Executive Summary
This paper is a feasibility study to evaluate the dynamics associated with setting up Empire Home Delivery services in the US market. Empire Home Delivery Service is a hypothetical company that deals in the delivery of medication throughout the United States (US). This paper identifies that, the supply and distribution of medications is subject to intense regulations as the main deterrent to trade.
However, this paper notes that, Empire Home delivery services, has a lot of opportunities to explore in this market (home delivery of medication) because the market is vibrant and it has few participants. However, to succeed in this business, this paper observes that, Empire Home delivery service needs to have a well-distributed drug network that will be able to deliver medications whenever they are ordered.
This requirement emphasizes the need for the company to set up drug stores in various locations where it operates.
With such infrastructural network in place, this paper observes that, a vigorous online marketing campaign would be appropriate for Empire Home Delivery services to succeed because it will ensure that, the company reaches a wide audience at very minimal costs. These dynamics withstanding, this paper recommends that, Empire should commence business.
Problem Statement
The medications supply market in the US has often experienced several operational problems. These problems are multifaceted, but the end-user (who is often the patient) is the one who suffers most. However, the drug supply market is not immune to market changes that happen in today’s world.
The general business environment has mainly changed because of shifts in consumer tastes, preferences and technological advancements (Madura, 2006). From this understanding, the home delivery business has picked up in many business segments such as food delivery, grocery delivery ( and the likes).
Major retail companies in the world, such as Wal-Mart and Tesco, have adopted the home delivery strategy for the supply of their goods and services. Tesco has especially specialized in the delivery of groceries through an online platform where orders are placed virtually. However, the drug market is not similar to the food market, though they share the same business model (home delivery of goods).
Nonetheless, both types of businesses aim to satisfy the same consumer needs. However, for a long time, many businesses have not ventured into the delivery of medications through the home delivery business model because of the sensitive nature of the drug market and the numerous legislations that surround it (Smith, 1991, p. 61).
Conversely, drug users have experienced tedious hassles of having to frequent hospitals and drug stores to buy drugs. This situation has created an environment where there is a lot of time wastage and manpower loss because people could use their time to do other productive things, instead of making frantic trips to hospitals and drug stores to buy basic medications.
Though this environment prevails, the drug market is unique to conventional markets because its end-users are normally not in a perfect physical condition to visit drug stores or hospitals to purchase drugs. Often, most consumers at the tail-end of the drug supply chain are patients who may be ailing from a certain condition, or who are not in the right physical state to drive or walk to drug stores to get their medication.
However, considering the dynamics of the current market, most of such patients have been forced to travel long distances to buy drugs (though their physical conditions may not allow them to do so). Sometimes, some patients have been forced to miss their dosages because they were not in a good position to purchase drugs (Madura, 2006).
Also, considering the fragile nature of sick patients; emergencies (which require a prompt administration of drugs) may turn out to be fatal experiences because patients may be unable to obtain drugs when they need them most.
This situation may be further worsened by a scenario where a patient stays alone and does not have a helper. Moreover, certain drug stores have strict operating hours that are not flexible to patients’ needs. These dynamics form the basis for the venture of Empire home delivery services into the medications supply market.
Project Business Requirement
The success of home delivery businesses thrive on several factors. First, there needs to be a technical infrastructure that supports the ordering and placement of goods (Wysocki, 2010, p. 1). For instance, the earliest home delivery businesses started with the creation of the telecommunications infrastructure where customers ordered for goods by phoning home delivery companies.
Today’s business environment is also characterized by the same model of business but the internet has significantly changed the entire business landscape because most home delivery businesses rely on websites for ordering. This technological platform is cheaper and more effective for today’s home businesses because it is spontaneous, and many homes are currently connected to the internet.
Confirmations for orders may also be placed through the same platform and customers can be guaranteed that their goods will be delivered to their doorsteps. For the success of home delivery businesses to be realized, such technological infrastructures need to be in place.
However, even as Empire Home Delivery service strives to adopt this technological infrastructure, emphasis will be laid on ensuring this platform is secure for payments. A guarantee for secure payments will therefore be sought because payments will have to be made online.
More importantly, research studies show that, customers always prefer a simple and effective payment option for home delivery businesses and Empire intends to live up to this expectation (Wysocki, 2010, p. 1).
The delivery of medication through the home delivery business model is however prone to several legislative guidelines which normal businesses would not experience. The drug market is excessively regulated because it is a sensitive market that touches on human health. Existing drug regulations therefore try to uphold safety standards for the good health of the citizenry.
It is also important to note that, home delivery businesses are likely to infringe on the tight safeguards implemented to observe high safety standards of drugs.
