SK-II has already established as a leading brand within its' skin-care industry. By empowering SK-II on the Internet forefront can boost not only its' sales figures, but also its' E-Brand, Customer Loyalty and Satisfaction and Community

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COMP5006 Web Advertising and Web Publishing

GROUP PROJECT: Research Company SK-II

Table of Contents

. INTRODUCTION 3

.1 Research Company: One of the World-Leading Cosmetics Brand 3

.2 Background information: Cosmetics industry in Hong Kong and PRC 4

2. OBJECTIVE & METHODOLOGY 4

2.1 Web Presence Objective/ Goals 5

2.2 Methodology 5

3. COMPANY BACKGROUND 6

3.1 Maxfactor Background 6

3.2 SK-II Background 6

3.3 Product Information and Target 6

4. EXISTING PROMOTION STRATEGY (WEB-BASED) 8

4.1 Sales Generation Channel: 8

4.2 Community Development: 9

4.3 Brand Development: 10

4.4 Products Information (Content): 11

5. EXISTING PROMOTION PROBLEM 12

5.1 Lack of Attractiveness: 12

5.2 Lack of customer-focused community and content / Education 12

5.3 Lack of Personalization 12

5.4 Lack of creative Sales generation methods and Inflexible pricing strategy 13

5.5 Problems with traditional banner advertisements for SK-II 13

6. SUGGESTED IMPROVEMENT 14

6.1 Personalized Marketing by means of CRM 14

6.1.1 To keep the best customers, SK-II management should concentrate on these strategies 14

6.1.2 The three phases of CRM that SK-II should adopt 14

6.1.3 CRM requirements for SK-II 14

6.1.4 Graphical description of SK-II CRM Architecture 15

6.1.5 Proposed marketing framework for SK-II 16

6.1.6 The SK-II Triangle 21

6.2 Dynamic Pricing: As contrasted to the fixed pricing strategy 23

6.2.1 Online Marketing Incentive Program 23

6.2.2 Haggling Pricing strategy 24

6.3 Make use of Distributed Selling Strategies 24

6.3.1 Affiliate Marketing 24

6.3.2 Building Affiliates 25

6.3.3 Managing Affiliates 25

6.3.4 Supporting Affiliates 26

6.3.5 How to build an affiliate partnership with SK-II 26

6.3.6 Estimated income from affiliate programs 28

6.4 Create Content and Community: 29

6.4.1 Provide Rich Content Information: 29

6.4.2 Partner with net-based training companies to provide cosmetic training to net surfers 29

6.4.3 Rich Content can generate more sales reference cases 29

6.5 Miscellaneous Marketing Techniques: 29

6.6 Mid-Term Advertising Strategy: Wireless Advertising 30

7. PHYSICAL WEB SITE DESIGN AND IMPLEMENTATION 32

7.1 Data Mining techniques 32

7.2 Chat room and FAQ 33

7.2.1 Chat room 33

7.2.2 FAQ 34

7.3 Pictorial Description and Explanation of SK-II Web Site Design in relation to the suggested solutions 35

7.3.1 Brief description of services provided within SK-II WebSite 37

7.3.2 Proposed Web site Flow Chart Design for SK-II 41

7.4 Complementary Web Strategy: m-commerce 42

7.4.1 Market Forecast 42

7.4.2 Benefits of M-commerce 42

7.4.3 Considerations in selecting m-commerce strategy 43

8. CONCLUSION 44

9. REFERENCE 45

9.1 Reference Books 45

9.2 Reference Materials 45

9.3 Reference Websites 46

0. APPENDIX 47

0.1 Appendix 1: Asian e-commerce sites lead world in efficient marketing 47

0.2 Appendix 2: Privacy policy statement of sasa.com 48

0.2.1 Sharing of Information 49

0.2.2 Further Information 50

0.3 Appendix 3: Web Design Guidelines 51

0.4 Appendix 4: Inverted Triangle 53

. INTRODUCTION

.1 Research Company: One of the World-Leading Cosmetics Brand

SK-II, a newly established skincare product subsidiary originated from Max Factor, its' core business focuses on skincare products, which have become a new trend for every women, even men in the modern cities.

