UNIVERSITY OF MALAYA

MASTER IN BUSINESS ADMINISTRATIVEGRADUATE SCHOOL OF BUSINESS

MARKETING MANAGEMENT

CMGB6102

KAO ATTACK CASE ANALYSIS

PREPARED BY:

ERFAN REZAMAND (CGA 070095)

NAZANIN KAZEMZADEH (CGA 070042)

LEILA BANAKAR (CGA 060093)

MESHARI (CGA070029)

LECTURERS: DR. YUSNIZA

TABLE OF CONTENTS

Introduction……………………………………………………………...21.0 Company overview 31.1 History.........................................................................................................31.2 Product & Brand Offering.............................................................................32.0 Strategic Plan.................................................................................................42.1 Mission Statement.........................................................................................42.2 Goals...........................................................................................................42.3 Vision............................................................................................................................43.0 Situation Analysis..........................................................................................53.1 Competitor Analysis.....................................................................................53.2 SWOT Analysis............................................................................................73.3 Market Analysis...........................................................................................83.4 Consumer Analysis.......................................................................................94.0 Product Market FOCUS................................................................................104.1 Marketing Objectives..................................................................................104.2 Target Markets...........................................................................................105.0 TheProblem , Solutions & Strategies…………………...……………….…....105.1 Problem Statement………………………………………………..……….105.2 Recommended Solution…………………………………………………...116.3 Product Strategy.........................................................................................116.4 Place Strategy.............................................................................................116.5 Price Strategy ............................................................................................116.6 Promotion Strategy.....................................................................................11Appendix …………………………………………………………………………………….12

2

Introduction (History of Detergents):

The soap and detergent industry's origins are obscured in antiquity. Michael C. Crossin,

writing for Soap, Cosmetics, Chemical Specialties, stated "the caveman who fell into the river

with his fur still on quickly learned that water is an excellent aid in the removal of soils and

odors from garments." Crossin calls this find "the single most important discovery in laundry

history."

Water alone, however, was not sufficient for all cleaning needs. The next important breakthrough

was the development of soap. Different accounts place its invention between 2500 B.C. and 300

B.C. The word "soap" may have been derived from Mt. Sapo, near Rome, a place where burnt

offerings were made to the gods. People discovered that the fat and ash residue from the

offerings had cleaning properties.

By definition, soap is a cleansing product created through the chemical process of combining a

fat or natural oil with an alkali (such as wood ashes or lye) under controlled conditions. Soap-

producing factories developed in France and Italy, where olive oil was plentiful and used as the

main ingredient, throughout the sixteenth, seventeenth, and eighteenth centuries. In the

nineteenth century, palm oil began to replace olive oil in formulations. By the turn of the

twentieth century, many people still made soap by boiling fats and lye to produce solid cakes.

In the United States, the soapmaking industry marks 1837 as an important year. In that year,

William Procter and James Gamble established a candle and soapmaking business. Their

company, Procter and Gamble, went on to become one of the foremost soap and detergent

makers in the country. Procter and Gamble's famous "Ivory" soap bar was first introduced in

1882. Lever Brothers, another major soap and detergent company, offered "Lifebouy" and

"Sunlight" soap bars in 1895.

3

1. Company’s Overview:

1.1. Company History Kao (Malaysia) Sdn.Bhd. (A Private Limited & Local Based Company for marketing

and manufacturing Consumer Products / FMCG) was incorporated in Malaysia at 1973, with

capital investment of Rm8 Million. This company originated from Kao Corporation located in

Japan .Kao Corporation, often called the Procter & Gamble of Japan, is one of Japan's leaders

in personal care products, cosmetics, laundry and cleaning products, hygiene products, and

bath additives. Kao also manufactures and markets fatty chemicals, edible oils, and specialty

chemicals, and is one of the world's leading suppliers of information technology products and

services. The company has operations in 26 countries in Asia, North America, Europe, and

elsewhere.

