Skii Case Analysis

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Practical Work # 1
P&G and SK-II

Paolo de Cesare heads to Japan to make a decision on one of P&G’s most successful and fast growing products – SK-II. SK-II was a high end product that had developed a strong following among Japanese women, who were increasingly conscious about skin care and willing to spend a significant amount of their income. Cesare must decide among three options: continue to focus on the Japanese market, introduce the product in china, or introduce it in Europe.
After careful consideration and analysis, I would recommend that Cesare pursue a strategy that prioritizes a focus on the Japanese market and eventually transitions into China. SK-II is a proven product in a market that is has yet to be
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Differentiating – Differentiating SK-II in Japan is one of the leading reasons for the product’s success. Consumers value the analysis of scientifically proven benefits that the product provides. Establishing this ideology in China will be difficult for P&G but the success of the product in Hong Kong and Taiwan may help alleviate the issue. European markets are saturated and have a high level of competition with various established products, and thus, differentiation in this market will be difficult.
Improving Industry Attractiveness – De-escalating or escalating the degree of rivalry will be a crucial factor when deciding which market to prioritize. Focusing on Japan will further strengthen P&G’s foothold among competitors such as Shiseido, Lion, and Kao. Companies have already been in China for three years (at the time the case was written) and a quick entry for SK-II would foster early entry benefits. European markets are too highly competitive – prioritizing this market may induce price wars.
Normalizing Risk – International operations can provide geographic risk reduction but can also create new sources of risk. While China will provide a new market to diversify P&G’s portfolio, it has still only recently opened its borders to foreign retailers. Strict governmental regulations and lack of transparency in economic predictability may actually increase risk. Europe and Japan’s economies, while slow in growth, are established and can
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