INTRODUCTION

 

Johnson & Johnson is a worldwide family of 190 companies, marketing health care products in more than 175 countries including PAKISTAN. Its annual sales are 24 billion USD. It is the world leader in the manufacturing of health care products as well as a provider of related services, for the consumer, pharmaceutical and professional markets.

There are more than 98,000 employees engaged in producing products that serve a broad segment of medical needs. They range from baby care, first aid and hospital products to prescription pharmaceuticals, diagnostics and products relating to family planning, dermatology and feminine hygiene.

 

BUSINESS STRUCTURE

• Headed by Ralph S. Larsen, Chairman of the Board and Chief Executive officer, and Robert N. Wilson, Vice Chairman of the Board.
• Board of Directors consists of 13 members, including three women and                       one person of color.
• A ten-person Executive Committee is the principal management group responsible for the operations of the Company. Managed by franchise, or groups of product categories, such as skin and hair care, endosurgery and wound care.
• Operating management of each company is headed by a president, general manager or managing director who reports directly to or through a company group chairman.
• International companies run primarily by natives of the country in which they are located.

 

BUSINESS SEGMENT

There are three main business segments of J&J.

• Consumers business
• Professional business
• Pharmaceutical business

 

CONSUMER

Major franchises in consumer business are skin and hair care, sanitary protection, wound care, oral care, baby care and nonprescription drugs. Familiar brand names include

• NEUTROGENA skin and hair care products.
• Adult and children’s TYLENOL and MOTRIN analgesics.
• BENECOL and SPLENDA Brand Sweetener.
• REACH toothbrushes.
• BAND-AID Brand Adhesive Bandages.
• IMODIUM antidiarrheal.
• BABY LOTION , BABY OIL etc

 

PROFESSIONAL

Products commonly found in hospitals worldwide, in clinics and physicians’ offices, used by medical professionals for surgery, patient care, wound closure, diagnosis, blood testing and related medical purposes. Well-known Brands include.

• ACUVUE Disposable Contact Lens.
• ONE TOUCH PROFILE blood glucose monitor.
• CIDEX Disinfecting Solution.
• PROTECTIV I.V. Catheters.
• BARRIER Packs and Gowns.

 

 

PHARMACEUTICAL

Responsible for development of prescription pharmaceuticals that represents major achievements in medicine since World War II. Development of products for family planning, psychiatry, mental illness and diseases of the nervous system, gastroenterology, oncology; immune therapy, cardiovascular disease, dermatology ,pain management, allergy, antifungals, antihistamines, anti-infective, and antiparasitic drugs and biotechnology-derived products. Pharmaceutical products generally are not sold under the Johnson & Johnson name. Many products introduced under names of Janssen Pharmaceutica or Ortho-McNeil. Well-known brands include

• PROCRIT; SPORANOX antifungals.
• RISPERDAL antipsychotic for schizophrenia.
• HISMANAL antihistamine
• LEVAQUIN anti-infective
• ULTRAM analgesic
• NIZORAL antifungal RETIN-A MICRO acne treatment
• PROPULSID gastrointestinal;
• REMICADE for treating Crohn’s Disease and Rheumatoid Arthritis;

 

 

JOHNSON AND JOHNSON  IN PAKISTAN

 

INTRODUCTION

Johnson & Johnson started its operations in Pakistan in 1967.  Most of its operations were concerned with pharmaceutical business. J&J started its consumer business in the same year with female sanitary pads. It was the first company in Pakistan to market products specifically made for baby care. The baby care business was started in early 1970’s.

In 1988-89 the entire consumer business was discontinued because of problems related to trade mark protection of Modess, the female hygiene product.

The consumer business was restarted through import of female hyiegene products.  The baby care business was restarted in mid 1990’s by producing it locally. It was re-launched with emphasis on selling and distribution along with repositioning of the range. The range was repositioned on the basis of its product users. This repositioning successfully results in more adult usage

In 1990 baby lotion was positioned as a mild and gentle product that can be used by   babies and adults. Which successfully reflects new policy of the company. In 1995-96 an ad was made that showed all the different positions which Johnson’s baby lotion had acquired in terms of usage and in the consumers’ mind. After 1997 the company started concentrating only on the moisturizer aspect of the brand’s image and usage.

