Procter & Gamble in Japan - Essay Example

Procter & Gamble in Japan Introduction The marketing field is very important business function whose application can either make or break a company. Even if a company has a good product it must be able to adequately market the product to attract consumer demand. Global companies such as Procter and Gamble had to be aware that consumer across national boundaries have different taste and preferences that must be consider prior launching a producing in foreign marketplaces. This paper through a series of answers to five questions in the case study Procter & Gamble in Japan discusses the experiences P&G had in its international expansion in Japan. 1. Proctor & Gamble during the 1970’s and 1980’s utilized a centralized marketing approach in which the US headquarters had full control of the marketing initiatives both in the United States and abroad. The company felt that this strategy was more effective because it provided a simple method that could be transfer elsewhere which provided savings and helped the company achieved benefits associated with economies of scale. The reality of this strategy in Japan was that the company was not doing poorly in this international market. The company by 1985 after been established in Japan for 13 years was losing nearly $40 million a year (Hill, 2007). Along with the obvious monetary losses the disadvantages of the centralized marketing strategy in Japan was that the company was not able to fully meet the consumer needs. The culture of Japan and the consumer taste were much different than in the United States. The strategy was inflexible and did not provide room to the necessary changes based on market research and consumer trends. 2. After years of struggling in the Japanese market with various products after 1990 the company decided a new approach. It created products based on the specific cultural profile Japan. A product that was introducing utilizing this new decentralized marketing approach was Joy detergent. The country specific research showed that the Japanese people were changing their cooking habits towards higher volume of fried foods which meant that the people needed a product that was more powerful cleaning up grease dishes. The company also considered other key stakeholders in its design in process in order to ensure success. The packaging of the product was tailored made to ensure supermarkets and other stores could maximize its shelf space. The strategy provided many benefits for the company, but there were some drawbacks. A decentralized marketing strategy requires a higher capital commitment because P&G needed to invest in infrastructure, research & development, and human resources in order to implement this strategy effectively. 3. In choosing between the centralized marketing strategy of the 1970’s and 1980’s and the new decentralized marketing approach which was implemented in P&G in the 1990’s the latter has been a better and more successful approach. The old strategy led to hundred of millions of dollars in losses for the company, while the new approach allowed the firm to increase its market share and operate profitably in Japan. The reason the new approach has been more effective has to do with the ability of decentralized marketing strategy to adapt to the consumer preferences and trends. There are many demographic variables such as household income, population growth, ethnic background, eating preferences and age among others which affects the consumer preferences between one country and another (Jensen, 2006). The decentralized marketing approach is better at adjusting to demographic factors. 4. In order for Proctor and Gamble to successfully make changes to its organization as far as utilizing a marketing approach that is better able to meet the needs of consumer worldwide the firm has to realize that ethnocentricity is no longer an approach that can be effective in the 21st century. The US based mentality of thinking that everyone in the world has similar preferences has to be forgotten forever. The company has to improve its human resource composition as far as adding more diversity to its workforce. Diversity in the workplace refers to the variety of differences between people in an organization which encompasses variables such as race, gender, ethnic group, age, personality, cognitive style, tenure, and education. Along with a more diverse workforce the company also needs to invest more in research and development centers across all seven continents in order to gain more knowledge about the local cultures of the over 200 countries in the world. The company is global firm that has been able to penetrate over 130 countries, which means there are still nearly 70 nations unattended. 5. This case study shows us that despite the fact that many markets are becoming more homogenous, the reality is that company can never undermine the reality that there are cultural difference among nations that affect the consumer behavior of potential clients. It was clearly shown that Americans and Japanese people have very different consumer taste. Assuming that the consumer taste is homogenous across national boundaries is a serious error of judgment. Procter and Gamble for nearly two decades paid a hefty price for their error of judgment as far as making the erroneous assumption that their US marketing strategy would work in the United States. I personally can not believe that such as recognize and successful global firm such as P&G did not realize sooner that changes need to be made in their marketing strategy. A company that was founded 172 years ago should have been able to handle their transition into the Japanese marketplace better (Pg, 2009). Conclusion This case study of P&G in Japan showed that multination companies can no longer rely on centralized marketing strategy that assumes that consumer preferences are homogenous across national boundaries. P&G lost a lot of money in Japan during its first couple of decades because the firm was not flexible in its marketing strategies. After the company realized that it needed a customized marketing strategy for its Japanese subsidiary it began performing local market research which paid great dividends for the firm. The company increased its market share in Japan and began to reap profits instead of losses from its Japanese expansion. References Greenburg, J. (2006). Workplace Diversity: Benefits, Challenges, and Solutions. Retrieved August 8, 2009 from http://www.diversityworking.com/employerZone/diversityManagement/?id=9 Hill, C. (2007). International Business (6th ed.). New York: McGraw Hill Companies Jensen, H. (2006). Consumer Issues and Demand. Choices, 21(3). Retrieved August 8, 2009 from http://www.diversityworking.com/employerZone/diversityManagement/?id=9 Pg.com (2009). Our History. Retrieved August 8, 2009 from http://www.pg.com/company/who_we_are/ourhistory.shtml Read More