October 31, 2005


"Consumer Driven Policy - Making Good Products with Integrity" (Kao Corporation)

Keywords: Newsletter 

JFS Newsletter No.38 (October 2005)

Staff Writer: Eriko Saijo

The first time soap was manufactured in Japan was about 130 years ago, mainly for commercial laundries. Fifteen years later, higher-quality soap for the face and body was put on the market.

Mr. Tomiro Nagase, Kao's founder, aspired to provide high quality personal soap to consumers, which led to the birth of Kao soap in 1890, the first domestically produced personal soap in Japan. Since then, Kao has been one of Japan's leading soap and detergent producers, having launched a shampoo that helped change the way Japanese people washed their hair, a laundry detergent that caused people to change from soap to synthetic detergent for washing clothes, and Japan's first household liquid cleaner.

Currently, Kao is experiencing success in marketing other types of products, such as industrial chemicals, cosmetics and health care products. Kao operates not only in Japan but also in other Asian nations, the United States and Europe. It has a total of approximately 20,000 employees in and out of Japan. Total sales for fiscal year 2004 amounted to 936.8 billion yen (US$8.29 billion), a quarter of which was generated abroad.

Kao issued a new company policy, the Kao Way, in October 2004; this policy is a revision of the former Kao Management Principle that incorporates a global perspective. This new policy was set up to guide how Kao develops its business, i.e. the company's overall purpose, where it wants to go, what it believes in and how it intends to behave.

According the Kao Way policy, the company's mission is to help people around the world to enjoy satisfying, affluent lives by providing quality products created from a consumer/customer perspective. Its vision is to become a global group of companies that is as close as possible to the consumer/customer, to earn the respect and trust of all stakeholders, and to contribute to the sustainable development of society. The Kao Way also describes the values and principles that support its mission and vision.

One of the products that represents Kao's corporate policy is "Attack," a concentrated laundry detergent.

In Japan, people do laundry almost every day. Consumers' former complaints about former detergents centered on difficulties in removing dirt from cotton clothing, and the size and weight of the detergent box. A box of detergent box at that time weighed 4.1 kilograms, too heavy for the elderly or mothers with little children to carry home.

After repeated research and development efforts to provide consumers with easy-to-use products, Kao discovered a bioenzyme that would also be effective in an alkaline solution and developed a high-performance cleaning technology that required only a small amount of detergent. The result was Attack, the world's first concentrated laundry detergent, which could achieve even better cleaning results with only a quarter of the volume of conventional detergent. With this innovative development, the weight of a box of detergent was reduced to 1.5 kilograms, a size that can be carried easily with one hand, that was a third of the size of former boxes of detergent.

As soon as Attack appeared on the market, it became popular among consumers. The year following its launch, Kao became far and away the leader in the entire domestic laundry detergent market. By the 1990s, most domestically produced laundry detergents were concentrated detergents.

The development of this product also reflected Kao's awareness that it was essential to shift from mass consumption to resource conservation after the oil crisis of the 1970s. Reduction in the amount of detergent used helps lower environmental impacts as well, besides improving its portability.

Attack's formula has been revised more than 20 times, and through this process it has become not only more convenient and effective, but also friendlier to the environment and society. As compared with its former package, the latest Attack package has been reduced 64 percent by weight and 80 percent by volume. The amount of energy used to produce it was cut by 44 percent. The number of boxes that can be loaded on a single pallet is 3.6 times more than formerly, helping reduce carbon dioxide emissions during transport. Moreover, in the spring of 2004, the company started using recycled materials for the measuring spoon, paper box and lid.

Kao's corporate culture is characterized by an awareness that the company should develop consumer-driven products through dialogue and listening to customer opinion in order to keep up with volatile consumer preferences. The company has established a system for reflecting consumer demands at all stages of operations--from gauging consumer demand to technological development and after-sales follow up.

This system is based on the online "Kao Echo System," launched in 1978. It supports interactive communication between customers and Kao, and stores the consumer inquiries, of which there are more than 120,000 a year, into a database. This information can be accessed by all employees.

Inquiries and requests about products are received at the Kao consumer service center by phone, e-mail and letter. On receiving an inquiry, the service center staff member searches the Echo System for related information, responds immediately, and inputs the new information into the database. The input information is distributed through the in-house network and opened to all workers by the next day. In addition to analyzing the information analysis, for example, which products are the objects of what kind of inquiry, the Echo System can automatically suggest suspected production troubles when multiple inquiries come in on products that have been manufactured in the same lot or on the same day.

How does Kao make use of the Echo System? Staff members for each product category have a meeting once a month to discuss product quality assurance. Based on the information in the Echo System, they discuss solutions to the dissatisfactions or inconveniences expressed by consumers.

In the process of product development, they use the system to draw inspiration for new products and get important information about consumers' opinions on existing similar products. After releasing a new product, they use the system to gauge immediate consumer response and make use of this information in future sales strategies and product improvement.

For example, a raised mark on the side of a shampoo bottle that allows people to distinguish it from the bottle of rinse is now common practice, but it originated in response to consumers' requests. Because the same brand of shampoo and rinse use the same shaped bottle, it was difficult for consumers to distinguish the two bottles in the shower. In 1991, Kao placed a raised mark on the side of the shampoo bottle so people could identify it by touch. They developed this design in cooperation with a school for the blind, as those who requested this mark included blind people. Kao disseminated use of this kind of mark through the whole industry and made it a standard in Japan for identifying shampoo and rinse bottles.

In this way, the Kao consumer service center is the most consumer-conscious division, responding not only to each consumer's inquiries, but also communicating interactively with consumers and taking the responsibility to promote consumer-driven products. From the year 2004, the service center issues an activity report to introduce Kao's efforts to the public and provide an opportunity to consider the way companies respond to consumers.

Kao is getting closer to its ideal vision, "a global group of companies that is as close as possible to the consumer/customer in each market," by seriously listening to consumers' requests, carefully analyzing information, and reflecting consumers' needs in its products.