 

CONSUMER DIVISON

 

MISSION STATEMENT

“ We will be the landmark company in baby care range, adult skin care, adult toiletries, feminine hygiene and oral care in Pakistan, by providing superior quality products than competition with brands that are the strongest in their segments by staff who are world class.”

 

J&J has three consumer business categories, which are given below:

• ADULT CARE

Reach toothbrush, Cotton net,            Band-Aid

• FEMININE CARE

Modess

• BABY CARE

Johnson’s baby Powder, Shampoo, Lotion, Oil & Bath.

 

Our focus in this report will be on baby care category of consumer business.

 

JOHNSON’S BABY’S BRAND IMAGE

The overall image is quite strong. Its core values are linked in its image of trust, pure, mild and gentle, knowledgeable about skin care, being the best, caring about the well being of babies, and having a full line of baby toiletries. The brand accomplished one of its great successes in developing a new class of users with its baby care range by including the adult usage for its shampoo and lotion.

BRAND AND IMAGE ASSOCIATION:

Marketing dept. at J&J give following image dimensions that users associate with their brand:

• Best you can use
• Pure, Mild, and gentle
• For people like me
• Trusted brand
• Knowledgeable
• Good value
• Offering a full line

Johnson’s baby is more expensive than local product as it offers better quality.

Johnson’s baby is:

• Gentle
• Pure
• Mild
• Best
• Trustworthy
• Caring
• Young/babyish

 

CORE VALUES OF THE BRAND

Johnson’s Baby means trust, nurturing, warm and care. It is a product that’s is right for people like you.

Johnson’s Baby means skin and hair care products that are pure, mild, and gentle that offer good value.

Johnson’s Baby is a product of a trusted company that offers a full-line of thoroughly tested products that are best that you can use for your baby and yourself.

BRAND EQUITY

• The Johnson’s Baby equity is comparatively strong versus other brands in baby care segment with regard to:
• Knowing mother’s and baby ‘s needs
• Trust
• High Quality
• Gentleness
• Making Healthful Products

2)         The strength of Johnson’s baby equity fit well with the mothers emotional and identity needs, which provides a differential advantage over other competing brands.

3)         The best communication focus is at the emotional and identity level of the parent (joys and rewards of motherhood0, rather than the physical and functional characteristics.

 

• The market can be segmented in demographic and psychographic segments. Through these segments the target market’s attitude towards motherhood, products, and the brands can be predicted reliably.

 

BRAND PLAN

 

OBJECTIVES

Certain objective was sought to develop the brand plan for Johnson’s baby that would solve if not all than most of its problem.  All the recommendations were evaluated and selected in line with the objectives of the brand plan. Keeping the following objective in focus has also incorporated the cycle plan and the changes:

 

• To re-align and improve the distribution channelTo decrease (if not eliminate) the penetration of the smuggled J&J products by 50 %

• To alter the consumer perception the local J&J products are not inferior in any way as compared to the foreign products.
• Develop an effective communication strategy that would inform and guarantee the consumer’s that local Johnson’s baby is the best for their babies and is available at the best price.
• Insure better and prominent shelf space for local J&J products.
• Enhance the company’s and the local brand’s image thorough better media relations, consumer events, and sponsorships.

 

SELECTION OF ALTERNATIVES FOR THE BRAND PLAN

We have selected the following alternatives

• to conduct consumer research studied
• to change the package and to write “ under UK formulation” on it
• To increase the retail margin but at the same time reduce the trade offers give. And also to negotiate for better shelf spacing
• to develop an umbrella d for all the baby care product
• to start certain consumer promotion
• to start sponsoring events
• to have newsletters for the trade
• put up billboards around the city

 

 

 

MARKET STRUCTURE

Some important statistics regarding the present structure of the market for skin and hair care products are given below

LOTION

Cosmetic lotion                                              83%

Baby lotion                                                          1

POWDER

Cosmetic talc                                                       80%

Medicated talc                                                  12%

Baby powder                                                       8%

SHAMPOOS

Normal shampoos                                              60%

Medicated shampoo                                          30%

Sachets                                                                 6%

Baby shampoo                                                    4%

SOAPS:

Toilet soap (beauty soap)                              93%

Medicated soap                                                 2%

Baby soap                                                          5%

 

 

THE BABY CARE MARKET SEGMENT

The baby care segment in Pakistan comprises of J&J, Mothercare and smuggled J&J products. With the exception of Johnson & Johnson no other multinational has been able to succeed in the baby care market. The major competitor of J&J is Mother-care. There is heavy inflow of parallel imports from the Middle East and UK.

