Suggestions to enforce promotion stratergies of johnson johnson company in vietnam (2006 2008)

I HCMC UNIVERSITY OF FOREIGN LANGUAGES AND INFORMA nON TECHNOLOGY DEPARTMENT OF INTERNA nONAL BUSINESS ADMINISTRATION , GRADUATION PAPER SUGGESTIONS TO ENFORCE PROMOTION STRATEGIES OF JOHNSON & JOHNSON COMPANY INVIETNAM (2006-2008) Student's name: PHAN NGOC HIEU Class : KDO 104 Advisor : Dr TRAN DUYEN DJNH JULY 2005 • ACKNOWLEGEMENT The time has come now that I have finished my paper after many • months of hard work with invaluable help, advice, and encouragement from my teachers, family, friends, and Johnson & Johnson Company First of all, I would like to acknowledge my sincere thanks to the steering committee of HUFLIT that provided me and other students with good environment to study during these four years (2001 - 2005) At the same time, I would like to thank also all the teachers of HUFLIT, especially Dr TRAN DUYEN BlNH, my advisor, whose instruction and guidance has made the compiling of this graduation paper possible Secondly, my special thanks are also due to Johnson & Johnson Company for supplying me with many valuable information, data, materials, and experience in marketing activities, particularly in promotion field Finally, I would like to take this opportunity to express my gratitude to my family and friends for their constant support and encouragement during the time I my research It is no exaggeration to say that I could hardly obtain this achievement without their enthusiastic help Once again, I want to express my thankfulness to all those who have given me a helping hand in completing this thesis Thank you very much ii Ho chi Minh City May 29, 2005 ADVISOR'S Paper Title: SUGGESTIONS Author Advisor ASSESSMENT TO ENFORCE PROMOTION STRATEGIES OF JOHNSON&JOHNSON COMPANY IN VIETNAM (2006-2008) : PH AN NGOC HIEU - KDOI04 : Dr TRAN DUYEN DINH Practicality Promotion is one of major elements of the marketing-mix Without promotion, no company can survive in the fiercely competitive market because nobody knows its product In recent years, a lot of different health-care products have been offered to Vietnamese consumers, some of them have been produced and sold by the Johnson&Johnson Company To compete with other health-care producers, the company should revise and adjust its promotion strategies The research paper focuses on enforcing the promotion strategies of the company, so that its practicality is justified in terms of applying marketing knowledge and skill that have been learnt to a specific case Content The paper contains chapters that are in a rather systematic arrangement Chapter I reviews briefly the main elements of promotion in the marketing mix The second chapter introduces the Johnson & Johnson Company and its products and promotion strategies Though the introduction to the company and its products looks rather long, it gives vivid pictures of the company's evolution and health-care products The chapter also provides the company's 5-year data of sales, promotion cost and net income The last chapter first considers the competitors of the Johnson&Johnson Company and their market shares in baby, adult and wow care products Then it gives some suggestions to enforce the company's promotion strategies such as free samples, trade discount, accumulating point, live-shows, conferences, outdoor posters, subsidiary opening, television program sponsor, more budget for adult and wow-care products, and co-ordination between marketing and production departments Presentation The paper is presented very well with a lot of images, figures and tables The footnotes and references are suitably written General Assessment The paper meets the demand of applying marketing knowledge and skill learnt from the university into a specific case Its content is organized logically and offers rather feasible suggestions The presentation seems to be suitable and well-designed Suggested Grade: Excellent Ad~ Dr TRAN DUYEN DINH EVALUATOR'S COMMENT • • • • •••• .••••••• •.•••• ••• • .• •••• ••••••• .••.•••• ••• • • .• •• • •.••.• .• .• • • ••.• •.•.•• •• • .• ••.•• .•••.••.•• •.•.•• •••••••.• ••••••••• •• • • .• .••.• •••••••••••• •.•• • • • ••••••.•• •••••• • •.•• • •••• •.•••.••• ••••••.••••.• .• •.•.••••• • .• .• .••••• •• • •.•.•• • ••••••••••••••.• •.•••.•••.• •.• .••• .••••••••.•• • • .• • ••••.•.••.•.• • • .•.•••••.•.• .•••••••••••••••• •• .•••.•.••• •••.•.• • •••.• .•••.••••••••••• • •••.• •••••.••••.••••.•• •• • .