Case Study Johnson Johnson Marketing Essay

Johnson & Johnson Consumer Products Division is one of the leading fast moving consumer goods manufacturers in India. It is also among the most consistent and successful enterprises not just in the J&J world-wide group of companies, but also in India. Johnson & Johnson Consumer Products division has been growing steadily over the last few years, and is one of the few companies in the Indian market to grow at extremely healthy levels. Johnson and johnson is the world most comprehensive and broadly based manufacturer of health care product and service for the consumer pharmaceutical and medical and diagnostics market. The Consumer Products Division owes its success to the strength of its brands, and the loyalty they enjoy from consumers, a strong sense of values driven from the Credo, and an environment, which sets the toughest standards of leadership.

Overview

Johnson and johnson founded in 1886 as a supplier of health care product in open market.

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The head quatered of John son and john son in new Brunswick ,Nj

The company sell more than 175 product in 57 countries in the world .

In 2003 the sale of Johnson and johnson were 4.19billion dollar.

John son and john son have 110,600 employers over the world .

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More than US280billion pa philonthrapy.

World leading heath care supplier

PRODUCTS OF JOHNSON & JOHNSON

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Johnson natural baby lotion

Johnson natural baby shampoo

Johnson natural head to toe foaming body wash

Listerine – total care

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COMPETETORS OF JOHNSON & JOHNSON

ABBOTT LABS

LILLY ELI & CO

NOVARTIS A G

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PESTLE ANALYSIS

POLITICAL & LEGAL

Johnson & Johnson operates in both developed and developing countries worldwide where the political situation in these countries is stable and encourages more Investments. Also legislations in these countries favours free market economy with no government intervention.

ECONOMICAL

With the introduction of the European Union and single currency the whole European market has been transformed to a single market hence increasing the market for Johnson& Johnson products.

Also inflation and exchange rates in most of the countries has been stable thus not affecting the prices of products or any future Investments.

SOCIOLOGICAL

Due to recent developments people around the world have changed from using natural food products to the use of genetic modified food products or to special types of fo

Unilever has tried to cope with all the changes that take place in the modern world.

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TECHNOLOGICAL

The objective of Johnson & Johnson is not only to maximize the wealth of its owners but also to anticipate the aspirations of its customers and to respond creatively and competitively with branded products and services that raise the quantity of life.

Johnson & Johnson put much emphasis on research and development, modern technologies and launching of modified products so as satisfy its stakeholders

SWOT ANALYSIS: Johnson & Johnson

Strengths

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Worldwide sales have grown 14% indicating a strong position for the global group.

The business model adapted by Johnson and Johnson fundamentally uses the adaptation of entrepreneurial values in order to retain an edge within the market place.

Working with intensive scientific notions Johnson and Johnson utilise a varied expanse of problem solving techniques in order to challenge the standard practice and capitalise on growth through emerging markets which enables associated growth.

The use of independent offices working as standalone units provides the opportunity to develop concepts with cultural considerations which can prove important when taking a product to global markets.

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Weaknesses

There is increasing pressure within pharmaceutical markets to reduce prices in line with medical budgets and maintain patent expirations to ensure generic programmes are updated within critical path movements.

Challenges have been faced within Johnson and Johnson where a reduction in the market demand for key products has been identified; some of these products were branded and have been replaced by generic programmes at the end of patent time lines.

Internal weakness across the industry and not isolated to Johnson and Johnson would be the level of theft and counterfeiting of drugs managed through internal personnel.

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Opportunity

Whilst the recent acquisition of Pfizer Consumer Healthcare will act as an opportunity in its own right to promote growth for the organisation through alternative routes there is the added value capitalised through the return on investment which will be realised 12 months before plan releasing funds back into the bottom line.

Johnson and Johnson have highlighted new developments in pharma products with five undergoing regulatory review which provides the opportunity to grow the existing product portfolio.

Development into new functions of medical devices and diagnostics will provide new markets to entry which will result in business growth.

With the development of WTO rules to prevent the availability of cheap generic drugs there is the opportunity to reduce the level of lost profit due to generic introduction as patents run out. Whilst this will aid Johnson and Johnson where they own the brand where they are looking to capitalise on introducing generic drugs to market this ruling will become a hindrance.

