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Marketing and Skin Care

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Global Expansion Japan – Marketing Plan
Presented by Group 1 Marketing Team – Bill, Brady, Christina, Ray, Pawan & Zia

2

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Executive Summary
The Global prestige skin care market accounts for $2.25B in annual consumer spending. Asia Pacific and Japan markets account for 80% of total global sales ($1.8B). Currently, P&G accounts for approximately 22% of the global beauty product market share.

The GLT’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&G should leverage the already developed momentum in the Japanese beauty care market as a source of hypergrowth.

Group 1 estimates current SK-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 SK-II product lines such as antiaging care, skin-whitening products, skin-cleansing and skin-nourishing products, in concert with greater consumer awareness and skin care education campaigns, P&G can greatly expand the Japan market opportunity.

Group 1 estimate P&G can significantly improve the SK-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-Pac market such as Malaysia, China, Singapore & Indonesia.

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Table of Contents
1
Executive Summary

2

Table of Contents

3

Summary of Current Situation
Current Economic landscape
P&G Penetration within current market
Opportunities and Challenges
SWOT Analysis
Decision Rationale

4
4
5
6
6
9

Focused Assessment of Market Opportunity
Target Market and customer needs assessments
SK-II Market Segment and product lines
Competitive Review and Challenges

10
10
10
11

Financial & Marketing Goals
Expected Revenue 1999-2002
Unit Sales

12
12
13

Month to Month Unit Sales Forecasts

14

Summary of Marketing Strategy
Objective
CVP
Marketing Mix
Product
Product Line
Place
Price
Promotion
The 6 M’s

15
15
15
16
16
16
18
19
19
21

Monitoring & Evaluation of Marketing Plan

23

4

Summary of Current Situation

Current Economic landscape
In 1999, The Global prestige skin care market accounts for $2.25 billion at retail level; out of which United States and Asia pacific combine accounts for 50% of market share. In Asia Pacific, Japan accounts for 80% of the total sales, whereas china is becoming the second largest market with a two-year growth rate of 28%. The facial skin care prestige market can be further segmented into facial cleansers, Anti-aging, Acne Treatments, Moisturizes and Fade/Bleach. In the skin care segment, facial cleansers accounts for 36% of the market share followed by anti-aging with 25%.

Procter & Gamble (P&G) is one of the global market leaders in beauty products. In terms of dollar sales, P&G 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 colorants, personal cleansing, professional hair care, and skin care. The key brands in this product groups are: Always, Head & Shoulders, Olay, Pantene, Wella, Cover Girl, Gillette Series, Herbal Essence, Hugo Boss, Nice ‘n Easy, Old Spice, Safeguard, Secret, SKII, and Tampax.

SK-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&G in 1991. “SK” stands for “Secret Key” – referring to an ingredient Pitera. Pitera, secret yeast based ingredient supposedly developed by Japanese monk who noticed how the hands of workers in sake breweries kept young looking. SK-II had a small but loyal following. Priced at $120 or more per bottle it was top of the skin care range.

With the SK-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 into other growth markets like China, Europe, Singapore, Malaysia and South Korea.

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P&G Penetration within current market

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 numberfive competitor, its 3 percent share dwarfed by Shiseido’s 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, SK-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. Olay was launched in 1989, and after early problems, eventually became highly successful by adopting a

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nontraditional marketing strategy. Olay was sold through counters in state-owned department stores staffed by beauty counselors. By 1999, Olay had almost 1,000 such counters in china and was a huge success.

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 SK-II market sales.

Opportunities and Challenges

SWOT Analysis

SWOT analysis is used as a framework to evaluate the SK-II launch as Global Brand in the markets of Japan, China and UK. In the following analysis the market has been broken down by geographical area and further at the country level.

Market

SWOT Analysis
Strengths:

Loyal SK-II customers spend $1000 a year on the brand.

Established distribution channel in Japan and

Best R&D Labs creating innovative products.


Japan

Successful and established brand in Japan.

Investment quite low for moving into new markets.

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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 (Shiseido, Kanebo, Kao).

Strengths:

China market well known through Olay launch.

