Marketing Essentials - Marketing Plan for Johnson and Johnson - Assignment Example

? Table of Contents Table of Contents 2 Chapter The Company Johnson & Johnson is a U.S. based multi-national company. It serves mainly in both consumer health and pharmaceutical industries. Johnson & Johnson is comprised of many companies. It has been identified as the world’s sixth-largest consumer health company; the world’s largest and diverse diagnostics and diverse medical devices company; it has been known as the world’s fifth-largest biologics company and the world’ eighth-largest pharmaceuticals company (Our Company, 2012). Currently, Johnson and Johnson operate in 60 countries and have more than 250 operating companies employing more than 129,000 employees. The Company Background In the year of 1886, three brothers, Robert Wood Johnson, Edward Mead Johnson and James Wood Johnson, laid the foundations of Johnson & Johnson in New Brunswick, New Jersey, United States of America. Subsequent to that, the Company developed and published ‘Modern Methods of Antiseptic Wound Treatment’ in the year of 1888. In the same year, the Company successfully innovated and launched the first commercial first aid kits. The Maternity kits were launched for the purpose of making childbirth safer in the year of 1894. Johnson & Johnson has strong credos that are inbuilt into the company’s business ideology. The first responsibility is to the nurses, patients, nurses, to fathers and mothers who use the company services and products. In addition to that, the Company maintains following standards: High Quality, Prompt service delivery, Equal opportunity for the suppliers, Individual attention to employees, Adequate and fair compensation and working conditions, Equal employment opportunities. Johnson & Johnson has no established mission or vision statement. However, the credos and values are considered to be serving the role of mission and vision statement for the company. Chapter 2 Analysis of company situation Source: (Johnson & Johnson annual report 2011). Johnson & Johnson performed well in the year of 2011. It produced adjusted earnings for the 28th consecutive year (Annual Report, 2011). In the year, the company’s aggregate sales were $ 65.0 billion adding an increase of 5.6 percent into the sales. Operationally, sales grew by 2.8 percent, representing the growing demand and strength of new products particularly in the pharmaceuticals business segment, science-based continuous innovations in the consumer business, steady and constant growth in the MD&D franchise and strong growth was recorded in the emerging markets (Annual Report, 2011). Up to 70 percent of sales were generated by products having No.1 or No.2 global market share positions. And approximately 25 percent of sales were generated through the products introduced in the past five years (Annual Report, 2011). Also, the company invested $ 7.5 billion in advanced robust pipelines and Research & Development across three of the main business segments. Due to this substantial investments in the R&D projects, the company generated considerable free cash flow of nearly & 11.4 billion. The consequent effect appeared in the shape of AAA credit ratings and consecutively increasing the dividend to shareholders for the last 49 years. Source: (Johnson & Johnson Annual Report, 2011). Chapter 3 Market situation The United States of America remains the biggest market for the personal care and health care products. The market situation in the United States indicates that there are more than 800 companies serving in the personal care and health industry and their collective annual revenues has been estimated around $ 38 billion (Hoovers, 2012). The major companies include Johnson & Johnson, Estee Lauder and Procter & Gamble. The research indicates that this industry is heavily concentrated and 85 percent of industry revenue is contributed by the 50 largest firms in the personal care products (Hoovers, 2012). Top 5 Companies Source: Hoovers D&B Company The above graph highlights 5 leading companies in the personal and health care products. The graph maintains that Procter & Gamble leads the industry with its sales of 82,559 Million and it is followed by the Kimberly-Clark Corporation having 20,846 Million, Kao Corporation, Avon Products, Johnson & Johnson, 14,321.49 Million, 11,291 Million and 9,262.68 Million respectively. Johnson & Johnson has been ranked in the top five companies in the industry. This provides that the company is facing stiff competition in the industry from the competitors particularly from the above mentioned companies who have bigger market share and sales in comparison with the market share and sales of Johnson & Johnson. Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Source: (Johnson & Johnson annual report 2011). Chapter 4 PESTLE analysis The PESTLE stands for political, economic, social, technological, legal and environmental. The purpose of PESTLE analysis is to identify and evaluate external factors that directly or indirectly affect business environment, market growth or decline and business performance of many companies. Johnson & Johnson is mainly established in the United States of America and the US market remains the biggest contributor to the sales of the company. Keeping this view in mind, the PESTLE analysis focuses on the US market for the purpose of PESTLE analysis. Political United States of America is one of the largest personal and health care products markets. The United States Federal government regulates the manufacture and sale of cosmetics, foods, medical devices and pharmaceuticals through the Federal Food and Drug Act (Rosen, 2005). As a result, Johnson & Johnson is required to comply with the policies, regulations, rules and