After living and working in Japan, I have been able to see what works and what does not when launching products or services in this market. For the international companies who have done well in Japan, I believe there are several reasons for their sustainable market success. The 6 factors described herein are based on my own professional experience working in the IT industry. If you are looking to enter Japan for the first time or considering to make tweaks to your existing strategy, perhaps the below will provide you some invaluable insight.
But why should global organizations even bother focusing on Japan?
Of course one can argue that the size of the market and the economic reemergence as viable reasons for why a company should invest in Japan. But these alone are not enough to justify the significance of focusing on Japan. Perhaps one important reason that is not underscored enough is that it is just smart for your overall business. What this means is that if you can succeed in Japan you will likely enhance your business around the world given Japan’s high demand for quality. The old adage that ‘if Japan customers are happy than an organization is very likely to make other customers happy around the world’ is not a fallacy.
So, what are the 6 questions you should ask before launching a product or service?
1. Does your product or service appreciate that “less is more” in Japan?
Simply put, bigger is not always better and Japan is certainly a country where this reigns true. People prefer products that are thin, lightweight, and easy to carry around in their pocket or purse. Moreover, just because something may be heavy does not mean it is perceived to be of high quality by Japanese consumers. In my own experience, working in the mobile arena, companies from the telecommunication industry would tell me they would only market smart phones that could easily fit into the hands of teenage high school students. This is because they wanted to ensure they had devices that would allow end-users to type with one hand while grabbing onto a strap handle with the other. If your product has to be carried around, be sure to recognize this and if you have a compelling “less is more” story, be sure to include this in your end-user messaging.
2. Do you have a “Win-Win” Partner Strategy?
Of course before you ask this question you need to throughly understand the competitive landscape and the key relationships you need to do business. Japan is a high-context society and places a high priority in having deep relationships with anyone they do business with. Organizations have to seriously take steps to invest in these relationships to cultivate trust and credibility before expecting business agreements and business results. Once you have a good grip about the landscape, you will be able to determine who are the best partners to engage with for your business. GE, for example, who already had a strong competitive advantage in the Internet of Things space, understood that they had to have a domestic partner to take advantage of the increasing infrastructure development in Japan. Hence, they teamed up with the #1 carrier in Japan, docomo, to effectively provide remote monitoring of structures using LTE. A win-win scenario for both sides.
3. Are you Embracing “Omotenashi?”
Omotenashi is all about providing unwavering service to the customer throughout their experience with the product or service. No matter the industry you are in, organizations need to prioritize a high attention to customer service and support in order to pull people to your brand. This is the baseline but the companies that provide value-added service are the ones who — I believe — can have a competitive advantage. Perhaps one of the reasons why Uniqlo — a Japanese company — has and continues to dominate the retailing industry is because of free in-store tailoring for any pair of ~$20 jeans. This is a great example of omotenashi. Indeed, there are other factors but this value-added service certainly helps to get people in the store, spend, and repeat.
4. Are your Prioritizing Cost and Quality Equally?
This is of course is much easier said than done but it cannot be emphasized enough that organizations have to prioritize cost and quality equally. From my experience, Japanese consumers care about the quality but they are not always willing to dig deep into their pockets to get it. Of course, there are luxurious brands that do very well despite their steep prices but generally speaking, if competing products have the same quality then naturally the decision to buy will come down to the price. One of the reasons for Old Navy’s demise in Japan was they did not have a fine balance between cost and quality. Cost was prioritized more than quality and, consequently, consumers gravitated to other retailers such as Uniqlo. So, if you are launching a product in Japan, be sure you are managing this challenge well. Perhaps doing a test of how the two are perceived by your customer segmentation is a good place to start.
5. Are you Addressing a Japan Social Opportunity?
Even though Japan is a developed country, there are immense opportunities for further growth and development. I will not list them all here but 3 areas that I am seeing are 1) Transformation in Education, 2) Smart City Infrastructure Development and 3) Japan’s Aging Population. Each of these areas have their challenges due to barriers to entry but also offer great opportunities for global companies who have a competitive advantage and to align with the right partner. For example in education, the Japan government is investing in school districts to ensure that every student from K12 will have their own mobile device by 2020. This is a significant opportunity for the entire tech industry who has any involvement in education to grow their footprint in a market that is fully committed to advancing how students learn.
6. Are You Listening to the Locals?
Finally if you want to have sustainable and meaningful growth in Japan you have to bring in the best people. There is a wealth of knowledge and talent out there to make an impact, hence, companies have to know where to look to find the right people. If you are only bringing people from the headquarters to make decisions that basically replicate what has worked in other markets then you are doomed to fail. Indisputably, having the right local talent will ensure an organization is balancing speed (i.e., getting this done quickly) with reality (i.e., being aware of the idiosyncrasies of Japan market).
By no means can one over simplify a market as complex as Japan but for for those companies — large or small — who are struggling to figure out a working Japan strategy, perhaps the above questions may be a good place to start. If you are an expert of Japan market, what has been your experience about cultivating a country strategy for your organization? Please share in the comments below and thanks for reading.