Final Report – Business Case Development
Module Tile: Research Seminar II: Presentation
Module ID: MCU-BUS 698
Dr. Ursula Schinzel
Student no. : R1501D601282
Date of Submission: 13 October 2018
Table of Contents:
TOC o “1-3” h z u 1.Introduction PAGEREF _Toc527231877 h 62.Objectives of the research PAGEREF _Toc527231878 h 73.The Company Mission, Vision and Strategy PAGEREF _Toc527231888 h 74.Elements of business environment: PAGEREF _Toc527231898 h 8A.PESTLE Tool PAGEREF _Toc527231899 h 85.Data Collection PAGEREF _Toc527231918 h 106. Discussions PAGEREF _Toc527231919 h 117.Suggested Strategies PAGEREF _Toc527231921 h 12A.SWOT analysis PAGEREF _Toc527231922 h 12B.Market Segmentation PAGEREF _Toc527231933 h 13C.Target Markets PAGEREF _Toc527231937 h 14D.Positioning PAGEREF _Toc527231938 h 14F.Marketing Mix PAGEREF _Toc527231939 h 158.Ethical Consideration PAGEREF _Toc527231945 h 189.Conclusion & Recommendations PAGEREF _Toc527231946 h 1810.References PAGEREF _Toc527231947 h 2011.Appendix PAGEREF _Toc527231948 h 23
Introduction:5480050112966500Johnson & Johnson® is considered one of the largest Medical Company in the world. Which was invented more than 100 years ago? Its biggest innovation was the surgical band which was popularly used among the soldiers during the American civil last century. Then the cycle of development and innovation has been continued till what the company reached its respectable position in the market as a leader in the medical field by achieving more than 70 $ billion sales (2015). (Johnson & Johnson).
In our research, I will give more space to make a deep investigation for the diabetic division. (Life Scan®)
5781040235267500The diabetic division is much more famous by its unique blood glucose monitoring devices ( One Touch) as it reached Sales up to 1.5 $ billion (2017).
One Touch brand provides the support and the help needed to the diabetic patients around the world (422 million patients) (WHO).
OneTouch devices have very good reputation due to their accuracy and easiness of use.
Many big names have invaded the diabetic field through unique and innovative devices such as Abbot, Roche and Bayer health care. As the competition now became more tough and challenging as the customers are looking for innovative and convenient solutions.
LifeScan ® was doing marvelous successes in the diabetes field for more than 20 years but due to several issues, the company is facing currently a lot of difficulties in maintaining its unique leadership position.
4857115-21907500Objectives of the research:Our objectives in this research are: To discuss the related issues which have resulted in the unfavorable situation for LifeScan ® either on the financial side or on the competition in the market. To find solutions for the company issues in order to help the company to regain its stability again in the market.5791200159067500The issues which are facing the company can be considered as follow:A severe decline in the profitability plus unstable financial position for the last 10 years.5685790251968000Limited business volume compared to competitors.Observed drop in the market share and the ranking position in the diabetes sector.
Poor customer service.5374640346710000Defect in products availability worldwide.The Company Mission, Vision, and Strategy:
Johnson & Johnson was the pioneer company in establishing concrete Mission, Vision & business strategies.
The company has invented code of conducts and general guidelines for their business strategies called “The Credo” which can be considered as one of the most successful company guidelines in the world.
The Credo:” We believe our first responsibility is to the doctors, nurses, and patients, to mothers and fathers and all others who use our products and services. In meeting their needs everything we do must be of high quality. We must constantly strive to reduce our costs in 3405505-21907500order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.We are responsible to our employees, the men, and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development, and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return”Elements of business environment:In able to understand the business model which will be discussed during our research and its related issues, we have to consider the external and internal environmental factors which are affecting the business. Such as:PESTLE Tool
The best tool to analyze and evaluate the external environment forces (Pestleanalysis.com) as follow:5219700481965000
No political impact from One Touch devices on any aspects as LifeScan is providing the customers and the market with the best diabetes management devices.
right583882500There is a noticed decline in the current business generated from Life Scan specifically on the global scale (Press reader).
