering lower prices than those presented to them This has led to a persistent demand for lower prices for their customers It is evident that the HCM sales team is not prioritizing the pharmacy channel, resulting in a lack of customer care and ultimately causing clients to leave our company.
3 What do you think which is the root causes?
If we allow pharmaceutical companies to maintain control, they will prioritize wholesalers over the pharmacy channel, potentially leading to issues for the HCM Team.
4 Could you please suggest the solution to solve this situation?
I think we should divide the wholesaler into the particular channel, sale team just only focus on pharmacy and clinic, the office will directly in charge wholesaler channel
Interview 3: Ms Phu Pham – Area Sales Manager HCM
1 The number of pharmacies declined in 2020 compare to 2019, what is the reason do you think?