Thanks to new technologies and rapidly increasing Web access, the selling of Johnson and Johnson products have went up dramatically. Last year, very few European retailers were taking orders on the Web, but this year has seen phenomenal growth. One reason is simply that more potential consumers are connected to the Web. On-line access almost doubled in Europe this year. Within five years the Euro e-penetration rate will be more than 50 percent. Almost a fifth (18 percent) of companies and medical institutions that are working with Johnson and Johnson have launched a product that is only available on the Internet. In addition, nearly three quarters of respondents have, in the last three years, launched a new product or an existing one, using e-commerce technologies. The research of Johnson and Johnson e-commerce strategies revealed that the gap between the electronically sophisticated companies and "the rest", identified in last year's report, is now narrowing. In the last 12 months, European business has grasped the monumental scale of e-business and e-commerce opportunities. All business leaders now know that they must respond quickly or they will die. In order to keep in tone with rest of the world Johnson and Johnson have operating many of well organized Internet sites. There are some of them: Advanced Sterilization Products, ALZA Corporation, BabyCenter, L.L.C., Biosense Webster, Inc., Centocor, Inc., Cilag AG (Switzerland), Codman and Shurtleff, Inc., Cordis Corporation, ETHICON, INC., Independence Technology, L.L.C., Janssen-Ortho Inc. (Canada) Janssen-Cilag (International) est. (http://www.jnj.com/our_company/company).
Barriers to entry are increasing as the first movers mature. The action is moving from pure e-commerce to the re-engineering of the whole enterprise to e-business. Last year's report makes a distinction between "sales attributable to the Internet", where Johnson and Johnson use the Internet for marketing purposes but use conventional channels to complete the purchase, and "Internet transactions" where all aspects of the sale, including payment, are concluded over the Internet. Major findings of the year's report include:Sixty-three per cent of company now say that they have sales attributable to the Internet, up from 45 percent last year, representing a 40 per cent increase. Currently, 23% of respondents make Internet transactions. By 2002, 83 % of respondents expected they would be making Internet transactions. On a sector level, manufacturing and retail wholesale distribution are the most advanced. Overall, 12 percent of respondents now claim to be fully automated with on-line customer purchases linked to back-up office systems such as stock control (Ernest, "Digital dealing" p.27). However 51 percent of company's potential are only at the stage where they have established two-way communication, but are still unable to carry out transactions on-line. The ability to reach new markets or customers is seen as the most important benefit of e-commerce by 36 percent of respondents (Ernest, "Digital dealing" p.29). However, speed and cost savings of e-commerce are now regarded as less important factors than a year ago. This may be because business has discovered that implementing e-commerce strategies is more expensive than they had originally calculated. The traditional barriers to electronic trading still remain but, as expected, are shrinking. Security continues to be the greatest cause for concern, cited by 78 percent of respondents. Most significantly, in 1998, 67 percent of respondents saw lack of understanding of the benefits of being on-line as a barrier, whereas this year, only 37 percent saw this as a barrier (Ernst and Young: Realizing eCommerce Transformation; Powerful E-Commerce Insights p.227). Marketing budgets for e-commerce are increasing but are still disappointingly low as a percentage of all marketing spending. Research demonstrates that Johnson and Johnson is now fully aware of the transformation that e-commerce will bring to their dealings with both customers and suppliers. The company surveyed in taking steps to embrace e-commerce technologies and they can be certain that all their competitors are doing the same. In reality the Internet is a territory which should be viewed from two perspectives: technology and business, as both an end point and a starting point for business managers. This is the beginning of the early stages of an entirely new style of business and competition. Although the Internet, and its business applications, is still in its infancy, business managers should strive to integrate the Internet into their organization's infrastructure. The fast paced and unrelenting revolution in information and communication technologies has made this new competitive resource known. Information is the new raw material and that material is applied to products, services, companies and entire businesses. The Internet provides a number of opportunities which may be exploited by Johnson and Johnson, in a systematic way, on what the Internet can allow Johnson and Johnson to do. In broad terms there are three distinct opportunities available: Establishing a direct link to customers to complete transactions or trade information more easily, allowing companies to bypass others in the value chain and in the supply chain. Creating Internet technology to deliver new products and services for and to new customers. Enabling Johnson and Johnson to become a dominant player in the health product industry and Internet can help to control access to customers and setting new business rules. By exploiting these opportunities, an organization may capture the critical mass within an industry, through Internet technology, and in this way be able to deliver three forms of services to customers, namely: To provide the same level of direct selling service as a salesman through live and on-line interfacing with customers, with details of products and previous purchases, both in transit and delivered; To establish customer retention and customer loyalty programs which are personalized/customized interactions to build customer loyalty; and. To provide a new product service and to launch a platform this can be used to introduce valuable new services inexpensively.
The business opportunities offered by Internet in a three-tier pyramid structure are:
1. Information infrastructure: Internet is provided within the Johnson and Johnson as an extra service, simply to provide another source of information.
2. Business report: Internet is used to support marketing, supplier and customer communications and transactions that increase the commitment of the organization.
3. Revenue generation: the access to and the use of Internet become a key part of the business's strategy and represents revenue-generating activities ("Technology Finds Place in Business."{p.75).