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Threats

Generally within the main pharmaceutical companies there is a high level of competition for the generics markets where patents finish and it is the first to entry where success will generally be determined.

Technological developments with bio-tech concepts will potentially move the traditional pharmaceutical methods out of the market place in the long term although there is an economical argument that this form of development can be segregated to run alongside traditional methods and complement as opposed to replace.

FINANCIAL ANALYSIS

The assessment of the financial position of the firm constitutes an important aspect of the internal analysis which must be carried out to determine the strengths and weaknesses of the organisation .It is important to carry out a financial performance of the corporation Johnson & Johnson. because the financial appraisal will indicate the extent to which the firm is meeting some of its key objectives and also help management to direct operations and make decisions in ways which will achieve or fulfil the overall corporation objectives.

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Two categories of financial performance measures are commonly used and these can be based on absolute values, which measure profitability and those based on relative form of return on investment or capital employed.

Profitability

Businesses come into being with the primary purpose of creating wealth for their owners. Profitability measures indicate how effectively the total firm is being managed and in many ways constitute the most important aspect. Profit is widely used as an absolute measure of profitability and provides a means by which a corporation can be compared with another in the same industry e.g. Novartis or the same company over different times of period.

Net profit margin

This ratio relates the net profit of the business to the sales generated for the sales period. Net profit represents the difference between sales, the cost of sales and the operating expenses used to generate that profit.

Year of

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Operation

2002

2001

2000

1999

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1998

Sales

48,270

51,514

47,582

40,977

40,437

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Net Profit

2,129

1,838

1,105

2,771

2,944

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Net Profit

Margin in %

4.4

3.6

2.3

6.8

7.3

We can see the profit ratio was up in early years but due to intensive competition and new product innovations it started falling.

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Gross Profit

Year of

Operation

2002

2001

2000

1999

1998

Sales

48,270

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51,514

47,582

40,977

40,437

Gross Profit

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5,041

5,174

3,181

4,303

4,410

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Gross Profit

Margin in %

10.4

10

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7

10

11

The gross profit margin indicates that the gross profit is stable over the five years under consideration at 10% at the most is a favourable trend.

Liquidity

In analysing the liquidity position we want to know whether Johnson & Johnson is able to meet its short-term obligations as and when they fall due.

Year of

Operation

2002

2001

2000

1999

1998

Current Assets

16,209

17,678

20,086

25,407

21,601

Current Liabilities

20,602

23,212

28,364

12,134

17,970

Liquidity Ratio

1:1

1.1

1:1

2:1

2:1

From the given figures we can see that Johnson & Johnson have a sound liquidity position of 1:1 meaning the corporation is able to meet its short-term obligations from its current assets without having to raise finance by borrowing, issuing shares or selling fixed assets which is a favourable trend.

2002

2001

2000

1999

1998

Price Earning Ratio

2:1%

2:1%

1:1%

3:1%

4:1%

The price-earning ratio is generally good at 31 it shows that the corporation is held in high esteem in the market

2002

2001

2000

1999

1998

Dividend Cover

2441

1838

1320

2972

3088

The divided cover compares the amount of profit earned per ordinary share, which is 2441 in 2002, is good compared to the previous years.

2002

2001

2000

1999

1998

Efficiency

2

1.74

1.63

2.65

3.30

The company is being operated efficiently in order to generate sales.

Finally Johnson & Johnson is financially sound and a going concern that is able to take up any challenges.

Vision

Value and low prices as hallmark of development

Mission Statement

For best quality and best price.

COMPETITOR PROFILE ANALYSIS

The five forces analysis will aim to identify the key forces, which will affect the level of competition in food, home and personal care where Johnson & Johnson operates.

The five forces Framework

Potential entrants

Threat of

Entrants (Low)

Suppliers

Bargaining

Power (Low)

Competitive

Rivalry (High)

Norvatis

Nestle

Kraft Food

Danone

Sainsbury

Marks & Spenser

Buyers

Bargaining

Power (low)

Threat of

Substitutes (High)

Substitutes

Threat from new entrants (Low)

Home and personal care requires high capital investment in order to enter market and Johnson & Johnson have built up experience and distribution channels to compete effectively in the industry. Currently Johnson & Johnson is operating in 100 countries and is able to tailor its products to the different markets and anticipate customers’ demand.

