Marketing Plan: Johnson & Johnson
Marketing Plan: Johnson & Johnson
Marketing Plan: J & J DiaperOrganizational OverviewBackground on Johnson & JohnsonIn 1886, Robert Johnson joined his two brothers, James and Edward Johnson and went into business in 1886 in New Brunswick, New Jersey with 14 employees. They incorporated as Johnson & Johnson (JNJ) in 1887. One of JNJ’s most well known products was Johnson’s Baby Powder, which was originally to sooth skin irritation in 1890. This led to a line of baby products with the marketing slogan, “Best for your baby, best for you.” Some of JNJ’s most well known products are Band-aid, Tylenol and the antipsychotic drug, Haldol.
JNJ has been a publicly traded company on the New York Stock Exchange since 1944. The company’s ticker is JNJ. They boast 72 consecutive years of increased sales and 44 consecutive years of dividend increases. Part of JNJ’s success is contributed to their innovation and continued development of new products.
Mission StatementJNJ does not have a simple mission statement but a one page document titled, “Our Credo.” The beginning paragraph of “Our Credo,” is as follows:We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.
Geographic LocationCurrently JNJ is parent to 230 companies throughout the world, all of which currently and historically market health care products. The principal office is located in New Brunswick, New Jersey and employs 116,000 employees in 57 countries worldwide.
Product MixThe business segments of Johnson & Johnson include consumer, medical devices and diagnostics, and pharmaceutical. Each segment has numerous companies and product lines. Our product will be part of the consumer segment and a product line of Johnson’s Baby.
Product DescriptionAfter much research JNJ decided to create a diaper in conjunction with Balmex diaper rash cream. Balmex is a successful product of JNJ and has been pediatrician recommended for over 50 years. Balmex reduces redness from diaper rash within hours. (Johnson & Johnson Consumer Companies Inc. 2006) The question the research team faced was how to prevent diaper rash instead of treating diaper rash. The answer that they came to was to get Balmex to the skin before the rash had a chance to develop. This idea is behind the creation of the brand new JNJ diaper.
SWOTT AnalysisThis SWOTT analysis will attempt to uncover the strengths, weaknesses, opportunities, threats and trends associated to this new product of JNJ diapers with Balmex.
StrengthsJNJ is one of the world’s leading manufacturers of health care products. The company has a strong product portfolio and has developed a well recognized name amongst parents for their child care needs. This strong brand image puts the company at an advantage when it comes to launching new products.
The company is in a healthy financial position that allows the company to provide the resources necessary to exploit opportunities and promote their products heavily.
Balmex is a well established product and has been recommended by pediatricians for over 50 years. This type of trust will automatically generate sales for the company. Balmex treated diapers would not only treat a diaper rash but prevent one from occurring. This new product in not only more convenient, but much less messier than the alternative of applying a thick cream that is difficult to wash off the skin.
The company already has developed the application process of this product through an existing product line, Carefree Panty liners. This will save the company from having to do the research from top to bottom for this new product line.
WeaknessesLike any new product, time and money needs to be spent on researching, developing and marketing. Customer demand needs to be created for this new product and this will require plenty of resources to accomplish this task.
The diaper industry is a new market for JNJ and it will be tough for the company to establish itself in this industry. Having a well established brand helps, however; Huggies and Pampers has dominated this industry for a very long time and breaking into this new territory is going to require a very expensive marketing campaign.
OpportunityDisposable diapers make up an industry worth over $19 billion a year worldwide. This new diaper will allow JNJ to tap into this lucrative industry with a distinctive and innovative diaper that has not been developed up until now. This product has the possibility of being a huge success for JNJ and can contribute to the company’s financial position.
ThreatsSafety concerns are always an issue especially when developing a product used by children. JNJ needs to be prepared for claims associated with misleading advertising, inappropriate use of the product and allergic reactions that some babies may develop. JNJ invests plenty of money on trials and developing their products, however; does not always guaranty that something will not go wrong.
Competition is also a major threat for JNJ. Huggies and Pampers have dominated the diaper industry for quite sometime. If this new product establishes a new demand with the customers in this industry it will not take long for these companies to produce and distribute their own versions of these types of diapers.
TrendsIn today’s society, consumers are always looking for a product that will make their lives much simpler. The majority of parent’s both work or even raise their children as a single parent. This product capitalizes on this demand to make lives as simple as possible by saving parents the hassle of having to apply a messy heavy cream to prevent their children from developing or treating a diaper rash. This trend will only continue into the future and JNJ needs to keep this in mind when developing a new product.
