Shiseido Case Analysis
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Problem Statement What marketing strategy should Shiseido pursue that will appeal to the cultural, social, personal and psychological characteristics of American consumers and therefore increase the company’s share in the US market? Target Market Adult American women belonging to the high-income earning class Areas for Consideration Strengths: Shiseido is the largest cosmetic manufacturers in Japan Shiseido already has a long history and a well-established image in Japan Weaknesses: The company holds only 1.3% share in the US market Shiseido lacks a well-known perfume brand, which most of American firms possess Opportunities: Americans are beginning to emphasize a return to basic values and a less stressful lifestyle that is in line with Shiseido’s well-being approach Consumers are becoming more vigilant and value information much more than promotions Threats: Cultural, social, personal and psychological characteristics of Japanese consumers.
The presence pf already established American firms in the cosmetic market Alternatives Alternative I: Pursue the same marketing strategy in Japan The company would exactly use its 4Ps strategies in Japan to appeal to the American consumers. Thus the company would produce the same products and use the same brand of cosmetics and consequently price them a premium price. It would also try to distribute it through retailers and work out similar arrangements wherein the retailer is to sell only Shiseido cosmetics with the condition that Shiseido would repurchase all unsold cosmetics. Lastly the company would opt to use standardized promotions, thus only altering its advertisements for language differences.
Alternative II: Develop a completely new marketing strategy for the American market In this strategy the company will still produce the same product but will make some modifications in the brand and packaging of the products. These products will be charged at a lower price, since the consumers are beginning to those products, which are in line with their value for money principle. These cosmetics would still be distributed through retailers, but the company needs to make do without the repurchase agreement with its retailers. Lastly the company would adapt its promotions to the American market by exhibiting and stressing the unique characteristics of its American market and how Shiseido can well serve this market.
Alternative III: Adopting only certain aspects of its marketing mix to the American market Shiseido company would still use the same products and brand name for the cosmetics that it will market in the US. These products will still be priced as a premium as when it is sold in Japan. The company, however, would need to formulate a new arrangement with its distributors that will primarily be composed of retailers. Lastly, the company would adopt a promotions strategy that would relate to the culture, personality and lifestyle of the American women.
Recommendation The company should adopt the third alternative strategy.
Because of the brand equity of the Shiseido brand in Japan, the company should preserve the said brand and use it when the company begins to market its cosmetics in the United States. Since Shiseido will primarily be targeted to high-income earners, it would be better to maintain the high prices of the product to project its image of sophistication and style. Further the cosmetics line will still be distributed through retailers, particularly departments stores that serve the higher classes. The arrangement, however, of Shiseido with its retailers in Japan, may not work in the US. There are so many cosmetic brands in the U.S. and Shiseido is not even one of the established brands, thus retailers would refuse to enter in such an arrangement that would force them to sell only this brand. Further this arrangement, even if accepted by retailers, is too costly and risky for Shiseido since there would be a chance that only a small percentage of consumers will purchase Shiseido when it is still a new brand to them.
Knowing that the US market may not readily accept Shiseido cosmetics, as evident by their present 1.3% share, the company must really work extra hard in promoting their products to their target market, the American women. One way to make the consumers aware of Shiseido is through aggressive advertising, especially during the first year. One effective advertising strategy is to place print ads in women’s magazine. The company, however, must be careful in choosing the right media vehicle that would reach their target market. It must take time to select the magazines that women from the high-earning classes read, and place their ads in these magazines. Examples of these magazines are Vogue, Cosmopolitan and Style. However with the number of ads in a single magazine, Shiseido must ensure that it is differentiated from the other established brands of cosmetics, like Revlon and Loreal.
To differentiate itself, it could use the scientific approach and define the benefits of Shiseido, which would be far from the other cosmetics brands that advertise beauty and glamour. This, in fact, though quite different from the usual cosmetic ads, may be appreciated by consumers who are now vigilant in their search for information. Further the company must stress their well-being approach and assert that “Shiseido creates products that make women feel beautiful inside and look beautiful outside”, this as mentioned in the case, may be a step with the times when Americans are now emphasizing a return to basic values and a less stressful lifestyle. This could be done by running a series of ads showing women living less stressful lives. One ad can show a woman reading a book on a patio, or a woman spending the day by the seashore, or perhaps a woman spending a breezy afternoon in a garden.
Such ads would surely capture the eyes of readers who have been for years used to seeing ads of glamorously made up women. Aside from these ads, the company can promote their products by continuing placing skin care consultants in Shiseido counters who can give expert skin advice to women. Women would highly appreciate this, and such if executed properly can give Shiseido a “skin expert” image that women could depend and trust on. With free skin care advice, the company can now let go of samples, without the customers feeling the lack of such give-aways. Moreover, this personal selling approach would be more effective than having salesladies pressure-selling customers into buying several makeup that they may not even need.
Further Shiseido can even add a customer hotline similar to that of the Ponds institute, where women can call whenever they have questions regarding skin care or Shiseido products. Also, they could listen and respond to their customers through their continuous operations of their website.
After the company has already established a name in skin care and make-up products, the company can opt to develop a perfume live that could even support their products. The image of the perfume should also be in line with the “well-being” approach of Shiseido so as not to create confusion in the company’s image.