1.2. Most Famous Kao Brands:Kao Merit: Beauty Products & Services, Beauty Services Equipment

Whsle & Mfrs: Hair Care Products

Kao Attack: Soaps & House Detergents: Retail

KAO BIORE: Parts & Supplies, Sanitary Products & Services, Sanitary ware, Skin Care

Centers, Skin Care Products

Most popular products in Malaysia’s market:

Between 1975 to 1985 Between 1985 to 1995Kao Feather Shampoo

Merit shampoo

Laurier sanitary napkins

Kao white soap

Cherina dish washing detergent

Laurier Maxi and Nice Day sanitary napkins

Magiclean floor cleaner

Sifone shampoo

Merris disposable diapers

Kao Biore facial wash

Most successful product:

Kao attack: Household powder detergent

4

2. Strategic Plan: 2.1. Mother Company’s Mission (Japan): Kao's mission is to contribute to the wholehearted satisfaction and the enrichment of the

lives of customers and employees throughout the worlds; they will accomplish this by drawing

on their creative and innovative strengths to develop products of excellent value and outstanding

performance. Fully committed to this mission, all members of the Kao Group are working

together as a single corporate force to win the loyalty and trust of customers.

2.2. Company’s Goals:

The main Core Value of Kao (Malaysia) Sdn.Bhd is Producing Products that contributed

towards building a “clean, beautiful and healthy” society.

Kao’s corporate culture is included better product performance, availability of raw materials,

new technologies and constant product improvements.

2.3. Kao (Malaysian) Bhd’s Vision: To be one of the most prominent manufacturers and marketers of a wide range of household and

personal care products.

3. Situation Analysis 3. 1. Competitor Analysis (Detergent Industry):

Table1- Percentage of Market Share in Detergent Industry (Global & Local market)

Global market Market Share

(Percent)

1996

Local Market Market

Share(percent)

1994 1995 1996

Market leaders Procter& Gamble(P&G)

Uniliver

Others

45

20

35

Colgate Palmolive 42 46 44

Unilever 28 28 29

Lam soon 8 8 9

Kao 6 5 7

Others 16 13 11

5

Chart1: Percentage of Market Share in Detergent Industry (Local market)

Table2-Colgate-Palmolive’s and Unilever’s Brands by Segment (1996)Segment Colgate-Palmolive Market

Share

Unilever Market

Share

Kao Market

Share

Powder Fab Ultralase

Fab Lemon

18% Breeze Colour

Breeze Matic

Breeze Power

11% Kao Attack 12%

Regular

Fab Total Care

Fab Total Ultra

Dynamo Power

Ekonomi Handalan

Drive

PersilTrojan 14%

Bar Fab Bar 42% Breeze Bar

Ekonomi Bar

Super BusaTrojan bar

Mama Dobi 13%

Liquid Dynamo Lime

Dynamo Blue

Dynamo Anti-

Bacteria

Fab Total

70% Breeze Ultra

Breeze Color

10%

6

3.2. SWOT analysis:

According to the in depth analysis of all part of case including the analysis made by

marketing team at Kao Malaysia(Internal Analysis & Competitive Analysis) and advantages &

disadvantages of this new product, we have concluded below SWOT analysis.

STRENGTH WEAKNESSLess quantity of new liquid detergent was required when washing.

More environment friendly of new liquid detergent because of less waste water which be discharged to pollute the rivers and seas.

Willingness of Kao Japan to share its advanced & innovative technologies in production and R&D skills with Kao Malaysia.

Ability to tap on Kao’s existing local resources and infrastructure to assist in marketing the new product(Kao attack compact liquid detergent)

The result from the blind-use test of the product was positive.

The performance of new product (softness & mildness being of product).

Last success of company in Kao Attack

Kao had less variety of product & brand names in the Malaysia market.(only one product)

Lack of financial resources in Kao Malaysia for launching this new liquid detergent.

The physical appearance of the new product in terms of content (transparent appearance) and bottle size (packaging in only one liter bottles) from the view, taste & preference of Malaysian consumers.

Having no market share in the liquid detergent.

THREATSRecent success Protector & Gamble (world leader in the laundry detergent market) in Japan and fear of launching its compact liquid detergent in Malaysia.

The two leading competitors in the detergent industry means Colgate-Palmolive & Unilever were established players in the market many products for each of the detergent segments. (table 1)

Palmolive & Unilever also controlled 44% and 30% of the market.

Existence of other players such as Lam Soon, Southern Lion, UDI and Unza in the Malaysia market.

OPPORTUNITYThe consumer trend toward the purchase of concentrated or compact liquid detergent.

Good growth potentials in liquid detergent segment.