Market ResearchIn order for Johnson and Johnson to get a new product to the right consumer, they must first divide the market and then target a smaller portion of that market. The process of segmentation is basically those buyers JNJ is looking for that share the same needs and have same buying behaviors. The purpose of segmentation allows narrowing down the same needs and buying behaviors they are looking for in a target market. There are several ways segmentation can help JNJ to find their target consumers. They include the geography, the psychographics, social-cultural graphics, and demography. Johnson and Johnson will have to evaluate all four bases in order to find an ideal customer.
The geographical base is probably the least important factor on the segmentation criteria, although it is important, there are other factors that are more crucial. Depending on where the consumers shop and live can also depend on availability of a product. If a consumer lives in a more rural area, there may not be a distribution of the new product. However, the internet has made it possible to reach consumers in remote areas and make it possible for them to buy products that are not available in their area.
The psychographics of the targeted consumers is one of the most important aspects on what will make the consumer buy into the product. Since our new product is directed towards convenience and prevention, we want to know what the lifestyles of our consumers are like. Specifically, we are looking for parents who are on the go, but are still concerned for their child’s healthcare. This new product will better suit those parents who are very active in their daily lives.
The behavior bases such as the social-graphics provide a sense of reassurance to all current JNJ customers. “The fundamental objective of Johnson & Johnson is to provide scientifically sound, high quality products and services to help heal, cure disease and improve the quality of life.” (Johnson and Johnson.com, 2002) Many people buy these products because JNJ is a well established company that has been around since 1886; therefore, some of these consumers will want to consider trying out a new and improved product. Also the fact that most of JNJ products are pediatrician recommended has in itself helped to establish the level of trust consumers feel towards the brand and know that these products will not harm their children.
The demographics for this new product will be the most important factor for the targeted market. The consumer’s age will typically define what maturity level is buying the product. Typically older parents ranging in age from 25 years to 35 years have the means to take better of their children’s healthcare needs than younger parents ranging in age from 16 years to 25 years. The parents in the older age bracket are generally better established in their full-time careers, both working full-time jobs and are always on the go; whereas, the younger parents are barely trying to get a head start and can not afford the convenience.
Family size is also another factor because the larger the family, the more likely the parents are concerned with the cost of the product. Studies have shown that smaller families are more willing to try new products and are not as concerned with the price as bigger families tend to be. Occupation is another important factor of demographics. With rising costs most families need dual incomes in order to cover their cost of living. As a result of both parents working, parents are more strapped for time; therefore, if a product proves to be more convenient they may be willing to pay a little extra for this convenience.
After analyzing all the segmented bases we are closer to realizing the target market of consumers for this product. We have found that the target market for our product is the older parents as opposed to the very young ones who have one or two children. The majority of our market will be families with dual incomes looking for the convenience that our product will offer to them. This market will buy our product due to the level of trust they have in our brand from pediatrician recommendations and brand recognition. Most likely these parents will be from urban and metropolis areas who will have easy access to our product as a result of our distribution. However, most importantly our target market will be parents who want to make sure their children are healthy and free from any infections or irritations due to diaper rashes, but at the same time looking for the convenience of this 2 in 1 product.
Competitors and the Competitive LandscapeJNJ has created a revolutionary product, a 2-in-1 diaper with diaper rash cream that makes changing diapers easier for the consumer. This no mess, one step diaper promises to prevent non-fungal diaper rash instead of just treating it. JNJ already has over 50 years of experience with its current diaper rash product Balmex. JNJ decided to take its very effective, well known diaper rash cream and add a new twist. Now parents will not only treat a baby for diaper rash, but they will prevent non-fungal rashes from occurring.
One problem that JNJ faces is anticipating who will buy this product and how much one will pay for this convenience this product offers. Since there is currently no item like this diaper on the market, there is no secondary research for JNJ to build upon. The only facts that JNJ has is the effectiveness and popularity of Balmex. Before JNJ can present this product to the public it must conduct primary research to determine whether or not the diaper can compete in the market of diapers and diaper rash creams.
JNJ has a long history with its customers and has been able to successfully meet their needs over this period of time. JNJ first began in 1887 with creating sterile dressing for surgical procedures, reducing the risk of infection. By 1897 they were named “The Most Trusted Name in Surgical Dressings” (J&J, 2006). In 1890, JNJ baby powder, the original treatment of diaper rash was introduced. In 1948, JNJ was the first company to create the disposable diaper (GPOABS). In 1951, Balmex was created to treat diaper rash (J&J, 2006). It was not until 1961 that Pampers were introduced and in 1968 Huggies hit the market (GPOABS, 2005).
JNJ has been caring for families for over a century in a variety of ways. Not only did JNJ produce over 90 percent of surgical dressings in the late 1800’s, but they protected families during the Great Depression by assuring none of the workers lost their jobs. JNJ has also protected families through its products and pharmaceuticals (J&J, 2006). This extensive history provides JNJ with a loyal consumer base, and the knowledge of filling the needs and wants of its consumers.
