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P&G Japan: The SK-II Globalization Project

SK-II, a P&G Beauty brand, launched in Japan. SK-II is considered one of the most expensive beauty brands globally
by

Jordan Arroyo

on 13 November 2012

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Transcript of P&G Japan: The SK-II Globalization Project

P&G Japan: The SK-II Globalization Project By: Nicole Stewart, Amalie Barras, Ben Johnson, Clement Petty and Jordan Arroyo Purpose To recommend an alternative to the question currently being considered of whether Proctor and Gamble should expand its SK-II product line globally and, if so, to which markets. Conclusion/Additional Comments Although it has its risks, global expansion provides the most opportunity for P&G growth
Addresses P&G's sluggish global growth rate with more aggressive strategy
Slower expansion mitigates risks with test markets
Large markets (e.g. China, U.K., U.S. primed for prestige brands
Marketing strategy may need to be tailored to certain markets Recommendation Alternative 1 Background Cesare, GM of Max Factor Japan, believes SK-II shows potential as a global brand, but higher executives (Lafley) remain unconvinced Company must decide whether the high margin, multistep prestige beauty care product is viable as a global brand. Alternative 2 Alternative 3 Alternative 4 Heavy-Up on the Home Front Quick, Aggressive Expansion to China Mass-Market Expansion to Europe Testing the Global Waters We feel the best course of action for P&G is Alternative 4. Implementing a slow, global expansion. Resigns to some of Lafley’s concerns (risk of failure, or defensive adverse action from competitors)
Abandon the idea of global expansion
Focus on increasing R&D and branding in the tried-and-true Japanese Market
Slow volume growth and the significant sales losses are red flags that both the brand and product need TLC before we “go big” internationally SK-II has slipping Japanese market share, and P&G has sluggish 2% annual growth rate globally.
P&G's CEO believes this is due to the company's risk-averse culture. Would allow SK-II to not only have the lead in the market but also drive innovation to match Kao and Lion with the 12% increase of R&D.
Chinese women show much inclination to sophisticated beauty products, which gives hope to the multistep SK-II line.
Although entering China shows much potential, targeting an elite niche consumer is contrary to P&G’s goal to reach the 1.2 billion population with basic products such as diapers, laundry detergent and hair-care products. European market provides a large and sophisticated group of target consumers
But, high level of existing competition (two-sided coin).
And, targeting an elite niche consumer goes against P&G’s goals to reach the huge population with basics.
Instead of throwing SK-II into a crowded market, P&G should rebrand it into a more approachable, mass-appealing product and focus on lowering its margins and increasing its sales volume. A final possible alternative to address Lafley’s concerns is a slow, careful global expansion.
Test markets in Asia, North America, and Europe which would provide insights into the potential success of SK-II internationally.
If leveraged carefully, bolsters the brand prestige.
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