GlaxoSmithKline's New Sales Force Compensation System in the US


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Case Details:

Case Code : MKTG258
Case Length : 10 Pages
Period : 2009-2010
Pub Date : 2010
Teaching Note : Not Available
Organization : GlaxoSmithKline Plc
Industry : Pharmaceutical
Countries : US

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Changing Dynamics in the Pharma Selling Environment

The environment for pharmaceutical marketing and sales changed significantly in the late 1990s and the 2000s. The earlier approach of the marketing team developing the marketing communication and the sales team visiting the doctor and detailing the product to him/her was no longer enough...

GSK's Sales Force in the US

GSK, which at one time maintained 9,000 sales representatives or Professional Service Representatives (PSRs) to promote its products in the US, had decreased its sales force over time. For instance, in November 2008, it cut 1,800 positions, bringing the US sales team down to 7500...

Delinking Sales Force Compensation and Sales Targets

The company realized that in the first decade of the new millennium, there had been a significant change in the US healthcare marketplace. This change, according to Connelly, was driven by the "demand by patients, healthcare providers, and payers for higher quality care, lower costs, and better health outcomes"...

Reactions

This move by GSK elicited mixed reactions from sales professionals, industry observers, and experts. Some felt that this marked a return to the old model of selling pharmaceutical products based on product knowledge rather than hard sell tactics...

Looking Ahead

Industry observers viewed GSK's new sales force compensation plan as a radical change and felt that it could transform sales and marketing. Analysts felt that as GSK was one of the world's leading pharmaceutical companies, the changes it made in its compensation for the sales force were likely to influence the business strategy of its competitors...

Exhibits

Exhibit I: World's Top 10 Pharmaceutical Companies
Exhibit II: Statute on Exemption for Outside Sales Employees under the FLSA
Exhibit III: Excerpts from US District Court Judge Frederick Martone's Ruling


 

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