Johnson and Johnson: Then and Now
Johnson and Johnson was a company created in 131 years ago 1885 by the three brothers James Wood, Robert wood and Edward mead (all with the last name of “Johnson”) in New Brunswick, New Jersey. The three brothers created a line of surgical dressings that later got produced in 1886, which was very successful, they became incorporated in 1887. From there they have a built a massive corporation, creating 127,100 jobs, and making around 71.89 billion dollars in revenue in 2016, but over the years they had decided to buy and absorb other companies, most notably the McNeil labs, Neutrogena, Janssen Pharmaceuticals, and many more, having over 250 companies under their belt, affectionately nicknamed, “The Johnson and Johnson family”.
Alex Gorsky is the chairman and CEO of Johnson of Johnson and has been apart of their corporation since 1988 as a sale representative and worked his way up to assuming the title of CEO of Johnson and Johnson.
Looking at J&J's net sales for the past 5 years (Appendix 1), gathered from J&J's 2009 annual report, we see a generally consistent growth in its net sales. Though there is a dip in worldwide sales figure of 2.9% ($61.9 billion) from 2008, this can be accounted with J&J's spending on research and development ($7 billion) as well as acquisitions and collaborations. Currently, J&J is expanding its operations in the BRIC countries (i.e. Brazil, Russia, India, and China) as well as other fast-developing markets. This should be a continued project of J&J for at least the next 3 years to maximize its profits and increase its global market share. This is inline with J&J's organizational vision - "drive superior business results and sustainable competitive advantage".
Johnson & Johnson is a well-known healthcare brand which ranks No. 1 within the industry under one decade of its historical development with a wide variety of skincare products and superior product quality.
Abundant financial resources are exploited by the R&D department to employ the committed staff for creating and even innovating the hygiene products through proprietary technology and build up the respected brand image. Besides, it focus on product leadership excel at product development and professional skills so that it can offer customers the best products in the industry.
As the facts show that, J&J expanded internationally around the world, like Asia (Singapore, China) that triggered by the better marketing skills. Additionally, the good world-wide distribution skills due to its global standardization strategy that allow J&J to generate great market shares by cost reduction that come from economies of scale and fast product development what based on stable relationship with local distribution agents and its respected brand image as well as superior product like baby care mainly but global standardization is the main international business strategy to control cost but this also is its drawback that results in the low customization. In addition to the worldwide product structure, the managers lack of flexibility to face the challenge of changes in local markets. In order to bring along the development of local economy, most of countries welcomes the international companies introduce their products to diversify the local economy. The increasing attentions of baby nurturance and its brand image prompt customers to purchase its products and grow rapidly in the global new markets.
There is an opportunity to generate more market shares and enhance its brand image in the long-term in the lights of the rise in global demographic population reach to 7 billion that data collected from statistics of 2011, China and India act as the representatives; moreover, the superior product quality of J&J is the critical to attract customers switching from other brands.
J&J faces the threats of the low barriers to entry due to the low cost of set-up, and the proprietary product differences will be difficult to protect when the barriers are reduced so that the customers would switch to other brands more possibly. Another threat reflected by the economic downturn, J&J is difficult to manage the exchange rate risk under the global standardization strategy.
Most important, J&J would be forced to stay at the passive threat that the customers would be attracted by its competitors and sales would be declined if rivalries adopting the new strategies.
Growth Strategies adopted by Johnson &Johnson
There are both internal and external environments to be carefully evaluated when planning for a three years growth strategy plan for Johnson & Johnson as what happen externally and internally will affect the company. These diagnoses are in reference to the SWOT analysis based on the company resources - assets, intellectual property, and people.
With careful consideration and by selecting market penetration growth strategy for a three year period, it will help them to gain more market shares through promotion and advertising from their strong marketing teams. Before planned the growth strategies, the firm should generate a lot of information about if the company is selling new, existing or emerging products in a new or existing market.
From the diagnosis of the Porter`s model, understanding that the threats of new entrants are low and also credited to the high brand equity of Johnson & Johnson, market penetration growth strategy defined by Ansoff is selected in the lights of situation that involves neither new markets nor new products, are forced to grow through this growth strategy. It is a strategy that is designed to give the business a greater percentage of market shares. Market penetration occurs when a company enters/penetrates a market with current products.
This type of strategy usually seeks to gain a competitive edge through competitive pricing strategies, advertising, sales promotion, marketing or other strategic initiatives. In addition, market penetration can be achieved by increasing customer usage through loyalty programs and incentives that target Johnson & Johnson`s existing customer base. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. Johnson & Johnson knows very well about how their products are going to serve the needs of their customer and always provides product satisfaction.
The first year of this growth strategy can be slowly picking up to gain exposure and awareness among the consumers through advertising and promotional efforts. Media advertising such as TV commercials are aired frequently during the peak viewer rate time phase and help to position Johnson & Johnson baby products into the consumer.
By the second year, Johnson & Johnson begin to see their advertising campaigns results as sales figured are expecting to grow even more. At this point of time, Johnson & Johnson has expanded their market share and penetrates the market with their current products. Concurrently, advertising campaigns are still ongoing and also increasing to remind consumers the strong brand of Johnson & Johnson.
At the third year into this growth strategy, there will be an increase frequency of purchase, increase amount per purchase occasion and also purchase from the once non customers of Johnson & Johnson. Marketing actions such as loyalty program in which their purchase gained them point to redeem for other products
Company position and global business environment are the 2 preconditions of decisions of entry modes; company position is described as business strategy and global business environment play an important role of measure risk through political economy.
