Making it Big in Japan via Customer Centricity
By Andrew Edsall
I recently sat down with Timothy Connor of Synnovate Consulting regarding his experiences and insights gained from his years in the Japanese consumer market.
BACKGROUND AND INTEREST IN JAPAN
Andrew: Hi Timothy, thanks for joining us today. Could you give a brief introduction?
Timothy: My interest in Japan started when Japanese brands, such as Yamaha and Sony, were becoming more ubiquitous, and I was encouraged by a Japanese teacher to visit Japan. Upon arriving, I developed daily fluency within a year and pursued my goal of studying fashion design at a school that taught in English, French, and Japanese. Upon completing my studies, I worked in the fashion business for a few years, before moving into interior design, and subsequently moved into marketing and customer strategy in senior executive management roles. These experiences have allowed me to develop a keen sense of what the Japanese consumer wants and expects.
KEY CONCEPTS – UCHI & SOTO
Andrew: What are some of the key concepts or drivers when considering the Japanese consumer?
Timothy: One of the major concepts I was taught when I came to Japan was “uchi” (inside) and “soto” (outside). These two diametrically opposed concepts are key to understanding Japanese relationships. When I worked in fashion, two key drivers were how the consumer acted (or felt) when they were in the comfort zone of their own “group” or “tribe”(uchi) and how they tended to act and perceived others when they were in a situation outside their “group” or “tribe”(soto).
With my design business, it required getting to know the client (uchi) so that I could propose colors and items that enhanced their own self-confidence, which put them in harmony with their tastes and desires (uchi). In this sense, the home is also is viewed as an extension of self, which is one reason why the majority of entertainment takes place outside the home.
The Japanese relationship with home is often different from the US, where people want to show off their belongings and entertain, the Japanese home belongs to the family. The role of in-home ethnography to understand how Japanese consumers really interact and relate to the items and space (or lack thereof) in their homes and environment or accompanying them on shopalongs to see how they make decisions has been instrumental.
One area that my US-based clients consistently struggle with is the proximity of houses, while in urban settings houses are expected to be close together, the same is relatively true out in the countryside. For the most part, Japanese consumers see proximity as a benefit, since it creates a sense of convenience. You will also find that similar small businesses will group in similar geographical areas.
KEY CONCEPTS – RELATIONSHIP vs. TRANSACTIONAL
Andrew: Japanese consumers are often perceived as extremely demanding.
Timothy: That has not been my experience. For now, Japan is still a relationship-based society, from my viewpoint, they are expecting a level of service that would give themselves. This concept of “pleasing the visitor without even thinking of it” is known as “omotenashi.” In contrast, the US is a transactional society, where both sides expect something. If you want good service at a restaurant in the US, you will pay for it with a tip or other system. The cultural differences in expectations result in two things; challenges and opportunity. The opportunity is that someone with my experience can help a firm planning a market entry to overcome these challenges.
EXAMPLES OF SUCCESS
Andrew: It sounds like there have been a lot of challenges along the way.
Timothy: That has certainly been the case. While every client has a unique situation, there is a process that makes it easier. It is important to consider the appropriate route to the customer. Some products were easy to explain and could be sold in high-traffic areas at a pop-up kiosk or booth, we were very successful at selling home water servers in the suburban bedroom communities; especially at key life moments such as while expecting or immediately after having a baby. Others required developing field sales teams that would go office-to-office or house-to-house – direct selling was extremely powerful.
Finding the right distribution partner is extremely important. Some distributors will offer to sell your products, but it requires a lot of work to bring their performance up to the expected level. In other cases, a successful introduction to one of Japan’s large discount club retailers resulted in an optimal sales channel.
Sometimes large cities like Tokyo or Osaka are the best places to start introducing a project, other times it is better to start in the smaller cities, where land is more plentiful, or consumers are more likely to have fewer choices.
ASSUMPTIONS AND MISTAKES
Andrew: Does it always go smoothly?
Timothy: While experience can be a great teacher, there were certainly times where external pressures or stubbornness resulted in less than desired results. Two critical cultural differences are risk avoidance and long-term thinking.
Japanese firms tend to be much more risk-averse, so they spend a lot of time planning for every possible contingency, sometimes the planning takes so long that they miss out on chances in the market.
On the flip side, their American counterparts often have a higher risk threshold, but their expectations are for a shorter return on investment. Launching a business in Japan is a lot like an airplane taking off, you need to have a long runaway to gather the speed necessary to lift off. Unfortunately, history is littered with examples of firms who decided to abort takeoff partway down the runway.
KEY CONCEPTS – MOTTANAI
Andrew: How do you feel in those situations?
Timothy: Mottainai is a Japanese term that conveys a deep sense of regret when things go unused or are wasted. While we were extremely successful selling coupon books for local restaurants and services, similar to an analog Groupon, an effort to sell coupon books with deep discounts to dozens of hotels across Japan went awry when savvy consumers pushed back with cries of “mottainai.” While the coupons promised substantial savings, consumers did the math and realized that they would maybe realistically use 10% of the coupons in the book, resulting in waste. Japanese consumers, in general, have a certain “frugality” about choices they make, hence the image of “conservative.”
UNDERSTANDING BUSINESS MODELS
Andrew: Could you give me an example of how business models can differ across markets?
Timothy: Sure. In another project, the client’s proposed business model was a fixed service plan, similar to a mobile phone data plan vs. the traditional approach. A few weeks after the launch, they came to the painful realization that their expectations were not going to pan out. Consumers were not interested because the analogy to a mobile phone data plan because most consumers did not understand how their mobile phone plan was structured and priced.
LOCALIZATION
Andrew: What are your thoughts about localization for the Japanese market?
Timothy: The degree of localization required for a product is a key strategic decision. Thanks to my experience as a designer, I aim to work over all aspects of a product, adapting it so that it will exceed customers’ expectations. Some products can be successful due to their “foreign cachet” while others require significant changes and market integration.
THE ROLE OF MARKET RESEARCH
Andrew: What are your thoughts about preparing to enter the market and market research?
Timothy: To be successful in Japan requires doing your homework, and that includes market research. It is really important to flesh out your customer personas. B2B interviews allow us to have a better understanding of the market and the current competitive landscape. For B2C applications, a combination of qualitative research, such as in-home visits or shop-alongs (aka ethnography), focus groups and in-depth interviews with target consumer segments, help us to understand the voice of the customer on a micro-level and their perceptions of brands, products, and services. Quantitative research, such as questionnaires, interviews, observational, or desk research helps to look at overall trends and see the big picture on a macro-level.
CONCLUSION
Andrew: Thank you for your time today. Is there anything you would like to add?
Timothy: Thank you as well. My breadth of experience in B2C marketing roles in Japan has served as a cornerstone for the importance of the customer experience. Foundational concepts like uchi and soto are critical to helping Western clients better understand the Japanese consumer, as the buyer-seller relationship is often more relationship-based than the Western transactional model.
Profitable opportunities exist in Japan, however, they may require a shift in business or distribution model, messaging, and strategy to reach their full potential in the market. It is important to do your market research and incorporate results into your execution strategy because not doing so is mottainai.
Timothy Connor Biography:
Timothy is a proven and recognized Japan market customer experience and marketing channel expert who leverages experience in integrating Digital and Real Market Strategy, Product Positioning, Pricing and Financial Modeling, and Omni-Customer Experience to build profitable B2C businesses.
Andrew Edsall Biography:
Andrew is the Business Development Manager for The Carter Group, which includes CarterJMRN, a full-service market research and strategic consultancy, and Carter Executive Search, a boutique recruitment firm.