Kao Case

Although Kao has been a reputable Japanese corporation since 1887, it has been faced with many advantages and limitations in their current market. Not only has Kao’s long term establishment in the Japanese market been a part of their success, but it has also helped by gaining consumers brand loyalty and established a wide long-term customer base. Some of the main advantages Kao has compared to their customers is that they are a vertically integrated company. Because of this, Kao has been able to reduce their costs while improving efficiency, and also is able to reduce their turnaround time in comparison to their competitors. Kao manufactures all three parts of their diaper and does not need to deal with other distributors and manufacturers in order to produce their diaper products. Kao has also taken a strong competitive position by establishing many joint ventures with other countries such a s Taiwan, Thailand, Hong Kong, Singapore, Indonesia and the Philippines. The majority of these ventures resulted in these countries only selling Kao’s consumer products, creating a competitive edge for Kao. As Exhibit 7 shows, Kao did not even begin advertising their diaper brand until 1983, which shows that their trusted name and familiarity was enough to make them the market leader for many years.

Kao also took initiative to employ a Marketing Intelligence System to track their sales by product, region, and market segment in order to gain some valuable market research data. This system provided up-to-date product information and helped control inventory and tracking information on products. To gain another competitive edge, Kao also launched a 24-hour “hot line” where consumers could call and share questions or concerns about Kao products.

While Kao currently remains the market leader, there are many limitations that their company faces. With the launch of P&G’s new Pamper products, Kao is no longer the most absorbant diaper on the market, however, they are still...