Analysis of Johnson & Johnson's Marketing Strategy: A Report

This report provides a comprehensive analysis of Johnson & Johnson's marketing strategy, beginning with an overview of the pharmaceutical industry and an application of Porter's Five Forces to assess the competitive landscape. It then delves into Johnson & Johnson's company overview, including its segments and the Resource-Based View, highlighting key resources such as advertising, technology, and reputation. The report also examines the company's tangible and intangible assets, including its history of mergers and acquisitions. Finally, it applies the VRIO framework to evaluate the value, rareness, imitability, and organization of Johnson & Johnson's resources and capabilities, offering insights into its competitive advantages and strategic positioning in the healthcare market.

RUNNING HEAD: JOHNSON AND JOHNSON MARKETING STRATEGY
Title: Analysis of the marketing Strategy of Johnson and Johnson
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Part 2
The pharmaceutical industry has evolved as one of the most critical and controversial
industry all over the world due the rise in the prices of the drugs. This industry is quintessential
in the general healthcare globally and hence, will never lose its relevance. The main targets of
this industry are the companies that develop drugs under brand names and have patent
protection. The analysis of the external factors that affects the industry will be helpful in
determining the strengths and the competencies required for improvement of the industry. The
present discussion will focus on the Porter’s five-force analysis to examine the industry context
of Glaxosmithkline Pharmaceutical Company.
Porter’s Five Forces
Porter’s Five Forces is a strategy which helps to understand business environment and
competitiveness in the market. It is very effective to find out the potential areas of a business
which can yield to profitability while the ones which are posed with threat due to market
conditions. The model is very useful to understand the forces which operate in a business
environment and employ strategies to adapt to them. The model was developed by Michael
Porter who evaluated the attractiveness of an industry and the chances of achieving profitability
(Dobbs 2014). It has been one of the most used and highly regarded strategies which has helped
businesses grow by evaluating conditions of the market. The model helps in the process of
analysis of five forces which include Competitive Rivalry, Power of Buyers, Power of Suppliers,
Threat of New Entry and Threat of Substitution.
Competitive Rivalry

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The number of competing forces against which the Glaxosmithkline Pharmaceutical
Company operate are less even though the companies are of large scale. The strategies which are
employed by a company have lesser chances of being unnoticed which makes the competition
within the market low to moderate (Barba-Sanchez, Calderón-Milán and Atienza-Sahuquillo
2018). The competition which Glaxosmithkline Pharmaceutical Company face is not always
restricted to the prices at which products are sold but also the regulations and rules which are
imposed by the government on health, pharmaceutical, consumer and medical products to
maintain safety and standards. Glaxosmithkline Pharmaceutical Company have large market
share which makes it one of the market leaders. Glaxosmithkline Pharmaceutical Company have
shown growth in the years and indicate growth in the years to come which is a positive sign in
the industry and competing forces will have to employ effective strategies to capture the market
share as them. Glaxosmithkline Pharmaceutical Company diversifies their product range and do
not solely concentrate on medicinal products which indicate that companies which pose
competition to them will have to open their prospects to other businesses as well.
Power of Buyers
The buyers in the market include doctors, medical practitioners, retailers, pharmacists,
wholesalers as well as insurance companies. The bargaining power of the buyer in the market
are quite low. The companies maintain product differentiation due to which the buyers are often
caught up in fixes unable to find alternatives of a specific product. The buyers of the products are
less price sensitive and it is important to maintain the quality of the products (Haleem et al.
2015). This pulls down the bargaining power of the buyers in the market as quality is a very
important factor which is also regulated by the government.