 

MAJOR SUB-SEGMENTS

The sub segments of the baby care segment are as follows:

 

• LOTION

The total volume of this segment is 325000 liters and this segment is growing 5% p.a.

• POWDER

The market size for this segment is 180,000 kg and it is growing by 10% per annum.

• SOAP

The total volume of this segment is 85000 kgs and its growth is15% per annum. This segment is also dominated by Johnson’s baby soap.

• SHAMPOO

The total volume of this segment is 80000 liters and it is growing by 7% per annum. The baby shampoo segment is dominated by Johnson’s baby shampoo.

Johnson & Johnson’s share in the baby care segment is as follows:

• Lotion 20%
• Powder 17%
• Shampoo 25%
• Soap 25%

The growth rate of the baby care business of J&J is 7% per annum

 

 

COMPETITORS

 

PARALLEL IMPORTS:

The presence of parallel imports in the market is a major threat to the company’s fast growing market share. The inflow of these products started during the two year period when the company was not operating in the Pakistani market.

Below we present some important facts about these smuggled products:

• VOLUME: Smuggled Johnson’s baby products have a 1.5 times the volume compared to the locally produced products.
• PRICE: the smuggled J&J are priced around 10% to 25% higher than the local J&J.
• Prices: The prices are 10% to 15% lower than the local J&J products.
• Retailer margin: The retail margin is the same as the local J&J products.
• Credit terms: Mother-care gives attractive terms to the retailers through heavy trade offers and extended credit facilities.

 

MARKET SEGMENTATION

The market segmentation for Johnson’s baby is done on the basis of consumer characteristic by taking into account their demographic, psychographic and behavioral characteristics.

DEMOGRAPHIC SEGMENTATION

The two most important variables in the demographic segmentation are:

• AGE AND LIFE CYCLE STAGE

Babies and young kids are the primary users groups of the Johnson’s baby products. Companies future sales are likely to improve with increase population.

• GENDER

As regard to gender Mother is the main target for purchasing and using these products for their babies, young girls are also targeted for the product usage.

 

Pakistan’s demographic environment offers a lot of opportunities for baby products. Because of following reasons.

• High birth rate
• Female population is comparatively greater than the male population.
• increasing literacy rate and income levels
• The influence of Indian ads through cable networks adds to the Brand equity of J&J products.

PSYCHOGRAPHIC SEGMENTATION:

The variables affecting the target audience’s psychographics are lifestyle, personality, and attitude of the mothers. Mother-child association has been the main theme for communicating with the target market. Mothers would want to conform to the general image of being the most caring mother and would buy personality-defining products like Johnson’s baby.

Traditionally mothers had simple attitudes towards motherhood and care giving but recently we have witnessed that care giving has taken a new shape. This has happened because mothers now have greater choices available and also because their role and status in the society and at home has changed.

 

TARGET MARKET

The market targeted for Johnson’s baby products and is divided into two broad categories namely the primary market and the secondary market. The primary markets consist of the heaviest users of the baby products, comprising of the babies and women. The secondary markets consist of young girls and boys with sensitive skins or who desire to use mild product because of heavy usage frequency.

ANALYSIS OF THE TARGET MARKET

The mothers can be segmented on the basis of lifestyle as working and non-working mothers.

1.The major categories of working mothers are

• Harassed mother
• Have it all mother

2. The non-working mother category can also be divided into two groups

• Traditional mother
• Baby and me

 

WORKING MOTHERS

• HARASSED MOTHERS:

This is “can’t find enough time” segment. Mothers in this category have difficulty managing their roles at work and at home. They have the most difficult time juggling roles (high levels of working) and have the greatest concerns with the responsibilities of parenting and concern with their baby’s well being. They are fairly strong users of baby toiletries.

• HAVE IT ALL MOTHERS:

Mothers in this category seem to get every thing done fairly easily.  They are able to manage work, home, husband, and the baby without much difficulty and complain. They show the highest desire for information on being the best parent.