Established distribution channel through Olay brand.


China

Highly successful Olay brand.

Best R&D Labs creating innovative products.

Weakness:

High R&D spending.

Slow Development of new products.

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Simultaneous organizational restructure.

Cost of Product 20-30 times more than local brand.

More complex regime of using SK-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 competitive goal of entering 600 Chinese cities.

Opportunity:

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%).

Threats:

Battling Counter fit products.

Intense Competition.

Every major competitor in beauty skin care space is already here.

Strengths:

Relatively large and sophisticated group of beauty-conscious consumers.


UK (Western
Market)

Achieve 10 million by the fourth year in UK market.

Weakness:

High R&D spending.

Slow Development of new products.

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Simultaneous organizational restructure.

No brand awareness or heritage in western market due to
prohibitive laws in advertising.

More complex regime of using SK-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.

Opportunity:

Possible to exploit sales chain already successful with fragrances.

Growth rate of 17% in skin care products.

Threats:

Intense competition from Estee Lauder, Clinique, Lancôme, Chanel, and Dior.

Prohibitive

Advertising

laws.

Decision Rationale
While there is a significant worldwide growth potential within the $9B prestige skin care 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 (SWOT 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, and strategy align.

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Focused Assessment of Market Opportunity
Target Market and customer needs assessments
SK-II’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.

SK-II Market Segment and product lines
SK-II is positioned in the premium cosmetic product based on the following unique factors:

1. SK-II offers the facial treatment essence with its unique SK-II Foaming Massage Cloth, which helps boost moisture levels to improve texture and clarity. It also has the microfibers ability to clean pores and trap dirt.

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

SK-II provides different product categories to meet the customer needs. The product categories include: Basic Cream, Whitening, Aging Care, Skin Oil/Pore care and Complex Trouble Care.

11

Competitive Review and Challenges
The following table shows a selection of competitors that directly compete against SK-II

Competitor

Model

Size

Price (USD)

Shiseido

Extra Rich Cleansing Foam

4.23 oz.

$55

Nivea

Anti-wrinkle & Firming Cream

1.7 oz.

$9.99

Este Lauder

Ultimate Lifting Cream

1.7 oz.

$1000

SK-II

Facial

3.8 oz.

$50

The above table shows the wide range of price offered by the facial cleaning companies and according to the market analysis, Shiseido is considered to be the biggest competitor to SK-II based on its unit price and feature offering. Despite the strong competition, SK-II can stand out against its competitors based on its definite image and brand recognition among the targeted segments.

As the Japanese skin care users has big focus in facial treatment (over 90% skin care usage in facial treatment), given the fact that P&G has achieved only 3% of the $10 billion of the Japan market with the forecast 6% twoyear growth rate, the continuous innovation in house, and its superior in-store service experience, SK-II would have a very good chance to grow significantly in its Japan market and thus, P&G should expand the SK-II brand within Japan.

12

Financial & Marketing Goals
Expected Revenue 1999-2002

Revenue for P&G skin care line is expected to increase
revenue ranging between 3-14% in the years 1999-2002.
China, the least mature market, is expected to lead Y/Y
growth, by increasing sales at a rate of 14% over the fouryear period. The GB and US markets are expected to grow at a 9% rate Y/Y for the next e years and Japan, P&G most mature prestige market is expected to grow at a rate of 3%.

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Unit Sales
Unit sales for the prestige product are expected to be in line with Y/Y revenue growth.

The P&G Sales unit forecast is based on annualized forecast and distributed evenly across 12 months. The current forecast model does not account for seasonality for specific product lines, it does account for country specific momentum and sales growth.

14

Month to Month Unit Sales Forecasts

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Summary of Marketing Strategy
Objective
Although there is a huge potential of SKII to be a global brand in prestige skin care product, we feel that there is a huge scope of growth in Japan
market. There is such a large un-tapped market segments for premium skin care products which can be catered in Japan. Current SK II sales of more than $150 million can be potentially doubled in next five years.

