London Drugs Company, Research Paper Example

Abstract

This paper presents a brief history of the London Drugs Company, founded in Vancouver, Canada and ultimately becoming a household name in pharmaceuticals across the provinces of Western Canada.  The paper presents an RPV analysis of the organization. It examines the organizations control and quality management techniques and relates these to my own personal experiences in this area.

Brief History of the Company

The London Drug Company was first formed in 1945 On Main St., Vancouver, BC.  It was the year, the Second World War ended and the soldiers returned home from Europe.  The store aimed to revive a new Hope and was named after London, England.  The store projected a new image of peace and future prosperity.  Today the stores are in more than 35 markets across the western Canadian provinces of BC, Alberta, Saskatchewan and Manitoba.  They have become a household name in local pharmacy stores.  They lay claim to a customer base of 45 million people and provide a range of goods that embrace cosmetics, drugs, small appliances, photographic equipment, TVs, cell phones, electronics and even furniture.

London Drugs is one of the earliest discount stores in Western Canada, and they initially stocked 1000 ft.² of discounted goods, with an emphasis on cameras and photographic equipment at great discounted prices.  This was risky at the time because customers were used to being very niche focused on buying habits.  i.e. meat from the butcher,  bread from the baker etc. .  Nevertheless, the risk paid off and  65 years on they changed  the retail landscape in Western Canada

“In 1975, London Drugs was sold to Daylin Corporation.  The next year, that company ran into financial difficulties in the US branch of its business, and decided to put London Drugs up for sale”  (London Drugs, 2004).

Figure 1 The first store on Main Street Vancouver in 1945

It was Mr. Tang Louie, the owner of a chain of grocery stores in Vancouver that  quickly stepped in and acquired  the company.  He was quick to recognize the potential of the company.  This created a new era of growth for the HY Louie group and  expanded the Company into the other  Western Canadian provinces.  He introduced  brand names like that of Elizabeth Arden, Lancôme and Shiseido, whilst building a model of value and customer service.

RPV and Market Analysis

An RBV  [resource Based view] of London drugs provides the concept that “the firm possesses resources, a subset to which enable them to receive competitive advantage and another view that leads to superior performance.”  (Wade, 2005). Fig 2 provides the model illustration of this concept.

The model shows three elements (i) Productive use of resources (ii) Short term gains and (iii) the sustainment of the gains over time.

Figure 2 : Illustration of RBV approach

Competitive advantage phase

In 1945 for the two main things in order to gain competitive advantage.  [1] it to the store for extended hours, evening, weekends and Sundays.  Local governments accept this, but healthcare products, but everything else was tricky, but they did not stop the sale [2].  It offered a discount price key based upon full purchase of commodities.  The big breakthrough came in the 1950s when London drugs broke with tradition on the standard charges for dispensing these, they discount these and for the first time that Cooper residents have a choice of paying less or prescription drugs.

So in the short-term, London drugs outpaced its rivals by having longer hours in order to sell their products.  On those occasions, like Sunday’s, where they concentrated on pharmaceutical products, they nevertheless had a marketing opportunity showing the people that visited their stores the discounted prices on the other goods.  The breakthrough in discounted prescriptions increase their customer base across the whole of Western Canada, and even long-distance for mail-order prescriptions.

Sustainability Phase

Real sustainability came in the 1990’s when London Drugs seized the opportunity of photo finishing in the new digital camera age. ” At a time that other retailers were pulling out of the photofinishing market, London Drugs saw an opportunity.  If people were taking pictures differently, they would need to print their pictures differently, too.  Again, they worked with equipment manufacturers and invested in upgrades that have proven essential in the digital photo revolution.  The new millennium has reaped the benefits of this bold move. ”  (London Drugs, 2004).

The 4 P’s Marketing Mix

“The term marketing mix became popularised after Neil H Borden published his 1964 article  the concept of the marketing mix ”  (NetMBA, 2007)

With London Drugs the target market was initially the working consumers of the Vancouver market place. This later expanded to Western Canada and parts of the United States.  The Products would be based upon the introduction of leading Brand Names but with the ability to discount based upon the concept of bulk purchasing.  Price was highly influential and people were looking for value for money but not at the sacrifice of quality goods.  Hence the discount store but selling brand leader names would boost them ahead of their competition.  Place was important and they opened on the Main Street of Vancouver providing them a highly visible market presence.  People in 1945 were returning from the War and rediscovering the new possibilities that the store offered them.  Promotion The store highly promoted itself as the store of choice.  The concept of being open ” all hours” enable working people to visit the store and shop at times when they were not working.  By using cosmetics and pharmaceuticals as core products they were quickly able to introduce buyers to the store as a concept of a “one stop shop” in order to get most of their domestic goods.

