J&J takes on the downturn

23 September 2009

NEW YORK: Johnson & Johnson, the healthcare giant, has been relatively unaffected by the recession, but will still need to pay careful attention to changing consumer needs during and after the downturn, Kim Kadlec, chief media officer of its Global Media Group, told the audience at Advertising Week 2009.

Speaking during a "Leadership Conversation" at the event – Warc's coverage of which is available here – Kadlec said that, even for Johnson & Johnson, the current climate has made it clear "the times of excess are over", and "we're not going to see it again in our lifetimes."

With regard to the post-recession environment, Kadlec added that consumer behaviour is likely to be transformed, both because of the impact of the financial crisis on their personal situation, and as they reassess their overall values. 

"Look at the younger people, the up-and-comers. How will they react after their parents lose their jobs, be forced to sell their houses, and not afford college tuition [for their children]?" she asked.

"It's important for us to keep our eyes on them. They'll be very different than the generation of boomers," whose legacy is to spend heavily and save lightly.

One advantage for J&J is that private label brands have not posed a substantial threat to its products, having played such a role in a number of other categories, and particularly the FMCG sector, as shoppers look to rein in their expenditure.

"It's more or less been business as usual," Kadlec said. "Our products are broad-based and value-based. We've not had to change our model as much as some others."

During the same panel discussion, Laura Desmond, ceo of Starcom MediaVest, argued "consumer confidence and spending is not coming back soon. But I do think that bread-and-butter marketers and manufacturers are looking at 2010 as a touchstone year."

However, the unique economic situation will also require a "big change" in how many brand owners choose which products to make, and how to market these goods, with a more global outlook one key trend that is likely to emerge.

"More and more, marketers of CPG products have been obsessed with value," Desmond said. "They've had ten or 20 years of growth driving more niche brands with niche products directed toward niche targets. And that was attractive, at the time, to consumers, who seemed willing to pay."

Now, "advertisers need to simplify their portfolios. They need to concentrate on areas where there's a clear need for a product instead of creating products that exist only because consumption is high."

One possible benefit that has resulted from the slowdown, however, is that advertisers and their agencies have been forced to focus "on what you must do to live and thrive," which may have positive benefits in the future.

For more detailed coverage of these issues, and reports from a range of other presentations from Advertising Week 2009, click here.

Data sourced from WARC