Harvard Case - SKII China: Managing Public Relations
"SKII China: Managing Public Relations" Harvard business case study is written by John JR Roberts. It deals with the challenges in the field of Operations Management. The case study is 7 page(s) long and it was first published on : Nov 20, 2008
At Fern Fort University, we recommend SKII China implement a comprehensive public relations (PR) strategy focused on building trust, transparency, and authentic engagement with Chinese consumers. This strategy should leverage digital platforms, influencer marketing, and proactive crisis management to address the current PR challenges and foster long-term brand loyalty.
2. Background
SKII, a Japanese skincare brand owned by P&G, faced a significant public relations crisis in China in 2017. The crisis stemmed from a controversial advertisement featuring Chinese actress, Fan Bingbing, which was perceived as insensitive and offensive by many Chinese consumers. This incident led to widespread negative publicity, boycotts, and a decline in sales.
The case study highlights the importance of understanding cultural nuances and the power of social media in shaping public perception. It also emphasizes the need for a proactive approach to crisis management and the importance of building strong relationships with key stakeholders, including influencers and media outlets.
3. Analysis of the Case Study
SWOT Analysis:
Strengths:
- Strong brand reputation and established market presence in China.
- High-quality products with a loyal customer base.
- Extensive marketing and distribution network.
- Strong financial resources and backing from P&G.
Weaknesses:
- Lack of cultural sensitivity and understanding of Chinese consumer preferences.
- Ineffective crisis management strategy.
- Dependence on celebrity endorsements, which can backfire.
- Limited engagement with digital platforms and social media.
Opportunities:
- Growing demand for premium skincare products in China.
- Increasing use of social media and digital platforms for consumer engagement.
- Opportunity to build a more authentic and transparent brand image.
- Potential to leverage influencer marketing for greater reach and impact.
Threats:
- Intense competition from both domestic and international brands.
- Rising consumer expectations for ethical and sustainable practices.
- Potential for future PR crises and negative publicity.
- Economic fluctuations and political instability in China.
Porter's Five Forces Analysis:
- Threat of new entrants: Moderate, due to the high barrier to entry in the premium skincare market.
- Bargaining power of buyers: High, as Chinese consumers are increasingly discerning and have access to a wide range of alternatives.
- Bargaining power of suppliers: Low, as SKII has access to a diverse range of suppliers for ingredients and manufacturing.
- Threat of substitute products: Moderate, as consumers can choose from a variety of skincare products, including natural and organic options.
- Competitive rivalry: High, as the market is highly competitive with many established players and emerging brands.
Key Issues:
- Cultural sensitivity and understanding: SKII needs to demonstrate a deeper understanding of Chinese culture and values to avoid future PR mishaps.
- Transparency and authenticity: Consumers are increasingly demanding transparency from brands, and SKII needs to build trust by being open and honest about its products and practices.
- Digital engagement: SKII needs to leverage digital platforms and social media to engage with consumers, build relationships, and address concerns proactively.
- Crisis management: SKII needs to develop a robust crisis management plan that includes clear protocols for responding to negative publicity and managing public perception.
4. Recommendations
1. Build a Culture of Cultural Sensitivity:
- Cultural Training: Implement mandatory cultural sensitivity training for all employees, particularly those involved in marketing and communications.
- Local Expertise: Hire Chinese nationals with deep cultural understanding to advise on marketing strategies and product development.
- Consumer Research: Conduct regular market research to understand evolving consumer preferences and cultural trends.
2. Embrace Transparency and Authenticity:
- Open Communication: Be transparent about product ingredients, manufacturing processes, and sustainability initiatives.
- Social Media Engagement: Actively engage with consumers on social media platforms, responding to questions and concerns promptly and honestly.
- Authentic Storytelling: Develop marketing campaigns that focus on genuine customer experiences and relatable stories.
3. Leverage Digital Platforms and Influencer Marketing:
- Social Media Strategy: Develop a comprehensive social media strategy that includes content creation, community management, and influencer outreach.
- Influencer Partnerships: Partner with authentic and influential Chinese bloggers, vloggers, and celebrities who resonate with the target audience.
- Digital Advertising: Use targeted digital advertising to reach specific consumer segments and promote key messages.
4. Develop a Proactive Crisis Management Plan:
- Crisis Response Team: Establish a dedicated crisis response team with clear roles and responsibilities.
- Communication Protocols: Develop clear protocols for communicating with stakeholders during a crisis, including media outlets, influencers, and consumers.
- Reputation Management: Implement a comprehensive reputation management strategy to monitor online sentiment, address negative feedback, and protect the brand's image.
5. Basis of Recommendations
These recommendations consider the following factors:
- Core competencies and consistency with mission: The recommendations align with SKII's core competencies in skincare innovation and product quality, while also reinforcing its commitment to building a strong and sustainable brand.
- External customers and internal clients: The recommendations focus on building trust and engagement with Chinese consumers, while also empowering employees to be brand ambassadors.
- Competitors: The recommendations aim to differentiate SKII from competitors by emphasizing cultural sensitivity, transparency, and authentic engagement.
- Attractiveness: The recommendations are expected to lead to increased brand loyalty, improved customer acquisition, and enhanced profitability.
6. Conclusion
By implementing these recommendations, SKII China can overcome the challenges of the 2017 PR crisis and build a stronger, more resilient brand. A focus on cultural sensitivity, transparency, digital engagement, and proactive crisis management will enable SKII to regain consumer trust, foster long-term loyalty, and achieve sustainable growth in the Chinese market.
7. Discussion
Alternatives:
- Continuing with the existing PR strategy: This would be a risky approach, as it would likely perpetuate the existing challenges and hinder future growth.
- Focusing solely on celebrity endorsements: This approach could be effective in the short term but carries the risk of future PR crises and lacks authenticity.
Risks and Key Assumptions:
- Cultural sensitivity: SKII may face ongoing challenges in fully understanding and adapting to the evolving cultural landscape in China.
- Digital platform engagement: Maintaining consistent engagement on digital platforms requires significant resources and expertise.
- Influencer marketing: The effectiveness of influencer marketing can be difficult to measure and may be subject to changing trends.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific timelines, responsibilities, and resources required for each recommendation.
- Pilot test key initiatives: Implement pilot programs to test the effectiveness of new strategies before rolling them out more widely.
- Monitor progress and adjust as needed: Continuously monitor the impact of PR initiatives and make adjustments based on data and feedback.
By taking these steps, SKII can successfully navigate the complexities of the Chinese market and build a brand that is both profitable and respected by consumers.
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Case Description
SK-II was Procter & Gamble's (P&G) only high-end skincare brand in China and sales accounted for an estimated 7 percent of SK-II global revenue in 2005. China was also P&G's fastest-growing market for skincare products and among the top markets in value worldwide. For many years, P&G China enjoyed high revenue and margin growth from SK-II and it was clear that this product could be a star. However, two consecutive public relations (PR) debacles in China in 2005-2006 resulted in a dip in SK-II's performance. As of 2007, P&G China was still trying to rebuild SK-II's prestigious brand image and to regain consumers' trust. This case examines the details of these two PR incidents and how P&G SK-II had handled these two events.
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