Free Custom «Johnson and Johnson as a Prospector» Essay Paper

A prospector refers to a company that applies adaptive strategies to realize fast and profitable growth by evaluating new market opportunities, increasing its appetite for risk and being the market leader in the introduction of new products to the market. Johnson and Johnson was established at a time when there were little discoveries in the medical profession. In the late nineteenth and early twentieth centuries, the company came up with the first aid kits that were accompanied by the first aid manual. Other first aid manufacturing companies simply modified their idea. Its encouragement of risk taking is well-illustrated by some of the new products that are launched on the market and fail to live up to expectations. For instance, in the 1980s, the company took the risk of recalling all of its Tylenol products when the drug was found to have caused a number of lethal outcomes. Despite having cost the company more than $150 million, the move saved the company’s image among its customers. Its expansion to more than 57 countries also shows its risk appetite. In addition, the company’s business strategy has proved workable, since Johnson and Johnson has continued to realize profits that amount to billions of dollars every year (Form 10-K, 2010).

Customers

Johnson and Johnson’s customers include baby mothers, women, men and hospital patients. One of the most popular products manufactured by the company is a baby shampoo that is very popular with baby mothers around the world. Many mothers tend to buy Johnson and Johnson’s products in relatively small batches and only replenish their stock on completion. The tendency has been caused by the recent scrutiny the company came under after mould found in proved to be responsible for harmful effects to humans. However, the company has been recalling all such products to save its image ever since.

Women carefree products are purchased on a monthly basis to suit women’s menstrual needs. Being in charge of prescribing medications to their patients, hospitals place their orders with the company and are supplied with huge quantities of products in designated periods of the year. However, purchase is dependent on the movement of products within the hospital.

Beauty products are purchased on a regular basis, particularly by women. Most consumer products are available in numerous specialized retail outlets of the company, while those requiring prescription are sold by medical facilities.

Purchase Motivation

Different customers are motivated differently to purchase the products. Baby mothers, for instance, are in search of products that alleviate their anxiety and security fears for their children. Therefore, products, such as baby shampoos, are preferred for their absence of irritation to the child during use. Women, on the other hand, determine the best menstrual products by their ability to absorb and hold moisture for long hours. Johnson and Johnson carefree products deliver such needs with amazing excellence. Cosmetic products are fashionable if they help one attain facial smoothness, prevent excessive oil on the face or brighten up one’s complexion with little side effects associated with such performance. The company’s products are synonymous with such attributes, thus making them a darling of their customers.

Audience Segmentation

The segmentation of the company’s products is depicted by three categories of products they sell. Into the first category fall consumer products that include baby care products, cosmetics and other adult care products. The second category comprises medical devices and diagnostics intended for the medical community, including doctors and nurses. The third category includes prescription products that focus on five key areas, such as: neuroscience, oncology, infectious diseases, immunology and heart-related disorders. The segmentation is meant to achieve higher sales, while causing the least form of inconvenience to the customer. For instance, consumer products can be sold at local outlets so as to reach customers more easily, while prescription products are only sold by qualified professionals. Such segmentation has also enabled the company to implement different pricing for their products.

Advertising

Johnson and Johnson mostly use such electronic media as television and the Internet to reach a large share of its target market. Video clips are perceived to convey a message more memorably, particularly when humor is incorporated. For instance, in an advert of their mouth freshener, two professionals are shown using oxygen masks to shield themselves from the bad breath from a patient’s mouth. Such humor makes the product more memorable, thus improving its chances of being purchased in the future.

Television adverts also evoke the need to have a commodity purchased, so as to avoid the incidence depicted. This form of advertising also helps the company exploit the anxiety and insecurities of baby mothers by getting them to buy the product. The Internet and social networking adverts ensure that products are known all over the world. Customers respond more to television adverts than to newspapers or other forms of advertising. In addition, the presence of the company in different parts of the world makes some of the adverts they use consider the cultural diversity of the target group. This makes the product appeal to the locals and ceases to be viewed as foreign (Gaudet, 2008).

SWOT Analysis

Internal Environment

Strengths

• Dominant Market Player: The company has continued to dominate the health care industry for the last 125 years, emerging the best in various instances.
• Excellent Image: In its many years of operation, products by the company have had few customer complaints. In the few instances observed, the company managed to rescue its image by recalling all the products from circulation.
• Qualified and Talented Staff: The company has been under the leadership of eight different CEOs, with each building on the successes of the predecessors.
• Wealth of Experience: Years of operation invoke customer confidence in the company’s products and greatly increases its sales.
• Huge Sales and More Funds: The availability of funds enables it to open up branches in other countries, thus boosting sales even more.

