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P&G Case Group Prezi
Transcript of P&G Case Group Prezi
Where is it available?
Japan, Hong Kong, Taiwan
Who is involved?
Paolo de Cesare (Max Factor Japan)
Alan Lafley ( Beauty Care Global Business Unit
1980's Difficult Start-up
Portfolio of self-sufficient P&G subsidiaries
1984 losses of $200 million and 75% negative operating margin
Limeted Profits- cost of local P&D labs & Mfg. plants
Global “rollouts” delayed ierce autonomy of local subsidiaries
Supporting Facts: UK and Western Europe
Many of the best marketing managers left P&G Europe
Due to organizational disruption/distraction caused by O2005 implementation
SK-II would be a "brand new” entry in and overcrowded field of high-profile competitors
Local advertising costs for initial market entry would be significantly higher in Europe
Focus on “stretch, innovation, and speed”
Integrated business planning process
Performance based compensation
Shifted profit responsibility from 4 regionals to 7GBU’s
Impact on Max Factor Japan
Innovations (Lipfinity, Swiffer and Dryel)
Supporting Facts- Mainland China
China is poised to become the second largest market in the world
Prestige beauty care segment rising 30-40% yearly
SK-II would “oust” P&G’s best selling (Olay) prestige brand to a 2nd tier level.
Promised 2 beauty counters to ease SK-II’s initial market entry
Import duties expected (35-40%) will raise price
Lower labor rates would benefit profit margin
Competitor (Shisedo) has been in the China market for three years.
High brand awareness (70% in Japan)
High profit margin
Excellent quality (scientifically proven)
Strong customer loyalty (spend $1,000/year)
Global demand for skin care products
95% use facial moisturizer lotion
High marketing research/ administrative costs
Only accessible to one market segment
Doesn’t fit P&G portfolio
Low volume, high margin
High product prices
Too many steps
Requires trained consultants
No brand recognition in China & UK
The SK-II Globalization Project
Prestigious Japanese skin care brand developed by Max Factor
Contains Pitera - the yeast based "Secret Key" ingredient
Who wants SK-II?
Wealthy, beauty conscious, sophisticated
Asian/Pacific women (in their mid 30’s)
Familiar multi-step skin cleansing routine
Due to it’s lack of consumer marketing research in Japan P&G suffered major losses early on.
Max Factor Japan has since successfully demonstrated its renewed capability and
commitment to develop and market innovative products that satisfy the “unmet global consumer needs” and can adapt them to fit the specific needs of its local market.
For example Lipfinity, Dryel, Swiffer, Olay, and SK-II facial cloths
Kao and Lion (competitors) have the knowledge, capability and extensive consumer insight to create and distribute comparable skin care products.
Max Factor Blue & Color cosmetics resulted in a 15% decline in sales
Approximately 80% of Japanese prestige products are sold through trained skin care consultants in specialty stores/ counters.
Durk Jager openly questioned if an acquired brand (like SK-II) would “fit” into the P&G global brand portfolio.
P&G’s marketing skills have allays been focused toward products with “Stack it High, Sell it Cheap” characteristics
According to a P&G survey report, at least 90% of Japanese women have used a facial cleanser/ facial lotion within the past seven days.
The Asia/Pacific global prestige skin care market is worth about $10 Billion and P&G currently controls a 3% share
China Economic Forces:
Future sales expectation $15 million (3 years)
Develop a new distribution system
2 year growth rate is 28%
Prestige beauty segment is growing (30-40% per year)
Lower labor costs
Second largest market in the world
China, Japan Socio-cultural forces:
Skin types, skin care practices are similar to Japanese consumers
Extend the product line (i.e. whitening cream)
Train beauty consultants
China Competitive Forces:
First mover advantage over competitors
Promise of premiere beauty counter space
Initial investment losses (10 % of sales over 3yrs)
Low-income consumers in Urban China
High Import duties (35 to 40%)
Existing Olay would move to 2nd tier level
Scarce beauty counter space filled by major competitors
Risk of piracy
Delays (1 year import registration)
Increase sales growth of SK-II
Improve market share rate by expanding product line
Evaluate price setting strategies to “attract/entice” competitor’s to switch brands
Skin types &practices similar to Japanese consumers
Extend the product line (i.e. whitening cream)
Train beauty consultants to provide superior service
Implement the Beauty Imaging System
Mature market with low growth rate
High labor costs
R&D costs to extend product line
Strong competitors (Shiseido)
UK trial platform for European market
High purchasing power
UK women use multiple step skin care
Possibility of department store distribution
Initial market entry losses ($1-$2 million)
Mass media is too expensive
Different skin types
Too many steps for UK habits
Cultural gap between Europe and Asia
UK Competitive Forces:
Market saturation (high-profile competitors)
Enter the U.K. and Western European market
Opens the door to expand SK-II marketing strategy Europe & Latin American
Smart and sophisticated consumers
Opportunity-R&D develop innovative SK-II products to extend brand portfolio
High-level competitors (Estee Lauder, Dior, Lancôme,)
High advertising cost
Option 2: Enter the mainland China market
Support from P&G China’s beauty care manager
Access target market (Shanghai trial platform)
Similar skin type and skin cleansing routine
Demand for beauty consultant analysis/services
Steady market segment growth (30 to 40% annually)
Access to 1.2 billion Chinese consumers (increasing annual incomes)
Not ready to act fast to gain “first mover” advantage
Import fees, competition, piracy
Restructure brand positioning strategy in proven Japanese market
Most valuable resource “ Paolo de Cesare” is already at the helm.
Increase 3% share $10 billion prestige skin care market by:
Leverage the 70% brand recognition in Japan increase customer loyalty/sales
Innovative “spin-offs” SK-II platform to extend product line
No stated conclusion
Page 9 Hint:
“His third possibility---really his first option, he realized---
was to build on the brand’s success in SK-II’s rich and proven home Japanese market.”
SK-II skin care product meets the criteria to become a successful P&G global brand.
Build on the brand success to increase the 3% share of the $10 billion skin care market.
Focus on building brand’s success by increasing growth existing markets
a. Restructure brand positioning strategy in the proven markets
b. Guarantee SK-II product quality to increase reputation and brand image
c. Increase advertising - use the media to increase brand awareness