Marketing and Skin Care

The Glut's aggressive goal of doubling sales in the next five years, coupled with the potential opportunity to serve a currently UN-tapped market segment, suggests P would leverage the already developed momentum In the Japanese beauty care market as a source of hypertrophy.

Group 1 estimates current SKI-II sales of $150 million can be doubled in next five years by focusing on growing the Japanese prestige skin care market.Technical product innovations and the introduction of new SKI-II product lines such as initiating care, skin-whitening products, skin-cleansing and skin-nourishing products, in concert with greater consumer awareness and skin care education campaigns, P can greatly expand the Japan market opportunity. Group 1 estimate an significantly Improve the SKI-II growth rate from current 5% per annum to approximately 20% per annum in two years by incorporating the aforementioned campaigns into the target markets segments.This plan deals in detail the analysis of different global markets and choice of Japan for further expansion in the premium skin care market, and how this expansion can be leveraged as a launch pad to global expansion Into Europe and new Asia-Pace market such as Malaysia, China, Singapore ; Indonesia. Table of Contents Summary of Current Situation Current Economic landscapeIn terms of dollar sales, P accounts for approximately 22% of the beauty product market share in the world. It sells facial skincare products through its Beauty ; Health division.

The key products in the Beauty sub group are cosmetics, deodorants, feminine care, fine fragrances, hair care, hair coolants, personal cleansing, professional hair care, and skin care. The key brands in this product groups are: Always, Head ; Shoulders, Lola, Pentane, Well, Cover Girl, Gillette Series, Herbal Essence, Hugo Boss, Nice 'n Easy, Old Spice, Safeguard, Secret, SKI', and Tampa.SKI-II is a leading, high-end beauty brand with a wide array of skin care products than had not been recognized, much less evaluated in the Max-Factor acquisition by P in 1991. "SKI" stands for "Secret Key' - referring to an ingredient Pitter.

Pitter, secret the hands of workers in sake breweries kept young looking. SKI-II had a small but loyal following. Priced at $120 or more per bottle it was top of the skin care range. With the SKI-II product line P&G was successful in the global prestige skin care market in Japan.Taiwan and Hong Kong, which encouraged management to begin expansion onto other growth markets like China, Europe, Singapore, Malaysia and South Korea.

P&G created its first overseas division n 1948 that drove three decades on rapid expansion. Growing first in Europe, then Latin America and Asia, by 1980 P&G had operations in 27 overseas countries accounted for over 25% of its $11 billion worldwide sales. For the analysis of prestige skin care market we are restricting to the locations to Japan, China, Hong Kong and Taiwan.Japan P&G has been operating in Japan in 1972. Not until 1990 did P&G enter the beauty care market under the subsidiary P&G Japan.

The parent company's 1991 acquisition of Max Factor gave P&G Japan a foothold in the 10 billion dollar Japanese's cosmetic market. But in Japan, sales of only $300 million made a distant numbering competitor, its 3 percent share dwarfed by Sheikdoms 20%. In 1992 Max Factor Blue was launched, a top end, self-select color cosmetic line to be sold in general merchandise and drug store.In 1994, the Japanese beauty care business lost $50 million on sales of less than $300 million. Over the next 3 years the local organization had made the Max Factor profitable.

The product lines were rationalized from 1,400 SKU to 500, distribution support was focused on 4,000 sales outlets as opposed to the previous 10,000 and sales and marketing staffs were cut down from 600 to 150. By 1999, SKI-II had sales of $150 million in Japan. They had created a great brand and loyal customer base. China P&G has been operating in china since 1988.Because of the extraordinarily low prices of Chinese laundry products, the company had uncharacteristically led with beauty products when it entered the huge market. Lola was launched in 1989, and after early problems, eventually became highly successful by adopting a nontraditional marketing strategy.

Lola was sold through counters in state-owned department stores staffed by beauty counselors. By 1999, Lola had almost 1,000 such Taiwan & Hong Kong P&G entered the Taiwan & Hong Kong market in the mid 1980.By 1999, both these markets were success full and accounted for 45% of total SKI-II market sales. SOOT analysis is used as a framework to evaluate the SKI-II launch as Global Brand in the markets of Japan, China and I-J. In the following analysis the market has been broken down by geographical area and further at the country level. Market Strengths: Loyal SKI-II customers spend $1000 a year on the brand.

Established distribution channel in Japan and Best R&D Labs creating innovative products. Successful and established brand in Japan.Investment quite low for moving into new markets. 7 Weakness: High spending on advertising in Japan, Taiwan and Hong Kong.

High R&D spending. Slow Development of new products. Simultaneous organizational restructure. Opportunity: Market of 10 Billion. Max-Factor has tapped only 3% of market share. Opportunities to move into new segment by anti-aging and skin whiting.

Strategy of product innovation and superior in-store service has the potential to double sales in Japan over the next 6-7 years. Threats: Market growth slowed down in recent years.Intense competition (Shied, Kane, Aka). China market well known through Lola launch.

Established distribution channel through Lola brand. Highly successful Lola brand. 8 Cost of Product 20-30 times more than local brand. More complex regime of using SKI-II (4 step process). High import duties. Forecasted 10% sales drop in the initial three-year period.

Distraction to P&G strategy of becoming a main stream Chinese company and to its imitative goal of entering 600 Chinese cities. Prestige beauty segment growing at 30-40% a year. Second largest market in the world.Cheap labor and marketing cost will improve profits. 10-15 million in sales in 3 years. Highest growth rate of skin care market (28%).

Battling Counter fit products. Intense Competition. Every major competitor in beauty skin care space is already here. Relatively large and sophisticated group of beauty-conscious consumers. I-J (Western Market) Achieve 10 million by the fourth year in UK market. No brand awareness or heritage in western market due to repetitive laws in advertising.

More complex regime of using SKI-II (6-8 step process). Initial consumer research in the U.K. Had proved mixed results. Blind testing.

Because of the lack of beauty counselors, analysis and advice and had not practiced the full skin care regimen. Loss of 1-2 million annually over the first 3 years. Possible to exploit sales chain already successful with fragrances. Growth rate of 17% in skin care products.

Prohibitive Advertising laws. While there is a significant worldwide growth potential within the $98 prestige skin are industry, P&G should fully consider the feasibility of successful and profitable market development and not solely focus on sales potential.Based on recent organizational changes, new corporate priorities and market analysis (SOOT analysis and the Revenue forecast template (attached excel template), P&G should continue to focus on the Japanese market by expanding into other new segments like anti-aging and skin-whiting to increase market share, with a keen eye on other global markets like Europe and China, and seizing the opportunity when P&G resources, capability, ND strategy align. SKI-l's market consists of female users who look for a superior one-step facial experience that offer the benefits of cleaning, conditioning and toning.The female users consist of teens and young adults and aging women with different needs. For teens and young adults, they look for a skin care product that can help them to treat acne.

For aging women, they look for a skincare product that can allow them to maintain a youthful appearance. SKI-II is positioned in the premium cosmetic product based on the following unique factors: 1 . SKI-II offers the facial treatment essence with its unique SKI-II Foaming Massage Cloth, which helps boost moisture levels to improve texture and clarity.It also has the micrometers ability to clean pores and trap dirt.

2. The innovative Beauty Imaging System (IBIS) allows SKI-II beauty consultants to boost the accuracy and credibility of their skin diagnosis. This system allows SKI-II to build significant loyalty to the customer. 3.

SKI-II spent significant amount of effort in developing detailed product performance data that Japanese beauty magazine required to prove that its product fits to the premium product category