With technical product innovation, introduction of new SK II product lines such as anti-aging care, skinwhitening products and skin cleansing and nourishing products, and consumer awareness and skin care education campaign, we can greatly expand the market opportunity. With targeted marketing campaigns, production innovation and quality product support, we can significantly improve the SK II growth rate from current 5% per annum to around 20% per annum in two years.

Slow and steady globalization and expansion of SKII to other Asia Pacific such as Singapore, Malaysia, China & Indonesia and European markets can still happen in parallel if P&G’ GLT chooses to do so as we believe SKII has the potential to succeed in those markets.

CVP

“FOR YOUNG, BOLD & BEAUTIFUL WOMAN WHO WANTS TO TAKE CONTROL OF WOMAN
WANTS
HER LIFE & DESTINY, SK II PREMIUM SKIN CARE PRODUCTS BY P&G ARE THE SECRET TO BEAUTY, SELF-CONFIDENCE, SUCCESS, HAPPINESS & CRYSTAL CLEAR SELF-CONFIDENCE,
SKIN.”

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Marketing Mix

Product

SKII is a premium skin care product developed exclusively from ‘Pitera’ secret yeast based ingredient which helps keep the skin young and glowing. SK II Pitera contains components natural moisturizing factors that occur naturally in the skin. Pitera has other ingredients such as polysaccharides
and proteins that improve the skin function. Pitera helps in Radiance Enhancement, Spot Control, Wrinkle Resilience, Firmness Power, and Texture Refinement.

Product Line

With a goal doubling the sales in next five year and potential opportunity to serve the un-tapped market segment in Japan as shown by relevant market researches, developing new product lines will help target different market segments to meet our sale goals.

Based on the research of the product attributes and skin care requirement, possible product category and target market segments and the percentage usage and recent sales, following product categories can be defined

17

#

Product Category

1

SK II Toner and Skin Nourishment

Young Women (Age 15- 45)

11%

2

SK II Anti-Aging Care

Middle Aged & Old Women (Age 35 -70)

12%

3

SK II Signature Facial Treatment

All Women (Age 15 – 60)

12%

4

SK II Eye Care*

Young Women (Age 15- 45)

5%

5

SK II Men*

Young & Middle aged Men (Age 19 – 60)

5%

6

SK II Acne Care*

Young Men and Women (Age 15 – 30)

8%

7

SK II Moisturizers & Body Lotion

All Women (Age 15 – 60)

5%

8

SK II Skin Enhancement, Lift & Glow

Middle Aged & Old Women (Age 35 -70)

8%

9

SK II Sensual Lips & Care*

Young Women (Age 15- 45)

4%

10 SK II Cleanser, Foundation, Exfoliation & Mask

Young Women (Age 15- 45)

12%

11 SK II Skin Whitening Products & Bleaches

Young Women (Age 15- 45)

10%

12 SK II UV Protection*

Men & Women (Age 15 – 50)

8%

* proposed new product line

Market Segment

%

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Place

Majority of the SK II customers are Urban and Sub Urban women rich and upper-middle class women who love to shop for premium beauty products and who are beauty conscious. Most of the Japanese women would like to browse at the store, look around different products, and talk to beauty consultant before buying their premium skin care products. So the Departmental stores and Premium outlet malls are the best place to sell SK II products in Japan. As more and more Japanese customers are now turning to online shopping, most of the repeat sales are made online.

P&G will retain the exclusive brand rights for SK II skin care products and sell then directly through retail channels and online through their web portal.

#

Product Channels

%

1

Department Stores

40%

2

Premium Outlets & Malls Kiosk

24%

3

Exclusive Beauty product Stores

14%

4

Online Sales

12%

5

Specialty Stores, Beauty Salons & Spas

8%

6

Mass Market Merchandizing & Others

2%

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Price

Since SK II is a premium skin care product with unique ingredients for total skin care revolution, we will maintain the SK II luxury brand perception by keep the prices 5-10% higher than the competition in the premium skin care products. We will add value to the customer for paying premium price with free in-store, online and over the phone beauty consultation, product support, help choosing the right product, access to beauty blogs and health and beauty tips online and exclusive email and social media notification to store promotions, events and by invitation only beauty seminars.