The key strengths and weakness of J&J reflect in its international business strategy - global standardization strategy that focus on increasing profitability and profit growth by controlling costs with worldwide standardized products, uniform promotional strategies, distributions channels and it seek higher quality under lower costs in the value chain and in the world that managed benefits, costs and risks; however the disadvantage of lack of flexibility also exist. J&J baby care product lines include the cream, lion and shampoo, the products are distributed same around the world which is also called as 'world-wide product (WWP)'; HRM would employee staff from the third country nationals for a greater pool of management skills.
The company faces competition from the following-
• Abbott Labs
• Lilly Elli & Co
• Novartis A G
• Hindustan Unilever
• Procter & Gamble
Products in the Marketing mix of Johnson and Johnson
Johnson & Johnson is a well-established brand whose product portfolio is divided into three segments like consumer products, Pharmaceuticals and equipment related to medical industry. Its consumer division is one of the most important manufacturers of India and helped in the steady growth of the company. Most of its items are available in different colors and fragrances. Its product line includes
• Baby care products like massage oil, toothbrush, shampoo, wipes, nappy pads, powder, body lotion, soap, cream and hair oil.
• Skin care products like Clean & Clear face wash, Clean & Clear deep action cleanser, Clean & Clear moisturizer, Shower to shower, Body lotion and Neutrogena skin care products.
• Wound care like band aid
• Oral care products like mouth wash under the name This is available in three varieties-mouthwashes, fresh burst and cool mint.
• Nutritional products
• Women's health care like Stay Free's sanitary napkins
• Pharmaceutical products– The range of these items is varied and large. They are generally used for therapeutic uses like Dermatology, Contraceptive, Cardiovascular, Anti-effective and Anti-fungal.
• Medical equipment that are used by medicinal professionals. This includes products related to spinal care, circulatory diseases and products for orthopedics. The other products include disposable contact lens and diabetes testers.
Place in the Marketing mix of Johnson and Johnson
Johnson & Johnson is a renowned brand name that has two hundred and thirty subsidiary companies with operations in more than fifty-seven countries. They have the advantage of local windows of the operating companies to meet the various s customer needs through scientific developments. The company has set up an executive committee, which is responsible for all its operations and for its resources allocation. The main responsibility of the company is to supervise and coordinate the various consumer activities, the medical devices and the diagnostic business. In most of the cases, the local citizens manage the subsidiaries.
In order to meet the aspirations of the consumers and to fulfill their needs, the company has been using a well-organized distribution channel. Johnson & Johnson has been using an approach called decentralized management, where the employees of the company are encouraged to give their hundred percent with the understanding that they will eventually benefit from this scheme.
They have also utilized the modern technology to their advantage and hence have been selling their products on various portals and shopping sites on the Internet. Today the company's sales figure through internet is astounding. All Johnson & Johnson items are easily accessible at retail outlets, wholesalers and modern markets like Metro Cash & Carry, Wal-Mart, Reliance Fresh and Big Bazar.
Price in the Marketing mix of Johnson and Johnson
The quality of every Johnson & Johnson product is very good and even then, the company has decided on an affordable pricing policy. Many times, its products also use psychological pricing by keeping the value of the product at multiples of 99 or 49.
As Johnson and Johnson is a consumer product, it takes care of its customers through its pricing policy. Johnson & Johnson is aware of its responsibility to the society and for this; they have worked closely with the government to keep prices reasonable for medical items. In order to determine the value of their product the company has a team of efficient members that analyses the various factors like the production cost, the targeted segment of the society, demand, supply and the ability to pay for the product. After proper evaluation, the prices for any product are determined.
In some cases, the prices are at a little higher rate, for instance on products like consumer goods and baby care products, where the consumer is willing to give out the extra money for the health of their family members. In cases of medical equipment, the prices are at affordably priced so that people can easily buy those products.
Promotions in the Marketing mix of Johnson and Johnson
Johnson & Johnson has realized the advantage of consumer awareness and hence has decided on promotional activities that are instructive with a strong message as well as are eye-catching. Good and sensible marketing is very important in order to increase the product visibility and so the ads are placed on the hoardings, magazines as well as newspapers so that they can be easily viewed. It is dedicated to the concept of natural and qualitative products and hence has made its packaging process environmental friendly.
Johnson & Johnson has been associated with promotions that inspire healthy living. Some of the famous campaigns are “Having a Baby Changes Things” and “The Campaign for Nursing's Future”. Famous actor Prachi Desai has been associated with the company and its various campaigns. The new baby to be involved in the Johnson's ads is “Khiyaan Singhvi”. The company has been showing delightful ads featuring babies and children in prime time slots of the various television channels. Popular cartoons like The Little Mermaid, Pocahontas and Winnie the Pooh and Pals have also been included in the ads for baby care products making them highly popular amongst the viewers.
One of the most loving part of Johnson and Johnson is the cute and absolutely delightful baby ads it shows on television. People love such ads. This is one of the reasons the company thrives because it has a strong emotional connect with its target audience.
Johnson & Johnson offers various schemes to its customers at regular intervals like soap free with every three purchases, hundred-milliliter bottle free with five hundred milliliter product. It also offers special discounted coupons on products like Stay Free Secure, Baby powder and Baby soap. Many hospitals have been giving out special baby product kits to the new mothers who leave the hospitals with their babies. This is a very smart scheme as the products gain the trust of mothers at an early stage and hence the mothers generally continue with the products of this company.
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