Abstract - National Tsing Hua University · Web viewSkin care products present a market worth over NTD 20 billion in Taiwan, with anti-aging products comprising half (NTD 13.2 billion)

The Marketing and Use of Skin Care Products in Taiwan:Development of Consumer Profiles and

Marketing Strategy Suggestions forSK-II Users in Taipei

Participants:

Scott Anderson 94933029 安思河Scott Lin 93932919 林文淵

Bill Hsiun 93932906 熊肇峰Helen Lin 95933004 林靜慧

Advisor:Prof. Charles Trappey, Ph.D.

Marketing Research ProjectInternational MBA

National Chengchi UniversityTaipei, Taiwan

January 2007

Table of Contents

Introduction....................................................................................................................................................4

Objectives........................................................................................................................................................5

Hypotheses.......................................................................................................................................................5

Methodology....................................................................................................................................................6

Sampling...................................................................................................................................................6

Analytical Procedure................................................................................................................................7

Review of the Literature................................................................................................................................8

Skin Care in Taiwan.................................................................................................................................8

Skin Whitening..................................................................................................................................8

Anti-Aging/Anti-Wrinkle...................................................................................................................9

Celebrity Spokesperson....................................................................................................................9

Distribution.............................................................................................................................................10

Competition............................................................................................................................................11

Marketing Approach...............................................................................................................................11

Results............................................................................................................................................................13

Sociodemographic and Psychographic Consumer Characteristics.........................................................13

Consumer Profile....................................................................................................................................15

Motivations for Purchase........................................................................................................................17

Product Characteristics...........................................................................................................................18

Purchase Channels..................................................................................................................................18

Discussion......................................................................................................................................................20

General Profile........................................................................................................................................20

Suggestions for the Marketing of SK-II.................................................................................................21

Potential Limitations and Future Studies...............................................................................................22

Conclusions...................................................................................................................................................23

Key Words.....................................................................................................................................................24

References.....................................................................................................................................................25

Appendix – I : Survey Sample....................................................................................................................27

Appendix – II: Product Pricing..................................................................................................................29

Appendix - III: Statistics Summary............................................................................................................29

Appendix - III: Statistics Summary............................................................................................................30

Appendix IV –Statistics Results..................................................................................................................33

SK-II 3

Introduction

SK-II is a leading, high-end beauty brand with a wide array of skin care products.

Created by MaxFaxtor, the brand was acquired by Proctor & Gamble in 1991. “SK”

stands for “Secret Key,” referring to an ingredient present in all SK-II products – pitera –

a yeast-based substance containing a variety of vitamins, minerals, amino acids and

organic acids that “enhance skin surface renewal,” the secret to smooth and beautiful skin

(SK-II, 2006). Legend has it that pitera was initially discovered by a Japanese monk

who, visiting a sake brewery in Kobe, discovered that the workers all had silky and

youthful hands. The observation led to an investigation, which eventually revealed the

substance.

In Taiwan, SK-II skin care products maintain high market share – over 10% – and

relatively high prices (see Appendix II), but this leading position may be weakening in

the face of increasing competition in the skin care product industry. For example, in

2006, SK-II lost its number-one rank at department stores’ annual anniversary sale event

to Sisley, a brand offering similar products (Zhuo, 2006).

Given the intense competition in the skin care product industry, it is expected that

strategies for marketing channels will become more complicated, brand images will

become more important, and demand for sophisticated and expensive products will

increase. Increased competition has been damaging to SK-II market share holding, but

this competition also reflects great market potential arising from trends in Taiwanese

socio-demographics.

The purpose, then, of this study is twofold: 1) to develop material in relation to

the consumption of skin care products in Taiwan in an attempt to understand the

sociodemographic characteristics of SK-II consumers, as well as their product attribute

preferences and reasons for purchase, and 2) to use this information to suggest strategies

for the continued marketing of SK-II in Taiwan.

Objectives

To understand consumer preference in SK-II purchase in the Taipei metropolitan area

To develop a SK-II consumer profile in Taipei, attempting to explain the socio- and

psycho-demographic characteristics of that consumer and channels through which they

purchase

To identify the reasons why SK-II consumers make their purchases

To identify the most important SK-II product characteristics

To propose ways in which the marketability of SK-II can be increased

Hypotheses

Differences Between SK-II Users and Non-Users

1. There are differences in the sociodemographic profiles of SK-II users and non-users.

2. There are differences in the psychographic (motivation) profiles of SK-II users and

non-users, including reasons for purchase and the importance of certain product

characteristics.

3. SK-II users spend more annually on skin care products than non-users.

4. SK-II users tend to purchase their skin care products from department stores more

often than non-users.

Importance of Product Characteristics for SK-II Users

1. The most important SK-II product attribute is product ingredient.

SK-II 5

2. Other important product attributes are related to the product’s functionality

(whitening, anti-aging, moisturizing) as well as to the appeal of the product

spokesperson, who looks younger than her age.

SK-II Users’ Reasons for Purchase

1. The most important SK-II reason for purchase is the origin of the product – Japan,

rather than the brand.

2. Other important reasons for purchase are related to promotional activities such as

department store anniversary sales.

