Introduction: Macro-Environment (PESTLE) Analysis
Political Conditions of the USA
The current US political context can be traced from the inception of the new government. It is the first anniversary since the Biden-Harris administration took over the US government. This administration has tried to improve businesses by identifying the crucial weaknesses present in the supply chains and has embarked on a journey to devise multi-layer strategies to address those weaknesses. One of the national supply chain strategies that this government has introduced is the Bipartisan Infrastructure Law (BIL), which focuses on modernizing the transport systems (Beyer, 2019). The supply chain strategy has been linked with historical and current investments such as President Biden’s Build Back Better Agenda to enhance the domestic workforce, grow to manufacture and strengthen supply chains (Beyer, 2019). Based on the J&J’s context, these government moves are favorable to the distribution channels of the J&J company. J&J primarily focuses on supplying its goods to rural areas. Thus, the development of roads through the supply chain strategy in regions like Yukon-Koyukuk in Alaska can increase the target market for J&J company.
Economic Conditions of the USA
The US has the largest economy in the globe, ahead of China. The country has continuously experienced growth over the years, apart from 2020, when the pandemic emerged when the GDP growth rate transitioned to a negative value (Dyer, 2019). Additionally, the reduced growth rate of the country’s GDP has been contributed by the soaring inequalities and the presence of outdated infrastructure. Nevertheless, Biden’s administration introduced the American Rescue Plan, which has long since underpinned private consumption (Dyer, 2019). The rescue plan is aimed at helping businesses impacted by the pandemic and stimulating those that focus on combating COVID-19. J&J is one of the companies on the frontline in vaccine discovery, meaning it was one of the plan’s beneficiaries. The economy is currently projected to grow by 2.8%, unemployment to maintain a 3.5% rate, and inflation to remain at 4.1% in 2022 (Dyer, 2019). Measures are underway to combat the inflation problem, such as increasing the interest rates for homes and mortgage homes. While the government tries to lower the inflation rate, consumer spending will increase, becoming favorable for the J&J company as sales increase.
The product portfolio for J & J is extensive and elaborate. Its main divisions are Consumer Products, Pharmaceuticals, and Medical Devices and Diagnostics. When J&J is considered, baby products come to mind, and indeed this is one of their divisions that falls under the Consumer Segment. This segment, however, is much larger than just baby products as it covers skincare, the woman’s health care field, and over-the-counter medications. Additionally, the pharmaceutical segment deals with prescription medications, including the Covid 19 vaccine. Along with providing vaccines, the company also provides oral healthcare products such as dental floss, dental picks and sticks, and mouth wash. The company tries to endorse itself in ophthalmology, where it provides vision care products such as eye massager, eyelash serum, and eyebrow trimmer. J&J is involved in oncology, neuroscience, immunology, infectious disease, metabolic, and cardiovascular illness (James et al., 2019). The medical devices and diagnostic include surgical devices utilized by physicians, orthopedic devices, and even contact lenses.
The main products by J&J include Remicade, Elmiron, Proceed Mesh, and Invokana. One of the bi-selling drugs from this pharmaceutical company include Remicade, which has long since faced competition from biosimilar products. The products have faced a threat of being overthrown by companies like Pfizer, which probed questions on the legitimacy of J&J’s Remicade. However, the Federal Trade Commission (FTC) looked into the biosimilar strategies employed by J&J’s and found out that the design complies with the law, confirming the strength of J&J’s in the offering of Remicade. The company also has shown prowess in providing drugs that are used to treat bladder pain and interstitial cystitis among kidney failure patients. Elmiron, produced by J&J, is the only drug approved by FDA for this role. Along with Elmiron, the company has a rich history in producing Proceed Mesh and Invokana. Proceed Mesh has been used to treat surgical hernias, while Invokana is in the treatment of type-2 diabetes (Dyer, 2019). Generally, these four products are the strongest pillars for J&J’s company.
J&J has a vast distribution network that allows it to employ the relevance-based criteria when selecting its distributors. The company has about 120,500 employees in about 175 countries and has a broad distributor base globally. Additionally, this company is consumer-oriented; thus, the distribution method should benefit the final customer. J&J uses the relevance-based selection criteria when selecting its distributors where it only chooses those distributors who can deliver products to the target audience. Among the parties involved in the distribution chain include wholesalers, supermarket chains, retailers, and e-commerce websites. Additionally, the company has introduced a centralized form of distribution. It has established a distribution center in Europe that helps coordinate and harmonize the distribution network present in the newly acquired firms. The distribution center has created the European supply hub, which has even products readily available in the European nations (Beyer, 2019). Generally, J&J applies the relevance-based and centralized distribution criteria t ensure the final customer gets its products.
J&J has various target audiences ranging from consumers of home care, healthcare, and personal care products. While the company is famous for its medical goods and services to contemporary customers, it also offers household products. These household products include the Aveeno, Listerine, and Band-Aid bandages. Despite the company’s successes while offering these home-based goods, it recently announced to split into two units, one offering the home products while the other offering medical and pharmaceutical goods and services. The second target audience is those who consume healthcare products, including hospitals, dispensaries, pharmacies, clinics, and maternity wards. These consumers buy goods ranging from medicinal drugs to hospital equipment such as stretchers offered by the company. The third types of target market include consumers of personal care products. The company meets the demands of the third type of target market by producing goods for eye, skin, and oral care (Zhang, 2021). Unequivocally, J&J’s primary target audiences include those customers who buy goods for household, personal, and healthcare usage.
