Mustika Ratu Case Summary

Mustika Ratus History

In 1978, the company was incorporated (with only 10 employees). In 1995,

Mustika Ratu capitalized on their success and went public, issuing 107,000,000
shares, priced at Rp 2,600 in their initial public offering (IPO), to become listed on
the Jakarta Stock Exchange (JSX) under the symbol MRAT.

Mustika Ratus Marketing Strategy

Throughout the 1980s, the company expanded its line traditional cosmetics
(facial care & decorative makeup, hair and body care product) and the established
itself as the uncontested market leader by 1998, four out of every 10 cosmetic
products sold in Indonesia were Mustika Ratu brands. Positioned as competitively
priced, quality products formulated specifically for Indonesian skin. Company
literature reinforced that its products were natural and integrated timeless
Indonesian beliefs of the health and beauty properties of local plants and herbs.
Mustika Ratus Jamus appealed to several market segments.

Segment : Men, women, adults, and teenagers.

Target : Predominantly middle- to upper-middle-income cunsumers.

Positioning : Products were natural and integrated timeless Indonesian beliefs of

the health and beauty properties of local plants and herbs.

Condition of competition in the jamu segment was becoming fierce in the

next following years. Many roadside stalls selling jamus to cure headaches, boost
sexual drive or to reduce weight were common. These jamus were targeted at the
middle- to lower-income market segment. So, Mustika Ratu also competed in these
market segments with their flank brand Jagaraga Jamus. According to the
companys 1997 annual report, this line contributed to overall profitability and had
great potential for future growth. Exhibit below are Mustika Ratus product
differentiation based on market segment. Each segment has each marketing
strategy that suitable to applied to their market.
 Based on reading text, Mustika Ratus core value that become major quality
of Mustika Ratus product was high quality of their natural ingredients. It become a
competitive factor for Mustika Ratu differentiation to another brands. This
competitive factor that Mustika Ratu tried to sell from their marketing campaign.
This became a major focus in the companys marketing communications. An
average of over 25 percent of annual net sales was spent on marketing campaigns
which promoted value-priced, natural alternatives to importd cosmetics. Another
key promotion activity that increased the companys profile was sponsorhip of
several major beauty events, including the Miss Indonesia pegeant.

B.R.A. Mooryatis high profile as an owner of Mustika Ratu, who grantedfor

meritorious achievement in the promotion of Indonesian culture and traditions and
the Asian Institutes Marketing Management Award (in 1992 and 1995) also
increased Mustika Ratus profile in domestic area.

Mustika Ratus Distribution Strategy

Over the years, Mustika Ratu had developed its own well-established and
highly organized distribution system, controlled through a recently installed
information technology (IT) control system. The application of improved IT control
systems ensured a higher level of service and more efficient delivery schedules as
well as more accurate and timely consumer information. IT system was also
installed due to the the challenges posed by Indonesians geography, which is
Indonesias area is so vast. Another significant challenge in distribution in Indonesia
was the highly fragmented nature of the retail industry thousands of small outlets
and roadside stalls accounted for a significant percentage of Indonesias retail
activity. Mustika Ratu used all of kind distribution channel to market their extensive
product lines.

Mustika Ratu Brands Distribution Channel :

- Lower- and middle- income brand :

Ubiquitous stalls, wet markets, conventional retail shop, supermarket, direct
sales channel
- Upper- income brand :
Department stores, company-owned stores, direct sales force

Since 1992, Mustika Ratu had concetrated on intensifying their departement store
distribution channel. Another key strategy was to increase of distribution channels
perviously managed by third parties in their most densely populated and lucrative
markets. The establishment of Mustika Ratu-owned and operated distribution
systems resulted in an average of two and one-half percent increase in Mustika
Ratus operating margins. Delivery time was also shortened, and quality of service
provided to retail outlets was enhanced. Company also changed its accounts
receivable policy, shortening the due period from 90 days to 30 days. Namely it
drecreased lead times and resulted to smaller order lots. According to Sayuti on the
reading text, the companys distributors were his eyes and ears monitoring
customer opinion and relaying vital market information to the corporate marketing
department.

Mustika Ratus International Market

In international markets, Mustika Ratu used a combination of in-house

ownedand operated distribution channels, as well as contracted distributors.

Malaysia :

- The companys most significant international market, accounting for 70% of

international revenue.
- 1995, Mustika Ratu established several House of Mustika Ratu treatment
centres, which resulted in doubling sales.
- Target Market : Indigenous Malays (primerly target), Chinese (lastest
catered), Middle market products.

Philippines :

- Demographics in Philippines market were relatively similar with domestic

product lines.
- Target Market : Health and beauty products for teenage girls was one of the
least crowded market segments.
- Next step in penetrating the Filipino market was to capitalize on the
established third-party distribution channels used for the body splash and to
introduce other product within the Puteri line as well as Mustika Ratus
slimming Tea.

The Middle East :

- Mustika Ratu had opened 14 House of Mustika Ratu outlets in United Arab
Emirates, Saudi Arabia, and Egypt.
- Target Market : Brand with in developing natural products that adhered to the
Muslim Halal standards products made with no animal fat and that had
never been tested on animals.

Other Countries :

- The another countries was : Hong Kong and Holland (Mail order
distribution channel)
South Africa, Canada, Australia, China, Japan,
Korea, Vietnam
 Taiwan, and Thailand (Investigating Market)

Successfully Navigating Through A Chaotic External Environment

Mustika Ratu had averted the misfortune in 1998 that had befallen
many of their competitors through cautious investment of the proceeds of
their IPO (much of which had not been used as originally planned), mostly in
short term deposits at foreign-owned banks.
Though many domestic competitors were faced with managing similar cost
increases, foreign competitors were expected to become an even more
significant threat. They were not exposed to the same increases. In addition,
with foreign-currency-dominated budgets, their marketing budget went a lot
further in Indonesia. However, the price of imported cosmetics had so far
risen in tandem with the devaluation of the rupiah.