Pharmaceutical industry is knowledge-based, high value-added industry. Recently a survey result showed that 12 out of 500 world’s most prominent companies were pharmaceutical companies, and the industry indeed has a bright future. Since the industry...
Pharmaceutical industry is knowledge-based, high value-added industry. Recently a survey result showed that 12 out of 500 world’s most prominent companies were pharmaceutical companies, and the industry indeed has a bright future. Since the industry is directly related to a human life, it also generates substantial public benefit and external economics effect.
Domestic medical product market has been steadily growing, but, since the separation of prescription and dispensations, the market has gone through many changes. As the sales ratio of prescribed medicine rises, that of general medicine is declining. The sales composition of pharmacies and pharmaceutical companies has changed significantly.
Following the Free Trade Agreement (FTA) with the U.S effective from February 2006, domestic pharmaceutical industry is confronted with hardship in overall business environment due to changes in policies regarding various issues such as reducing drug manufacturing cost. As people can easily get medicine from a drug store, pharmaceutical industry needs to come up with long-term strategies to cope with dramatically changing market environment.
This study conducts a theoretical examination of relation among company reputation, brand equity and customer loyalty as intangible assets of a pharmaceutical company that call for strategic, long-term management. Based on this, the study established a RBC (Reputation-Brand equity-Customer loyalty) model. The study identifies both direct and indirect impact of company reputation factors - products, service quality, ethical management, social responsibility, and company image -on brand equity and customer loyalty. This is to analyze weight of impact of the reputation factors, and mediating effect of brand equity.
The study also analyzes the impact of the aforementioned factors on brand equity and customer loyalty by different customer groups (pharmacists/consumer) to verify difference in their impact.
According to the research, reputation of a pharmaceutical company has positive impact on company image, expertise, and social responsibility in that order; brand equity has highly positive impact on customer loyalty.
The RBC model and analysis of impact of reputation factors on brand equity by different customer groups revealed that as for pharmacists, expertise, sincerity, and a company image have positive impact on brand equity in that order. Expertise was the only factor that showed direct impact on customer loyalty. For consumers, the order was expertise, company image, followed by social responsibility. None showed direct influence on customer loyalty.
Researches on reputation of a pharmaceutical company have not been conducted before, and this study suggests that the impact of a company reputation needs to be analyzed separatelyfor different customer groups when the industry engages in both B2B (business-to-business) and B2C (business-to-customer) activities.
To facilitate domestic pharmaceutical companies to acquire competitive edges in a rapidly changing business environment,the study suggested importance of a company reputation, which has been neglected so far, based on a RBC model. Also, the study identified relation among reputation factors, brand equity and customer loyalty in order to establish a framework to manage intangible assets. The significance of the study can be found in that it suggested marketing strategies to ensure continued competitive advantage of pharmaceutical companies.
The study is expected to contribute to assist domestic pharmaceutical companies to acquire competitive advantage in competing with other industries, and with global companies.