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Mark Project Executive Summary

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    This market audit report provides an overview of Johnson & Johnson’s Vistakon Contact Lens in the market worldwide. Johnson & Johnson being among the top manufacturers of health care products and related services, has a division called Vistakon which has revolutionized the vision correction industry with the invention of ACUVUE® Brand Contact Lenses.

    Contact Lens is increasingly becoming the first choice for individuals who need vision correction as well as for beauty enhancement. Demographics of this market ranges with different needs and lifestyles. ACUVUE Brand is focused upon providing comfort, vision correction, easy handling, customer compliance and lifestyles. According to the studies of current market trends, the contact lens sector has seen a growth of 145% over the last five years with Johnson & Johnson holding the highest world market share of 48%. Even during the world financial crisis, the year 2008 financial results show that the Vistakon business has rose by 13%.

    The technique of SWOT analysis has been used to identify the key points on which the company can direct its marketing efforts. The marketing strategy of Vistakon is based on the Johnson & Johnson Credo. Their marketing objectives focus on the product wise key target segments. The brand is positioned in a way that different products cater to meet the various needs of the market.

    A market mix analysis defines the ACUVUE product and the pricing strategy used by Vistakon. Vistakon works to keep their price increases in line with the health care products Consumer price index. It promotes its products through various media and distribution channels.

    Lastly, recommendations are provided within the guidelines of the market in order to benefit the organization for maximum customer acquisition.

    Introduction of the Organization

    About Johnson and Johnson

    Johnson & Johnson is the world’s most comprehensive and broadly based manufacturer of health care products, as well as a provider of related services, for the consumer, pharmaceutical, and medical devices and diagnostics markets. Headquartered in New Brunswick, NJ, it is a family of more than 250 operating companies employing approximately 119,200 men and women in 57 countries. It is organized on the principles of decentralized management, diversification in health care, long term perspectives and shared values across our businesses.

    Johnson & Johnson’s brands include numerous household names of medications and first aid supplies. Among its well-known consumer products are the Band-Aid Brand line of bandages, Tylenol medications, Johnson’s baby products, Neutrogena skin and beauty products, Clean & Clear facial wash and Acuvue contact lenses.

    About Johnson & Johnson and the environment

    Their purpose is to improve the health and well-being of people everywhere. They understand that environmental degradation threatens human health, and thereby take the responsibility to protect the environment.

    They have established five-year Health Planet goals in the areas of energy use, water use, paper and packaging, waste reduction, product stewardship, biodiversity, and others. In developing these goals, they sought counsel from many stakeholders, including government officials, environmental groups, other companies and academic thought leaders. They are confident that their Healthy Planet 2010 goals will help safeguard the health of our planet.

    Headquartered in Jacksonville, Florida, Vistakon is a division of Johnson & Johnson Vision Care A true leader in innovation, Vistakon revolutionized the vision correction industry in 1988 with the invention of ACUVUE® Brand Contact Lenses, the world’s first soft disposable contact lens.

    Today, ACUVUE® Brand Soft Disposable Contact Lenses remain the number one brand in the world. The ACUVUE® Brand is worn by more people globally than any other contact lens. The ACUVUE® Brand is truly transforming the world’s vision by providing an outstanding range of contact lens options to meet the vision needs and wants of just about everyone requiring vision correction. ACUVUE® Brand Contact Lenses positively change lives by giving people who require vision correction the freedom, comfort and clarity of natural vision.

    Vistakon has built an impressive team by fostering an unyielding dedication to innovative thinking and to maintaining the highest standards in quality. With a workforce of approximately 2,500, Vistakon makes ACUVUE® Brand Contact Lenses for people in over 70 countries worldwide.

    The essence of Vistakon’s philosophy is perhaps best embodied in the Johnson & Johnson Credo which reflects the values and commitment of the entire organization worldwide

    Situation Analysis

    A.   Market Summary

    Market Demographics

    The demographics for the Contact Lens market are as follows:

    ·         Ages 13-39, with high representation of females which have upscale in income and education.

    ·         The Presbyopic users tend to be ages 40-60.

    Market needs

    The company seeks to fulfill the following benefits that are important to its customers:

    ·         Comfort: While purchasing the contact lens, the primary concern for the customer is Comfort. ACUVUE® Brand Contact Lenses are very thin and comfortable. Unlike LASIK, contact lenses are a reversible form of vision correction

    ·         Vision: Customers who have Visual impairment choose contact lenses for vision correction. Studies show that 7 out of 10 people see better than 20/20 when properly fitted with ACUVUE® contact lenses by an Eye Care Professional.

