Report SDM

8/11/2019 Report SDM

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Medical Devices & Diagnostics

And Sales results by these segments are:

Segments Percentage of SalesPharmaceutical 47

Medical devices and diagnostics 35Consumer 17

Sales by region:

Regions Sales in percentageUSA 61

Europe 21Asia Pacific 12

Latin America & Canada 6

Name of awards received:

Six Sigma Industrial safety Image award Process excellence award Best employers 2003 rank 4


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ORGANIZATION STRUCTURE:

SALES FORCE STRUCTURE:

Pharmaceutical Representatives and Medical Device representatives report to TSI TSI reports to ASI and ASI reports to SLM Similarly SLM reports to RSM There is one RSM for 5 to 6 states RSM reports to VP Sales and VP Sales reports to MD


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MD

VP Sales

RSMRSM RSMRSM RSM

SLM SLM SLM SLM SLM

ASI ASI ASI ASI ASI

TSI TSI TSI TSI TSI

PharmaceuticalRep

Medical DeviceRep


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Decentralization at JNJ:

Each company focuses on a specific areas of health care. Each company has its ownmanagement board and is self-directed. The decentralized and global structure drives us tovalue diversity throughout the organization.

Assessment:

SELLING PROCESS:

With reference to the Selling process at Johnson and Johnson, there are 2 teams

Johnson & Johnson owned team Distributor owned Team

The J&J team is mainly a Marketing team that is focussed on servicing the endCustomer-the retailers.

The approach used here is Pull based Strategy The company owned team also interacts with the Doctors, as they are the Key

Influencers in prescribing the products of J&J to the consumer


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As shown in the diagram, the from the Manufacturing plant the goods are transferred to theCFA. From the CFA the goods are trickled down to the Main distributor. Here the maindistributor has a team of his own based on which the goods are now transferred and sold tothe Dealer. This is a Private Sales Force, and there is disparity in the payment made to theSales force of both teams.The company headquarters maintains a record of the goods transferred by getting data on theInvoice.

Invoice plays an important role here, as the entire credibility and processing, Understandingof the amount of goods sold, depends on the invoice that is generated and passed along theChain.

PRODUCT PORTFOLIO AND DISTRIBUTION CHAINS:The following table shows the list of products that at available at Rohtak:

CATEGORY PRODUCTNAME

DISTRIBUTION PROCESS

Baby Care Johnsons Johnsons bedtimeJohnsonshead -to-toe fragrancefree baby lotion

Extensive distribution at retailsstores.Depending upon the city- Tier 2 3,availability of some products andthe frequency of delivery isreduced

RETAILER

CFA DEALER DISTRIBUTOR

JOHNSON &

JOHNSON SALES

REPRESENTATIVE

PRIVATE

SALES FORCE


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With reference to list of products available in Rohtak, the distribution chains have also beenmapped. On interaction with the Sales personnel, we found that the process remains the samealmost for all products.The issue here being that- some products are Premium and making them available at allstores wouldnt augur well for the organisation.

Products in the Visi Care Category are made available at select outlets only.

Same is the case with Nutritionals as it has to be made available at Multi Brandretails, because that is where the Demand is generated.

As far as OTCs are concerned, it depends on the product as some very popularGeneric products like Benandryl are to be available across all pharmacies, whereassome are made available only at stores near the Physicians.

The type of city and the kind of demand generated by it are important parameters inthe distribution channel and this affects the Skin and Hair Care Products distributionchain.

Same is the case with Oral Care too, as it is available at Leading pharmacies only As far as the Baby Care products are concerned, it being the main product category

the basic products are made available at retailers, and the others depending onDemand and the Premiumness.

Skin & HairCare

BebeClean&ClearROCVendome

Neutrogena

Clean&Clear distributedexclusively

Neutrogena being premium ismade available only at premium

stores

Wound Care &Topicals

Band AidSavlon

No exclusive distribution, availableat most stores

Oral HealthCare

ListerineListerineWhitening

Available only at select stores

OTCMedicines

BenadrylMotrinTylenol

Benandryl- available at all pharmaciesMotrin, Tylenol- Only to someshops

Nutritionals BenecolLactaidSplenda

Available at Multi Brand Retailstores and leading Pharmacies

Vision Care AcuvueVisine

Very limited distribution.Limited to Tier 1 Pharmacies, EyeCare Hospitals and Opticals


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Channel Structure:

A distribution channel consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

In J&J channel structure is more or less like traditional channel considering the need toincrease reach of the product to different types of people.