The same situation has also been experienced in the supply of alcohol (through the home delivery model) because critics have observed that, a home-based business model (in the alcohol supply market) is likely to circumnavigate existing regulations which are meant to discourage under-age drinking (Fukumi, 2008, p. 72).
For instance, it would be simple for an underage teenager to order alcohol to his (or her) residence, thereby bypassing the requirement to produce an identification card for alcohol purchasing.
The same principle applies to the drug market because some drugs are considered to be highly addictive and certain consumers may want to abuse them. Such is the situation observed in the sale of prescription drugs because people tend to abuse such drugs for non-medical reasons (Fukumi, 2008, p. 72).
Somewhat, this observation has also been made regarding the use of marijuana because it is recommend for medical use (in certain cases, such as, the treatment of cancer). However, some people have abused such regulatory provisions and consequently ordered marijuana for non-medical use (Fukumi, 2008, p. 72). Considering such dynamics, the home delivery of medications is subject to a lot of regulations.
Nonetheless, these regulations cannot be overlooked. For home delivery businesses (engaged in medical supplies) to succeed, there ought to be a keen compliance to such regulations.
Compliance to such regulations may mean that, some medications may be exempted from the array of products to be delivered because there may not be an existing legislation that governs the distribution of the drugs (in the context of the home delivery business).
Description of Products and Services
The supply of medication through the home delivery model is expected to be done through an online platform. Medications that require a doctor’s prescription will not be sold through this business model. The online sales strategy will be able to transcend the geographical boundaries that conventional drug stores are limited to.
This business model will also be able to capitalize on the opportunities that technology provides the healthcare sector because Empire Home delivery services will be able to market its products to new market bases, which do not fall within the limitations of conventional drug supply systems (Gay, 2007).
Through this online business model, Empire will be able to realize a positive growth projection because drug users will be able to gain access to drugs from the convenience of their homes. There will not be any significant changes to Empire’s product offing because its array of products is strongly limited by existing legislations. Therefore, any product modifications will have to be excluded from the context of this study.
Marketing Strategy
Empire’s marketing strategy will be based on online techniques, where virtual marketing tools such as, e mail listings, promotional advertisements (and the likes) will be used to improve customer loyalty and seek the participation of potential customers (Gay, 2007).
Since Empire home delivery service is a new company, it is crucial to acknowledge that, it will not have the capacity to develop an internal expertise pool that is able to develop a sophisticated technological infrastructure to handle payments, orders, feedbacks, marketing services and the likes.
Consequently, this paper proposes that, such services will be outsourced to an internal market place provider who can design such a technological platform. Though this process will be outsourced, it is crucial to understand that, the technology already exists, and since it has been tested in other home delivery companies, the risks associated with its implementation will be significantly reduced (Gay, 2007, p. 2).
Regardless of the sophistication of its marketing tools, Empire home delivery services still needs to differentiate itself in the market. To do so, Empire should aim to personalize its products and services through the development of new product packaging (Meyerson, 2005, p. 23).
Currently, many medical supply companies operating the home delivery business do not personalize their packaging, and Empire aims to capitalize on this opportunity.
Empire will also adopt an e mailing list to support its online marketing strategy because it will use this platform to send product promotions, sales advertisements and similar marketing tools that complement the company’s marketing strategy. This sale strategy will not be designed to sell medications but rather, to market the company to customers (Meyerson, 2005, p. 23).
Costs will be an integral factor to be considered in the formulation and implementation of Empire’s marketing strategies. Since most of the company’s marketing strategies are electronic, minimal costs are likely to be incurred. The only (relatively) expensive marketing strategy will be the direct mailing strategy.
Nonetheless, in spite of these marketing costs, Empire expects to realize high returns from the same marketing campaigns. However, if an effective marketing strategy is to be realized, the working staff needs to be properly trained. The training costs will be considered as part of the company’s start-up costs.
Product/Service Market
The market for medications has always existed since the existence of human science. The pharmaceutical industry is perceived to be a lucrative industry of the 21st century because of the surge in terminal illnesses and increased consumer purchasing power (Fulco, 1995).
For instance, the pharmaceutical industry is known to have low overheads of operation and a high return on investments. The high return on investments has been a common feature of the pharmaceutical industry, for a long time. For instance, among the fortune 500 companies, the pharmaceutical industry was estimated to rake more returns than the combined median of all the existing companies within the category (Fulco, 1995).
For example, during the late 80s period, statistics showed that, new drugs introduced during the period raked in close to $36 million in revenue after tax deductions. This profit margin was estimated to be two to three percent more than what other industries projected, even after considering the risks of researching and developing the new drugs (Fulco, 1995).