Methodology

Sampling Rather than randomly sampling skin care product distribution channels

throughout Taipei, survey data were collected from a targeted group of respondents in

order to focus the ability to interpret the results of data analysis. Based on the resources

available and due to time and permission restrictions, local female respondents from

Taipei were selected. In addition to meeting general gender and residency requirements,

target respondents were selected based upon their apparent age. SK-II is marketed as a

brand that rejuvenates and radiates aged, dull skin within a short time period.

Respondents with surveyor-perceived age between 25-45 were target with the assumption

that younger Taiwanese women do not seek to “take years off” of their complexion.

Surveys were conducted according to a questionnaire (Appendix A) designed by

the authors and collected in two stages. The questionnaire was designed with the intent

to collect information relevant to the hypotheses stated above; survey sections on

respondent sociodemographics, purchase frequency and price range, the importance of

certain product attributes (including product ingredients, varying functions, and

associations with celebrity spokespersons), reasons for purchase (including product

origin, brand, and promotion activities) and purchase channel reflect this intent.

SK-II 6

The first stage of data collection focused on determining SK-II market share while

the second stage enabled statistical testing between users and non-users. In the first

stage, a sample of 96 skin care product consumers was collected. Of this sample, 10.4%

of respondents were SK-II users, which was expected given the market share data. In

order to facilitate statistical analysis, additional SK-II user responses were collected with

a second stage of data collection, increasing the total sample size (n=106, user=20, non-

user=86).

Analytical Procedure

Survey responses were compiled into a Excel 2003 and Minitab 14 databases for

overall analysis and statistical hypothesis-testing. All data were analyzed for mean,

standard deviation, and coefficient of variation, where appropriate, as well as median and

mode values, to begin the descriptive process. Additionally, Mann-Whitney and Chi-

square tests were performed, frequency tables designed, and distribution histograms

created.

SK-II 7

Mann-Whitney and Chi-square tests were used to test each variable for median

differences between SK-II users and non-users in order to evaluate the first group of

hypotheses regarding inequalities between groups. Mann-Whitney is a good choice in

cases of ordinal data (the majority of survey responses) because it tests for differences

between medians not means, while Chi-square allows for statistical comparison of

nominal response data. A t-test of difference between means was performed for the ratio

data (annual spending on skin care products) after making assumptions about the

normality of this data.

Review of the Literature

Skin Care in Taiwan

In Taiwan, increases in the living standard and national income, along with

changes in consumption patterns, have given rise to an expanding market for cosmetics

and toiletries, with foreign firms supplying about 80% of demand (Chou, STAT-USA,

Sep. 1, 2004). According to statistics published by Taiwan’s Industrial Development

Bureau, the 2003 US$545.4 million cosmetics and toiletries market share for skin care

products, including medicated or whitening products, was 47% of all cosmetic products

(Chou, STAT-USA, Aug. 16, 2004), and has only increased over time.

Within the skin care sector, the greatest demand is for medicated cosmetics, i.e.

whitening products, sunscreen products, and anti-aging products. Skin care products

present a market worth over NTD 20 billion in Taiwan, with anti-aging products

comprising half (NTD 13.2 billion) of that market (Big Century, 2006). In 2003, annual

growth rates of this segment were projected at 7 to 8 percent (Chou, STAT-USA, July 29

2003).

SK-II 8

Skin Whitening

Skin whiteners and skin care products dominate in Taiwan, playing a considerably

bigger role than cosmetic colorants (makeup). Whitening products make up 36% – over

one-third – of the total skin care market in Taiwan (Zhuo, Liberty Times, 2006).

Reportedly, there is a perception that Japanese skin care products are more suitable for

Asian skin types that drives many Taiwanese consumers to choose Japanese products

over U.S. and European products (Chou, STAT-USA, September 1, 2004). SK-II (made

in Japan), Shiseido and Shu Uemura are noted as the most popular brands. Estee Lauder

and L’Oreal have also introduced skin whitening product lines for Asian people. The

market for sunscreen and whitening products is expected to expand by about 10-12% per

annum over the next three to five years (Chou, STAT-USA, September 1, 2004).

Anti-Aging/Anti-Wrinkle

Similar to Japan, where by 2010 some 25% of the population will be aged 65 or older,

Taiwan is also an aging population (Euromonitor International, 2005). This trend is

expected to lead to increased demand for anti-aging products among older consumers

looking to minimize wrinkles on their faces. At the same time, younger consumers in

Taiwan are increasingly using anti-aging skin care products. Qiu Qiaozhen, writing in

Liberty Times , suggests that the potential customer base for anti-aging products in

Taiwan is growing as increasingly-younger women feel the need to stay young(Chou,

STAT-USA, September 1, 2004).

Celebrity Spokesperson

Does beautiful celebrity spokesperson really work for SK-II in driving sales

performance? Study indicates that inference and attitude formation can substantially

mediate behavior intention (Mitchell and Olson, 1981). The use of physical

attractiveness in making inferences begins early in life, as early as Nursery school

children. They evaluate their class mates in a manner similar with the adult to make

stereotype for physical attractiveness (Dion and Berscheild, 1971).

SK-II 9

However, female and male react differently to the attractive spokesperson.

