case study - hello kitty

60 June 2007MARKETING MASTERMIND

‘Hello Kitty’A Japanese Superbrand

© 2006 The Icfai Center for Management Research (ICMR). All Rights Reserved. For accessing and procuring thecase study, log on to www.ecch.cranfield.ac.uk or www.icmrindia.org

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June 2007MARKETING MASTERMIND 61

Hello Kitty was the name of acartoon cat developed in 1974by Sanrio Co. Ltd. (Sanrio), aJapanese company that soldcharacter-branded goods inJapan and other parts of theworld. Sanrio initially used thecharacter to adorn pettymerchandise like coin pursesand pencil boxes targeted atsmall girls. However, after HelloKitty became hugely popular,Sanrio extended the brand to avariety of other products.

By the early 2000s, HelloKitty featured on productsranging from vacuum cleanersto DVD players, toilet paper tocars, and computers to candy,and was thought to be one ofthe most powerful brands in theworld.

This case discusses thereasons for the popularity ofHello Kitty, and tries to analyzethe unique features of thebrand. It also talks about thevarious steps Sanrio took overthe years to revive andreinvent Hello Kitty when salesshowed signs of flagging. Therole of celebrity endorsementsin creating brand value is alsodiscussed. The case concludeswith a commentary on Sanrio’sefforts to convert Hello Kittyinto a luxury brand.

She (Hello Kitty) is the original, and it is hard to replace her. She becamethe icon of cute for a whole generation. You can’t buy that kind of lucky coinci-dence.1

– Ken BelsonCo-author, Hello Kitty: The Remarkable Story of Sanrio

and the Billion Dollar Feline Phenomenon, in 2004.

Hello Kitty was propelled from day one by the character’s cute and simpledesign. After 30 years, we’re glad to see that people are still buying her prod-ucts.2

– Bill HensleyMarketing Director, Sanrio Inc., in 2003.

Hello Kitty Goes LuxeIn early 2005, Sanrio Co Ltd.(Sanrio), the Japanese companywhich created the popular cartooncat Hello Kitty, entered into a licens-ing agreement with jewelry designerKimora Lee Simmons’ (Simmons)company, Simmons Jewelry Co., tocreate a line of diamond jewelry—the “Hello Kitty Collection by KimoraLee Simmons.”

Simmons’ jewelry line, which in-cluded pendants, rings, and diamondwatches, was priced in the range of$350 to $3,5003, and was launchedin March 2005. The diamondwatches, which were reportedly thebest selling items in the line, werepriced between $1,875 and $3,250and were available in eight differentdesigns. All of Simmons’ jewelry wasavailable exclusively at Neiman-Marcus outlets across the US. (Referto Exhibit I for pictures of some ofSimmons’ jewelry pieces).

Diamond jewelry was only asmall part of the Hello Kitty mer-chandising universe. The Hello Kittybrand was also used on designer ap-parel, accessories, and perfumes.High-end pet accessories were sold

under the label the “Hello Kitty Col-lection by Little Lilly” at upscale bou-tiques in the US. On the technologyfront, a Japanese company calledBusiness Design Laboratory created a20-inch tall Hello Kitty robot4 thatcould perform the job of front-deskpersonnel in the early 2000s.

Apart from luxury products, con-sumers could also buy affordableproducts like Hello Kitty pencilboxes, purses, and apparel from vari-ous stores worldwide. Reportedly, asof early 2006, there were thousandsof different Hello Kitty productsavailable in over 40 countries aroundthe world.

Sanrio first introduced Hello Kittyin 1974, as an embellishment on asmall coin purse sold by the com-pany. Children, especially small girls,loved the cartoon and the cat becamevery popular. Keeping the character’spopularity in mind, Sanrio producedseveral Hello Kitty branded products,aimed at small girls and preteensover the late 1970s.

However, during the 1980s, thegrowing popularity of other cartooncharacters such as Doraemon (an-other cat) resulted in the Hello Kitty

1 Edward Gomez, “Pop: How Hello Kitty came to rule the world,” http://www.sfgate.com,July 14, 2004.

2 Parija Bhatnagar, “Hello Kitty’s a whisker away from 30,” http://money.cnn.com,November 14, 2003.

3 Dollars ($) refer to US Dollars in this case study.4 The robot could recognize as many as 10 faces, ask visitors to speak their names, and tell

them when the person they had come to see was ready.

‘Hello Kitty’

MARKE



brand losing some of its appeal.Therefore, in the mid-1990s, Sanriorepositioned the brand to make it ap-pealing to a wider age range of fe-male customers. The repositioningwas successful, and Hello Kitty re-gained its popularity.

Over the years, Sanrio launchedthe Hello Kitty brand in various coun-tries in Southeast Asia, Europe, andthe Americas. In Southeast Asia, ana-lysts noted that girls showed almost afanatical devotion to the brand.Apart from Southeast Asia, HelloKitty was also hugely popular in theUS—so popular that she was consid-ered to be in the same league as car-

toon characters like Mickey Mouse,Snoopy, and Winnie the Pooh. Suchwas Hello Kitty’s popularity that shewas chosen the UNICEF5 ambassadorfor the USA in 1983 and for Japan in1994.

By the early 2000s, however,Hello Kitty began facing brand fa-tigue6 in its domestic market, Ja-pan. In 2002, Winnie the Pooh re-placed Hello Kitty as the best-sellingcharacter among female consumersin Japan. This in turn had an impacton Sanrio as Hello Kitty was thecompany’s main brand and Japanits key market. In the early 2000s,Sanrio was trying to reposition the

brand once again by associating itwith jewelry and luxury products.

