brand. With leading Hollywood stars, pop singers and sports personalities visiting these resorts, it creates a desirable attribute for the brand in the eyes of prospective customers.
Future challenges Company culture
With its iconic status and following from all over the world and the cream of society being die-hard patrons of the brand, it seems that nothing will be able to challenge Amanresorts’ positioning. The biggest challenge will be to sustain the unique company culture and commitment to delivering the brand promise without manuals and detailed management practices. With success comes the obvious threat of copycats – different hotel and resort chains start- ing their own version of Amanresorts in an effort to give a similar paradise experience. Although so far no other resort chain is mentioned in the same breath as Amanresorts, it will indeed be a threat worth keeping an eye on.
Management
Another challenge will be to nurture a solid line-up of capable and passion- ate leaders who will be well equipped to carry the Amanresorts’ spirit forward after the first generation of managers led by Adrian Zecha fade out.
He turns 73 in 2006. This will probably be the most important crucial chal- lenge for the management, as the success of Amanresorts is totally depen- dent on the organization’s unique culture and philosophy. In addition to this, Adrian Zecha himself personifies the brand and is much admired and loved by the many loyal Aman junkies. Instilling this guiding philosophy in the next generation of leaders, who must not only abide by it but also be passion- ate about it, will decide the continuing success of Amanresorts in the future.
CASE 3
Shiseido has been one of the few non-technology brands from Japan that has made it big in the global fashion, beauty and cosmetic scene. Leverag- ing its unique heritage and the positive effects of its country of origin, Shiseido has been able to penetrate markets around the world by offering high-quality, relevant and exciting products. Early on, Shiseido realized the importance of offering a highly differentiated experience to customers and continually exciting them with innovative and high-quality products.
There are several reasons for the enduring success that Shiseido has enjoyed since its inception a century ago. But in the recent past, one of the main reasons for its success has been its well-managed brand management practices. The commitment from the company’s management has seen a continuous investment in brand building activities.
Breaking into the fashion and beauty market, traditionally dominated by European and US brands, and establishing a brand name is no easy task.
Shiseido truly stands apart as a great example for many aspiring cosmetic brands from Asia to become international players.
Background
Shiseido was started in 1872 by Arinobu Fukuhara as Japan’s first Western- style pharmacy in Gizna, Japan’s fashion and cultural hub. Shiseido started out as a pharmaceuticals company when herbal medicine was the order of the day in Japan. But it outgrew its initial business quite soon when it formulated the winning concept of blending oriental mystique and aesthet- ics with the technology and science of the Western world. This combination became a strong advantage for Shiseido right from its early days. Soon Shiseido diversified from its pharmaceuticals business.
As early as 1888, it launched Japan’s first toothpaste, and in 1897 it ventured into the cosmetic business by launching Eudermine, a cosmetic product. In 1918 Shiseido launched its first perfume, and by 1937 it came out with its first line of cosmetics. Since then, Shiseido has transformed itself into a fully fledged cosmetics company with a wide product line encompassing various aspects of cosmetics, from skin care, to beauty prod- ucts, to general cosmetics. By the late 1970s, Shiseido started penetrating foreign markets in Europe and the United States with specific product lines.
Although the unique concept of blending Eastern aesthetics with Western science provided Shiseido with a strong differentiating factor, it had to extend this beyond a mere concept. Shiseido relied on its core philosophy for guid-
ance. From the beginning, Shiseido based its philosophy on five core manage- ment principles which were enunciated way back in 1921. They were: quality first; co-existence and co-prosperity; respect for customers; corporate stabil- ity; and sincerity.22Shiseido also crafted brand identities for all its products and aimed at positioning them toward different customer segments.
Shiseido has based its brand building on five key points:
■ Creativity and innovation in all its product offerings
■ Unique blend of oriental mystique and sensitivity with Western fashion values
■ Application of clinically tested formulae to create products that would enhance skin care and beauty
■ Ability to customize its offerings to its different markets by constantly analyzing market trends
■ Strong distribution strategy.