Though male produce higher acceptance for the attractive female model than female, it is

apparent that attractive endorser would have more credibility over unattractive endorser

(Baker and Churchill, JMR, 1977). This is the reason why attractive celebrity or

spokesperson may incur extra cost, but the beauty industry is still allocating marketing

budget to hire beautiful spokesperson to endorse their skincare product.

Given that credibility of the product can be enhanced through spokesperson, other

study also shows that the credibility of the corporation is significantly more important

than the spokesperson. In other words, spokesperson has considerable less impact when

it comes to making their actual purchase (Lafferty and Goldsmith, 1999)

Distribution

There are four primary outlets for skin care products in Taiwan:

(1) Department Stores such as Sogo and Shin Kong Mitsukoshi remain the

primary channel for cosmetics sales of high-quality and internationally-branded products.

New-to-market products compete with existing international brands represented in this

channel. Around 42% of total cosmetics sales occur at Taiwan’s 65 major department

stores (Chou, STAT-USA, September 1, 2004). In department store distribution

channels, one product manager suggests that SK-II maintains market share of 11-12%,

making it the number-one skin care product brand in Taiwan (Big Century, August 19,

2006).

(2) Specialty stores, covering a range of drugstores and discount stores such as

Sasa, Marsa, Cosmed, and Watson’s, offer more than 10% market share of total

cosmetics sales in Taiwan, attracting customers through competitive pricing (Chou,

STAT-USA, September 1, 2004).

SK-II 10

(3) Beauty and skin care salons account for approximately 15% of cosmetics

sales in Taiwan and appeal to an increasing number of consumers who are able to invest

in beauty programs and are interested in purchasing products only found at the salons or

prescribed by dermatologists for the treatment of aging and sunspots (Chou, STAT-USA,

September 1, 2004).

(4) Direct sales account for about 22% of all cosmetic sales in Taiwan. Recent

figures indicate that there are 3.5 million people working for the 600 "direct sales”

businesses in Taiwan, which specialize primarily in health foods and cosmetics products

(Chou, STAT-USA, September 1, 2004).

Competition

At the same time, the competition is mounting. In the past, European, U.S. and

Japanese brands shared the skin care product market, but recently local brands have also

entered the competition, now meeting more than 6% of Taiwanese demand for skin care

products (Chou, STAT-USA, July 29, 2003). Japanese brands entered the market early,

with brands such as Shiseido, Shu Uemura, Kanebo and Kose and Pola Cosmetics now

well recognized. Western brands, including L'Oreal, Estee Lauder, Unilever and Proctor

& Gamble's brand lines are also now well established. There are over 100 brands

competing in Taiwan (SaSa, 2007). Max Factor's SK-II and Oil of Olay's Olay White

Radiance (both P&G brands), account for a combined 16.5 percent share of the total skin

care market in Taiwan (Chou, STAT-USA, July 29 2003). According to Qiu Liling, SK-

II’s current market share is about 10%, dropping from an earlier 13-14% share as a result

of fierce competition (Qiu, 2006).

Marketing Approach

According to trends in Taiwanese sociodemographics, manufacturers have

attempted to segment consumers by age in attempt to build market, such that since 2004,

consumers in their mid-to-late twenties have been encouraged to begin using anti-aging

SK-II 11

products to prevent wrinkles before their formation, rather than in reaction to them

(Euromonitor International, 2005). Women aged 18 to 44 (population 4.7 million)

represent 70 percent of the consumer base for skin care products. While the market for

anti-aging skin care products aimed at women aged 35 and older is strong and the upper-

end anti-aging products reflect increasing levels of disposable income (Chou, STAT-

USA, July 29 2003), increasingly younger Taiwanese women are also purchasing anti-

aging products.

The major firms noted above deliver products to consumers through sales outlets

in department stores and focus their marketing strategies on specialty stores for their

prestige products. These firms have invested heavily in building brand advertising

campaigns using promotions in local TV, newspapers and magazine ads. Celebrities of

have also been hired as brand spokespeople intended to attract consumers of a similar age

(Euromonitor International, 2005). Reportedly, brands and brand loyalty generally

influence Taiwan consumers’ purchasing behavior, as do pricing, discounting and sales

promotion activities (Chou, STAT-USA, Aug. 16, 2004).

SK-II 12

Results Sociodemographic and Psychographic Consumer Characteristics

The results presented in Table 1 include the numerical variable annual

expenditures on skin care products, as well as categorical variables gender, age, marital

status, education, location, and frequency of purchase. Of these seven characteristics,

three exhibit significant differences between SK-II users and non-users, based on

significant difference testing at the 95% probability level and on sampling design.

Variable Difference Between Users and Non-Users?

Gender*** NoAge** NoMarital Status** YesEducation** NoLocation*** NoFrequency of Purchase** YesAnnual Expenditure on Skin Care* Yes

Table 2 presents the results of significant difference testing of the variables

related to a) the reasons consumers decide to purchase skin care products, and b) the

characteristics consumers look for in these products once the decision to buy has been

made. The results indicate that both consumers’ reasons for purchase and the value they

place on certain product attributes vary between SK-II users and non-users in some

regards.

