Situation Analysis essay

Neutrogena is a brand name for American cosmetics, hair and skin care products. The company has its headquarters at Los Angeles in California. The distribution of Neutrogena products is in over 70 countries. Currently, the company is part of the U.S based conglomerate known as Johnson & Johnson. The company deals in hair and hair products of a wide range including product lines such as sun protection, anti-ageing among others.

Market needs

Neutrogena Corporation is one that stands for the everyday quality of life improvement for its customers. This is through the dissemination of information on the variety of products that the corporation offers. Therefore, the corporation has been placed better in coming up with meaningful innovation of its products through its efficient research and development department. Mass customization has gained a lot of ground in the corporation’s quest of satisfying its customers. This is due to the realization that one size fits all problems are not the best approach in addressing each and every customer’s needs. Eventually, the corporation being a world leader in the cosmetic industry has exhibited creativity by the introduction of its Neutrogena skin iD product line employing the concept of mass customization.

It is, therefore, of increasing importance that Neutrogena Corporation uses mass customization so as to meet the needs of each and every customer. The corporation has done this so well by engaging the services of dermatologists so as to make cosmetics of the right choice. The corporation has gone an extra mile in designing an online portal called Neutrogena skin iD acting as a virtual dermatologist. A kit of skin solution is recommended to users by the virtual dermatologist   after the users’ subjection to a querying session about their skins and themselves.

This approach is very significant in meeting the corporation's market needs as it recommends solutions with active ingredients of the right amount to customers.

Market

The sole goal of Neutrogena Corporation is the domination of the cosmetic industry globally, through the zeroing on the ability to delivering cosmetic solutions that are personalized to markets of different types. For the corporation to achieve its global branding, the targeted markets have been sub-divided based on various market segments. A market segment comprises of sub groupings of organizations and people who happen to share related characteristics that influence their similarities in their product needs. Therefore, every user of Neutrogena’s products may be considered to be unique in that each customer’s needs differ from the needs of another customer. Market segmentation is the process of market division into identifiable and relatively similar segments. This is paramount because it enables the corporation in the tailoring of marketing mixes that meet the needs of each and every other segment. Thus, this segmentation plays a crucial role in the corporations marketing strategy.

Neutrogena’s products are hence in an advantageous position of meeting the preferences and product needs of its customers. Neutrogena’s segmentation is based on; Geographic segmentation: the skin types of Neutrogena product users differ across various geographical regions. This factor is carefully considered by the introduction of the product line, “Neutrogena skin iD”. Thus, users are expected to indicate their geographic regions during the diagnosis of skins. Therefore, solutions recommendations from this product line are categorised on the basis of the users’ continent of origin. Demographic segmentation: this is due to the corporation’s products global target on the market for skin care products.

Neutrogena uses the following demographic basis in attracting consumers; breakdown of demographic variables such as income, level of education, age, sex, and religion, among others.

Market demographics

Neutrogena’s products for sun care have high SPFs features. The SPF formula is portrayed as good and gentle for skin types that are oily. The products targeted markets consist of Asian women, learned women and the female ageing population. The corporation has recorded increased demand in its age defying products such as the Neutrogena’s sun block age shield. This has resulted to a moderate growth projection in Neutrogena’s skin care products, especially from Asian buyers who prefer sunscreen solutions that are oil-free. The major competitive advantage of Neutrogena is its brand positioning as a company that deals in skin care products that are premium-priced. The skin health improving soaps and lotions sold by the company make customers have younger appearances. This has led to Neutrogena’s favourable review by a variety of websites. The company’s sunscreen solutions are more nourishing and gentler on the skins of their customers, as opposed to the solutions offered by their competitors. These competitors include Coppertone and banana boat that lack an enticing brand image. Neutrogena strong foundation in its brand has given it a competitive posture in the market for sun care products, caused by the products appeal in several market niches. . Moreover, Neutrogena products tend to skew towards consumers whose skins are more sensitive also those who are light skinned.

Market trends

Neutrogena has a better penetrative opportunity in the market due to its huge size. This puts the company in an advantageous position of increasing its sales revenue as well as the creation of new products. The market penetration opportunity is further enhanced by Neutrogena’s concept of mass customization. The company focuses on production of female products that provide them with the benefits of safe and healthy skins depending on their various skin types. On the other hand, Neutrogena prices its cosmetics in comparison with prices offered by the company’s competitors. The prices are usually lower than those of competitors so as to make its products affordable and at the same time ensure customer satisfaction. Besides offering low priced products, Neutrogena does a lot of advertising for its products so as to make consumers aware of the products existence. This production promotion is done via promotion packs, free gifts, personalized deliveries to consumers, among others. Neutrogena has also come up with a strategy of placing its products for sale at designated places where the targeted customers frequent. For instance, these places comprise of beauty salons and supermarkets.

