SK-II launched 20 years ago in Japan, and was developed, according to legend propagated by P&G, by a monk who discovered skin-rejuvenating "pitera" after noticing workers at a sake factory had unusually soft hands from the yeast used for fermentation. P&G acquired SK-II as part of Max Factor in 1991, and it caught the fancy both of former Chairman-CEO Durk Jager and current Chairman-CEO A.G. Lafley, who formerly headed P&G's Asian business.
In the past decade, SK-II has grown at compound double-digit rates as it expanded into Taiwan, Korea and Hong Kong. Since its U.K. launch, the brand has grown globally at a 16% annual clip to $400 million, Mr. Lafley said at a recent investor conference.
Interestingly, SK-II bucks convention at P&G, which under Mr. Lafley intensified its restructuring in recent years to slash overhead and prices across a broad range of brands and emphasize value brands as never before.
Price is almost no object to "age-defying" SK-II consumers, said Patrick Hansson, Geneva-based brand manager for SK-II in Western Europe. The most avid spend as much as $10,000 a year on their twice-daily ritual of creams, lotions, cosmetics, masks and cleansing cloths. Average SK-II consumers in the U.K. may spend $2,000 a year-more than 10 times what an average U.S. family spends on all P&G brands combined.
following u.k. model
"SK-II consumers would rather give up the fifth Prada bag than their SK-II," Mr. Hansson said.
P&G would not comment on plans for the U.S., but one of the executives familiar with the situation said the company will follow the U.K. model by initially targeting the most elite stores of such U.S. chains as Neiman-Marcus and Bergdorf Goodman. In the U.K., where the brand was introduced in 2000, SK-II launched solely in two Selfridges stores; three years later it is in only about a dozen more stores in that chain, along with Harrods and Fraser.
In contrast to the typical big-budget mass-market P&G launch, SK-II marketing is a low-risk, low-budget, high-service affair that really does build the brand one consumer at a time. First purchases come only through a "consultant" who performs an individualized skin analysis in one of SK-II's elaborate stores within stores and follows up with a handwritten note. Database-customized mailings drive most new SK-II product launches in the U.K., Mr. Hansson said.
"SK-II is one of the most PR-driven brands P&G has ever had," he added. "We do advertising, but we only do print and only in the top three or four or five beauty magazines. And it's not continuous. We do about three insertions [per magazine] a year."
SK-II thrives on the endorsement of its U.K. spokesmodel Stella Tennant, a.k.a. Lady Grencom, granddaughter of the duke and duchess of Devonshire, and from buzz generated by such celebrity brand enthusiasts as Kate Moss and Drew Barrymore.
Publicis Groupe's Beacon handles SK-II in Asia, with Leo Burnett Co., London, adapting ads for Europe and independent Purple PR, London, handling publicity. P&G's three-member marketing team handles most of the direct mail.
SK-II gets TV support in Japan, where SK-II is more established and TV advertising of prestige brands more common, Mr. Hansson said.