Between SK-II users and non-users, the median differed in the respondents’

evaluations of the importance of quality and anti-aging functionality as attributes of skin

care products. Significant differences between users and non-users also exist in the

proportions of each group indicating impulse, recommendations from the sales-counter

representative, promotional activity, and product origin as reasons for purchasing skin

care products.

Table 1. Significant difference test results for sociodemographic variables. Taipei. December 2006.

*Mann-Whitney test result; **Chi-square test result;***Statistical test of difference not performed - 100% of Sample Represented By Response

Variable Difference Between Users and Non-Users?

Reasons for Purchase* Advertisement No Impulse Yes Referred by friends and family No Just out of stock No On Sale at a Department Store No Just happen to see it in the shopping center No Fashionable No Really like it when browsing around No Recommended by the sales Yes Promotion Yes Branding No Made in Japan YesImportance Rating of Product Attributes** Price No Formula No Quality Yes Whitening Function No Anti-Aging Function Yes Moisturizing Function No Reputation No Packaging No Product Design No Spokesperson (蕭薔) No Spokesperson (劉嘉玲) No Post Purchase Services No Sales Rep's Attitude and Information No Attractive Promotion No Great Ads No

Based on the results of Tables 1 and 2, it is apparent that the two consumer groups

are similar but not identical (numerical results of all statistical tests performed can be

found in Appendix III). Therefore, the analysis following is performed for SK-II users

and non-users separately, rather than as an aggregated group.

Table 2. Significant difference test results for psychographic variables. Taipei. December 2007.

*Chi-square test result; **Mann-Whitney test result

Consumer Profile

The consumer profile of the Taiwanese skin care product consumer, classified by

usage of the SK-II brand, is presented in Table 3. Mean values are presented for the

continuous, numerical variables. Median values are given for the ordinal variables to

more accurately reflect the importance that the SK-II consumer places on skin care

product attributes and reasons for purchase. Understanding that there are significant

differences between users and non-users, the consumer described by these results is

generally in an age range between 25~35, single, well educated; and purchases skin care

products out of referrals, loyalty, and department store sales.

Table 3 – Data Summary USER NON-USERMean St. Dev. C.V. Mean St. Dev. C.V.

Soci

o-de

mog

raph

ics

Annual Skin Care Exp. ($NT) 8625 4538.94 0.526 5010 3611.052 0.721 Median Mode Median ModeGender Female (100%) Female (100%)Age (yrs.) 30-35 25-30 30-35 25-30Marital Status Single (90%) Single (52%)Education College/University (90%) College/University (71%)Frequency of Purchase (1 purchase every...) 1-2 months (40%) 3-4 months (36%)

Median Median

Impo

rtan

ce o

f Pro

duct

Attr

ibut

es

Price Important ImportantFormula (Pitera) Important ImportantQuality Very Important ImportantWhitening Function Important ImportantAnti-Aging Function Very Important ImportantMoisturizing Function Very Important Very ImportantReputation Important ImportantPackaging Neutral NeutralProduct Design Neutral NeutralSpokesperson (蕭薔) Unimportant Unimportant

Spokesperson (劉嘉玲) Unimportant UnimportantPost Purchase Services Neutral ImportantSales Rep's Attitude and Information Important ImportantAttractive Promotion Important ImportantGreat Ads Neutral Important

3 Most Important (% of sample placing in personal top 3)

Moisturizing Function (50.0%) Moisturizing Function (40.7%)Quality (45.0%) Quality (38.4%)Anti-Aging Function (30.0%) Price (31.4%)

SK-II 15

Rea

sons

for P

urch

ase

% Indicating Variable as … % Indicating Variable as …Advertisement 30% 19%Impulse 25% 8%Referred by friends and family 90% 74%Just out of stock 60% 63%On Sale at a Department Store 60% 45%Just happen to see it in the shopping center 10% 6%

Fashionable 10% 10%Really like it when browsing around 20% 8%Recommended by the sales 0% 17%Promotion 60% 34%Branding 55% 41%Made in Japan 25% 6%

3 Most Important (% of sample placing in personal top 3)

Referrals ReferralsOn Sale At Department Store Just Out Of StockJust Out Of Stock / Branding On Sale At Department Store

Purc

hase

Cha

nnel

Department Store 90% 50%Drug Store 10% 21%Grey Market 0% 13%Direct Sales 5% 45%Open Market 5% 10%Hypermarket 0% 9%Open Rack 5% 33%Convenience Drug Store 55% 52%Internet 20% 30%

Motivations for Purchase

The results of statistical testing in combination with Chart 1, it suggests that SK-II

consumers purchase skin care product more often with impulsive reasons, because the

product is subject to some form of promotion, and because the project is one of Japanese

origin. This is the opposite case with recommendations by sales counter representatives,

where non-users cite these recommendations as reasons for purchase while user do not.

Beyond the differences in users and non-users, over 75% of all respondents indicate a

friend or family member’s referral in driving a purchase decision, and nearly half of

respondents consider both department store sales and a product’s brand as reasons for

purchase. Many consumers, over 60%, purchase skin care products simply because they

were “just out of stock.”

