Project Name: Pearl Harbor

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Project Name Pearl Harbor
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Executive Summary
We, Shiseido, are the company who constantly seek
to identify new, richer sources of value and use
them to create beauty in the lives and culture of
our customers. Based on the solid and outstanding
domestic performance, we seek to provide our
services in overseas market. Currently, we
acquired 1.3 of international market share,
however, we are pursuing the growth up to 11
within next 5 years while being the no.1 in
quality, service, and corporate image. In order
to accomplish our goal, we decided to enter US
market as an initial step. The constant growth
in the overall cosmetics industry, especially the
enormous potential predicted for the Skin Care
segment, provides us with the great opportunity
to thrive in the international cosmetics market.
Our solid domestic cash cows, scientific and
reliable image of Japan, our own prominent RD
systems and growing interest in oriental
philosophies are guiding us to the bright future.
However, there also are several threats and
weaknesses that we should overcome. For instance,
having thin corporate image in US market,
existence of huge competitors, and having no
competitive perfume, which is crucial for
acquiring prestige image as well as entering the
male cosmetics, are several representatives. Based
on the above analysis, the principal strategy
that we, Shiseido, have decided to take is the
promotion of scientific-cum-inner well being
image. The scientifically proven colors and
aromas, influencing various human senses, have
positive effects over spiritual being, and
ultimately aid recovery of the outer appearance.
Overall Shiseido products have this psychological
influence, however, the 5S system further
intensifies this concept. 5S products aim for
both the skin and the mind care targeting the
general middle class women, including the teenage
group which shows great potential for the future
cosmetics market. Another target market is
prestige class women, mainly career women with
high income. The market will be targeted with the
brand Shiseido(Global Line), which differentiates
its subordinate product groups such as Pureness,
Benefience, The Skin Care, and the Suncare
meeting specific customer needs.
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1-1. Environmental Analysis
- Trends of Cosmetics Industry
The growth of cosmetics industry, which has shown
a constant growth with the annual growth rate of
4.8, has always been closely related to womens
development and the general trend of the society.
In 1990s, women rights have been more equalized
to men than past decades. For example, the number
of top female managers is constantly increasing.
More social interactions for women means more
make-up needs for them as well. Nowadays the
trend of making-up is going so far as to the
girls in the age of 12 years old. These are the
clear signs of the current and the potential
growth of the entire cosmetics market.
A. Dollar Volume in Manufacturer's Sales Note
that the clear divisions between product
categories are becoming blurred.
1997 (Millions)
Skin Care 5,551
Color Cosmetics 6,173
Womens Fragrance 3,345
Body Bath 3,498
Mens Products 1,478
TOTAL 20,045
1997 ()
Skin Care 3.4
Color Cosmetics 8.9
Womens Fragrance 1.4
Body Bath 7.5
Mens Products (-2.6)
TOTAL 4.8
B. Growth Rate All product categories experienced
some growth, except Men's Products which
continued a sales decline.
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1-2. Environmental Analysis
- Trends of Cosmetics Industry Greatest
Potential Lying in the Skin Care Market
While all cosmeceutical categories will
experience healthy growth in the next five years,
Datamonitor predicts that the skin care market
will see the largest growth rate. "Between
1995-1999, the makeup and hair care categories
were the growth leaders in the cosmeceutical
market," comments Post. "However the next few
years is likely to see a slowdown in growth in
makeup and hair care cosmeceuticals as consumers
realize that formulating makeup and hair care
products with active ingredients is largely a
marketing strategy, and these ingredients are
more effective in skin care products."
Such high potential expected in the Skin Care
market led us to choose the Skin Care products,
especially Facial Care products, as our major
product line.
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1-3. Environmental Analysis
- Trends of Skin Care Industry
The population is maturing and the skin care
industry keeps on growing. People are trying
anything to reverse the strain time has put on
their faces and bodies. Recognizing this, skin
care marketers have turned the category into a
potluck dinner, throwing all kinds of ingredients
into the mix. Also, consumers are ravenous. Mass
market facial cleanser sales jumped 43.2 to 622
million and moisturizer sales jumped 7.6 to 531
million in 1998, according to Information
Resources, Inc., Chicago, IL. Also, the prestige
anti-aging segment grew 12, according to NPD
BeautyTrends of Port Washington, NY. In fact, the
segment is growing so rapidly that the average
life of a new product is estimated at only three
years, said Dr. Daniel Maes, vice president
research and development, Estee Lauder.
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2. Competitive Analysis
The industry is dominated by Estee Lauder
Companies (Estee Lauder, Clinique, Aramis,
Prescriptives, Tommy Hilfiger, Origins, M.A,C.,
Aveda, La Mer, Danna Karan, Bobbi Brown etc.),
which accounts for 45 of all department store
cosmetics purchases. Other companies include
LVMH, Chanel, Elizabeth Arden and Clarins.