Currently, Internet has exposed to the world a new form of media where innovative means of advertising and publishing have been exploited by many corporations in search for a winning formula in the cyberspace.

E-branding has a tremendous value in future, so shifting the promotion strategy from brick and mortor to click and mortor becomes a hot topics for all companies including SK-II.

SK-II has already established as a leading brand within its' skin-care industry. By empowering SK-II on the Internet forefront can boost not only its' sales figures, but also its' E-Brand, Customer Loyalty and Satisfaction and Community as well as many numerously intangible benefits . In the following sections, we will explore in-depth of how to make it work and excel.

.2 Background information: Cosmetics industry in Hong Kong and PRC1

* Most of the companies in the industry are traders who act as agents of the foreign brands to sell in the region, particularly in mainland China

* International brands such as Lancome, Christian Dior, Estee Lauder, Elizabeth Arden, Shisheido and Max Factor play a dominant role in the upper-end market of Hong Kong and the region

* Customized products are increasingly popular and consumers are placing more and more demands on each product they buy.

* Local distribution of cosmetics and toiletries is usually conducted by agents and sub-distributors to expand sales in department stores, supermarkets, specialty retail stores and the professional markets such as beauty salons and beauty schools.

* Direct marketing is also popular in the Asian region, except the Chinese mainland, which has issued regulations to limit direct marketing. Besides, Internet marketing grows at a fast pace in the region, although actual sales are not substantial at the moment.

* China's cosmetics market is highly brand-oriented, with the top 10 brands accounting for two-thirds of the market

* Cosmetics tend to have shorter life cycles than many other consumer goods. Colour and shades play an important role in this industry, and these elements are heavily influenced by fashion trends, tastes and seasonal moods.

* Customized products are also increasingly popular. Consumers are no longer satisfied with ready-to-use cosmetics, and cosmetics companies satisfy their needs for "personal branding" by offering personalized moisturizers and shampoos, as well as personalized colour cosmetics such as do-it-yourself lipstick.

* Men are paying more attention to their appearance. Branding is becoming more important in the men's category of cosmetics and toiletries products, especially for skin-care, cleanse, shave, hair products and fragrance products. A growing number of young men now consider fragrance as daily-care products in the US.

2. OBJECTIVE & METHODOLOGY

This research report is divided into 4 sections, namely introduction section, existing strategy and problem section, suggested solution section and finally, the conclusion section which are listed underneath for your easy reference:

* Introduction Section:

o It will be composed of chapter 1,2 and 3.

o This section will give viewers a brief summary and a general understanding of our research corporation, namely SK-II.

* Existing Strategy and problem Section:

o Chapter 4 will be focused on the existing promotion strategy of SK-II.

o Chapter 5 will be focused on problems that are discovered in Chapter 4.

* Suggested solution section:

o Chapter 6 will be focused on logical solution that SK-II should make use of in order to improve its' web presence image and strategy

o Chapter 7 will be focused on physical solution (Web-site design) that SK-II should implement in order to strengthen its' web presence image and strategy.

* Conclusion section:

o Chapter 8 will summarize the key E-commerce values that SK-II should posses in order to be successful in web advertising and promotion.

If possible, all cited solutions will be accompanied by a successfully implemented e-commerce sites as a reference that these suggested logical and physical solutions really work in cyberspace and have been tested and proven by other corporations prior to give recommendations to SK-II corporation.

2.1 Web Presence Objective/ Goals

Specifically, objectives of SK-II web presence should achieve the following goals:

* Attracting attentions of web-surfers, potential customers and existing customers / visitors

* Making the site interesting to explore

* Generate direct or indirect sales revenue

* Create a virtual Community / SK-II Fans Club

* Creating a positive image consistent with the SK-II desires

* Reinforcing already held positive image regarding as the leading skin-care product

2.2 Methodology

* By means of CRM, integrated sales, marketing and service strategy that preludes lone showmanship and depends on coordinated actions.

* Use existing relationships to grow revenue

* Use integrated information for excellent service

* Introduce more repeatable sales processes and procedures

* Create new value and instill loyalty

* Implement a more proactive solution strategy

3. COMPANY BACKGROUND

3.1 Maxfactor Background

Maxfactor is an international famous cosmetic products company. The founder Max Factor is known as "the make-up of make-up artists". This brand has a long established link with the film and entertainment world and it all started with legendary make-up artist Max Factor himself (1872-1938).

