P&G Japan: The SK-II globalization project
P&G Japan Case
Case Analysis Template
Reading: Bartlett, C. A. (March 2004). P&G Japan: The SK-II globalization project.
Boston: HBP.
Who:
- Paolo de Cesare
- Alan Lafley, head of P&G Beauty Care Global Business Unit
- Durk Jager
- Ed Artzt
-GLT member on the Beauty Care GBU
Immediate Issue/Problem Being Faced:
Should P&G try to integrate their SK-II beauty brand into new global markets? would it be worth the potential risk because of the large uncertainty of how successful the product would be?
Basic Issues:
-Some worry that SK-II could be a distraction to P&G's strategy of becoming a mainstream Chinese company
-SK-II relied on women having a 4-6 step skin care routine, while olay had a 1-3 step. skeptics worried that it would be difficult to sell the added steps to a new market
- putting a new product into an already saturated market.
- Tbudget constraints of the project
- De Cesare think his strategy in product innovation and superior in-store service would increase potential growth rate in SK-II products.
- From history sold Ariel and Pampers were consuming too much time to get into the market, cosmetics would require more time and effort from local sales forces in order to step in the market.
-Jager concluded that P&G’s sluggish 2% annual volume growth and its loss of global market share was due to a culture he saw as slow, conformist, and risk averse.
-Although SK-II had good sales in Japan, its home market growth had slowed in recent year.
- With the company’s having such a small share of such a rich market, de Cesare felt that a strategy of product innovation and superior in –store sevice had the potential to accelerate a growth rate that had slowed to 5% per annum over the past three years.
-The widespread existence of counterfeit prestige products to the bureaucracy attached to a one –year import-registration process in China market. SK-II would have to be priced significantly above the retail level in other markets
-The bigger challenge, would be introducing a totally new brand into an already crowded field of high-profile, well-respected competitors including Estee Lauder, Clinique, Lancome, Chanel, and Dior. TV advertising is not necessarily an effective marketing strategy for Europe market.
-Face significant budget pressure.
Urgency/Importance:
Because the local markets in Japan and China are full of technology driven compeittors with high level of customer satisfaction and help, it will be difficult to formulate a strategy to compete with companies in these markets. It makes this issue urgent because it will take time to formulate a suitable innovation plan and in this time, competitors will continue to grab more of the global market share and make it tougher for the SK-II to succeed in the global market.
Decision Criteria:
- Risk in expanding. Even SK-II is growthing very fast in Japan, it did not gaurantee success expanding in other countries worldwide.
- P&G Japan has good experiense and budget in expanding to global skin brand.
- The customer preference in Japan and other is ot the same. P&G need more research study and development in order to support P&G in global brand.
- After the expanding success, SK-II need to consider the distribution channels, competitors and customer in worldwide country.
-SK-II should guarantee skincare product quality, effort to increase their reputation and brand image.
- For the price-setting of SK-II, P&G should consider the market position of product, consumption capacity, and taxation in different countries and area.
- P&G need have enough financial support to develop the SK-II globalization project. The budget need maintain in the reasonable scope to control risk.
- Look for a right time to carry out new strategies.
Alternatives:
1, Enter the China Market, identify the target consumer group in the first-tier cities
2, Bring SK-II into that large Europe market. To drive sales of own label products by providing high-level consulting & advisory service, organizing different promotion events, build up the image of company. Improve the understanding of consumer for SK-II skincare through presenting with sample.
3, Build on the brand’s success in SK-II’s rich and proven home Japanese market. Move into new segments by adding anti-aging and skin-whitening products to the SK-II range.
Missing Information:
- Key potential of competitors in SK-II products toward global market.
- The consumption ratio of high-end cosmetics in China market
Assessment of Alternatives:
1, Enter the China Market, identify the target consumer group in the first-tier cities.
Pros
-entering a market that is proven for beauty products
Cons
-proven local competitors could make it difficult to get any market share
2, Bring SK-II into that large Europe market. To drive sales of own label products by providing high-level consulting & advisory service, organizing different promotion events, build up the image of company. Improve the understanding of consumer for SK-II skincare through presenting with sample.
Pros
-open up a larger potential market
-Familiar market for the products
Cons
-again, many competitors
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3, Build on the brand’s success in SK-II’s rich and proven home Japanese market. Move into new segments by adding anti-aging and skin-whitening products to the SK-II range.
Pros
-Japanese consumer with significant loyalty
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Cons
- The distinctive needs and habits of the very demanding Japanese consumer
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Selection of Preferred Alternative:
Take SK-II into the larger European market. It opens up a larger market potential for the products
Assumptions:
European customer willing to adopt the disciplined six-to eight-step ritual that the most devoted Japanese SK-II users followed
Action/Implementation Plan:
At first, set up a professional team to responsible for European market. Before exploiting into new market, the team of SK-II needs a lot of market research and budget estimates.
Advertising is indispensable, Sk-II need effective use of the media to improve brand influence. And look for a celebrity who has perfect complexion as product spokesmen.
Positive marketing strategies. SK-II should provide a sample to our customer that will make them understanding our product. And in the product are sold to further understand customer feedback and requirements of the product, which improve products and services.