NON- WORKING MOTHERS

• TRADITIONAL MOTHERS

Mothers belonging to this group are least likely to work and the least accepting of non- traditional childcare as a different but equally successful means of child. This segment is a strong Johnson’s baby user segment

• BABY AND ME:

This segment is the least “self” and most “Baby” focused of the groups. They most seek the rewards of motherhood.

Ensure their child’s success and are least likely to indicate a need for their own outside sources of stimulation. They are heaviest users of baby toiletries and most committed to Johnson’s baby both in image and attitude.

 

 

POSITIONING

THE POSITIONING STATEMENT

Johnson’s baby is a premium brand in care-giving and personal care segment; that offer the benefit of clinically proven mildness that best for baby and best for you; with a target market of babies and women (age 18 –35) belonging to the middle upper and upper income segment.

 

Johnson’s baby is positioned as a mild and gentle product that has been clinically proven.  Every package of J&J products mentions “Clinically Proven mildness” to communicate that Johnson’s baby is a reliable brand. It is currently seen as having very strong existing equities in

• Trusted
• Research backed
• The leader

The baby shampoo has competitive edge over its competitors because of its “NO TEARS” image.

 

ANALYSIS OF 4 P’S

PRODUCT

Johnson & Johnson baby care products are convenience goods. They are staple products, as they require low customer involvement the strategic quality that J & J products offer is that they are clinically proven. These products are mild so that they do not harm they baby’s sensitive skin.

PRODUCT LINE

The Johnson’s baby product line consists of the following:

 

• Baby powder
• Baby bath
• Baby oil
• Baby lotion
• Baby Shampoo

 

It is made of millions of tiny slippery plates that glide over each other eliminating friction. Skin is left feeling cool and comfortable.
It is clinically formulated with a neutral pH and is soap-free, hypoallergenic and dermatologist and allergy-tested to clean gently, yet effectively. Also, because infants do not have normal tear secretions to protect their eyes from irritants. The NO MORE TEARS Formula is as gentle to the eyes as pure water. JOHNSON’S Baby Bath also lathers quickly and rinses easily, leaving your baby feeling fresh and soft.

 

 

It has a patented formula with rich emollients to help protect your baby’s tender skin against drying and friction. JOHNSON’S® Baby Lotion is hypoallergenic and dermatologist- and allergy-tested. The fast-absorbing, long-lasting formula leaves your baby’s skin feeling soft and smooth, not greasy.

 

 

It is made with pure mineral oil to form a silky barrier to prevent excess moisture loss. It helps soften and protect your baby’s delicate skin. It’s effective enough for adult use, too.

 

It is made from a special combination of ingredients, which during normal use will not irritate your baby’s delicate skin or eyes. And the NO MORE TEARS Formula is as gentle to the eyes as pure water. Clinically proven mild, JOHNSON’S Baby Shampoo is soap-free, hypoallergenic, and dermatologist- and allergy-tested. JOHNSON’S Baby Shampoo rinses easily, leaving hair soft, shiny, manageable and clean.

 

PRODUCT DEPTH:

The J&J baby products come in the following sizes

PRODUCT		SIZES
BABY LOTION	50 ml	100ml	200ml
BABY SHAMPOO	100ml	200ml	300ml
BABY BATH	100ml	200ml	300ml
BABY POWDER	100g	200g	300g
BABY OIL	100ml	200ml	300ml

 

 

PRODUCT LIFE CYCLE

The baby care products are in the growth stage of the PLC.  J & J plan to add more products to its product line such as baby sun block, and baby cologne. Baby Bath is still facing the introductory stage.

 

 

PRICING

PRICING STRATEGY

Because of its strong brand image Johnson & Johnson charge a higher price as compared to its competitors. In this way J&J uses psychological pricing approach through which the price is used to say something about the product, its quality, and the image of the brand.

PRICING OBJECTIVE:

To achieve a target of around 25- 40 % gross profit and to stay ahead over local competitors. J & J use a cost plus profit based pricing. Their prices also depend upon competitors price.

The pricing policy changes according to dollar fluctuations because the company imports the raw materials from abroad. The rupee dollar parity affects the cost of the product and as a result the product price is affected. For example, when the rupee devalues against the dollar, the cost of the input rises and thus, the price of the product is increased.

