1. Case 1 Pilgrim Drug Company Case Presentation
Marketing 458 – Sales Management:
Kellen Blomquist
Chase Hughes
Elizabeth Martin
Hilson Merrill
Brad Ruleman
Eustace Winn

2. Outline Case Background Business Case Issues Analysis
Business Problem(s)
Solution

3. Case Background 74 wholesale drug divisions in the U.S.
18,000 products. All in store except periodicals.
Each division an autonomous unit: maintaining warehouse, sales, purchasing, and accounting departments.

4. Case Background- business model
Sales reps visit current and potential accounts
Sales calendar for each division
Compensation- commission based. Determined by the margins of the products sold.
Market analysis records
Sales territories divided geographically

5. Competition Only two main competitors.
One carries roughly the same line as Pilgrim
The other carries a more limited line than Pilgrim

6. Business Case Issues Performing less than adequate
Senior reps less educated than young MBAs
Schultz did not adhere to regulations set forth by New York office.
Nelson wanting Brooks’ accounts

7. Analysis of Current Situation
Compensation-
Commissions paid to the sales reps varied depending on the product mix being sold.
Rolling commission rate. Paid on the basis of margins.
Certain products are pushed with higher commissions
The share of the Syracuse market for wholesale purchases of retail drugstores held by Pilgrim Drug was 20%, compared with a 48% share for some of the other divisions.

8. Analysis
Plans were implemented that would focus sales reps’ efforts to minimize the handling cost of their sales and to maximize profits
The company promoted a three step sales plan for increased profitability
Sales of larger quantities of an item or of high value items were encouraged because the cost of processing and filling each line of an order was practically constant.
Sales of larger total values were encouraged because the profit made on sales to individual account is related closely to delivery expense. The larger the total proportion of the account’s business that went to Pilgrim, the greater the profits as delivery expense remains more or less constant.
Because some manufacturers offered margins considerably larger than others, sales of higher-margin items were encouraged.

9. Questions
Any questions so far?

10. Business Problems Diverse Sales Force Strategy and Policy enforcement
Territory Issues

11. Business Problems- Diverse Sales Force
Veteran Sales Reps
Seniority Issues
Focused on Relationships
Newer Sales Reps
Educated and Driven
Vets vs. Newbies

12. Strategy and Policy Enforcement
Sell High Volume or Sell High Margin
Policy:
Sales Calendar coordinating activities and accounts.
Neither was adopted heavily by Veteran Sales Reps.

13. Territory Issues
Supposed to be divided using Sales and Market Analysis Record System.
Actually Divided by Seniority and Geography
This heavily favored the Vets and left the Newbies with less than perfect accounts
All territories were picked through and not worked to its full potential.

14. Solution A mix of old and new
-sharing of accounts between old and new reps.
Certain product quotas
-make quotas for high margin products
Mix of salary and commission

15. Solution Sales rep retreat for division
Train and reiterate sales policies and strategy
Build bond between old and new reps
Compensate based on total sales and not per product profit margin basis
Behavioral monitoring
Call records
Account checksheets

16. Questions and Class Discussion
Are there any questions?