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Shiseido — The Asian Cosmetic Brand

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Of the handful of Asian brands that usually make it to any global brand rankings, most like Sony, Canon, and so on originate from Japan. Japan has for long been known for its prowess in technology, production efficiency, and superior quality. So it is quite natural if it comes as a surprise that one of the strongest Asian cosmetic brands, Shiseido also comes from Japan.

Shiseido has been one of the very few non-technology brands from Japan that has made it big in the global fashion, beauty and cosmetic scene. Leveraging 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. Shiseido has realized from quite early on, the importance of offering a highly differentiated experience to customers and also to excite them constantly through innovative and high quality products.

There are several reasons for the enduring success that Shiseido has enjoyed since its inception a century ago. But over the recent past, one of the main reasons that have contributed to its success is its well managed brand management practices. The commitment from the company’s management has seen a continuous investment in brand building activities.

Introduction

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 aesthetics 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 perfume, and by 1937, it came out with its first line of cosmetics. Since then, Shiseido had transformed itself into a full fledged cosmetics company with a wide product line encompassing various aspects of cosmetics, from skin care, to beauty products to general cosmetics. By the late 1970s, Shiseido started penetrating foreign markets in Europe and the United States with specific product lines.

Though 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 guidance. From the very beginning Shiseido based its philosophy on five core management principles which were enunciated way back in 1921. They were: quality first, co-existence and co-prosperity, respect for customers, corporate stability, and sincerity. Shiseido also crafted brand identities for all its products and aimed at positioning them towards different customer segments.

Shiseido has based its brand building on five key points.

•Creativity and innovation in all its product offerings

•Unique blend of the 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 been one of the first Asian brands to adopt the acquisition strategy 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.

Brand Philosophy

Right 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 out of natural flowers to maintain its uniqueness. It was quite easy for Shiseido to gain a high level of acceptance in its domestic market as the heritage of the brand was well known.

The 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. Moreover, Japan was more known for its production efficiency, technological prowess and high quality electronics, but not for cosmetics and beauty products. This made it quite an uphill task for Shiseido. The fashion, beauty and cosmetics business was dominated by brands from Europe and the United States. Therefore Shiseido had a dual challenge of breaking into the global cosmetic industry, get acceptance, and to build a strong brand.

Right from its inception, Shiseido took the innovation route. The same strategy was extended when Shiseido entered the cosmetics business. One of the strongest advantages for Shiseido was the fact that it was an Asian brand venturing into the western markets. It used the mystique and aura of a distant land with its oriental tradition, color, smells, and aesthetics, as an advantage. Its first product for the global market was named Zen, and was launched in 1964. Shiseido packaged it using traditional lacquer designs from 16th century motifs of Kyoto temples. This not only gave it a distinct 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 its research and development by introducing products based on clinically 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 is Shiseido’s first anti-aging skincare line called Benefiance in 1982, the Shiseido relaxing fragrance cultivated with a new aromacology. This initiative has given Shiseido credibility in new markets. By bringing together rational elements backed by a scientific proof and aspirational as well as emotional elements backed by a strong brand image and personality, Shiseido has been successful 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 these 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 segments 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 positioned it as an elite brand. It was catering only to the top 1% 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 make up products, customers preferred a good and 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.

Finally, Shiseido has developed a very 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 proven very successful for Shiseido as it has been able to market the entire product portfolio through leveraging multiple channels.

(Continued in the next issue)

Print ed: 03/09

 

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