|Johnson & Johnson | |Neutrogena | |Entrance into China | Ted Baskerville | |5/31/2011 | Contents Executive Summary4 History4 Situation Assessment4 Strategies4 Operation/Action Plan4 Our Company5 Project Description and Objectives5 Team Description6 Situation Assessment6 External/Macro Environmental Factors6
Internal Assessment of Neutrogena (Johnson and Johnson)8 Market Analysis10 Target Market11 Strategies and Programs11 Generic Business Strategy11 Marketing Mix13 Financial Information15 2011-2013 Pro Forma Projections of Profit and Loss15 Budget and Financing15 Operational/Action Program16 Operational and Action Elements16 Appendix18 Appendix A: SWOT Analysis18 Appendix B: Map of District Clusters19 Appendix C: Product lists with prices in Yen and US dollar20 Appendix D: Budget Tables21 Work Cited22 Executive Summary History
Neutrogena is a producer of skin care products for men and women and has been around for over 80 years. It started back in 1930 and flourished with its development of a soap that could neutralize the skin’s pH after only eleven seconds. The company was eventually bought out in 1994 by the world’s leader in health care products, Johnson & Johnson, but this only benefitted both companies, helping them to grow and remain competitive over the years. Situation Assessment The Chinese market has been expanding in recent years and their love of skin care products has grown as well.
Both men and women are becoming more interested in taking care of their skin by use of several-step skin care product. We have decided to focus our penetration approaches in China are men and women aged 18-35. There is great opportuni...
ty for Neutrogena to expand into the market because of this fact. The Chinese market is very penetrable at the moment and the Chinese people are very receptive to new products as long as they are packaged appealingly and appropriately and placed in the correct outlets. We have decided to place our products in retailers such as Carrefore, Wal-Mart, and Watsons.
Our main competitors currently have some advantage because they have been in the Chinese market for several years, however our products are high quality and with the research done, we believe we can overcome the competitors and face the challenges of entering a new market. Based on the SWOT analysis we performed, Neutrogena’s main strength is their years experience while their main threat is their lack of experience in the Chinese market and facing American competitors who have been in the market longer and have already figured out how to overcome some of the challenges of entering a new market.
Strategies We plan to introduce 38 new products into the market to start and over time expand the lines based on how the initial introduction goes. We first want to focus on introducing our products to affluent areas like the Jinginji district which is composed of Shanghai, Tianjin, and Shijiazhang and has a potential customer base of over 2 million. Operation/Action Plan We plan to implement our introduction into the Chinese market in 2012. We plan to do this with a bureaucratic structure which will ensure speed and precision and will help to reduce friction with regards to materials and personnel costs.
Each member of our managerial team will have specific goals which will be met and taken car
of within the first year of implementation. Our Company Neutrogena was founded in 1930 by Emanuel Stolaroff. Before it was Neutrogena, it was known as Natone and its purpose was to supply specialty products to beauty salons who served the Hollywood film industry. In the 1940’s Natone decided to expand its manufacturing and distribution to the larger retail market. When Stolaroff was travelling in Europe in 1954, he was inspired to invest in a new product which he believed would lead the future of Natone’s operations.
Dr. Edmond Fromont, a Belgian cosmetic chemist, had come up with a new soap which was easily rinsed off the skin and left no soap residue. It was found that eleven minutes after using the soap, a person’s skin pH would return to normal – this was unheard of at the time. Stolaroff decided to call the soap “Neutrogena” and made arrangements to import and distribute it in the United States through department stores and drug stores. By 1962 the special soap had become such an integral part of Natone’s business that they changed the company name to Neutrogena Corporation.
In 1967, Stolaroff handed over the reins of the company to his son-in-law Lloyd Costen. Over the next 20 years, Costen’s niche-marketing strategy would catapult the company into great success. The company was so successful with their products that competitors like Wal-mart and Johnson & Johnson began producing similar products at lower prices. By the 1990’s consolidation and acquisition of smaller companies became a prominent phenomenon. In 1994, Neutrogena was acquired by Johnson & Johnson – a world leader in health products (“Neutrogena Corporation”).
With Neutrogena and J&J teamed up together, they were able to take on bigger rivals across various markets both domestically and internationally. Today, after 125 years in business, Johnson & Johnson remains a world leader in health products ranging from the consumer segment which consists of skin care, baby care, women’s health, oral care, wound care, and over-the-counter pharmaceuticals and nutritional products, the pharmaceutical segment consisting of various medications, and the major medical devices and diagnostics segment.
In 2010, the company saw sales of almost $62 billion, more than half of that came from international sales (Johnson & Johnson). Project Description and Objectives By the fiscal year 2012, Neutrogena plans to introduce several products into the Chinese market. More information about the products proposed for introduction will be discussed further in the marketing mix section of this paper. Based on secondary research performed, Neutrogena has gathered a management team to put together and organize penetration into the Chinese market because the research has shown it to be a receptive market for skin care products.
The team has come up with several objectives which must be met in order to remain in the Chinese market. The objectives are as follows: ? Build brand awareness and loyalty through penetration into the market ? Increase international sales by 10% within the first year ? Increase market share and international presence Team Description Our international division management team is composed of: ? April Allison: General Manager April has been with the company since it was founded in 1993 and
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