Chart 1

Chart 1. Reasons for skin care product purchase. Taipei, Taiwan. December 2006.

SK-II 17

Product Characteristics

Once the decision to purchase skin care products has been made, consumers

generally consider moisturizing functionality to be of primary importance in selecting

products (Table 4), followed by quality. Interestingly, SK-II users consider anti-aging

functionality to be third most important while non-users consider price as more

important.

According to the results of Table 4, SK-II users consider quality and anti-aging

functionality as two “very important” product characteristics, while non-users consider

these same variables only as “important,” results which are significant at the 95%

confidence level.

Beyond differences in groups, respondents generally do not consider packaging,

product design, or – interestingly for the SK-II brand – the spokesperson representing the

brand to be particularly important product attributes, but do consider important a wide

range of other attributes: price, product ingredients (formula), whitening functionality,

brand reputation, the sales representative’s attitude, and attractive promotion.

Table 4Top 3 Most Important Attributes

USERS NON-USERS

#1 Moisturizing Function

Moisturizing Function

#2 Quality Quality#3 Anti-Aging Price

Purchase Channels

The data in Table 3, again in the context of statistical difference testing noted

above, suggest that SK-II users generally purchase their skin care products at department

stores, while refraining from purchase through direct sales (SK-II is not sold on a direct

sale basis) or from open rack channels. However, 30-40% of non-users purchase their

skin care products through each of these channels. Skin care product consumers, user

SK-II 18

and non-user alike also tend to purchase at convenience drug stores (53%) and via the

internet (28%).

Chart 2 – Skin Care Product Purchase Channel

Chart 2. Skin Care Product Purchase Channels. Taipei, Taiwan. December 2006.

SK-II 19

Discussion

General Profile

Socio-demographics

Based on the results of statistical difference testing and in evaluating the

consumer profile, it becomes apparent that the female Taipei-based skin care product

consumer is similar, although not identical, between SK-II users and non-users. The

average consumer is well educated, between 25 and 35 years old, and unmarried. This

profile is expected, being similar to that established in previous literature.

What socio-demographic differences do exist between SK-II users and non-users

might be generally attributed to wealth, as users appear to have a greater level of

disposable income suggest by greater annual spending on skin care products.

Reasons for Purchase

Nearly three-fourths of the surveyed consumers purchase skin care products

considering referrals by friends and family as a reason for purchase. This reason is

perhaps the most widely understood motive, users and non-users alike, for purchasing

generally amongst Taiwanese women (Hedrick-Wong, 2006). Other particularly

important reasons for purchase amongst these consumers include department store

anniversary sales, the branding of the product, and because consumers had simply “run

out of stock” of their product. Loyalty, then, appears to be an important motivation for

purchase.

Important Product Characteristics

Once a consumer decides to purchase skin care products, whatever the reasoning,

the characteristics sought after become quite apparent. Again, some important

differences exist between SK-II users and non-users exist, but the importance of quality

and functionality is evident amongst all respondents. A majority of respondents indicated

quality to be at least an important, if not very important, product characteristic, while at

the same time indicating moisturizing, anti-aging, and whitening function, as well as

product formula as at least important. In conjunction with importance of word-of-mouth

SK-II 20

referrals in motivating purchase, the data indicate that products must work well to sell

well, at least in Taiwan.

As established in previous literature, price also continues be a key product

characteristic; important to the extent that price segments SK-II users from non-users.

While both groups indicate price to be an important product characteristic, users tend to

spend more on skin care than non-users, and at least some of that spending is on SK-II

products. Interestingly, and unexpectedly, spokesperson affiliation was indicated by

respondents to be an unimportant product characteristic, even amongst SK-II users

themselves.

Extending the Profile

In the event of a lack of resources devoted for site-specific marketing and

development, the consumer profile for Taipei skin care product consumers may be

generally comparable enough to create a common marketing strategy for Taiwan.

Additionally, the profile more or less fits with the consumer profile suggested by

previous research.

Suggestions for the Marketing of SK-II

Re-expanding, or at least maintaining, SK-II market share in the face of

increasing competitive pressures will require sustained marketing efforts. The results of

this project, however, suggest that such efforts need not preserve the content or style of

previous campaigns completely. As loyalty to brand motivates Taipei consumers’ skin

care product purchases, retention of current SK-II users is critical in future marketing

endeavors. An SK-II membership program might be created that could stimulate

frequent purchase through members-only promotions and harness the power of referrals

by rewarding members who convince others to join.

However, with an evolving and expanding potential consumer base in Taiwan,

SK-II marketers would do well to consider altering previous campaigns to better match

the preferences and socio-demographics of new potential customers. Specific targeting

of the yet-untapped seniors market as well as focused marketing for relatively young

Taiwanese women is in order. Moreover, because over half of current non-users

SK-II 21

purchase at least some skin care products through convenience drug stores, marketers

might do well to broadened distribution possibilities as well.

