Sales Management | January 17^th, 2020

Sales Territory Realignments and its Impact and Consequences | Engelhard Arzneimittel GmbH & Co. KG

Tobias Frank (Director National Sales) and Christine Collot (Head of Shopper & Trade Marketing)

For the last guest lecture of this year’s sales management course, the IfM welcomed two representatives from Engelhard Arzneimittel, Tobias Frank, Director National Sales, and Christine Collot, Head of Shopper & Trade Marketing. Not too long ago, Christine Collot participated in the sales management module herself. The topic of the day was the sales territory realignment that happened at Engelhard a few years ago, and its impact and consequences.

To familiarize the students with the pharmaceutical industry, the two speakers briefly introduced the company. Originated from a single pharmacy in Frankfurt in 1872, Engelhard has been growing fast, being owned by the 5^th generation of the Engelhard family today. The medium-sized company is active in more than 100 countries, meaning that you are able to treat your cough with Prospan, as one of their main products, almost everywhere in the world. The biggest challenge for Engelhard is to convince the pharmacists to buy from them. In Germany, there are more than 16.000 pharmacies.

Offering products in a highly competitive environment with large competitors, repeatedly new entrants and international mergers, Engelhard had faced high pressure on prices, margins and conditions. Similarly, the changing role of pharmacists with new governmental restrictions as well as the necessary adaptation to altering consumer behavior represents additional specific challenges. This contributes to stagnating sales and, thus, stagnating market share. As a consequence, Engelhard undertook a big realignment of their sales force and territories. In a first step, they had to deal with questions like: Who are the “right” customers – i.e., should they rather serve pharmacists or physicians? Should they increase the number of salespeople? Which customer relationships should be intensified? Among others, decisions about which customers to call, frequency of visits and by how many sales people had to be made. As the students already learned during their lecture, territories were reassigned according to different alignment metrics, including the travel time and distance and sales volumes. Tobias Frank underlined that, in a situation like that, a good change management is essential. In a small case study, he instructed the students to put themselves into the positions of the managers facing a territory realignment. In 6 groups the students worked on the design of a change process and came up with interesting ideas and concepts.

Being an expert on the consequences of the alignment, Collot presented short- and long-term effects, including the salespeople’s perceptions of the changes, the influence on overall performance, the identification of satisfaction and performance drivers and the impact on salespeople’s motivation. All in all, the territory realignment at Engelhard has been successful and resulted in an increase of the number of visits and sales. Those realignments, executed from time to time, often offer growth potential for sales driven companies. However, there are a lot of different factors that have to be taken into account, in particular a good change management.

In the end, Frank and Collot drew the students’ attention to career opportunities at Engelhard in Frankfurt, including internships and trainee positions. During the “Meet & Greet” to which Engelhard had invited, the students had the chance to learn more about the daily business in the pharmaceutical industry.