procedures of Food and Drug Administration (FDA). Economic The 2008 global meltdown have considerably affected the US economic situation. The effects of 2008 global meltdown were also faced by Johnson & Johnson. The purchasing power has substantially decreased. The people have less disposable income to continue their similar trend of buying. Still, nearly 10 percent unemployment means more people are unemployed than they used to be before the year of 2008. This fact can be authenticated by analysing the declining trend of net sales figures of Johnson & Johnson from 2008 onwards. In 2009 and 2010, $ 61.9 billion and $61.6 billion net sales were recorded respectively. In addition to that, uncertainty in financial markets, high unemployment, slowing economic growth and pressure on health care costs has considerably contributed to constraints on health care spending (Annual Report, 2011, p.2). Sociological The US society is comprised of diverse communities. They range from different countries, traditions, races, norms and values. People from Europe, Asia, Africa and other continents make the US society. Keeping this view in mind, Johnson & Johnson should develop such products and services that are in line with the existing values, norms and traditions in the country. Technological The US market represents one of the latest and fastest mechanisms and methods in technology. There is no match for the US as far as technological advancements are concerned. From computer to medicine, education to research, the US as a market can easily satisfy technological requirements of any company. Johnson & Johnson uses more funds in research & development activities particularly in the field of biotechnology as it sees more opportunities ahead. Legal The US market is professionally regulated and controlled by the FDA. Heavy fines and penalties are normally charged when a company fails to comply with regulatory conditions. In order to avoid fines, Johnson & Johnson must comply with the relevant rules and regulations and must ensure that it has strong system in place ensuring the smooth compliance with the regulatory requirements. Environmental Environmental issues receive considerable attention from the general public. And the companies having unfriendly environmental practices can face sales reduction. Johnson & Johnson must ensure that it complies with the local and international environmental regulations if it wants to keep increasing its sales volume. SWOT analysis SWOT stands for Strengths, Weaknesses, Opportunities and Threats (Lane, 2004 p.339). Various companies use this business technique to evaluate their internal and external situations or viability of a strategy (Richmond and Powers, 2009 p.3). The SWOT analysis provides both internal and external analysis. Strengths and weaknesses are internally used in which company takes into account internal strengths and weaknesses whereas opportunities and threats are employed to external business and industry environment. Strengths Innovation Innovation mainly contributes to the sales of Johnson & Johnson. As mentioned above, in the annual sale of 2011, 25 percent of sales were contributed by the products introduced in the span of last five years. Global Presence The global presence enables Johnson & Johnson to keep increasing its sales revenues annually. Johnson & Johnson employs more than 118,000 employees and operates in 60 countries with more than 250 operating companies (Annual Report, 2011, p.3). Decentralization Decentralization is one of the main parts of business strategy of Johnson & Johnson. It believes and practises the concept of decentralization which empowers lower rank employees. The employees can enjoy workplace freedom and fulfil their job responsibilities in a professional manner. Weaknesses Demand Reduction of key products The global recession has considerably affected the business results of Johnson & Johnson. From the year of 2008, the global economy and particularly the US economy are showing a declining trend, highlighting reduction in aggregate demand of goods and services. From the same year, the aggregate sales of Johnson & Johnson has not been increasing instead it is experiencing stagnation and slow growth. Highly diversified Johnson & Johnson is a diversified corporation. It serves in the personal care, health care and medical devices and diagnostics. Its business operations are highly segmented. As a result, it has not been able to particularly focus on any single business segment. Opportunities Economic recovery The US economy is recovering. The latest employment statistics indicates that employment rate is inclining and small and large companies are producing more and more employment opportunities. There is a direct link between economic recovery and increase in sale of Johnson & Johnson products as purchasing power will be improved. Increase global presence Currently, Johnson & Johnson is only operating in 60 countries. Johnson & Johnson should increase its global presence as it mainly deals with health care products and services which cannot be limited to any country as health is one of the basic human necessities. Innovation and research and development in the field of medicine Johnson & Johnson must further accelerate research and development activities particularly in cancer and HIV aids treatment. Currently, there is a considerable scope in these two diseases. Any meaningful breakthrough shall have capacity to increase demand and sale of Johnson & Johnson products. Threats Saturated market The US market is saturated. The US market has become very slow and this inactivity is being represented by limited market growth rate. Many reasons contribute to the market saturation. For example, a minimal gap between demand and supply