• • iii ABSTRACT This thesis consists of three chapters Chapter 1, "An Overview of Promotion", deals with some definitions of promotion, the importance of promotion, and the promotion mix In this chapter, we will discuss four types of promotion mix: advertising, sales promotion, personal selling, and public relations Chapter 2, "An Overview of Johnson & Johnson Company", is divided into four parts The first part tells the history of Johnson & Johnson Co and we will get an idea of how it was established and developed The second part introduces some product lines of Johnson & Johnson Co After that, we will touch on "Promotion Strategies of Johnson & Johnson Company in Viet Nam" Combining advertising, sales promotion, and public relations is the promotion strategy that Johnson & Johnson Co chooses to implement "Analyzing the Effects of Promotion Strategies on the Johnson & Johnson Company's Business Activities" is the last part in this chapter It helps you understand how promotion strategies can affect the enterprise's sales revenue Finally, Chapter 3, "Suggestions to Enforce Promotion Strategies of Johnson & Johnson Company in Viet Nam (2006-2008)", refers to the competitors of Johnson & Johnson in Viet Nam and suggests some ideas to enhance its promotion strategies iv . -~ _ CONTENT Page INTRODUCTION CHAPTER 1: AN OVERVIEW OF PROMOTION 1.1 THE DEFINITION OF PROMOTION 1.2 THE IMPORTANCE OF PROMOTION 1.3 PROMOTION MIX A Advertising B Sales Promotion 12 Free Sample 16 Exchange Scheme 16 Discount 16 Scratch and Win Offer 17 Trading Stamps 17 Fairs and Exhibitions 17 Money Back Offer 17 C Personal Selling 18 D Public Relations 22 CHAPTER 2: AN OVERVIEW OF JOHNSON & JOHNSON COMPANY 2.1 THE HISTORY OF JOHNSON & JOHNSON COMPANY 26 2.2 THE PRODUCT LINES OF JOHNSON & JOHNSON COMPANY v A Baby Care Products Johnson's Baby Top to Toe Wash 33 Johnson's Baby Shampoo 34 Johnson's Baby Powder 35 Johnson's Baby Bath 36 B Adult Care Products Johnson's pH 5.5 37 Johnson's pH 5.5 Facial Wash 37 Johnson's Clean & Clear 38 Shower to Shower 39 C Wow Care Products Carefree 40 Modess Maxi Dry with Wings 41 Carefree Intimate Feminine Wash 41 2.3 PROMOTION STRATEGIES OF JOHNSON & JOHNSON COMPANY IN VIET NAM A Advertising 43 B Sales Promotion Consumer Promotion 45 Trade Promotion 46 Sales-force Promotion 47 C Public Relations 48 2.4 ANAL YZING THE EFFECTS OF PROMOTION STRATEGIES ON THE JOHNSON & JOHNSON COMPANY'S BUSINESS ACTIVITIES vi Johnson & Johnson Company's Income Statement 50 CHAPTER 3: SUGGESTIONS TO ENFORCE PROMOTION STRATEGIES OF JOHNSON & JOHNSON COMPANY IN VIET NAM (2006-2008) 3.1 COMPETITORS OF JOHNSON & JOHNSON COMPANY IN VIET NAM 53 3.2 SUGGESTIONS TO ENFORCE PROMOTION STRATEGIES OF JOHNSON & JOHNSON COMPANY IN VIET NAM (2006-2008) A Type of Product and MarkeL 57 B Stage of the Product Life Cyc1e 58 C Target Market Characteristics 60 D Buyer Readiness Stage Problem recognition 60 Information search 61 Evaluation of alternatives 61 The purchase decision 61 Post-purchase evaluation 61 E Available Funds 62 F Position of Company in the MarkeL 62 G Push Strategy versus Pull Strategy Push Strategy 63 Pull Strategy 63 CONCL USI ON 67 REFERENCES 69 vii List of Figures Page Figure 1.1: Role of Promotion in the Marketing Mix Figure 2.1 : BAND-AID 29 Figure 2.2: Johnson's Baby Top to Toe Wash 33 Figure 2.3: Johnson's Baby Shampoo 34 Figure 2.4: Johnson's Baby Powder 35 Figure 2.5: Johnson's Baby Bath 36 Figure 2.6 : Johnson's pH 5.5 37 Figure 2.7: Johnson's pH 5.5 Facial Wash 38 Figure 2.8: Johnson's Clean & Clear 38 Figure 2.9: Shower to Shower 39 Figure 2.10: Carefree 40 Figure 2.11: Modess Maxi Dry with Wings 41 Figure 2.12: Carefree Intimate Feminine Wash 42 Figure 2.13: Net Income of Johnson & Johnson Company from 2000 to 2004 51 Figure 2.14: Promotion Expense of Johnson & Johnson Company from 2000 to 2004 51 Figure 3.1: The Market Share of Johnson & Johnson Company and Its Competitors in Baby Products 54 viii Figure 3.2: The Market Share of Johnson & Johnson Company and Its Competitors in Adult Products 55 Figure 3.3: The Market Share of Johnson & Johnson Company and Its Competitors in Wow Care Products 56 Figure 3.4: Relative Importance of Promotion Tools in Consumer versus Industrial Markets 58 Figure 3.5: Push Strategy versus Pull Strategy 64 ix Johnson's pH 5.5, Johnson's pH 5.5 facial wash, perfume and so on In this product line, Johnson & Johnson corporation only occupied 20% market share compared to a wide range of competitors such as: Dove, Enchanteur, Nivea, and Palmolive Johnson's pH 5.5 -Dove o Palmolive o Nivea - Enchanteur Figure 3.2: The Market Share of Johnson & Johnson Company and Its Competitors in Adult Products These strong competitors spend much money on advertising especially Dove (a product line of Unilever Company) The rest of their funds is for sales promotion and public relations Unilever is a very big corporation in manufacturing adult consuming products for many years So, Johnson & Johnson needs time to compete with this competitor Clearly, Johnson & Johnson should put more efforts in improving its adult product quality to attract more and more customers buying its goods 55 There are a lot of competitors in wow care product lines such as Kotex, Whisper, Diana and SofY These competitors invest their promotion budget in advertising supported by public relations and sales promotion For example, Kotex organizes a scholarship fund for poor female students This program can make gOod publicity for Kotex Company and