BackgroundShintaro Tsuji (Tsuji), the founder ofSanrio, was born in 1927 in theYamanashi region of Japan. Tsujiwas an engineering graduate, andworked for the Japanese governmentbefore resigning to pursue his entre-preneurial ambitions. Tsuji set up theYamanashi Silk Center (YSC) in1960, through which he sold silkgoods like purses, slippers, etc.7However, Tsuji did not find much suc-cess in this business initially.

In 1962, Tsuji started selling a lineof slippers that had the picture of astrawberry on them. These slipperswent on to become a huge success andgave a boost to Tsuji’s struggling busi-ness. Tsuji realized then that consum-ers were more attracted to items thathad been embellished with some de-sign or character. He was later quotedas saying, “If you attach added valueor design to the product, they sell in acompletely different way.”8

After the success of the slippersTsuji concentrated on developing de-signs and pictures that could be usedto adorn his merchandise. In themeantime, he received a license fromCharles Schulz9 to use the famousSnoopy character on his merchan-dise. Apart from this, Tsuji also be-gan selling Hallmark 10 greetingcards and Barbie11 dolls in Japan.However, these products did not finda good market in the country asJapanese consumers considered themto be too “western”.

Source: Cheryl Kremkow, “Licensed to sell,” http://www.modernjeweler.com, June 1, 2006.

Exhibit I: Hello Kitty Diamond Jewelry Collection by Kimora Lee Simmons

5 Established by the United Nations in 1946, UNICEF is the acronym for United Nation’s Children’s Fund.6 Brand fatigue occurs when consumers get bored of a particular brand, after purchasing too many products of the same brand.7 The YSC did not actually manufacture any of these products. The manufacturing was contracted out to smaller companies, and YSC

concerned itself only with the marketing of the products.8 “Pick of the Litter,” http://metropolis.japantoday.com, Issue 513.9 Born in November 1922, Charles Schultz was the creator of the famous cartoon strip, Peanuts. Snoopy, a dog, was one of the main

characters in these cartoon strips.10 A Missouri, US based company, Hallmark is one of the largest manufacturers of greeting cards in the world.11 Barbie is one of the most well-known and also one of the best-selling dolls in the world. It is manufactured by the US-based toymaker,

Mattel Inc.

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Over a period of time, Tsuji re-cruited artists to develop charactersthat could be used to decorate itemslike key chains, cups, etc. By the endof the 1960s, he had put together anin-house creative team that was re-sponsible for churning out new de-signs and characters. Tsuji’s intentionwas to take advantage of the Japa-nese custom of giving gifts. In Japan,people often exchange small and in-expensive gifts like key chains andother tokens. Even children like to ex-change small gifts and small statio-nery items. Tsuji noted that there wasa huge market for merchandise suchas pencil boxes, small purses, etc.,that young people could afford tobuy.

In 1973, Tsuji incorporated YSC asSanrio Co. Ltd. The company adoptedthe motto “Small Gift, Big Smile, ” im-plying that a small gift could bringgreat joy to both the giver as well asthe receiver, and that gifts were a formof expressing one’s feelings to anotherperson. Sanrio focused on sellingcharacter-branded goods to youngpeople. The company defined its mainbusiness as “social communicationgift products” or small gifts that wereexchanged socially.

During the early 1970s, Tsuji andhis creative team introduced variouscharacters and designs for use onmerchandise. Prominent amongthese were Patty and Jimmy (cartooncharacters of a girl and a boy) andHello Kitty, in 1974. Hello Kitty be-came an instant hit with children,who took a liking to the cute catwith the oversized head. Hello Kitty’ssales grew quickly, and this contrib-uted to Sanrio’s success in the 1970s.Soon, Hello Kitty had become sopopular that many companies startedapproaching Sanrio for permissionto use the image. In 1976, Sanriostarted licensing the Hello Kitty im-age to various companies for use on

their merchandise. Over the years,Sanrio introduced several otherpopular characters like Chococat,Keroppi, Cinnamoroll, etc., butHello Kitty remained its most suc-cessful character. The brand’s suc-cess made Sanrio one of the leadingcompanies in the lucrative characterbranded goods market in Japan.Sanrio also made money by licens-ing its other cartoon characters toother companies in Japan andworldwide.

Apart from marketing character-branded goods, Sanrio also producedmovies. In 1978, Tsuji received anAcademy Award in the “best docu-mentary film” category for the movieWho are the Debolts and Where DidThey Get 19 Kids? However, most ofthe company’s revenues still camefrom its “social communication busi-nesses” or the sale of character-branded merchandise.

Over the years, Sanrio continuedto introduce new cartoon charactersat regular intervals while retiring

some of the older characters. How-ever, Hello Kitty remained thecompany’s main brand. (Reportedly,the Hello Kitty brand was providingalmost half of Sanrio’s revenues bythe early 2000s.)

Sanrio opened an amusementpark called Puroland in Tokyo, Ja-pan, in 1990. In 1991, the companyopened another amusement parkcalled Harmonyland in Oita, Japan.Sanrio’s product range, which com-prised mainly stationery items in the1970s, was extended to a wide arrayof products including apparel andaccessories by the early 2000s (Referto Exhibit II for Sanrio’s major busi-nesses in early 2006).

