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Executive Summary

Support for National Wholesale Druggists' Association members' consumer products marketing programs is one of the key strategic objectives for the NWDA staff in the coming year, President Charles Trefrey said during the association's annual meeting Nov. 1-5 in San Diego. Trefrey noted that "while dollars of OTC products continue to grow, from $1.65 bil. to $1.79 bil. from 1984 to 1985, their relative share of drug wholesaler's product mix dropped slightly. Our showing in the toiletries category is similar, where not only did share decline but actual dollars dropped from 1984 to 1985. We are also losing ground in the sundries category." In an effort to reverse the trend, Trefrey said, the association staff will devote added resources to develop programs to assist members in increasing their share of consumer products. Trefrey added that NWDA is in the process of recruiting for the newly created staff position of director of consumer products marketing. The problem, Trefrey declared, "is three-fold. Many independents seem to have given up on the front end of their store. Many don't have the internal resources and marketing knowledge to fight the competition effectively. Secondly, we need to aggressively pursue the customer bases that are now channeling much of the H&BA business. Lastly, drug wholesalers who wish to be successful in consumer products sales must commit sufficient resources to make the difference in marketing these products through their customers." The attention the NWDA staff will give to consumer products marketing is part of an overall effort to identify strategic goals of the organization. NWDA has spent the last year in developing a plan for the future to guide the organization's activities, and a comprehensive report is being prepared, Trefrey said. In remarks to the membership earlier in the meeting, Trefrey placed NWDA activity in the context of a changing business environment for drug wholesalers. "The old era was technology oriented and brought with it reduction in operating costs unparalleled in our history. The new era will be marketing oriented, much more so than today. [There are] still technological advances ahead, but each having lesser capabilities for cutting operating costs because there is less now to save, and zero is simply unattainable." Trefrey continued: "These hard facts drive us in wholesaling more deeply into marketing, whether it is niche marketing or customer broadening and truly heavy duty distribution. Right now, most of our members are neither here nor there. This period of transition will probably last until or through about 1989. The challenge, Trefrey declared, is to "avoid the drift of gross margins that decline faster than technology can reduce cost." NWDA Chairman Joseph Churchman, Alco Health Services president, who was installed at the annual meeting, also said that drug wholesaling is going through a period of change. Noting that wholesalers are continuing to experience declines in gross margins, Churchman pointed out that the economic environment is partly the reason. "We have been accustomed to conducting our personal and business finances in a period of high inflation. . . with a little luck, inflation would carry you." Now with decreased inflationary pressures combining with consolidation among wholesalers, manufacturers and both hospitals and retailers (through the formation of buying groups), the industry must respond with increased efficiency and high standards of service in order to sustain profit levels, churchman said:

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