Site Loader

AFTER KAO ATTACK, WHAT’S NEXT? 1. 0 Case Introduction: This case is about the introduction of a new brand of Kao Malaysia Sdn. Bhd. Kao Malaysia is a leading company having third position in the detergent industry of Malaysia with its most popular powder detergent “Kao Attack”. Presently, the company is enjoying a leading position in household detergent market of Malaysia, however, the company has only Kao Attack in the household detergent category and don’t has any product in the liquid detergent category.

Rapidly changing consumer preferences and globalization are constantly putting pressures for re-positioning of the company image by introducing new products in laundry detergent industry. The company already has prepared a plan, after a considerable market research, to introduce a new liquid laundry detergent “Kao Attack Compact Liquid Detergent”. Top management wants a final decision, based on the information gathered by market research, by its marketing team on weather it should launch this new product or not.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

Kao Malaysia was incorporated in Malaysia on March, 1973, as a subsidiary of Kao Corporation Japan, a market leader in Japanese household and personal care industry, with the introduction of a single product, Kao Feather Shampoo. It had since grown to be one of the most prominent manufacturers and marketers of a wide range of household and personal care products. The company has always been a pioneer in introducing new products in the market and wants to keep its image of first mover by introducing a new unique product in the detergent market.

Kao Malaysia was guided by the philosophy of producing products that contributed towards building a “clean, beautiful and healthy” society. Extensive studies on better product performance, new technologies and constant product improvements constituted the corporate culture of Kao to match the vision of the company. Support from Kao Japan to Kao Malaysia for technical know-how and new product development has been a great strength in the success of the company in Malaysia. 1. 1 Brief Overview of Kao Corporation Japan:

It is appropriate to have a look on the parent company of Kao Malaysia to assess its competitive advantage in the Malaysian market. Kao Corporation’s principal business field is consumer products, especially the areas of “beauty care,” including cosmetics, skin care and hair care products; “human health care,” covering beverages and cooking oils in the “health food product” as well as sanitary products and “fabric & home care” products, such as laundry detergents and household cleaners.

In the “chemicals” business, Kao manufactures industrial products with detailed attention to the needs of various industries. In these fields the company aspires to make its contribution with a view towards enriching the everyday lives and the lifestyles of people around the world, through “better manufacturing” from the perspectives of its customers and consumers. (Kao Japan website) “The Kao Way” is the company’s overall corporate image/guideline for Kao Corporation Japan and its all counterparts worldwide.

It consists of “Mission”, “Vision”, “Values” and “Principles”. It is based on “Kao Management Principles” (issued in1995 and partly revised in 1999) and been constantly reviewed and revised to reflect the changes that have occurred in the business environment internally and externally. (Source: Kao Corp. Japan website) Research and development has been the key success factor in the company’s all time success in the industry. The development of products for general household use is the mainstay of Kao’s business operations.

To accurately grasp the constantly changing needs of consumers and to provide valuable products that excite consumers and employees both, the company engages in unremitting research through the spirit of “Yoki-Monozukuri. ” The technologies developed from this research are applied to laundry detergents and household cleaning products that find their way onto the markets not just in Japan but throughout Asia. The Kao Way is shared by all Kao Group members as a corporate philosophy.

Based on The Kao Way, members of individual Kao Group companies and divisions that operate on a global basis are engaged in business activities aiming at Yoki-Monozukuri that can really satisfy the customers and enable the company to share its joy with them. (Source: Kao Corp. Japan website) 2. 0 Situation Analysis: Kao Malaysia is a major player in detergents segment of Malaysian market and owns a reputable image in introducing innovative products. Its products, especially Kao attack, have been very successful in Malaysian household and personal care consumer market since its incorporation.

Marketing department of the company is well established and been playing key role in the development of brand and product awareness as well as the growth of the consumer base. The company is going to launch an altogether new product in the detergent market of Malaysia. Although market competition is intense in the detergent market of Malaysia, the compact nature of Kao’s liquid detergent gives this product a unique competitive advantage by product differentiation, and is very much aligned with the company’s vision of “clean, beautiful and healthy society”.

Because only half of the quantity of this liquid can give better results, with extra benefits, in contrast to the products currently available in the market by competitors. Also, less usage of water is required to wash this detergent from the clothes and thus it helps in building an image of social responsibility of the company. 2. 1 Global Detergent Market: The global market leaders in the detergent industry are Proctor & Gamble (P&G) and Unilever while Kao is one of the major regional players in Asia. It has biggest market share in Japan (45%) and overall Asia (23%).

