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The Pharmaceutical Industry

Discuss About The Presents Opportunities For Global Growth?

Multinational companies operate in multiple target markets and opt for diverse modes of entering those markets. They target specific customer segments to whom they sell their products and earn revenue. They segment their target customers on the basis of  demographics, life style patterns and income. They choose diverse modes of entering foreign markets like exports, acquisitions and mergers, franchisee models and wholly owned subsidiaries. These market entry strategies have led to the success of the multinational all over the world and generate robust profits for them.

The pharmaceutical industry is an international spread industry which offers medicines, medical instruments and various instruments used to treat and cure diseases all over the world. The products of this found demand all over the world because and generate huge revenue for the pharmaceutical companies. Most of the pharmaceutical companies in the world are public limited companies which generate huge capital from the securities market which account for their financial strength. The companies like Pfizer and Johnson & Johnson are among the world’s top pharmaceutical companies operating in hundreds of countries and serving millions of customers.

Johnsons & Johnson and Pfizer are the leading pharmaceutical companies in the world and serving millions of customers. These two companies manufacture consumer products and pharmaceutical drugs. J&J in addition manufactures surgical instruments, which are used by medical practitioners all over the world to perform crucial surgeries. These two companies are headquartered in the United States and are the toughest international competitors in the pharmaceutical industry.

Johnson & Johnson(J&J) uses the target market segmentation theory to segment its market into segments consisting of people of all ages, lifestyle, country and income bracket. The target market of the company consist of laboratories, medical professionals, small pharmaceutical firms from all round the world and individual customers who consume its products. The product line of the company consists of consumer products, pharmaceutical products and medical devices(Hinterhuber and Liozu 2014).

The consumer products are further subdivided into baby and beauty products and health and healing products. The baby and beauty products segment consists of products like Johnson’s baby care range of products, Clean & Clear face care products,  Aveeno and Neutrogena. The health and  healing products consists of products like band-aid tapes, Mortin liquid gels and Benadryl allergy treatments. The pharmaceutical products consists of wide range of prescribed drugs used to heal a wide range of diseases like cardiovascular diseases and metabolic diseases. The target markets for these two categories of products consist of both business customers like hospitals, pathological centres and individual customers. The J&J baby products target the babies while the products like Clean & Clear target adult customers. It can also be pointed out that the J&J baby products are of high quality and are expensive. As a result the target market of these products are mainly middle and upper class customers who have sufficient disposable income to buy expensive skin care products. The pharmaceutical products target customers of all ages and income groups because they consist of medicines which are among the basic necessities of life(jnj.com. 2017)

The target customers for the third category of products manufactured by J&J, the medical devices are the nursing home, hospitals and medical practitioners. These customers are business customers who purchase expensive medical devices manufactured by the pharmaceutical giant to conduct complicated and urgent medical operations. An analysis of the above customer segments show that apart from the business and individual customers, the target customer segments of the company also consist of medical stockists and wholesalers who buy the Johnson & Johnson products to sell them in the retail markets all round the world to the end customers(Farfan-Portet et al. 2014).

Johnson & Johnson(J&J) follows two global expansion theories to enter foreign markets namely, wholly owned subsidiary and mergers and acquisition methods. The multinational pharmaceutical company enters foreign countries using wholly owned subsidiaries, which are public companies, listed on the stock exchanges. An analysis of wholly owned approach shows that compared to approaches like franchisee and export market entry strategies, the company is able to raise fund from the host countries by following this approach. J&J has wholly owned subsidiaries in both the developed markets of Europe and America and developing markets of Asia(Chang, Chung and Moon 2013). The subsidiaries are able to raise capital from the host countries and finance development of products suited to the local conditions which help the company to cater to the more specific needs of the local customer segment. This helps the company to gain deeper market penetration and earn higher profits(López-Duarte and Vidal-Suárez 2013).

The second foreign market entry strategy or theory followed by J&J is acquisitions and mergers. The company acquires smaller pharmaceutical companies and laboratories all across the world. The company operates one hundred and thirty four manufacturing facilities and eight innovation laboratories  all across the world. Its principal research facilities are present in the US, Belgium, Brazil, Canada, China, Germany, the UK and India. These facilities help the company to carry out exhaustive research and development to bring out more developed and advanced products capable of fighting diseases more effectively(Lebedev et al. 2015).  It can be pointed out that the research laboratories facilitate open innovations, which are crucial for the company’s competitive advantage in the international market.

The target markets of Pfizer consist of both business and individual consumers. The product line of the company consists of consumer products and pharmaceutical products. The consumer products of the company consist of products like Chap Stick lip balms and multivitamin tablets. The pharmaceutical goods include a wide range of drugs which are used to fight critical diseases. A comparison between Johnson & Johnson and Pfizer shows that the former more successful in launching three types of products. Pfizer does not manufacture surgical instruments. An evaluation of the target market shows that the products of the company target business and individual customers like J&J. The company caters to individual customers through both its product categories. Business customers like hospitals and clinics who use them to treat patients purchase the pharmaceutical products of the company. There target business customers of Pfizer consist of a large number of medicine stockists and wholesalers who buy products from the company and sell them to the retailers(Pfizer.com. 2017). The company does not manufacture surgical instruments and hence, does not cater to the hospitals and laboratories in this segment unlike J&J.