7

3.3. Market Analysis:

Table3-Detergent Demands in

1996(Global Market): US$39Billion

Table4- Detergent Demands in 1996 (Local Markets):RM286Million

Type of segment

Local Market Demands (Marginal Grow Rate:2%-6% )

Sales Value Sales Volume Year of

IntroductionRate of Growth

1995 1996Powder Detergent 65% 62% 1970’s 4% 6%

Liquid Detergent 12% 11% 1980’s 11% 12%

Bar Detergent 23% 27% 1960’s -2% -9%

In 1996, the demand for laundry detergent worldwide was about $39billion, of which 75%

of the total sales volume comprised of powder formulations.

According to Table 1, Colgate Palmolive and Unilever were established players in market

offering many products for each of the detergent segments. Different brand names were adopted

for different products, aimed at different segments of the market.

The global detergent market could be divided into the powder and the liquid detergent segment

which has been decreased the popularity of powder detergent during the years, main reason

could be due to the general increased in demand for liquid detergent.

Type of segment

Global Market DemandMarginal Grow Rate:1%-2%

Sale Value

1996 1997

Powder Detergent 75% Decrease

Liquid Detergent 11% Increase

Bar Detergent 14% Negative

8

The Malaysian laundry detergent market could be divided into three segments included: powder,

bar and liquid. Bar detergent was first introduced in Malaysia market in 1960s, then Powder

detergent in 1970s.finally followed by liquid detergent around 1980s.

3.4. Consumer Analysis:

Malaysians spent a high percentage of their household income on food, groceries and personal

care items, ranking third out of the ten major economies in the Asia-Pacific region (excl. Japan).

According to ACNielsen, Malaysians on average spent MYR505 per month on food and

groceries, with just under half of that on fresh food like meat, fruits and vegetables.

3.4.1. Lifestyles / Shopping habits

Malaysia’s consumer lifestyle has been evolving and changing due in part to rising affluence and

education levels. High profile international retailers and the global mass media have also played

a hand in shaping consumer-buying behavior. Malaysians are becoming more westernized,

sophisticated and cosmopolitan. Malaysians also have an open demand for foreign brands. It is

easy to find products marketed by Procter & Gamble, Unilever and Nestlé on the retail scene.

Preference is not only limited to consumer goods, but also to durable goods, such as motor

vehicles. Since the emergence of the foreign-owned hypermarkets, Malaysians who live in

urban areas have become accustomed to shopping for groceries at hypermarkets and

9

supermarkets. Meanwhile rural people continue to purchase from traditional grocers,

convenience stores and mini-marts.. High and middle-income households spend most of

their money at hypermarkets followed by supermarkets and traditional grocery stores. The high

income group has household income of more than MYR3, 500 per month.

3.4.2. Consumers’ Response to new productAccording to the preliminary product testing ,the 96% of the users liked the product and in the

term of product’s attractiveness and the user’s intention to buy ,55% and 53% of them had

expressed positive reactions.

4. Product Market FOCUS:

4.1. Marketing Objectives:1. To achieve a market share of 30% in the liquid detergent market within 12 months of the launch.2. To achieve a market share of 10% in the total detergent market within 12 months of the launch (in 1996 its market share was 7% of the total detergent market).3. To achieve a sales target of RM10 million within 12 months of he launch.

4.2. Target Market: Target market for liquid detergent should be according the survey that has been done,

the users who where mainly the more affluent urban dwellers who were better educated in the

niche market and also the users who wand clean clothes that felt soft and had a colour protection

function .

5. Problem, Solution & Strategies:

5.1Problem Statement:

Should the marketing team of Kao (Malaysian) Sdn. Bhd. Come up with recommendation

and having delay in launching their compact liquid detergent although it should be introduced in

mid -1996 but was postponed or launching this product now because of the fear that major

players make the first move by introducing this compact formula in Malaysia’s market?

5.2. The options of possible solutions:First: Introducing new product to Malaysia’s market at this time. (1997)

Pros Cons

10

being pioneer in the market for compact liquid detergentIncrease in Liquid Detergent Demand(Table 3)Success of Kao in Japan

lack of information and awareness of characteristics and environment friendliness of this new products among Malaysian consumersMalaysian consumers’ behavior about foreign brands and interest to US brands.

Second: making delay in launching new product to Malaysia’s market and come up with recommendation.

Pros ConsHaving enough time for making awareness among Malaysian consumers about the characteristics and environment friendliness of the new products.

