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8CHAPTER 1FUNDAMENTAL RULES IN MARKETINGThe chapter is devoted the general questions of market characteristic,including pharmaceutical, and to marketing as market theory of management by activity of the enterprises. Definition, kinds, elements, principlesare resulted, functions and the marketing environment is described.1.1. VALUE OF MARKETINGMarkets may be viewed as gaps that separate parties interested in anexchange. Consequently, the process of the market actualization requiresthat various activities (called marketing activities) remove the gaps between parties interested in an exchange. Some of these points require careful examination.Understanding of demand and supply through the eyes of the customer is a process called marketing.Marketing is a process that starts with identifying and understandingthe needs and wants of the customer (demand) and then fulfilling thoseneeds and wants (supply). An effective marketing plan offers a solution tofulfil the needs and wants of society (individuals and organizations), whileachieving the goals of the organization. In addition, marketing can createnew needs or reformat existing needs. Both customers (demand) and organizations (supply) have objectives. Customers’ goals are to satisfy theirneeds and wants. Organizations’ goals are to supply a good or service thatprovides value or is useful to customers and to provide employment foremployees and profit to shareholders. In the case of nonprofits organizations, marketing success may be measured by the public’s response ratherthan by profitability.By marketing the enterprise can receive answers on questions: Whatis necessary to sell? Who can sell? Why is necessary to sell? Where andhow to sell? When is necessary to sell? How to operate goods movement?

Chapter 1. Fundamental rules in marketing9Value of marketing for consumers is defined by several positions:- marketing allows people to become more informed;- optimization of working hours of the retail enterprises, promotionof the goods, expenses on advertising, commodity assortment and otherareas of marketing improves coordination of resources;- marketing considerably influences sights of people and a way of life;- marketing promotes improvement of life quality. For example, marketing experts stimulate firms to produce more safe goods; develop thereference to the public concerning questions of energy’s economy, treatment of illnesses, abusing alcohol, help a recognition and distribution ofthe new goods, ideas and services.Pharmaceutical marketing, as a subspecialty of marketing, can be defined as a process, by which market for pharmaceutical care is actualized. Itencompasses all the activities carried out by various individuals or organizations to actualize markets for pharmaceutical care. Let us examine thisdefinition closely. Marketing plays a key role influencing or directing activities from the manufacturer to the patient. It should be noted that the patient stands at the peak of the marketing pyramid. It is his characteristicsthat determine which goods will be sold or, more correctly, which goodswill be produced.1.2 THE CHARACTERISTIC OF THE MARKETThe market forms a direct connection of manufacture with consumption, subordinates manufacture to requirements of the customer. Marketers constantly study a situation in the market, their task is revealing of requirements of each market and a choice from them with what their enterprise can provide better, than others.Market is defined as people or organizations wants (needs) to satisfy,money to spend, and the willingness to spend it. A market may be definedas a place where buyers and sellers meet, products or services are offeredfor sale, and transfers of ownership occur (Fig. 1.1).A market may also be defined as the demand made by a certain groupof potential buyers for a product or service.

10ResourcesManagement and Marketing in Pharmacy. Part II – Marketing in re 1.1 – Market definitionThus, in the market demand for any given four definitions there arethe following terms:1. The aggregate of forces or conditions, within which buyers andsellers make decisions that result in the transfer of goods and services.2. The aggregate demand of the potential buyers of a commodity orservice.3. The place or area, in which buyers and sellers function.4. To perform business activities that direct the flow of goods andservices from a producer to a consumer or user.Classification of markets is possible to different attributes:- from positions of the economic space or depending on scale: the local, regional, national, foreign, international, world markets;- a commodity market, wholesale market, retail market;- by the way of the goods consumption: the consumer goods market,the industrial purposes goods and services.Kinds of the market are as follows: the consumer’s market and theseller’s market.At the seller’s market the commodity assortment is limited, the competition is absent, and the buyer is in full dependence on the seller. At theconsumer’s market the market is sated with different goods and services.Commodity producers and sellers compete among themselves strugglingfor the buyer. The buyer himself decides when to buy it and it determineswhat goods to make.Distinguish three spheres of the market: the goods and services (thecommodity market), bank stocks (the financial market), a labour (labourmarket).In marketing practice are considered usually markets of consumergoods, of industrial appointment’s products and services market.