The main competitors for J&J include Merck, Pfizer, Bristol Myers Squibb, Unilever, and Procter & Gamble. Comparing J&J CEO ratings with that of other companies, the CEO, Alex Gorsky, ranks first with 80 out of 100 (Zhang, 2021). On product score comparison, J&J ranks 4th in the product quality score, with Unilever, Proctor &Gamble, and Pfizer taking the lead in this sector (Zhang, 2021). Along with product quality score comparison, the company ranks 4th in the net promoter score (NPS), with Merck, Bristol Myers Squibb, and Unilever leading. However, comparing the pricing scores of J&J with that of its competitors, J&J ranks 1st with a score of 4 out of 5. These marks show that the price rating of the company is better than that of its competitors (Zhang, 2021). Nevertheless, the company is part of the top-three firms based on the customer service comparisons among its competitors. In customer service, the company is rated 4 out of 5, with Merck and Bristol Myers Squibb leading with 4.2 and 4.1 out of 5, respectively (Zhang, 2021). Generally, J&J company compares favorably with its competitors, indicating that it has a good performance.
J&J operates in four central regions: the US, Europe, Western Hemisphere, Asia-Pacific, and Africa. At the end of the fiscal year 2020, J&J’s accrued revenue of 45% outside the US, with 7% in the Western Hemisphere excluding the US, 23% in Europe, and 18% from Asia-Pacific and Africa (Zhang, 2021). The company has its headquarters in New Brunswick, located in New Jersey, US, making the US become the central administration point of the company. The company has about 66 offices distributed among the 53 countries located in the four central regions (Zhang, 2021). Since the US is the country that hosts the company’s headquarters, more offices are located there than in any other country where J&J operates. Ideally, the company started its internationalization journey by setting up its first office in Canada in 1919, followed by another one in Britain in 1924 (Zhang, 2021). Today, J&J continues to globalize as it aims to increase its revenue potential, explore foreign investments opportunities, and diversify its markets. Generally, J&J operates in four central regions, with its headquarters in the US.
Advertising and Promotion Strategy (IMC)
J&J applies a modified version of the integrated marketing communication (IMC) to promote its products. IMC involves unifying communication elements like social media, audience analytics, social media, and business development in a brand’s identity to allow its product promotional methods. This unification of production advertising methods allows a company to maintain a centralized form of product promotion when the media channels of advertisements are distinct. J&J has modified this strategy by using mental and emotional communication to advertise and convince customers to buy its products. For instance, in India, the company creates feelings and develops trust to persuade mothers to buy baby products. It also has a discount scheme that allows customers to purchase goods at lower prices, especially when they are buying in bulk. Lastly, the company has recently introduced promotional campaigns such as the ‘BeThere’ campaign that encourages healthy lifestyles and supports people concerned with healthy living (Ullah, 2021). Generally, J&J uses a modified IMC, print media, discounting, and campaign strategies to promote its products.
Pricing Method and Strategy
The pricing strategies employed by J&J focus on keeping the prices at parity with the company’s competitors. The first strategy employed by J&J is the penetration pricing strategy for the new products and markets. The penetration pricing strategy involves attracting customers to the new products by selling the goods or offering the services at lower prices initially. The low prices allow the goods or services to penetrate the market and bring new, giving the company a chance to beat its competitors. The second type of strategy involves the premium pricing strategy, which primarily applies to established goods such as the company’s baby care products. In the premium pricing strategy, J&J sets the prices of established goods at higher prices than the market average to strengthen the attributed quality and form a luxurious brand image. After seeing its success in companies such as Apple (Ullah, 2021). The company also employs high-pricing strategy along the two strategies. Generally, the two main pricing strategies employed by J&J include penetration and premium pricing strategies, where the latter is for established goods while the former is for new products.
The primary positional strategy for J&J company is providing baby care products at low prices. In most J&J social media advertisements, it is common to see children with mothers preoccupied with work and other tasks. For instance, in the recent advertisement video, some mothers wash their babies’ hair with shampoos from the J&J company. The main message from this advertisement is that the company has chosen to baby product line as the main differentiating factor from its competitors. Additionally, the advert depicts mothers who are busy with their work responsibilities, but with the presence of J&J’s products, these mothers create time for their children. This promotional advertisement indicates that the company is child-oriented and that its products help bring mothers and their children together. Its focus on baby shampoos, baby lotions, and baby oils has allowed the company to exercise its premium pricing strategy on these goods, capturing mothers who relate high prices with quality (Ullah, 2021). Unequivocally, J&J’s positional strategy offers baby care products at higher prices than its competitors.
