Mba Economic: Panadol Research Paper

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Panadols global brand franchise offers variety of products in more specific formats to suit different types of consumer needa.As with any strong category market leader, panadol in subject to the threat of small brands who attempts to capture the portions of the market share through aggressive and persuasive price competitions and advertizing, where Panadol is also compelled to involve in advertizing to protect market share and grow sales.

Introduction to the selected Organization

SmithKline Beecham is the consumer healthcare wing of the world pharmaceutical giant GlaxoSmithKline (GSK). GlaxoSmithKline came into being in 2001 as a result of the merger between global pharmaceutical giants SmithKline Beecham and Glaxo Wellcome.Although the global merger also effected the two companies whom were in operation at that time in Sri Lanka, the company still functions as SmithKline Beecham (Pvt) Limited and involves in manufacturing and marketing of Consumer Healthcare products. The operation consists of a two packing sites and a marketing operation. Today company markets key brands such as Panadol, Horlicks, Viva, Horlicks Buiscuits, Iodex and Glucolin.

Organization Vision

“To be the number one consumer healthcare company in Sri Lanka”

Organization Mission

“To be the most admired company in Sri Lanka to make available through robust Marketing, Sales & Distribution systems & processes, innovative products, in order to make people do more, feel better and live longer”.

Staff Strength

Sales and Marketing

Manufacturing

Administration

Other

125

189

23

24

Table 01: Staff Strength

Market Strength – Over the Counter (OTC) Products (Inclusive of Panadol)

Company

Rank

Mkt. Share % (Aprox.)

SmithKline Beecham

1

85.00%

InterPharm (Hemas)

2

8.00%

Others

3

7.00%

Table 02:Market Strength (OTC)

CHAPTER 04

DATA ANALYSISS

Panadol Sales Revenue and A&P Expenditure

Panadol

Year

Value

A&P (€,000)

NS (€,000)

1999

66,112.00

522,432.00

2000

67,321.00

523,489.00

2001

76,688.00

601,513.00

2002

79,431.00

603,718.00

2003

83,451.00

647,435.00

2004

80,312.00

634,513.00

2005

87,181.00

717,813.44

2006

97,492.92

863,581.02

2007

119,735.19

1,113,773.78

2008

121,752.00

1,083,991.77

2009

138,772.00

1,131,885.00

Table 03: Panadol Sales Revenue and A&P Expenditure

Here we want to find a relationship (if there is any) between advertising expenditure and sales revenue of panadol brand. As shown in the above table, we collected the data of advertising expenditure and sales revenue of panadol for last eleven years (1999-2009).Firstly we draw scatter diagram to get idea about the kind of relationship between variables. It seems linear relationship so we used simple linear regression model for this.

To analyze this we are focused on statistical technique called Regression analysis. Regression analysis is a statistical technique that attempts to explain movement in one variable, the dependant variable, as a function of movement in an other variable, called independent variable through the quantification of a single equation.

Simple linear regression model

In this case the dependant variable Y, sales revenue is assumes to have a following relationship with the independent variable X, promotional & advertising expenditure and also we assume other things are equal for the period of measurement (environmental factors, social factors, political factors...etc.).

Y, Net Sales revenue

X, Promotional and Advertising expenditure

Theoretical model: Y = β0 +β1X + ε

In the equation β0 is the constant term, the value of Y when X is 0, it means β0 is the amount of sales revenue