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SNAPSHOT

Institution: Liberty Discount Drugs, an independent retail pharmacy

Location: Avon (population 44,779), located in the East South Central region of the United States

Characters: Ms. Laura Winters, Owner and Pharmacist Mr. David Parker, Staff Pharmacist (both of Liberty Discount Drugs)

Context: In this case, the owner of an independent retail pharmacy is puzzled that store sales have plateaued but it takes the perspectives of an outsider to help her understand why.

Laura Winters is at a loss. Sales at her retail pharmacy are stagnant and have been so for quite some time. She is fortunate that she is maintaining her current level of business, but nothing seems to lift sales volumes. In recent months and years, Laura has attempted to revitalize her business and prompt growth, but her efforts have failed to generate traction in the marketplace. Knowing that stagnation ultimately leads to failure, she is determined more than ever to get to the bottom of things and has made this her top priority.

Laura is the owner of Liberty Discount Drugs where she also serves as its chief pharmacist. Liberty Discount Drugs is an independent retail pharmacy located in Avon, a city of 44,779 situated in the East South Central region of the United States. As for the competitive landscape in Avon, it is fairly stable, with the area not seeing the introduction of a new pharmacy in nearly 7 years. This starkly contrasts with a prior period in which Avon witnessed the arrival of a number of large national retail chain pharmacies, which placed pressure on the independent retail pharmacies in the market. This ultimately forced the closure of several independent pharmacies in Avon. Fortunately, however, Liberty Discount Drugs survived this tumultuous period and currently operates alongside several national chain stores and a few independent pharmacies in the city.

Laura became the owner of Liberty Discount Drugs 15 years ago, immediately after graduating from pharmacy school, but she has always been familiar with store operations. Liberty Discount Drugs was founded by her father 35 years prior to the transition of ownership. She essentially grew up at Liberty Discount Drugs and has never worked at any other place of business. This focused experience is a good thing on one hand, in that Laura has familiarity with the history and operations of Liberty Discount Drugs, but bad on the other, in that it has limited her exposure, something that is especially problematic in that this can lead to myopic perspectives of the marketplace and result in missed opportunities.

Liberty Discount Drugs' primary revenue generator rests with prescription pharmaceuticals, but critical secondary revenue comes from the store's moderately sized consumer goods and services retail section. This section, located in the front part of the store, includes everything from candy and detergent to digital film processing and package shipping services. In addition to the revenues generated by consumer products retailing, this component also serves to draw customers into the store, providing opportunities for Liberty Discount Drugs to capture their lucrative prescription pharmacy patronage.

With a 50-year history in Avon, Liberty Discount Drugs has its share of loyal customers, some spanning generations of the same family, creating a stable customer population, but the store has had difficulties in growing its customer base, causing sales to plateau. Market share has been level for quite a few years, this despite numerous attempts to push sales higher, including the renovation of Liberty Discount Drugs' retail space 5 years ago, improvements in parking 3 years ago, frequent placement of advertisements in local newspapers, use of direct mail solicitations sent to target markets, and the initiation of low-price guarantees on prescriptions. All of this, however, has served only to maintain, not grow, Liberty Discount Drugs' customer base.

Laura understands that her lack of experience at other pharmacies both within and outside of Avon probably is limiting her ability to break the sales stagnation that she has been witnessing. She simply has not experienced varying business scenarios and learned methods to adapt operations and overcome obstacles. Knowing this, Laura has come up with an idea that just happened to coincide with another business necessitythe hiring of a new pharmacist to replace one who was retiring.

Laura has already selected a candidateDavid Parkerand forwarded an offer that David has accepted. David is an experienced pharmacist and, in previous employment positions, he also has managed business operations. He is seeking to move to Avon from a much larger metropolitan area, giving him fresh eyes in which to view and evaluate Liberty Discount Drugs and the city of Avon. David is scheduled to begin his new position of employment at the end of the month, but in the meantime, Laura asked him to study Liberty Discount Drugs in the context of the marketplace of Avon and surrounding communities and seek to identify methods to boost sales. David happily agreed to do so, promising to share his views when he reports to work.