While JNJ does not currently market a diaper, it has made diapers in the past. JNJ also has the advantage of studying other companies’ diapers and understanding what works best and why. Through this secondary research that was available to JNJ we are able to create a diaper that could promise the same breathable, stretchable, compact fit that other diapers offer. Now JNJ can exceed what the other diapers promise, by being able to provide the first diaper that will prevent non-fungal diaper rashes.
These new diapers will not only prevent diaper rash and be just as comfortable as other diapers, they will cost the same amount as Pampers, the current most expensive diapers. Since most families are always on-the-go, the hassle of applying messing diaper rash cream in neither convenient nor time saving. A baby with diaper rash also means a baby that is more irritable from skin irritation. JNJ diapers will prevent non-fungal rashes reducing a baby’s irritability from rashes. JNJ’s diapers will be both convenient by eliminating the need for excess messy products and provide the baby with healthier skin that is not provided by the competitors.
It is crucial for a company such as JNJ to market their new product line accordingly to add to their success. They must be able to communicate their marketing message in such a way that their targeted group will be interested in what they have to offer. By using their available resources to the fullest extent, they will be able to generate more revenue. The goal to promoting the new product line is to be acquainted with the selected buyers. Since this will be a completely new product for this industry and company, JNJ has to take on a strong position and really be prepared to overcome the challenges that may arise.
JNJ must consider what their consumers are looking for in a diaper. If they can successfully determine the needs and wants of those purchasing diapers, they will be able to expand their cliental. They should evaluate their current customer base and determine how to maintain their loyalty when
purchasing diapers. By identifying their current market group and considering some of their demographics such as income and also looking into their life-style, how often will they need or use the product and the loyalty of their customer base.
Another important factor for the marketing plan is to focus more on the benefits of the product. They must pay special attention to the direct needs of the purchaser. They must be able to understand and deliver how a customer will profit by this new product. Recognizing the needs of the consumers will help in convincing them to buy their products, which will lead to more sales revenue. Consumers are really buying products that will bring them convenience, save money and time. The more JNJ knows about their customers and competitors the more they will be successful. Since this product line will be completely new, they must work out all the negative drawbacks that may come up so it does not affect the company’s reputation as a family friendly organization.
This product will be targeted to the type of parents that want convenience and with the least amount of hassle that will fit into their busy schedules of juggling work and raising a family at the same time. At JNJ the company understands the need to make life as easy as possible for these working parents and has discovered this new market opportunity that has the potential to be a highly demanded product in the disposable diaper industry.
In the United States, $8.5 billion a year is spent on disposable diapers. Currently there are two big companies who own a large portion of this market, Procter & Gamble (Pampers) and Kimberly-Clark (Huggies). JNJ does not currently produce diapers; however, they have developed a brand association amongst parents of being a dependable and trustworthy company for their childcare needs. Obviously, the company’s main priority is to increase sales and profits for the company; however, they also wish to sustain the trust that has developed through the years with a new product that is what the consumer wants, needs and depends upon.
Using the five-step marketing research approach, JNJ has developed the route for the new product; JNJ Diapers with Balmex. Step one requires that research objectives are set by having a clear understanding about the type of research needed to introduce the product to the market. By using casual research, JNJ will try to determine if adding diaper rash cream to diapers will actually motivate consumers to buy the product. Casual research tries to determine if a change in one factor changes another one. This type of research would best suit the purpose of JNJ because Balmex is a product that already works; however, the company hopes to make that product even better and create the need and demand in the targeted market.
Step two is to develop the research plan by specifying the constraints on the research activity, identifying the data needed for marketing decisions, and determining how to collect the data (Kerin, Hartley, Berkowitz & Rudelius, 2006). The constraints on this project fall heavily on time and money needed to do research; however, JNJ is a large corporation that can afford the necessary funds to develop and do the required R&D. Even so, it is important to establish the budget and time that will be allocated to this research. The type of data that is needed needs to be collected by sampling from a population that is most likely to use the diaper. This product is targeted to a specific market and for that reason there must be a parameter set up with precise rules to select that sample. This type of sampling is referred to as probability sampling.
Step three is collecting relevant information. Since this product has never been developed before, it is important to collect primary data for this research by using questionnaire data placed in specific magazines targeted towards parents. Also Internet surveys will be conducted on JNJ websites. JNJ will offer incentives to those that participate in these surveys by sending free samples of existing product lines. By offering these types of incentives JNJ hope not only to target the specific diaper market, but possibly develop a wider consumer base for existing products.