The targeted marketed segment customers for SK II are not price sensitive and they can afford to pay a higher price for quality product and great service. A small increase of price will not affect the size of the market and a small decrease of price may help attract a whole middle class market segment. Effective pricing without compromising on the brand perception of premium skin care products is very critical.

Promotion

Japanese consumers are ‘need to know’ kind of shoppers and they are usually are market aware. They like to know and learn about their products before they buy. Once they are satisfied with the product they tend to remain loyal to the brand. So education and product awareness is the key to attract loyal customers. Majority of the first time purchases occur at the store. The following product promotion can be considered.

1. In-store beauty consultant to demonstrate, educate and create product awareness among the customers.

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2. Touch screen kiosk for product self-learning and helping customers in choosing and buying the right product.
3. DMS and LCD product display in department stores and in premium malls, clubs, movie theaters and other elite venues frequented by rich and upper middle class patrons. 4. Mobile App for choosing SK II products, online chat support and toll free live agent help 5. SK II sponsored invitation only beauty & health seminars in-store, at malls and other public places 6. Social media campaign using social tools such as twitters, blogs, Facebook& YouTube videos about different products lines.

7. Blogs about health tips, beauty care and how SK II can help. 8. Targeted web based personalized ads and promotional events 9. New products and promotional announcements on web using social media tools 10. Maintaining vibrant and engaging online community such as interactive twitter followers, Facebook page likes etc.

11. Exclusive coverage and advertisement on beauty and health care magazine 12. Product endorsement by young and popular female celebrities 13. PR events, media coverage, TV shows, movie premiers to create positive awareness of SK II brand 14. Doctor/Dermatologist and health care expert endorsements 15. TV and radio commercials, print and popular magazine advertisements 16. Training and educating in-store beauty consultants to educate and sell SK II products to the customers. 17. Product purchase reminders and new product tips for repeat customers 18. SK II website with detail product descriptions, beauty tips and product recommendations.

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The 6 M’s

Market

The Japanese premium skin care product market. Different target segmentation based on product line is described in product section.

Mission

To double the SK II product sales in Japan from current $150 million in next five years by 2004 and significantly improve the growth rate from current 5% per annum to around 20% per annum in two years by 2001.

Message

Our brand awareness, product and value proposition
“For young, bold & beautiful woman who wants to take control of her life & destiny, SK II premium skin care products by P&G are the secret to beauty, self-confidence, success, happiness & crystal clear skin.”

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Media

We would leverage both traditional and not traditional media. Our media strategy also includes extensive use of social IT platforms and social media tools to educate and spread brand awareness of our SK II products. Detail use of different media is discussed under promotion

Money

We will heavily depend on the marketing budget set aside for the SK II global expansion product. Our target is to use no more than 5 million dollars for all marketing activities. Detail marketing budget requirements will be documented separately and sent to the global leadership team for approval.

Measurement

A detailed market objective assessment exercise will be undertaken every quarter and impact of each marketing campaign and event will be assessed. Any course correction and lessons learned will be implemented immediately as needed. Next section discuss the detailed monitoring and evaluation of
marketing plans

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Monitoring & Evaluation of Marketing Plan
Monitoring and evaluation of marketing plan will be done on quarterly basis. Here are some of the measurement indices against which objective assessment and success of the marketing plan and strategy can be measured on an ongoing quarterly basis

1. Increase in sales revenue due to impact of marketing event/s in that quarter or fiscal year 2. Quarterly Increase in total customer numbers directly related to marketing promotion 3. Number of Online website visitors & kiosk browsers

4. Online purchases made
5. Facebook page likes, twitter followings & YouTube video views 6. Mobile Apps downloads
7. Number of online bloggers about SK-II products
8. Number of celebrity and expert endorsements
9. Number of repeater customers through online ad campaign and promotions 10. What is the positive impact on the brand, percentage increase in brand valuation?

Cite this Marketing and Skin Care

Marketing and Skin Care. (2017, Jan 25). Retrieved from https://graduateway.com/marketing-and-skin-care/

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