John & John Case
I. Problem: The major issue that Johnson& Johnson (J&J) faces with its face powder is that despite the product’s innovation, a toiletry design and confidence in potential customers, it positions its product line as a cheap skin refresher by using supermarkets as main distributing channels and setting the price range of product cheaper compared to that of competitors sold in department stores, which damages its brand and profits.
In order to ensure that J&J makes a success in launching new brand category product with profits, it needs to develop a marketing strategy to make more profits by changing its distribution channels, the price range higher and targeted customers under the toiletry concept.
II. Alternatives: ) Position as a premium refresher through department stores channels + Raise awareness of a new product as a premium brand by severing relation with baby powder + Higher margin and potential to raise prices above original margins + Successful upper and middle level customers targeting with high value brand and synergy with J&J brand – High price and little difference with cosmetics may be unattractive to teen and young adults – Fierce Competition with current face powders sold (ex: Angel Face) in the department stores – Losing opportunity to use established strong distribution strength in supermarket channels ) Position as a premium refresh for both young female and adults through department stores + Enlarging market by targeting both teen and young adults and older female, including mothers + Less pressure from mother’s opposed to their daughter’s using cosmetic face powder from compacts + End user’s enhanced purchasing power resulting from targeting older females – Young customer’s alienation from the product due to their tendency not sharing with old generations – More designs and functions for satisfying different kinds of customers in terms of age – Unpromising forecast about current cosmetic user’s transition into new product category ) Position as a premium refresher for young adults through supermarket channels + Easy access to the product from potential customers + Differentiation from household items sold in the supermarkets due to high price and premium brand + Strong distribution power by usage of already established supermarket distribution channels – Difficulty in separating its image from grocery items in the supermarkets – Small profit margins compared to that of department stores – Huge advertising cost is unnecessary, unprofitable and ineffective
III. Recommendation: I suggest that J&J set a new product line as a premium refresher with higher price by distributing it through department stores. At first, the demand of targeted customers such as teens and young adults is already verified. In order to make more profit with this product, J&J needs to target the market segmentation more specific.
Considering most potential customers are young females living in urban areas with relative economic capability, more profit margin in department stores compared to supermarkets, and a marketing strategy under the toiletry concept, I recommend that J&J change its distribution channel into department store and set the price range higher than the current competitors in the market, thus resulting in more profit margin and boosting an image of brand new product as premium items among young adults-main target customers-in the Philippines.
In addition, high end strategy will pave the way for launching J&J’s future youth lines such as body care product with high profit margin and providing high brand image with future customers to J&J’ baby products, not mention to more profit margin and enhanced J&J’s premium brand resulting from department stores distribution.