    ·         Handling: Customers prefer lenses which are easy to handle

    ·         Lifestyle: Customers choose the type of contact lenses according to their lifestyle. People with active lifestyle prefer Daily disposable contact lenses.

    Market Trends

    As per the Annual report on the contact lenses 2008, in Contact Lens Spectrum issued in January 2009, the ophthalmic sector as of whole was up 145 percent over the last five years. This is far ahead of the S&P 500, which is now lagging behind where it was five years ago.

    Worldwide and U.S. market share estimates by company are similar with Johnson and Johnson leading at nearly 48 percent, CIBA vision at 18 percent, Coopervision at 18 percent and Bausch and Lomb at 12 percent. Correspondingly, when practitioners were surveyed about their perception of product portfolio innovativeness (1-to-5 scale), Vistakon, again led, followed by CIBA, CooperVision and B&L.

    Market Growth

    The strategy of concentrating its marketing to areas where there are the most profits to be made is also the case in Asia where the Japanese market – which holds the biggest market potential by far – is the country where J&J has greatest domination. A new advertising campaign in Thailand is aiming to increase brand awareness there. For J&J Vision Care its strategy seems to be working even in tough economic times. Global revenue from its Vistakon business rose 13% in 2008 to $2.5bn and through a series of clever acquisitions its parent company should be guarded against patent expiries and the credit squeeze

    B.   SWOT Analysis

    Strengths

    First mover advantage with disposable lenses
    Unique proprietary manufacturing process – “stabilized soft molding”
    Reliability of manufacturing process to produce large volumes at low cost and at low cost to Eye Care Practitioners
    Strong distribution channels to authorized Eye Care Practitioners
    Clear objective to continue innovation in disposable market
    Financial backing of Johnson and Johnson to support new product launch and decentralized structure of Vistakon to make corporate decisions
    Weakness

    Surveys and test market results show that consumers perceive 1-Day Acuvue as too expensive
    Acquisition strategy of new consumers is weak because Eye Care Practitioners rely on “pulling” consumers in for eye exams
    Opportunities

    Key unmet needs
    Advancing science and technology
    Geographic opportunities
    Global information flow
    Threats

    Potential Competition from an already established market participant such as Baush & Lomb, Ciba Vision, Cooper Vision etc.
    Increasing LASIK (Refractive surgery) Surgery
    Regional threats. For example, there is a threat in Iran as people have started boycotting American Products.
    C.   Competition

    Vistakon’s major competitors within the disposable contact lens market are

    Bausch & Lomb
    CIBA Vision
    CooperVision
    Biomedics

    D.   Product Offering

    Whatever the Vision’s need is, ACUVUE® Brand has a contact lens to add comfort, ease and freedom to life.

    Daily Disposables

    1•DAY ACUVUE ® MOIST™

    1-DAY ACUVUE ® MOIST™ Brand Contact Lenses are daily disposable contact lenses from Johnson & Johnson designed to help eyes stay moist and fresh even at the end of the day.
    1•DAY ACUVUE ® DEFINE™

    1-DAY ACUVUE ® DEFINE™ Brand Contact Lenses are daily disposable contact lenses from Johnson & Johnson. It’s used as eye enhancer.

    Reusable
    ACUVUE® OASYS™ with HYDRACLEAR™ PLUS

    ACUVUE® OASYS™ with HYDRACLEAR™ PLUS, creates a wettable, ultra smooth contact lens for contact lens wearers with dry eye feeling. The extraordinary, premium reusable contact lens in the ULTRA COMFORT SERIES™ are designed to help keep eyes moist and fresh even in challenging environments.
    ACUVUE® ADVANCE™ with HYDRACLEAR™

    These lenses can be worn comfortably all day long. ACUVUE® ADVANCE™ incorporate HYDRACLEAR™, so you’ll enjoy a unique soft, silky feel – no matter how long your day lasts.

    Astigmatic Lenses

    ACUVUE® ADVANCE™ for ASTIGMATISM Contact Lenses

    Designed to comfortably correct astigmatism while providing                             outstanding visual acuity

    Bifocal Lenses

    ACUVUE® BIFOCAL Contact Lenses

    Designed to clearly both near and far, in all lighting conditions – without the hassle of glasses.