And if we considered the fast dynamic changes which are happening now in the Middle East which are going to change the economic conditions all over the region such as VAT tax implementation and restrictions in the health services which have started in many countries such as Egypt, GCC countries and North Africa.
Social:right7134225The customers’ behaviors have been changed a lot due to many reasons which impacted these behaviors such as the economic conditions, the buying power, and the education level.
Now the customers become more educated and aware of the new technologies due to the globalization and the high interest in getting the newest and advanced technology.
46196251016000Technological:Managing diabetes has been developed dramatically by using the available technologies such as sensor patches or using color sure technology. (Diabetes Time).
Legal:48602905191125Changing the regulations in some countries regarding how the medical devices have been used and distributed in the governmental sector made new pressure on the customers in many countries.
Environmental and Ethical:Most SMBGs are environmentally safe and matched with the latest ISO specifications.
Data Collection:I have started collecting the data required for our research as a qualitative method by discussing the issues with various departments in the company.
I have focused on these departments while I was collecting the data for my research:
Customer Service department.
Supply chain department.
The total no. of the employees who participated in the survey was around 30 persons from the above departments.
4709795661987500I have selected the qualitative method in collecting my data for the following reasons: (the Balance Small business)
The solutions required for solving the research subject should be provided based on explanations and interviews with various departments. (Sales, Marketing, HR, etc.)
The discussions with selected groups mainly include opinions and suggestions by the participants.
As there is no specific numbers of data or information will be collected so we won’t be able to use the quantitative method in this case.
4962525-15303500Discussions:The interviews have been conducted with more than 30 persons in different departments and questions were intended to give more space for explanations.
The interviews showed various explanations for the current situation of the company but to some extent, they gave common conclusions on the reasons behind the crisis and the possible solutions.
Most participants agreed that the company has a clear issue in the profits for the last 10 years due to the inappropriate business strategy which has directed the company to this situation.
5209540410527500Majority of the participants see that the company activities are moderate and need urgent improvement especially for the sales and marketing, they refer that the typical marketing campaigns without adding anything new to attract more customers. Plus the tough pricing policy which limited the business in many regions.
Most of the participants confirmed that the 1st priority should be for the Sales and marketing activities by pushing more flexible and innovative plans in the market.
More than half of the participants saw that the company problems nowadays are a mix of complicated circumstances not only a reason for one factor such as the pricing.
The majority of the participants agreed that the major drawbacks are due to three factors: the routine work, the lack of new innovative solutions and the non – flexible strategies and policies.
5267325608647500Most of the Participants have admitted that there is a serious issue regarding the customer satisfaction level and urgent actions should be implemented.
They suggested a complete change in the procedure of customer service starting from receiving the complaints, handling customers concerns, advising the customers for better management and etc.
Most of the participants agreed that global availability is a very important factor for success and development as the customers won’t worry about the products available anywhere and anytime.
The participants thought that the supply chain system should be improved by engaging with more distribution channels in different countries. And securing more stocks of products in main and big accounts, plus develop the business in un-explored areas such as Africa and Asia.
In the same time, while the company is looking for elevating the profits and even the urgent need for improving some important functions inside the company but the need to improve the financial situation for the organization is much more important as explained by the participants.
4504690-15240000″Every department should make maximum efforts in order to increase the company outputs in the current time” as mentioned by the HR department manager.
The participants offered solutions to improve the profits such as lowering the budget allocated for big conferences and medical events, restrict unnecessary luxurious expenses, merging many functions within the company to minimize the costs such as supply chain and distribution.
Discussion of the findings:
The participants are aware of a good extent about the issues that the company facing regarding the low profits, poor expansion and defects in customer services.
The participants gave solutions and suggestions in order to solve issues such as new marketing and sales activities, more flexible pricing policies, a new supply chain system and other solutions.
The participants confirmed that some issues are connected together such as poor expansion will lead to more complains about the customer service so quick actions in improving both areas should be implemented at once.
Some participant referred that many R&D types of research should be conducted in order to introduce products matched more with the customers’ needs and behaviors.