Shiseido has also developed a brand architecture system in line with its aspiration to serve several segments of the market. With constant investment in brand management, Shiseido has been able to successfully serve both the premium as well as the value segments in many markets around the world.
Shiseido was one of the first Asian brands to adopt the acquisition strat- egy to grow beyond its home market. Acquiring rival firms in global markets has served two purposes. On the one hand, it gained an easy entry into the market and, on the other, it helped Shiseido to gain customers’
acceptance. This strategy, along with a strong brand management practice followed religiously throughout the organization, has contributed to Shiseido’s emergence as an international brand.
Brand philosophy
From its inception, Shiseido has managed to build its image as an innovator and a market leader. When it ventured into the cosmetics business from its core pharmaceutical business, it leveraged this very perception to the fullest. It came out with unique fragrances and cosmetics made from natural flowers to maintain its uniqueness. It was easy for Shiseido to gain a high level of acceptance in its domestic market as the heritage of the brand was already well known.
Successful Asian brand cases
147The company faced many challenges when it decided to venture out of Japan in the early 1970s. This was the period when brands like Sony and Canon were still establishing their brand names in the global market. More- over, Japan was more well known for its production efficiency, technologi- cal prowess and high-quality electronics than it was for cosmetics and beauty products. This made it an uphill task for Shiseido. The fashion, beauty and cosmetics business was dominated by brands from Europe, particularly France and the United States. Therefore Shiseido faced the challenge of breaking into the global cosmetic industry, gaining acceptance and building a strong brand.
One of the strongest advantages for Shiseido when it entered the cosmet- ics business was the fact that it was an Asian brand venturing into Western markets. It used the mystique and aura of a distant land, with its oriental tradition, color, smells and aesthetics, to its advantage. Its first product for the global market, Zen, was launched in 1964. Shiseido packaged it using traditional lacquer designs from 16th-century motifs of Kyoto temples.
This not only gave it a distinctive appearance but also created an aura of mystique around it.
In 1997, Shiseido was awarded the US Fifi Award, the most authoritative fragrance industry award, for a new fragrance that it had created using aromacology.
Shiseido has always used R&D to introduce new products based on clin- ically tested formulae. The vision behind Shiseido’s R&D has been
“creative integration”. This vision called for an integration of function with sensitivity. In line with this vision, Shiseido has introduced many products aimed at enhancing the beauty of its customers. An example was Shiseido’s first anti-aging skin care line called Benefiance in 1982, the Shiseido relax- ing fragrance cultivated with a new aromacology. This initiative has given Shiseido credibility in new markets. By bringing together rational elements backed by scientific proof and aspirational as well as emotional elements backed by a strong brand image and personality, Shiseido has been success- ful in positioning itself in many markets globally.
Another important pillar of Shiseido’s brand philosophy is its flexibility in modifying and customizing its offerings. It not only does this in different markets in line with its unique needs, cultures and so on, but also in its brand management practices. One of the reasons for Shiseido’s success is that the brand has been able to span markets from the premium segment to the value segment by creating distinct brand identities and personalities for
its product lines. A case in point is its strategy in the Chinese market. When it entered China in 1981, it introduced a sub-brand called Aupres, and posi- tioned it as an elite brand. It was catering only to the top 1 percent of the market. Later on, when Shiseido decided to target the mass market, it came out with another brand extension called Za. By tracking the trends of the customers and the associations that they had about certain products with certain places, Shiseido created their distinct stories. For example, for makeup products, customers preferred an elite image and that was conveyed by creating a brand personality with an American undertone. For skin care products, customers preferred quality and reliability which was conveyed by creating a brand personality with a Japanese undertone with the brand Pure & Mild. This kind of flexibility in its brand management model has helped Shiseido to take on different market segments in different markets quite successfully.23
Finally, Shiseido has developed a strong distribution network in Japan, across Asia and in all its major markets across the world. Shiseido adopted the three main channels:
■ Department store for luxury products along with personal counseling to customers
■ Shiseido licensed store (chain store) selling luxury and also middle- level products along with personal counseling to customers
■ Convenience and drug stores through which it sold middle- to mass- market products by launching self-cosmetics (no counseling provided).