However, since Internet is a vehicle whereby product knowledge is available in a very short time, customers have "perfect" information on pricing policies of competing products. The effect of this manifests itself in a downward pressure on margins. However, while Internet effectively opens and widens markets, business managers also need to build switching costs so as to keep customers and at the same time minimize the costs to the company associated with retaining such customers. The Johnson and Johnson need to used the technology to create a combination of three types of relationships: Transaction: electronic ordering of goods and services, together with electronic payments. Information: information ranging from static displays of text to the full range of dynamic multimedia. Interaction: electronic links between company and customer. Benefits of the web to business Customers are changing and success in the future depends on who can provide the greatest value to the customers, when and where they want it. The web enables businesses to attract a wider audience on a permanent basis, reduce costs and satisfy the needs of existing and new customers. In some instances there will be a lot of benefits. It will be easy to quantify the return on investments with the web because Johnson and Johnson can see when their site is being hit, you can invite users to open up a dialogue with you, and you can change your pages to suit their needs. It is a place where you can provide all the information about your company, product offerings, featured articles, sale items, changes in strategy etc. And it only needs to be done once and then maintained. 92 million people world-wide are now on line and by the year 2000 almost 25 million households in Europe will be on line (Ernst and Young: Realizing eCommerce Transformation; Powerful E-Commerce Insights p.57). Through the web Johnson and Johnson can reach this audience. The consumer has only to switch on the television and he is offered a choice of things to buy. Home shopping is now bursting into the internet as more and more goodies go on line. There are 50 million people in the UK. How many televisions? How much buying power? It is important to use the net to relay the story of Johnson and Johnson and its vision, to tell web users what you sell and what makes you the best in your field. Johnson and Johnson has the opportunity to develop a strong on-line market position and perception of your business - across geographic boundaries, to many audiences.
The future of the business will depend on "Who gives the biggest value to consumers". If Johnson and Johnson would offer customers value they will get the repeat business and loyalty they need. This means convenience. Consumers want new ways of managing their lives. They are busy people. Many customers now want to do their business on line. Have you ever wanted to go into a shop, but have been deterred because you only wanted to browse, to compare prices or even to kill time - but you knew the shop assistant was waiting, ready to pounce on you with the hard sell. The internet enables customers to browse without being submitted to pressure. Increase speed and breadth of communication Customers can e-mail over the internet and in many cases create a strong dialogue with the producer of the goods or service. There is the opportunity to learn from these customers, and develop both the site and what is sold in the business. Opening up this dialogue is quick and easy. There are 92 million potential new customers out there. Johnson and Johnson have the ability to reach them, opening up more lead generating activities. Many people, world-wide, use the web to look for employment and to develop interests. The internet wipes out geographic barriers. Similarly, it would be possible for property agents in different countries to arrange accommodation for people visiting or re-locating to their respective local areas. The web is a tool which, more than anything else, allows Johnson and Johnson to proceed by both constant testing and checking. It is an ideal field for flexible strategies, for exploring and searching while acting. The absence of rigidity and limitations can be used as to advantage rather than being a problem. Dialogue, interaction and service are the keys to building an island within the web. Experience already shows that this is a winning card. If we analyze the market for any single product, we would see a gradual start, a sharp boom and at the end a slowdown when the market has reached maturity. The web is the sum of a multitude of different phenomenon and behavior. So Johnson and Johnson can expect a positive trend which will increase with both accelerations and decelerations. Access to the web allows Johnson and Johnson:to enrich company communication through the market for marketing ends, to ensure more efficient delivery, to become more efficient- by cutting costs, to use the web as a dealing channel. In particular using e-commerce could give both many opportunities to Johnson and Johnson and many benefits to consumers as shown below: opportunities for Johnson and Johnson, opportunities for consumers, globalization, more choice, more competitive, better quality of service and goods, mass production, customized goods and service, decreasing of price, new business opportunities, new goods and services. There are three kinds of e-commerce: 1. Business to business which means only trade among companies. 2. Business to consumers which means a supply of final goods and services to customers. 3. Inter business which takes place when there is an exchange either within the company or between two offices. However, the biggest percentage of trading on line stems from the first one: business to business. When choosing between two goods or services, the consumer is really choosing between the values of the two goods. Economists call this opportunity cost. For instance, customers have to evaluate the inconvenience (cost) of going to one shop rather than to another. It must be made clear that the consumer is weighing up the relative values of two possible purchases. In this way, the consumer sets a scale of preferences in which goods are ranked by order("Technology Finds Place in Business."p.89).
It is well known fact that people like to "shop around", and they want to shop when and where they want. The pressure on their spare time has increased, with many people working much longer hours than in the past, and therefore they value time much more. The funny thing is that this has caused customers to look for other channels to make their purchases. Rather than jumping in the car and popping along to the local high street, many of them now spend an hour or two a week (when all the shops are closed) surfing the web, looking for things to buy. They want to conduct their buying process on line and they want to evaluate their alternatives without pressure of time and place, or even people. To offer advantages which each and every consumer can recognize as such and to be considered as a partner capable of supplying - always and in every way - the best possible solution are the two conditions which have to be respected in order to attain the ultimate end of complete customer satisfaction. Every company has to be guided by the client himself. These basic rules are also valid in e-business(Blakey, E-Commerce Thriving Amid Turmoil, Study Says p.39). Even a company which already operates using web technologies for its business must try to offer tangible advantages in order to prove that it can offer them in the future to all its customers. However, in e-business, the Johnson and Johnson is guided by the e-customer, who is not just any customer but a special client with his own individual characteristics, needs, expectations and evaluation criteria, often different from those of a customer in the "real world".
Bibliography
1. Sited on http://www.jnj.com/our_company/company.
2. Blakey. Saliba, Clare. ''E-Commerce Thriving Amid Turmoil, Study Says.'' www.EcommerceTimes.com. 15 Jan. 2001.
3. ''Technology Finds Place in Business.'' Employment Review Jan. 2001.
4. Cap Gemini Ernst and Young: Realising eCommerce Transformation; Powerful E-Commerce Insights (July 2001).
5. Hall, Robert Ernest. Digital dealing: How E-markets are Transforming the Economy. New York. W.W. Norton, 2001.
