Learning to change: Three steps to a successful market entry in Japan
by Dominic Carter
Why does the Japanese market seem so hit and miss when it comes to western brands being able to make a ‘go’ of it here? Starbucks and Disney are wildly successful in Japan. On the other hand, Sephora and Vodaphone failed miserably despite being huge success stories overseas. When and how does the plot diverge so profoundly in the market entry tales of companies like these? Here are my three golden rules to a successful market entry in Japan.
Market entry in Japan: Fail to adapt and perish
Well, I’d say Shakespeare could not have put it better: ‘the fault dear Brutus lies not in the stars but in ourselves’. From the very beginning of their journeys, more often than not, unsuccessful western brands have only themselves to blame. They fail to appreciate the changes that they need to make in the way they think about marketing in order to be successful in Japan.
Compared to their home markets, different values, needs, and priorities underlie consumer behaviour in Japan. This means that it is highly unlikely that you will not need to make some adaptation to the way that you make your approach to the consumer, and do business in general.
After more than 20 years of working closely with brands that are looking to make it big in Japan, I feel that there are three critical stages in consumer strategy that are required and that there are no feasible shortcuts around these. All three are closely connected and it is desirable that all three are given attention.
The first rule to market entry in Japan: It’s the trust, stupid.
To gain Japanese consumers trust, who are without doubt some of the most sophisticated and demanding in the world, you must persuade them both rationally and emotionally that you are worthy to sell to them.
In Europe or the US, many consumers may not even realise that the cheese or shampoo they are buying is owned by P&G, Unilever or Mondolez. Such ignorance is rarely the case in Japan. The first thing to understand is that when it comes to spending money, the Japanese adopt a defensive, risk-averse posture. Further, it is far more important to cause no risk to yourself or others than it is to meet a need or solve a problem.
Japanese consumers will look for signs of trust before they buy
For this reason, Japanese buyers always ‘look before they leap’; and they place a high premium on trust in the seller in order to allow themselves to make the leap to your product. If you are entering the Japanese market, the dimension of trust should be dealt with first; because coming in cold, you enjoy no trust. There are multiple ways of gaining trust and too numerous to list here and I will address this further in a separate article.
One way of building trust is the use of celebrities in a brand’s advertising and communications. For a long time, this has been a huge topic in Japan, and I have witnessed many a debate about the use of celebrities among my clients who can tend to feel as if they are being led by their agencies to trite and expedient solutions.
Celebrity endorsement is popular in Japan
Suffice it to say for now that the selection of the right face for your brand is an important opportunity, even if the criteria for selection might seem alien to you. Like everywhere in the world and arguably more so in Japan emotion is a key driver of consumer intentions. Hitching yourself to a star connects your product or brand to positive feelings among your target group. And on that basis I speculate that it will be a long time before we see Kim K endorsing products in Japan!
Moving on from celebrities, let’s look at the aforementioned case of Disney, in particular Tokyo Disneyland.
When Tokyo Disneyland opened in 1983, it bent over backwards to counter any fears and anxieties on the part of the consumer. Today, it is still the most popular theme park in the country. In a market disposed to treat you with suspicion, implementing extraordinary measures to reassure the consumer is a good way of tackling the trust issue.
How did Disney do it?
The answer is with an enormous amount of care and attention paid to fears of potential culture shock from Japanese consumers. Firstly, the park was kept exceptionally clean with much tighter checks and regulations concerning cleanliness than at parks in the USA. Ride drivers were issued with white gloves as used by drivers on Japanese public transport.
Having researched Japanese consumer expectations, Disney ensured that there were proper gift-wrapping services available, more sit-down restaurants than take-away stands, and a small picnic area on the park’s outer perimeter for families to eat their lunch boxes (bentos). The attitude of the crew in the park has also always been a clear focus of attention – way better, in my subjective opinion, in Japan than in the US.
At the cultural level small but significant changes were made to reassure the consumer that their visit to Tokyo Disneyland was an entry into a very special place that may not exist in Japan (key to making it worth going to in the first place!), but in no way is a betrayal of Japanese norms.
Partner with a local in Japan
In order to help navigate through unknown territory partnering with a local company can be a very successful path to success. It is worth mentioning that the brand owner, Disney, has had a very long and successful partnership with Oriental Land – a Japanese company who have done the execution on Tokyo Disneyland from the beginning.
Please note however that partnering is not a prescription. There are many instances of failed partnerships, and it is not always necessary. However, in general, there are no better people than local businesses with a good reputation to coach you on how to build trust for your brand.
The second rule to market entry in Japan: Turn your differences to your advantage
One thing you will never have an issue with is, as a foreign brand, coming across as different. Being different is often hard to manage and entrants often underestimate just how sensitive Japanese are to even minor points of difference.
