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Marketing Case, After Kao Attack, What's Next
Marketing Case, After Kao Attack, What's Next
Marketing Case, After Kao Attack, What's Next
Team Members
Course Code
Course Title
Muhammad Zia Aslam
Muhammad Shahid
CMGB 6101
Marketing Management
Un
CGA 070040
CGA 070092
CGA 060137
Fac
Academic Year 2007/08
Semester 2nd
CONTENTS
1.0 Case Introduction
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
2.3.1 Strengths
2.3.2 Weaknesses
2.3.3 Opportunities
2.3.4 Threats
7.1 Product
7.4 Pricing
9.0 Appendix
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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)
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.
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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.
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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.
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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)
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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.
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
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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
7.2 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
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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 RM11.90 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 RM11.90 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.
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
(Appendix 1)
Bar Detergent,
23%
Liquid Detergent,
Powder
12%
Detergent, 65%
15%
10%
5%
growth %
Powder Detergent
0% Liquid Detergent
1995 1996 Bar Detergent
- 5%
- 10%
- 15%
year
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CMGB 6101 Marketing Management After Kao Attack, What’s Next?
Appendix 2:
Others, 20%
Breeze
(Unilever),
10%
Dyanamo
(CP), 70%
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