How SK-II become market leader from nearly bankrupt

SK-II is a product under a US company call Max
Factor. Thus, before I start talking about SK-II. Lets talk about Max Factor.

Max Factor is a make-up artist, complete his study in Russia and work as make-up apprentice in an opera performing company. Due to his passion on ladies movies star. He started his own retail business.

In 1936, Max Factor has become a leading cosmetic company in US. He build his reputation with cooperation with Hollywood movies star.

Max Factor is a family business as all his 4 sons work for the company. But non of it daughter in law work for the company. Thus, The company is manage and dominance by male even this is a famine business.

Max Factor family later dispose off the company and the new owner listed the company in stock Exchange in 1961. However, the new owner dispose to another company in 1971. He claim than operating a public listed cosmetic company is not fun as much of his time emphasis on profit and growth rather than creative and beauty previously.

A scientist in Japan, in search for a cure for his friend sickness, accidentally found a yeast called saccharomycopsis has successfully cure his friend illness. They name it Pitera. The scientist then sell the recipe formula to Max Factor in Japan.

In 1980, Max Factor launch it first product base on the recipe formula. They call it success Key initially. Only second generation product, they call it SK-II which used until today.

Procter and Gamble (P&G) acquired Max Factor (including SK-II ) in 1991. However, as the company used to sell detergent and pampers or what we call mass market product. This is first time P&G enter into beauty & cosmetic industry. Max Factor making loss of USD30million for continuously 3 years accumulating total loss of USD100million.

A 30 years old brand manager of Olay product in Taiwan's P&G's Olay division, Michelle was send to Japan as SK-II brand manager January 1994. She does not know Japanese language at that point of time.

Michelle was the third batch of brand manager assigned to revive the brand. The company has try numerous method but fail. Thus, an out of the box or breakthrough strategy was needed.

SK-II, despite an unpopular product with merely 5% of the population heard of it at that point of time, have a batch of loyal customer including movies star and royal family. It market through word of mouth.

Michelle, look for a spoke person for SK-II among it loyal customer. They decide to used Momoi Kaori (right picture) eventually. She is 45 years old at that point of time. Michelle also replace the TV advertisement prepared by the advertising company with a black & white advertorial in magazine.

After the launch of the new promotion. Sales start picking up and the division stop bleeding. Thus now the target is to become top mega brand in Japan.

She convinced P&G in Japan to allocate 50billion yen budget for TV advertising expenses. They also provide a hotline on the TV advertisement for customer to call up to request for sample product. From the first day of the launch of TV commercial, they received 100 thousand call. They retrieved the hotline number after 5 days as they only prepare 500 thousand sample sets.

It take 7 days for the yeast to convert to Pitera like brewing alcohol. It become the factory unable to produce enough to meet demand. Whole country women age 35 to 50 in Japan are talking about SK-II.

Michelle get promoted immediately. P&G in Taiwan & Hong Kong also shooting similar TV advertisement using local spoke person. P&G hq in US also consider launching the product in North American.

Later, Michelle launch another TV commercial to target for customer age below 35. She used same spoke person Momoi Kaori describing she start using the product since at the age of 20.

Michelle however, request to transfer to other department after that. P&G transfer her to hair care product Pantene division. She has left P&G now.

Spoke person Momoi Kaori career in entertainment industry pick up again after such incident

P&G acquired Cover Gil in late 1990 and hair care product Wella in 2003.

Wikipedia

Technorati Tag: Cosmetic : Beauty: Biotechnology:Pantene

Maybelline invent Mascara

In 1913, William, a 19 years old chemist like to help his younger sister Mabel to attract the eye of her admiry. He uses a mixture of chemical together with Vaseline to put on her sister eyelash to make her sister look beauty and attractive. Her sister married to her admiry eventually.

William invented the first Mascara in the history. He used his sister name and the name of his raw material to create a brand name......That how Maybelline born.

William's family operate the business for 50 years. Then, it sold to a drug manufacture Plough in 1967. In 1990, Plough sold the company to an investment group call Wassertein Perella & Company.

Investment banker Bruce Wassertein like to buy a near bankruptcy company, revive the company and dispose off at higher price.

In late 1990, Protect and Gamble ( P&G )buy a cosmetic brand Cover Girl. P&G competitor Unilever eying to buy Maybelline.

Unilever back out eventually. They feel it is difficult to revive Maybelline and do not feel P&G would successfully revive Cover Girl. Loreal CEO feel he able to revive this American brand into a global brand.

To revive a brand does not depend on instinct, Loreal already have similar brand. They have a similar brand in French call Gemey and Jade in German. Loreal feel that by combining Maybelline with it existing 2 brand Gemey and Jade. The deal has more advantage than P&G acquired Cover Girl.

Maybelline already venture to Asia back in 1994, when Loreal acquired Maybelline. Maybelline have penetrate China's market. And have a 300 workers factory in Suzhou. At that point of time, Loreal only has a one man representative office in Shanghai and Beijing respectively.

When Loreal executive visit Maybelline China operation. They discover that they have far behind that P&G in China's market. Thus, they want Maybelline to be a starting base in China, and hope that every Chinese's lady have a Maybelline lipstick.

The merger of 3 brand start immediately. Maybelline star product mascara was introduce quickly into Gemey and Jade preduct line and market it in European Market. Gemey flagship product Volume Express become a product under Maybelline brand as well.

Purchasing of raw material and packaging material quickly reach critical mass to take advantage of economic of scale by requesting a bulk discount. Cost saving quickly turn to budget on advertising and promotion to penetrate market.

They put a New York label under Maybelline. Loreal retain the same advertising company and it slogan at that time:

Maybe she's born with it, maybe it's Maybelline

In Europe, Gemey and Jade would add a Maybelline brand on it packaging. Slowly, it enlarge the Maybelline the make the word Gemey and Jade smaller on it packaging. Today, you still can see Gemey and Jade printed on Maybelline product in Europe.

In 1999, R&D division of Maybelline launch a Nail Polish that able to dry in one minutes. This fulfill the requirement of fast pce environment of office lady. It later make all the product to dry faster, like mascara, eye liner and lip liner.

Water Shine Lipstick is the first "globalize" product that produce by the company. This is also the first product not invent in Europe or US within Loreal Group. It invented in Asia.

Kose was an agent in Japan for Maybelline before takeover of Loreal. Sales of mascara was very good than. After the Loreal take-over, Loreal want lipstick become core product.

Product recommended by US team Moisture Whip too dry. Color and quality also not suitable for Japan market, and it fail in Japan market eventually. Japanese team reinvent the product to make it more suitable for Japanese market.

In August, 2000. Water Shine launch in China, then Japan, then other Asia country. From Tokyo, Shanghai to Singapore. Water Shine lipstick make a record sales.

From Water shine, Maybelline become a global brand. It become the first choice brand for 15-19 Japanese girl. In Taiwan, Maybelline control 40% market shares. Star product mascara even control more than 75%, almost monopoly. In China, Maybelline can sell 10 million units of lipstick per year and growth at 200% per year. In Europe, it control 20% market shares.

Technorati Tag: Cosmetic : Beauty