P&G Japan: The SK-II Globalization Project
P&G Japan: The SK-II Globalization Project
P&G Japan: The SK-II Globalization Project
P&G Japan
The SK-II Globalization Project
Agenda
Introduction and Problem Definition Situation Country selection 1 Country identification 2 Preliminary screening 3 In-depth screening (SWOT) 4 Final selection (Portfolio) Globalization strategy Implementation Forthcoming analysis
2
Situation P&G
P&G worldwide Total sales $38 billion (1999) Global company geocentric orientation Euro Brand/Technical Teams Strategy Innovation of products with a global scope Extension of global products with minor local adaptations P&G Japan Entered in 1972 Strong competitor 1997: turnaround (cosmetics) Source of innovation (Lipfinity, technology centers)
Structure P&G
Organisation 2005 Risk loving culture Global budgets MDOs 7 GBS 7 GBUs (profit responsibility) Globalization advantage Innovation Simple ressource allocation Local adaptation Coordination of transactional activities Reduced bureaucracy Efficience
Product High quality Nobel packaging Complex usage High class brand Price High price ($120)
Globalization of SK-II
Positive aspects Global need for soft, moistured, clean-feeling skin Global prestige skin care market is huge ($9 billion) SK-II big success in some Asian countries High brand awareness/brand image in Japan Complements global brand portfolio (Max Factor, Olay) Brand name legally available Universal brand name Negative aspects SK-II high priced limited customer segment no fit to P&G portfolio (Stack it high, sell it cheap) SK-II developed for Japanese market SK-II known in a few asian countries Narrow product line Complicated usage (6-8 steps) Senseless brand name Special distribution system needed
Product characteristics, brand name could be extended globally Do minor adaptions, if needed e.g. price, distribution system
1. Country identification
Old product Old market
Market penetration Option 1: Japan
New product
Product development
New market
Diversification
2. Preliminary screening
Japan / China / UK Worth In-depth screening Germany / France Strong competitors Major sales through mass distribution outlets Expensive advertising costs
IN
OUT
3. SWOT: SK-II
Strengths High brand awareness of 70% in Japan High product margin Innovative product Excellent quality Universal brand name Weakness High marketing, research and administrative costs Doesnt address young consumers No fit to P&G image High prices
10
3. SWOT: Japan
Opportunities Social/cultural forces Skilled labour High demand for skin care products (95% use facial lotion) Need of new product lines (e.g. whitening) Economic forces Huge market for skin care (over $6 mio.) Established distribution network Opportunity to double sales in 6 years Technologic forces Lead market for innovative products Regulatory / legal / political forces Political stability Threats Economic forces Mature market with low growth rate (6%/year) High labour costs Competitive forces Strong competitors (e.g. Shiseido)
11
3. SWOT: China
Opportunities Social/cultural forces Skin type similar to Japanese Developed skin care practices Economical forces Sales of $10-15 mio. (first 3 years expected) Existing distribution network/trained councelors Low labour costs High general market growth (28%) Economical growth (9,1%) Growing prestige beauty segment (30-40%) Competitive forces No dominating competitors Threats Economical forces 10% of sales for introduction (first three years) Low average income Competitive forces First mover advantage of existing competitors Regulary/legal/political forces High import duties (35-40%) Risk of piracy Limited political stability 1 year import registration
12
3. SWOT: UK
Opportunities Social/cultural forces UK women use multiple step skin care Possibility: department stores Economical forces UK: trial / platform for European market High purchasing power Regulatory/legal/political forces Political stability Threats Social / cultural forces Different skin types SK-II: too many steps for UK habit Cultural gap between Europe and Asia Economical forces $ 1-2 mio. losses for introduction High labour costs Mass media is too expensive Competitive forces High competition
13
4. Portfolio Analysis
30% Market attractiveness (growth rate)
Country market share Relative market share = Market share of strongest country
UK: Japan:
-10%
Marginal market
sales USA
14
Globalization Strategy
Waterfall strategy
Hold position
15
Implementation Japan
Product Promotion Place Price Introduce new product lines (e.g. whitening) Use BIS Attract also younger segment Additional online distribution / counselling No change
16
Implementation in China
Product Standardised, extension => high privilege, sophisticated package, create prestigious brand TV commercials (testimonials), trials, events Limited to special stores in big cities with counsellors, avoid discount stores 20~30times higher as the local brand, a bit cheaper than Japan prices (penetration strategy) Our expected market size is huge! Population 1,3** billion Women 0.5 25~55 37% Rich 9.8% Product Usage 45% Potential customers 10,606,050
17
Net sales
$14,100.000
19