Market growth

Neutrogena’s business growth results from its efficient and effective managerial team. For instance, the company’s regional managers are vested with the responsibility of devising growth driving strategies of the business base, as well as portfolio expansion through future pipelines development of new products. These managers also see to it that growth is accelerated in emerging markets in conjunction with growth opportunities exploration. On the other hand, brand managers ensure the company’s growth through market share increase, brand equity building and marketing plans development. More precisely, they developed the entry plan and strategy into the market for Neutrogena’s facial moisturizer product last year. The brand managers have also identified the company’s support model for the address of its various stages of operation. The brand staffs are also committed to the company’s growth through their long-term strategic plan development. This will address brand challenges that might arise as well as the management of product line portfolios.

Macro environment

These are classified as factors that inhibit the smooth progress of the Neutrogena’s activities in one way or another. In the first place, political factors in terms of political stability greatly affect the operations of the company. The main challenge is the conformation with leadership styles of different governments within the various countries it carries out business. Extreme restrictions and legislations are found in certain countries in terms of how certain chemicals should be used. This particularly concurs with the chemical which might be carcinogenic especially in the industry for cosmetics. Thus, Neutrogena Company is put under the obligation of producing only products that are safe with no harmful substances. Moreover, the company’s product promotion and advertising methods may be affected by different advertising legislations in different countries.

Secondly, economic factors to a great extend do affect the company’s operations. Therefore, Neutrogena Company is forced to adapt to a variety of economic problems and environments in the many countries of its operations. On a positive note, a recovery is predicted from the recent economic crunch meaning that consumers’ disposable income will increase thus, increasing their spending on the company’s products. Third, social cultural factors, especially the diversity of people across different regions have posed a great challenge to the company. This is through the question of whether the company is capable of delivering to all the targeted consumers. Neutrogena has counter balanced this problem by the institution of a decentralized system of operation in the various geographic markets it serves. Fourth, technological factors particularly the fact that people have become savvier in IT, has led to opportunity creation for Neutrogena to venture into selling its products online.

However, competitors have also improved on the technologies they use. This calls for Neutrogena’s R&D to their game if the company is to continue enjoying its competitive advantage.

The company was an independent one until its acquisition in 1994 by Johnson and Johnson. Neutrogena Corporation deals with the marketing and manufacturing of hair and skin care solutions that are premium-priced and which have distribution in over 70 countries. The company’s niche marketing, which is very, innovative, has made the corporation known worldwide. Emanuel stolaroff founded the company in the year 1930 with its headquarters at Los Angeles, in the state of California. Initially the company was referred to as Natone with its main function being speciality cosmetics supply to beauty parlours. In the 1940s, the company expanded after spreading its cosmetic distribution and manufacturing to the entire retail market. Stolaroff business trip to Europe bore inspirations that led to the charting of the company’s future course in 1954. Dr. Edmond Fremont a cosmetic chemist developed a soap whose rinsing was easy and quick leaving no residue. The unique soap was named Neutrogena. Stolaroff overexcited by the new soap imported it to the United Nations. The niche marketing strategies created during the company’s presidency by Lloyd Cotsen shaped Neutrogena’s success.

Mission

Neutrogena has partnered with the dermatologic surgery society of America on the campaign choose health of the skin. This is so as to empower and encourage members of the public in following behaviours that are sun-safe and healthy. Some of these behaviours include skin protection from the sun and screening for skin cancer annually, and taking individual skin examinations monthly. Therefore, people are advised to use sunscreens daily. This is due to the alarming increase in the number of people diagnosed with skin cancer.

Service offering

Customers enjoy a wide variety of differentiated skin care solutions offered to them by Neutrogena Corporation. The company claims to offer different products that fight aging signs. For instance, the SPF 20 anti-wrinkle, healthy skin Neutrogena product decreases wrinkle signs and anti-aging. The sun protection factor (SPF) is constituted in each and every product offered by Neutrogena. Retinal SA is contained in the anti-wrinkle solution and helps in skin renewal all through the day. Moreover, helioplex is included in the healthy defence moisturizer product which contains a sunscreen complex for protection against UVB rays, which are harmful, from entering the skin. The product also prevents the process of aging from UVA rays that are detrimental to the skin.

