New Article: Consumer marketing goes 2.0 in Tokyo as the customers take control
Evolution; Consumer marketing goes 2.0 in Tokyo as the customers take control
ACCJ Journal. (c) 2010.
In the Darwinian world of consumer retail, few markets are as tough, fickle, and potentially lucrative as the Japanese market. There are more than a million enterprises and 160,000 restaurants in Tokyo alone, competing for the attention of around 35 million consumers. Trends come and go on a weekly basis.
Japanese companies have to stand out in order to create attention and keep consumers interested. To do this, companies either need to follow a trend right away or start one for themselves. Consumer marketing in Tokyo is constantly evolving, often innovative and always competitive. As a laboratory of techniques, Tokyo can offer potential tools to markets further afield.
Brands in Japan are reinventing themselves
Japanese consumers love brands. In the world of luxury goods, where exclusivity is the key component of marketing, Japan stands apart. The nation is said to be the world’s only luxury mass market with surveys indicating that almost all Japanese women own at least one Louis Vuitton item. The brand is thought to be the favorite among the consumer conscious Japanese public.
But this does not mean that consumers are always brand loyal. Once a brand becomes “uncool” or does not offer the expected value anymore, consumers easily switch to a competitor’s brand. So, in a market where consumers of all income brackets buy expensive brands, how do marketers ensure that brands stay exclusive? In order to combat this problem, Japanese brand managers have developed a number of ideas to keep their brands attractive to consumers.
Leading again here is Louis Vuitton. The company opened its first concept store in Tokyo, in cooperation with the Seibu Department store chain. Louis Vuitton Underground in Ikebukuro presents LV products in an environment that would have never been previously associated with the brand - a construction site. Meanwhile, other brands have entered a completely new field: the service industry. Bulgari in Omotesando has started serving handmade, Italian-style chocolate. Real Bulgari fans can even go so far as traveling to Bali to stay at the company’s own resort. Furla, the Italian leather manufacturer, also offers coffee at its Ginza shop and invites customers to participate in Furla Yoga in Aoyama. Taking a different tack again, Chanel teamed up with France’s chef Alain Ducasse to give Chanel customers the chance to wine and dine in an exclusive restaurant on top of the Chanel building.
Brands represent their customers’ lifestyle and the overall brand experience is perceived to be enriched by these new activities and ideas. Customers can now feel and experience the brand with all of their senses. This in turn improves brand loyalty and gives many traditional brands a new, cooler and younger image.
Consumers involved in product design
Consumers are increasingly interested in customized and individualized products and, consequently, business models which help customers design their own products are booming. As consumers seek out unique, personalized products, they are also becoming interested in customizing the products they buy. Bling Me, a company which helps customers personalize their mobile phones, bicycles, etc. with shiny stones, is one example of a company that has based its business model on customers’ desires to create their own products. Some brands even go a step further and include customers in their product design processes. Soup manufacturer Maruchan and beverage company Calpis have even starting asking their consumers to vote for their favorite flavors each year.
Integrating customers in product development processes comes with rewards. Customers feel more attached to the products and show more interest in the overall brand. The company meanwhile can create greater customer feedback and launch campaigns that specifically target their customers’ wishes and ideas.
Social networks go offline
As in every major city, Tokyo has a growing number of customers who live alone. The number of single households or households without children in Tokyo has steadily increased over the past several years. People are increasingly lonely and desire more social interaction and contact with one another.
This need has resulted in Japanese companies creating opportunities for social networking beyond the Internet models to connect consumers in the physical world. Leading in this field are the Japanese railway companies. Seibu Train Company started its first hiking day a few years ago. This was soon followed by initiatives by Tokyo Metro and other major railway lines around the capital. The companies organize guided tours in certain locations for interested customers. These free events have developed a strong, ever-expanding fan base.
Another well-known example of this trend is an event started by sporting goods producer Asics. The company is famous for sponsoring the Tokyo sightseeing run, which covers all major sights of Tokyo in a 15km run. Other runs target women, beginners, and early morning runners, and are offered every day. Again, all of these events are free of charge, but it’s evident that consumers become avid fans of them and eventually all of the companies start offering them.
Social meetings of consumers also support difficult purchase decisions. Tokyo real estate developers, for instance, offer seminars for women (their new target group) who plan to buy apartments. These seminars allow potential buyers to meet each other and often lead to more positive purchase decisions in the end.
Connecting with consumers has a positive effect on a company’s long-term strategy. Consumers become fans of the brand which in turn will positively influence their purchasing decisions in the future.
Simplifying product choices
As the number and speed of new products being introduced to the market dramatically increases, more and more consumers find it difficult to make purchase decisions. This can happen simply because they are worried about buying the wrong product or missing a bargain. These overwhelmed consumers tend to buy products later than others or not buy them at all. This is a trend not only in Tokyo, but in most industrialized countries. Shoppers feel increasingly out of the loop when it comes to new products and the advanced technologies that often accompany them.
Companies in Japan have started tackling this dilemma by developing products and business models that help customers make quick and simple purchase decisions. KDDI, for example, introduced the Kantan Keitai, a mobile phone that strips away all the complicated and high-tech gadgets that are the standard for most Japanese mobile phones. The company’s target group are consumers who want to simply buy and use the talk feature of a mobile phone.
ACCJ-Evolution-phone310
Simple and low risk product choices are the base of Ranking-Ranqueen’s business model. The company targets consumers who might shy away from buying simply because the choice of potential products is too overwhelming. Based on the best selling items of its parent company, the Tokyu department store chain, Ranking-Ranqueen produces a ranking of the most popular products each week. The hit products in each category are displayed in the shops and consumers do not have to come to any decision as to which product is the best. The concept has already been copied by big retail chains. In theory, this lowers the risk of customers buying a product that might turn out to be wrong for them or of low quality. In turn, customers show higher satisfaction with their purchases and place greater trust in the company.
Tokyo offers a wide variety of innovative marketing techniques and strategies that are constantly evolving due to the high competition. Tokyo’s consumer groups represent the future of all industrialized societies. The number of baby boomers, singles and overwhelmed consumers is on the rise around the world. The way Tokyo caters to these groups and adapts products to them can provide a lesson for other nations.
As knowledge about the marketing innovations in Japan becomes more widespread, Japanese marketing may become the new focus of Japanese management training over the next couple of years.
The authors
Dr. Parissa Haghirian is associate Professor of International Management at the Faculty of Liberal Arts at Sophia University in Tokyo and Editor of “J-Management: Fresh Perspectives of the Japanese Firm in the 21st Century.”
She is also the author of the soon to be published book “Innovation and Change in Japanese Management.”
www.parissahaghirian.com
Additional Research by Paul Gaspari. Gaspari is a masters student of International Business and Development at the Faculty of Liberal Arts at Sophia University in Tokyo.
www.paulgaspari.com
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