OBJECTIVES:

To know sales and distribution structure of the company

To know the sales force structure of the Company
To know the major challenges of the sales people
To know the compensation plans of the company

METHODOLOGY:
DATA COLLECTION
Primary Data:
We visited the distributors in the city Rohtak and interviewed them
Also interviewed some of the Sales Executives through telephone from the corporate
office, Mumbai
Secondary Data:
Analysed the Annual reports of the company
Collected the data of product portfolio/diversification of the business from the
company web site.


ABOUT JOHNSON & JOHNSON:

Johnson & Johnson is an American multinational medical devices, pharmaceutical and
consumer packaged goods manufacturer founded in 1886. Johnson & Johnson is
headquartered in New Brunswick, New Jersey. The corporation includes some 250 subsidiary
companies with operations in over 57 countries and products sold in over 175 countries.
Johnson & Johnson had worldwide sales of $65 billion for the calendar year of 2011.

Johnson & Johnson spread its roots into India in 1947 with the arrival of Mr. Patrick Whaley
and in 1948, started marketing Johnsons Baby Powder which was manufactured by a local
company, British Drug House, in Mumbai. In September 1957, a new company - Johnson &
Johnson Limited was created and registered with 12 employees on its roll. The company was
licensed to manufacture a broad range of consumer and hospital products. Production began
in 1959 from the earliest Johnson & Johnson plant in Mulund in Mumbai.

In over 65 years of operating in India, Johnson & Johnson Limited has gained a reputation for
delivering high-quality products. Today, it employ more than 2000 people in India.
All the products are organized around three groups
Pharmaceuticals
Consumer & Personal Care
Medical Devices & Diagnostics


And Sales results by these segments are:

Segments Percentage of Sales
Pharmaceutical 47
Medical devices and diagnostics 35
Consumer 17

Sales by region:
Regions Sales in percentage
USA 61
Europe 21
Asia Pacific 12
Latin America & Canada 6


Name of awards received:
Six Sigma
Industrial safety
Image award
Process excellence award
Best employers 2003 rank 4





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
































MD
VP Sales
RSM

RSM RSM

RSM

RSM

SLM
SLM

SLM

SLM

SLM

ASI ASI

ASI

ASI

ASI

TSI TSI
I
TSI TSI TSI
Pharmaceutical
Rep
Medical Device
Rep
Decentralization at JNJ:

Each company focuses on a specific areas of health care. Each company has its own
management board and is self-directed. The decentralized and global structure drives us to
value 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 end
Customer-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



















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

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




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

CATEGORY PRODUCT
NAME
DISTRIBUTION PROCESS
Baby Care Johnsons
Johnsons bedtime
Johnsonshead-to-
toe fragrance
free baby lotion
Extensive distribution at retails
stores.
Depending upon the city- Tier 2 3,
availability of some products and
the frequency of delivery is
reduced
RETAILER DEALER
RETAILER
CFA
DEALER DISTRIBUTOR
JOHNSON &
JOHNSON SALES
REPRESENTATIVE
PRIVATE
SALES FORCE



With reference to list of products available in Rohtak, the distribution chains have also been
mapped. On interaction with the Sales personnel, we found that the process remains the same
almost for all products.
The issue here being that- some products are Premium and making them available at all
stores 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 Brand
retails, because that is where the Demand is generated.
As far as OTCs are concerned, it depends on the product as some very popular
Generic products like Benandryl are to be available across all pharmacies, whereas
some are made available only at stores near the Physicians.
The type of city and the kind of demand generated by it are important parameters in
the distribution channel and this affects the Skin and Hair Care Products distribution
chain.
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 on
Demand and the Premiumness.
Skin & Hair
Care
Bebe
Clean&Clear
ROC
Vendome
Neutrogena
Clean&Clear distributed
exclusively
Neutrogena being premium is
made available only at premium
stores
Wound Care &
Topicals
Band Aid
Savlon
No exclusive distribution, available
at most stores
Oral Health
Care
Listerine
Listerine
Whitening
Available only at select stores
OTC
Medicines
Benadryl
Motrin
Tylenol
Benandryl- available at all
pharmacies
Motrin, Tylenol- Only to some
shops
Nutritionals Benecol
Lactaid
Splenda
Available at Multi Brand Retail
stores and leading Pharmacies
Vision Care Acuvue
Visine
Very limited distribution.
Limited to Tier 1 Pharmacies, Eye
Care Hospitals and Opticals
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 to
increase 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
Coverage
These 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:

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 equal
resources 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
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 of
distributor is done basically, with a long term vision in a product range, segment, territory
etc. To be able to achieve market leadership in a specified territory, right selection of the
distributor is very much important. Selection and appointing a distributor is an objective and
rigorous 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 support
it. Also, it requires an experienced person to evaluate alternative parties, taking the following
broad criteria into consideration:
Criteria
Financial capacity
A distributor is evaluated based on the investment he would be ready to do. The financial
strength 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 large
amounts of money to the manufacturer.
The credit a distributor provides with credit days varying based on the requirement to
the 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 be
minimal.
Time taken to build rapport with institutions/retailers is less.

Infrastructure

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

Market reputation
The relationship of distributor with retailers explains the market reputation of the particular
distributor, 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 know
the distributors interest with respect to day-to-day information and happenings of the market
will surely help.

Synergy

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

Technology

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

Attitude

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

Social profile

Education level and age becomes relevant in many cases, like for instance a young distributor
is preferred when a long term stability in the territory is the major concern.
Well educated distributor is preferred because of the easier adaptability towards technology
or 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 the
requirements specified.

Also, while selecting a distributor, it is to be noted that this person is appointed with a long
term vision in a territory, in a segment and/or in a product range. Therefore he/she needs to
know 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 selective
distribution involves evaluating stores customers, followed by store location and
growth potential.
Selecting intermediaries that are sales agents involves evaluating number or
characters of another lines carried and size & quality of sales force.




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 nature
of the products. During periods of scarce demand it is very tough for the sales people to make
the required sales
Fight for shelf space
This is another challenge for sales people and retailers want to stock products from lesser
known brands whereby they get better margins. They have to negotiate hard with customers
to 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 by
the 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 its
salespeople. Retailers doesnt want to make advance payment; on the contrary, they like to
make the payment only after the products are sold to their customers.
Product related objections from customers is a very rare issue. Johnson & Johnson maintains
stringent quality standards for their products so that customers dont get any opportunity to
complain. For other issues like taking product orders, fulfilling the orders or any other
problems faced by the customers, Johnson & Johnson maintains a team of dedicated
employees to address those issues.
Some customers complain about the lack of transparency between the channel members as
they want the processes to be more transparent and want access to more information related
to the business.





MAJOR HURDLES FACED BY THE SALES PEOPLE IN ACHIEVING SALES
TARGETS:

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 a
slump in demand for the products. There are periods where selling become very difficult due
to lack of demand from consumers due to the scarcity of demand for that product among the
consumers.

Territory infiltration
It is one of the major issues hampering the performance of salespeople. They get demotivated
as they feel that their performance drops due to the problem of infiltration. This becomes a
major hurdle in target fulfilment. The management need to take concrete steps and assign the
respective 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 sales
representatives poses a big problems for Johnson & Johnson sales people for realizing their
targets. This competition hampers their performance and ultimately their morale in a huge
way.

Communicating value
A huge percentage of the Johnson and Johnsons sales people claim that communicating their
value and differentiating their solution were a challenge. Customers ask questions, What are
your definable and defendable differences? For similar kinds of products, the retailers
always 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 is
nothing 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.



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 sales
targets given by the area in charges are unrealistic. These targets are given without taking into
account 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 or
managers keeping in mind the market forces and trends as improbable targets will only result
in frustration among the sales people and the result a dip in their productivity.

























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