Business Plan Retail Pharmacy Business Plan

Pages: 8 (2186 words)  ·  Bibliography Sources: 5  ·  Level: College Junior  ·  Topic: Medicine

Business Plan

This business plan is for a retail pharmacy. The pharmacy is going to provide two distinct product lines -- pharmaceutical and retail. The organization will be designed around that model. As a small company, the organizational structure is going to be relatively flat, with a General Manager, Assistant General Manager, Head Pharmacist and Retail Manager. Duties for each are described in the document.

This will be a small neighborhood pharmacy, and as such its target market is mainly geographic. It is expected, however, that seniors will be the largest target market since they are the heaviest users of pharmaceuticals. This market will be targeted using a service-oriented strategy, which also reflects that fact that the company lacks the bargaining power of major competitors like Wal-Mart, Walgreens and CVS. The focus on service will help to justify the higher prices, and will give the pharmacy a competitive advantage in the marketplace. The promotion plan is focused around creating initial awareness, differentiation and marketing to physicians to have them direct patients to us.

The financial plan is based on 12 FTEs including the management team, and an inventory turnover of 6x. The results show that if these targets -- and other cost targets -- are met the pharmacy will turn a small profit in the first year. The initial expenses will primarily be with the inventory, along with some minor expenses for initial set-up and supplies.

Service Description

The business in question is a retail pharmacy. Located in a shopping center, this medium-sized store will provide a variety of consumer goods along with pharmaceutical products. The store therefore will have a pharmacy in the back of the store, and it will have a retail section in the front of the store. The pharmacy will provide a variety of services with respect to prescription drugs and non-prescription medications as well. The pharmacists can assist customers not only with filling prescriptions but also with analyzing how their different prescriptions go together, and ensure that the customer does not have any drug conflicts. The pharmacists will also be able to give advice about certain products that they carry. The role is defined as "optimizing therapy and promoting health, wellness and disease prevention…focus on both pharmacologic and nonpharmacologic strategies" (ACCP, 2008). The pharmacy will also contain ancillary services, such as a blood pressure machine, health care advice, lifestyle advice, fittings for medical equipment such as crutches or wheelchairs, and a variety of other services with respect to health and wellness enhancement. The pharmacy business is challenging, with about 5% of the nation's 30,000 independent pharmacists going out of business each year (Hellinger, 1995).

The other staff members can assist with over-the-counter drugs, and explain some of the factors with respect to those. In addition, there will be service staff who can help customers with non-medical items and with paying for their purchases. The basic service component of the retail side of the store (as opposed to the pharmacy side) is the facilitation of sales. Products will include basic food items, stationery, tobacco products, household items and cleaning products. This will be a low service operation, typically with just one or two non-pharmacy staff members. The service on the pharmacy side will receive most of the organizational emphasis and be a source of competitive advantage.

Organizational Plan

For a retail pharmacy, the organizational chart is not particularly complex. For a one-outlet pharmacy, the owner is the final authority, but most day-to-day decisions are made by the General Manager. Working under the General Manager is the Assistant General Manager. Either the GM or the AGM will need to be present at all times to ensure that there is a chain of authority while the store is in operation.

There are two divisions, broken out along functional lines -- Pharmacy and Retail. The pharmacy is run by the Head Pharmacist, and all other staff in that department report to him/her. There are no further layers of management with the Pharmacy division. The Retail Manager is in charge of the retail side of the business and is the only manager there. In total, it is expected that there will be around 20 employees, though not all of them will be full-time.

The organizational chart for the company is as follows:

The General Manager needs to have experience in running a retail pharmacy, not just retail store, because of the unique regulatory needs associated with the pharmacy department. The GM is in charge of all aspects of the company's operations, but has the freedom to delegate as many or as little of these tasks to the other managers as need be. The Assistant General Manager has more specific role guidelines, including the accounting and human resources administration for the store. General administration duties will be split between the GM and the AGM, including all sundry paperwork, facilities management, and marketing. The AGM may also be called upon to assist with the budgeting process for each

The Retail Manager and Head Pharmacist are responsible for tasks specific to their areas. Such functions will include hiring, firing and scheduling of employees, submitting budgets to the GM for approval, ordering and other inventory management, and the Head Pharmacist will also need to act as liaison with pharmaceutical companies and health care regulatory bodies.

Marketing Segment

The pharmacy is going to cater to a broad market, defined more by geography than by any other factor. There is an effective zone of exclusivity for the pharmacy within a 1.5-mile radius of the proposed location. Beyond that radius, there are other competitors. It is expected that a significant amount of the customers will come from the immediate area. The demographics of the area are fairly well mixed in terms of age and race. The heaviest users of pharmaceutical products are older individuals in the community, as they are more prone to health ailments. However, it is common in the pharmaceutical industry to create markets with innovative products (Miles, 2011). Thus, perhaps other demographics might emerge as key target markets. For non-prescription drugs and retail supplies, the target market is considerably broader, and would include most members of the community.

The marketing plan is going to focus on a few different aspects. Consider for a moment the marketing mix, which consists of product, place, price and promotion (NetMBA, 2010). Place is perhaps the most important element of the marketing mix for this business. The pharmacy has a location with good traffic, but is far enough away from major competitors to draw its own traffic. Product is another key element. The product is the same as any other retail pharmacy -- drugs and basic consumer goods -- but service is a critical element in the marketing plan. The service at the nearby competitors (major drug store chains and discounters) ranges between poor and terrible. Thus, service becomes the key selling point for our small retail pharmacy. It is important that customers receive the best possible service, personal, one-on-one and caring. This will differentiate our pharmacy from the big guys.

Price is not going to be a strong suit for our pharmacy and we will not attempt to compete on price. The economic realities of this business are that small pharmacies simply do not have the bargaining power with suppliers of companies like Wal-Mart, Walgreens and CVS. In addition, we will not have the same high sales volumes, so we need to take higher margins. The result is that our prices are going to be the highest in the area. This is why it is important to provide the best service in the area in order to have a viable value proposition in order to compete (Fein, 2006). Any price promotions will be focused on non-pharmaceutical products, perhaps matching the big guys (even if at a loss) on consumer staples in order to help attract new customers. However, it is not expected that price promotions are going to be a significant part of the marketing effort. The focus on differentiation with service is going to take precedence at all levels of the marketing plan. All of our major competitors are focused on cost leadership, and that leaves a segment of the market that values heartfelt, reliable personal service unserved. It is this niche that we expect to fill.

Promotion is another key element of the marketing plan. The primary objective of the promotion plan is to create awareness. Signage and small-scale advertising will be critical to this initially. The signage needs to be large and bold enough to attract passersby. In addition, the signage should convey the image of a high-quality, high-service pharmacy. Advertisements in local newspapers will also help to create awareness. Additionally, we will use our contacts in the local medical community to help raise awareness. We want physicians to recommend us specifically as the pharmacist that gives good personal service, so that clients who are seeking a service-oriented pharmacy as opposed to a price-oriented one will be directly to us. We believe that outreach to… [END OF PREVIEW]

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