Figure 3  Market Mix

A personal opinion

I was first introduced to the London drug store in 2005.  The immediate impression is of a fairly well polished conservative store.  The blue-and-white logo is a fairly good brand image, but it is starting to look a little dated, and the overall impression looks somewhat similar to that of the Wal-Mart stores.  The perception changes when you enter the store, and how they have actually layed this out.  There is a common or similar feelings toward London drug stores, and as such familiarity with one is the same as entering another store elsewhere.  The pharmacy and drug  counters are normally contained at the rear of the store.  The remaining stories then split out into a series of aisles that sell most of the consumer goods.  The exception to this is that of the camera and photographic section and the electronics and computer section, which are normally contained in separate cells.  So essentially you get to see an emphasis on four main sections within the store i.e.  ,  Pharmaceutical, photography, electronic and IT and general consumer goods.  The pharmaceutical section also incorporates the cosmetics area where there is a wide variety of brand leader goods available at discounted prices.

One of the main differences with London drugs, is it the quality of the products that are on sale.  By contrast to Wal-Mart, in  stores of this type we are witnessing a lot more cheaper, lower quality imported goods from China and Southeast Asia.  Whilst this is also prevalent in London drugs.  It is not to the wide degree of its competitive stores.  It is possible to find quality goods on sale produced in Europe and North America.  This quality of the products is found across the entire range of the store and not merely concentrated in one specific elements of it.  The store has recognized the need for consumer choice, and clearly has provided a degree of alternatives.  There are other cheaper low-end products there if you want them; equally, there are a range of high quality, effective products at a more expensive price for the more discerning consumer.  Other competitive stores have tended to fall into the junk store category and offer a wide variety of inexpensive, low quality and inferior goods from the Far East.

London drugs has inspired me to think about the importance of  strategic business planning, and the development of an effective marketing campaign.  It is important to know your customer and  the principal stakeholders of your business.  London drugs, ensured that they understood  what the customer wanted in terms of service and product delivery.  The importance of having high quality goods at a reasonable price that everybody could afford., relative to their income capability.  They consolidated the service model and expanded their regional distribution of goods and services.  They understood what their core business was and provided the expert capability in order to diversify this and meet the  increased consumer demand.

An example of good quality management is illustrated by the weight of the drugs developed the computer store side of its business.  In the first instance, the CEO travelled to Silicon Valley in order to get the major players selling in the retail store outlet.  In the first instance, this was rejected, as they stated drug stores simply do not sell high technology and computer equipment.  This did not deter London drugs and a suit against the likes of HP and IBM to sell products in their stores. ” This resource has become increasingly important as computers become more complex. London Drugs decided to formalize the role of in-store technicians. Now there would be a designated technician in every store with threshold qualifications. London Drugs chose the internationally recognized Computer Technology Industry Association and its A+ Certified status for every technician in every London Drugs store. ”  (London Drugs, 2004).

Figure 4: London Drugs Computer Counter

This new concept of having technical experts in the stores in order to support the technical product sales created a new model of customer service support  and delivery.  ” One of the things that makes London Drugs unique is that, in addition to typical drugstore products, we also sell pretty expensive home theatre systems, complete with the ability to architecturally install them in homes. We also are one of Canada’s largest retailers of computers, one of the country’s largest retailers of big-screen TVs. We also sell house wares, hardware and automotive products. And we are one of Canada’s largest photo finishers.”  (Murphy, 2005).

One of the important success stories related to London drugs is that of the customer service model.  Essentially, they offer a full service solution.  Whether it is a expensive home theatre system or a computer network configuration, they will help you to find the precise specification, and technology system to meet your individual needs.  In addition, if this needs custom installation.  They will arrange for the implementation to be carried out for you.  They also examine precisely what will try to obtain from your system.  They are excellent at pointing out enhanced value technology solutions and potentially we obtained either improved value for money or optimize the performance of your system.

London drugs has made full use of the technology age and the online mail-order service is extremely impressive in terms of the range and quality of goods that have marketed online.  In more recent years.  They have been quick to recognize the important emerging market of the health and wellness industry.  The website provides a comprehensive range of products that are available for both this store and find mail-order online.[1]

Works Cited

London Drugs. (2004). The 1970s: The Times,. Retrieved 5 30, 2010, from London Drugs: http://www.londondrugs.com/Cultures/en-US/Content/CorporateInfo/The+Story+of+London+Drugs/The+1970s.htm

Murphy, J. (2005, 9 1). London Drugs Lays the Groundwork For Growth With Network Modeling. Retrieved 5 30, 2010, from Supply Chain Brain: http://www.supplychainbrain.com/content/industry-verticals/pharmaceuticalbio-tech/single-article-page/article/london-drugs-lays-the-groundwork-for-growth-with-network-modeling/

NetMBA. (2007). The Marketing Mix. Retrieved 5 30, 2010, from NetMBA: http://www.netmba.com/marketing/mix/

Wade, M. (2005, 9 10). R e s o u r c e B a s e d V i e w o f t h e F i r m. Retrieved 5 30, 2010, from Appalachian State University: http://www.istheory.yorku.ca/rbv.htm

[1] http://www.londondrugs.com/Cultures/en-US/Categories/Health/default.htm?BreadCrumbs=Health;Health&Catalog=Health&RootCategory=Health&Page=1&Sort=0