Max Factor emigrated to the United Sates in 1902 from Russia and settled in Los Angeles with his family in 1909 where he began selling hair goods and imported stage greasepaints to local stage actors - actors from the fledgling movie industry also came to Max for make-up advice.

When Max Factor saw his first motion picture he declared the heavy, shiny stage greasepaint 'terrifying!' on film and created Flexible Greasepaint, the first ever make-up created for film, to make actors appear more natural on screen.

Credited as the father of modern make-up, Max Factor is responsible for inventing many key cosmetic products (for both on screen and off) and is still the inspiration behind beauty trends and innovations today.

3.2 SK-II Background

SK-II represents a skin routine discovered, rather unusually, by a Japanese monk visiting a sake brewery where he noticed that the brewery workers had extraordinarily soft and youthful hands. A series of experiments by a team of skincare scientists attributed the secret to clear, nutrient-rich liquid extracted during the yeast fermentation process. This liquid was named Pitera and now forms the basis of this precious skin care range, penetrating deeply into the dermis level, strengthening the skin structure and restraining the production of melanin for a clearer, youthful complexion.

3.3 Product Information and Target

The products are divided into 4 major categories:

. Purifying - to gently cleanse skin thoroughly.

Facial Treatment Cleansing Gel

2. Pitera Soak - helps boost moisture levels to improve texture and clarify for a more beautiful, glowing complexion.

Facial Treatment Essence

3. Moisturizing - helps to promote a fresher, more radiant complexion.

Advanced Protect Essence UV

4. Special Care - offers a full range of Special Care products that pamper skin.

Facial Treatment Mask

Since the products designed for adult women who are over 25 with medium to high income, so the list price are more expensive than other common skincare products.

4. EXISTING PROMOTION STRATEGY (WEB-BASED)

4.1 Sales Generation Channel:

* Use traditional selling method by means of phone call selling within the country (UK) as per description in the mail order sub-menu clipped from SK-II (UK) web site.

* Use electronic mail order form, which is in PDF format, for overseas market buyers to purchase SK-II products. Currently, overseas market buyers need to print out the PDF electronic mail order form, then they need to manually write down their order details, then send back the mail order form by traditional mail to SK-II (UK) which will automatically deduct British VAT, equal 17.5% of the good retail price for international orders outside EU.

* No on-line ordering is accepted from the web site currently.

Picture 1 clipped from the SK-II UK web site.

4.2 Community Development:

Using ONE-WAY AND PASSIVE communication methods to contact and interact with potential customers / web surfers via the following channel:

* Ask potential customers / web surfers to visit SK-II skin counselors at one of the exclusive SK-II counters located at physical SK-II stores.

* Provide a web-interface for users to leave down their email address as well as messages

Picture 2 clipped from the SK-II UK web site.

4.3 Brand Development:

* Use static html pages to disseminate company story to potential customers

* Use mainly textual format to promote SK-II liquid 'Pitera' as the secret key to beautiful skin which is hard to attract potential customers' attention and interest.

Picture 3 clipped from the SK-II UK web site.

4.4 Products Information (Content):

* Standardized information is delivered to all web-surfers, indifferent to their sex, age and needs.

* Use electronic brochure-like information to attract customers

Picture 4 clipped from the SK-II UK web site.

5. EXISTING PROMOTION PROBLEM

5.1 Lack of Attractiveness:

No attempt was made at using the abilities of new technology tools like:

* RealMedia Player / Windows Media player

* Adobe Photoshop

* Shockwave

* Flash

* DreamWeaver

All the above software products are aimed to create visually attractive effects to retain visitors and customers to stay longer in the web site, thus increasing the chances of generating new or repeated sales.

Although we are not saying that SK-II should build some complex graphics, animation and plug-ins which are definitely not a very good concept to do so. Examples like Boo.com, which was a very good example of a site designed by engineers not by marketers. Only approximately 40% of the users were able to access this site due to the site was filled with cumbersome programming tricks, required software plug-in and so on... therefore, it recently filed for bankruptcy. The main point is to design web site of SK-II towards a more interactive and dynamic manner to attract customers' attention.