Importantly, product spokespersons are not valued by either users or non-users in

driving purchase; while the traditional SK-II ad style and celebrity spokespersons may

have been extremely effective in the past, they are not as relevant today. Survey results

suggest a reduction in TVC budget. Japanese origin, while more important for current

users than current non-users, does also not register high on consumers’ evaluation of

importance. The ingredient Pitera, the “secret key,” should still be emphasized in

marketing communication given consumers’ perceptions of the importance of quality and

functionality. However, the Japanese origin of the product need not be included in such

communication, provided that perception of the SK-II brand and its meaning is not

significantly linked to its Japanese origin; Taiwanese consumers perceive both brand and

reputation to be important element of their skin care product purchase, and changing the

meaning of the SK-II brand would be potentially disastrous.

Potential Limitations and Future Studies

The majority of the sources of error for this study are related to the survey

process. First, different surveyors invariably used different techniques to obtain their

data. Some surveyors carried out each interview verbally, recording the answers

themselves. Others handed the surveys to the respondents and asked them to fill them out

while the surveyors waited. Still others handed the surveys to respondents, left, and came

back later to collect the completed surveys. This inconsistent sampling technique

probably resulted in varying interpretations of some questions by respondents, and it also

allowed some surveys to be filled out incompletely. To avoid this, a standard

interviewing procedure to be followed by all interviewers should be established before

future data collection is started.

Another challenge related to the data-collecting process is language translation.

Questionnaire forms were distributed in Chinese, while findings have been presented here

in English. The authors have made assumptions about respondents understanding of

survey questions and attempted to translate the meaning of each variable correctly, but

invariably cultural and language usage differences provide room for miscommunication.

SK-II 22

This problem is inherent in the study and probably cannot be avoided, but it is important

to identify.

Hopefully, the results of this work will motivate others in Taiwan to explore

cosmetic product consumer preferences in a systematic manner in order to inform the

expansion of such markets. Future research must be conducted to adequately address the

interactions of multiple factors influencing the cosmetic product market. Interesting and

pertinent topics within this market might include: the effects of income on cosmetic

expenditures; the effects of consumers’ reasons for purchase on expenditures; and

comparisons of other, similar brands, product types, or distribution channels to SK-II.

Conclusions

The hypotheses of difference between SK-II users in terms of socio-demographic and

psychographic characteristics can only be partially accepted. While consumers are

similar, they are not identical. SK-II users spend more annually on skin care products,

and tend do to more shopping than non-users for such products at department stores.

The primary factor influencing the decision to purchase skin care products is referral

by friends or family members, while moisturizing functionality and quality are the most

important product characteristics in the consumer’s opinion.

SK-II 23

Key Words

Skin care products, SK-II, Taipei, Taiwan, marketing, consumer preference,

celebrity spokesperson,

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Chou, Angeli, “International Market Research Report”, Country: Taiwan, STAT-USA, September 1, 2004, http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr117416e.html

Chou, Angeli, “Market Brief: Cosmetics and Toiletries”, Country: Taiwan, STAT-USA, August 16, 2004, http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr126833e.html

Chou, Angeli, “The Taiwan Cosmetics and Toiletries Market”, Country: Taiwan, STAT-USA, http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr118628e.html

Qiu Li-Ling, “Winning Taiwan from World’s View (贏得台灣就是放眼世界), Industrial and Commerical Times, Nov. 24, 2006

Zhuo Yi-Jun, Skin Care Product Going Upscale (保養品精品化頂級逆勢成長), Liberty Times, Nov. 16, 2006

Hedrick-Wong, Yuwa. “Female Spending in Taiwan.” Presentation delivered to the Taiwan banking industry. Sept. 8, 2006.

Euromonitor International. “Cosmetics And Toiletries in Japan.” Market Research Report published by Euromonitor International; Distributed by Global Information, Inc. September 2005.

SK-II Official Website, http://www.skiimf.com.tw/, 2007

SaSa Website, http://www.sasa.com/, 2007

Big Century(大紀元), “SK-II Grabs Anti-aging Market Share”August 19, 2006

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http://www.sasa.com/

http://www.skiimf.com.tw/

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Appendix – I : Survey Sample

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Appendix – I I: Product Pricing

Price range for the SK-II products (Sa Sa, 2007)

Appendix - III: Statistics Summary

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Appendix IV – Statistic s Results

EXPENDITURE

Two-Sample T-Test and CI: AnnExp-U, AnnExp-N

Two-sample T for AnnExp-U vs AnnExp-N

N Mean StDev SE MeanAnnExp-U 20 8625 4539 1015AnnExp-N 76 5010 3611 414

Difference = mu (AnnExp-U) - mu (AnnExp-N)Estimate for difference: 3614.8695% CI for difference: (1710.31, 5519.40)T-Test of difference = 0 (vs not =): T-Value = 3.77 P-Value = 0.000 DF = 94Both use Pooled StDev = 3816.8230

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PRODUCT CHARACTERISTICS Mann-Whitney Test and CI: Price-U, Price-N

N MedianPrice-U 5 2.000Price-N 60 2.000

Point estimate for ETA1-ETA2 is -0.00095.2 Percent CI for ETA1-ETA2 is (-0.000,1.000)W = 191.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.5221The test is significant at 0.4481 (adjusted for ties)