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Power of Suppliers
The power of the suppliers in the market is also quite low. Pharmaceutical, diagnostics
and medical devices require standardization. The dominant forces of the companies also needs to
choose the right suppliers to ensure success in the industry. Large scale companies require
several suppliers in order to cater to the demand and meet the deliveries which are crucial for the
growth of the company. Suppliers are responsible to manufacture medicines and medical
equipment which should meet standards. Compromising with regulations and standards may lead
to grave consequences (Haleem et al. 2015). Thus, the companies maintain contractual
agreements before initiating long tern collaborations. Glaxosmithkline Pharmaceutical Company
has more than thousand suppliers which makes it difficult for them to dominate the prices and
values of the products.
Threat of Substitutes
There is considerably high degree of threat of substitutes in the medical and
pharmaceutical industry as the demand for the products is quite high. The substitutes for medical
and health products could be medicinal herbs, plants and other ways which can be implemented
to achieve cure for diseases and conditions for which medicines are purchased, primarily because
the cost of medicines are higher as compared to medicinal herbs and other substitute products.
Products from competitive brand names may gain popularity through substitute products as well.
Pharmaceutical industry should aim at maintaining quality and standards by keeping affordable
prices of the products which will attract and retain buyers in the market.
Threat of New Entrants

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The threat of new entrants is low as there is less scopes for companies to enter the
market. If a company has to influence the market, it will require great financial capability and
experiences, which pharmaceutical industry possesses and adds competitive advantage to the
company profile. In the health and medical products market there are high barriers, which are
sometimes impossible to penetrate as new entrants. In order to pose competition to company
such as Glaxosmithkline Pharmaceutical Company experience of the market plays a great role.
Production of medicines is a tough process which requires intense quality checks and
maintenance of standards, which companies need to abide by. Thus, the chances of entering the
market is low as to create the final products, it is important to go through the difficult process
and ensure quality products like the dominant forces in the market.
Part 3
Company Overview
Johnson and Johnson is an American multinational company which specializes in the
development and manufacturing of health care products. The company operates within some
segments which include pharmaceutical, consumer and medical devices (Jnj.com (2020). The
company was established by Robert Wood Johnson I, Edward Mead Johnson Sr and James
Wood Johnson in 1886. The head quarter of the company is situated in New Brunswick, NJ.
Resource Based View:
The method of analysis of the environment in which a business is operating is known as the
industry context of the company. The scanning of the environment has its main focus on the
macro environment of the industry that can possible affect the productivity and other related

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conditions of the operations of the company. By analysing the context, the will also be able to
determine the target market and the future trends that it should adopt.
The organisation of Johnson and Johnson is primarily divided into three main segments-
1. Consumers that will also include the skin care as well as the baby care.
2. Pharmaceuticals: like the anti viral drugs,
3. Medical devices as well as the diagnostic segments.
The resource based view of any company enables it to put in a place the resources that it has and
the compatibilities it possess so that both can be put together for the more effective productivity.
It is to be taken into account that the capabilities and the resources are the main sources of
profitability for the company and also analyses the needs for the future resources and
competencies that it will need in order to compete with the contemporary market. The Johnson
and Johnson company earns its key resources of revenue from the Healthcare as well as the
Medical devices. The pharma segment of the company earns 45% of the total revenue for the
company, and adds upto 605 of the total value of the company. Most of the extracted revenue
comes from the major two divisions under the pharma segment, which are mainly Immunology
and Oncology. These two divisions create the quarter of the total segment of the revenue
resources for the company.
The productive assets for any company are the tangible and intangible assets of the
company. The tangible assets refer to the cash and plant of the company. The total assets of the
company was 152.954 USM$ in 2018. And in 2019, it extended to 155MUS$ approximately.
The intangible assets of the company are the reputation, culture or the techno logy used in it. The