    E.   Key to Success

    The key to Success of Vistakon are

    Footprint of Johnson and Johnson
    Innovative Products to meet the needs of the people.

    Marketing Strategy

    Mission

    At Johnson & Johnson there is no mission statement. Instead it has a Credo which has guided their actions in fulfilling their responsibilities to their customers, employees, community and stockholders. A copy of the Credo is attached as Appendix 1.

    Marketing Objectives

    Maintain positive, strong Growth each Quarter
    Achieve a steady increase in market penetration.
    They work to grow the product category in order to increase the customer their clientele.
    They believe in the concept of Shorter is Better. They promote Daily disposable lenses because it is healthier, convenient, and has low risks of eye infections. Hence helping them to retain happy customers.
    Target Markets

    Primary target group of Vistakon are young, female consumers, between the ages of 13-39 years and presbyopic baby boomers, aged 40 to 60 yrs. It also studies the market and narrows its focus on key target segments depending on the type of product.

    ·         Key target segment for the Acuvue Oasys is the 25-34 year old, non-astigmatic, female spectacle-wearing patient

    ·         Key target segment for the Acuvue 2 contact lenses is female and in the 18-24 year old age group

    ·         Key target segment for Acuvue Advance is female in orientation with the 25-34 year old

    ·         Key target segment 1-Day Acuvue Moist attracts the age spectrum extremes (teenage and 50+) both at rates significantly higher than their respective base penetrations

    ·         Key target segment for 1 day Define is young females and in the 15-30 yr old age group.

    Positioning

    Once target market is analyzed, the next step is to position the offer. Positioning is an attempt to show a product or service in a manner that meets certain desired wants or needs of the target audience. For example, a post-menopausal female daily disposable wearer is probably more interested in the benefits of comfort and moisture as opposed to a teenage daily disposable wearer who is more interested in the ease and convenience of a wear-once-and-throw-away modality. The goal of positioning is to underscore one or two characteristics that make a product or service stand out in the minds of consumers as the answer to their wants/needs.

    Brand Positioning of Acuvue Contact lenses

    1•DAY ACUVUE® MOIST™
    For a moist, fresh contact lens feeling from morning to night. Our new daily disposable contact lens leaves your eyes feeling fresh and comfortable all day long

    1•DAY ACUVUE®
    Offers excellent comfort and handling
    Our original daily disposable contact lens, healthy and convenient with no commitment to a cleaning regime

    ACUVUE® OASYS™
    A contact lens designed to help keep your eyes feeling moist and fresh
    Our extraordinary new, premium reusable contact lens in the ULTRA COMFORT SERIES™ designed to help keep eyes moist and fresh

    ACUVUE® ADVANCE™
    Has the fit and feel of a hydrogel lens
    Our entry level, reusable daily wear contact lens in the ULTRA COMFORT SERIES™ with all the benefits of a premium lens

    ACUVUE® 2
    Offers excellent optics, ease of handling and a flexible wear schedule
    Based on our first disposable contact lens, ACUVUE® 2 is a great introduction to contact lenses

    SUREVUE®
    A quality monthly lens with UV protection2
    An economy monthly lens

    ACUVUE® BIFOCAL
    The lens with PUPIL INTELLEGENT DESIGN™ providing optimal near and far vision
    Our bifocal lens with excellent visual acuity

    ACUVUE® TORIC
    Unique dual thin zone ‘constant stabilisation’ design
    Designed for contact lens wearers with astigmatism, providing spherical comfort and efficient fit times

    Marketing Mix

    Product:

    Acuvue Brand Contact lenses offer a variety of products such as:

    ·         Daily Disposable Contact lenses such as 1 day Acuvue Moist and Acuvue Define.

    ·         Reusable Contact Lenses such as Acuvue Oasys, Acuvue Advance, Acuvue Bifocal and Acuvue Bifocal

    Pricing:

    The prices which are set for the products help the company to cover their research, manufacturing, education and marketing costs. And this allows them to provide a return to the investors so that future investments will enable them to conduct more research and bring new medical advances to people.

    In the United States, the company works to keep their net price increases for health care products within the Consumer Price Index (CPI). A government measurement, the CPI is calculated by gauging price changes across a wide array of products and weighing these changes against the percentage of income that typical consumers spend to purchase these products. The result is the “weighted average compound growth rate”.