Most of its products like Baby care products are market leaders.

Threat of Substitutes (high)

There are so many competitors in consumer goods industry. there is a great competition among these consumers. So there is a substation effect which is very high.

Bargaining power of Suppliers (low)

Johnson & Johnson is a very big and strong business entity, which cannot be easily influenced or forced in its decisions by suppliers, as it is not dependent on one supplier. As stated in the case Johnson & Johnson has no problem with supply of raw materials as is able to operate in 100 markets with a variety of products without run short of raw materials.

Bargaining power of Buyers. (High)

Customers especially in European market frequently keep on demanding more new products, better features and great variety at acceptable prices. This has forced Johnson & Johnson to develop new products.there are so many competitors prevailing in the consumer goods industry. So the bargaining power of buyers is very high.

Competition (High)

Johnson & Johnson main competitors are unilever P&G etc. Due to this Johnson & Johnson was under restructuring programme

Competitors are producing the same products as Johnson & Johnson, hence bring competition in the market.

ANALYSIS OF THE MARKETING MIX OF JOHNSON & JOHNSON

Weldon was a master of marketing, which was then to the advantage of the monolith J&J. The following discussions will analyze the capability of J&J using the marketing mix to maximize the profits gained by the said company under the headship of Weldon.       

II.    Marketing Points

A.   Product

Based on the article of (2003) Johnson & Johnson was a company who dwell in innovation and new products. This shows that the company has a commercial advantage against its competitors. Not only does it have a recognizable brand, it also offers products which the public identify with them. This is possible because they have identified themselves with the product. A good example of this would be their treatment of the drug, Procrit.  

B.   Place

Along with the famous products of the company, it also shows how effectively they make these accessible to the public. In the case of their product Band aid, they targeted hospitals by making it more scientific through the improvements made by their research and design department. The product was made liquid and thus accessible for hospitals as wound closing agents. Another product was also made accessible to the public. Their product, Nizoral, was formerly an antifungal treatment targeted for hospital use was transformed to commonplace merchandise, shampoo. This shows the tenacity of the company to offer the public their products and in the same time expand their market.     

C.   Promotion

The promotion of the products of J&J, the company takes on the persuasive craftsmanship of Weldon to the public. The article indicates that Weldon does impose rather challenging tasks to his executives. These tasks are expected to be successful at the first attempt that some of the executives even consider it impossible. Nevertheless, the pressure provided by Weldon has been considerably effective given the performance of J&J in his reign. The competitive compulsion that has enveloped the company through Weldon has helped improved consciousness and creates a positive image towards the products offered by the company.

D.   Price

Early on in the article, the discussions have presented that J&J have offered the public with low-cost and considerably affordable products in the market. This doesn’t only make their product known to the majority of the public, but also the choice of many buyers. The good thing about J&J’s recognizable brand name is that the buying public tends to trust their products. In this manner, this part of the marketing mix tends to contribute largely to the rest of the determinants of product choice.   

Johnson & Johnson as one of the most influential companies in the commercial sector. One could learn largely on the situations of J&J. It shows that a firm leader could do wonders for the company. Weldon was cognizant of both internal and external elements that affect the overall environment of the company. In this manner, he was able to use these to his advantage. Knowing what needs to be done for product has greatly influenced how he became aware on how these are going to be carried out.  

More important than the effective implementation of the marketing mix, the proper communication within the organization is required. Along with the strong leader, the need of a healthy interaction within the ranks presents not only an opportunity to develop but also, as seen in the case of J&J, to essentially make seemingly impossibly demanding tasks into measured ones.

 

BCG Matrix

The Boston Consultative Group BCG Matrix is a Portfolio strategic analysis tool. It evaluates the portfolio of strategic business unit or markets according to their performance and groups them as Stars, Cash Cows, Question Marks or Dogs. The matrix is a market share – market growth matrix.

Companies must develop new businesses but also must carefully prune, harvest or divest tired old businesses in order to release resources and reduce cost. In the case of Johnson & Johnson, we are going to analyse the portfolio of the business based on BCG matrix, examine the relationship between market share and market growth of the different business units.

