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Rookie mistakes may be common, but some are more costly than others. You know it’s bad when a corporate blunder becomes a case study in business schools. (Want to read a few? See Sometimes Even the Best Brands Strike Out.)
Procter and Gamble Co., for example, paid a steep price in the mid-1970s when it tried to crack into Japan’s notoriously difficult markets and sell Pampers disposable diapers.
P&G’s case is worth a closer look, not only as a cautionary tale but also as a success story – because the company ultimately found a path to profitability in Japan.
It all started with a bad ad.
In the U.S., P&G’s marketing for Pampers was right on target, with a TV ad depicting a cartoon stork delivering disposable diapers to a grateful, happy household. The ad captured the real-life relief (elation?) of 1970s-era parents eager to be done with messy cloth diapers.
In Japan, however, a similar ad and packaging missed the mark terribly. P&G was right about Japanese consumers wanting disposable diapers – but it was wrong about how the diapers were delivered.
Blame the stork. Japanese parents were stumped by the strange sight of a stork delivering diapers. As P&G later learned, the Western folklore of storks delivering babies simply does not exist in Japan. Instead, Japanese folklore tells tales of newborns arriving courtesy of a giant peach floating down the river. Peaches, not storks, bring the babies in Japan. And nobody at P&G had bothered to check.
P&G’s experience in Japan is worth a closer look, not only as a cautionary tale but also as a success story. – Click to tweet
Many U.S. businesses have learned painful “lost in translation” lessons overseas, but P&G’s was closer to “I lost my homework.”
The stork mistake was discovered when P&G conducted market research into why sales were slumping. The company changed course with its marketing, but another obstacle would also emerge: domestic competition.
Japanese producers, known for quality and innovation, began to overtake the Americans by creating diapers more suited for smaller Japanese babies and packaging more suited for smaller Japanese apartments. They also developed more effective materials to absorb liquid and prevent diaper rash.
Japanese-made diapers were indisputably better – and, by 1983, they were driving Pampers out of business.
P&G was right about Japanese consumers wanting disposable diapers – but it was wrong about how the diapers were delivered. Blame the stork. – Click to tweet
Former P&G president Werner Geissler once told Japan Inc. Magazine that Japanese consumers are “the most demanding in the world in terms of product quality … We believe Japan is the toughest market in the world.”
Japan’s complex regulatory environment also compounded the challenges and costs for foreign firms trying to do business there. If P&G had given up and gone home, it wouldn’t be the first to fail in Japan.
Instead, the company decided to play the long game – to learn, build and innovate in a difficult test market. “Competing in such an environment makes us work better, stronger and quicker,” Geissler said.
P&G clearly made the right call. Japan’s demanding consumers, difficult business climate and creative competition pushed the U.S. company in a positive – and ultimately profitable – direction.
P&G’s willingness to learn, adapt and invest in Japan’s tough market was ultimately profitable. – Click to tweet
The company’s willingness to learn, adapt and invest led to advances in its distribution methods, in consumer-driven services like 24-hour delivery, and especially in product quality. In the mid-1980s, P&G unveiled its own super-absorbent disposable diaper and ratcheted up the competition.
A healthy dose of patience didn’t hurt, either. It took several years, but Pampers built a trusted, high-quality brand in Japan and climbed to the top of the market.
And this time, not a stork in sight.