Procter & Gamble Narrative Essay Example

tried to maintain its position by reducing prices, but this led to financial difficulties. The second oil shock in 1979 further exacerbated the situation by driving up the cost of detergent raw materials. Additionally, Japanese consumers and government officials started to express concerns about the presence of phosphates in detergents.

In 1981, Pampers faced competition from Uni-Charm's Moony diaper, which was priced 40 percent higher. Moony quickly gained a 23 percent market share, causing a decline in Pampers' sales. By 1983, P&G had accumulated losses of $250 million and annual sales had dropped to $150 million. However, the company saw potential in Japan as a gateway to the rest of the Asian market. In 1985, they initiated a reform project called ichidai hiyaku, or The Great Leap, aimed at building a profitable base business and preparing for future growth.

The goals of the plan in the first year were to significantly increase volume while avoiding additional operating losses. In the second year, the company aimed to strengthen existing brands and introduce new ones to the testing market. In the final year, the objective was to achieve a break-even position and establish a solid volume foundation for expansion. To accomplish these objectives, a local R&D team was established to lead product development, serve as the technical support hub for P&G in Asia, and establish a P&G global technology group.

Despite the limited number of people in the group (60), this posed a significant challenge when comparing it to Kao's R;D section, which had 2,000 individuals. However, the Japanese group managed to overcome this obstacle with the assistance of the company's R&D unit in the United States.

Consequently, they successfully created a diaper that was not only the world's thinnest but also the most absorbent, surpassing products from Uni-Charm and Kao. P;G's President of Northeast Asia, Werner Geissler, stated that having locally focused R&D resources allowed them to gain valuable insights into local consumer needs, habits, and practices, which played a vital role in designing winning products. Additionally, these resources provided them with a better understanding of their competitors' technologies and innovations. Geissler further added that since Japan serves as the primary technical center in Asia, their work includes a combination of developing global technologies, adapting them for Japanese market requirements, and adapting and developing them for other Asian markets.

The marketing team analyzed the growth patterns of the company's competitors and conducted studies that found unique cultural and communication patterns that greatly influenced advertising in Japan. In Japan, advertisements always had a friendly tone and never used aggressive tactics. Commercials also featured background music and well-known celebrities to promote the products, and they explicitly mentioned the manufacturer. Additionally, by reducing the number of plant management staff from 36 to 9 managers and eliminating the 12-month lead time for custom-made diapers in the U.S., P&G was able to reduce costs significantly and handle product changes more efficiently.

The company has factories in three locations: Akashi, where they produce diapers and FemCare products; Takasaki, where fabric and home care products are made; and Shiga, where cosmetics are manufactured. After conducting internal research and seeking advice from a consulting firm, P&G found that the distribution system in Japan relied mainly on primary and secondary wholesalers instead of retailers as seen in the United States.

To address this issue, the company decided to narrow its focus to fifty core wholesalers instead of the previous 500. Additionally, they also reduced the number of secondary wholesalers from 2,500 to 1,000.

Deploying the Best Technology Here First Japan is a supremely demanding marketplace. In the diaper market, for example, the performance demands of Japanese consumers clearly exceeded those of Recovering and Regrouping—The Great Leap the European and American consumers. P&G, battling Kao and Uni-Charm for technological leadership, made the strategic decision to introduce its most advanced global technology in the Japanese market before the United States. By late 1989, Pampers had successfully regained its position as the market leader with a 23 percent share.

Since entering the Japanese market over thirty years ago, P&G has successfully established a strong presence in the feminine hygiene product market with Whisper, achieving a market leadership of 25 percent within three years. In 1988, P&G introduced Ariel as a replacement for Cheer, utilizing its superior worldwide detergent technology. Despite the high costs involved in research and development in Japan, P&G firmly believes that the country is an ideal location for R&D facilities due to its thriving innovation scene and rapid introduction of new products.

Acquisition was another important factor contributing to P&G's growth. In 1991, P;G bought out Max Factor, a global acquisition with a substantial portion of the business in Japan. Despite having good products, technology, and understanding of the Japanese consumer, Max Factor lacked a strong business strategy. By implementing a clear business plan and leveraging their consumer understanding, P;G swiftly revitalized the business and achieved substantial revenue growth.

The Max Factor

business achieved great success through its SKII line of beauty products. Initially launched as a brand limited to Japan, SKII has now gained a strong presence in Taiwan, Hong Kong, Singapore, and several European countries. In 1999, P;G also purchased IAMS, a global pet food company that had significant operations in Japan. Leveraging its cost-effective offshore production and expertise in marketing and distribution, P;G rapidly boosted IAMS' revenue growth by promoting brands like IAMS and Eukanuba.

P&G’s success is built on a variety of factors including their commitment to the Japanese market, localized R&D and marketing efforts, efficient offshore production, and strategic M&A transactions for expansion. Despite facing financial setbacks, P&G continued to operate in Japan and even made it a hub for regional operations and R&D.