The purpose of the study is to determine whether P&G have the capacity to acquire and make SK-II products an international brand. The study seeks to find out the relevance of a global strategy for P&G and their capacity to popularize SK-II to become a global product. It will also examine the need for P&G to intensify its marketing activities in the Japanese market as they explore the needs of the intended market.
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Some of the factors to consider before deciding to recommend to the SK-II presentation are described below. Since it is the first time P&G is proposing to enter a global market, it will be important to reflect on the different cultures of people outside Japan. P&G is in the middle of restructuring from O2005 recommendations, considering it would be disruptive.
From experience, the events of 1980s where cost of producing local products was very high, business leaders objected to production of new products since it would eat up local profits. The proposition to introduce SK-II into the global market is an opportunity to break through $9 billion global skin care market according to Paolo De Cesare’s. According to Ram, SK-II should to be brought into the Chinese market because it was the second biggest consumer of skin care products in the world.
Analysis to be carried out should consider the following objectives: the impact of culture and changes in organizations of O2005 in determining the global penetration of SK-II products. The analysis should be based on the business model of SK-II, hence, the need to have its knowledge and whether it complies with O2005 recommendations. The analysis should look at ways of determining the most potential countries that use skin care products. Lastly, the analysis should look at entry strategies to be applied in implementation.
SK-II has the potential to become an international brand because of the following reasons: its products are of high quality, it uses clear perfume free liquid which is distinct, there is good brand image in Japan, and the global market for skin care products is worth $9 billion and the superior product technology. The limitations that can derail SK-II products though insignificant include: little brand awareness in Japan and the difficulty in translating the product in Western countries.
After he arrived in Japan, Paolo DeCesare discovered that SK-II products had gained a substantial market in the Chinese cities of Taiwan and Hong Kong. Due to this success, leaders had proposed to venture into Singapore, South Korea and Malaysia. Paolo DeCesare perceived these markets to be small and wanted to pursue a bigger ambition.
The following markets would be recommended for the new skin care products: Mainland China because of the breakthrough in Taiwan and Korea, Western markets which has a big potential and making new strategies to position the brand in Japan.
The Chinese market is wide and there is a big presence of low priced and counterfeit products. SK-II through P&G should have a strategy of building a strong brand identity and target it to a specific market segment in China. P&G has to create an awareness campaign aimed at educating customers in the procedures of skin care. Since the import duty is high, about 40%, the company should squeeze its profit margins to manageable levels.
In the Western countries, P&G should differentiate distribution channels of its products. It should not use the same channels because consumers might not feel the difference. In the Japanese market, the company should give a justification of increasing the price by accuracy of skin diagnosis.
Implementation of O2005 would increase the yearly growth by 2% which would translate to $900 million in savings. However, there are some implications that will be faced. One of the implications is on culture which can be resolved by reducing employees bringing non value adding work. The other implication is on the change process which can be resolved by leaving traditional processes and adopting modern systems and processes.