Over the years, Sanrio launchedits characters in various countriesmainly through licensing. In 2006,the International Licensing IndustryMerchandisers’ Association (LIMA)inducted Tsuji into the MurrayAltchuler Licensing Industry Hall ofFame. According to LIMA, Tsujiwas recognized for his 30-year ca-

Segment Subsegment Major Businesses

Social communication gift Social communication Stationery, kitchen and tableware, interiorbusiness gift products decorative goods, portable goods,

apparel, etc.

Greeting cards Birthday cards, Christmas cards

Publications Gift books, general publications andmagazines

Movies, videos Film distribution, video software sales

Theme park business Theme park service Amusement park, sales of merchandise,restaurants.

Tie-up commissions Commissions from collaboratingcompanies

Plays Revenues from musicals and other plays

Other businesses Restaurants Restaurants, Kentucky Fried Chicken(franchise)

Theatre Revenues from performances at Sanrio-owned theaters

Real estate Real estate rentalAdapted from www.sanrio.co.jp.

Exhibit II: Sanrio’s Main Businesses as of Early 2006

‘Hello Kitty’



reer in the licensing industry, dur-ing which time he had built upHello Kitty into a “global licensingphenomenon”.12

Although Sanrio expanded itsoverseas market over the years, Ja-pan remained its key market throu-ghout. Tsuji was considered to be theequivalent of Walt Disney in Japanbecause of the success achieved bySanrio’s characters in the countryand around the world.

As of early 2006, Sanrio sold itsproducts in more than 40 countries inAsia, Europe, and the Americas (Referto Exhibit III for the various subsidiar-ies of Sanrio as of early 2006).

Hello Kitty Through theYearsDuring the early 1970s, Sanrio car-ried out a consumer survey which re-vealed that the most popular cartooncharacters in Japan were those ofdogs, bears, and cats. Accordingly,

the company asked its creative teamto develop new characters based onthese animals. In 1974, ShimizuYuko (Shimizu), one of the designerswho mainly designed wallets for thecompany, created several charactersincluding designs for a cat, a dog,and a bear.

The design of the cat characterwas interesting in that it had anoversized round face with two dotsas eyes, a button nose, and nomouth. It also had six whiskers anda red bow on its left ear. The cat,like most other cartoon characters,sat in a human-like posture. One ofthe most striking features of this cat,however, was that its face was com-pletely expressionless (Refer to Ex-hibit IV for a picture of the firstHello Kitty design).

Sanrio first used the cat (whichhad no name at the time) to deco-rate a coin purse, which it soldalong with other wallets in 1974

(Refer to Exhibit V for a picture ofthe Hello Kitty coin purse). Overtime, Sanrio observed that thepurses featuring the cat were sellingbetter than the others. To make themost of the cat’s popularity, the com-pany decided to give it a solo launchin 1975. Sanrio named the charac-ter “Hello Kitty”, and began sellingtoys, stationery items, and othersmall gift articles with pictures ofHello Kitty. Explaining the rationalebehind the name, Bill Hensley(Hensley), marketing director,Sanrio’s US business, Sanrio Inc.13

said, “Gift-giving is an importantpart of the Japanese culture. In Ja-pan, ‘Hello’ communicates the ideaof open communication. That’s whyshe was named Hello Kitty.”14

Tsuji initially targeted the HelloKitty merchandise at girls aged be-tween 4 and 6. The goods werepriced low so that they could bebought by the target consumers.

Name Location Major Businesses Business Relationship

Sanrio Inc. San Francisco, USA Social communication gifts Imports and sales of Sanrio products, loyalty trading

Sanrio Do BrasilComercio e Tamboré, Brazil Social communication gifts Import and sales of Sanrio productsRepresentacoes Ltda.

Sanrio (HongKong) Co.,Ltd. Hong Kong Social communication gifts Manufacturing of Sanrio products, loyalty trading

Sanrio Korea Co. Ltd. Seoul, Korea Social communication gifts Manufacturing of Sanrio products, loyalty trading

Sanrio Taiwan Co.,Ltd. Taipei, Taiwan Social communication gifts Manufacturing of Sanrio products, loyalty trading

Sanrio GmbH Schleswig-Holstein,Germany Social communication gifts Imports and sales of Sanrio products, loyalty trading

Sanrio (Shanghai) Shanghai, China Social communication gifts Manufacturing ofSanrio products,loyalty tradingInternational TradingCo., Ltd.

Sanrio AsiaMerchandise Co.,Ltd. Hong Kong Social communication gifts Manufacturing ofSanrio products,loyalty trading

Sanrio Puroland Co.,Ltd. Tama-Shi,Tokyo Theme parks Purchase & sales of Sanrio products, loyalty trading

Harmony Land Co., Ltd. Hinode-cho, Hayami-gun, Oita Theme parks Purchase & sales of Sanrio products, loyalty trading

Sanrio Far East Co.,Ltd. Shinagawa-ku, Tokyo Social communication gifts Manufacturing of Sanrio products, loyalty trading

Note: This is the not the complete list of Sanrio’s subsidiaries.

Source: www.sanrio.co.jp

Exhibit III: Various Subsidiaries of Sanrio as of Early 2006

12 http://www.licensing.org/news.13 Sanrio opened its first shop called “The Strawberry Shop” that sold Sanrio merchandise in the US in 1969. Later in 1976, the company

set up its American subsidiary, Sanrio Inc., in California.14 Parija Bhatnagar, “Hello Kitty’s a Whisker Away from 30,” http://money.cnn.com, November 14, 2003.