However, the upside is that difference can be translated into real market advantages. For this, it is necessary to work out firstly where your real and perceived differences lie and which of these differences can potentially add value. This could be the unique, popular even quirky image of the brand, country of origin, material differences, innovative features, and cost points. The key is to learn to play difference as a strength by not watering it down but celebrating the elements of difference that can add interest or status to your brand.
In the Japanese market, heritage sells
As there are with trust-building strategies, there are many ways to leverage difference. Let’s look at the idea of heritage. In Japan, heritage can add a particularly positive resonance to a brand’s image. Maybe this is because it strikes a chord with the Confucian emphasis on reverence of the past. In any case, Japanese consumers like to feel that the brands that they buy are established, respectable and popular. Of course, heritage is socially constructed, and this can be manipulated. This means that you don’t necessarily need to be hundreds of years old to gain benefits from heritage. It can be alluded to via product or brand name, location of store, form of packaging, or storytelling/myth-making commercials.
KFC, for example, have harnessed heritage and made successful use of their differences in their advertising for the Japanese market. While the figure of the colonel is powerful for consumers who crave heritage as much as they demand innovation, in Japan KFC has become synonymous with Christmas. This not only makes use of their “foreignness” which matches the Western festival of Christmas, but allows the consumer to buy into a constructed idea of tradition. Commercials self-perpetuate and construct the fact that KFC is always eaten by families at Christmas (http://www.youtube.com/watch?v=mM9IeRXxdTA). Yet this is only a “fact” in Japan.
The third rule to market entry in Japan: Reset the agenda in your category
Although Japan can be extremely conservative and, in some respects, resistant to change, highly successful western brands do, at times, manage to re-set the agenda in the Japanese market, forcing competitors to compete with them on their own terms. Resetting the agenda is simple to explain, but hard to achieve.
Think of how iPhone caused a re-appraisal of the cellular phone market, positioning feature phones as yesterday’s technology. In short, the introduction of your proposition in the market should cause to consumer to view their existing alternatives differently and less favourably. Resetting the category agenda is about turning differentiation into meaningful differentiation.
The incredible fairytale story of Starbucks in Japan
One of the clearest cases of a category agenda reset is Starbucks. They entered the market here in 1996, and the Seattle coffee company has just opened their largest store yet in Tokyo and shows no signs of running out of energy. The Starbucks Reserve Roastery in trendy Nakameguro is a testament to how a foreign brand has changed the way the Japanese think about coffee.
When they entered the Japanese market, they were up against players like the local giant Doutor and its dingy, smoky outlets frequented by salarymen in uniform suits for quick, small, cheap cuppas. Starbucks created a new context for the coffee experience that leveraged new thinking on space, time and product. They went against the grain with spacious, stylish stores decked out with comfy sofas and a no-smoking policy, inviting people to linger with much bigger, tall-sized lattes (although small sizes were also available). They also adapted their product range to the Japanese market with the creation of the green tea Frappuccino and matcha latte, and the sale of seasonal limited-edition flavours.
Fail to be a game-changer in Japan, and you will merely become a fad
Failure to re-set the agenda as a new foreign brand means that your brand, even if it enjoys a brief honeymoon period driven by sheer novelty, runs the risk of being overwhelmed by competent and proven domestic equivalents. In a culture that rewards innovation but quickly moves on, there is little point expecting sustainable success if you can’t build on a sense of newness and difference with a revolutionary and hard to copy reason to buy your brand versus those of competitors.
Though I am a great believer in exploiting complacency in your competition, we need to remember that local players are in a good position to know their customer better than you and usually have vast resources to throw at any threat. Resetting the agenda is a case of finding the weakness in their strength.
Feeling your way through to a successful market entry in Japan
To put things simply, in order to be on the winning foot in Japan, you need to gain permission from the consumer to sell to them in the first place, offer a new angle with an element of interest and status based on your differences and then make that difference meaningful enough to trigger a re-appraisal of their current alternatives.
It’s a tall order, and it is understandable that entrants underestimate the sheer amount of knowledge they need to build about the market, the players in it as well as the end consumer before they are ready to launch in Japan. This can be a process that takes some years. It certainly takes longer than ‘some months’!
One final thought is that, on top of all the knowledge gained, it is the ability to feel your way through Japan that is the ‘plus alpha’ of success. Japan is a culture that is fueled by emotion, and this is equally true in the three areas I am stipulating for success.
For a foreigner that wants to see success here, this requires some inherent qualities and sensitivities. But it is also necessary to spend a lot of time with real people, really listening. For this reason, I have become a huge fan in the early stages of market exploration on the incorporation of less highly structured research approaches such as ethnography that provide the potential for new information as well as empathy with the consumer. These help support the yin of market data with the yang of
consumer human understanding.
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