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Procter & Gamble's Joy in Japan

Read the case below and answer the questions that follow.

P&G's Joy Makes an Unlikely Splash in Japan

Anyone who thinks Japan doesn't offer opportunities for U.S consumer products should look at how quickly Procter & Gamble Co. has cleaned up in the

country's dish-soap market.

Until 1995, P&G, didn't sell dish soap in Japan at all. A few years later, it had Japans best-selling brand, Joy, which commanded a fifth of the nation's $400 million dish- soap market. That's astounding progress, given that the market had appeared to be classically "mature"-both shrinking and dominated by giant Japanese companies. "Joy surprised us all," says Tatsuo Ishii, dish-soap brand manager for one of those giants, Kao Corp. "It was brilliant."

How the Cincinnati company executed its coup provides lessons that transcend the kitchen sink.

One big lesson: "Mature" Japanese markets can be surprisingly complacent. P&G offered new technology, something the two incumbents hadn't bothered to do for years. It developed packaging that let stores make more money. And it spent

heavily on oddball commercials that created a buzz among consumers.

Joy offers "potent lessons" for foreign companies, says Hiroshi Tanaka, a marketing professor at Tokyo's Josai University. "At the least, Joy should tell you that Japan's got a lot more good opportunities for foreign companies than they might assume," he says. "Those opportunities are often disguised as unattractive markets suffering from saturation and oligopoly."

Just two years ago, two powerful consumer-product concerns, Kao and Lion Corp., each controlled nearly 40% of the kitchen-soap market with several brands

and had essentially declared a truce. The rest of the market was cornered by private brands at chain stores. Meanwhile, the Japanese were cooking less at home and thus buying less dish soap every year.

P&G actually washed out of the Japanese kitchen detergent market during an earlier attempt. It withdrew in the late 1970s after failing to make a dent

with Orange Joy, a product that it transplanted from the U.S. But by 1992, it had succeeded in marketing other products, such as Pampers, in Japan. The

home office told its Japanese unit to find new markets for products in which P&G was strong else- where in the world.

So that year P&G sent out researchers to study Japanese dish-washing rituals. They discovered one odd habit: Japanese homemakers, one after another, squirted out more detergent than needed. It was "a clear sign of frustration" with existing Japanese products, says Robert A. McDonald, head of P&G's Japanese operations. He saw the research as a sign that an "unarticulated consumer need" was more powerful soap. "We knew we had something to go after," he says. .'

Some P&G executives wert: concerned about entering such a mature market, says Mr. McDonald. But P&G's lab in Kobe went to work to create a highly concentrated soap formula, based on a new technology developed by the company's scientists in Europe, specifically for Japan.

The first hint that Joy was a hit carne in March 1995 in the region around Hiroshima, 400 miles west of Tokyo, where P&G started test-marketing it. Four weeks into the test, Joy had become the most popular dish soap in the region with a 30% market share.

P&G's marketing pitch was deceptively simple: A little bit of Joy cleans better, yet it's easier on the hands. The message hit a chord, says Ayumi Osaki, a 31-year-old homemaker who rushed off to buy Joy after seeing pilot commercials. "Grease on Tupperware, that's the toughest thing to wash off," says Ms. Osaki, a mother of three in Hiroshima. "I had to try it."

Emboldened, P&G finished a nationwide introduction in March 1996, when Joy had attained a 10% market share, Three months later it had a 15% share. A year later it had 18%, and now its share is up to 20%, according to industry statistics,

The results astounded even P&G. "Everybody in Japan wanted it," says P&G's Mr, McDonald. "Every retailer in Japan wanted to get his hands on Joy." Retailers clamored for Joy because P&G had built in "fat margins," explains Masaharu Kubo, a buyer for Daiei Inc." which operates 383 supermarkets in Japan, P&G had exploited a weakness in the Japanese giants' products. Their long-necked bottles wasted space, P&G's containers were compact cylinders that took less space in stores, warehouses and delivery trucks, Joy improved the efficiency of Daiei's distribution by about 40%, Kubo estimates,

"Before Joy, dish soap was a sleepy category; [the containers] were bulky and took up a lot of shelf space, and their unit prices were falling every year," he says, "Joy freed up a lot of space for other products, pushed up prices of dish soaps as a whole, and gave us bigger margins, It was revolutionary."

P&G's advertising binge also delighted retailers, Kubo says. To look for ideas, P&G marketers had watched more than a hundred commercials from around the world from P&G and its rivals. They settled on a documentary-style TV ad used in Britain by P&G for a laundry soap called Daz. P&G's advertising agency, Dentsu Inc. created commercials in which a famous comedian dropped in on homemakers, unannounced, with a camera crew to test Joy on the household's dirty dishes.

The camera homed in on a patch of oil in a pan full If water, Then, after a drop of Joy, the oil dramatically disappeared.

Japanese soap makers were alarmed by the campaign. Kao's Mr. Ishii says he ordered up research into Joy and concluded that more than 70% of Joy users began using it because of the commercials. "We had mistakenly assumed Japanese didn't care much about grease-fighting power In dish soaps." Mr. Ishii says. "The reality was people are eating more meat and fried food and are frustrated about grease stains on their plastic dishes and storage containers."

Kao and Lion are now playing catch-up, turning out products that unabashedly mimic Joy, from its package and color (green) to its grease-fighting

Technology.

Successes like Joy have given P&G a change of heart about Japan, "For a long time, P&,G's approach was to dump in Japan what sells in the U.S.," says a

P&G manager who declined to be named. Now, he says, P&G generates ideas in Japan that it uses in other markets. It has begun selling Joy, for example, in the Philippines and is considering it for other Asian markets, It has also started to use a leak-free cap in the U. S. that is designed for Joy in Japan.

The Japanese consumer is "among the world's most educated and the most perceptive and articulate evaluators,: says P&G's Mr. McDonald. "I've worked in a lot of countries but never been anywhere else where I can have a scientific discussion with the consumer like I can do here about dish soap.

Case Questions

1. What lessons can international marketers learn from Procter & Gamble's experiences in Japan?

2. Identify and describe the roles of product policy, pricing, promotion and distribution in marketing Joy in Japan.

3. What lessons from Japan might benefit Procter & Gamble in other markets?

Solution Preview

The biggest lesson international marketers can learn from Procter & Gamble's experience in Japan is the importance of market research. Global companies must understand that each country represents a new market that must be evaluated to understand the needs of the people, based upon the culture. The living conditions are much different in Japan, with smaller houses and stores and space is an important commodity. By making the Joy detergent ...

Solution Summary

This solution addresses a case study involving Joy detergent in Japan.

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