    As the cost of raw materials and other expenses continue to rise, the company works to keep the price increases modest and still maintain competitive profit margins by producing the products more efficiently, by reducing operating costs and by improving the productivity.

    Promotion:

    Vistakon promotes its products through various ways as below:

    Print Media: It advertises through newspapers, magazines, local optical magazines like Eye Zone.
    Banners: Banners are put up at Major Streets and Shopping malls.
    Radio: It announces offers and product launch through radio channels
    Johnson and Johnson have established The Vision Care Institute (TVCI) in various regions including Dubai, UAE. These institutes provide hands on training to various Eye Care Practitioners, hence promoting its Product range.
    Sales Promotion: There are various seasonal promotions in which various other cosmetic/health care products are bundled free with a sale of Multipack Contact Lenses
    Price discounts/ trade discounts are strictly against the Corporate Policy.
    Distribution:

    Vistakon supplies its products to the end-users through Distribution channel which includes Wholesalers and Retailers. The manufacturing unit supplies to the regional wholesaler who further supplies to the optical retail outlets. For example in the Middle East, the Sole Distributor of Acuvue Contact lens is Yaco Trading, part of Yateem Group. Yaco trading further supplies these contact lenses to the retail Opticians.
    Vistakon has launched an “Acuvue Direct Delivery and Payment Plan.” This is more commonly known as get now, pay later.  Acuvue direct allows patients to spread the financial commitment out over four equal payments, while still receiving the cost reduction you get for purchasing an annual supply. Acuvue is locking in future revenue with this program, which is a great idea to release during this tough economy
    Controls

    The purpose of Vistakon’s marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance:

    Revenue: monthly and annual
    Expenses: monthly and annual
    Customer Satisfaction
    New Product development

    Conclusion & Recommendations

    I recommend Vistakon management the following:

    Vistakon should opt for the premium price strategy, launching 1-Day Acuvue at a higher retail price and running short-term price promotions if needed to assess demand. This is the most sensible option in minimizing cannibalization of other products and maximizing profit.
    Volume discounting is beneficial to Vistakon by encouraging quantity order placement. This in turn will lower production and overhead costs with efficiency in handling fewer orders of larger quantities vs. high quantity of orders of low volume.
    While the new set of pricing to the Eye Care Practitioners (ECPs) provides similar gross profit to Vistakon, the increased margin to ECPs will encourage them to promote and push Acuvue products to customers vs. other disposables and thus increase sales of Acuvue Contact lens.
    Intensive sales force deployment to increase ECP coverage, to which the net contribution is highly sensitive.

    Reference List

    1. Introduction of the Organization: About Johnson and Johnson, from Johnson & Johnson 2007 Sustainability report and about Vistakon from the website http://www.acuvue.com.au/about_acuvue/about_vistakon.html retrieved on March 3, 2009.

    2.  Marketing needs: According to http://acuvue.ie/2.htm retrieved on   March 13, 2009

    3. Market Trends from the Annual report on the contact lenses 2008, in Contact Lens Spectrum issued in January 2009.

    4. Market Growth from http://www.medicaldevice-network.com/features/feature50290/  retrieved on March 15, 2009

    5.  SWOT Analysis from http://www.collegeresearch.us/show_essay/13677.html     retrieved on March 15, 2009.

    6. Competition: According to http://www.hoovers.com/vistakon/–ID__103993–/free-co-competitors.xhtml  retrieved on March 15, 2009

    7. Product Offering: According to http://acuvue.ie/1.htm  from retrieved on March 21, 2009

    8. Mission: According to www.jnj.com  retrieved on March 25, 2009

    9. Target markets: According to CONTACT LENS BRAND DEMOGRAPHICS, By David M. Pearce, Responsible Marketing Consulting Services. ©2007 David M. Pearce and Responsible Marketing Consulting Services

    10. Positioning: According to http://acuvue.ie/ecpPro/3_01_03.htm retrieved on March 25, 2009

    11. Pricing: According to Johnson & Johnson 2007 Sustainability report, (source: http://www.jnj.com/connect/pdf/publications-pdf/2007-sustainability-report.pdf  retrieved on March 30, 2009)

    12. VISTAKON’s Market references for the UAE – Dr. K.K.SHARMA, Head Optometrist, at Yateem Optician (Official distributor of Acuvue Contact Lenses in the Middle East)

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