Step four is the development of the findings collected. After relevant information has been collected the data needs to be analyzed carefully. The last step will require JNJ to implement a marketing action once all data has been reviewed and possible recommendations have been considered. Finally,
JNJ will need to constantly evaluate the results by comparing profits with goals established for this product.
Positioning and DifferentiationJNJ’s new rash-free diaper will be more convenient and effective for parents compared to what is offered by the other leading brands. This will give JNJ a competitive advantage over the market place with a product that is differentiated amongst existing products and will help them to gain a customer base in a heavily dominated market.
What differentiates JNJ’s product from all the other products is that the new diaper is a modification to an existing product. JNJ does not currently produce diapers, however; they do produce and sell diaper rash cream. This new product will be a combination of both products and will add efficiency and effectiveness for the parents when changing their baby’s diapers. It will also aid with the prevention of diaper rashes for small children and give parents a new option when choosing a diaper for their childcare needs.
JNJ will have to continue to redesign and improve their product process. One of the key elements to positioning this new product is through the research and development. This is where they can solve any current problems they may have against the product and through technology help aid in new findings and possibly better the product with new inventions. Research and development needs to be an ongoing process that never stops because it won’t take long before the competitors are doing it better and more efficient than you are.
JNJ has already positioned themselves as a common household name. Many consumers feel a certain level of trust when hearing or seeing their famous trademark because JNJ has been in the health and baby care business for the past 60 years. JNJ is committed to helping people live longer and healthier lives. Since JNJ has already established a large consumer base, the immediate challenge will be to heavily promote this new product into their existing product lines.
Product Life CycleThe first step in the product life cycle of JNJ’s new baby diaper is the market introduction. The initial expectation is that sales will be low as customers will not be aware of nor will they be looking for a diaper made by JNJ. Promotion will be essential during the introduction stage. Even with significant promotion, it may take some time for potential customers to learn about the availability and the advantages of using JNJ’s new diaper. JNJ further expects to experience a loss on this product during the initial market introduction due to product, promotion and place expenses. JNJ should expect a prolonged introduction phase because it is trying to take a share of an established market. Customers who are content with their current diaper choice may not be too eager to switch brands. The most likely customer will be people who have become recent parents and have received various types of promotion from JNJ.
The next phase in JNJ’s new diaper life cycle is the market growth stage. JNJ expects both new and experienced parents to purchase the new rash free diaper. During the market growth stage, JNJ will experience rapid growth and exposure. The diaper will initially experience strong profits. During this phase, JNJ will experience its largest profits from this new product. It is JNJ’s expectation that the competitors will produce a similar product in approximately three months from the market introduction. If JNJ ignores the competition during this stage, it could be devastating to the success of this product. It will be essential to the success of this product to win over and maintain the customers who are already using JNJ baby care products by stressing and promoting the trust that they have developed through the years with their Balmex diaper rash cream.
The third phase of JNJ’s new rash free diaper will be the maturity stage. During this stage the competition will get stiffer and JNJ should expect lower prices from the competitors. The competitors may also spend more money on promotion while fighting to keep their share of the market. The competitors have a lot at stake and will fight hard to keep their customers. During this stage JNJ needs to concentrate of reinventing the product by considering revisions to the marketing mix primarily focusing on promotion.
The last stage in the new diapers life cycle will be the sales decline stage. The primary reason for sales to decline is a vigorous product war from the competitors. They will essentially duplicate JNJ’s new diaper and try to make it better. They will lower their prices and spend more on promotion. At this stage, the competitors will usually drive the small organizations out of business. However, lucky for JNJ, the company is too large to be easily driven out of the marketplace; therefore, the other diaper companies will have to fight long and hard to hold on to as much of their customer base as possible by relying on generational experience and loyalty.
The United States is experiencing rapid population growth which means new families are being created everyday. This is good news for JNJ as new families develop; new potential customers are born everyday. Between July 2004 and July 2005, the countries population grew by 2.8 million people. The southwest portion of the United States saw the most growth. California has remained the most populous state in the country with 36.1 million people. Nevada has been the fastest growing state for 19 consecutive years with a growth rate of 3.5%.
Arizona is a close second with a growth rate of just under 3.5% (U.S. Census, 2005). JNJ must concentrate developing new life cycles and reinventing the product in areas with significant growth patterns. With the right strategy JNJ will overcome the sales decline phase by reintroducing the rash free diaper to new families by including the new diapers into the marketing mix already in place for other JNJ products.
