Editor's Note: Hello Kitty became a global sensation nearly two decades after its launch in 1974 because of a culmination of forces that expanded branded awareness exponentially and sparked a craze. Though Hello Kitty remains largely popular, she-like all brands-must be managed to remain profitable.

In the following article, the authors show how one company tackled the challenge of staying fresh and turned a huge, mouthless cartoon cat into 上海vi入口公司a ferocious business plan.

Hello Kitty offers rich insights because of the power of sustaining the brand, the brand's broad global appeal, and its unique ability to say so many things to so many diverse groups.

Carmel Li is a typical workaholic Hong Kong professional. Educated, fashion-conscious, and upwardly mobile, she takes her job-and her free time-seriously. When Li was in her mid-20s, the stress of her job as a buyer at a big department store in the city started to prove too much. During her occasional breaks in the morning, before work got too hectic, she starting browsing to blow off steam, and it was then that she discovered a Sanrio store nearby. She started buying some Hello Kitty goods. First she bought some notepads, notebook, and a pencil holder for her desk. Then she added a flowerpot and a mouse for her computer. The floodgates opened when she bought things for her home: stuffed animals, a lamp, a pair of pajamas, and some baskets. Li had become a full-fledged Kitty addict.

"I built my own Kitty world at home to escape from the pressures of the outside world," Li mused.

Carmel Li's story illustrates the latest phase of Hello Kitty's nearly 30 years on the scene. Not only is Kitty finding a growing audience among young adults, but she is also finding them outside Japan. Sanrio Ltd.'s mouthless feline is no longer the preserve of Japanese school children and their lunch pails, but it is a hot item in Hong Kong, Taiwan, and throughout Asia, as well as in the United States and, increasingly, Europe.

Though Sanrio unleashed Hello Kitty in America and Europe in the 1970s and 1980s, she really took off as a global phenomenon when Japan's Asian neighbors flocked to the cat in the 1990s, just as their economies were hitting their peaks. Hello Kitty's growing popularity worldwide-especially among adults-is testament to her wide appeal. Hello Kitty is available in over 40 countries, and the company, trying to offset slowing sales in Japan, is eagerly developing these overseas markets.

Sales from overseas are now a crucial portion of Sanrio's business. Sales in three of Sanrio's biggest overseas markets-Hong Kong, Taiwan, and South Korea-grew 20 percent to 25 percent through the late 1990s and into the new century. Sanrio was so encouraged by its reception overseas that it unveiled a bold plan to push into new markets. By 2005, Sanrio wants to increase the number of foreign outlets it directly runs to 100-a 150-percent increase-and boost sales from overseas by 66 percent. To that end, Sanrio opened its first store in Shanghai in December 2002, and plans to open another 50 in China over the next three years.

A globetrotting tiger. Selling overseas may sound run-of-the-mill in today's increasingly intertwined world, but back in the 1970s, it was unusual for a tiny service provider like Sanrio that was trying to sell in markets where titans like Disney and Warner Brothers ruled.

Looking overseas, though, is a typical business strategy in Japan, an island nation with few resources. Indeed, because of the dense web of wholesalers and retailers, th上海包装入口e cost of doing business in Japan is often far more costly than in other major economies. This keeps large swathes of business operating, but also cheats customers and stunts growth. It is a major reason why many of the country's largest manufacturers lose money on their sales in Japan. To stay afloat, these companies rely on markets overseas, where the costs of producing and selling are lower and customers are equally if not more ravenous. Japan's carmakers, for instance, earn about three-quarters of their profits offshore. Companies like Sony Corp. and Matsushita Electric Industrial Co. have similar profit profiles, and have also moved many of their factories overseas. These days, a stagnant home market makes selling overseas all the more important.

With the exception of a couple of airlines, hotel chains, and department stores, few Japanese service providers operate overseas and then only in places frequented by Japanese tourists. Contrast that with, say, the Hilton Hotel chain, McDonald's fast-food franchise, or Toys 'R' Us stores-all American service providers that have expanded offshore and have strong global brand names. So by Japanese standards, Sanrio was ahead of its time. Shintaro Tsuji, its founder and president, realized early on that the center of the character-goods industry was in the United States, and specifically the West Coast.

Tsuji made his first links abroad when he started importing Hallmark Greetings cards and licensing Snoopy and other Peanuts characters. Soon after, he started to sell Sanrio's characters in San Francisco, California. After Hello Kitty had already taken root in Japan, Sanrio Inc. was established in San Jose, California to take over product development and distribution, years ahead of Japan's computer game makers and more than a decade before Nintendo, Bandai, and others released Super Mario and other characters. Sanrio also established a toehold in Europe by opening a field office in Germany. Several years later, the company did the same in South America, when it set up a subsidiary in Brazil.

It was Tsuji's decision to move into Asia that really put Sanrio on the map outside Japan. Asia now makes up 30 percent of Sanrio's overseas sales and still has potential for more. To emphasize his commitment to overseas expansion, Tsuji put his son, Kunihiko, in charge of the day-to-day operations of the Hong Kong, Korean, and other overseas subsidiaries.