The global detergent market can be divided into the powder and liquid detergent segments. In 1996, 75% of the total sales volume comprised of powder segment and 11% for the liquid segment. However, there were clear signs of consumer shift from powder to liquid detergent with the changing lifestyles around the world and thus showing great potential for the growth of liquid segment in the detergent market worldwide. Apart from market share, figures indicate a slow growth rate for powder detergents, with even negative growth for some brands, and a high growth rate of liquid detergents in last few years. . 2 Malaysian Detergent Market: (Trend & Growth) In 1996, the Malaysian detergent market was showing relatively better growth trend than global market, as it grew at a marginal rate of 2% to 6% between 1994 to 1996 whereas global market grew between 1% to 2% during these years. Malaysian laundry detergent market can be divided into three segments of powder, bar and liquid. Of these, powder detergent holds the most market share of 62% along with 27% for bar variety and 11% for liquid.

Although powder detergent comprised the largest segment, its growth was only 4% in 1995 and 6% in 1996 as compared to the liquid segment’s growth of 11% in 1995 and 12% in 1996. This trend was very much aligned with the global market trend in detergent segment. Moreover, it was predicted that Malaysian market will eventually experience a clear decline in demand for powder detergents. In other words, we can say that demand for liquid detergents will increase over the years. A graphical presentation of Malaysian detergent market by segment and market growth trend in 1996 is given in Appendix 1. 2. 3 SWOT Analysis:

SWOT analysis will help us understand the key strengths and weaknesses of the company, and opportunities and threats present in the external environment for Kao Malaysia. We will focus on the elements of SWOT analysis particularly keeping in view the decision about Kao’s new brand launch, Kao Attack Liquid Detergent. 2. 3. 1 Strengths: Kao Malaysia and its proposed new brand have many strategic competitive advantages in Malaysian detergent market context. Following are the key strengths: ? Strong brand image in Malaysian household and personal care products as a first mover in the market with innovative quality products ?

Well established marketing team and distribution channels, that can save cost in advertising and promotion expenses for the new product ? Current position as a major market player in the industry can help it reposition in the market easily ? Strong support from its parent company, Kao Corp. Japan, in research and development and technical knowledge ? The product is already experiencing great success in Japan because it gives promised results to the customers and does not need any further testing for quality 2. 3. 2 Weaknesses:

The only disadvantage for the company is the lack of financial resources, as only limited funds are available to assist in launching the new product. In addition, import expenses can also be a problem because the product is to be imported from Japan rather than manufactured in Malaysia. 2. 3. 3 Opportunities: Market research information shows many opportunities for the company in launching the new product immediately. Most important ones are: ? Positive trend in the Malaysian detergent market to shift from powder detergent to liquid with a high growth rate in recent years ?

The estimation that the segment for compact liquid detergent alone would comprise about 30% of the total world market by the year 2000 shows a great potential for the compact liquid detergent products ? Opportunity to move first once again by introducing an entirely new and unique product in the market, as detergent market players in Malaysia don’t have this type of unique product 2. 3. 4 Threats: The greatest threat for the company was that major players in the detergent market may make the first move by introducing their compact formula and thus depriving Kao to be a pioneer in the compact liquid detergent.

Because of this threat company wanted a quick decision about the launch of the product. Colgate Palmolive and Unilever are established brands in the market and are capable of any product development. Although P&G is not a participant in Malaysian detergent market, it is a great potential threat too for the market to come in Malaysia with its global reputation and huge resources. As for the current liquid detergent segment in Malaysia, Colgate Palmolive’s “Dynamo” is the market leader with 70% market share and Unilever’s “Breeze” is at the second position with 10% market share in liquid detergent market of Malaysia.

However, Unilever’s product is just a “me too” product without any clear functional advantage. Therefore, Dynamo is the major threat for Kao because of its huge market share. Other less known brands can hardly put a threat for Kao’s liquid detergent. (See Appendix 2 for graphical presentation of liquid detergent market in Malaysia) 3. 0 New Product Offering: The management of Kao Malaysia felt the need to introduce a new product to better compete in future because it would be difficult to be competitive with only one product in the long run.

It was necessary to meet the consumer preferences in detergent segment of the market as research showed a clear trend toward liquid detergent instead of powder detergent. The company is considering launching a compact liquid detergent with the name of Kao attack Compact Liquid, a product that is already experiencing an overwhelming success in Japan. The product is also been tested through a blind-use test and found positive results without any negative responses by the sample users. 4. 0 Marketing Objectives: Three marketing objectives have been set by the company: . To achieve a market share of 30% in the liquid detergent market within 12 months of the launch 2. to achieve a market share of 10% in the total detergent market within 12 months of the launch (in 1996 its market share is 7% of the total detergent market) 3. to achieve a sales target of RM10 million within 12 months of the launch 5. 0 Target Market: The new compact liquid detergent is to be targeted at a niche market, aiming at detergent users who want clean clothes that feel soft and has a color protection function.

This product would provide extra benefits to the current users of detergent to clean the clothes. 6. 0 Market Positioning: Kao Malaysia will try to retain its position as a pioneer in detergent market of Malaysia by going one step ahead of its competitors in introducing innovative products. The new product is totally new for the market and also has extra benefits. Thus it will provide support for the positioning strategy of the company. 7. 0 Marketing Mix: 7. 1 Product: Product itself is the most important element for its success.

