Marketing Plan: Shiseidos Shampoo in Australia - Essay Example

?Marketing Plan: Shiseido’s Shampoo in Australia Introduction Japan based Shiseido has its footprint in as many as 85 countries. The company has a vast array of products in its portfolio and now, as a business strategy it intends to expedite expansion in international markets. The Asia/Oceania region has contributed significantly towards the company’s sales. Shiseido has registered a growth of 11 percent in that region. One of Shiseido’s brands in its Toiletries product line is the Tsubaki shampoo. One of the main ingredients of this shampoo is tea seed oil which has been used in Japan since time immemorial. Akin to olive oil in terms of function, tea seed oil is very effective for hair care. Not only does it strengthen hair and protect it from damage, it also provides moisture to the hair. Shiseido now intends to sell Tsubaki in Australia as it sees tremendous potential for that product in that market. Competitive Landscape in Australia Procter & Gamble Australia Pty Ltd, Unilever Australia Ltd, L'Oreal Australia Pty Ltd, Hans Schwarzkopf & Henkel GmbH & Co KG, Colgate-Palmolive Pty Ltd and Alberto-Culver Pty Ltd. In addition to these there are many other, domestic as well as international players, vying for a chunk of the shampoo market in the country. Demographic Environment The total population of Australia stood at 22 million in 2010. The gender-wise break-up of the Australian population is depicted in table below: Population (Gender Wise)   2010 2020   in '000 % in '000 % Male 10998 49.76 12591 49.86 Female 11102 50.24 12663 50.14 Total 22100 100 25254 100 Source: Euromonitor International The table shows that the male female population is almost equal and is likely to remain so by 2020. The ethnic composition of the country includes 92 percent Whites, 7 percent Asians and 1 percent Aboriginal and others (Euromonitor 2011). Thus females of Asian origin residing in Australia are approx .7 million. The Tsubaki shampoo would be targeted at this section of the society. It is imperative that the age-wise break up of the female population is considered while developing/modifying the product for the Australian market.   Female Population Age-Wise ('000) Age 2009 2010 2015 (E) 2020 (E) % Growth 0-14 2033 2052 2173 2326 13.3 15-64 7327 7415 7763 8095 9.2 65+ 1591 1635 1925 2242 37.1 Total 10951 11102 11861 12663 15.6 Source: Euromonitor International The above table clearly demonstrates that a drastic shift in Australia‘s demographic profile is imminent as a considerable chunk of the population is set to grow old in the coming future. This growth in the number of older consumers is likely to propel the demand for products that make people feel and look younger (Data Monitor 2011). The life expectancy in the country is 81.81 years for the total population. While it is 79.40 years for men, the life expectancy for the average Australian woman is 84.35 years. Economic Environment The Australian economy has registered a steady growth in the GDP in the last few years. The economy is estimated to grow by 3.7 percent this year. The inflation rate has also been below the 3 percent mark since 2010. The unemployment rate which has been steady at a shade above 5 percent is the brightest spot. Compare this to the unemployment rates in other developed countries where the joblessness has reached double digits. Key Economic Indicators   2009 2010 2011 2012 (E) GDP Growth (%) 1.3 3 3.5 3.7 Inflation 1.8 2.9 2.8 2.9 Unemployment Rate 5.6 5.3 5.2 5.1 Source: Data Monitor 2011 Australia is primarily a middle-class society. Close to 5 million, or 61 percent of the households in the country had an annual disposable income of more than US $45,000 in 2009. During the same time period, 36 percent of the Australian households had an annual disposable income of more than US $75,000. At the same time, more than 95 percent of the country is above the poverty line (Data Monitor 2011). The table below depicts that the average annual gross income has steadily risen across income brackets. The growth is considerably higher than the rate of inflation which means higher disposable incomes in the hands of the customers. Avg Annual Income(Age,AUS $, Constant 2009 Value) Age Bracket 2005 2009 % Growth 15-19 35515 38565 8.6 20-24 43011 46790 8.8 25-29 50350 54886 9 30-34 56723 61983 9.3 35-39 61208 67081 9.6 40-44 63745 69909 9.7 45-49 64322 70619 9.8 50-54 63374 69622 9.9 55-59 61427 67497 9.9 60-64 59094 64954 9.9 65+ 54395 59852 10 Euromonitor International A look at the savings trend as depicted in the table below reveals that the saving ratio has been steadily increasing in the country.   2005 2006 2007 2008 2009 Saving Ratio (% of disposable income) 5.4 5.9 6.9 6.5 7 Annual Saving (AUS $) Per Capita 1552 1759 2249 2185 2428 Source: Euromonitor 2011 The consumers are likely to buy Tsubaki out of their discretionary incomes which are on the rise. All in all, all the major economic trends suggest propitious times ahead for the product. Socio-cultural Environment Australia is amongst the top-notch countries when it comes to human development. In fact the country bagged the second position among 169 countries on the Human Development Index (HDI) in the UN Development Programme’s Human Development Report for 2010 (data Monitor 2011). The country boasts of well developed education and health sectors as well as an awe inspiring literacy level of 99 percent. Occupation In 2009, almost 2.6 million Australians, or one-a fifth (20 percent) of all workers in Australia, were employed as part time workers. 