Case Study



Hello Kitty became an instant hitwith small girls because of her “cute-ness”. As a result, Hello Kitty mer-chandise began selling well in themarket. The fact that the merchan-dise was priced affordably added toits success. Hello Kitty’s popularitycontinued to increase throughout the1970s. Meanwhile, Sanrio launchedHello Kitty and other characters in theUS. Here too, the company noticedthat Hello Kitty was more popularthan its other Sanrio counterparts.

However, in the 1980s, HelloKitty began losing its cachet in Ja-pan, due to the growing popularity ofnew anime15 characters such asDoraemon. Anime continued to grow

in popularity throughout the 1980sand the early 1990s, not only in Ja-pan, but also in other countries(Mainly in Southeast Asia and NorthAmerica).

In the mid-1980s, Sanrio re-cruited a new designer, YamaguchiYuko (Yamaguchi). Yamaguchi wasbelieved to be responsible for ex-tending the Hello Kitty brand to awide array of items including candy,accessories, clothes, and electronicgoods. By this time, Sanrio had be-gun efforts to make the Hello Kittybrand more attractive to teenagedgirls (going beyond its traditionalmarket of small girls) in a bid to re-vive the fading brand. Reportedly,Sanrio got the idea after a high-schoolgirl wrote a letter to the company in1986 complaining that it did not pro-duce products for girls of her age.

After this, Yamaguchi visited vari-ous shops in Japan to find out whatcustomers expected from Hello Kitty.She realized that although the com-pany had positioned Hello Kitty as acharacter for small girls, the brand’sappeal went far beyond the originaltarget market. Consequently, she con-vinced the company to take steps tomake Hello Kitty acceptable to di-verse age groups. She even intro-duced a sober black and white HelloKitty design in order to attract olderconsumers. However, in spite of theseefforts, Sanrio was not very success-ful in reviving the brand.

Hello Kitty got a fresh lease of lifein the mid-1990s, after Sanrio man-aged to successfully change the posi-tioning of the brand. This period wascalled the “Kitty boom” by some in-

dustry observers. In 1996, Yamaguchidesigned “hip” products like HelloKitty mobile phone cases, etc., tar-geted at high-school girls. These prod-ucts were popular, and sold well.

Some analysts, however, believedthat Hello Kitty’s revival during thistime was the result of several factors,and could not be completely creditedto Sanrio. They believed that HelloKitty experienced a sudden rise inpopularity due to the voluntary en-dorsement of the brand by TomomiKahara (Kahara), a young Japanesesinger, in the mid-1990s.

Kahara, who was very popularwith high school girls, proclaimedherself to be a big fan of Hello Kitty,and sported a variety of Hello Kittyproducts during her public appear-ances. Said Takahashi Ko (Ko), mar-keting executive at Sanrio, “Kitty ex-perienced the greatest rise in popu-larity since her creation thanks topop singer Kahara Tomomi. Shewent on the highly rated TV program—Utaban and told the hosts that sheloved Kitty-chan16 more than any-thing. Within days sales in our outletshad nearly doubled.”17

Analysts also attributed the popu-larity of Hello Kitty among teenagedgirls in Japan to another fad preva-lent in Japan during the mid-1990s— Print Club kiosks18. These kioskswere mainly used by female consum-ers aged between 13 and 28. Sanrio,spotting a business opportunity, setup Print Club kiosks in its shops. Ac-cording to the company, young girlswho were waiting to use a kioskbrowsed around the shop and boughtHello Kitty merchandise.

Source: “Hello Kitty Celebrates ThirtiethAnniversary,” http://web-japan.org, March 2004.

Exhibit V: The Hello Kitty Coin Purse

Exhibit IV: The First Designof Hello Kitty


15 Animation is referred to as anime by the Japanese. Anime is also the term popularly used the world over for Japanese animation work.16 Hello Kitty was popularly called “Kitty-chan” by her Japanese fans.17 Alex Jordan, “Big in Japan—Hello Kitty!” http://metropolis.japantoday.com.18 Photo booths, popular in Japan. A typical booth is large enough to hold up to eight people, and some are even larger. They typically cost

between 300 and 600 yen per session. Once the money is inserted, between two to ten different pictures can be taken. Once the pictureshave been taken, the occupants select those that they wish to keep and print using a touch sensitive screen or pen-sensitive screen. Thepictures can then be decorated on the screen with a vast array of virtual stamps, borders, and text. (Source: http://en.wikipedia.org/wiki/Print_Club)

‘Hello Kitty’



Another reason for Hello Kitty’srevival, according to industry observ-ers, was that young women who hadbeen fans of Hello Kitty in their child-hood continued to buy the brand evenafter they grew up. It was noted thatwomen liked to decorate their officedesks with Hello Kitty merchandise.Further, young mothers were buyingmerchandise for themselves (liketoasters, hair curlers, etc.) as well astheir children, and Hello Kitty had,by the early 2000s, become a brandthat attracted female consumers inthe age group of 4 to 30.

Interestingly, a “Kitty boom” oc-curred outside Japan too at this time.During the 1990s, Hello Kitty hadbecome hugely popular in the US andsome Southeast Asian countries. Ap-parently, Hello Kitty’s popularityamong celebrities was not restrictedto Japan. The brand became a favor-ite with many celebrities in otherAsian and western countries, espe-cially in the US, during the late1990s. Reportedly, celebrities in theUS like singer Christina Aguilera,musician and TV personality LisaLoeb (Loeb), supermodel TyraBanks, and singer Mariah Carey(Carey) were big fans of Hello Kitty.Carey made headlines when sheshowed off her Hello Kitty hair dryerand boom box19 while appearing inan episode of a popular televisionshow, MTV Cribs, in the early 2000s.Loeb, a popular singer in the US,even dedicated an album to HelloKitty. The album was aptly titledHello Lisa.20 Many celebrities such asCameron Diaz, Mandy Moore, HeidiKlum, Carmen Elektra, Nicky Hilton,Ashley Judd, Madonna, and othersposed for fashion magazines dressed

in outfits with pictures of Hello Kittyand accessories (Refer to Exhibit VIfor pictures of celebrities with theHello Kitty brand).

