CASE STUDIES FOR PART FOUR

more’s representative, Berry. He supplies them with whatever information and assistance they may request. Technically, since Kenmore does not operate its own business in South Africa, these detail men are employed by one of the two distributors which process Kenmore sales; Kenmore reimburses the distributors for their expenses, which amounts to over $15,000 per man. There would be no legal obstacles involved in establishing sales offices in South Africa, but, of course, some legal and operating costs would be involved. The present set-up is primarily one of convenience growing from Kenmore’s original entry into the South African market and there has been no pressure for changing it. The nature of Kenmore’s products requires that they may be promoted on an ethical basis. They are advertised only to the medical profession, and the work of the detail men is largely with doctors rather than retail drugstores. The detail men attempt to show the doctors and purchasing departments of hospitals and clinics the merits of Kenmore products and in this way pull these products through the distributors and retail outlets. In his report, Mr. Berry cites the following as reasons for Kenmore’s lack of growth in recent years:		557
	1. Increased Competition With the entry of a second major foreign pharmaceutical house in South Africa, Kenmore now must compete with two large competitors, both having some manufacturing capacity in South Africa. These two firms, one American, the other British, have been able to underprice Kenmore on several products; they have lower shipping costs (i.e., costs of shipping raw materials are less than costs of shipping finished product). Furthermore, these companies and the several small local producers have snagged by far the major portion of government purchases which are awarded on the basis of competitive bidding between “domestic” producers. Government purchases represent about 5 per cent of total pharmaceutical sales in South Africa. 2. Inadequate Sales Coverage Mr. Berry feels that in order to take advantage of the growing market, Kenmore must increase the size of its sales force. Seven men, he feels, can cover effectively less than 3,000 of the 8,000 doctors in the country. 3. Long Waits for Deliveries Due to Long-Distance Shipping Mr. Berry cites the fact that distributors do not provide sufficient warehousing space for Kenmore, and as a result, there is often insufficient inventory on hand to meet the large orders, which may be obtained from time to time.
To overcome these drawback, Mr. Berry makes the following recommendations:
1. Increase the size of the detail (sales) force from seven to ten men immediately, and plan to add another ten men within the next three years.