BCG MATRIX FOR PRODUCTS

Market Share

growth

High

low

HighStars

Best foods

Frozen

Market Growth

Question Marks

Deodorants

Anti- Prespirant

Cash cows

Knorr

Flora

Dogs

Slim Fast

STARS (High market share, high market growth)

As we have seen in the question mark businesses, there are brands within the business units that are performing well and if the question marks are successful they become stars.

In home and personal care, products for cleansing, deodorant and antiperspirant under the brands of Axe Lux Pond’s, Rexona, CIF, comfort, Domesto, Omo, Skip and Snuggle have a good share of the growing market. However, Johnson & Johnson may have to spend substantial funds for its stars to keep up with high market growth and fight off the competitors’ attacks as a leader in these core brands.

CASH COWS (Low market share, high market growth)

Johnson & Johnson does not have to invest heavily on marketing or to finance capacity expansion, as the growth is low and market conditions more stable. As these business units are market leaders, they enjoy economies of scale and higher profit margin. Johnson & Johnson should use these cash cow businesses to support the lagging ones that drive down the profit of the company.

QUESTION MARKS (High market share, low market growth)

Question Marks

According to our matrix question marks are operating in a growing market without high market share. Johnson & Johnson is categorized as question marks.

Therefore it can be noticed that not the whole divisions are under performing, as a result Johnson & Johnson needs to invest more in these business units to keep up with the fast growing market because they are already successful but need better performance.

DOGS (Low market share, low market growth)

.

With a weak market share in low growth market, they may be considered as dogs. As consumers started questioning the effectiveness of products and turning to alternatives.

Segmentation

Market segmentation is the process of taking a heterogeneous market and breaking it into smaller homogenous groups where all members have similar needs and respond similarly to a set of marketing efforts.  Once the market has been segmented, the organization selects the segments to be served (known as target markets). 

Targeting

.

Johnson & Johnson target households for home care products, health care products, personal care products for the people who are hygiene concious. Prices are generally set for middle class people, who can easily afford it.

Positioning

Determine positioning. A market position is developed for the product so that the target will clearly know where the product stands in relation to the competition, as well as other products marketed by the organization.

Johnson & Johnson have positioned themselves as home and personal care producers.

Product positioning is how a product is positioned in the mind of the consumer.  Positioning begins with finding a difference in the product that is worth establishing to the extent that it is important, distinctive, superior, communicable, pre-emptive, affordable, and profitable.

Johnson & Johnson have position their products-High Quality and good price

Johnson & Johnson products are positioned as good value products but are slowing threat faced by Johnson & Johnson

Differential advantage refers to any feature of a product or organization perceived by customers to be desirable and different from the competition. An organization uses its resources and capitalizes on them to obtain a differential advantage by offering unique products.

CRITICAL SUCCESS FACTORS

Critical Success Factors are factors upon which the success of the business is dependant. Johnson & Johnson attend to these factors to ensure success.

Ability to tailor products according to different market and anticipate customer demands

Understanding in depth of the countries in which Johnson & Johnson operates

Policy of listening to customers.

Producing different range of products to match the diversity of its consumers

Increased advertising budget and interaction with advertising agencies

.

CORPORATE OBJECTIVES

Yet one of Johnson & Johnson s major and most important objective was anticipating the aspirations of consumers and customers and responding creatively and competitively with branded products and services which raise the quality of life In crease customisation to local national taste by establishing additional brand names.

Regain Market Leadership with 5 years.

Regain Stockholder confidence

Internationalise Management

Marketing Mission Statement

‘To provide the best quality products and Service to the customer and be the market leaders in the retail industry.’

MARKETING OBJECTIVES

Johnson & Johnson, consumer goods manufacturer has these main marketing objectives:

To create sustainable, profitable growth and value for shareholders and employees by improving profits by 10%.

To improve performance of the lagging businesses

To boost sales and margin through its path to growth strategy by 10%

To increase market share and maintain leadership of its core brands by creating customer loyalty.

To tailor products to different markets and anticipate consumer demand through research and development-innovation.