Marketing MixProduct StrategyThe JNJ pre-medicated diapers are made with the same high quality cotton as their sterile surgical supplies. The otter shell is soft to touch and breathable. There is elastic around the legs and back allowing for baby to move freely without the parents need to fear of leaking. There is a tab on either side of the waist that is re-adjustable. The center of the diaper is filled with a dry gelatin substance that is capable of absorbing 500 milliliters of fluid. The inner liner of the diaper is made of cotton and has a very thin layer of Balmex applied in a three inch by six inch area. Last there is a wax paper cover over the Balmex which must be removed before the diaper is applied. Each diaper is wrapped in an airtight thin plastic pouch.
These pre-medicated diapers are designed with the concept of keeping a babies’ skin healthy. For that reason all materials used are hypo-allergenic and have been tested of a variety of skin types. All materials used are breathable and latex free. None of the materials used have been tested on animals. The diapers are guaranteed to keep fresh as long as outer plastic bag is kept intact. If there should be some malfunction of the diaper or should the baby develop a reaction JNJ will refund the full purchase cost.
Place StrategyJohnson & Johnson foresees the new rash free diaper being carried primarily as retail item. These retail stores would probably include baby care sections and a wide array of baby care products. These stores are usually located in or near densely populated areaswith a large and diverse customer base. Due to the explosion of urban sprawl and rapid population growth, more families shop at these types of retail outlets.
Before organizational buyers begin to carry our unique product, we will conduct surveys to help us narrow down the right consumer groups. Data from the surveys taken will determine whether or not this product would be viable in a market that is diverse and unpredictable. Price, place, promotions, and our product must be considered. Targeting marketable locations through marketing surveys will help us to better understand the locations that we will make our product available and it will also enable us to create a reasonable price that will meet our costs and profit requirements and those of the consumers buying our product. Promotions through personal selling, sales promotions, public relations, direct mail, trade fairs, exhibitions, advertising and sponsorship will help us to create the demand and the awareness of our new product.
Retail stores are mostly profit organizations that are concerned with revenue. If the organization is unable to make a certain amount of profit they simply choose not to carry our new product. That is why it is so important that we price this product correctly to not only meet the needs and wants of our own and those of our consumers, but also to meet the needs of the organizational buyer. These diapers must also be a product that is demanded by the consumer in order for the retail stores to continue stocking our products. If we are not successful in generating a significant amount of demand, these retail stores will simply discontinue their purchasing of our new product line. Retail generally desires a high inventory turnover rate. They expect JNJ to heavily promote their new product in order to create the demand and if successful will continue to stock our product as long as they continue to move off of their shelves.
Another retail concern is the availability of the product. Stores and their consumers do not like to be told that a particular item is on back order. When a store sells items they need to fill that spot on the shelf quickly so more items can be offered for sale. It is a very frustrating situation when the demand for a product can not be met not only for the consumer but the organizational buyer as well. This type of situation results in a significant loss of revenue for the organizational buyer and upsets the consumer that relies on the store to carry the product and will result in loss of business for all parties involved in the transaction. That is why it is very important for our company to understand what that demand will be and have the product available to meet those demands.
The diaper has to be consistent with the stores existing product mix. Some retail stores and supermarkets consistently carry baby items while others tend to specialize in just a few specific items. Most important, the product must work and be free of defects. No retail store wants to be associated with a large-scale recall.
Another prospective organizational buyer will be daycares and hospitals. These types of venues will offer a great opportunity to introduce our product to consumers. Hospitals will require diapers for newborn babies and ill baby patients. Not only will they desire a service contract but also hospitals tend to give out care packs to the babies’ families when they leave the hospital. Care packs contain baby products including diapers and coupons. Hospitals will expect a certain amount of promotional products. Daycare Centers commonly stock baby care products. Again, this is a great opportunity to establish a relationship with consumers. Daycares contract with companies such as Huggies or Pampers in order to purchase diapers in bulk.
Diaper consumers will be family oriented men and woman from a wide range of social economic levels. Many first time parents will be in an experimental stage. They will try different diapers and see what appeals to them the most. Most new parents rely on care packages and samples at the start of parenthood until they form preferences. Children are expensive and parents quickly learn that price is a significant factor. Parents who have experienced diaper rash will want to prevent future occurrences. An experienced parent may be attracted to a diaper that has the cream included as opposed to one where the parent needs to get their hands messy with diaper rash cream. Due to this experience, it is easy to see how pre-medicated baby diapers can save time, money, and frustration; leading to happier moms, dads, and babies.
Pricing StrategyIdentifying a pricing strategy for this new diaper will be based on what the competition is already doing in the marketplace. JNJ has decided to price the new diaper at the same price as other leading brands. This will give the company a competitive advantage since consumers can try the convenience that the new diaper offers without the cost of having to pay more. This diaper will understandably cost more to produce than the diapers produced by the competition resulting in a loss of profits, however; JNJ needs to gain a share of the marketplace and sometimes high markups do not always mean big profit (Perrerult & McCarthy, 2004).