It can be pointed out that J&J manufactures three categories of products namly consumer products, pharmaceutical products and surgical instruments compared to Pfizer which manufactures only the first two categories of products. This is responsible for the success of J&J in catering to a greater consumer base and giving Pfizer a stiff competition internationally. It can recommended that Pfizer as an alternative to its two product categories strategy should follow product line expansion strategy. This will help the company to gain more competitive advantage in the international market by catering to a larger target customer base(Hanks 2015).

The market entry strategy or theory of Pfizer consists of green chemistry innovation and innovative commercial models which would allow the company to strengthen its global market hold. An analysis of the market entry strategies of the company shows that its apex management was did not consider acquisitions and merges as profitable market entry strategies. However, Pfizer acquired Warner-Lambert, the American pharmaceutical company to strengthen its market position(Forbes.com. 2017). The company has prepared its own global innovative commercial models to enter and strengthen markets. The innovative model divides the total market of Pfizer into three categories, the branded emerging markets of Asia and Brazil, branded traditional markets of Japan, Western Europe and South Korea and patent protected markets of the USA and Canada. It can evaluated that this market entry strategy of Pfizer has enable it to carry out large scale open innovations in its host countries to manufacture drugs which are more suited to the local needs(Press.pfizer.com. 2017). This approach like J&J has allowed Pfizer to gain greater competitive advantage internationally by offering market specific drugs and earning higher revenue.

Multinational companies use global branding strategies to sell and market their products internationally. They manufacture and offer products which are also big brands consumed by people all over the world. This global branding strategy helps the multinational companies sell the products in the global markets, earn huge revenue and gain competitive advantage in the world market.

The food industry is an internationally spread industry which manufactures and markets food products of all types like dairy, desserts and cereals. The industry is worth billions of dollars and contain some of the biggest companies in the world like Nestle.

Nestle and Mondelez International are among the largest food companies in the world. Nestle apply global branding theory to sell its branded products like Kit Kat and Maggi noodles. Mondelez International is an American multinational company and owns brands like Cadbury and Oreo. These two companies owing to the products of same category(Kit Kat for Nestle and Dairy Milk for Mondelez International) are the toughest rivals who use their brand power to sell their products and earn huge revenue.

Modes of Entry into Foreign Markets

Nestle is the largest manufacturer and marketer of food products in the world and the owner of globally branded products like Nescafe, Maggi and Kit Kat. The company follows a global branding strategy to gain maximum penetration in the international market. The company and its products are worth billions of Swiss Francs and have a high position in the market. The company owns and protects patents worth billions. Nestle follows global branding strategically to maintain these brands and use them to sell products to earn high revenue(Nestle.com. 2017).

Nestle uses global branding theory by branding its products very high in the international market and gain deeper market penetration. The global branding strategy of Nestle stands on six pillars and embraces digital marketing of the brands as well. The company first profiles the target customer segments  and then creates the essence of the brands to show how the brands would create value for these customers. The value created by the high quality branded products of Nestle form the third pillar of the global branding strategy. The fourth pillar consists of bringing about innovation in these branded products to augment the value they cause to the consumers. The fifth pillar is all about creating global distribution channels to make Nestle products available to the consumers and the sixth pillar consists of execution of the total branding strategy(Media Marketing. 2017). An analysis of this global branding strategy shows that the company’s branding strategy starts from market segmentation, proceeds through recognising their needs, designing products for them, carrying out continuous innovation in the products to add value to the customers usage and then finally establishing distribution channel to make these products available to the customers. It can be evaluated that this detailed global branding strategy followed by Nestle has helped the company establish its products as top brands in the market internationally(De Mooij 2013).

Mondelez International Inc is an American multinational company, which offers branded food products like chocolate bars, chocolate drinks and biscuits. The company uses branding theory to make its global brand strategy. The company owns brands like Cadbury, Bournvita, Cote D’Or, Clight, Oreo and Wheat Thins. The company follows a aggressive global branding strategy to maintain its high position in the international market(mondelezinternational.com. 2017).

The branding strategy of Mondelez International stands on three pillars which also form part of its growth strategy. The first pillar consists of recognising the appropriate customer segments to whom the company would sell its products. The second pillar consists of marking the principal markets where the company can sell its premium products. The third pillar consists of establishment of an international distribution channel, which the company can to make its products available to the consumers. The distribution channel of the company would also include ecommerce portals on which the customers can order Mondelez International products online(Cavusgil, Knight and Riesenberger 2013).

