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8/10/2019 Ukessays.com-Case Study Johnson Johnson Marketing Essay

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COMPETETORS OF JOHNSON & JOHNSON

ABBOTT LABS

LILLY ELI & CO

NOVARTIS A G

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.

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

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


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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.

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.

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.

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


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also help management to direct operations and make decisions in ways which will achieve or fulfil the

overall corporation objectives.

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

Operation

2002

2001

2000

1999

1998

Sales

48,270

51,514

47,582

40,977

40,437

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.

Gross Profit

Year of

Operation

2002

2001

2000

1999

1998

Sales

48,270

51,514

47,582

40,977

40,437

Gross Profit

5,041

5,174

3,181

4,303

4,410

Gross Profit

Margin in %


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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


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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)


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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 thedifferent 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 bargainingpower of buyers is very high.

Competition (High)


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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 ofthe 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 newproducts. 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 wasmade 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 doesnt only make their product known to the

majority of the public, but also the choice of many buyers. The good thing about J&Js recognizable

brand name is that the buying public tends to trust their products. In this manner, this part of themarketing 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


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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


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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 Ponds, 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


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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 OBJECTIVESJohnson & 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%.


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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


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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 organisations 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 activitiesnecessary 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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