The pricing strategies will be closely tied to that of the competitors throughout the product cycle. JNJ is prepared for the competition to release their own version of the product; however, they will continue to base their marketing strategies on the experience and trust of Balmex that has been established for the past 50 years. The makers of Pampers and Huggies currently do not produce or have any experience with diaper rash cream and this will be a major advantage for JNJ. Discounts for the product will be offered to new mothers in part of the care package they receive from the hospitals. These discounts will result in a fair amount of profit loss, but hopefully help JNJ to establish a new consumer base.
JNJ realizes competition will be intense amongst the other leading brands, but JNJ has the advantage of being a successful and large organization that can withstand the heavy blows that will inevitably be thrown by its competitors. Through constant research, JNJ will continue to find new and innovative ideas to differentiate themselves from their competitors.
Promotion StrategyIn July 2007, one month prior to the public launch of the champagne, JNJ will provide free samples to be distributed throughout hospitals and pediatricians offices. These samples will provide money saving coupons and an online diaper club membership. This online diaper club will allow parents to leave reviews and recommendations for the diaper, communicate with other parents, and entitle them to future promotional savings. The diaper club is free, but exclusively for JNJ customers.
JNJ will then launch its public diaper champagne in August 2007. This is the usual time when school starts and parents become busier. The promotional angle will be to help simplify and expedite the care of infants and allowing more time with older children. This will allow for the new diaper to circulate for two months before the holiday season. During the holiday season, JNJ will offer addition coupons to increase sales as gift items and personal use purchases. Since the holidays are full of busy schedules and parties to attend, parents can find piece of mind knowing that the new JNJ diapers will grant them much needed time, by reducing the time of diaper changes and eliminating the need to carry excess supplies.
JNJ is anticipating competition around April 2008, when other diaper manufactures will be producing their own pre-medicated diapers. At that time JNJ will have a promotional program to match the price of its competitors, should their diaper be less expensive. JNJ will already have a customer base by that time, and with the diaper club will be able to make any necessary changes to their product. After the introduction of competitors, JNJ will focus mainly on the trust that has been developed with their name.
In August 2008, JNJ will offer all current customers a substantial money saving coupon, to help celebrate their one year birthday. After this one year mark, JNJ will continue to offer savings through mail and online diaper program, and with the anniversary of their diapers. The diaper will be promoted the same way as the rest of their baby products. Hospitals that currently use JNJ baby products will also be provided with free sample diapers and coupons for all parents.
Advertising PlanJNJ pre-medicated diaper advertising will first appear on their website four months prior to the release of the product. Parents can click on this advertisement a chose to be one of the first to use the product for free and provide feedback. Two months prior to release of the diaper, JNJ will begin advertising through commercials. These commercials will focus on the health of babies’ skin, how messy tradition diaper rash creams are, and the busy hectic lives of parents.
One month before the product is launched samples of the diaper will be dispersed to parents in hospitals. Two weeks prior to product release, coupons will be sent out in all newspapers. On all sample products and coupons the website for the baby diaper club will be clearly printed. All parents signing-up in the diaper club will receive a welcome package with samples of diapers and other JNJ baby products.
When diaper is released, large displays will be set up in major retail stores that already sell other JNJ products. Free samples will be provided along with information on diaper rashes and how to care for a babies’ sensitive skin. Knowledgeable JNJ staff will man each display for the first 3 weekends the product is sold to answer questions and provide information to parents. Pamphlets will be available showing the clinical results of the diapers as well as access to the website.
After the initial launch of the product, JNJ will continue to advertise their diapers in the same fashion as they do their other baby products. Through commercials on television, to Internet advertisements, to newspaper circulars there will be a very limited number of Americans who have not heard of JNJ’s new pre-medicated diaper. After one year of use and exposure in the United States, JNJ will launch its diaper throughout the world.
Public Relation OpportunityMedia coverage and endorsements from various groups such as First Five will boost the Company’s image. JNJ has had a long history of quality products and quality customer service. Some may say that developing an innovative improvement to the diaper is long over due for a prestigious corporation such as JNJ. The development of a diaper that prevents diaper rash will create a renewed awareness for the JNJ Corporation and all of its products. This product will remind people of JNJ commitment to quality and innovation.
Channel ManagementChannel management is as important as setting a reasonable price, providing a quality product and having adequate promotion. JNJ must get the product to the customer in a convenient and timely fashion. Essentially JNJ must keep the selves stock wherever perspective customers expect to find diapers. JNJ will utilize a variety of distribution channels from direct to indirect. JNJ will use a mix of selective channels as well as extensive channels.
