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The Role Of Strategic Marketing Management In A Japanese ...

  1. 1. The Role Of Strategic Marketing Management In A Japanese Community-Driven Development Program, Michi-No-Eki (Road Station) Tadayuki Miyamoto, Richard Grainger, Curtin University of Technology, WA Kunihiko Iwasaki, University of Shizuoka, Japan Abstract This paper describes a unique Japanese community-driven development program, Michi-no- Eki, (in English, Road Station), a program which takes advantage of the main roads system to distribute various public services and promote community-driven development. The growing importance of strategic marketing management in successful operation of the Michi-no-Eki is discussed before an analytic framework is proposed for the study and practice of strategic marketing management of the Michi-no-Eki. Keywords: Japanese community-driven development, marketing, value innovation Background Japan is a nation with the economic superpower status. Although retaining an international reputation since the 1980s, Japan has gone through drastic socio-cultural, economic and political transformation over the two decades. In particular, changes during the 1990s are noteworthy as a catalyst for the country’s current self-renewal efforts. In the Western management and marketing literature, the decade is variously described as post- industrialisation fueled by progressive ‘servitisation’ of businesses (Vandermerwe and Rada 1998), an era of postmodern consumerism driven by nostalgia to archaic tribal sociality (Cova 2002), or a period of ever-diversifying customer needs and wants (Normann 1991). In addition to these market phenomena of mature economies, Japan has also faced growing socio-cultural, economic and political pressures from an aging population (prolonging life expectancy and declining child birth rate) and ever growing gulf between vibrant urban and listless rural communities (Ministry of Health, Labour, and Welfare 2002). Against this background the Japanese government was forced to give in to a decade-long call for a paradigm shift in the policy making and state administration system through decentralisation of power to local governments and civil society (see Barrett, 2000). The Michi-no-Eki is a community-driven development program which emerged as a manifestation of this paradigm shift. Michi-no-Eki (Road Station) Literally translated, Michi-no-Eki (MnE), denotes a dedicated ‘space’ along a community’s main road which is equipped with various service facilities for its visitors. Its conceptual origin came out as a policy recommendation at a rural community development symposium in regional Japan – i.e., to build stations (like train stations on railroad track) along main roads which can be used as hubs for community networks? (Road Management Technology Centre, RMTC, 1993). Following a social experiment in three local prefectures, the concept was officially adopted as part of a nationwide road safety program in 1993, but more recently has gained wide public recognition and support as a community-driven development enabler as well as a tourist ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 157
  2. 2. destination (Road Bureau, MLIT, n.d.a,). Recognition of the MnE potential is not confined to Japan. For example, following MnE pilot-studies in Kenya and China, the World Bank has recently developed Guidelines for Road Stations “Michinoeki” to promote sustainable social, economic and environmental development movement in less developed nations (World Bank 2004). The Michi-no-Eki Development Model and Three Core Functions Figure 1 depicts a Japanese MnE development model as well as three core functions. The model defines the following three stakeholders as founding blocs of the MnE development, namely a MnE managing organisation (i.e., a municipality or other approved organisation1); a road administrator (i.e., central or prefecture government); and various central and/or prefecture government agencies. It is the partnership (between the state and civil society) that has made the MnE project a highly successful community-driven development program. A community’s enthusiastic interest and involvement in their own development alone is often not sufficient for a successful outcome. This especially applies to start-up programs which are generally in need of capacity building. In a MnE project, financial support (i.e., funding and loan) from a road administrator (either at a state- or prefecture-level), as well as support from other government agencies is indispensable for the community’s capacity building. While the former financially supports construction of MnE facilities relating to road safety, the latter aids construction of unique interface facilities between the local community and visitors for their cultural, social, and/or economic exchanges at a MnE. MnE Managing Organisation municipality or approved orgaisation1 Community capital ‘Michi-n o- Eki’ Michi- o-Eki’ Fin - Rest id la - Information an cia - Exchange cia an la Fin id Road Administrator Central and Prefecture central or prefecture Government Agencies government Figure 1: Michi-no-Eki Development Model A For successful registration and annual renewal, a typical Japanese MnE must comply with a set of requirements in the Road Bureau’s Guidelines (The RMTC 1993). According to those guidelines, a MnE must perform the following three core functions:1) provide a safe, comfortable and convenient resting space and facilities for visitors; 2) offer traffic, emergency medical and tourist information as well as information on neighboring communities and MnEs; and 3) provide an interface between visitors and the community for their cultural, social, and/or economic exchanges. These conceptual requirements are then operationalised into a service infrastructure which includes at least 20 free parking bays, a minimum of 10 accessible clean toilets which are accessible on a 24 hour basis, public telephones, (ideally staffed) information centre, and a services infrastructure which facilitates unique cultural, 1 The Road Bureau’s guideline qualifies the following three organisations as a possible alternative Michi-no-Eki managing organisation to a municipality: a prefecture government, a legally qualified social enterprise, and a social enterprise recommended by a municipality. ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 158