Mann-Whitney Test and CI: Formula-U, Formula-N

N MedianFormula-U 6 1.5000Formula-N 56 2.0000

Point estimate for ETA1-ETA2 is -0.000095.1 Percent CI for ETA1-ETA2 is (-1.0000,-0.0003)W = 166.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.6004The test is significant at 0.5719 (adjusted for ties)

Mann-Whitney Test and CI: Quality-U, Quality-N

N MedianQuality-U 5 1.0000Quality-N 61 2.0000

Point estimate for ETA1-ETA2 is 0.000095.0 Percent CI for ETA1-ETA2 is (-1.0000,0.0002)W = 151.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.7072The test is significant at 0.6691 (adjusted for ties)

Mann-Whitney Test and CI: Whitening-U, Whitening-N

N MedianWhitening-U 4 1.0000Whitening-N 61 2.0000


Mann-Whitney Test and CI: AntiAge-U, AntiAge-N

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N MedianAntiAge-U 6 1.0000AntiAge-N 60 2.0000


Mann-Whitney Test and CI: Moist-U, Moist-N

N MedianMoist-U 7 1.0000Moist-N 62 1.0000


Mann-Whitney Test and CI: Rep-U, Rep-N

N MedianRep-U 3 3.000Rep-N 54 2.000


Mann-Whitney Test and CI: Pack-U, Pack-N

N MedianPack-U 2 2.500Pack-N 52 3.000


Mann-Whitney Test and CI: Design-U, Design-N

N MedianDesign-U 2 2.500Design-N 52 3.000

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Mann-Whitney Test and CI: Spoke1-U, Spoke1-N

N MedianSpoke1-U 2 4.500Spoke1-N 50 4.000


Mann-Whitney Test and CI: Spoke2-U, Spoke2-N

N MedianSpoke2-U 2 4.500Spoke2-N 51 4.000


Mann-Whitney Test and CI: Post-U, Post-N

N MedianPost-U 3 1.000Post-N 52 2.000


Mann-Whitney Test and CI: Promo-U, Promo-N

N MedianPromo-U 3 2.000Promo-N 52 2.000


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Mann-Whitney Test and CI: Ads-U, Ads-N

N MedianAds-U 2 2.500Ads-N 52 2.000


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REASONS FOR PURCHASE Chi-Square Test: Advertisement (RFP), Advertisement (Not RFP)

Expected counts are printed below observed countsChi-Square contributions are printed below expected counts

Advertisement Advertisement (RFP) (Not RFP) Total 1 6 14 20 4.15 15.85 0.824 0.216

2 16 70 86 17.85 68.15 0.192 0.050

Total 22 84 106

Chi-Sq = 1.281, DF = 1, P-Value = 0.2581 cells with expected counts less than 5.

Chi-Square Test: Impulse (RFP), Impulse (Not RFP)


Impulse Impulse (Not (RFP) RFP) Total 1 5 15 20 2.26 17.74 3.306 0.422

2 7 79 86 9.74 76.26 0.769 0.098

Total 12 94 106


Chi-Square Test: Referred by friends and family, Referred by friends and famil_


Referred Referred by by friends friends and and family famil_1 Total 1 18 2 20 15.47 4.53 0.413 1.412

2 64 22 86 66.53 19.47

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0.096 0.328

Total 82 24 106


Chi-Square Test: Just out of stock (RFP), Just out of stock (Not RFP)


Just Just out out of of stock stock (Not (RFP) RFP) Total 1 12 8 20 12.45 7.55 0.016 0.027

2 54 32 86 53.55 32.45 0.004 0.006

Total 66 40 106

Chi-Sq = 0.054, DF = 1, P-Value = 0.817

Chi-Square Test: On Sale at a Dep, On Sale at a Dep


On Sale at On Sale at a a Department Department Store ( Store_1 Total 1 12 8 20 9.62 10.38 0.587 0.545

2 39 47 86 41.38 44.62 0.137 0.127

Total 51 55 106

Chi-Sq = 1.395, DF = 1, P-Value = 0.238

Chi-Square Test: Just happen to s, Just happen to s


Just Just happen happen to see to see

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it in it in the sh the _1 Total 1 2 18 20 1.32 18.68 0.349 0.025

2 5 81 86 5.68 80.32 0.081 0.006

Total 7 99 106


Chi-Square Test: Fashionable (RFP), Fashionable (Not RFP)


Fashionable Fashionable (RFP) (Not RFP) Total 1 2 18 20 2.08 17.92 0.003 0.000

2 9 77 86 8.92 77.08 0.001 0.000

Total 11 95 106


Chi-Square Test: Really like it w, Really like it w


Really Really like it like it when when browsing browsing ar _1 Total 1 4 16 20 2.08 17.92 1.785 0.207

2 7 79 86 8.92 77.08 0.415 0.048

Total 11 95 106


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Chi-Square Test: Recommended by the sales (RFP), Recommended by the sales (Not


Recommended Recommended by the by the sales (Not sales (RFP) R Total 1 0 20 20 2.83 17.17 2.830 0.467

2 15 71 86 12.17 73.83 0.658 0.108

Total 15 91 106


Chi-Square Test: Promotion (RFP), Promotion (Not RFP)