A couple of weeks pass by and, on David's first day of work, the topic of sales growth is first and foremost in Laura's mind, with her eager to hear David's insights and suggestions. Happy to share his perspectives, David conveyed that, based on his informal market research over the past 14 days or so, he viewed Liberty Discount Drugs to be stuck in a time warp of sorts, noting that from his perspective, the drugstore had not changed with the times. He pointed out that the store indeed had been modernized over the years, that customer service was excellent, and that a loyal customer base exists, but Liberty Discount Drugs appeared to be addressing the populace of Avon as it was decades agoa predominantly white communityrather than addressing the marketplace as it is todaya multicultural city with large populations of whites, blacks, and Hispanics. The demographic composition of the city and even the section of the community surrounding the store had changed over the years, spurred on by changing perspectives of society, the growth of industries in the area that created new jobs and fueled growth, and related matters.

David noted that after a review of consumer products on Liberty Discount Drugs' store shelves, he found nothing to indicate that the store was addressing the wants and needs of the multicultural marketplace. He noted that, as any consumer behavior text will confirm, tastes and preferences between and among different populations, at least in some cases, will be different, and that Liberty Discount Drugs was not addressing these differences. Although the consumer products retailing section of the store provided only a secondary revenue source, it was very important for the purpose of drawing customers' pharmaceutical business. Without providing consumer products that appealed to diverse audiences, the draw of this component of the store was unnecessarily limited.

Of equal concern, David observed that the advertisements and other marketing communications forwarded by Liberty Discount Drugs featured only members of the white population, potentially deterring minority patronage. Given everything he noted, it was very clear to David that Liberty Discount Drugs was ignoring the fastest growing populations in the marketplace. He believed that, with a redirection of attention to diverse audiences, the drugstore likely would witness increasing sales.

Laura's eyes were opened. While Liberty Discount Drugs had successfully attracted some patronage from minority populations in the area, business had never been as robust as she had desired. Acknowledging her limited exposure to other establishments and markets, it simply never occurred to Laura that Liberty Discount Drugs' product selection and advertising were serving as potential deterrents to patronage.

Through David's past exposure to many pharmacies and marketplaces, he was able to see something that had been elusive to Laura. With good effort and attention, Laura believed that sales from growing, diverse populations could give Liberty Discount Drugs the boost that it needs to move beyond the sales plateaus witnessed in recent years. With a newfound perspective of how to attack the problem of sales stagnation, Laura and David decided to work toward crafting and implementing an effective plan of action.

DISCUSSION

1.Based on your knowledge of this case and of the discipline of marketing, what errors of good marketing practice do you view Laura to have committed? How would you suggest that she rectify those errors and forge a path toward marketing excellence for Liberty Discount Drugs. Please justify your responses.

2.David indicated that the consumer products at Liberty Discount Drugs fail to adequately address the wants and needs of the multicultural marketplace. He notes that the store appears to be focused primarily on addressing the wants and needs of the white population and that this is a potential deterrent to minority customers. Based on the information provided in the case, what products or product variants might have been missing from the store shelves at Liberty Discount Drugs? You might wish to visit a large pharmacy in a diverse area of your local market to address this inquiry better.

3.David notes that the advertisements deployed by Liberty Discount Drugs lacked minority representation, citing this as a potential reason for the store's inability to attract minority customers. Do you believe advertisements that feature minority populations play a role in attracting the patronage of these groups and, if so, to what degree? Please justify your views on this matter.

4.Assume that you are planning to open an independent retail pharmacy in your local market. Give the hypothetical establishment a name and select a particular location in the market where the store will be situated. Then, estimate the store's trading area and analyze the population demographics in this area. Assuming that your store sought broad-based patronage from those in the trading area, design a newspaper advertisement promoting its grand opening that would broadly appeal to the populations surrounding the establishment. While a hand-drawn sketch will suffice, an advertisement designed using graphics software is preferred.

5.In this case, Laura has neglected to monitor the environment surrounding Liberty Discount Drugs and her establishment is paying the price for her oversights. Although the case presents an extreme example, oversights and failures associated with monitoring the environment are quite common. What steps would you recommend to ensure that institutions do not neglect the important duty of environmental surveillance?