Probability of losing the chance of being pioneer in the market for compact liquid detergent by making the first move by major players.

5.3. Recommended solution and Strategies:

It is better he marketing team of Kao should select the second option but the delay time shouldn’t

be much, just for making a rapid awareness about the benefits of their products in comparison

with the other main competitors specially market leaders and the strategies that it should use are

as below:

5.3.1. Product Strategy:It should be Recommend for using a package design test and they can show the size of bottle

bigger than the real size according to the tastes and preferences of Malaysian consumers and in

the term of labeling showing proper information about the amount of product usage per wash

load is very important that should be in three Malay, Chinese and English language.

5.3.2. Place Strategy:Distribution channels can not be the same as powder detergent according to this new product’s

target market, Supermarket and hypermarket are the best distribution channels and also selling in

laundry recommend.

5.3.3. Price Strategy:The price strategy that should be used at the first is competitor price instead of premium price

until the time that Malaysian consumers be awarded about the our product’s value added as we

have strong competitors in market.

5.3.4. Promotion Strategy:

11

Advertising in TV should be interesting to attract consumers and can transfer the product’s

information and benefits of it in comparison with competitors’ products and designing

consumers’ education programs to convince the public about the quality products.

Trade show’s holding in the supermarkets and hypermarkets recommended. Also recommended

for releasing the result of blind use test in the newspapers for making more awareness.

Appendix:

Group Operation - Major affiliates overseas

CountryArea Company name

Consumerproducts/prestige

cosmeticsChemical lproducts

China Kao (China) Holding Co., Ltd.  

Kao Corporation Shanghai  

Kao Commercial (Shanghai) Co., Ltd.  

Kao (China) Research and Development Center Co., Ltd.

 

Kanebo Cosmetics (China) Co., Ltd.  

Kao Chemical Corporation Shanghai  

Hong Kong Kao (Hong Kong) Ltd.  

Taiwan Kao (Taiwan) CorporationTaiwan Kanebo Cosmetics Co., Ltd.  

Philippines Pilipinas Kao, Inc.  

Thailand Kao Consumer Products (Southeast Asia) Co., Ltd.

 

Kao Industrial (Thailand) Co., Ltd.Kao Commercial (Thailand) Co., Ltd.  

Kanebo Cosmetics (Thailand) Co., Ltd.  

Vietnam Kao Vietnam Co., Ltd.  

Malaysia Kao (Malaysia) Sdn. Bhd.  

Fatty Chemical (Malaysia) Sdn. Bhd.  

Kao Soap (Malaysia) Sdn. Bhd.  

Kao Oleochemical (Malaysia) Sdn. Bhd.  

Kao Plasticizer (Malaysia) Sdn. Bhd.  

Singapore Kao (Singapore) Private Ltd.Indonesia P.T. Kao Indonesia  

12

P.T. Kao Indonesia Chemicals  

Australia Kao (Australia) Marketing Pty. Ltd.  

Table2-Colgate-Palmolive Events (from 1806 to 1997):

1806 Company is founded by William Colgate in New York to make starch, soap, and candles.

1857 After founder's death, company becomes known as Colgate & Company. 1873 Toothpaste is first marketed

1896 Collapsible tubes for toothpaste are introduced. 1898 B.J. Johnson Soap Company (later renamed Palmolive Company) introduces

Palmolive soap. 1910 Colgate moves from original location to Jersey City, New Jersey. 1926 Palmolive merges with Peet Brothers, creating Palmolive-Peet Company1928 Colgate and Palmolive-Peet merge, forming Colgate-Palmolive-Peet

Company. 1947 Fab detergent and Ajax cleanser are introduced. 1953 Company changes its name to Colgate-Palmolive Company. 1956 Corporate headquarters shifts back to New York. 1966 Palmolive dishwashing liquid is introduced. 1967 Sales top $1 billion. 1968 Colgate toothpaste is reformulated with fluoride; Ultra Brite is

introduced. 1976 Hill's Pet Products is purchased. 1987 The Softsoap brand of liquid soap is acquired. 1992 The Mennen Company is acquired; Total toothpaste is introduced

overseas. 1995 Latin American firm Kolynos Oral Care is acquired; Colgate-Palmolive undergoes major

restructuring.

13

Total toothpaste is launched in the United States; Colgate takes lead in domestic

toothpaste market.

14