P&G Japan: The Sk-Ii Globalization Project Harvard Case Solution & Analysis

ISSUES STATEMENT

The P&G is facing the issue regarding the product development, the product SK-II is in the category of skin care products, the market in the Japan has been matured now, because many players are competing in this market so the profitability and the growth has reduced significantly. The cost of the advertisement and promotion is higher in Japan. The company is not improving its product based on the customers need, the company has the research and development department but because of the culture over there in P&G the employees invest their time in non-core activities rather than investing in the core activities.

ANALYSIS

The P&G’s product Skin II, is a standing skin care lotion launched in the Japanese market. Currently the P&G is in the consideration to expand its first ever Japanese product worldwide. This product has also been launched to some of the other countries successfully. The company is currently based on the mass production rather than research based because their analysis has shown that the research and development cost is just eroding their profits. However, recently they have focused on the research and innovation in order to innovate the new products. At the start the company was focusing on the standardized product rather than the customization of product that based on the people need in different countries. Before the 1999 the P&G’s culture was not as efficient as the employees do the non-relevant task rather than the doing the relevant tasks. But now on the culture of the organization has been changed and therefore the efficiency of employees has also been improved.

SK II is a high quality product that is priced US$ 100. The product is being distributed through the special stores. However, the company was not so active in the marketing and promotion of the product, but later on it started doing the promotion and found that the sales improved dramatically. However despite this fact, the growth for this product has declined in 1999 after the burst of the bubble in the Japan. The Globalization of the SK II product can give the benefits in several ways; such that the famous brand of the product in Japan would become famous in the other countries as well. The brand awareness campaigns and the marketing would also help in the same. SK II has a big success in some of the Asian countries.

There can be some drawbacks for this product as well, such that this is the high priced product so looking at the general economy, the price might be the constraint in the globalization. The globalization needs the complete and new distribution system that might be costly compared to the cash flows that are expected from the product.

The Skin II product is in the Japanese market now, the market development options that P&G is considering, are China and Europe. In Germany and France there is intense competition between the existing players over there as the market for such cosmetics products has matured and the cost for promotion and advertising is high. China, Japan and the Europe are still easier with regard to the competition and the cost of promotion.

The SWOT analysis on SK-II has been discussed in detailed. The strengths of this product are, it has got the 70% brand awareness in the Japan, it is an innovative product as customers are satisfied with this product, the most important point is that it is a high profit margin product compared to the other products;also; it has a universal brand name.

The weaknesses of this product are, it contains the high marketing and promotion cost, it also has the high cost regarding the research, since it is an innovative product therefore it needs a continuous research. It has high price, this might have an effect on some of the economies and finally it does not capture the young consumers as it is targeted at the consumers over 30 years of age.

 The opportunities in the Japanese market are, there is the skilled labor available for such innovative products, there is a high demand for skin care products as 95% of the consumers use the facial lotions, there can be the technological advantage and the important point is it is the politically stable country.

The Threats are, the market has matured,and as there are many players in this market therefore the growth rate has also declined to 2%...................

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