Question 1:

What is promotion?

Which sales promotion tools are most commonly used for supermarket products? Give reasons for your answer.

Question 2:

The Pharmaceutical industry

Barriers to entry are high because of the need for huge fixed research and development costs and economies of scale in selling to physicians. Substitutes for an effective drug are slow to prepare, and Buyers have not historically been price sensitive.

Suppliers, who give mostly commodities, have little power. Finally, Rivalry has been moderate and focused not on price cutting that erodes industry profits but on other variables such as R&D that tend to expand overall industry volume. Government legislation has also slowed competitive imitation. Industry structure in pharmaceuticals has been highly favourable to profitability, supporting sustained returned on investment among the highest of any major industry.

Using Porter's five forces model critically analyse the above case and formulate a strategy that a firm in that position could adopt.