J & J Philippines -Case

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J & J (PHILIPPINES), INC. —
JOHNSON'S FACE POWDER (A)1

Professor John Kennedy prepared this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality.

Ivey Management Services prohibits any form of reproduction, storage or transmittal without its written permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Management Services, c/o Richard Ivey School of Business, The University of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca. Copyright © 1994, Ivey Management Services

Version: (A) 2010-02-19

“We have decided that we must have product introductions if we are going to grow this company.” The speaker was P.M. “Boy”2 de Claro, Vice President for Marketing of Johnson & Johnson (Philippines), Inc. It was Tuesday, September 21, 1990, and on the following Monday the firm would begin shipping to the trade a brand new product for the worldwide Johnson & Johnson organization. The product, called Johnson’s face powder, was packaged in a plastic compact in order that it could be used outside the home. “We’re not looking for rocket science new products,” said Boy de Claro, “what we want are products that may provide relatively modest sales and profits initially, but for which we have very high confidence regarding their acceptance in the marketplace. Those successes are needed, not only for our bottom line, but to instill the confidence in our employees that this firm is doing its part to make this country grow.”

THE PHILIPPINES MARKET

The Philippines had a 1990 population of 61 million people living on about 2,000 of the country’s 7,100 islands. Estimated population growth was 2.3% per year. Although 42% of the population was defined as living in urban areas, only about half that proportion lived in the dozen cities with a population greater than 250,000. Within this group, Metro Manila, with an estimated 1990 population of 7.9 million, was by far the dominant urban area. As Table 1 shows, the age distribution of the country was skewed towards youth, with just under 50% of the population under 20 years of age.

1

This case was developed in collaboration with Professor Francisco L. Roman and Marjorie Poblador of the Asian Institute of Management (AIM). AIM has rights to reproduce and use this case for AIM educational purposes.

2
Many Filipinos, both male and female, have nicknames. It is quite common for people to use their nickname on their business card as a replacement for their given name.

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Table 1
AGE DISTRIBUTION OF PHILIPPINE POPULATION, 1989
Age

under 5
5-9
10 - 14
15 - 19
20 - 24
25 - 29
30 - 39
40 - 49
50 - 59
60 and over

% Of Population

Cumulative %

14.0
12.9
12.2
10.7
9.6
8.4
13.2
8.3
5.5
5.2

14.0
26.9
39.1
49.8
59.4
67.8
81.0
89.3
94.8
100.0

Source: National Statistics Office

Table 2 shows that with a 1989 GDP per head of US$708, the Philippines was behind all but one of their major ASEAN partners. Further, the table shows that the Philippines GDP growth in 1989 had lagged behind that of their partners, and that forecast 1990 growth was much behind the others as well. This poor performance was attributed by many people to political instability and unrest, together with a severe power shortage, resulting in brownouts that created substantial reductions in industrial output. JOHNSON & JOHNSON, INC.

Johnson & Johnson was founded in the United States in the mid-1880s, initially producing antiseptic bandages for wound care. The company grew to be the leading manufacturer of...
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