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Case Study: Kikkoman Corporation Case Overview: Kikkoman ± a premier soy sauce manufacturing company from Japan is a successful company worldwide especially in the United States of America and with threatening crunches in profitability looming ahead, it is now evaluating its strategies ahead. 1) What are they key success factors of Kikkoman's success in entering new markets? We believe the key reason why Kikkoman was successful in entering new markets is that it got all its four P¶s of marketing
  Case Study: Kikkoman CorporationCase Overview: Kikkoman ± a premier soy sauce manufacturing company from Japan is a successful companyworldwide especially in the United States of America and with threatening crunches in profitability loomingahead, it is now evaluating its strategies ahead. 1)   Wh at are t h ey key success factors of Kikkoman's success in entering new markets? W e believe the key reason why Kikkoman was successful in entering new markets is that it got all its four P¶s of marketing correct along with a very good market entry strategy. a)   P roduct Kikkoman had the ability to focus on customers of that region and blend in with local food habits rather than something foreign to that market. For example, in America, they promoted the soya sauce as an ad-on to the local food to make it tastier rather than promoting it as an ingredient that changes the taste of the dish.Kikkoman gave a lot of importance to adaptation of its product in the individual markets. For example,they launched different kind of sauces to meet local needs such as Teriyaki in U.S. and customized onesto suit varied Asian tastes.Adaptation also included changing the product size to suit the non Asian consumers. The bottling sizewas reduced from 4 liter to a small bottle as per consumer needs. b )   Pl ace They targeted supermarkets as its main retail outlets which gave them access to masses. Their strategyof creating demand and acceptance by supermarkets was repeated in every region they entered. After establishing the hold in this retail sector they moved into the institutional market to become a part of thefood service channel. They understood the business dynamics of each country and attuned their distribution system accordingly. For example, in USA, they practiced the function-oriented businessculture whereas in Asia, especially in Japan, they stressed on building relationships and abiding bythem.Also they significantly reduced their costs by cutting down the logistics and transportation after theyopened manufacturing units in the profitable regions like US and Singapore after initial years of importing from Japan. c)   P rice Their pricing strategy was market skimming i.e. they made a strategic decision to stay high end,however since it was important to gain sufficient market share they could not charge a very high price.They priced their product at a 15% premium over their competitors La Choy and Chun King in the d)   P romotion I t promoted itself as a premier brand product. Their promotion activities included extensive campaigns.They always promoted their product as a naturally brewed one. These included sponsoring cookeryshows and promoting their products via them as a food taste enhancer. They even sponsored cookingclasses to home makers to promote the use of soya sauce. They doled out free samples of their productsin order for people to accept the taste of their product. They relied on the ripple effect such campaignswould produce.They also influenced professional chefs to promote their product. They also included a recipe book consisting of local delicacies along with their product to promote its use. e)   M arket entry decision B efore venturing into any new market, they carry out extensive market research and then strategizeaccordingly. For example, they realized the very fact that U.S. was receptive to new food and hadenough disposable income to experiment. That is why they ventured into this market. They took noticeof the burgeoning middle class in China and thus entered the market in the 2000s i.e. their timing of entering new market was apt. Similarly their timing of entering the US market was also perfect becauseit was in the post WW - II period in the 1950s, the US population became oriented towards orientalcuisines.  W hile entering a new market, they gave complete autonomy to the local office and allowed them toadapt their product to the local taste. W hile launching in U.S. they gave the same liberty to their SanFrancisco office. They followed this practice in every international venture hence forth. 2)   S h ou l d Kikkoman spend more resources to expand in t h e food service sector? Or s h ou l d Kikkomanrat h er focus on direct consumer sa l es? Since the 1980s, there has a shift in consumer preferences to go for prepared foods from restaurants, retailchains, convenience stores, home-delivered pizza and the like which made these places as attractivecustomers for Kikkoman in the industrial or food service sector. I n fact, from exhibits 13a and 13b, we canspot a growing share of the food service sector in Kikkoman¶s sales volumes.Thus, Kikkoman should spend more resources to expand into the food service sector because of thefollowing reasons: y   The demand in the food service category is expected to increase over the years following thedemographic shift in population with more and more women joining the workforce and thus havinglesser time to cook  y   As the smaller competitors are fast disappearing from the market, the field is open for large playerslike Kikkoman to strike institutional deals with related industries y   Also since a major chunk of Kikkoman¶s operating profits come from the US market, investing infood service sector would be a profitable strategy given the general propensity of the American population to go for prepared food y   I n some countries like China, the local competition is so high that profitability will be at stake if Kikkoman targets only direct consumersOne of the major hindrances in this regard was unfamiliarity of the supply chain from Kikkoman¶s point of view where they only dealt with the distributors and not the end-clients. Thus, we believe, Kikkoman, viaK  II should invest more into building a strong network of both distributors and institutional users. 3 )   E va l uate Kikkoman¶s strategy in terms of standardization vs adaptation According to a paper by Porter in 1986, there are certain conditions where a company can successfully carryout a standardization strategy. These include similar customer needs everywhere in the world, certainspecific kinds of goods such as luxury products, products that require standardized technology and thosethat require sufficient research and development. However, none of these hold good for Kikkoman and thuswe feel that Kikkoman made an apt decision when it followed adaptation in the different markets. I t did not promote itself as a Japanese firm selling Japanese product but always strived to bring out something thatsuits the local tastes. Thus they created a demand for their product in the different markets. Had Kikkomangone for standardization, it would have appeared as a rigid and foreign brand to the worldThis is why Kikkoman majorly went for adaptation apart from its basic soy sauce which was keptstandardized across all markets. That gave Kikkoman the required economies of scale. B ut what really fetched Kikkoman its global success was the way they adapted their products to suit theneeds of the different consumers. For example, in US, they introduced a variety of products like Teriyakisauce (Kikkoman¶s answer to the American barbeque sauce), Tofu, seasonings, soups ± all targeted atgiving the customers positive reasons to try their products. Not just in US, they had customized soy saucesto cater to specific regional tastes (a sweeter variety of soy sauce for Taiwan). Also in US, they introducedSoya Sauce Lite ± a low salt version of the same to cater to increasingly health conscious population. Addedto that, they changed the container sizes to smaller ones to meet the consumption habits of non-Asians whoused less of the product. Thus, though Kikkoman followed dual policies of standardization and adaptation, itis their adaptation strategy that gave them their competitive advantage. Su b mitted b y: Adrija C h akra b orty, Gaurav M akkar and P rit h a Gupta
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