Weaknesses

• Decentralized Organization Structure: Johnson and Johnson has numerous department and sub-units that monitor its operations all over the world. This complicates the monitoring of the cannibalization of products from the various departments.
• Sector of Operation: The company operates in the health sector that calls for consistent and advanced research which may often require huge funding.
• Different Culture: Its operation in different countries calls for taking into account different cultural diversities in the marketing mix of their products, which often increases the expenses or inhibits successful performance of a product in that market.

External Environment

Opportunities

• Population Increase: Health care affects the lives of all human beings in the world. Since the world population is always on the rise, the company has an increasing target market to be exploited.
• Competition: A large majority of rival companies do not have the diversity associated with the company and this gives it a comparative advantage. It easily outperforms them in market competition.
• Health Awareness: People are becoming more conscious of their health and tend to chose products that will help them stay in good health. This implies that the company has an increasing demand for its products due to the excellent image.
• Reliable Suppliers: The company has dependable suppliers who timely deliver raw materials for the manufacture of its products. The available raw materials can accelerate the company’s rate of expansion.
• Advance in Technology: The advances in technology keep introducing new and more effective ways of meeting consumer needs. For instance, the Internet has facilitated the advertising of its products in different parts of the world where the company’s products are sold.
• Quality of Products: Consumers are concerned about the quality of products they purchase more than ever before. This limits the sale of poor quality products by mediocre competitor companies, thus ensuring the company’s position in the market.

Threats

Competition from other generic companies: increasingly more companies are beginning to realize the profits that can be earned from the industry. Therefore, they are also selling substitutes and complements to the company’s products.

• Wariness of Chemical Products: An increase in worldwide cancer cases is causing people to be more vigilant with regard to what they consume. Therefore, there is a general tendency to reduce the level of chemical intake.
• Economic Downturn: The 2008 recession and the current economic crises in Europe reduce the level of consumption or sales of the company’s products.
• Price Restriction: The U.S. government places restrictions on the level of pricing of health care products and these could render their production ineffective.

Competitors

Johnson and Johnsons operates in different sectors and, therefore, has a large number of competitors. However, the largest competing companies, such as Merck, Pfizer and Novartis, provide the same product diversity.

Merck

The company operates in the same line as Johnson and Johnson, but with extension into the animal sector. It has a larger capital base and operates in more than 150 countries. It, therefore, faces the same predicaments that face the Johnson and Johnson Company. The company uses electronic media as its main form of advertising to boost its sales. However, unlike Johnson and Johnson, it has not been very careful about its image. For instance, it has been accused of remitting several taxes before, while some of its vaccines have failed to meet the stipulated quality as per FDA. This has led to a negative publicity for the company (Weyzig, 2004).

Pfizer

This company is termed as the largest pharmaceutical company in the world, particularly in the provision of animal drugs. It was founded more than four decades, long before Johnson and Johnson was incepted. This gives it a greater wealth of experience in handling organizational matters responsibly. To reach its target market, it uses print media, electronic media and the Internet so as to ensure maximum operational efficiency (George, 2009). It operates in more than 180 countries of the world and receives billions in revenue every year. The company is rated as more responsive than Johnson and Johnson. The fact that its advantages outweigh the strengths of Johnson and Johnson makes the company a formidable competitor.

Novartis

This is another pharmaceutical that operates in more than 140 countries and specializes in the manufacture and sale of health care products. Unlike Johnson and Johnson, its growth has been perpetuated by the amalgamation or acquisition of different entities with excellent future prospects. To reach its target market in different parts of the world, the company makes use of different forms of advertising, such as electronic media, print media and the Internet. Like Johnson and Johnson, it has a website from where prospective and current customers can retrieve and analyze information about the company and its products. Most of its adverts are lased with humor to ensure they are memorable, thus matching those of the Johnson and Johnson Company. Like Johnson and Johnson, the company has been the first to introduce to the market a large number of new products, such as the H1N1 vaccine developed through application of bio-technology in 2009. All the above makes the company a formidable competitor of Johnson and Johnson (Scott , 2007).

Additional Research

Research based on secondary data often fails to reflect the current state of affairs in the area under study due to mismatch in the timing of events. Therefore, primary research will be necessary to identify how customers have reacted to the recent events pertaining to the company. For instance, it would be interesting to answer the following research questions resulting from the scrutiny the company came under after a dangerous mould was found in its products:

• How do customers feel about Johnson and Johnson after such an incident to which the company reacted rather slowly?
• Given similarity of products manufactured by the four companies, which company would one purchase from and why?
• What makes a product valuable in the eyes of the customer besides quality and pricing?

Methodologies

The best way to obtain these data would be through administration of questionnaires to customers of the companies. The samples should ensure that all audiences in the segments discussed earlier are chosen with as little bias as possible.

This information will be used to determine what can be done to alter the current situation and hopefully win more customers for the company.