Many export managers have experienced over the years the ways Time, Quality, Reactivity and Service have another dimension or meaning in the “Land of the Rising Sun”.
The interest of Japanese Success Stories lies in what they usually showcase, that is, Persistence and Concepts such as “Getting to know your Client” or “Adapt and Change”, more than in the results achieved.
Cross-cultural Management Practices are very important when approaching Markets like Japan. However, in this article, we will instead focus on the business side of things.
“Money grows on the tree of Persistence.” (Japanese Proverb)
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” (Charles Darwin)
So why bother going to Japan, investing time and money in entering this difficult Market? Among many other good reasons, Japan is a great Retail Laboratory, where new B2C concepts are localized and developed. There is a prevalent myth that it is a country with a monolithic culture and uniform tastes, but a walk in Shibuya, Harajuku or Shinjuku (distinct areas in Tokyo) will prove to you the opposite and show you various lifestyle choices.
Furthermore, Japan is the world’s second-largest Retail Market after the US (the country’s retail sales in 2007 were estimated to 135 trillion JPY or 1,124 billion $), thanks to the high level of per capita income that gives Japanese consumers considerable purchasing power. It is a mature market and, for foreign retailers, there are diverse opportunities to sell products and services that offer luxury (high-end retailers), style (fashion items for the apparel market), convenience (non-store retailers) and high value (that is, improving lifestyle, environment and health of customers).
It is also often said that products succeeding in the Japanese Market will have a better chance of success in other markets around the world. Further, Japan’s Retail Market attracts customers from across Asia, who visit the country for shopping.
Zoom on B2C Business
Anyone shopping or retailing in Japan will quickly spot Japanese specificities (compared to Western standards) impacting the Japanese consumer behaviour, lifestyle, purchasing habits, preferences of merchandise, design taste, response to marketing campaigns and service expectations.
All those specificities illustrate the specific Japanese mindset and impose specific service and marketing implications for any company willing to retail in Japan. Among key elements of the “mindset model”, we have: Novelty seeking, High quality standards & service expectations, Fun-Shopping, Relative Price Sensitivity & Attractiveness of imported goods.
Nowadays, Japanese Consumer Behaviours are changing. So far, Japanese consumers have long been both distinctive and predictable, frequently visiting high-end department stores and pricier regional supermarkets. They were willing to pay high prices for quality products and their love of brands sparked the emergence of a mass-luxury market.
Why and how consumer behaviour is changing?
Various structural reasons can be put forward: the current economic downturn, the digital revolution, the emergence of a new (less materialistic) generation ….
Hunting for value, spending more time at home, buying differently, Japanese consumers are changing not only WHAT they buy but also HOW they buy it, looking for fulfilling lifestyles, as well as becoming health and environment-conscious.
Furthermore, the Japanese Internet Retail Market Growth and Online shopping are central to both the economizing and the nesting trends. The ability to browse products, compare prices and make purchases relatively anonymously is creating new attitudes and empowering consumers.
So, knowing now more about the Retail Market in Japan, how do you adapt your consumer product/service? That is, how to apply the Rules of the Four Ps’ (of the Classical Marketing Theory) to the specificities of the Japanese Consumer Market? To do that, we analysed over 50 EU Success Stories in Japan.
Recommendations for your B2C Marketing Mix in Japan
From the feedback obtained from the many executives interviewed and from our own experience, we propose the following:
– Product:Target the right segments. Pick your best products, eventually adapt them or customize them, test them or design new exclusive ones for Japan. Keep innovating and refreshing, choose your target market segments carefully, and select the finest and most adequate packaging. Build a story or an emotional bond and communicate a strong brand image! Have stricter quality controls made on any product bound for Japan.
– Place: Go for Multiple Sales channels: other selective channels than department stores, including private-brand stores and mail order/online shopping, should be considered in parallel. Provide customized, full scale/integrated, quick and on time, local, impeccable Service. Study and Understand the Distribution Network.
– Price: Position your product as a premium product (higher pricing) or as a value product (competitive/affordable pricing), eventually suggest a recommended retail price. Take into account import duties, exchange rates, packaging & distribution costs. For luxury items, eventually adjust pricing down: consumers are nowadays more cautious in buying and do spend more time in comparing prices (even abroad) and seeking for advice.
– Promotion: There are many ways to promote your products or services. Do it regularly and in an original way that suits your business best, preferably involving your Japanese distributor or partners. For luxury products, the shopping experience is everything. Build a sense of lifestyle (for example, evoking elegance, fun or opulence) around products, through concept stores and other experimental branded retail venues. Digital marketing, online presence and social media are important for all companies in Japan, but is especially a must for luxury brands.
Hoping this post has been helpful, I wish you the best in your “Japan Sales & Marketing process”. For questions, advice or enquiries, please feel free to contact me.