of health care and personal care products. Strong competitors The existing competitors are already occupying majority of market share. Proctor & Gamble, Kimberly-Clark Corporation, Kao Corporation and Avon Products, Inc are the key competitors who are considerably fulfilling the existing demand of health care and personal care products in the US market. Chapter 5 Competitors’ analysis Johnson & Johnson deals more than one industry. Cosmetics, pharmaceuticals, medical devices and diagnostics are representing the main business areas in which Johnson & Johnson sells its products and services. It would be considerably difficult to take each industry and carry out competitors’ analysis. As a result, following graph is used to highlight different competitors and their market share in market. The Proctor & Gamble (P&G) has the biggest market share and serves more than 26 percent of the total demand of market. It is followed by L’Oreal has 25.8 percent market share. Subsequent to that, Unilever owns 16 percent of the total market share. Avon satisfies 7.6 percent the total market demand and Johnson & Johnson only satisfies 5.6 percent of total market demand. This indicates that Johnson & Johnson faces very stiff competition in the industry. There are numerous companies in the industry who are working as the competitor. However, the Proctor & Gamble, L’Oreal and Unilever are the key competitors in the industry as they have major market share in the entire industry. Source: http://www.slideshare.net/lovee911/economical-analysis-of-cosmetic-industry, Accessed on 4th, July, 2012) Chapter 6 New product idea Johnson & Johnson should put more focus on developing medicine controlling the HIV aids patients. Although there are numerous corporations working on the product, the absence of any effective drug in the market indicates a possibility opportunity for Johnson & Johnson. There are various reasons to work on this new product. Globally, the HIV aids patients are rapidly increasing. The patients are not only increasing in Africa, Asia but also in Europe and America as well. Globally, a strong need is felt requiring an immediate but effective cure for the HIV aids disease. Secondly, the existing research and development department is already equipped with the latest means of research relating to such issues. It has every possible access to all those aspects that are highly essential for any research. In addition to that, the existing expertise of the researchers has already proven that they can make a significant difference in the field of research. Chapter 7 Marketing objectives The marketing objectives shall be designed in a way to increase the usefulness and way to consume the medicine. The potential patients shall be informed about: The uses and benefits of the medicine, The causes and effects of the medicine, The things and activities that shall be taken or forbidden while taking the pills, The different effects on the different age groups. Marketing strategy Philip Kotler defines marketing strategy as a set of principles of adjusting the marketing programme to changing conditions (Anand, 1997 p. 139). In addition to that, if marketing strategy is sound, new traffic movement will grow rapidly (Raj, 2002 p. 200).The seven Ps of marketing mix include every aspect of marketing strategy that are highly essential for marketising a product. Product The product name shall be Tranoica for HIV aids treatment. The product shall be developed to cure the HIV aids disease and decrease the growing rate of HIV aids. Place The product shall be mainly available at only authorised drug stores across the US. In the initial phase, the product shall be launched in the United States and then Africa, Europe and Asia. Price Price can be established now. &40 per pill shall be charged. Cost per pill and its effectiveness are two major steps that shall be taken before finalizing price of the product. It is expected that company shall be able to sell around 500,000 items per month in the US market. People There shall be no new hiring for the research and development of the product. The existing employees shall be utilized and training sessions shall be provided them to sharpen their research and development skills. Promotion Promotion shall target the HIV aids patients. In the initial stage, the US patients shall be targeted and promotion shall target them as the main audience. For that purpose, the Internet shall be the main source to reach them. Process There is no doubt that process shall consume considerable time, energy, investment and efforts. As the HIV aids treatment has become challenge, process will take much time. Chapter 8 Financial forecasts for the product Year one (000) Year two (000) Year three (000) Sales (500,000x12x40) 240000 264000 290400 Cost(500,000x12x 32) (192000) (211200) (232320) Profit 48,000 52,800 58,080 Note: Ten percent increase in sales is expected. References Anand, S1997, Advance Dictionary of Tourism, Sarup & sons, New Delhi Annual Report, 2011, Johnson & Johnson Annual Report 2011, viewed 4th July, < http://www.investor.jnj.com/2011annualreport/index.html> Hoovers, 2012, Personal Care Products Manufacturing, viewed 4th July, 2012 Lane, D2004, CIO Wisdom: Best Practices from Silicon Valley’s Leading IT Experts, Prentice-Hall, New Jersey Major Market share, n.d. viewed 4th July, Our Company, 2012, Johnson & Johnson, viewed 4th July, 2012, Raj, J 2002, Modern Dictionary of Tourism, IVY publishers, New Delhi Richmond, T, Powers, D 2009, Business Fundamentals for the Rehabilitation Professional, 2nd edn, Slack incorporated, New Jersey Rosen, MR, ed, 2005 Delivery System Handbook for Personal Care and Cosmetic Products: Technology, Applications and Formulations, William Andrew, Inc, New York. Read More