70 percent of the part time employees were women. At the same time 10 percent of the Australian workers were self-employed while the rest of the population had full time jobs. Household Patterns As the number of widowed, divorced and single people is on the rise in Australia, the size of the average Australian household is shrinking. Simultaneously, young people have started living in their homes for longer periods or have started to share rented accommodation with friends and acquaintances as the spiralling cost of housing has made independent houses out of the reach of many. A surge has also been witnessed in the number of single-parent families in Australia, the number of which has risen to one million in 2009. The number of two- person households is projected to reach the 2.3 million mark by 2020, a growth of 18 percent. The table below depicts the type of household, projected till year 2015, in Australia. Household by Type (in '000)   2010 2015 % Growth Single Person 2001 2166 8.2 Couples without Children 1502 1446 -3.7 Couples with Children 1482 1340 -9.6 Single Parent Family 1059 1283 21 Other 2124 2557 20.4 Total Households 8168 8792 15.3 Euromonitor International The maximum growth is likely in the single person and single parent household which suggest that Tsubaki should aim smaller pack sizes so as to suit the needs of these households. Technological Environment Australia, as a country has always encouraged technological development. This facet of the government is visible in the budgetary support and government investments towards technological advancements. The Australian government had, during 2009–10, announced a new R&D tax credit on the lines of International practices. The purpose of the tax credit was to encourage the companies to step up the ante on research and development in their respective domains (Data Monitor 2011). Meanwhile, the National Broadband Network project in Australia is likely to provide high-speed broadband to almost everybody in the country; be it homes, schools, universities or businesses. This connectivity through fiber-optic cables, fixed wireless, and satellite technologies is likely to take the e-commerce market to unimaginable levels as the customer base would increase many times. Political-Legal Environment Australia is a federal parliamentary democracy. The compulsory voting system in the country ensures that legitimacy is added to the government. At present there is political instability in the country as Julia Gillard, the current Prime Minster of the country, is staring in the face of diminishing approval ratings. The unresolved issues in the country pertain to climate change, mining tax, asylum seekers and live cattle export. Natural Environment Packaging Material The Australian Government is committed to rein in the burgeoning pollution levels and is therefore, in consonance with the industry and the community, working to minimize the environmental impact of plastic. The government is raising community awareness about the adverse repercussions of plastics and is working on developing standards of degradability. At the same time the government is encouraging importers, plastic resin producers, manufacturers, users and retailers to use degradable plastic products. Resources Available in Australia Australia committed to abide by the Kyoto Protocol. The country intends to reduce its greenhouse gas emissions by as much as 60 percent from 2000 levels by 2050. In the short term, the country is aiming to slice these emissions by 5 percent before the end of this decade. As things stand, the country has not been able to reign in the pollution levels, which continue to rise primarily due to the country’s dependence on the mining industry. While the Australian economy is heavily dependent on exports, the main driver of growth has been the country’s mining industry as stated above. The country‘s major mining resources include iron ore, coal, nickel, gold, uranium and zinc. In addition to these, the country has huge reserves of copper, bauxite, silver and diamonds. Oil and natural gas resources also abound in the country. China is Australia’s biggest export market with the former now accounting for over one-half of the latter‘s iron ore exports. Resources Required for Shampoo Manufacturing Specifically talking about shampoos, water is the primary ingredient in all shampoos as it constitutes approx 70 to 80 percent of the total formula. Detergents, derived from natural fatty acids or petroleum derivatives, constitute another 10-15 percent of the liquid. Detergents, foam boosters, thickeners, conditioning agents, preservatives are the other ingredients in a shampoo. Australia happens to be the driest inhabited continent on earth, with minimal amount of water in rivers and the smallest area of permanent wetlands of all the continents. It will therefore make business sense for Shiseido to import Tsubaki from Japan and not set up any manufacturing facility in Australia. Summary of Opportunities The global economic surveys indicate that Australia is monetarily stable and is open to global commerce. The country provides a favorable business environment for companies. The proportion of female population in the country is 50 percent and is likely to remain the same at least till the end of the decade. Shiseido thus has a target market which will only increase in absolute numbers. A low inflation rate indicates that consumers will not be hard pressed to buy this premium shampoo. The unemployment rate is considerably lower than that of the US. The country has thus seen of the latest recession without letting it cripple the economy. Summary of Threats Lack of natural resource water may lead the company to be always dependent on imports and never be able to set up a manufacturing facility in the country. A