Chapter 1. Fundamental rules in marketing11Market basic elements are demand, the supply and the price. Their interconnection forms a market mechanism.Market mechanism functions:- information of market operators;- the functions which connected with efficiency of the market, efficiency of resources expenditure;- maintenance of efficiency in distribution of economic resources;- achievement of market balance.The market situation is characterized by a parity between need, asupply and demand. Need subjective sensation of a lack something necessary, depending on cultural level and the person of the individual. Demandis some need for certain volume of goods which the consumer wishes andhas possibility to get. In other words demand is the need supported withconsumer ability.In market researches allocate an economic conjuncture and a conjuncture of the separate markets. The economic conjuncture characterizes acondition of all market process for any period.Market condition characterizes a situation on the market in the paritybetween a supply and demand, price level, commodity stocks, volume oforders in branch and other economic indicators. It is a question of a condition and market tendencies in short-term period.1.3. CHARACTERISTIC, STRUCTURE AND ORGANIZATION OFPHARMACEUTICAL MARKETThe pharmaceutical market represents a part of the market of goods and services, sphere of interaction of subjects and objects which are influenced by a certainfactors. Objects of the pharmaceutical market are consumers of medicines and the experts who appoint and give information in buying of medical products. Subjects aremedical products, services, the parapharmaceutical goods, ideas, the pharmaceuticalinformation, consumers preferences. Subjects of the pharmaceutical market are: authorities of regulation and control over pharmaceutical activity; the production, wholesale and retail enterprises and establishments; the specialized marketing and analyticalcompanies; educational institutions; research institutes; pharmaceutical associationsand other public organizations; hospitals.Social and economic aspects of the pharmaceutical market. Economic laws of themarket have specific features in pharmacy as socially focused sphere. The reasons aresuch components.

12Management and Marketing in Pharmacy. Part II – Marketing in PharmacyFirst, granting of the pharmaceutical aid to the population requires personal contacts of the doctor and the pharmacist, on the one side, and the consumer (patient) with another. The medicinal help is characterized by certain individuality to the patient.Secondly, in comparison with other services spheres (even in public health services) influence of inadequacy of the information concerning consumer properties of amedicine at their manufacturers, at pharmacists and consumers (patients) is more essential.Thirdly, the need in vital medical products is necessary to keep health and thehuman life. Fourthly, in the field of pharmacy (as well as in all system of public healthservices) it is insufficiently defined connection between expenses of work of pharmaceutical employees end results is indistinctly traced.Fifthly, use of the special managing mechanism in pharmacies is dictated necessity of economic efficiency and social justice.Feature of a medicines in comparison with the goods of other markets is important also. Granting of the medicinal help require high professional qualification of thedoctor and the pharmacist, and also the financial possibilities of the consumer (patient).General characteristic of the world pharmaceutical market. The world market ofpharmaceutical production is difficult, multilevel, multifunctional formation with stablyhigh rates of manufacture growth, sale and, accordingly, profitability indicators. Thesereasons are connected with specificity of medical products as commodity category,demand on which increases irrespective of economic and political factors.Three basic pharmaceutical regions of a planet are the USA, Europe and Japanhaving about 80 % of the medical products market. Despite some change of priorities,the pharmaceutical market of the USA, as before, remains to the largest in the world.Rates of its annual growth make more than 8 %. In Europe some decrease in growthrates of the pharmaceutical market (on 1-2 % a year), despite high enough level of development of the markets of France, Germany, the Great Britain, Italy and Spain (thesecountries provide more than 70 % of sales volumes of pharmaceutical production inEurope) is marked.Second-large pharmaceutical market in the world – the market of Japan whichshare is about 13 % of a world sales volume, has low growth rates of sales volumes ofpharmaceutical production ). The basic feature of this market – the increasing distribution of preparations of the American and European manufacture.Appreciable rates the pharmaceutical markets of China, India, Brazil and Turkeydevelop. Share of these countries is 17 % of the world pharmaceutical market, andgrowth rates of sales make more than 11 % in India is one of the world's largest manufacturers of generics, taking the fourth place in the world on volume of made production. Competition growth forces the companies to search for essentially new models ofdevelopment. Expenses on research are increase. One of the most effective remediesof positions strengthening for the pharmaceutical companies is their integration, creation of strategic alliances and agreements between firms about joint creation of amedicine.