The age reverse anti-oxidant cream is another Neutrogena’s anti-aging solution. The cream protects against future aging as well as reducing free radicals by 99% as claimed by the cream. The above products and services offered by Neutrogena have earned it the trust of the majority of consumers in the industry for skin care. The company offers the best service to their customer base by ensuring that its anti-aging products are built with a sunscreen component. This is a crucial factor in the production of skin care regimens meant for anti-aging purposes. Neutrogena has also ensured efficiency in its service offering by seeing to it that the skin care products are readily available. Precisely, Neutrogena products are available in many departmental and drug stores and are easily bought over the counter or from online portals.

Neutrogena also urges its customers who want to experience the best results to complement the anti-aging solutions with other skin care products from Neutrogena.

Positioning

Neutrogena is an international leading skin care brand originating from the United Nations. The year 2009 witnessed the relaunch and rejuvenation of the company so as to compete favourably in the world skin care industry. This was through its entry into the Indian market together with the launch of its clean & care brand in the same market. The company’s brand equity is strong in many world markets. In addition, the company does a lot of promotion for its brands through models and celebrity actors. Nonetheless, the real driving force for the acceptance of the Neutrogena brands is its products efficacy and quality. Furthermore, the premium positioning of Neutrogena skincare brand is recommended and approved by dermatologists. Thus, Neutrogena follows its global positioning from the above. On the other hand, the high profile endorsements by celebrities support the brand’s rational positioning.

SWOT summary

This summary is referring to the identification of external and internal factors affecting Neutrogena Corporation. Thus, this identification makes the company’s strategic decision making more efficient and reliable. The internal analysis of these factors comprises the weaknesses and strengths of the company. Neutrogena Company is a market player which is very dominant. The corporation’s sales worldwide have registered a 14% growth which is an indicator of its stout position in the global market place. In the next place, Neutrogena has a strong brand and a big share in the market for its skin care products. The strong Neutrogena branding and huge share of the market has made it easy for the company to produce more quality consumer and healthcare products.

This has been made possible by its research & development efforts in providing products that satisfy different customer groups. Moreover, Neutrogena works with scientific notions that are very intense thus, utilising expansive techniques in problem solving. These applications enable the company take up challenges in growth capitalization and standard practicing throughout all the emerging markets. On the contrary, Neutrogena’s organizational decentralization structure is its major weakness. This makes other departments products to be cannibalized as well as making the control of the company difficult. The company’s structure is more decentralized due to the many sub units and departments put in place. This decentralized system makes it even more difficult in the minimization of product cannibalization from different departments also the organization's control.

On the other hand, external analysis consists of the threats and opportunities affecting Neutrogena Corporation. The opportunities arise when more importance is attached by consumers for the overall brands and quality of Neutrogena products. With time, consumers brand awareness has increased making them demand additional product value in exchange for their money. Therefore, it can be forecasted safely that Neutrogena’s future sales are bound to be better due to its global brand positioning. The other source of the company’s opportunities is its targeting of groups that exhibit the highest growth potentials.

This is through Neutrogena’s personalized cosmetic solutions introduction and thus, providing it with the opportunity to deliver to a bigger consumer range. The threats to Neutrogena’s products include strong competitors without and within the industry for cosmetics. This happens through the easy copying of concepts of bio-technology that are developed technologically. Due to this, Neutrogena’s ability to maintain a competitive advantage that is sustainable has been severely hampered. Moreover, the high competition level in pharmaceutical companies’ generic markets controlled by patents and thus, success is determined by the fastest company to enter the market. In addition, the global economy downturn has posed threats to Neutrogena’s products due to the expensive nature of the majority of Neutrogena’s products.

Competition

Neutrogena is a leader in today’s facial cleansers industry due to its introduction of its new self differentiating products in the market. The most recent has been the launch of its skinID product which delivers acne customised solution to the entire market. Thus, giving the skinID product unique features different others available in the consumer market. The acne product is specialized in customization and reverts back to the company’s niche marketing strategy that enabled it secure a place in the cleanser market. The company’s market leadership is evidenced by the great number of companies trying to emulate Neutrogena’s success and products. Niche marketing is clearly portrayed in the company’s website due to the sites division into various segments of target markets. The divisions constitute men, teens and women.

The method has beyond doubt proved its profitability as evidenced by the company’s annual report. Skin care solutions sales recorded an increased growth of 10.8%, which was approximately, 3.4 billion U.S. dollars in the year 2008. The other attributive strategy for the company’s success is effective marketing of its product lines. Apparently, this has been made possible by the use of celebrity endorsements in the establishment of its products and brand identity. The celebrities include Vanessa Hudgens, Hayden Panettiere, just to name but a few. The use of fresh and young faces in brand promotion leads to the equation of flawless skin, youth and beauty with the company’s products. This not only helps in the products selling as well as brand loyalty creation among its targeted consumers.

Situation Analysis essay

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