Creating unprecedented frenzy. Hello Kitty is much more than a brand. In some parts of Asia, she's an obsession. Hello Kitty has proven so popular in Singapore, Hong Kong, and Taiwan that it has led normally docile people to riot. One of the best-known flashpoints was triggered by a joint campaign between Sanrio and McDonald's. The companies joined hands by offering a stuffed Kitty doll with every "Happy Meal" customer bought. Sales boomed and McDonald's ran out of its entire stock of 4.5 million dolls in five weeks.

The frenzy spread to nearby Taiwan and on the first day of the campaign, McDonald's stores sold its entire ration of dolls-half a million-in just four hours, with Taiwanese braving long lines and intense summer heat to get their hands on the famous feline.

It did not take long for other companies in Taiwan to recognize the value of using Hello Kitty to pitch their products. For example, the Makoto Bank started plastering Kitty's moon-pie face on credit cards. The bank reportedly paid Sanrio $295,000 as a licensing fee and spent another $3.5 million to market the promotion. The company quickly made its money back. In the first ten months alone, about 400,000 rushed to the banks to switch cards.

Sanrio's success in Asia has no doubt been driven by Hello Kitty's cuddly and seemingly universal appeal. But to get that message across, Sanrio has learned to package its products in a unique way. While some media companies prefer to control as much of their distribution as possible, Japanese companies from different aspects of the media business routinely work together to publicize their products. This cuts into each company's share of the profits, but it also reduces costs because a television company does not need to become an expert at producing toys. These "image alliances" between publishing companies, bookstore chains, TV broadcasters, and merchandisers, which are common in Japan, are now being formed to gain a foothold overseas. Sanrio's alliances have been less complex-like the promotional dolls at McDonald's-because its characters lack an ongoing storyline, so the company has invested less in television, video games, and cards. Still the company has broken ground by partnering Hello Kitty with other characters.

One of the company's first experiments in co-branding came when Sanrio co-launched a line of limited edition accessories with Paul Frank Industries, maker of Julius the Monkey. The shoulder bags, purses, T-shirts, and other items were sold through Paul Frank boutiques, Bloomingdale's, Nordstrom's, and other department stores in the United States. The character T-shirts went for $25 each.

The partnership was a reasonable success, with the entire collection sold out. The alliance also paved the way for another, more ambitious deal between Hello Kitty and Tweety Bird, the wide-eyed canary owned by Warner Brothers. The two companies announced plans to have Kitty and Tweety together on about 200 products including stationery, fashion accessories, and toys, which are sold throughout Asia. Notably, Warner Brothers will allow Sanrio to design exclusive Tweety products on its own to take advantage of Sanrio's expertise at marketing to women.

"Both characters appeal to a similar audience-young women of today," said Mark Matheny, executive vice-president of international licensing for Warner Bros. Consumer Products. "This partnership allows us to bring them together through creative, fashion-forward merchandise with a cross-cultural theme."

Intriguing characteristic. What makes Hello Kitty so intriguing is that she projects entirely different meanings depending on the customer. A Japanese teen finds emotional comfort in Hello Kitty artifacts, while a 20-something single woman in New York may like the feline as a display of whimsy. Figuring out what makes brands click, how they migrate across borders, and appeal to widely divergent demographic groups has long been the Holy Grail for market researchers. And the whole field has become a lot more sophisticated in gathering and manipulating raw sales data, census numbers, and the like.

In the case of Hello Kitty, word-of-mouth networks among the character's fanatical following certainly played a big role. They eventually built upon one another and expanded at a ferocious rate in Japan. The tipping point came when several Japanese pop divas mentioned in interviews that they had collected a pile of Hello Kitty artifacts. By the end of the 1990s and early into this decade, this "epidemic" had spread into Hong Kong, South Korea, Taiwan, and Singapore.

The upshot is that the marketing team at Sanrio probably could not write a cannot-miss marketing plan that could duplicate the success of Hello Kitty and the worldwide embrace of the brand. Somewhere along the way, Hello Kitty as a brand took on a life of its own.

Hello Kitty kind 上海样本入口of functions like a mirror, McVeigh added, embodying cuteness to girls, coolness to young women, and nostalgia to older female customers. The image's ability to incite desire, be it a feeling of childhood comfort or a small bit of escapism from the drudgery of everyday life, makes Hello Kitty somewhat contagious.

Hello Kitty and other product crazes sometimes materialize out of nowhere. There are no such things as surefire hits. Yet sustaining a craze can and should be the result of careful and creating market planning. Unlocking the secrets of this cat's success requires something more than just analyzing the traditional notions of product, price, place, and promotion. It also requires some imaginative thinking when the passion starts to cool, as it inevitably does, toward the product.

Excerpted with permission of the publisher John Wiley and Sons, Inc. from "Hello Kitty: The Remarkable Story of Sanrio and the Billion Dollar Feline Phenomenon" by Ken Belson and Brian Bremmer. Copyright ? 2004. Published by John Wiley & Sons, Inc. All rights reserved

Ken Belson writes about Japanese business, economics, and government policy for the New York Times in Tokyo. Brian Bremmer currently serves as Asia Economics Editor for Business Week magazine based in Tokyo.