A comparison of the global branding strategies of Nestle and Mondelez International shows that the strategy of the former is more powerful than the latter. The global branding strategy of Nestle starts with recognition of appropriate customer segments, followed by recognition of their needs, designing products for them and bringing about innovation in response to their needs. The branding strategy also includes establishment of the a network of distributors who would distribute the products(Czinkota, Kaufmann and Basile 2014). However, the branding strategy of Mondelez does not speak explicitly about product innovations, which are so important to bring about improvement in the products and maintain their brand strength in the market. The power of the global branding of Nestle is evident from its higher global position. An analysis of Mondelez’s branding strategy shows that the company strategy is more concerned about the American market and does not include the other important markets like Asia. The global branding strategy of Nestle is more global in nature and embraces all the important markets in the world like North America, South America, Asia and Europe(Boyland and Halford 2013). It can be pointed out that an exhaustive product line consisting of high quality branded products have led to the success of Nestle in the market. It is this global branding supported by high quality products which has helped Nestle to be a most successful company in the food industry.

The above discussion clearly points out that the global branding of Nestle is more powerful than Mondelez International. It can be recommended to Mondelez International that the company should expand its global branding to embrace innovations and product development in explicit ways. Secondly, as an alternative to its branding strategy centred on the US, the company must expand its branding strategy to incorporate all the major markets like Asia and Europe(De Mooij 2013).

Conclusion:

It can be concluded from comparison between Pfizer and J&J on the basis of target markets and modes of entry that Pfizer should enter the surgical instrument market. The company as a result would be able to serve more business customers like hospitals and earn huge profits by selling them expensive instruments. It can be recommended to the pharmaceutical companies that they should enter more markets and earn revenue by selling their products. They can diversify their extremely high cost of production over this increased revenue base to lkower the prices of their products. This would enable more consumers in the world to use their products. As far as Mondelez International is concerned, the company should expand and strengthen its global branding strategies. The company should expand its branding plans to incorporate its host countries like the UK and European countries as well. It can be recommended to the food industry that the it should offer higher quality products at affordable prices to consumers.

References:

Boyland, E.J. and Halford, J.C., 2013. Television advertising and branding. Effects on eating behaviour and food preferences in children. Appetite, 62, pp.236-241.

Cavusgil, S.T., Knight, G.A. and Riesenberger, J.R., 2013. A framework for international business. Pearson.

Chang, S.J., Chung, J. and Moon, J.J., 2013. When do wholly owned subsidiaries perform better than joint ventures?. Strategic Management Journal, 34(3), pp.317-337.

Czinkota, M., Kaufmann, H.R. and Basile, G., 2014. The relationship between legitimacy, reputation, sustainability and branding for companies and their supply chains. Industrial Marketing Management, 43(1), pp.91-101.

De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.

Devices, M. 2017. Medical Devices Products | Johnson & Johnson. [online] Available at: https://www.jnj.com/healthcare-products/medical-devices [Accessed 18 Sep. 2017].

Farfan-Portet, M.I., Gerkens, S., Lepage-Nefkens, I., Vinck, I. and Hulstaert, F., 2014. Are biosimilars the next tool to guarantee cost-containment for pharmaceutical expenditures

Forbes.com. 2017. Forbes Welcome. [online] Available at: https://www.forbes.com/sites/johnlamattina/2014/05/06/major-acquisitions-now-a-necessary-part-of-pfizers-future-strategy/#1d25ccad54a1 [Accessed 18 Sep. 2017].

Hanks, S.H., 2015. The organization life cycle: Integrating content and process. Journal of Small Business Strategy, 1(1), pp.1-12.

Hinterhuber, A. and Liozu, S.M., 2014. Is innovation in pricing your next source of competitive advantage?. Business Horizons, 57(3), pp.413-423.

Lebedev, S., Peng, M.W., Xie, E. and Stevens, C.E., 2015. Mergers and acquisitions in and out of emerging economies. Journal of World Business, 50(4), pp.651-662.

López-Duarte, C. and Vidal-Suárez, M.M., 2013. Cultural distance and the choice between wholly owned subsidiaries and joint ventures. Journal of Business Research, 66(11), pp.2252-2261.

Media Marketing. (2017). Nestlé: Strategic building of brands, creativity and discipline are the key to success - Media Marketing. [online] Available at: https://www.media-marketing.com/en/interview/nestle-strategic-building-of-brands-creativity-and-discipline-are-the-key-to-success/ [Accessed 18 Sep. 2017].

mondelezinternational.com. 2017. Brand Family. [online] Available at: https://www.mondelezinternational.com/brand-family [Accessed 18 Sep. 2017].

Nestle.com. 2017. Cite a Website - Cite This For Me. [online] Available at: https://www.nestle.com/ [Accessed 18 Sep. 2017].

Pfizer.com. 2017. Our products | Pfizer: One of the world's premier biopharmaceutical companies. [online] Available at: https://www.pfizer.com/products [Accessed 18 Sep. 2017].

Press.pfizer.com. 2017. Pfizer Presents New Opportunities for Global Growth | Pfizer Pharmaceutical News and Media | Pfizer: the world's largest research-based pharmaceutical company. [online] Available at: https://press.pfizer.com/press-release/pfizer-presents-new-opportunities-global-growth [Accessed 18 Sep. 2017].

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