Why have we, Shiseido, decided to choose Estee
Lasder as our major competitor? The reasons
follow 1.It may seem that competing with small
market share holders is easier than competing
with huge Estee Lauder for the initial stage.
However, Chanel, Elizabeth Arden, Georgio etc.
have extremely prestigious reputation thus, the
customers are mostly very loyal to their
conventional brands. 2.Our ultimate goal is to
become world no.1 which means becoming even
bigger than Estee Lauder. Thus, we must compete
with the biggest brand to acquire their position
as ours, not the small brands with highly loyal
customers. This will help us to focus on our
ultimate goal without any unnecessary divergence
of strategies.
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3. BCG Matrix Analysis
Note that various cash cows in the domestic
cosmetics market, not shown in this matrix,
firmly supports the new global line brands
displayed on the dog and question sectors of this
matrix.


Shiseido Suncare
Market Growth Rate in the U.S.
High
Shiseido Benefiance
Targeted Future Position by 2004
Shiseido The Skincare
Shiseido Pureness
Present Position In 1999
5S
4.0 (averagee cosmetic market growth Rate in
1999)
Low
4x 2x 1x
0.5x 0.25x
Relative Market Share in the U.S.
High
Low
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4. SWOT Analysis
Opportunity Threat
Opportunity Threat Strength Weakness  The market for cosmetics, especially the skin care segment, shows great growth potential. Career women are looking for inner or natural spiritual well-being products Japan has a scientifically advanced and reliable image in overseas The interest in eastern philosophies, famous for the assimilation with the nature, is dramatically increasing. One of the competitors, Estee Lauder group, plays extremely dominant role in the prestige cosmetics market. This means Estee Lauder has already acquired solid costumer basis. Moreover, most of the other small market share holders have extremely unique and prestige image formed over long period of time along with other industry lines such as fashion in western society. (e.g. Chanel, Ralph Lauren, Calvin Klein) US consumers may demand different style (different needs from those of Japan).
Strength - Special concept of caring for inner well-being as well as the skin itself. - Has Solid Cash Cows which yield enormous profits so as to support the international investment - Big and experienced company who has the know-how to be a global player (has prominent and experienced Human Resources to deal with various issues) - Excellent sources for research on new and better products through own RD facilities and established Research Centers Make good use of the enormous cash produced by the Cash Cows of domestic market to invest in the new global product lines. Apply the interest toward oriental philosophies and the conventional image of Japan in US to promote the scientific-cum-inner well being concept. The cash cow should be used to wisely support the new brands so as not to fail due to the extensive competition with Estee Lauder. Experienced Human Resources, and RD facilities should be managed effectively to successfully handle the severe competition. The Shiseido Research Centers and RD facilities should be used wisely to discover the US consumer needs.
Weakness - no reputation established in US market with hard-to-pronounce name - low market share - doesn't have high reputation for perfumes which is significant in US when creating the brand image Create a unique image through the use of the conventional Japanese image being scientificand the use of oriental philosophy Apply the technology of utilizing natural resources to create aroma effecting the inner being into the creation of Shiseidos new fragrance brand. Establishing prestigious image as well as overcoming the hard-to-pronounce name against Estee Lauder is one of the major tasks to acquire the greatest international market share. Finding out the need and taste of US and the difference from those of Japan is crucial for the success.
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5. Goal/Objectives/Strategies
Corporate Mission To become no.1 in quality,
service, and corporate image Business
Statement To fulfill the customer needs and
desires through individual scientific-cum-inner-we
ll being products and the companys
know-how. Objectives 1) To Increase overseas
market share from 1.3 to 11 within next 5 years
2) To create and establish a unique group
individual brand image
suitable for the US market Strategies -Target
market attracting prestige class women with high
income(with the brand Shiseido), as well as the
middle class women including the teenage groups
with extreme market potential (with the brand
5S) -Positioning scientific-cum-inner well-being
products providing healthier looks through
healthier spirit -Price targeting prestige and
middle class/ trying to set lower costs for
middle class products and similar price for
prestige class when compared with the
competitors -Distribution focus on department
stores as well as on-line shops / special 5S
stores for experiences in aroma and color
effects -Sales Promotion advertising campaigns
focusing on the use of natural resources to
influence consumers various senses, promoting
the spiritual being. / Shiseido store dedicated
to free try-outs for customers -Company Growth
in order to increase the market share, We should
not only pursue selling our own products and
brands, but also has to make joint ventures, buy
or take over US companies, or sell our products
under other company brands
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6-1. Specific Strategy Accomplishment through
Various Brands/Product Portfolios
- Shiseido (Prestige Class) Product
Differentiation meeting specific customer needs
b. Pureness
a. The Skincare
The Skincare is for overall prestige customers.
It has been designed to offer calming solutions
for stressed-out skin. The Skincare line
strengthens, restores and protects.
