Case 1
Pilgrim Drug Company
Case Presentation
Marketing 458 – Sales Management:
Kellen Blomquist
Chase Hughes
Elizabeth Martin
Hilson Merrill
Brad Ruleman
Eustace Winn
Outline
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Case Background
Business Case Issues
Analysis
Business Problem(s)
Solution
Case Background
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74 wholesale drug divisions in the U.S.
18,000 products. All in store except
periodicals.
Each division an autonomous unit:
maintaining warehouse, sales, purchasing,
and accounting departments.
Case Background- business model
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Sales reps visit current and potential
accounts
Sales calendar for each division
Compensation- commission based.
Determined by the margins of the products
sold.
Market analysis records
Sales territories divided geographically
Competition
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Only two main competitors.
One carries roughly the same line as Pilgrim
The other carries a more limited line than
Pilgrim
Business Case Issues
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Performing less than adequate
Senior reps less educated than young MBAs
Schultz did not adhere to regulations set
forth by New York office.
Nelson wanting Brooks’ accounts
Analysis of Current Situation
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Compensation–
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Commissions paid to the sales reps varied depending on
the product mix being sold.
Rolling commission rate. Paid on the basis of margins.
Certain products are pushed with higher commissions
The share of the Syracuse market for wholesale
purchases of retail drugstores held by Pilgrim Drug
was 20%, compared with a 48% share for some of
the other divisions.
Analysis
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Plans were implemented that would focus sales reps’ efforts to
minimize the handling cost of their sales and to maximize profits
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The company promoted a three step sales plan for increased
profitability
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Sales of larger quantities of an item or of high value items were
encouraged because the cost of processing and filling each line of an order
was practically constant.
Sales of larger total values were encouraged because the profit made on
sales to individual account is related closely to delivery expense. The
larger the total proportion of the account’s business that went to Pilgrim,
the greater the profits as delivery expense remains more or less constant.
Because some manufacturers offered margins considerably larger than
others, sales of higher-margin items were encouraged.
Questions
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Any questions so far?
Business Problems
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Diverse Sales Force
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Strategy and Policy enforcement
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Territory Issues
Business Problems- Diverse Sales
Force
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Veteran Sales Reps
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Newer Sales Reps
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Seniority Issues
Focused on Relationships
Educated and Driven
Vets vs. Newbies
Strategy and Policy Enforcement
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Strategy:
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Policy:
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Sell High Volume or Sell High Margin
Sales Calendar coordinating activities and accounts.
Neither was adopted heavily by Veteran Sales Reps.
Territory Issues
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Supposed to be divided using Sales and Market
Analysis Record System.
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Actually Divided by Seniority and Geography
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This heavily favored the Vets and left the Newbies with
less than perfect accounts
All territories were picked through and not worked
to its full potential.
Solution
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A mix of old and new
-sharing of accounts between old and
new reps.
Certain product quotas
-make quotas for high margin products
Mix of salary and commission
Solution
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Sales rep retreat for division
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Train and reiterate sales policies and strategy
Build bond between old and new reps
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Compensate based on total sales and not per product profit
margin basis
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Behavioral monitoring
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Call records
Account checksheets
Questions and Class Discussion
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Are there any questions?