INTRODUCTION

1.1 Background of the Study

The rising cost of maintaining a salesforce has been a concern for most sales managers in today’s increasingly competitive markets. In many pharmaceutical firms, direct selling costs account for almost half of all marketing expenses. Often, the cost of maintaining the salesforce is greater than advertising and promotion costs and exceeds 14 percent of a typical firm’s revenues. The median cost of a business-to-business call is about N2,500 in Nigeria. Therefore, sales managers have the crucial responsibility to make sure that their salesforces contribute to the company’s objectives effectively and efficiently. The current economic environment in Nigeria has prompted significant cost savings especially in pharmaceutical and health care industry, and has led to demands for more accountability. In turn, there have been calls for evaluating the contribution of the marketing function to the firm. Within the marketing department, sales managers are becoming increasingly concerned about justifying their investments and are facing stiff competition against each other in competing for scarce resources, such as additional salespeople. Yet, an area that has received relatively little attention, especially in the pharmaceutical and health care industry in Nigeria, is the assessment of the impact of a salesforce motivation on effective implementation of a CRM strategy (Moynihan, 2008: 1163; Maduka, 2006: 2735).

In the Pharmaceutical Business Environment Ranking, Nigeria is found towards the bottom of the table featuring fourteen key countries in the Middle East and Africa (MEA) region. While Nigeria continues to be considered one of the least attractive markets in the region, its potential beyond the forecast period is relatively considerable, given the sheer population size and it’s high disease burden. Nigeria’s pharmaceutical market is forecast to grow to US$ 1.27 billion in 2012, thus more than doubling the 2007 figure of US$ 596 million. In local currency value, five – year growth will be considerably lower, given the forecast inflation levels. In the meantime, the federal government of Nigeria remains supportive of the local pharmaceutical and health care industry, despite the fact that it is failing to meet the target of 70% of domestic supply. The industry growth is imperative for the National Health Insurance Scheme (NHIS) target of universal health coverage by 2015 (Tungarazer, 2008: 1193-1196; Kang, 2009: 28-34; Odutola, 2008: 43-45).

Pharmaceutical and health care companies commonly spend a large amount on advertising and personal selling. In Nigeria, drug and other health care companies spend about $20 million a year on promotions. They generally employ salespeople (often called ‘medical reps’ or ‘drug reps’) to market directly and personally to physicians and other health care providers. Physicians, physicians’ assistants, and nurse practitioners are perhaps the most important players in pharmaceutical and health care sales because they write the prescriptions that determine which brands will be used by the patient. Influencing the physician is often seen as the key to prescription of pharmaceutical and health care sales. A medium–sized pharmaceutical company in Nigeria might have a salesforce of 50 representatives. The largest companies have about a hundred of representatives. Currently, they are approximately 5,000 salespersons in Nigeria pursuing some 7,000 pharmaceutical and health care prescribers. In Nigeria, drug companies spend millions of naira annually sending salespersons to physician offices. Commercial stores and pharmacies are a major target on non-prescription sales and marketing for pharmaceutical and health care companies (Moyniha, 2008: 1163; Myers, 2008: 1169811699; Mackenzie, 2006: 27-35).

The shift away from transaction-based marketing, which focuses on short-term, single exchange, to customer–focused relationship marketing is one of the most important trends in pharmaceutical and health care marketing today. Companies recognize that they cannot grow simply by identifying and attracting new customers; to succeed, they must build loyal, mutually beneficial relationships with existing customers, suppliers, distributors, and employees. This strategy benefits the bottom line, because retaining customers costs much less than acquiring new ones. Building and managing long-term relationships between buyers and sellers is the hallmark of relationship marketing in the pharmaceutical and health care industry in Nigeria. Relationship marketing is the development, growth and maintenance of cost-effective, high-value relationships with individual drug customers, suppliers, distributors, retailers, and other partners for mutual benefits over time. Recently, emerging from and closely linked to relationship marketing in this industry is Customer Relationship Management (CRM). This is the combination of strategies and tools that drive relationship programs, reorienting the entire organization to a concentrated focus on satisfying drug customers. CRM leverages technology as a means to manage customer relationships and to integrate all stakeholders into a company’s product design and development, manufacturing, marketing, sales, and customer service processes (Boone and Kurtz, 2004: 164-187; Lamb, Hair and McDaniel, 2004: 640-644).