These are factors on the basis J&J decides its channel design:

Product

Cost

Capital requirements

Control

CoverageThese are channel alternatives:

Exclusive Channel

Selective Channel

Intensive Channel

Considering product portfolio of J&J Intensive Channel is obvious option to go for.

Distribution Channel Structure J&J:


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Steps of downward distribution:

Issue Faced in Day to Day distribution

Sales Variation

Start and End of month witness more sales.

Seasonal variation in demand.

Infiltration

Entire country is divided into 20 equal parts in terms of market potential and equalresources are allocated avoid infiltration

Area Business Incharge/Manager has to raise voice against it.

Channel Conflict

Big retail are directly catered by company that creates conflict with dealers.

15 days advance payment policy force dealers to do business on their capital.

Other Issues


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Stiff competition for self space

Scattered market in rural area makes supply chain very long and difficult to control.

Process and criteria for selecting a distributor:

A distributor comes to play a major role in the whole of FMCG distribution channel,therefore, careful steps must be taken before appointing a distributor. Appointment ofdistributor is done basically, with a long term vision in a product range, segment, territoryetc. To be able to achieve market leadership in a specified territory, right selection of thedistributor is very much important. Selection and appointing a distributor is an objective andrigorous project. Figure below shows the general flow of distributor appointment process.

Distribution selection process

Each step specified in the figure above requires extensive detailing and filed work to supportit. Also, it requires an experienced person to evaluate alternative parties, taking the following

broad criteria into consideration:Criteria

Financial capacity


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A distributor is evaluated based on the investment he would be ready to do. The financialstrength he shows is further varied depending on the product range or market potential.Financial capabilities of the distributor becomes important because of the following reasons:

Bulk stocking of products is required which requires the distributor to shell largeamounts of money to the manufacturer.

The credit a distributor provides with credit days varying based on the requirement tothe retailer or institutions require stronger financials.

Distributor should also be able to invest in new products, mew initiatives of the company,technology and infrastructure without expecting immediate returns.

Prior Experience

Prior experience a distributor has would help in the following: Time taken to understand the functioning of various members in the channel would beminimal.

Time taken to build rapport with institutions/retailers is less.

Infrastructure

Infrastructure required like godown space, redistribution vehicle, manpower should be readilyavailable of required quantity and quality.

Market reputationThe relationship of distributor with retailers explains the market reputation of the particulardistributor, which talks about the efficiency of his work.

Market Knowledge

Distributor should be well knowledgeable about retailers attitudes, marketing conditions,

competitors products etc. which would help get a good hold on the market. Also, to knowthe distributors interest with respect to day -to-day information and happenings of the marketwill surely help.

Synergy

If a distributor distributes more than one product in relevant industry, that would be anadvantage to the company since it can push for more retail space for its product due to theexisting good relationship of the distributor with the retailers, which brings out synergy inretail penetration.


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Technology

Integrating technologies like computing, internet, SMS in various aspects of distribution willincrease efficiency in operations, communications etc.

Attitude

Positive attitude and basic set of managerial skills are required. Should be willing to takerisks and to work with new products.

Social profile

Education level and age becomes relevant in many cases, like for instance a young distributoris preferred when a long term stability in the territory is the major concern.Well educated distributor is preferred because of the easier adaptability towards technologyor environment he/she possesses.

The criteria specified above are some of the important factors one should consider for judging. Each criterion is evaluated and judged based on detail work that is done and therequirements specified.