certainly, its products will take advantage of this incident By giving these scholarships, it can create good expression from the publics, so they can easily accept and buy its products Kotex becomes a leader in products for women It occupied 35% market share 5% IJModess II Kotex °Whisper °Diana Sofy Figure 3.3: The Market Share of Johnson & Johnson Company and Its Competitors in Wow Care Products Johnson & Johnson Corporation has to try harder to increase its market share in wow product lines by making higher quality product with the same price as well as creating an efficient promotion strategy so that it can become a market leader of this product line in the near future 56 3.2 SUGGESTIONS TO ENFORCE PROMOTION STRATEGIES OF JOHNOSN & JOHNSON COMPANY IN VIET NAM (2006-2008) " In order to survive in the highly competitive market, Johnson & Johnson organization need not only produce good commodities but also design powerful promotion strategies A successful promotion strategy chosen by Johnson & Johnson Co for its product lines depends on several factors: type of product and market, stage of the product life cycle, target market characteristics, buyer readiness stage, available funds, position of company in the market and push versus pull strategies A) Type of Product and Market Characteristics of the product can influence the company's promotion strategies Companies selling consumer products often spend more money on advertising than companies selling industrial goods In these companies, marketing managers put most of their promotion budgets into personal selling When the products are expensive and sold in the market with fewer and larger sellers, personal selling becomes more important For instance, airplanes, cars, complex machinery, new buildings and new homes are usually promoted by personal selling Salespersons help the buyers make sure that they are spending their money wisely and provide information to aid them make the proper choice Johnson & Johnson is a consumer product company, so its • • promotion strategies focus on advertising, sales promotion and public 57 relations rather than personal selling However, personal selling still plays a very important role in Johnson & Johnson Corporation because salespeople can help the retailers and wholesalers sell their offerings more easily and prosperously Similarly, advertising also has a very significant impact on industrial goods companies It can build product awareness and knowledge as well as locate potential customers and encourage them to make a purchase Consumer Industrtar goods goods Public relations Public relations Relativeimportance FIGURE 15-4 Relative importance industrial markets Relativeimportance of promoti01~ tools in co1t5um~r versus Figure 3.4: Relative Importance of Promotion Tools in Consumer versus Industrial Markets B) Stage a/the Product Life Cycle One of the main factors affecting the company's promotion strategies is the product stage in its life cycle During the introduction stage, Johnson & Johnson uses advertising and public relations to produce high awareness Because the basic goal of promotion at this stage is to inform the target market that the new product is available, sales promotion is 58 useful in attracting early trial and personal selling utilized to convince retailers to carry the product When the product reaches the growth stage of the life cycle, marketers in Johnson & Johnson Co continue exerting advertising and public relations to make powerful influences to customers, whereas sales promotion can be reduced because fewer incentives are needed In this stage, Johnson & Johnson's promotion strategies emphasize the differential advantage of its products over that of competitors Thus, persuasive promotion is used to maintain and develop brand loyalty of the consumers in order to support the product during the growth stage For instance, a differential advantage of Johnson's pH 5.5 facial wash is to clean dusts and cosmetics without drying the skin and having the same pH with the skin's pH This feature will be emphasized in its growth stage The role of personal selling at this stage is to get adequate distribution for the product In the mature stage, sales promotion is considered as the most important promotion activity because of fiercer competition In this stage, buyers are familiar to Johnson & Johnson's products; thereby advertising is needed only to remind consumers of the product As Johnson's products enter the decline stage, all promotion elements are reduced Advertising is kept at a reminder level, public 59 relations is decreased, personal selling may be maintained at the retail level because customers pay very little attention to the goods at this stage However, sales promotion continues to be strongly emphasized C) Target Market Characteristics Johnson & Johnson's budgets in advertising promotion strategies need to put more and sales promotion and spend less money on personal selling in the market where there are