Becoming a “Hollywood favorite”helped Hello Kitty gain visibilityworldwide. Sanrio also acted quicklyto make the most of this popularity.During the “Kitty boom” the companyentered into several licensing agree-ments and brought out a host ofHello Kitty products. It licensed HelloKitty for varied products targeted atdifferent consumer groups. While onthe one hand, Hello Kitty was featuredon small items like pencil boxes forsmall girls and accessories for high-school girls, there was also a HelloKitty car targeted at young women.

Thanks to voluntary endorsementsby celebrities, Hello Kitty had becomea fashion symbol by the early 2000s.This allowed Hello Kitty to gain ac-ceptance as a “premium brand” eventhough the brand was still used bySanrio and other companies (under li-cense) for small stationery items likepencils and sharpeners.

In the early 2000s, the Hello Kittybrand had reached near saturationpoint in traditional products. There-fore, Sanrio looked for tie-ups with

high-end luxury items. The fact thatit was voluntarily endorsed by celeb-rities helped Hello Kitty’s new posi-tioning as a luxury brand. In April2003, the Hello Kitty brand was usedby Heatherette, a fashion label in theUS, for its Spring/Summer 2003 col-lection. Designers Richie Rich andTraver Rains launched a new line ofclothing featuring exclusive HelloKitty designs. Swarovski21 offered arange of Hello Kitty merchandise likewatches, jewelry, charms for mobilephones, etc. By this time, there werecollectors of unique Hello Kitty mer-chandise. The items ranged fromhigh-end products like a Hello Kittywatch by Swarovski to limited edi-tion dolls like the Hello Kitty wed-ding collection by Sanrio.

In November 2004, Hello Kittycompleted 30 years. It was interest-ing to note that organizations otherthan Sanrio were also keen to cel-ebrate Hello Kitty’s 30th “birthday”.For example, the Japan Mint pro-duced 200,000 commemorative coinsets to commemorate the anniver-sary. Another Japanese company,Tanaka Kikinzoku Kogyo KK, made12 solid platinum statues worth$30,000 each, and sold all 12 (Refer

Exhibit VI: Celebrities Endorsing the Hello Kitty Brand

Cameron Diaz wearing aTarantino necklace

Mandy Moore with a HelloKitty beaded purse

Nicky Hilton wearing a HelloKitty Heatherette dress

Source: www.sanrio.com.jp

19 Boom box refers to a portable stereo system.20 Kelly Carter, “Hello Kitty is the Cat’s Meow,” http://www.usatoday.com, April 21, 2002.21 Founded in 1895, Swarovski AG is a Switzerland-based company that is popular for its crystal glass products sold under the name

Swarovski. As of early 2006, the company sold jewelry, fashion accessories, home accessories, and eyewear under the brands DanielSwarovski and Swarovski.

Case Study



to Exhibit VII for a picture of theHello Kitty platinum statue).

Sanrio’s Licensing ofHello KittyAccording to analysts, Sanrio’s deci-sion to put Hello Kitty on a wide vari-ety of products was largely respon-sible for keeping the brand in thepublic eye for more than three de-cades. After featuring the cat on acoin purse in 1975, Sanrio had, overthe years, branched out to includeseveral other items under the HelloKitty brand. Analysts commentedthat Sanrio had put Hello Kitty onpractically everything. Only HelloKitty featured on items ranging fromvacuum cleaners to DVD players, toi-let paper to cars and computers tocandy. Said Bruce Guiliano(Guiliano), senior vice president oflicensing, Sanrio Inc., “In Japan, it’spossible to have your entire housedecorated and fixturized in HelloKitty…. There’s even a Hello Kittydishwasher.”22

Sanrio was able to feature HelloKitty on a variety of products throughits licensing agreements with compa-nies. For instance, in Japan,toymakers like Takara Co. Ltd.23 andBandai Co. Ltd. (Bandai)24 producedHello Kitty toys under license fromSanrio. Matsushita Electrical Indus-trial Co. Ltd. (Matsushita)25 had thelicense to make Hello Kitty toasters.Mitsubishi Motor Corp. (Mitsubishi)26

created a prototype “champagnepink” Hello Kitty minicar in 2006.Sanrio also offered Hello Kitty videogames and mobile games in associa-

tion with gaming companies. For in-stance, in 2006, Sanrio and MOffy, aHong-Kong based mobile games de-veloper, launched a series of mobilegames called Hello Kitty Saves theBeach, Hello Kitty Magic Block, HelloKitty Amazing Circus, and Hello KittyJoyful Balloon.

It was also through licensing thatSanrio was able to extend the HelloKitty brand to luxury products. Forinstance, Daiwa Resort Co. Ltd., apopular hotel chain in Japan, offeredHello Kitty-themed suites to its cus-tomers under license from Sanrio.Tarina Tarantino (Tarantino), a fa-mous designer in the US, launched anew line of jewelry called the “HelloKitty Pink Head Collection” under li-cense from Sanrio.

In addition to licensing out thebrand, Sanrio also introduced new

items of its own every year. (Report-edly, 90% of the creative design teamat Sanrio’s headquarters werewomen. According to some analysts,this went in favor of the company asthe designers understood the needsand preferences of the target marketwell.)

