Case Study Johnson Johnson Marketing Essay

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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.
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 .
More than US280billion pa philonthrapy.
World leading heath care supplier
PRODUCTS OF JOHNSON & JOHNSON
Aveeno ageless vitality
Aveeno nourish + hair collection
Aveeno nourish + style collection
Aveeno hydrarting body wash
Johnson natural baby lotion
Johnson natural baby shampoo
Johnson natural head to toe foaming body wash
Listerine total care
Neosprine - lip health
Neutrogena - men sensitive skin
Neutrogena sore pimple gel
Neutrogena skin clearing mineral powder
Neutrogena advanced sun block lotion

Roc brilliance day rejuvenating

Roc brilliance eye beautifier
Skin crystal all natural sweetner
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

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

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

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 %

10.4
10
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 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 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 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

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 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 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.