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P&G Case Group Prezi

To be or not to Be? Is SK-II a global P&G brand?

on 21 August 2013

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Transcript of P&G Case Group Prezi

What is SK-II?
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

Organization 2005
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

Innovative product

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

P&G Japan
The SK-II Globalization Project
Presented By:
Christado Ado
Carmel Denis
Nick Laflash
aria Stevens
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

Political instability

Delays (1 year import registration)

Opportunities Japan
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)
Threats -Japan
Opportunities- UK
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)

Option 1:
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
Threats- UK
Option 3:
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.”
Thank You

SK-II skin care product meets the criteria to become a successful P&G global brand.
Option #3:
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

Threats- China
Full transcript