Renhuang Pharmaceuticals


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Renhuang’s Marketing Strategy

Renhuang employs a multi-channel marketing strategy to reach out to its consumers – OTC Market, Direct Sales, Wholesale, and Raw Materials.

The below table provides a breakdown of these channels by revenue contribution for fiscal year 200x:
To achieve its goals, the Company uses a four-pronged approach:

First, build brand awareness through advertising and education utilizing TV, radio, newspaper, magazine, trade publications, pamphlets, store flyers, etc.

Second, leverage a variable pricing strategy to increase its market penetration in non-urban areas, where 90% of the Chinese population resides in the countryside and have low income level. By using a variable pricing strategy adjusted to the lower income consumers in non-urban areas, Renhuang is targeting increasing market penetration of its TCMs in these areas.

Third, target key cities such as Beijing and Shanghai to serve as geographical sales centers that distribute Renhuang‘s products to major drug chain stores in the urban and suburban areas around the city, supported by advertising and promotions.

Fourth, focus on top-tier hospitals by leveraging its high-quality standard and manufacturing processes. Traditionally, hospitals in China are divided into different tiers due to different capabilities. Junior level hospitals only cover small areas, middle level ones cover several areas, and top-tier hospitals cover multiple regions. Renhuang has a top-down strategy and is targeting the top-tier hospitals, and will gradually gain access to middle and junior level hospitals when it has established a strong brand name for its products in the top-tier hospitals.

Renhuang’s Sales Strategy

Renhuang distributes its products through a multi-layer sales network of over 2,000 sales agents organized under 70 sales centers across 24 provinces that cover over 50% of greater China and an estimated 80% of the Company‘s target areas. Furthermore, Renhuang has strong alliances with distributors who have established sales channels but lack manufacturing or product development capabilities. Renhuang‘s products are not only sold extensively across China, but are also exported to Russia and Southeast Asia.

The below chart provides a breakdown of these sales channels by revenue contribution for fiscal year 200x. CCG recommends creating a pie chart to show this information with clearer definition of each type of sales channel.

chart2

map

Renhuang‘s extensive network of 70 sales centers across 24 provinces in China further extends support to its regional sales agents and contracted distributors. The vast majority of the Company‘s regular sales force is commission-based.

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