JNJ will use direct and indirect channels to reach the consumer. For example: JNJ will sell directly to large hospitals and medical groups. Since hospitals and medical groups are going to be parent’s first introduction to baby products; JNJ will directly contact these organizations and attempt to form contracts with them. Having JNJ’s new diaper being used in hospitals and clinics is also a type of promotion for the new product. JNJ will not rely on a middleman to gain such an important business relationship.
Another direct channel JNJ will use is their subsidiary, Baby Center. Through the website, Baby Center, JNJ has embrace technology as a form of reaching perspective customers. Baby Center is an interactive information center on the Internet. In addition to researching and networking with others; parents can order products directly from the Internet site.
An indirect channel of distribution will be large retailer stores. JNJ will not deal with small stores, as they do not move enough inventory. These retail chains have huge distribution centers strategically located to service their stores. JNJ would deliver their product to these large distribution centers and they the individual chains would worry about getting the product to the selves. Ideally, JNJ wants to move as much product as possible to as few locations as possible. Then the middlemen or retail chains would take it from that point forward.
JNJ will practice intensive channel distribution. JNJ expects the majority of retail stores that historically carry baby products to carry JNJ’s baby diaper. Examples of retailer stores JNJ may use are: Wal-Mart, Target, Kmart, Costco, Sams Club, Walgreens, Sav-On and Rite-Aid. All large supermarket chains would also carry the new diaper. JNJ wants this new diaper to be as available to the consumer as any other diaper. JNJ’s position is not to make the diaper a specialty item that is difficult to locate. JNJ’s aim is to make their diaper a wise and simple alternative to the conventional diapers.
JNJ will utilize contractual agreements whenever possible. Contracts will enable JNJ to monitor their inventories coming in from China. These inventories can be trucked directly from the docks to the various regional retailer distribution centers. Storing inventory is very expensive therefore JNJ will strategically plan production levels based on contractual agreements. JNJ will use the same distribution channels used for other baby products therefore shipping costs will be nominal.
One way to create a channel is if the retailer is motivated to sell JNJ product. Initially JNJ may have to offer a better profit margin for their diapers than the competitors. This will create channel motivation where the retailers will push JNJ’s diaper over the competitors. By creating this channel motivation, some of the retailers may even promote the diaper on their own to make more sales.
The other way to create a channel of motivation is if the consumer is asking for the product. This is why the marketing mix is integrated. If JNJ created a quality product, the price is right and it has been promoted well; then there will be a consumer demand for the product. This demand will pull the product through the distribution channel to the selves. When the customer begins pulling the product through the distribution channels; JNJ will not have to push so much and lower the retailer’s profit margin.
Fortunately JNJ already has a full range of baby products. JNJ will continue to use the same format for their diapers as they do for their other baby products. JNJ Sales and Logistics division will be the primary contact for JNJ retail customers. These teams will take orders and ship directly to the retailer’s regional distribution centers.
Budget PlanIn 2005, JNJ spent approximately $6.5 billion in research and development for future products. The amount of this investment for research & development shows that JNJ deems it imperative to invest heavily in order to realize company goals and future growth. JNJ showed impressive sales at $50 billion in their 2005 Statement of Earnings, 29% of these sales were contributed to their consumer goods sector. Using this information and ratios to sales we will forecast a budget plan for the product development of Balmex Diapers.
The following is a projected forecast for the Profit and Loss Statement of Balmex Diapers for Q1:Johnson & Johnson: Balmex Diapers (Dollars in Millions)Consolidated Statement of EarningsSales to customers $ 375Cost of products sold 104Gross profit 271Expenses:Selling, general, marketing andadministrative expenses 158Research expense 48Purchased in-process research anddevelopment 13219Net earnings 52Our projections take into account the heavy investment costs associated with product development like new capital assets, additional personnel, market research, patents and testing processes to launch the new product. We forecast that we will make a profit in the Q1 of $52 million. However, continuous research will be needed throughout the product cycle to gain superiority and growth in the diaper industry.
MonitoringIt is critical in the marketing plan for researchers to continue to monitor the expectations, wants, and needs of their consumers since they change constantly. By having a monitoring process in place they are able to stay within the competitive market. However, this is not the only monitoring process they will have, there are several other monitoring processes JNJ will have in place in order to achieve success with their new product. The use of the SWOTT analysis also helps to monitor the external and internal marketing environment and what factors affect it. Business behavior must also be monitored and evaluated periodically because it affects the production of the product. This new product will also be monitored through the pharmaceutical alliances in order to ensure they are within medical compliance standards.
