Determinants of distribution intensity among firms in the Kenyan pharmaceutical industry

Abstract

As a strategic marketing tool, the field of marketing channels had, for many years taken a "back seat" to the three strategic areas of marketing i.e. product, price and promotion. But in recent years this relative neglect of marketing channels has been changing in many cases to a keen interest area. This has been due to greater difficulty in gaining sustainable competitive advantage; need to reduce distribution costs and new stress on growth. One of the key elements in channel management is deciding how many sales outlets should be established in a given geographic area. It was therefore necessary to conduct a study to find out distribution intensity used by firms in the pharmaceutical industry and to determine the factors they consider when deciding on the distribution intensity strategy to pursue. To aid this study a survey was undertaken using a structured questionnaire. The questionnaire was administered using drop and pick later method. The questionnaire was adopted because of the high degree of anonymity it gives to respondents who considered certain responses strategic and sensitive to their business. The populations of the study were pharmaceutical companies based in Kenya. The sampling frame consisted of manufacturers, franchise importers, and generic importers of pharmaceutical products. A sample frame of sixty firms was picked for the study. The respondents of the study were the marketing or distribution managers of the respective companies. Data analysis was done using mean scores and factor analysis. The study findings showed that most pharmaceutical firms follow intensive distribution strategy but a few companies with high end prescription products follow a selective distribution strategy. The greatest limitation to this study was the reluctance by many respondents to disclose information deeming it strategic to them. Further research should be done on factors that determine distribution intensity on specific product categories.