many potential customers, brand-loyal purchasers and highly informed buyers However, frequently, personal selling is required even when buyers are well informed For example, computers are often sold to competent and educated people but salesperson are still needed to explain the product and close the sale D) Buyer Readiness Stage In fact, it is very hard for Johnson & Johnson Company to identify its potential customers Thus, it needs to understand thoroughly the buyer readiness stage because promotion strategies might be different from one stage to the others Put it another way, each stage will require different promotion activities Generally, customers go through steps from the time they recognize a need or a problem until they buy the product to satisfy their need 1) Problem recognition: The buying process begins when the consumer recognizes a need or a problem Marketing managers in Johnson & Johnson Co should utilize advertising 60 and public relations to establish awareness for the good and convince consumers that its products can satisfY their needs 2) Information search: At this stage, customers will search for information about how to satisfY the need Advertising is required to convey important product information and personal selling is helpful to answer specific questions 3) Evaluation of alternatives: Before coming to a buying decision, buyers will compare and evaluate features and attributes of different companies and brands Personal selling is the most effective promotion activity at this stage by encouraging customers to take final step and make a purchase 4) The purchase decision: This stage includes sub-decisions The purchaser decides not only which product to buy, but also which company to buy from, how many to buy, when to buy, and how to pay for it Sales promotion and personal selling used to help the customer complete the sale 5) Post- purchase evaluation: Satisfaction or dissatisfaction will come to the consumers after making a purchase Thus, the job of Johnson & Johnson Corporation does not end when the product is sold It must check whether the customers are satisfied or not with Johnson & Johnson products Advertising 61 and personal selling become very effective in confirming that they make the right choice E) Available Funds The promotion strategies of any companies depend closely on how much money they will invest in promotion budget It will be very difficult for marketers in Johnson & Johnson Co to design effective promotion mix with very little money Most companies try to minimize the promotion cost and maximize their return on promotion However, a successful promotion strategy is not the one that requires much budgets but the one having a suitable combination among four elements of promotion F) Position of Company in the Market In well-known companies, advertising can obtain more influence on customers than sales promotion Therefore, many multi-national companies spend more funds on advertising than sales promotion In addition, consumers usually have higher confidence with long history companies than the new ones That is why the position of Johnson & Johnson company in the market can decide if its promotion strategies are successful or not 62 G) Push Strategy versus Pull Strategy The last factor marketing managers in Johnson & Johnson Co need to consider when creating their promotion strategies is whether a push or a pull strategy will be used • Push strategy is a promotional strategy designed to motivate wholesalers and retailers to push a producer's product to end-users This strategy is applied for high-tech products, industrial products or high price products Manufacturers may use aggressive personal selling and trade advertising to convince a wholesaler or retailer to carry and sell their merchandise The wholesaler, in return, must often push the merchandise forward by persuading the retailer to sell the goods The retailer then uses advertising and sales promotion to convince the consumers to buy the" pushed" product • Pull strategy is a promotional strategy that stimulates consumer demand, which then exerts pressure on retailers and wholesalers to carry a product This strategy is often designed for convenience goods or low price products such as candy, tobacco products, chewing gum and so on When the consumers begin demanding the product, the retailer will order the merchandise from the wholesaler The wholesaler then places an order for the " pulled" product from the 63 manufacturer It means consumer demand pulls the product through the distribution channel Pushslrategy Orders to manufacturer PuN strategy • Orders to maflllfacturer Figure 3.5: Push Strategy versus Pull Strategy However, the effective promotion strategy is the one combining both push and pull strategy Therefore, Johnson & Johnson Co not only stimulates consumer demand by giving free samples but also motivates retailers and wholesalers to carry its products by trade discount and accumulating point programs 64 