Also, while selecting a distributor, it is to be noted that this person is appointed with a longterm vision in a territory, in a segment and/or in a product range. Therefore he/she needs toknow the specific market segment and target customer

Factors to consider:

o Create product value that others cannot or are not willing to provide

o Channel the product to its desired market

o Have a pricing and promotion strategy compatible with the products needs

o Offer customer service compatible with the products needs

o Be willing and able to work cooperatively with other members within the products channel

Selecting intermediates that are retail stores that want exclusive or selectivedistribution involves evaluating stores customers, followed by store location andgrowth potential.

Selecting intermediaries that are sales agents involves evaluating number orcharacters of another lines carried and size & quality of sales force.


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MAJOR CHALLENGES FACED BY THE SALES PEOPLE:

Seasonal variation in product demand

This is one of the tough challenges faced by the salespeople. This happens due to the natureof the products. During periods of scarce demand it is very tough for the sales people to makethe required sales

Fight for shelf space This is another challenge for sales people and retailers want to stock products from lesserknown brands whereby they get better margins. They have to negotiate hard with customersto gain more shelf space

Sales fluctuations during start of the month and month end

Lastly, sales people have to cope with this problem also. Their problem is compounded bythe unrealistic targets set by their area managers sometimes

OBJECTIONS RAISED BY THE CUSTOMERS:

Johnson and Johnsons customers have to make advance payments for any products bought.They are required to deposit a certain number of cheques to the Johnson & Johnson account

payee. This business policy of realizing early payments poses a serious challenge to itssalespeople. Retailers doesnt want to make advance payment; on the contrary, they like tomake the payment only after the products are sold to their customers.

Product related objections from customers is a very rare issue. Johnson & Johnson maintainsstringent quality standards for their products so that customers dont get any opportunity tocomplain. For other issues like taking product orders, fulfilling the orders or any other

problems faced by the customers, Johnson & Johnson maintains a team of dedicatedemployees to address those issues.

Some customers complain about the lack of transparency between the channel members asthey want the processes to be more transparent and want access to more information relatedto the business.


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MAJOR HURDLES FACED BY THE SALES PEOPLE IN ACHIEVING SALESTARGETS:

Seasonal variation in demand due to the nature of the product

This is a major problem bothering many sales people during the months when there is aslump in demand for the products. There are periods where selling become very difficult dueto lack of demand from consumers due to the scarcity of demand for that product among theconsumers.

Territory infiltration

It is one of the major issues hampering the performance of salespeople. They get demotivatedas they feel that their performance drops due to the problem of infiltration. This becomes amajor hurdle in target fulfilment. The management need to take concrete steps and assign therespective territories to salespeople in such a manner so as to minimize infiltration

Competition from distributors sales people

This parallel working of sales people of Johnson & Johnson and distributors salesrepresentatives poses a big problems for Johnson & Johnson sales people for realizing theirtargets. This competition hampers their performance and ultimately their morale in a hugeway.

Communicating value

A huge percentage of the Johnson and Johnsons sales people claim that communicating theirvalue and differentiating their solution were a challenge. Customers ask questions, What areyour definable and defendable differences? For similar kinds of products, the retailersalways have a tendency to push lesser known brands products whereby they can earn better

profits. This is a major problem for salespeople and they can do very little about it.

Buyer inertia

Another obstacle for sales people are buyers who do not want to change. Buyer inertia isnothing new. It is a common phenomenon that humans resist change at times. This is

especially the case when no one has given the person a compelling reason to change.


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Unrealistic sales targets given by the area business in charges

Lastly, this is also a major hurdle for sales people in achieving targets because often the salestargets given by the area in charges are unrealistic. These targets are given without taking intoaccount the current market scenario and demand for the companys products, rather they are

based on past sales data. Targets should be set more rationally by the area in charges ormanagers keeping in mind the market forces and trends as improbable targets will only resultin frustration among the sales people and the result a dip in their productivity.


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Bibliography:

http://www.jnj.com/ http://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdf

http://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdf
http://www.jnj.com/http://www.jnj.com/http://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733042/ddd2abd5-2cc6-41d2-8acb-ec2a967727e4/ar2013_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdfhttp://files.shareholder.com/downloads/JNJ/3012794104x0x733046/e7c3b260-bfa3-49a8-9374-733215819847/proxy2014_JNJ.pdfhttp://www.jnj.com/

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