This strategy has proved successful for Shiseido as it has been able to market the entire product portfolio through leveraging multiple channels.
Brand strategy
Shiseido has followed a strategy which is uncommon for Asian brands expanding beyond the region. Shiseido has used acquisitions as a main chan- nel to gain a foothold in the crucial cosmetics markets of Europe and the United States. As cosmetics is an industry driven by aspirations, lifestyle issues and images, Shiseido decided on the acquisition path to gain visibility, acceptance and access to established customer bases in new markets rather than spending years trying to establish the Shiseido brand from scratch.
Successful Asian brand cases
149In order to gain entry into the French and thus the European market, Shiseido acquired the Carita brand and prestigious salon on the Faubourg St.
Honoré in Paris in 1981. The salon, with it distinguished and rich clientele of royalty and celebrities, commanded a unique position in the French market.
To gain entry into the North American market, Shiseido acquired Unilever’s Helen Curtis in 1996.24These acquisitions gave Shiseido an opportunity to build on something already strong in those markets.
Another major strategy of Shiseido has been the setting up of two brand holding companies. It established InterAct Co. Ltd. to market new imported non-Shiseido brands, and AXE Co. Ltd. to market brands which are devel- oped by Shiseido but operate as independent brands in the market, without Shiseido’s name to them. This strategy helped Shiseido in many ways. It has been able to bring a lot of new brands into the market which have been quite different from its own brands. This has given it the leeway to address the latest emerging trends without having to worry about the possible effects on customer perceptions or any potential dilution of its brand equity.
At the same time, the opportunity to import and market non-Shiseido brands has given Shiseido a chance to test the market for newer tastes, trends and so on without taking too much risk.
Future challenges
Despite Shiseido’s enduring success, it faces a new set of challenges as it travels ahead into new markets with different demographics, increased competition and multiple segments.
Continue the Asian/Western blend
One of the main challenges for Shiseido in the future will be to maintain the blend that it created between oriental mystique and Western science and technology. It becomes significant as Shiseido has been acquiring brands in the US and Europe with their own heritage and unique brand stories. Given this, it will be a challenge for Shiseido to carry on with the blending as that is one of its strongest differentiation factors.
Consistency in positioning
Shiseido has positioned itself predominantly as a high-end premium and luxury brand in the US and European markets and it spans the entire market
spectrum from low-end, through value and middle to luxury segments in Asia. With customers traveling around the world, a global media landscape and internet making information flows across countries much easier, Shiseido should take steps to ensure that it conveys its varied positioning carefully in its different markets.
Maintaining a strong brand architecture system
Managing the brand architecture could prove to be a challenging task for Shiseido. Shiseido has been engaged in three main activities:
■ Acquisitions of brands in Europe and the US
■ Importing new non-Shiseido brands into Japan through the brand hold- ing company
■ Introducing multiple brand extensions in the market.
Given the diverse market segments that Shiseido’s brand extensions serve, these brand extensions will obviously have their own brand image and personalities. Integrating them with the parent brand and managing their interactions with the parent brand will be challenging.
Developing the corporate brand in the Western world
Although Shiseido has been successful in following the acquisition strat- egy, it has yet to build a strong corporate brand in the US and European markets. As it has been acquiring brands with a loyal customer base, modi- fying the brand identity and personality of the acquired brand to suit the overall Shiseido brand architecture could prove challenging. Developing a strong corporate brand with a unique identity and personality will be crucial for Shiseido’s long-term success.