Japan is long known for its unique and difficult market to tap into.Before getting into Japan’s market, here is basic information about Japan’s market for global marketers.
To get a feeling for the size of Japan’s market:
- World’s third largest GDP of $5.15 trillion, Japan represents about 10% of the world’s economy
- 10% of all cars are made by Japanese brands
- World’s third largest smart phone game market in terms of cash revenues
Let’s take a closer look at Japanese market.
- Japanese customers are demanding
Japanese consumers are said to be the most demanding consumers in the world, not only for the products but for many other reasons.There are many “otaku” consumers with a level of product knowledge like professionals.Perhaps because of the deep-seated value of “the customer is God,” the Japanese, who are usually calm, can suddenly find themselves in the customer’s shoes and have a very different attitude toward service providers (customer harassment has recently become a social problem).Even for global companies that are successful around the world, this elusive Japanese market is not easy to capture.
Japanese customers’ expectations:
- Quality of product
- (Color/Type) variations
- Customer Service
- Easy to open and other packages (if it is physical product)
- English usage is low
Very few Japanese people (less than 3% – 5%) speak good English so everytthing from website to advertisement, to product information need to be translated into Japanese. Some people are mentally allergic to English.
- Still bureaucratic country
It’s a very bureaucratic country in many ways, with a dense network of regulations, permissions, certifications, procedures, offices and authorities with approval procedures for many things, which don’t need approval in Europe and US. Many of these restrictions are designed as entry barriers against newcomers to existing industries. Slowly these regulations are “eased” and seldom eliminated. With professional help, for example by lawyers or experienced management consultants – depending on what needs to be done – you can often find ways to do work – particularly in new industries. Good example is that Uber as taxi is not widespread as it is in any other countries. They changed strategy recently to start working with local taxi companies.Japanese government also put higher bar for airbnb business in Japan by requiring hosts to acquire official business certificate etc.Note however, that there are also industries, where Japan is more open than the US and Europe to outside investment. An example is Japan’s telecommunication industry: Vodafone had no difficulty at all to acquire almost 100% of Japan’s No. 3 telecom operator. That Vodafone’s fail had nothing to do with the closed nature of Japan or any Government intervention.
- Saving is beautiful
One business consultant listed the reasons below.
- A single ethnic group with a diverse target audience
In the United States and other Asian countries, ethnicity is often used as the axis of target segmentation, but in Japan, often referred to as a monoethnic country, the ethnicity axis is rarely taken into account in marketing. As a result, many foreign marketers may have the impression that the market is simple and easy to understand.
However, if you live in Japan for a while, you will soon realize that this is a big misconception. Even though they may look similar and have similar attributes (demographics) at first glance, when you look at them closely, their values (psychographics) are very diverse. For this reason, establishment of a target segmentation axis based on values, rather than demographics, is an extremely important step in marketing the Japanese market.
Even if the main target is women in the workforce, this segment is too broad to be considered a single entity with common needs, so it is necessary to cut the mesh of values into smaller pieces.
Here is a quick target segmentation (each needs to be detailed.)
Career women – there are various kinds within.Single men – Not easy to get these people due to low motivation but once they buy products, they are loyal.Power couple – Together earns more than 7 million yen (66000 USD) yearly, active on social media.New seniors – Unlike traditional seniors, they enjoy their lives after children left them.
- Not religious but sincrere to values in culture and traditions
Although they are not religious, traditional values are strong.While many foreigners may perceive Japan to be a religion-free country, this is not the case. It is true that the constitution provides for the separation of church and state, and about 70% of the Japanese people do not have a particular religion.
In reality, however, there are undeniably some traditional values that are unique to Japan that are not found in other countries. These traditional values have been formed over a long period of time through the complex intertwining of Shinto, Buddhism, Confucianism, Bushido and other forms of value systems. For this reason, unlike Hinduism in the Indian market or Islam in the Indonesian market, it is often difficult for foreigners to see it as a religion. However, whether you call it a “religion” or not, it is undoubtedly an important factor to consider when marketing in the Japanese market.
This traditional value of taking care of things and nature is a very natural way of thinking for the Japanese, who have been familiar with the gods of eight million since childhood. In the context of marketing, this can be rephrased as a characteristic of the Japanese market: a unique sense of “things” and “ownership”. The rise of the sharing economy has been remarkable in recent years, but at the same time, there is a deep-rooted obsession with “things” and “ownership”. This is not unrelated to the traditional values of the Japanese who find spiritual value in “things” as well.
Good example for this is success story of Mercari, a flea market app.They re-defined Japanese concept as “too good to waste” sprits.They truly ticked the Japanese insight.
Here is a very good summary of illustration of Japan’s Market by Danny Risberg, a CEO of Phillips Electronics Japan.
“Users in other countries don’t care if the packaging is difficult to open, as long as the product is well-made. By comparison, the Japanese are very finicky. But if you don’t respond to this “fineness”, even if they buy your product, they won’t be satisfied. In other words, if you make a product that satisfies Japanese consumers, you can satisfy people all over the world. Therefore, we may ask the Japanese for their opinion before introducing a new product, or we may test the product in Japan. Success in the Japanese market, where high quality products are required, is the key to global success.When doing business in Japan, I am particularly conscious of introducing products where there is already a market and taking the time to understand the market needs.Developing products that meet the detailed needs of the Japanese people from the beginning would require an enormous amount of time and money. Therefore, we carefully research the needs of Japanese consumers and develop a strategy to ensure that our products are accepted by them. It is important to get one step closer to the needs and preferences of the Japanesepeople.”