The market for home delivery medication is not crowded. However jurisdiction laws seem to affect the extent which independent companies can operate. The most established companies that engage in the trade (delivery of medications) include RX America, and Direct RX (Critser, 2007). Other companies that engage in the trade (delivery of medications) do not specialize in the exclusive delivery of medications.
They include the delivery of other goods such as groceries, meals and the likes. This last group of competitors is not going to be a threat to Empire Home Delivery services because they do not specialize in the delivery of medications (per se). Adopting a simpler and convenient platform for ordering and delivering service is going to be relied on as the main strategy for outperforming the competition.
This strategy will be backed by an online marketing strategy that is expected to increase the customer pool. Empire should ensure its products are distributed to different customer locations from the nearest store location, thereby ensuring timely shipping and the avoidance of bureaucracies and inconveniencies of operating one store.
The operation of several drug locations will be a costly affair (in terms of maintenance and initial setup costs) but considering the future company projections, the establishment of several outlets is still going to be a viable strategy.
Success is expected to be realized from the stocking of adequate inventories and the realization of customer satisfaction because Empire anticipates that repeated purchases and word-of-mouth marketing will sustain the company’s sales.
Organization and Staffing
Empire’s focus on online marketing as its major marketing tool is expected to be independent from the company’s structural makeup. Nonetheless, the company needs to employ more staff if it intends to achieve its objectives (especially regarding customer satisfaction). A staff of 50 people will be appropriate in the early stages of the company’s lifecycle.
The main position to be filled will be the online sales manager, where directions regarding existing (and upcoming) sales opportunities will be formulated. The second (main) position to be filled will be the online marketing manager.
This office is expected to undertake a comprehensive market research that includes the identification of target markets and the identification of workable strategies to satisfy the needs of such target markets. Both positions require a direct reporting to the director of marketing.
Strategic Management
The anticipated financial breakdown for setting up Empire home delivery service is explained in the following table.
This table accounts for all aspects of the initial operating and setup costs. However, these costs are subject to several assumptions including a constant store sales projection, and a completion of operating expenses with one year (there should be no balances carried forwards or backdating).
Findings and Recommendations
After weighing the findings of this feasibility study, this paper recommends that, Empire should commence business because is stands a good chance of succeeding. This recommendation is based on certain key findings. On the technical front, this paper notes that, Empire should use new technology to minimize the severity of projected operational risks.
Secondly, this paper observes that, though the medical supply market is heavily regulated, there are immense opportunities to exploit the distribution of legal and easily accessible medications. Sensitive prescriptions will therefore not be included in the group of products to be distributed.
This paper also identifies that, the home delivery of medications is not a very competitive market and Empire stands a good chance of succeeding because there is more incentive for investments in this regard.
However, considering the minimal competition that exists in the market, there is a strong need for Empire to differentiate its products and services. Through personalization of the products’ packaging and a sensitive “customer care” framework, Empire will be able to differentiate itself from other market participants.
Through this feasibility study, this paper acknowledges that, an online marketing strategy will be most appropriate for Empire because it poses several advantages to the company. First, the company will be able to reach more people at a minimal cost. Secondly, Empire will be able to gain access to markets that it would otherwise not have accessed using conventional marketing techniques.
Also, through the financial projections table, this paper identifies that; Empire will be able to break-even during its second year of operation. Moreover, from the paper’s financial projections, this paper identifies that; Empire will be able to achieve high market success if it maintains an active in-store and online presence where it can be able to communicate with its customers and amicably deliver medication to them.
References
Critser, G. (2007). Generation Rx: How Prescription Drugs Are Altering American Lives, Minds, and Bodies. Michigan: Houghton Mifflin Harcourt.
Fukumi, S. (2008). Cocaine Trafficking In Latin America: EU and US Policy Responses. New York: Ashgate Publishing, Ltd.
Fulco, C. (1995). Development of Medications for the Treatment of Opiate And Cocaine Addictions: Issues for the Government and Private Sector. New York: National Academies Press.
Gay, R. (2007). Online Marketing: A Customer-Led Approach. Oxford: Oxford University Press.
Madura, J. (2006). Introduction to Business. London: Cengage Learning.
Meyerson, M. (2005). Success Secrets of the Online Marketing Superstars. New York: Kaplan Publishing.
Smith, M. (1991). Pharmaceutical Marketing: Strategy and Cases. London: Routledge.
Wysocki, R. (2010). Effective Project Management: Traditional, Adaptive, Extreme. London: John Wiley & Sons.