Suggested Strategies:SWOT analysis:46742356078220
Using SWOT analysis is very important in order to focus on the strengths and opportunities and minimizing the threats and weaknesses.
Strengths: OneTouch products have many strong points such as the ease of use, the availability in many countries in the world and the high accuracy.
Weakness: The products are relatively outdated compared to competitors which are more attractive to many customers.
Opportunities: The company has the chance to grow in many areas around the globe such as Asia, Africa and some countries in Europe and Latin America.
Threats: The main threats are from the global economic instabilities due to new taxation policies or change in the regulations in many countries.523113057150000
Market Segmentation:The segmentation process for this market will consider two combined variables:
The behavioral segmentation:4671695212344000The market is being classified into two main groups based on the patients’ usage for Insulin (WHO, 2015):Insulin-dependent patients:
Patients who count mainly in using insulin in their daily activities (90 % of diabetic patients)
Non-insulin dependent patients:
Patients who don’t count on using insulin in their daily routine and using mainly oral medications (10 % of diabetic patients)
The Demographic-Psychographic variable: We can categorize the patients in 3 groups (Diabetes, 2015):
4738370481965000High level of education, mostly young age, they follow up well with HCPS and interested in new technology and advanced options. (15%)
Mid-level of education, average age, accepted follow up with HCPS and they need a simple device with good options. (70%)
Low level of education, old age, they need very simplified devices with minimum options (15%)
Target Markets:Based on the previous analysis, our target market will be:
Insulin-dependent patients who either aware or mid aware.
And we have selected this category of patients for the following reasons:
They are the highest share of the patients.
They can be easily targeted and attracted by using the right messages.
They are identifiable, sizable, accessible, stable, responsive and actionable so we can easily focus on them
Our main competitors in the market (IMS, 2018):
Accucheck® (30 % Market Share)
Contour® (10 % Market Share).
FreeStyle® (5 % Market Share).
Positioning:The current position of the products in the market can be improved as follow:
As we have the highest MS (55%) comparing with the next competitor (Accucheck 30% market share) and we have our objective to reach 70 % of MS using the available resources and opportunities.
Diabetic patients preferring our brands: as they are reliable, durable and high accurate devices but we are sharing these benefits with other competitors – points of paring (POP) – as mainly other competitors are being manufactured by multinational companies, and their results are relatively acceptable with low errors messages and also they provide nearly the same customer service experience (Kotler, 2015).
We can consider our points of difference (POD) for the OneTouch products as they are easy to use and giving quick reliable results compared to other brands.
OneTouch Products will position itself as an accurate and modern solution for the patients’ issues in checking blood glucose level. Based on its benefits and functions (Life Scan, 2018):
OneTouch Products will have only (the ISO 2015) certified SMBG device in the market which will support the patients with the most accurate results as very close to laboratory results. (Strong POD over competitors).
OneTouch products will offer modern, advanced screen and device specifications.
OneTouch Products will offer 5 sec. testing time which will gain more customer attention.
OneTouch Products will provide the easiest way to get the blood glucose results through simple steps in the device.
OneTouch Products are easy to be handled by customers due to its convenient size and shape. (Life Scan, 2018).
Marketing Mix495427051435000Product:OneTouch Products are available in the market as a blood glucose monitoring device with multinational standards due to its expected availability in many international markets but with a specific adaption to the Middle Eastern market.
This adaption will be through: introducing the Arabic language as one of the operating systems languages (with English and French).
OneTouch products packages are introduced in the market as a combined kit, consists of:
2- Two test strips (Each contains 50 strips).
The strips will be also available separately in the market as one of the consumables for the device and can be sold to the consumers.
Other supplements for the product like:
Evaluation test solutions
USB cables and
The product features will include:
The blood glucose testing
The patient’s history for the past readings (Last day, week, Month).
Average for blood glucose consistency levels.
Price:5301615531495000In order to have a clear picture of the pricing point, we need to consider the competitors’ prices as follow:
Accucheck: 57 $
Abbot : 56 $
We will implement the pricing penetration strategy (Kotler, 2012) which will allow us to penetrate certain sectors in the market which are price sensitive.