J&J has a well-established value proposition that the company ensures its employees work to achieve. The slogan for J&J’s value proposition reads, “From the day you’re born, Johnson & Johnson never stops taking care of you.” This statement shows that the company focuses on providing goods for people across all age groups. The company has a photo of an aged man holding a child on its website, which complements the value proposition statement. Ultimately, the company has pioneered the production of baby products ranging from shampoos to lotion. For the elderly, the company produces medications necessary for maintaining a stable immunity, as many old individuals are immunosuppressed. Intrinsically, the company pushes its employees to achieve the value proposition by encouraging them to unleash their full potential in providing services and goods to customers. Recently, the company introduced diversity and inclusion across its employee base to foster value promotion across employees of all origins (Ullah, 2021). The company realized that it through employee motivation that the company can achieve an effective value proposition. Generally, the J&J value proposition aims at providing goods to consumers of all ages.
There are three main strategies: pricing, promotional, and leadership, that differentiate J&J in the market. As discussed earlier, J&J uses both penetration and premium pricing strategies, meaning it can differentiate both its new and established products. The new products are typically sold at lower prices during the initial launching stages. In comparison, the established products are sold at higher prices to reflect the luxury and quality that the company perceives in its products. The company realized that the sales force is critical in determining the products sold. Therefore, it has resorted to providing incentives to the salesforce team to motivate it to achieve more excellent sales targets and volume. The third differentiation factor includes the company’s unrivaled leadership, where the organization is controlled by a management that is effective in assigning roles and overseeing operations. Additionally, the quality of J&J’s products gives it a competitive edge where most consumers, especially mothers, prefer the company’s baby products as they give the desired effect (Ullah, 2021). Generally, J&J’s differentiation strategy range from pricing, promotional, product quality, and effective leadership within the company.
Customer Relationship Management
J&J manages its relationship with its customers by being caring and establishing campaigns that encourage customers to live healthy lives. The first factor that enables J&J to create effective relationships between itself and the customers is the caring nature of the company, starting from its investors to its employees. The value promotion encourages customers to stick to the company for future purchases. Additionally, the company has established various campaigns that aim at keeping its wide range of customers. For instance, it started the Camp Baby campaign, which aimed to establish relationships with mothers rather than promote its goods to the general public. It has also established the Nursing Future campaign, which aims to recruit and retain nurses in the healthcare settings supervised by the J&J company. The company has developed a ‘Strength for Caring’ movement online that aims at helping family caregivers’ cards for their people, especially the elderly who might be vulnerable to diseases and illnesses ranging from mental to physical (Dyer, 2019). Generally, J&J manages its customer relationships through campaigns like the Nursing Future and value promotion statements.
J&J has various strengths, weaknesses, opportunities, and threats that either promote or destabilize the functioning of the cooperation. On strengths, J&J is one of the most admired companies globally, making it won awards such as 2011 Humanitarian of the Year Award. The company also has a strong brand presence based on print and advertising media for various products. In weaknesses, the company faces challenges maintaining a global brand as some retailers sell expired products. The company can acquire smaller companies and increase its brand presence in opportunities. Additionally, the company enjoys the opportunity to ring out various portable products that suit the economy class and an opportunity to penetrate rural areas (Dyer, 2019). On threats, the company promotes its products excessively to make the goods generic which would mean lowered prices. Additionally, many brands have a similar name to the existing J&J, which often confuses the customer when purchasing (Dyer, 2019). Lastly, many cheap goods could serve as an alternative for J&J products, especially those from low-priced competitors.
The first consideration J&J needs to focus on is delivering differentiated products to offset the problem of generic products in the market. The second recommendation for the company is to build a transformational pipeline. The company needs to continue building new partnerships and select new acquisitions, which will ultimately result in a robust pipeline (Dyer, 2019). Thirdly, J&J needs to invest in talented organizational and people capabilities. This consideration involves integrating talent into essential roles, which can help accelerate knowledge and skills that can help solve complex business environment problems. Fourthly, the company needs to encourage innovation among the employees, which can differentiate as more differentiated products such as medication are produced. Innovation can be promoted through transformational innovation. J&J also needs to establish quality control for all its products to avoid retailers from selling expired products especially for those goods that in the Healthline as they can lead to devastating health problems. Additionally, the prices should be flexible to avoid keeping the high which might chase customers. Lastly, the company strengthens its geographical presence since the pharmaceutical business will grow and develop its geographical footprints in the new markets.
Johnson & Johnson is a multinational conglomerate that recently developed one of the three Covid-19 vaccinations in the United States. Johnson & Johnson is a multinational conglomerate that recently developed one of the three Covid-19 vaccinations in the United States. The company operates in a diversified industry ranging from consumer health to medical devices. The position within the industry in which J&J operates is based on the large-cap pharmaceutical industry. In the company’s marketing, J&J’s product line ranges from personal products, homebased goods, and baby products such as lotions. J&J uses a distribution strategy that utilizes the intermediaries such as wholesalers and retailers to allow its products to reach its target audience, mothers. The premium and penetration pricing strategies differentiate it from its competitors. Based on the value proposition of the company, it is evident that baby mothers are the target audience with the company having a positional strategy that focus on baby products. Generally, the company needs to follow the four recommendations mentioned in the preceding section to achieve maximum success in the market.
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