Pureness is a skincare line that provides the
ideal type of moisture replenishing for young
skin, refines it and brings out the skin's
natural clarity. It contains the exclusive
Shiseido ingredient Phytogenic Complex, a
water-based moisturizing factor found in various
fruits and plants.
c. Benefiance
d. Suncare
Shiseido's Suncare line offers products that are
ultra-gentle and protect skin from the redness,
dryness, oxidation, skin peeling and damage
caused by UV rays, thus minimizing skin aging.
Designed for mature women with a keen interest in
anti-aging skincare, Shiseido Benefiance was
developed to please the customer entirely, to
please her body and mind. The concept is "Total
Luxury for the Skin."
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6-2. Competitive Advantage
- 5S (Middle Class) Skin Care Mind Care
5S system is the product that represents the
Shiseido philosophy most distinctively, harmony
of spirit and form the outer reflection of the
inner self. Combined with advanced technology,
herbs and natural extracts function to
effectively care for customers skin and
positively influence their minds with
scientifically proven color and aroma effects.
The number 5 is deeply significant throughout
many cultures and religions, as well as
philosophies about the natural and spiritual
world. For example, Confucianism has the five
classics, Islam the five pillars, and we all have
5 fingers and toes, as well as 5 senses. 5S
skincare is about UNION mind and body, east and
west, nature and technology. 5S was born out of a
collaboration between scientists, dermatologists,
color therapist, environmental specialist, aroma
therapists and herbalists in order to have
positive influence on skin though using all 5
senses.
Major Competitor Clinique
Clinique, one of the biggest subordinate brands
of Estee Lauder Group, is the strongest
competitor in the Skin Care industry for the
middle class consumers. Not only they target the
same market segment, but 5S and Clinique also
have similar image of being scientificsince
they both were founded upon the researches of
dermatologist. However, 5S has a very
significant competitive advantage over
Clinique,that is using natural ingredients for
positive influence on the inner being. Clinique
products are formulated with chemicals thus,
when applied on the skin, the initial users may
feel a kind of hurt as well as the stinging smell
of strong chemicals. On the contrary, the 5S
Products are made up of natural resources, such
as herbs, while outsourcing them in an
environmentally sustainable ways. These natural
resources influence consumers 5 senses so that
the skin care and the mind care are both done
simultaneously.
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7-1. STP - Segmentation
Market Segmentation Market/Product Features Consumer Features Competitors (Brand Names)
High Prestige Extremely high quality with solid brand reputation established upon long period of tradition. Images are created along with the famous fashion designers Perfume plays significant role in the image formation. Long-term PLC Main channels department stores and specialty stores High income Strong loyalty to their current brands Chanel Christian Dior Elizabeth Arden Aramis Lancome Estee Lauder
Prestige High quality with high reputation Main channels department stores and specialty stores Relatively high income with constant social activities (i.e. career women, mainly late 20s-40s) Clinique Estee Lauder Tommy Hifiger
Middle Average price with good quality Great market potential due to increase in beauty interest as well as the decline in the initial age of using cosmetics and mens cosmetics Main channels department stores, general merchandise stores, and variety stores Broad age groups, especially early 20s Teenage consumers show high growth potential Men consumers are coming in. Clinique Body Shop Origions Revlon Loreal
Mass Low Price Great potential due to increase in beauty interest as well as the decline in the initial age of using cosmetics Main channels are general merchandise stores, convenience stores, drug stores and supermarkets. Dominant products are body bath care. All age groups with low income. Teenage consumers play significant role. Body Shop Origions Revlon Loreal
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7-2. STP -Targeting

• Target skin care market as they occupy the
  greatest portion of the whole cosmetics market
  with high market growth rate.
• Target prestige and middle classes for the
  initial stage. The high prestige class is hard to
  take over due to the solid brand reputation and
  high consumer loyalty of conventional brands.
  Also, The mass market consists of mainly the body
  and bath products, not the skin care nor color
  cosmetics segment. In addition, targeting mass
  market from the initial step might lower the
  overall Shiseido group reputation. Prestige
  market should be targeted since Shiseido showed
  greatest volume of sales in domestic prestige
  sector. Furthermore, the middle class is targeted
  as it is expected to show the greatest potential
  growth in the teen and men market. Thus,
  targeting prestige and middle classes will
  contribute greatly to the increase in the
  overseas market share, one of the ultimate goals
  of Shiseido.

Brand Name Target Market Product Feature
Shiseido(Global Line) Prestige Class Includes specialty products such as anti-aging, sun care, and young skin.
5S Middle Class(Concentrating on the Skin Care market) Utilizes scientifically proven color and aroma effects on skin spirit. Relatively low-price, suiting diverse market, esp. young generation.
7-3. STP - Positioning
Brand Name Overall Brand Positioning Main Channels Selling Format
Shiseido(Global Line) Main global brand, embodying the Shiseido corporate brand image. Department stores Specialty stores Counseling
5S Brand targeted at urban women, based on a SoHo, New York City, image. Spiritual/Psychological image as well as scientific. Department stores Variety stores General merchandise stores 5S stores Advice Self selection