As mentioned by Kotler “Some companies want to maximize their market share. They believe a higher sales volume will lead to lower unit costs and higher long-run profit” (Kotler, 2012). So we will adjust reasonable pricing technique to be able to reach our desired market share in the well-organized plan
Also according to the existing market conditions which will support this strategy, for instance: increase the number of competitors, price-oriented market and lowering the price to engage more customers.
“The following conditions favor adopting a market-penetration pricing strategy:
The market highly prices sensitive and a low price stimulates market growth
Production and distribution costs fall with accumulated production experience
Low price discourages actual and potential competition” (Kotler, 2012).
We will use the markup pricing method in setting the price for OneTouch Products (Kotler, 2012):
Variable cost per unit (Cost of two strips): 42 $
Fixed costs: 1,100,000 $
Expected units sales: 500,000 / year
Unit Cost = Variable Cost + (Fixed Cost)/ (Unit Sales) =
42 + 1100,000 / 500,000 = 44.2 $
The unit cost is 44.2 $, and we will set 25% as profit margin. Thus, the markup is calculated:
Markup Price = (Unit Cost)/ (1-desired return on sales) =
44.2 / (1-0.25) = 44.2/0.75= 59 $
So the final price for the product will be 59 $ with 25 % profit margin.
Place:The distribution for OneTouch Products will be through an authorized local distributor.
As the choice for the distributors for our products will be for many reasons:
It should have good no. of outlets and selling channels.
It should have well-structured distribution agency with a premium trained sales and marketing team.
It should have an excellent reputation for serving customers
It should have good communication channels with most of the wholesaler and retailers in the market either in the private or governmental sectors.
Enough stock levels of the products should be available when supplying from the country of origin as it should match with the market demand.
We are depending in distributing the products across the market on the following channels:
The pharmacies: either chain pharmacies or single pharmacies, varying in potentiality from class A to B to C class according to daily and/or monthly sales and according to its location either it is near or far from hospitals or doctors’ clinics.
The hospitals and health centers: either governmental or private ones, also varying in potentiality and patients’ flow.
Direct selling: through our agency offices which are distributed all over the country or through the selling spots which we can arrange in the shopping malls or in public parks or in governmental hospitals or health centers as we can sell directly to the customers through these channels.
Hypermarkets and supermarkets: there is a huge flow of customers in these channels, so we can include our product in the electronic or medical sections.
Inventory levels in the market will be checked on a regular basis by our sales team and followed by the line managers either for the retailers or the distributor to ensure the optimum supply and avoid any shortage.
Pending orders should be followed up by the sales team to avoid any out of stock periods in order to avoid shifting to competitors or customers’ dissatisfactions which will affect negatively our business in the market.
5225415299593000Promotion:We will concentrate on demonstrating the features of the products and connect these features to the customers’ related benefits.
Our ads should include our message (Your Small Lab. Machine) in order to attach this message to the customers’ mind to build the desired confidence in the product performance and tolerability.
444817566676005181600666750058769256667500We will focus on the following aspects of promotion:
481520577152500Direct response and interactive advertising
Trade and consumer-oriented promotions.
Event marketing and sponsorship
Ethical Consideration:4741545661035000The research has confirmed on respecting the ethics and the fairway in dealing with the proposed research issues.
The participants have been involved in the research were fully aware of the research objectives and they had the full right to express their opinions and suggestions as they were not directed to a certain point of view or specific ideas.
Many of the participants have refused to participate in the research as they had their personal and professional considerations but we considered confidentiality in dealing with the participants even though they didn’t participate in the research.
Each participant has signed informed consent and has been ensured on respecting the identity of the each one of them.
Sticking to the ethical way of dealing with this research had the main focus during the communications with the participants as voluntary participation, confidentiality and anonymity were the main guidelines for our research. (Social research methods).
4910455201930000Conclusion & Recommendations:Based on the issues included in the research which have discussed deeply the main concerns which are affecting Life Scan (One Touch) business in the diabetic market, we can suggest our recommendation as follow:
We can consider the profits and the pricing issue are connecting to each other as the company is not performing well on the profits side and also didn’t get the big share of the market do its tough pricing strategy.