CRM represents a shift in thinking for everyone involved with the pharmaceutical company–from the CEO down through and encompassing all other key stakeholders, including suppliers, dealers, and other partners. All recognize that solid customer relations are fostered by similarly strong relationships with other major stakeholders. However, the principles of personal selling as just described are transaction oriented – their aim is to help salespeople close a specific sale with a customer. But in many cases, the company is not seeking simply a sale: it has targeted a major customer that it would like to win and keep. The company would like to show that it has the capabilities to serve the customer over the long haul in a mutually profitable relationship. The salesforce usually plays an important role in building and managing customer relationships. Today’s large customers favour suppliers who can sell and deliver a coordinated set of products and services to many locations, and who can work closely with customer teams to improve products and processes. For these customers, the first sale is only the beginning of the relationship. Unfortunately, some pharmaceutical companies ignore these new realities. They sale their products through separate salesforces, each working independently to close sales. Their technical people may not be willing to lend time to educate a customer. Their engineering design, and manufacturing people may have the attitude that their job only is to make good products and the salesperson’s to sell them to customers. Their salespeople focus on pushing products toward customers rather than listening to customers and providing solutions. But other pharmaceutical companies, such as those in North America, Great Britain and Western Europe, however recognize that winning and keeping accounts requires more that making good products and directing the salesforce to close lots of sales. It requires listening to customers, understanding their needs, and carefully coordinating the whole company’s efforts to create customer value and to build lasting relationships with important customers. Salespeople are an important link within a firm since they help translate sales and marketing strategy into effective implementation. Therefore, studies that investigate the activities and attitudes of the salespeople in Nigeria, can provide sales management with important in sights and contribute towards filling an important gap in the literature..

1.2 Statement of the Problem

CRM is a comprehensive business model for increasing revenues and profits by focusing on customers. Many companies are now adopting CRM as a mission-critical business strategy. These companies are redesigning internal and external business processes and associated information systems with them. Because the focus of CRM is aligning the organization’s internal and external systems to be customer – centric, marketing as a discipline becomes a core contributor to the success of CRM by virtue of its disciplinary expertise on customers. Specifically, the salesforce is a group within most firms that can add substantial value to the success of this process. The salesforce can play a pivotal relationship management role.

More sophisticated approaches to data management are a key enabler of CRM. Yet, it is a serious mistake to consider CRM as a mere software. In fact, many pharmaceutical firms in Nigeria are struggling with their CRM initiatives probably because they have bought the sophisticated software, but do not have the culture, structure, leadership, or internal technical expertise to make the initiative successful. The biggest mistake is thinking that CRM is owned by the IT people simply because the process is software – driven. But if anyone should own CRM, it should be the customer contact team within a firm, which usually means the salesforce. Problems leading to CRM failure often are traced to organizational, not software, issues. A recent report from a conference board information group indicates that half of the companies’ survey in North America and Europe suggest that lack of salesforce alignment is the leading difficulty in CRM implementation (Myers, 2008: 1173-1178).

Salesforce have a key role to play in fostering successful relationships. They spend a large amount of time by themselves calling on customers and traveling between accounts. This means that most of the time they are away from any kind of support from their peers or leaders, and they often feel isolated and detached from their companies. Consequently, they usually could require more motivation than is needed for other jobs to reach the performance level management desires. Salespeople can also be fiercely independent. Particularly, very successful salespeople may balk at changing their customer approach substantively when their interests are not integrated into the system. This potential pitfall of CRM implementation, if not properly addressed, can be devastating to a firm financially, operationally, and culturally. As stated earlier that if a CRM system fails, the first place to look is not within the software but within the ranks of management. This gave rise to the importance of this study, which was to examine the impact of a salesforce motivation on effective implementation of a CRM strategy in the pharmaceutical and healthcare industry in Nigeria.

1.3 Objectives of the Study

The broad objective of this study was investigating the impact of a salesforce motivation on effective implementation of a CRM strategy in Pharmaceutical and health care Industry in Nigeria. The specific objectives included:

1. To ascertain if CRM strategy exists in the pharmaceutical and healthcare industry in Nigeria.
2. To examine if CRM strategy is effectively implemented in the pharmaceutical and health care industry in Nigeria.
3. To find out if salesforce is motivated in the pharmaceutical and health care industry in Nigeria.
4. To examine if the elements of the saleforce motivation mix are effectively implemented in the pharmaceutical and health care industry in Nigeria.
5. To determine if there is any relationship between the saleforce motivation and the effectiveness of CRM strategy implementation in the pharmaceutical and health care industry in Nigeria.

1.4 Research Questions

To achieve the purpose of this research, the study was guided by the following questions:

1. What elements of the CRM process are evident in the pharmaceutical and health care industry in Nigeria?.
2. What is the extent of the CRM implementation in the pharmaceutical and health care industry in Nigeria?
3. How motivated is the salesforece in the pharmaceutical and health care industry in Nigeria?