Chapter 1. Fundamental rules in marketing13Progress in creation of new medical products proceeds. The new preparationswhich have appeared last years, have more aim mechanism of action, and, as consequence, are more suitable for treatment. These preparations are appointed for the differentiated groups of patients and preparations of a wide spectrum of action withwhich they urged to replace are more valuable, than. The wide circulation in pharmaceuticals manufacture is got biotechnology, gene engineering.Essential feature of the modern pharmaceutical market is the increase in manufacture and sales of the medicinal preparations-generics. According to experts IMS it ispredicted, that the market capacity will increase annually on the average 14-17 % whilethe pharmaceutical market will grow on 6-7 % a year.1.4 NATURE, EVOLUTION, PRINCIPLES AND FUNCTIONS OFMARKETINGThe essence of marketing is an exchange. The existence of a market isthe foundation for an exchange and not a substitute for it. Every exchangerequires that (1) there are two or more parties (2) interested in satisfyingtheir unfulfilled desires, (3) have something of value to offer to each other,and (4) are capable of communication and delivery.The process of the market actualization may be initiated by eitherparty interested in an exchange. In the normal economic sense, the partywith goods is called a producer and the party with money is called a consumer. That is why markets, as defined from the producer’s view, areviewed as people with money (purchasing power) and felt or quiescentneed.The term marketing has changed and evolved over a period of time,today marketing is based around providing continual benefits to the customer, these benefits will be provided and a transactional exchange willtake place. In a business firm, marketing generates the revenues that aremanaged by the financial people and used by the production people in creating products and services. The challenge of marketing is to generatethose revenues by satisfying customers’ wants at profit and in a socially responsible manner.There are a lot of definitions of marketing. The most common definition in the world of business is “Marketing is the process of planning andexecuting the conception, pricing, promotion, and distribution of ideas,goods, and services to create exchanges that satisfy individual and organizational objectives”.

14Management and Marketing in Pharmacy. Part II – Marketing in PharmacyThe Chartered Institute of Marketing define marketing as ‘The management process responsible for identifying, anticipating and satisfyingcustomer requirements profitability’If we look at those definitions in more detail, marketing is a management responsibility and should not be solely left to junior members of staff.Marketing requires co-ordination, planning, implementation of campaignsand a competent manager(s) with the appropriate skills to ensure success.Marketing objectives, goals and targets have to be monitored andmet, competitor strategies analyzed, anticipated and exceeded. Through effective use of market and marketing research an organization should beable to identify the needs and wants of the customer and try to deliverbenefits that will enhance or add to the customers lifestyle, while at thesame time ensuring that the satisfaction of these needs results in a healthyturnover for the organization.Philip Kotler defines marketing as “satisfying needs and wantsthrough an exchange process”.Within this exchange transaction customers will only exchange whatthey value (money) if they feel that their needs are being fully satisfied,clearly the greater the benefit provided the higher transactional value anorganization can charge. The definitions have some significant implications:1. It is a managerial, systems definition.2. The entire system of business activities must be customeroriented. Customers' wants must be recognized

wholesale and retail sales and use of the complex of marketing communications at the pharmaceutical market. The nature and specificity of the international marketing in pharmacy is described. The textbook is recommended for foreign students of higher pharmaceutical sc