Shiseido Company Limited Is A Japanese Cosmetics Company Marketing Essay

Strength: One of the main strengths of Shiseido is its high quality products. In order to satisfy customers, the company invested a lot on research and development and worked hard on product differentiation. Its R&D sector is complete and on the top of technology. The product portfolio of the firm is strong; it has also launched inexpensive Cosmenity lines and brands for customers who cannot afford too much. High inventory turnover helps the company’s avoid cash flow problems (which will then shown on the financial performance of the firm), while goodwill and strong positioned brands keep the firm in a powerful market position. Besides, other aspects such as advertising, large amount of outlets, the development of membership club, good communication with affiliated stores and excellent growth in overseas sales all make the company more competitive.

Weakness: While customer loyalty to Shiseido is strong in the rural areas, it is weaker in the urban areas. The company has problems when competing with those segments with lower quality. Although the overseas sales keep increasing, it only account 15% of the total income. Moreover, the company classify customers by age, which is not so appropriate. Highly dependent on Japan and geographic concentration will limit the company’s development.

Opportunities: While the customers’ needs become diverse nowadays, there are more chances for all the companies in the industry to make money by meet the customers’ requirement. Men’s cosmetics market can be seen as a good chance for Shiseido, and the strategic alliance with Johnson and Johnson will also bring benefit to the firm. Besides, since Shiseido president is now a chair of the cosmetics industry association, the brand will be more famous.

Threats: The competitions between both companies from Japan and overseas and Shiseido are intense. Especially in these years the government’s policies about opening the Japanese cosmetics industry and the economic slowdown are all negative factors to Shiseido. While the company has to face foreign companies such as Max Factor, Revlon and Clinique entered the Japanese market with low prices, counterfeit goods are also troublesome. In 1992 the Ministry of Health prohibited common ingredients approved for use in cosmetics outside Japan, which required the reformulation of most products. Last but not lease, the percentage of products are patented is too low (5%) for Shiseido, which means its competitors can easily copy the company’s product without extra cost.

2, How can Shiseido deal with the men’s market

Nowadays, it is not unusual for a man to use a cream for lifting or use some general cosmetics. While the level of both technology and life quality have raised, men started to care more about their outlooks as women do. More men, especially those between 18 and 35 years, are no longer ashamed using cosmetics, going to beauty store or even taking spa for themselves. The reason why they do so is just because they want to take care of their outlooks to feel better. Besides, middle age men are also paying more attention to their appearance, they want to “stay” and seem young as well. In addition, since there are more and more pollution on the earth, using some cream or lotion that can help preventing the pollution would be a good idea for those men who are working outside all day long. Therefore, segments of products can be developed to meet these different group’s needs, and it is sure that the men’s market will grow very fast.

Since men’s cosmetics accounted for no more than 12% of the total sales within Shiseido and its major competitors in Japan, it is clear that although there exists the men’s market, but it is not exploited enough. Kanebo might be the main competitor of Shiseido in the men domestic market. To get more market share, Shiseido need to use its R&D sector efficiently and more innovation will be used for developing men’s cosmetics. For the products, they should be designed easy to use and have more functions within a single product, because unlike women, most men do not have the patience to do the face maintenance for hours. For the promotion, the suggestion is that professional men’s cosmetics shop can be set up to create masculine image rather than feminine one which may cause unnecessary prejudice.

3, Shift distribution away or not

The Shiseido’s majority of cosmetics are distributed through the selective system; it has contracts with exclusive stores. These mom and pop stores help build a good brand image for Shiseido as unique high quality and value. As a result people can only find Shiseido’s products in shops chosen by Shiseido and the shops are ranked according to sales of Shiseido products, higher class shops can get more benefits from the company. Besides, the company provides enough information to employees in different stores, to make them have good knowledge about the products, and then they can give proper suggestions when their customers are choosing products. In this way, trust and good relationship are built between consumers and the company. However, this method of distribution has disadvantages. Although the brand image is good, the cost to maintain such a complicated system is rather high; the firm has to negotiate with all of these shops to renew contracts annually and the company also may face the threat of lose control of its own products due to some blind competition.

When mention the shift distribution strategy, since the company’s four other brands that are cheaper products and do not carry Shiseido’s name are sold in department stores successfully, to sell other Shiseido’s products in department stores and supermarket would be a quick method of improving sale. Furthermore, since more customers now prefer more personal shopping experience in beauty stores, their needs have moved to self-selection products, the assistance of its representatives will no longer need. Thus to shift its products into department stores and supermarkets will help reduce the cost of the company.

4, Policy of classify customers based on age

We are in the society that respect beautiful as good. Most people who are “good people” on the TV or magazines are good-looking. People admire beautiful things directly while they do not do so to the things that are not so pretty. So most people use cosmetics such as firming or against age to keep their external image seem young as long as possible. It is quite normal nowadays that a lot of women who are a bit older than 55 years which belongs to the final stage of the Shiseido’s classification, they do believe that they are not old, they do not want to be seen as old grandma. To make themselves looks younger is the reason why these women use cosmetics. Thus if there is such a classification for the company’s products, they cannot find the right product corresponding to the age category, and they may choose those products belongs to the fourth stage which is for age 35-54 instead. If that happens, the classification is meaningless. Moreover, a lot of young girls do not want to be taken as little girls, they want to be, act like, or buy the products for 18 years old. They may also not satisfy to be sorted to the group that their real age belongs to. The same things would happen to all of the age groups.In addition, for people whose ages are just on the ends of the age stages for example 17 years or 24 years, it is hard to explain how they can choose their products from Shiseido.

In sum, since many people do not want to seem as their real age, to classify by age is not reasonable.

5, Maintain competency against global competition

First and foremost, the Shiseido need to keep and expand the advantages it has already got on R&D sector. Creation and innovation are critical for the industry and products with newer and better functions are always customers’ preference.

Retail stores need to be controlled carefully, because it is not only a way that the company can communicate with customers, but also a channel for gather the markets’ trend.

To develop the men’s cosmetics market, by offering wide range of products, the firm can win the market share quickly.

The corporate philosophy need to be kept on to help maintain the goodwill and brand image of the firm. Besides, to reduce the using of polluting products in the cosmetics is another way to gain trust and praise from society.

Differentiation while keep the quality of the products at the same time is another key to success; the company can develop high quality products for people different in area, gender, age and body condition to satisfy their requirement.

Pay more attention to foreign markets is important for keep strong in the global competition. The company’s brand image of health is welcomed for people who are worried about chemicals.

Finally, the strategic alliance with Johnson and Johnson of the United States is a good chance for the company’s development, with the help of Johnson and Johnson, Shiseido can except a increase on the profit and compete with competitors more easier in the areas where the company is not well operated.