Sanrio replaced old Hello Kittybranded merchandise in shops withnew items every six months. This keptthe merchandise trendy and relevant.Sanrio’s amusement parks Purolandand Harmonyland were “Kitty-themed”, and they even offered HelloKitty-theme weddings. By the early2000s, Sanrio was introducing closeto 100 new designs of Hello Kittyproducts per month, worldwide. 27

Even though the Hello Kitty brandwas used on a range of items, Sanriotook measures to protect the brand’simage from being sullied. For ex-ample, Sanrio did not permit compa-nies to use the Hello Kitty brand forthree categories of products—alco-hol, firearms, and tobacco. Report-edly, Sanrio spent ¥1.5 bn28 everyyear on measures against unautho-rized copying to control its character-goods business.

It was also worth noting thatSanrio used minimal advertising topromote Hello Kitty. The advertisingmostly consisted of print and onlineadvertising, which was primarily cre-ated in-house. The company believedthat word-of-mouth was more pow-erful than promoting the product inthe media through TV advertise-ments, movie tie-ins, etc. SaidHensley, “The publicity feeds word-

22 Sandy Cohen, “Hello Kitty’s Sweet Puss on Everything from Toys to Toasters,” www.dailybreeze.com, November 4, 2004.23 Founded in 1955, Takara Co. Ltd., is a well-known toy company in Japan.24 Bandai is a major toy manufacturing company in Japan and belongs to Namco Bandai Holdings Ltd. As of early 2006, Bandai was the

third largest manufacturer of toys in the world.25 Founded in 1918, Matsushita is an electronics goods company based in Kadoma, Japan. It produces several electronic goods like home

appliances, automotive components, microchips, etc., under the brand names Panasonic, Quasar, Ramsa, Nais, Technics, and National.26 Mitsubishi is one of the largest auto manufacturing companies in Japan.27 http://www.toydirectory.com28 As of July 17, 2006, 1 Japanese yen was equivalent to 0.00862738 US$.

Exhibit VII: The Hello KittyPlatinum Statue

Source: “Platinum Hello Kitty on sale in Japan,”http://www.platinum.matthey.com,

February 4, 2004.

‘Hello Kitty’



of-mouth better than advertisingdoes, and that word-of-mouth is re-ally what drives the Sanrio experi-ence.”29 Sanrio, unlike other cartooncompanies, did not produce HelloKitty based comic strips, movies, orTV shows on a regular basis.

However, Sanrio actively partici-pated in co-branding and other pro-motional programs. For instance, in1999, Sanrio entered into a market-ing tie-up with McDonald’s30 in Tai-wan. As a part of the promotionalprogram, McDonald’s gave away alimited edition of Hello Kitty wed-ding collection dolls with every“Happy Meal”. The campaign was sosuccessful that it led to stampedes andfights among consumers. Reportedly,many fans purchased Happy Mealsonly to throw them away while keep-ing the dolls. The limited edition dollswere later sold for thousands of dol-lars as collectors’ items.

In 2005, Sanrio permitted EvaAir, a Taiwanese airline, to decoratesome of its aircraft in the Hello Kittytheme. It was said that these flightswere booked more than 90% on anaverage. The carrier also did briskbusiness in Hello Kitty branded duty-free goods. In the US, Sanrio workedwith some retailers to develop prod-ucts that met their specific require-ments. For instance, Target, a US-based retailer, carried an exclusiveline of Hello Kitty merchandise suchas party invitations, small inflatablechairs, etc. Target even had a specialHello Kitty princess costume consist-ing of a Kitty-themed dress, wand,footwear, etc.

By the early 2000s, the Hello Kittywas recognized in more than 40countries in Asia, Europe, and theAmericas. Hello Kitty was believed to

be one of the most successful com-mercial images in the world.

What Made Hello KittyClick?Over the years, experts have tried toanalyze the reasons for Hello Kitty’sextraordinary popularity worldwide.They were puzzled as to why onlyHello Kitty, from among the manyother characters created by Sanrio,clicked in the market. They have triedto discover the reasons that madeHello Kitty the “Queen of cute” formany female consumers worldwide.

Many analysts attributed HelloKitty’s success in Japan to the preva-lence of the Kawaii31 culture in thecountry. The Japanese, regardless oftheir age, were known to have a pas-sion for “cute” objects. For instance, itwas considered normal for grownwomen in Japan to be seen with mo-bile phone cases that were adornedwith cartoon characters, or for banksto print check books with pictures ofcartoons. The postal department is-sued stamps featuring popular car-toon characters, and it was said thateven the local police departments inJapan had cute-looking mascots.

The Kawaii culture began to gainprominence in Japan during the 1970s,and persisted through the 1980s and1990s. It helped that Hello Kitty cameinto existence at a time when theKawaii culture was at a high in thecountry. Because of this, it was widelybelieved that Hello Kitty had becomean icon of “cute” for the Japanese.

Another reason for Hello Kitty’ssuccess was considered to be its de-sign. It was generally believed thatthe simplicity of the character’s de-sign appealed to consumers. TheHello Kitty design consisted of simple

lines and very little detail. Besides,the design was kept unchanged overthe thirty years of its existence. Whileother cartoon characters had evolvedover time, Hello Kitty remained al-most the same. For instance, whenMickey Mouse was first introduced,he looked like a rat. However, overtime, Disney “toned down” the lookto make him more likeable to chil-dren. The only major change in thedesign of Hello Kitty was made in1993 when Sanrio replaced the cat’sbow with a flower. Later on, the com-pany began selling Hello Kitty designsthat had either a flower or a bow. (Thebow, however, remained the favorite.)