So my suggestion for this issue as follow:
To increase the profits for the company: the company should implement budget constrain policy, restructuring the departments and their job responsibilities, cutting off the unnecessary (luxury expenses) and reallocate events, conferences, and other marketing budget and many other solutions.
Also, the company will focus on the profitability per item wise as a lot of cutting costs can be done regarding the shipments patterns, distribution, and legalization.
The pricing issue can be solved: by focusing on the volume which can cover the losses in the profits as once the products won more market share by penetrating big accounts which will increase the sales volume.
Offering a lower margin on the products can be compensated for by the high sales volume gained.
The company should invest in the R&D (research and development) as their development strategy should work side by side with market needs, the new technologies, customer satisfaction and overcoming the competitors’ advantages.
Focusing on the consumers’ sector as they are representing a huge area for growth and development as the customer now become more educated and aware and can easily compare between the products for what can be best fitted for their needs and demands.
More loyalty and customer engagements programs can be implemented which will improve customer satisfaction as they will feel that the company is rewarding them for being loyal. More social media campaigns and educational programs can be established through different channels either: Facebook, YouTube, and Instagram to increase the customers’ awareness and knowledge.
Customer service department should be renovated completely in terms of responsiveness, cooperation, and customer care services.
Dedicated teams should be available on duties to consider customers complains and inquiries and direct them to the best solutions they can receive.
The company should invest more in establishing well-constructed supply chain cycle across the world which will be concerned with the products available in each country and ensure that the customers can access these areas easily and get the products they want.
Distribution teams should work hard to ensure the availability of the products in the pharmacies, hospitals and medical shops.
We can conclude that many corrective actions should be started at once in order to solve the issues which are facing the company such as new pricing policies, cutting costs, new customer service procedures and renovated supply chain and distribution systems.
The employees have a very optimistic vision regarding the company future and they aligned to the corrective actions once the company started to implement.
The company’s management should put priority for the corrective actions based on the importance of these actions to the business and the resources available.
There are no intentions to add new departments to the company as every employee should do his maximum effort in order to help the company to solve its issues.
References:Johnson & Johnson (n.d), Johnson & Johnson Our Story. Retrieved (13 Oct 2018) from https://ourstory.jnj.com/Johnson & Johnson (n.d), Johnson & Johnson Products. Retrieved (13 Oct, 2018) from:
https://www.jnj.com/healthcare-products/medical-devices#orthopaedics-cardiovascular-disease-specialtyOneTouch (n.d),OneTouch Products Retrieved (13 Oct, 2018) from:
https://www.onetouch.com/WHO (2017, Nov 15), Diabetes. Retrieved (13 Oct, 2018) from: http://www.who.int/news-room/fact-sheets/detail/diabetesArundhati Parmar (2017, Jan 31), Who’s J&J’s stepchild? Its consumer diabetes device business. Retrieved (13 Oct 2018) from https://medcitynews.com/2017/01/whos-jjs-stepchild-consumer-diabetes-device-business/?rf=1 Pestleanalysis.com (n.d) what is PESTLE Analysis? A Tool for Business analysis. Retrieved (13 Oct 2018) from http://pestleanalysis.com/what-is-pestle-analysis/KPMG (n.d) Value added tax (VAT) and excise tax developments in the Gulf Cooperation Council (GCC).Retrieved (13 Oct 2018) from https://home.kpmg.com/xx/en/home/insights/2017/06/vat-excise-tax-developments-in-the-gcc.htmlArab Health Online.com (n.d) Driving Change. Retrieved (13 Oct 2018) from.https://www.arabhealthonline.com/magazine/en/latest-issue/3/driving-change.htmlStan Arnaud (Oct 12, 2018), Life Scan profits Health suffers. Retrieved (13 Oct 2018) from https://www.pressreader.com/uk/the-press-and-journal-aberdeen/20161012/282192240501025Diabetestimes (Sep 16, 2014), LifeScan launches new meter. Retrieved (13 Oct 2018) from https://diabetestimes.co.uk/lifescan-launches-new-meter/Mind tools.com (n.d) Porter’s Five Forces, Understanding Competitive Forces to Maximize Profitability. Retrieved (13 Oct 2018) from:
https://www.mindtools.com/pages/article/newTMC_08.htmMind Tools.com (n.d), SWOT Analysis, Discover New Opportunities, Manage and Eliminate Threats. Retrieved (13 Oct 2018) from https://www.mindtools.com/pages/article/newTMC_05.htmPestle analysis.com (Feb 26, 2015).Internal Factors that May Affect the Business Organization. Retrieved (13 Oct 2018) from http://pestleanalysis.com/internal-factors-affect-business-organization/JnJ.com (n.d). Johnson & Johnson Credo. Retrieved (13 Oct 2018) from https://www.jnj.com/credo/Ros Cardinal (April 16, 2013). 6 MANAGEMENT STYLES AND WHEN BEST TO USE THEM – THE LEADERS TOOLKIT.Retrieved (13 Oct 2018) from https://leadersinheels.com/career/6-management-styles-and-when-best-to-use-them-the-leaders-tool-kit/Mio, Chiara; Venturelli, Andrea; Leopizzi, Rossella (March, 4 2015). “Management by objectives and corporate social responsibility. Retrieved (13 Oct, 2018) from: https://www.emeraldinsight.com/doi/abs/10.1108/AAAJ-09-2013-1480Philip, Kotler ; Keller, Lane., 2012, Marketing Management Global Edition, 14th edn. Pearson (Intl).
LifeScan Inc., (n.d) 2015, OneTouch Verio Meter. Retrieved (13 Oct, 2018) from: http://www.onetouch.com/verioMeterWHO (n.d). Diabetes. Retrieved (13 Oct 2018) from http://www.who.int/diabetes/en/Mindtools.com (n.d).The Marketing Mix and the 4Ps of Marketing. Retrieved (13 Oct 2018) from https://www.mindtools.com/pages/article/newSTR_94.htm Paul McKinney (n.d).What Is Customer Service? – Definition, Types ; Role in Marketing. Retrieved (13 Oct 2018) from https://study.com/academy/lesson/what-is-customer-service-definition-types-role-in-marketing.htmlKristy Dorsey (Oct 17, 2017). Johnson ; Johnson Medical sees profits plunge in 2016. Retrieved (13 Oct 2018) from https://www.insider.co.uk/news/johnson–johnson-medical-sees-11377906Ransdell Pierson (Jan 19, 2016). J&J to cut 3,000 jobs in struggling device division. Retrieved (13 Oct 2018) from:
https://www.reuters.com/article/us-johnson-johnson-redundancies-idUSKCN0UX1EILifeScan.com (March 25, 2013).LifeScan Announces Voluntary Recall of All OneTouch® Verio®IQ Blood Glucose Meters. Retrieved (13 Oct 2018) from https://www.lifescan.com/about-us/news/244GIGI DEVAULT (2018, August 18), Qualitative and Quantitative Research Methods. Retrieved (13 Oct 2018) from https://www.thebalancesmb.com/choosing-between-qualitative-and-quantitative-methods-2297137 Appendix :The questions discussed in the questionnaire were around 10 questions discussing the different aspects of the research issue:
Do you think that the company profits have been affected during the last 10 years due to inappropriate business strategy? (Pls explain).
If we compare marketing and sales activities for our company compared with our main competitors, how you can evaluate our performance (good – average – need urgent improvement) and how?
If we can rank the actions we need to do in order to regain the company its leadership position in the diabetic market, which actions we need to do 1st and why?
Do you think that the pricing issue represents a serious problem in our expansion plan? Why?
Based on your knowledge, what are the most significant drawbacks in our operational system?
How can you rate the level of satisfaction for our customers (High – Moderate – low) and Why?
What are the actions need to improve the customer satisfaction level?
Do you think that global availability is important and why?
How to improve our supply chain system around the world?
Do you think, that the company is in need to add more new departments in order to solve the existing issues?