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company had earned a good reputation in the medical device and pharma. It is a well known
brand all across the world. The company had their dynamic competencies which has been
demonstrated in the success rate of the company along with their new techniques in protecting
the tangible assets like the cost saving exercises while they are acquiring the firm or the benefits
they extrapolates by limiting the culture clashes. The company through Mergers and
Acquisitions acquires the main tangible assets of the company. Another way in which the
company has achieved the success in their merger and acquisition are their huge successes in the
successful acquisition of the MD&D franchise and the DePuy Inc. With the purchase of the Du
pey the company has not only been able to acquire a huge brand, but also got hold of the new
valuable and innovative technology of the Hip Replacement. The company i this manner had
been able to access the $270 billion dollar a year.
Thus, the main resources of Johnson and Johnson are the technologies are thus
advertising, reputation, and value of sales, policy choice, technology, and patents.
Advertising: the company has created a content platform and defined their baby products
by the well defined audience profile as well as the expectant mothers. The projection of such
delicate symbols instantly creates an affinity towards the brand. In recent times, the company has
launched the for every face campaign in Indonesia to empower the teen girls. In addition to
these, the company also promotes content based advertising strategies in newspaper and the
social medias.
Technology: the company focuses on the ERP technology and digital technology in order
to contribute more into the sustainable and growth strategy. The company has its reputation of
being thirsty for innovations. The company has created the Enterprise Resource Planning in

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order to manage the inventory and the suppliers and audit trials. They have enhanced their supply
chain policies with the collaborations with the in pharma technologists the company has also
focused in the pioneering of the hi-tech new strategies and investing in increasing the supply
chains. Johnson and Johnson currently make use of the Internet of Things sensors to collect data
from the required data. The company also use the concept of analytics system in order to prevent
the failures of the machines by predicting the real time modelling and the process range.
Reputation: the reputation of the company had been quite owing to the supplies and range
of the medicines and the medical devices. However, in recent times, the company had been
battling the reputation crisis because of its involvement in the opioid crisis. The brand position
has also suffered a fall because of this issue and now it is in the 57th position straight down from
the 8th position.
VRIO Analysis:
The brand of Johnson and Johnson is valuable as it mitigates the threat of rivalry by the effective
use of the resources. The company makes use of the effective technological devices that has
created an important asset for the country. The company uses the technology in gaining data.
This helps the company in analysing the present and the future demands of the market. the
company also gets a grope in the supply chain policies of the products by the effective use of the
recent technologies. This will help the company in being aged of the competitors and the
competitors. This will also enable the company in communicating well with the target market
and knowing the demands. The advertising strategy of the company is also an important resource
for it caters to the innovative level that the target markets seeks for. The promotions through the
advertising and social media content help the company in generating the interest of the target

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market and reaching to a large number of audiences. The rarity factor of the company primarily
includes the branding of Johnson and Johnson. The brand image of the company is
comparatively high in comparison to other substitutes in the market. With their reputation and
their strong customer base the company had been able to create a brand image for itself which
cannot be imitated or duplicated. Moreover, the imitation of the service given by the brand is
also costly which can be borne by a handful of companies. The company emphasises on their
promotion of the tactic of the caring for family, which is also unique to the company and
contains the originality. Few companies have a past history and business as Johnson and Johnson
and hence cannot imitate their brand image. The tangible assets of the company is also build over
the years and this high amount of asset cannot be mitigated by any new entrants in the industry.
Patents are also important part of the resources that contributes to the growth of the company. the
company’s patent system is complex. Moreover, the suppliers will not jeopardise their relation
with the company, which earn them a huge profit.
There are both inward and outer environmental situations that need to be analysed by the
company in order to prepare the three years development plan for the company. Johnson and
Johnson imparts the costly loyalty trainings to the employees that helps the company in creating
the organisational culture that builds the resource competency matrix from the Human Resource
point of view. However, the company needs to focus more on its internal environment and not
merely depend on the patents for they will not last long. The continuous improvements and
experiments with the technologies will help the company in creating a trustworthy and consistent
image.

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Conclusion:
From the above discussion about the forces, that affects the macro environmental context
of the company of Johnson and Johnson it is identified that the company has to mainly face the
competition from other large companies from the same industry. Moreover, their strategies are
quite passive so it do not get easily noticed by the consumers or other related stakeholders.
However, the resource based analysis of the company shows that the resources in hand , both
tangible and intangible are quite competent in order to cope up with the internal as well as the
external adversaries. Thus, the company needs to focus on their strategic implementation in order
to keep their resource-competence level in track.

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