Promotion Promotion (RFP) (Not RFP) Total 1 12 8 20 7.74 12.26 2.350 1.483

2 29 57 86 33.26 52.74 0.547 0.345

Total 41 65 106

Chi-Sq = 4.725, DF = 1, P-Value = 0.030

Chi-Square Test: Branding (RFP), Branding (Not RFP)


Branding Branding (Not (RFP) RFP) Total 1 11 9 20 8.68 11.32 0.621 0.476

2 35 51 86 37.32 48.68 0.144 0.111

Total 46 60 106

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Chi-Sq = 1.351, DF = 1, P-Value = 0.245

Chi-Square Test: Made in Japan (RFP), Made in Japan (Not RFP)


Made Made in in Japan Japan (Not (RFP) RFP) Total 1 5 15 20 1.89 18.11 5.137 0.535

2 5 81 86 8.11 77.89 1.195 0.124

Total 10 96 106


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CHANNEL Chi-Square Test: Department Store CH, Department Store NOT CH


Department Department Store NOT Store CH CH Total 1 18 2 20 4.91 15.09 34.952 11.359

2 8 78 86 21.09 64.91 8.128 2.642

Total 26 80 106


Chi-Square Test: Drug Store CH, Drug Store NOT CH


Drug Drug Store Store NOT CH CH Total 1 2 18 20 3.77 16.23 0.834 0.194

2 18 68 86 16.23 69.77 0.194 0.045

Total 20 86 106


Chi-Square Test: Grey Market CH, Grey Market NOT CH


Grey Grey Market Market CH NOT CH Total 1 0 20 20 2.08 17.92 2.075 0.240

2 11 75 86

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8.92 77.08 0.483 0.056

Total 11 95 106


Chi-Square Test: Direct Sales CH, Direct Sales NOT CH


Direct Direct Sales Sales CH NOT CH Total 1 1 19 20 7.55 12.45 5.680 3.442

2 39 47 86 32.45 53.55 1.321 0.801

Total 40 66 106

Chi-Sq = 11.243, DF = 1, P-Value = 0.001

Chi-Square Test: Open Market CH, Open Market NOT CH


Open Open Market Market CH NOT CH Total 1 1 19 20 1.89 18.11 0.417 0.043

2 9 77 86 8.11 77.89 0.097 0.010

Total 10 96 106


Chi-Square Test: Hypermarket CH, Hypermarket NOT CH


Hypermarket Hypermarket CH NOT CH Total 1 0 20 20 8.11 11.89 8.113 5.538

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2 43 43 86 34.89 51.11 1.887 1.288

Total 43 63 106

Chi-Sq = 16.825, DF = 1, P-Value = 0.000

Chi-Square Test: Open Rack CH, Open Rack NOT CH


Open Open Rack Rack NOT CH CH Total 1 1 19 20 5.47 14.53 3.654 1.376

2 28 58 86 23.53 62.47 0.850 0.320

Total 29 77 106

Chi-Sq = 6.201, DF = 1, P-Value = 0.013

Chi-Square Test: Convenience Drug Store CH, Convenience Drug Store NOT CH


Convenience Convenience Drug Store Drug Store CH NOT CH Total 1 11 9 20 10.57 9.43 0.018 0.020

2 45 41 86 45.43 40.57 0.004 0.005

Total 56 50 106

Chi-Sq = 0.047, DF = 1, P-Value = 0.829

Chi-Square Test: Internet CH, Internet NOT CH


Internet Internet CH NOT CH Total 1 4 16 20 5.66 14.34

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0.487 0.192

2 26 60 86 24.34 61.66 0.113 0.045

Total 30 76 106

Chi-Sq = 0.837, DF = 1, P-Value = 0.36

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DEMOGRAPHICS

Results for: SKII-Demographics.MTW Chi-Square Test: Married, Single


Married Single Total 1 2 18 20 7.40 12.60 3.941 2.314

2 35 45 80 29.60 50.40 0.985 0.579

Total 37 63 100

Chi-Sq = 7.819, DF = 1, P-Value = 0.005

Mann-Whitney Test and CI: Age-U, Age-N

N MedianAge-U 20 3.000Age-N 82 3.000

Point estimate for ETA1-ETA2 is 0.00095.1 Percent CI for ETA1-ETA2 is (-1.000,-0.000)W = 963.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.5780The test is significant at 0.5658 (adjusted for ties)

Mann-Whitney Test and CI: Education-U, Education-N

N MedianEducation-U 20 2.0000Education-N 80 2.0000


Mann-Whitney Test and CI: Frequency-U, Frequency-N

N MedianFrequency-U 20 3.000Frequency-N 79 3.000

Point estimate for ETA1-ETA2 is -1.000

95.1 Percent CI for ETA1-ETA2 is (-1.000,-0.000)W = 766.5Test of ETA1 = ETA2 vs ETA1 not = ETA2 is significant at 0.0423The test is significant at 0.0351 (adjusted for ties)

Mann-Whitney Test and CI: Price-U, Price-N

N MedianPrice-U 20 3.0000Price-N 78 2.0000


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Documents

Abstract - National Tsing Hua University · Web viewSkin care products present a market worth over NTD 20 billion in Taiwan, with anti-aging products comprising half (NTD 13.2 billion)