Name: Zaireen Raihana Binti Zaharuddin

Student ID: 2001612134

ISSUES & PROBLEM STATEMENTS:

1. Did SK-II have the potential to develop into a major global brand?
2. Which market were the most important to enter now?
3. How should this be implemented in P&Gs newly reorganized global
operations?
SOLUTION
1. Research and Development
One of the sources of new idea is to partake in research and development
activities. Research and development (R&D) can be done by Procter and
Gamble (P&G) to develop a new and improved SK-II in order to penetrate the
new market. The company should conduct research to identify new potential
products that can be introduced to the European market. The problem faced
by P&G is that it has a 60-person R&D team which is miniscule compared to
its competitor, Kao which has a 2,000-person team. P&G should make the
move to expand its R&D department so that it would be able to compete with
the tough, technology driven competitors across the globe.
To be innovative, P&G should invent new ways of doing things such as
developing a product that suits the needs of the European market. Doing R&D
can uncover critical strengths and weaknesses. What P&G could do is do a
single-country research whereby the market growth and segment can be
identified, to identify the competition in the foreign market, to identify the
consumer needs and consumer perceptions. The main question P&G should
ask itself is will strategy used in country A also work for country B? And what
adaptations are necessary to adapt the strategy.
According to the case study, skincare products in Europe used by
women left their skin moisturized and conditioned but not as clean as they
wanted. Different products used in different countries offer different results.
The essential goal for P&G is to create a product that helps users of SK-II to

achieve soft, moisturized, and clean-feeling skin. Moreover, P&G should focus
on the health trend. Health maintenance and concerns about health care
provisions together are one of the biggest trends today that will continue in the
next decade as the world population ages. Many people from around the
globe prioritize their health and would pay for products that are of high quality
and is effective. The most important market for SK-II to enter is the European
market.

European Market
It is known that the European market consist of a large segment of
urbane beauty conscious consumers who are already committed to a
multistep regimen using various types of specialized skin care
products. P&G should create a new version of SK-II product to suit to
the local needs. If P&G are able to create a product that have a 3-in-1
function it will appeal to the consumers more as it helps them to save
time.
SK-IIs top competitors who are in the same luxury item league
is Lancme, Estee Lauder and Clinique. These major brands have a
stronghold in the skin care market and it will be tough for SK-II to
compete with. It is not impossible for SK-II to develop a new formula
that can be suitable for the needs of the European consumers. The
R&D process will take time, effort and money but P&G have the
resources to engage in the costly R&D.
Furthermore, P&G has done research on SK-II in the United
Kingdom but the research has proven to be a failure due to the lack of
knowledge that consumers have on full skin care regimen. SK-II should
penetrate the European market even if the risk is high.

SWOT ANALYSIS

Strengths

Weaknesses

A good product with proven

results
Strong brand image
Loyalty
Strong marketing support
High recognition

Opportunities

Threats

Men industry
Launching of makeup
series
Growing affleuce
Collaborations with
established brands

Imitation
Strong competition

Niche market
Narrow range of product
Weaker bargaining - under
department stores
Absense of retail flagship
stores

A. Strengths
SK-II is a high quality luxury skin care product which is very successful in the
Asian market. They have a strong brand image which gives it a competitive
edge over its competitors. Having a good image gives SK-II leverage over
other products and consumers from around Asia knows the product as a
premium skin care product. Moreover, due to its effectiveness and efficiency,
SK-II products have loyal users.
Being a product that is in the P&G product line, SK-II has the
advantage of strong marketing support due to the strength of trust consumers
have over other P&G products. P&G is a company that has been in the

business for many years thus they are trusted and recognizable by people
from around the globe.

B. Weaknesses
Being in a niche market is a major weakness of SK-II. As the product is
concentrated only on a segmented market, it will be focused only for the highincome group of consumers. It would be an advantage for SK-II if the product
is created for all the high, middle and low income group to enable it to have a
larger market segment.
The product range offered by SK-II is only limited to skin care products.
Rivals of SK-II are providing consumers with a wider range of products that
serves as a comparative advantage for its rivals. Unlike some of its
competitors, SK-II are sold in department stores and specialty stores like
Sephora and Guardian. This weakens the product as it has less brand
exposure compared to its rivals. SK-II should have its own flagship stores so
that its customers are able to get their hands on the product and be served by
SK-II specialists. Moreover, the weakness of being sold in department stores
is that customers have the power to compare the price of SK-II and other
similar products.

C. Opportunities
Nowadays men are becoming more conscious of their skin care and many
companies are producing skin care products specially for men. SK-II should
take the opportunity to venture into this new business. The variety of men skin
care products are not as extensive as of the womens skin care products.
Moreover, SK-II has recently launched a new product line in the
makeup line. Venturing into a new market may help SK-II improve its
recognition as a brand that has a wider variety of product and may help
further increase its market share. Lastly, SK-II has made collaborations with
established brands such as Senze Salus, a spa company. This move made by

SK-II will further strengthen their brand and create good relationships with
future customers.

D. Threats
The two threats that SK-II has to face is the threat of imitation which is
something that all company are facing. If the consumers are not educated in
differentiating imitated SK-II products, the brand will have to face
consequences. SK-II should create a holographic design on its product or a
authenticity code to help customers check whether the product is original or
counterfeit. The sale of counterfeit goods will leave SK-II with a bad name and
it will not be good for the company.
The skin care product market is not a new market thus there are many
existing competitors selling the same products. This gives the consumers a
high buying power. It will be essential to provide the customers with a loyalty
program the enables them to stay loyal with the brand.