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Benecol Spread and Media Planning Case Solution
| Solution Id | Length | Case Author | Case Publisher |
|---|---|---|---|
| 534 | 734 Words (5 Pages) | Richard Johnson, Robert I Carraway, Ervin R. Shames, Paul W. Farris | Darden School of Business : UV2930 |
A Word File
Identify the issues facing the organization.
‘Johnsons and Johnson’ has recently introduced a cholesterol lowering product. In spite of the fact that the sale of cholesterol reducing drugs is on the rise, J&J is operating on a net loss position with respect to the product. The following table shows the relevant numbers:
Table 1: “Benecol Spread” Statistics
|
“Benecol Spread” Statistics |
|
|
Market share |
2.20% |
|
Revenues (In $M) |
27.6 |
|
Advertising Budget (In $M) |
49 |
|
Cost of Production |
N/A |
|
Net Loss |
(21.4) |
|
Amount of revenues needed to breakeven Adv. Budget (In $M) |
49 |
|
Target Breakeven Market Share |
3.91% |
Without taking into consideration the cost of sales and administrative expenses etc., J&J has to gain at least 3.91% dollar market share to cover the initial advertising expenses. At the same time, the company has no clue as to what should be the most effective medium for advertising. The company also faces an urgent dilemma to divide a limited $2 million budget into different advertising media. On the other hand, J&J is also unsure about how to orient the margarine spread (either as a drug or a daily product). J&J also needs to analyze different age groups, as in most of the cases; the cholesterol level is related to the age. In short, the whole advertising campaign and strategy of J&J has to be reformulated.
Following questions are answered in this case study solution:
-
Identify the issues facing the organization.
-
Provide recommendations on how the organization should address those issues.
Benecol Spread and Media Planning Case Analysis
2. Provide recommendations on how the organization should address those issues.
The first and foremost urgency is to devise the market orientation of the brand. The most crucial fact for Benecol spread is that it bears a ‘corrective nature’ as it diminishes already accumulated cholesterol level. Therefore, the 35+ age group should be the prime target of advertising media. Additionally, in order to find out the most effective means of communication for advertising, the ‘time spending’ habits of this age group are crucial. It makes an intuitive sense to assume that the prime targets for ‘cholesterol hit’ people are either the doctors or the health and fitness club. Additionally, it is also safe to assume that this age group has relatively more spare time and; therefore, they may spend a large portion of this time utilizing either electronic or print media. By taking the two of the above mentioned factors into consideration, this is recommended that first of all J&J should target the hospitals and health clubs or gyms. The following table depicts the increase in average health care membership by dividing the population in age groups:
Table 2: Changing Demographics of Health Club Membership 1987-1999 (millions of members).
|
Changing Demographics of Health Club Membership 1987-1999 (millions of members). |
|||
|
|
1987 |
2000 |
+%Change |
|
Under 18 |
1.4 |
3.2 |
129% |
|
18-34 |
9.1 |
10.2 |
12% |
|
35-54 |
5.3 |
11.9 |
125% |
|
Over 55 |
1.5 |
7.4 |
393% |
Source: (Kratzman and Stamford, 2000)
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