When Johnson & Johnson Company decides to use any types of promotion mix, it always reflects their business attention Let's say buying two products getting one product free is a type of using sales promotion through giving additional goods The purpose of this method is pushing a huge product quantity to the market so that they can solve the problem of inventory storage And it also helps the corporation lengthen the customers' using product time So, they not have opportunity to change or use other products Furthermore, sales promotion via accumulating point helps Johnson & Johnson sell more product lines Thus, all the company products will be known and used by consumers In addition, all departments in Johnson & Johnson Co must be • combined with each other, especially the Marketing Department and Production Department so that the organization can introduce higher quality products to the consumers and promote them effectively in the market The business should avoid the situation that the marketing managers introduce to the customers the goods the production department cannot manufacture Besides, there are some suggestions to make Johnson's promotion strategies more effective and efficient in Viet Nam: 65 ~ Stabilize and consolidate its public relations activities by organizing live shows, conferences to promote its products ~ Strengthen the sales-force and promoters in supermarkets to make more and more consumers know about Johnson & Johnson's products ~ Pay more budgets on promotion for two new product lines: adult products and wow products to increase their market share ~ Design many attractive sales promotion programs to give encouragement to the customers to make a purchase ~ Reinforce advertising on television, in newspapers, magazines and outside advertising such as posters in supermarkets and public places about adult and wow products ~ Open subsidiaries of Johnson & Johnson Corporation in Ha n9i, Hue', ciin Thd, Hili PhOng, and Da Nilng to distribute Johnson & Johnson products all over Viet Nam ~ DiversifY the adult and wow products with anti-acne facial wash, anti-acne creams, Modess for night, different scents body wash for baby and adults ~ Sponsor television programs for baby care instruction 66 CONCLUSION Nowadays, in the market economy the development of one company will lead to either the development or weakening and even the bankruptcy of the others This economy forces companies to design competitive promotion strategies A successful company needs to have good and perfect promotion strategies to compete in the highly competitive market because business enterprises that not accept competition will find themself thrown out of the market We see that due to suitable and efficient promotion strategies, Johnson & Johnson Company has significantly raised sales revenue and expanded market share in Viet Nam Besides, it should identifY who are its customers, who are its suppliers, and who are its competitors To business effectively, Johnson & Johnson Co has to consider its customers as a focus for its operations because they are the ones who determine the supply and demand in the market and the success of the company Thus, the company's task is to bring satisfaction to consumers by combining high quality products with effective promotion mix Moreover, Johnson & Johnson needs to recognize SWOT so that it can develop strengths, reduce weaknesses, gain opportunities and overcome threats the company is facing 67 To conclude, Johnson & Johnson Corporation should pay more attention to improve its promotion strategies to successfully run the • business If this enterprise wants to increase its market share, it has to search for new promotion strategies so that it can continue to stimulate the consumers' demand toward Johnson's products It is known that a product with stable sales in the market will decrease its market share without a good promotion strategy Therefore, to keep the product from decline period, Johnson & Johnson's management should try their best to design new and effective promotion strategies so that Johnson & Johnson can become the market leader in all product lines the company manufactures • 68 REFERENCES 111 Kotler, Philip and G Armstrong and Sak Onkvisit Basic Concepts & Practice Marketing.James R Pinnels, 1998 Skinner, Steven J Marketing 2nd ed USA: Houghton Mifflin Company, 1994 Lamb, Charles W Jr., Joseph F Hair and Carl McDaniel Principles of Marketing USA: South Western Publishing Co Cincinnati, Ohio, 1992 Perreault, William D Jr., Ph.D and E Jerome McCarthy, Ph.D Basic Marketing Irwin McGraw-Hill, 1999 Kotler, Philip and Gary Armstrong Principles of Marketing New York: Prentice-Hall, Inc, 1999 Mekong Project Development Facility Promotion and Advertising The Youth Publishing House, 200 • • Lamb, Charles W and Joseph F Hair, Jr and Carl McDaniel Essentials of Marketing South-Western College Publishing, 1999 Siegel, Carolyn F Marketing Foundations and Applications Irwin Mirror Press, 1996 69