OTHER MARKETING STRATEGIES

GROWTH STRATEGIES

Growth Vector Analysis

Existing Product

Improved product (new, changed)

New Product

Options

Existing market

Market Penetration

Product variants or product differentiation

Product line extension

Market expansion

Market segmentation

Market-Product segmentation

-New product development

-Market development

-Existing boundary

New Market

Market development

Diversification

Conglomerate diversification

Alternatives

The most suitable strategies of meeting the Marketing objectives stated above are:

Market Penetration

A market penetration strategy suggests that growth is possible by achieving a deeper penetration (sell more) of its present product within a present market.  An organization could sell more of its current product(s) to its current customers, attract competitors’ customers, or convince non-users to begin using the product, thereby increasing its existing market share. Another growth alternative is to try and identify new markets for its present products.

Johnson & Johnson should sell more of the existing Products in Asia, Europe and North America.

Product Line Extension

Through a product line extension strategy, an organization might create an augmented product in order to stimulate the current markets and create new ones.

Unilever must quickly start pursuing this strategy as its current products are falling out of favour with the consumer and should pursue this further. 

Market Development

By employing a market development strategy, an organization might identify new markets for its product by determining potential user groups for its current products, seeking additional distribution channels in its present locations, or offering its product for sale in new geographic locations, either domestic or international.  Another alternative is to develop new products for an existing target market.

Ford has the opportunity to develop a very profitable market in Africa and the pacific region in particular the former commonwealth countries that readily identify with anything British.

.

New Product Development – New Product development in existing Boundaries. Entirely new products can be developed taking into consideration customer tastes and preferences. This will enhance competitive advantage and keep competition at bay.

Johnson & Johnson must use a combination of these strategies to achieve best result in market growth and be able to compete effectively in the industry.

COMPETITIVE STRATEGIES

Focused Differentiation

This occurs when the company a range of clearly differentiated products which appeal to different segments of the market. This will be the most suitable strategy to pursue due to the companies reputation of quality, value and service. It will also be congruent with the core aspirations of the company.

Cost Leadership- (problem solution)

Although Johnson & Johnson has not competed on cost in the market it must try to cut costs because it is currently under attack from its competitors on both quality and cost of products. Therefore it must be seen to be challenging the competition not only on the quality of the products but also on the cost.

MARKETING MIX STRATEGIES

Marketing mix strategies

The marketing mix is the means used by the marketer to satisfy customers.

Product policies- new product development & brand development

Branding – family, corporate branding. Branding is part of the actual product and is a major issue in overall product strategy. Branding is used to give products unique identities and helps the marketer to differentiate their product from those of competitors use a tool.

Branding Strategy Family branding: this involves using a brand image and name for a range of products.

Corporate branding: this means that a company uses its own company name as a brand for its products.

Individual branding: this means that each product is given a distinct name and image by a company.

Johnson & Johnson must use this strategy because the brand name is well established, launch costs of new products may be low and brand loyal customers are more likely to try the branded new products

New Product Development – An organisation that wishes to survive long term, must invest in new product development (NPD). Always, all products eventually reach the decline stage of the PLC. Without new products an organisation’s sales will eventually become non-existent and Customers will seek competitors’ products. Additionally, by introducing new and innovative products to the market place first, an organisation may generate customer loyalty and maintain its market share as the market grows. NPD is costly and can be a long process. If a new product fails, a company may make huge financial losses and the ensuring bad publicity can be detrimental. The NPD process helps to minimise the risk of failure. Johnson & Johnson must heavily invest in this strategy of new product development.

Promotion policies

Promotion is more than just advertising. It includes almost any form of communication that a company has with its customers.

Indeed, it includes communication with stakeholders, suppliers, intermediaries and the general public. The range of parties that a company promotes to is known as the target audience.

Promotion strategies and the communities mix

When a company is pursuing a pull strategy, it promotes its products to the final customers to encourage them to buy. They are encouraged to demand the product from intermediaries.

Place policies

Place is the term used in the marketing mix to mean distribution. Distribution involves all the activities necessary in getting a product to a customer.

Distribution can be looked from two perspectives: channels of distribution and physical distribution. Channel of distribution refer to the organisations involved (distributors, wholesalers, retailer, agents). Physical distribution refers to the physical transportation, handling and storage of products necessary to make products available to customers.

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