Principle of marketing - Essay Example

Principle of Marketing Marketing as such is defined as a set of human activities directed at facilitating and accomplishing exchange of goods and materials. Market in general can be defined in two ways as Consumer market or industrial market. Consumer market is the market where goods or services are sought by individuals for their own or family use. Retail marketing serves this particular market. Boots Plc and Superdrug Plc are part of the retail business in OTC healthcare drug and chemists sector.

Boots Group PLCStarted in 1849 with selling of herbal remedies from a small store in Goose Gate, Nottingham today Boots has its presence in more than 15 countries. After its merger with Alliance Unichem in July 2006 the company seeks to become the world's leading pharmacy-led health and beauty group. The alliance aspires to develop its core businesses of retail pharmacy and wholesale across the world and become a significant player in many major international markets. With more than 1500 retail outlets of Boots alone the Alliance Boots has now more than 3000 retail outlets, besides a good presence on the net.

The combined skills, strengths and brands of Alliance Boots makes it Europe's leading pharmacy-led health and beauty group. This is a Market-leader in own brand products.Superdrung Plc Superdrug, on the other hand is UK's fashion conscious beauty and health retailer. Today it is the second-largest beauty and health retailer with over 740 stores in England, Scotland, Wales, Northern Ireland. Superdrug currently has 226 in-store pharmacies. During the last two year the company has made good investment in establishing itself as a brand in UK.

Superdrug recently took up a 10 month campaign for reducing the VAT on condoms and came out successfully when the UK government reduced the VAT from 17.5% to 5%. Now the company has taken up the issue of slashing the VAT on kids' sun care products and for reclassifying the sun-care cream as an essential health care product instead of a luxury beauty item. In addition the company's stores also hosted Metrosexual Men and Lipstick Lesbian days. Highlighting such issues obviously helps in establishing the brand.

The market for retail chemists is of course not a seasonal market. Drugs and beauty creams are of course consumed round the year, the percentage of consumption may vary to a certain extent depending upon the season. The market for retail chemists and drugstores is quite complex as the range of products is very big and matching number of retail outlets. According to a market survey1, the total value of this business is around m 9,541 at retail selling prices. The market is projected to become worth m 11,389 by 2010 with an annual growth of around 4.5%. The overall number of retailers in the category remains more or less static due to certain restrictions laid out by government legislation controlling the location and number of dispensing pharmacy outlets.

The system of registration - in the form of the National Health Service (NHS) Contract for Pharmacies, introduced in 1987, has not allowed an increase in the number of retailers. But there's intense competition amongst the existing retailers in the business. Superdrug has been feeling the heat as the company reported a decline in profits by about 20% to GBP20.3 million in 2005. These drug stores have to live with competition, not only from within the category of chemists and drug stores but also with the likes of Tesco, Wal-Mart, Saisbury, Asda etc, which also keep the beauty concepts and some other related branded items as part of consumer goods, because an average consumer finds it more convenient to purchase such items with other grocery items.

The mergers and acquisitions that have taken place during recent times are an indication that in order to consolidate and take on the hypermarkets, the industry will have to pool their resources together. Around 41% of retail outlets are now owned by2 large chains, such as Lloyds Pharmacies and Moss Chemists, the chains themselves being owned by the two largest pharmaceutical wholesalers in the UK - AAH Pharmaceuticals and Alliance Unichem. Boots Plc has started reaping the benefits after its merger with Alliance, with 2600 outlets in UK alone, while Superdrug is still carrying on its own.