It was interesting to note that HelloKitty’s “look”, however, changed withthe times although the basic design re-mained the same. The change in lookswas initiated by Yamaguchi in the mid-1980s after she had spent time withcustomers at various Sanrio shops tofind out what they expected from HelloKitty. Yamaguchi found out that con-sumers wanted to see Hello Kitty in avariety of costumes.

Based on this feedback, over theyears Yamaguchi dressed Hello Kittyup as a bride, a nurse, a teacher, anda rock star, among others. She alsointroduced the character in variouspostures — standing, playing the pi-ano, etc. According to many analysts,children and adults alike were fasci-nated with the different looks sportedby Hello Kitty. In Japan, Sanrio intro-duced close to 200 “localized” HelloKitty dolls by 2003. The company in-troduced localized Hello Kitty for ev-ery region and major city in Japan,and this represented the region’s spe-cialty. Some examples were those ofHello Kitty peeking out of a cabbagein Gunma and one dressed like

29 James Betzold, “Bill Hensley,” Advertising Age , October 8, 2001, Issue 41.30 McDonald’s Corporation is a US-based fast food restaurant chain company with operations spread in over 119 countries. The company

operated close to 30,000 local restaurants all over the world.31 Kawaii means cute in Japanese.

Case Study



Momotaro, a legendary character be-longing to the region, for theOkayama region.

Unlike other cartoon charactersthat were originally developed forcartoon strips, TV shows, etc., andlater used on merchandise, Sanrio de-veloped Hello Kitty purely for its mer-chandise. Although Sanrio did releasesome Hello Kitty movies, comic strips,and video games, it was done only af-ter the character had already been es-tablished in the public eye.

Many also noted that Sanrio, un-like other companies, did not de-velop Hello Kitty’s character traits.For instance, children could easilydistinguish between the nature andpersonality traits of Mickey Mouseand Donald Duck or Winnie thePooh. The characters were generallydeveloped with the help of TV showsand movies. Hello Kitty, in contrast,was a “mysterious” cat. AlthoughSanrio’s website did give a brief biog-raphy of Hello Kitty, her family, andfriends, it did not make an attempt tocommunicate it aggressively to theconsumers (Refer to Exhibit VIII forthe biography of Hello Kitty). Accord-ing to the company this was done de-liberately. “We work very hard toavoid things that would define thecharacter. All of Sanrio’s charactersare very minimalist,” said Giuliano. 32

Much was also made of HelloKitty’s lack of a mouth. Some peopleopined that Hello Kitty’s lack of amouth (which implied that she couldnot speak) appeared to be more‘Zen33-like’ to the consumers. “ThisZen-like technique, intentionally ornot, has allowed Kitty to become atonce the princess of purity to tod-

dlers, a cuddly playmate for younggirls, and a walk down memory lanefor adults yearning for another tasteof childhood,” said Ken Belson andBrian Bremner, authors of HelloKitty: The Remarkable Story ofSanrio and the Billion Dollar FelinePhenomenon.34 Further, the lack of amouth also gave Hello Kitty an emo-tionless face, in stark contrast to thefaces of other cartoon characters,which were very expressive.

Some people believed that the emo-tionless face allowed consumers toproject their own emotions onto HelloKitty. Said Nakajima Seiji, a Sanrioemployee, “Without the mouth it iseasier to imagine (that) Kitty-chanshares whatever feeling you have atthat moment. If Kitty-chan was smilingall the time, and you’d just broken upwith your boyfriend or something andwere very sad, the last thing you’d wantto look at was a grinning Hello Kitty.Without a mouth you can imagine sheis sad with you.”35

Some analysts, however, attrib-uted Hello Kitty’s rise to popularity tojust plain luck. According to them,Hello Kitty had gathered a huge fanfollowing thanks largely to the proc-lamations of certain celebrities thatthey were Kitty’s fans. For instance,Tarantino, a famous designer in theUS, was quoted as saying, “She’s sosweet, it just radiates from her cute

little face.”36 She, along with a hostof other celebrities, created uniqueHello Kitty items while celebratingthe 30th ‘birthday’ of Hello Kitty inNovember 2004.

On the Hello Kitty craze amongcelebrities, one executive at Sanriocommented, “Our characters are allintended to look cute. But thesepeople seem to think of Hello Kitty assomething ‘cool’ and we haven’t ex-actly figured out why. Kitty wouldn’tbe cool if we meant her that way.”37

However, according to Hensley,“Kitty appeals because she’s reallycute and we create functional stuffwith a fun design. We listen to what’sgoing on in the customer’s lifestyleand make things with Hello Kitty. Sowhether it’s a teenage girl going tothe prom or Tyra Banks going to theMTV Awards, she can carry that funHello Kitty sequin purse.”38

Is Hello Kitty Losing HerCharm?Even though Hello Kitty was stillamong the top-selling brands in Ja-pan as of early 2006, the avenues forfuture growth seemed limited. Theincreasing popularity of Winnie thePooh among female consumersprompted analysts to say that HelloKitty’s cachet was at risk in Japan.

Analysts noted that Sanrio hadsucceeded in reviving the brand in

Hello Kitty was born in suburban London on November 1.

Her real name is Kitty White.

Hello Kitty’s family consisted of her father, George White, mother Mary White and a twin sister,Mimmy. Other family members included Anthony and Mary White, Hello Kitty’s grandfather andgrandmother respectively. Sanrio also created several friends for Hello Kitty.