 

PRICE STRUCTURE

The price structure of its product line [As Nov 2010]

 

PRODUCTS	SIZE		RETAIL PRICE (Rs)
Baby powder	100g		42
Baby powder	200g		72
Baby powder	300g		92
Baby shampoo	100ml		52
Baby shampoo	200ml		92
Baby shampoo
Karachi
Lahore		3000
Islamabad & Rawalpindi		1500
Others		5000

DISTRIBUTION STRATEGY

Johnson & Johnson  is  currently following intensive distribution strategy to counter the threat parallel imports and their distribution network is conventional in nature.

DISTRIBUTON CHANNELS

• Johnson & Johnson – Distributors – Wholesalers – Retailers

·         Johnson & Johnson – Distributors –  Retailers

• J&J sell directly to Agha khan university hospital.

 

 

PROMOTION

 

ADVERTISING

Johnson&Johnson Pakistan is not spending huge amounts in advertising let it be electronic or print media. Recently they have started extensive advertising of baby products in print media and road side hoarding. One major reason for which they are not advertising on electronic media is that they are taking advantage of the media spillover. Media spillover indicates the running of J&J commercials ON satellite channels, which are commonly viewed in Pakistan.

SALES PROMOTION

• Trade promotion is mainly done by individual negotiations at the retail level. This is done basically to convince retailers to display J&J Pakistan products at their shelves instead of the smuggled ones. They also offer seasonal discounts to wholesalers in order to keep them intact.
• Sales force promotion is also used by the company to motivate its field force. The sales force incentive is given in the form of percentage of sale
• Organizing of baby contest: arranging a baby health care competition on a regular yearly basis has been an effective part of the company’s promotional activities.

 

FACTORS HINDERING THE GROWTH OF J&J PRODUCT

• Complacency towards baby care range.
• Poor distribution channel.
• Less investment in brand building.
• Profit oriented approach.
• Credit given by suppliers of smuggled J&J
• Additional 10 to 15% of retailer margin on smuggled J&J products.
• Packing difference between the local and foreign adds to this perception by making the products more distinguishable.
• The price difference between the smuggled and local Johnson’s baby products
• Insufficient advertising, promotion or sponsorships are done for the brand.

This can hurt the brand image and equity by slipping from the consumer’s awareness.

The company’s image may also go down in the consumers’ mind especially if they compare the Johnson & Johnson India with Johnson & Johnson Pakistan.

 

ANALYSIS AND SUGGESTIONS

After analyzing several aspects of the marketing operations of JNJ we would like to suggest the following..

1. Effective lobbying is required by the company to stop inflow of smuggled JNJ product. Since the present government is commuted to scratch the menace of smuggling from Pakistan JNJ should openly support there efforts.
2. Improve advertising campaign is required the strong advertising in the late 80s which reposition the baby brand as best for baby and best for mother needs to be revitalized because consumers are required to be convince but at regular intervals to purchase your products.
3. The company is presently using the Thai formula for manufacturing its products because of the climate similarities. In the present scenario where companies are working for mass customization it is required for JNJ to invest more into R & D and start manufacturing products made specifically for the Pakistani market.
4. The packaging of the products should be improved, as it has to compete with the smuggled products. This improvement should be done while keeping in mind the need for distinction.
5. The company must rethink about its premium price policy if it wants to increase its target market. This will also give JNJ competitive edge over smuggled products and other brand competitors.
6. The company should create more awareness about its entire product range available in Pakistan. It should also try to launch other JNJ products not presently available in Pakistan. As the consumers in Pakistan are well informed about them through the satellite channel.
7. Retailer margin should also be improved from 11%, which is less than the retailer margin given by the suppliers of parallel imports.
8. The company should try and negotiate with the regional head of J&J or with the J&J headquarters in USA to eliminate the inflow of goods from Middle East, UK, and other countries like Korea and Thailand. These countries should be banned to export any of their Johnson’s baby products to Pakistan except for the ones that are under license.
9. The company should try and negotiate with the regional head of J&J or with the J&J headquarters in USA to eliminate the inflow of goods from Middle East, UK, and other countries like Korea and Thailand. These countries should be banned to export any of their Johnson’s baby products to Pakistan except for the ones that are under license.
10. The “Johnson & Johnson Pakistan (private) Limited” written on the pack should be changed to “Johnson & Johnson Pakistan under formulation from UK” Also the color difference should be eliminated and the transparent sheet should be removed.