consistently rising saving rate may indicate that people do not buy premium products and be content with products meant for the masses. Estimates suggest that single person and single parent households would register the maximum growth. This may lead the company to sell smaller pack sizes typically for small families and lose out on the advantage to gain volumes by selling in bigger pack sizes. Wage costs in Australia are pretty very high vis-a-vis countries like India and China. The productivity levels in the country also lag behind the productivity levels in countries like the US and the UK. Marketing Objective It makes commercial sense for the Japanese cosmetics manufacturer, Shiseido, to make use of the favourable environment provided by the country. It should launch its Tsubaki luxury shampoo in Australia, targeting high-income women living in urban areas. The graph below depicts the sales of shampoo sales in Australia which has been constantly rising since 2007. The marketing objective for the company would be to make the customers aware of Tsubaki’s launch in the first six months. The company would aim to capture 5 percent of the market share in the first year and 10 percent within the first three years of launch. In absolute terms, the company should be able to generate sales of approx AUS $ 13 million. Assuming that the price of the shampoo bottle (500 ml) that Shiseido will sell in Australia is AUS $ 80, the company should be able to sell 1, 62,500 bottles in the 1st year of operation. Marketing Implementation The aforesaid discussion suggests that there exists a lucrative market for the Tsubaki shampoo in Australia. The Japanese shampoo manufacturer has to however venture into a foreign terrian and therefore has to get the basics right to be able to sucessfully attain the marketing objectives. The Tsubaki shampoo is to be imported into Australia and therefore no manufacturing facility has to be set up in the country. All that Shiseido needs is set up an offshore sales office and a marketing channel consisting of its own warehouse, distributors, wholesalers and retailers. It is recommended that the new sales staff should be hired from Australia so that the personnel are conversant with the Australian market. Additionally the employees who are transferred from Japan should undergo a thorough, structured training program apprising them of the Australian market and general business conditions. In terms of the organizational structure, the overall responsibility of sales in Australia would rest with the national sales manager (NSM). Four regional managers (RMs), one each for Northern Australia, Western Australia, Eastern Australia and Southern Australia, would report to the NSM. The RMs would ensure that the Tsubaki shampoo passes through the distribution channel and is placed at the predefined retail outlets in their region. They would also be responsible for maintaining healthy relations with the channel members and carrying out various promotional activities that are rolled out from time to time. Tsubaki would be launched in Australia with a lot of fanfare. At the outset there would be a launch part wherein all the famous female celebrities would be invited and honored. The function would announce the arrival of the premium shampoo in Australia. The introduction of the product would be backed by a blitzkrieg of advertising in the print and the electronic media to make the Australian consumers aware of the shampoo. Evaluation and Control The company will not be required to set up control standards for the product in Australia as the shampoo would be imported from Japan. However, it will have to ensure that the packaging and labeling of Tsubaki is done as per Australian standards and requirements. Shiseido would hire a specialized research agency which will help the company in conducting marketing audits and help it determine whether the advertising campaigns and sales strategies are bringing in the desired results or not. The said agency would provide the region wise sales data as well as market share data of premium shampoo brands in the Australian market. In case any region is not achieving its marketing objectives corrective action can be taken. There may be numerous reasons like weak distribution channel, low awareness, less motivated sales staff, for lagging sales in a particular area. Corrective action can be taken after the weak link has been identified. Shiseido will have to take special care of the cultural differences that may arise since this is an international marketing venture. To ensure that all its employees remain in harmony and respect each other’s opinions, values and rituals, Shiseido will have to, from time to time, organize training programs for them. Celebrating all festivals, irrespective of religion, will help build camaraderie in the team. References Briney, C. 2005, "Niche Outpaces Mass in Australia", Global Cosmetic Industry, vol. 173, no. 5, pp. 38-40. "Hair gets a premium boost", 2006, SPC Asia, , no. 44, pp. 4-4. Hoggett, J. 2004, "Business Environment Conservation", Review - Institute of Public Affairs, vol. 56, no. 4, pp. 16-17. Neidermeyer, P.E. & Lacasse, A. 2009, "Doing Business In Australia: Illustration Of A Class Exercise", The International Business & Economics Research Journal, vol. 8, no. 11, pp. 35-44. "New Hair Shampoo and Treatment from Oshima Tsubaki", 2003, Cosmetics & Toiletries & Household Products Marketing News in Japan, vol. 25, no. 11, pp. 1-1. Research and Markets: Haircare in Australia - Market Forecast & Consumer Demographics 2011, , New York, United States, New York. Shiseido Launching "Tsubaki" Hair Care Products in China 2007, , Tokyo, Japan, Tokyo. Read More