Exhibit VIII: A Brief Biography of Hello Kitty

32 “Pick of the Litter,” http://metropolis.japantoday.com, Issue 513.33 A Japanese Sect of Mahayana Buddhism that aims at attaining enlightenment through meditation.34 Yuki Allyson Honjo, “Kitty power,” http://www.japanreview.net.35 Charles Spreckley, “What’s up Pussy Cat?” http://metropolis.japantoday.com.36 Sandy Cohen, “Hello Kitty’s Sweet Puss on Everything from Toys to Toasters,” www.dailybreeze.com, November 4, 2004.37 Tomoko Otake, “Hello Kitty, Pokemon, Doraemon Battle for Global Supremacy,” http://www.japantimes.co.jp, September 9, 2003.38 Kelly Carter, “Hello Kitty is the Cat’s Meow,” http://www.usatoday.com, April 21, 2002.

‘Hello Kitty’



the 1990s by repositioning Hello Kittyto make her appealing to a largernumber of people. However, theywere doubtful if the company couldpull off the same trick a second time.There were several reasons for this.Hello Kitty had already been placedon a wide range of items and therewere few new items left. Further, ademographic shift was taking place inJapan, with the number of youngpeople decreasing over the years ow-ing to low birth rates. This in turn lim-ited sales as Sanrio’s target consumerswere young people. Also, as the char-acter-goods business in Japan had itsroots in the Kawaii culture, brandslike Hello Kitty and others were ex-pected to lose their appeal once theculture died out in the country.

Apart from these problems, ana-lysts also opined that Sanrio couldsoon face succession problems. Tsuji,who was largely acknowledged to bethe driving force behind thecompany’s growth, had turned 78 in2005, and it was thought that hiseventual exit would create a leader-ship vacuum in Sanrio.

According to analysts, Sanrio’s fi-nancial performance was also likely tosuffer as a result of Hello Kitty’s de-creasing popularity. This was becausethe brand contributed almost half ofthe company’s revenues. “It’s needlessto say that Kitty is Sanrio’s most power-ful product, their fortune,” said KazuoRikukawa, president, CharacterDatabank 39. Adding to Sanrio’s woeswas the fact that it had been makinglosses in the amusement park businessand was relying heavily on its socialcommunication business (Refer to Ex-hibit IX for Sanrio’s operating profitfrom various business segments).

Sanrio had been increasingly fo-cusing on the overseas market to im-prove the revenues from the HelloKitty brand. “In Japan, Hello Kitty isa mature brand, even though it hasseen substantial growth over theyears,”40 said Hensley. He also said,“Our biggest market for her is stillJapan and Southeast Asia, but ourbig push going forward is the West-ern hemisphere, primarily the USmarket.”41 Sanrio also appointedMas Imai, a former Disney executive,as president and chief operating of-ficer of Sanrio Inc. in 2005 in orderto lead Sanrio’s US operations.

Sanrio continued with its licensingstrategy, bringing out a variety ofHello Kitty products like a guitar, acredit card, etc., in the US. In October2004, the company started offeringco-branded debit cards in associationwith MasterCard Inc. targeted at girlsaged between 10 and 14. In the samemonth, it entered into an agreementwith Nokia, a major mobile phonemanufacturer, and Cingular Wireless,a service provider to offer Hello Kittymobile phones. In 2006, Sanrio andFender Musical Instruments Corp.42

launched a guitar called “Hello KittyStratocaster”. The guitar was pricedat $229 and was sold on thecompany’s website and at participat-ing Sanrio boutiques in the US.

By 2005-06, Hello Kitty was un-dergoing another image overhaul ina bid to attract older consumers. Asof early 2006, the Hello Kitty brandwas used on a variety of luxury goodsthat were available at high-end re-tailers like Neiman-Marcus, SaksFifth Avenue, etc., in the US.

Sanrio’s target customers forHello Kitty in the US mainly con-sisted of Asian and Hispanic consum-ers. But in 2005-06 Sanrio was tryingto target female consumers belong-ing to all age groups, and all ethnicand cultural groups. Said Giuliano,“Hello Kitty is finding increasing ac-ceptance as (a) symbolic icon offeminine style and taste.”43 However,it remained to be seen whetherSanrio’s extensive licensing of theHello Kitty brand would add to thebrand’s value or dilute it.r

Segment For the year ended For the year ended For the year endedMarch 31, 2004 March 31, 2005 March 31, 2006

Social communication 70.37 82 83gifts business

Theme parks business (20.86) (11) (2)

Other businesses 0.41 (1) (0)


Exhibit IX: Operating Profit/(Loss) of Sanrio by Business Segmentfrom 2004 to 06 (In ¥100 mn )

39 It is a consulting firm in Japan that tracks the country’s character-goods market.40 Parija Bhatnagar, “Hello Kitty’s a whisker away from 30,” http://money.cnn.com, November 14, 2003.41 Ibid.42 Fender, a US-based company, is one of the leading manufacturers of guitars, amplifiers, basses, and related equipment in the world.43 Brian Bremner, “Kitty glitter: Saving Hello Kitty,” www.businessweek.com, June 23, 2006.

Reference # 10M-2007-06-12-02

SS GeorgeDirector,

The Icfai Center for Management Research (ICMR),Hyderabad.

The author can be reached at [email protected]

Shirisha ReganiFaculty Associate,


The author can be reached [email protected]

Smitha MogantyFormer Research Associate,


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