Bob McDonald, President, Procter&Gamble Japan

Consumer Market Entry in Japan - A History of Successes and Failures

“Japan is the toughest, most difficult consumer market in the world. If you can beat the competition here, you can beat them anywhere else in the world ... Japan is a strategic market for Procter&Gamble”

Bob McDonald manages a multi-billion dollar business, and we were fortunate that he took an entire afternoon off his busy schedule to introduce us to the company, its philosophy, and the Japanese consumer market. After welcoming us to P&G’s highly impressive building in Kobe, the city rocked by a big earthquake only a few years ago, we were led through the center of P&G Japan’s research and development efforts for haircare and cosmetics products.

For P&G Japan, the execution of their Japanese market entry strategy was a rocky road. At one point, they seriously had to consider writing off their investment and retiring from the Japanese market. They chose to stay and compete with local competitors, even though it meant having to develop a precise understanding of Japanese consumer needs, their way of doing business, and especially their distribution infrastructure. Today, P&G continues to enhance this understanding, and constantly adapt strategy and execution, in a blend of world brands and centralized functions with local adaptation.

An example for local adaptation is P&G’s distribution strategy which has evolved over the years, to address changing consumer demands. Bob observed that the largest U.S. distributor, Walmart, moved over 30% of P&G’s business, while their largest Japanese wholesaler accounted for no more than 2.5%. Consequently, from initially over 2,500 wholesalers, each of which serving only a small number of retailers, P&G moved to a 100, and eventually to 5 “key partner” wholesalers. At times, this was a painful process that countered the Japanese philosophy of building lifetime relationships.

In addition to the fantastic building, the helpful and knowledgable staff we met at P&G, and especially the impressive Board Room where we held our meeting, what really stuck in our minds was Bob's managerial style and personality. An Army Veteran, he began his career with P&G over 18 years ago, and this has been his third international executive engagement. He joined P&G after getting his MBA because he shared its cultural values, which he explained as nurturing, yet competitive. Bob was kind enough to spend an entire afternoon with us, and in parting company, we felt that hanging around this guy gave us more than just insights into marketing in Japan. His predecessor in this job is now P&G's Chief Executive. We could definitely see Bob in that role, some time down the road...