If product is not innovative or don’t posses any uniqueness, thus can’t provide competitive advantage, it will not be able to get success. Kao’s new product, other than its functional advantages, has different physical appearance than the products available in market. This product is to be imported directly from Japan with same bottle size as is used in Japan already. The overall design and color of one litter bottle will also be same as in Japan. It will provide economies of scale and will compensate import expenses in a way. Given below are some of clear competitive advantages of the product: ?

Product, Kao Attack Liquid Detergent, is a unique product in the Malaysian detergent market, because it is a compact liquid formula that none of competitors have at the moment ? The product gives a competitive advantage also by serving as a step towards corporate social responsibility of the company, because it is an environment friendly product that need less quantity of liquid as well as water to be used for fabric cleaning ? It is convenient to use as well as highly soluble ? Other product features like transparent, prevent color fading and softness to fabric are additional advantages for the company 7. Placement / Distribution: The new product will be sold by the existing sales force through the same distribution channels as company’s powder detergents. The retailers would include small provision shops, mini markets, supermarkets and hypermarkets. 7. 3 Advertising and Promotion: Consumer awareness about the product is much desirable in this case and needs more attention than other issues. It is a new product in the market with different functional advantages and different size as well than available products in the same category.

It will be available in one liter bottles whereas market leader, Dynamo, is available in two liter bottles. Therefore, advertising, sales promotion, personal selling and publicity measures have to be taken at the same time to create product awareness. Total budget for one year has been estimated RM4. 5 million, of which fifty percent will be spent on advertising. RM2 million will be spent on sales promotion and rest will be used for other promotional activities. Television advertisements will be used to “pull” customers by creating awareness about the product and sales promotion for “pushing” the product will be used through retailers.

Personal selling will be made possible by providing training to the sales team and news releases will be used for publicity. 7. 4 Pricing: Pricing is always a very difficult process for a new brand. Same will be the case with Kao’s new product in Malaysia. This product is a high cost product due to the high manufacturing costs in Japan and import expenses as well and needs premium pricing strategy to cover all expenses and give profit margin. One important consideration for Kao’s management is to keep in mind the price and size of the market leader Dynamo that is RM11. 0 per two liter bottle. If we look logically, the price for one liter bottle of Kao liquid detergent should be half of the price of Dynamo because its quantity is half. But, Kao’s liquid detergent is 100% more effective in function and quantity, as it gives better results with only half quantity than competitors. So, it can be priced higher than competitors. Assuming the product awareness campaign successful through promotion and advertising activities, we recommend RM13. 70 as price for one liter bottle of Kao compact liquid detergent. We suppose that consumer will pay RM11. 0 for substitution to other two liter products available in the market, because Kao’s compact liquid detergent is needed even half of the competitors, and will pay extra RM1. 80 for extra benefits, which include prevention of color fade, fabric softness, nice smell and most of all less wastage of water. Here we also presuppose that, in result of effective awareness campaign, buyers will try to be a part of Kao Malaysia’s vision of “clean, beautiful and healthy” society and will show responsible personal behavior towards green environment. . 0 The Decision: Based upon research findings about the product and overall market trend, our recommendation is to launch the product immediately with unit price of RM13. 70 for one liter bottle. Strong brand image of Kao Malaysia and premium quality of the product will make it sure success in the market. The company will loose the chance to be a pioneer in introducing compact liquid detergent if delays more in introducing the product. Because, timing to grab opportunity is the key for success in business. 8. Support for Decision: To summarize all the discussion raised in support for the proposed decision about the product, we would like to raise points like: ? Malaysia is making rapid progress towards knowledge based economy and thus making consumers more careful about social responsibility, which supports the launch of this product ? Malaysian consumer is more knowledgeable now and can pay premium price for premium quality products, because disposable income of Malaysian consumer is been rising from last few years ?

Although there is competition in liquid detergent segment of the market, there is no competition in compact liquid detergent segment of the market and it is a competitive advantage for Kao in launching the product ? If import of the product is a disadvantage, as can raise expenses, on one hand, the same overall color and size of the packaging is an advantage on the other hand, because it will save cost through economies of scale in production ? The product’s uniqueness (extra benefits) is already a proved fact with the overwhelming success in Japanese market.

Therefore, it is absolutely appropriate to introduce it in Malaysian market ? Strong brand image of Kao Malaysia will make this brand extension possible to achieve success easily in the market with well established distribution network as an added advantage ? Customer will experience improved results with this product and will feel an association with a premium product that not only cleans fabric but also softens the fabric with refreshing smell ? As for as price is concerned, we believe it is very well justified with the benefits associated with the product quality (Appendix 1) Appendix 2:

Post Author: admin


I'm Tamara!

Would you like to get a custom essay? How about receiving a customized one?

Check it out