SK-II provides the potential to be considered a global company within P& G's around the world operations, but the commercial achievement of internationalization depends on which will specific market segments P& G aims to focus on. When comparing the outlook of going into the Chinese language market against the prospect of entering the UK market, you observe that the Chinese language market is better due to many qualitative and quantitative elements.
Qualitatively, P& G has recently experienced success in China's premium skin-care market through a nontraditional online marketing strategy for the Olay manufacturer. The primary risk of introducing the SK-II manufacturer to a industry that is already exposed to Olay is sales cannibalization and an uneven sales/marketing force. However , P& G can easily minimize cannibalization risk through proper segmentation and niche consumer focusing on. While the complex and wealthy Chinese consist of a small percentage of most Chinese, the sheer magnitude of the overall population makes a target market pertaining to SK-II that is certainly uncharacteristically huge (and therefore attractive) to get a developing industry.
A quantitative analysis from the net present value with the expansion in to China supports our studies that this can be described as worthwhile job. As seen in exhibit 1, while the task will require roughly $4 mil in new venture costs and definitely will have a rest even amount of about a few years. In this analysis, extremely conservative presumptions have been made out of respect to year one particular sales, the growth rate following 2 years, plus the lifetime of the project. Despite having these conservative assumptions, the project has a positive NPV of $1. 2 , 000, 000 and would therefore be worthwhile for P& G to execute.
The moment observing the qualitative elements of the proposed UK growth of SK-II, we can see that there are significantly more questions regarding the commercial accomplishment. For example , P& G can be entering a highly competitive space with a brand that has no real recognition or heritage in European countries. In addition , the O2005 restructuring...