The internet has helped in the monitoring process. This is where the consumers will find out more about JNJ’s products and issues. They can also find opinions, other consumer insights, feedback on the products strengths and weaknesses, comparing prices, customer satisfaction, and distribution concerns. Because the internet has such a broad space for a marketing audience, the product must be clearly defined to the targeted audience. The audience will give continuous feedback so it will be critical for JNJ to keep the monitoring of the internet communication, maintenance, and sales results.
Continually observing and analyzing the SWOT of JNJ will allow them to remain on the competitive market as a new product line is launched. Analyzing and preparing for the internal and external factors that are affecting their business with this new medicated diaper will put them into a lead position. Part of the monitoring process will also have them seek out potential sources that will provide them strength and filter through marketing weaknesses. The marketing environment is constantly changing therefore JNJ will have to develop knowledge on the current trends of their specific industry. Johnson and Johnson strongly believes in protecting the environment and the natural resources they use and in order to stay true to their promise they must continue environmental monitoring for their products.
Monitoring consumer expectations and satisfaction is important to the success of a new product as well. The company will want to ensure the customers are satisfied with the product. By monitoring these results they will be able to determine whether production will need to make more or less of the item. Sales results can be monitored through how many rebates or coupons have been redeemed during purchases. In the beginning phases of the new launch, more production will be needed in order to advertise it. But once it is being advertised, monitoring the satisfaction of the customer through surveys will give feedback. As feedback is being given, they are able to amend any errors or oversights right away.
The company behavior is closely observed because this is where the ethical and social responsibilities of Johnson and Johnson employees are involved. All the focus has now turned to the consumers and JNJ needs to ensure their buyers are pleased with the service and quality of their products they have purchased.
Johnson and Johnson will consider outsourcing a third party vendor such as an audit team to assess their customer performance versus the company’s performance. This can also be done through recent purchase surveys and having a customer satisfaction phone number on the product for a consumer to call in to voice their opinion about the product. It can be set up in an open forum to allow for comments, suggestions, or complaints. On the other hand an audit team can also be set up for the medical part of product. This audit will make certain JNJ is within medical guidelines since this new product will have medication.
EvaluatingIn order for a large company such as JNJ to be successful with a new product, they must have adequate control processes in place. JNJ will have the four major control plans in place which are: annual-plan control, profitability control, efficiency control, and strategic control. There will be different job families responsible to ensure they have control over these. As they all work together it will meet the objectives to produce results.
According to the textbook, Marketing Management, in chapter 2 is states companies can use Market Opportunity Analysis (MOA) to determine the attractiveness and probability of success. In this case JNJ will be able to exercise this feature in order to measure out the effectiveness of the marketing plan they are looking for. They will be able to mostly narrow down the targeted audience and reach them more cost-effectively. JNJ will also be able to analyze whether they will be able to provide the best products for their consumers rather than the competitors and will it still meet the company’s budget.
All these factors must be evaluated during the MOA. (Kotler and Keller 2006)It is clearly mostly important for JNJ to evaluate and consider their strengths and weakness in their SWOT analysis. They will want to improve on their weak points. If they are not aware of their major weaknesses and opportunities it can damage the brand element and image they have work so hard to set. If during an evaluation process they realize sales numbers are not coming in as they projected, they will have to analyze the corrective action to the problem. Some things they may want to consider might be to drop the production down on the item until they can figure out where the problem is and why people are not interested in it.
Part of the evaluation process is the company must understand and evaluate what the consumer is looking for. Customers are always looking for benefit to satisfy a need. As consumers are making purchases they will go through a list of alternatives on which product they should purchase. As they are doing this, this is where JNJ must come in strong with they brand element such as their logo, symbol, character, and slogan. Since JNJ has been around for many years people are familiar with their products and services. Customers will also evaluate and associate one bad experience as a lifetime connection. If something ever went wrong, they would remember that when evaluating whether they would by a JNJ product.
ControlMaking sure all controls are in place will ensure profitability and results. An annual-plan control ensures that JNJ stays within their goal according to their annual plan of sales, profits, and any other goals they might have set. Senior management will set a goal for the company as a whole and then goals will be dispersed between all other groups within the companies to stay within the group goal. Profitability control ensures they company is always making a profit. They is main responsibility of the marketing director since this person is who get the name and product out to the public which will generate more sales and profits for a company.
If they are able to create an excellent marketing strategy and consumers are consistently buying in, they will have successfully completed the job requirements. Efficiency control makes sure the entire staff is aware of the staying within a budget of marketing expenses which will increase the advertising campaigns, sales force, and distribution of the new item. Lastly, strategic control accounts for pursing the best opportunities on which markets to search for and the channels to get there can be done through a meticulous audit team.
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United States Department of Commerce Census Bureau (2005, December 22). Retrieved June 21, 2006, from http://www.census.gov