5.2 Lack of customer-focused community and content / Education

" Besides the big C of commerce there are two other Cs you must consider in making your e-business a success - content and community." 2that the web site can offer.

* Importance of Content and Education to visitors and customers:

o Too many e-business systems, including SK-II, have ignored this fundamental fact, which is the purpose of the Net is to provide information, not to perform a transaction, in it's first place.

* Visitors and potential buyers will only stay longer in SK-II web site only if the contents are rich and attract their interests. By simply adding electronic-like brochures to the SK-II web site will not help retain customers and build its relationship with them, thus the chance of selling diminishes.

* By providing more education to net surfers, their confidence with SK-II products will increase and this may help boost new sales and repeat sales to these targeted customers / potential customers.

5.3 Lack of Personalization

Lack of consumer attention: SK-II web site fails to capture the attention of a buyer. In today and future business model, the capability to earn customers' attention is the key to e-business success.

5.4 Lack of creative sales generation methods and inflexible pricing strategy

* Sales generation channel via the Net by means of phone callings and static electronic forms are just like driving your Lamborgini on a jammed city street where the potential power of your car has not been utilized at all.

* This kind of sales generation method is doomed to failure due to the fact that:

o Inconvenience for customers to purchase online: Customers must download the PDF mail order form from the web, then they need to complete the form and then mail back to SK-II for order completion. This lengthy process will only discourage customers to purchase SK-II products via the web.

* SK-II does not offer flexible pricing scheme to customers and provide only one fixed pricing per each products to all customers, therefore web surfers are not encouraged to purchase SK-II products online.

5.5 Problems with traditional banner advertisements for SK-II

By using traditional banner advertisements, SK-II may not successfully attract the online customers due to the following facts:3

- The fact that more than 80 percent of the space intended for banner advertising goes unsold each day

- Most intense users, those online more than 40 hours per week) admit that they never purchase anything via a banner ad. And considered them some forms of annoyance.

- We are not forced to view banner ads.

- They have been tainted with a reputation for hucksterism.

Note: Facts: Less than 0.5 percent of the American advertising dollars was spent on Internet advertising in 2000

Therefore, SK-II should exploit more innovative methods rather than using traditional banner advertisement approach.

6. SUGGESTED IMPROVEMENT

6.1 Personalized Marketing by means of CRM

SK-II, if done right in its' e-business side, can collect enough information on its shoppers to personalize their shopping experience, bringing them BACK AGAIN and AGAIN, and keeping them as a customer.

For instance, office-supplier site of Staples, www.staples.com, uses personalization to the advantage of its' large number of online customers. Staples can create a customized supply catalog with each customer by keeping lists of previously ordered items. Armed with this information, Staples can make customized special offers to generate new and repeat sales.

Technology-Enabled CRM :

It occurs when a firm obtains detailed information about a customer's behaviour, preferences, needs, and buying patterns and uses that information to customize its entire relationship with that customer. This information can be used to set prices, determine needs and desires, tailor promotions, add product features and negotiate terms.

6.1.1 To keep the best customers, SK-II management should concentrate on these strategies

* Quickly and efficiently creating new delivery channel

* Capturing massive amounts of customer data

* Tying it all together to create an unique experience

6.1.2 The three phases of CRM that SK-II should adopt

* Acquiring new customers

* Enhancing the profitability of existing customers

* Retaining profitable customers for life

6.1.3 CRM requirements for SK-II

* Capability to track customers and their activities (Track SK-II Club members' activities via data mining tools and customer knowledge base)
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* Provide customer with update information in an instant (SK-II personalized web page, e-mail and e-newsletter)

* Customers can offer feedback and comment (via SK-II online chat room or free e-mail services for SK-II Club members)

* Give customers the ability to track their orders (SK-II customer order tracking system)

* Provide customers with a personalized catalogue (Personalization via customer knowledge base)

* Proactive in providing customers with offers tailored to their needs (Personalization via customer knowledge base)

* Perfect the long-term customer relationships (repeat customers, personalized product/services promotion)

* Amazon's 70% ...

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