There are many factors that need to be considered when deciding recommendations to the GLT of SK-II.
Being that this is P&G’s first proposal to build a Japanese brand worldwide, it is important to take into consideration different cultures than of the consumers in Japan.
Since 2005, P&G's global organization has been in the middle of a restructuring program, which can sometimes cause a disruption to the normal functions of the company.
Local managers resisted the surfacing of new products based on the possible negative impact on local profit. Lafley’s idea that most of the budget allocated for advertising should be adjusted to focus on two main products: MaxFactor Color and SK-II, since SK-II had such a high margin. However, DeCesare’s point of view surrounded the idea that SK-II could break into the $9 billion skin care market. From Jager’s eyes, his concern surrounded that a major product development technology center was needed for Japan’s demanding consumers. Ideally, this would also support product development throughout Asia and other parts of the world. For Ram, it was considered that SK-II would work best as introduced into Chinese department stores as Oil of Olay. Ram also predicted China to be the second largest market in the world for upscale beauty products
2. Does SK-II have the potential to become a global brand within Procter & Gamble’s worldwide operations? Why or why not?
SK-II’s potential surrounding breaking into the global market and becoming a competitive brand would allow P&G to obtain a high margin product while still making a high-quality product. The characteristics of the SK-II’s clear, un-perfumed liquid makes it distinctly different from other products. With this P&G would also sell its product with superior in-store service. There is already the foundation of Japanese innovation with Lipfinity and a good brand image in Japan. By moving into a worldwide market P&G would have a change to tackle the prestigious $9 billion skin care market. With SK-II’s success in Taiwan and Hong Kong, it shows a trend for being well received in other Asian countries.
However, there are a few things to think about before making the leap into global branding. SK-II is not totally in line with the P&G portfolios and SK-II will need to build its brand awareness outside of Japan. Also, the hurdle of translating the product’s value in Western society needs to be analyzed and researched.
The pros outweigh the cons and SK-II definitely has the potential to become a recognizable brand in the worldwide market.
3. Which of the three market options should Paolo DeCesare recommend to the GLT? What benefits do you expect to gain? What risks do you see?
Paolo DeCesare, after arriving in Japan, found that SK-II is already a successful product in Taiwan and Hong Kong. Because of this success, the management was encouraged to begin expanding into three market options including Singapore, Malaysia and South Korea. Even though these are relatively small markets, Paolo DeCesare thought that and SK-II would make a bold entry.
Paolo DeCesare had three options to recommend. The first, he would introduce the brand to mainland China where the beauty care management team was interested in the success following SK-II’s introduction into Taiwan and Korea. Secondly, he wanted to break into the western market, and third DeCaesare sought to restructure the strategy for brand positioning in Japan’s market.
In regards to introducing the brand to Mainland China, P&G had previously had a problem with Olay after launching it in the country, but recovered by adding a service component. They built showrooms and staffed them with beauty consultants. One of the major benefits of the China...