  3. 3. social, and/or economic exchange between the visitor and the community. These MnE service infrastructure and facilities need to be built based on a barrier-free space design for children, women, the aged and the disabled (The Road Bureau, n.d.b). Apart from these regulatory requirements, each local community is encouraged to design and develop its idiosyncratic, attractive space and service facilities in harmony with a given topography as well as its service offerings. Their features are widely made public through MnE websites of the RMTC and the Road Bureau. Proliferation of a Michi-no-Eki model: Catalyst for Market Competition After the 22nd registration round in August this year, the MnE list now includes 830 stations across Japan, a more than eight-fold increase from 103 in 1993 (The RMTC, n.d.). This increase in MnE over years has also accompanied proliferation of MnE development and business models. Generally speaking, for any form of partnership to come into existence, there must be mutual gains between the involved parties. Under some circumstances, however, this ‘golden’ rule has proved to be a bottle-neck to a community’s MnE development pursuit. From the perspective of a road administrator (in a state or a local government level) who manages a main ‘road system’, there are at least two situations where financial support is not forthcoming: 1) when a proposed MnE site is in close proximity to an established station, and 2) when a proposed site resides outside the system domain. In either case, if it wishes to proceed, a community is left with no alternative but to pursue its MnE project without a road administrator’s financial support. Against this background, determined local communities have found another avenue to overcome funding shortages for capacity building. This is, the creation of ‘the third sector’ through joint ventures between municipality and social enterprises while ensuring partnership with other external funding sources (i.e., central and/or prefecture government agencies). This new type of MnE differs from the conventional ones for the increased autonomy in the development and management due to the absence of a road administrator, and the consequently greater pressure on profitability (i.e., commercial orientation) due to their greater internal funding for infrastructure developments. Apparently, the emergence of these commercially oriented MnE managing organisations has added a new dimension to the MnE paradigm – i.e., market competition. According to the MnE Study Group Report (the MLIT 2001), proliferation of MnE business models has led to the emergence of the following three types of MnE: 1) those with a strong focus in providing rest and recuperation for travelers; 2) those in the information service function; and 3) those in the (cultural, social, and/or economic) exchange function as a commercial tourism opportunity. Although the MnE Study Group Report does not present a statistical breakdown on the grouping structure, the continuous increase in MnE, in light of the aforementioned fiscal discipline applied by the road administrators, suggests that the third group is on the rise. This has created and been intensifying market competition for visitor traffic and spending among MnEs within and between regions. For the MnE managing organisations in the commercially oriented category, our logic suggests there are three potential avenues to the future: dominate the region for visitor traffic and spending (rise); coexist through collaboration with the neighbouring MnEs to compete collectively with MnEs in the neighbouring regions (sustain), and demote to the second or even the first type (fall). Given the inherent pressure on commercial viability associated with their greater initial capital investment, only the first path can be viewed as a realistic strategic choice, at least in the short- and mid-term. As for this growth strategy, the MnE Study Group ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 159
  4. 4. (MLIT 2001) underscores the need for strategic marketing management of the MnE. The report reveals a lack of innovation in the visitor-community exchange function and poor management of market intelligence (i.e., generation, dissemination and application of market intelligence) at many MnEs. As a result, they have become more or less homogenous in their offerings despite their idiosyncratic community capital mix, with their focal domain of visitor-community exchange failing to go beyond sales of fresh and/or processed local agricultural produce, and/or catering services of authentic local foods. One of a few exceptions is MnE Kunma Suisha-no-Sato, which is actively staging ‘a memorable experience’ (Pine and Gilmore, 1999) based on its rich community capital (most notably human, social and environmental),. They have been successfully attracting over-night trans- community visitors from major cities who long for nostalgic, experience-based tourism attractions (Shizuoka Chamber of Commerce, 2005). An Analytic Business Model for Strategic Marketing Management for a Michi-no-Eki This section discusses a proposed analytical business model framework as a basis for strategic marketing management of those commercial oriented MnEs, which are expected to grow in number. The model is developed based on our analysis of available descriptive information on MnE cases in light of prescriptive literature across disciplines, namely strategic management, marketing, and community development. Figure 2 depicts the model. Visitors visitor mix Value Community Capital Ma social, human, on rk physical, et ati financial, & int ov environmental ell Inn MnE Managing Community ige Organisation Entrepreneurs nc community involvement e commercial orientation Figure 2: n AnalyticMichi-no-Eki BusinessModel A The above model defines market intelligence, innovation and (visitor) customer value as primary drivers of MnE strategic marketing management. Its underpinning tenet is Drucker’s thesis which was put forward more than half a century ago. That is, ‘Because it is [the business] purpose to create a customer, any business enterprise has two – and only these two – basic functions: marketing and innovation’ (Drucker 1954, p. 38). Reading the thesis in light of contemporary strategic management and marketing literature and the context of the MnE managing organisation, we posit the following thesis: To ensure sustainable market success, a MnE managing organisation needs to offer superior customer value through ‘value innovation’ (Kim and Mauborgne, 1999) whereby, based on effective management (i.e., generation, dissemination and application) of market intelligence (or ‘market orientation’ as per Kohli and Jaworski (1990)), unique community capital and resources are innovatively applied for the creation of superior values (Deshpandé, Farley & Webster, 1993; Christensen, 2000). ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 160
  5. 5. The model identifies three interdependent stakeholders instrumental to operations of the MnE venture: 1) a MnE managing organisation as the facilitator of (cultural, social, and/or economic) exchange through the effective management of market intelligence; 2) community entrepreneurs as an idea source of successful value innovation; and 3) MnE visitors (trans- community and intra-community). The posited interdependence among them, in particular between the first two and the last, is evident given the visitor’s role as co-creator of customer value (e.g., Christopher, Payne & Ballantyne, 1991, Prahalad and Ramaswamy, 2004). Not only are they the critical source of inputs to community entrepreneurs’ innovation, they also play a significant role as a participant in the production and delivery system of services at the MnE. Furthermore, in relation to the stakeholders, the model proposes three organisational variables which collectively determine idiosyncratic strategic marketing challenges and opportunities at each MnE, namely commercial orientation, a community involvement, and a target visitor mix. For instance, a varying degree of commercial orientation across MnE managing organisations defines a different level of emphasis on each of the three domains of exchange (i.e., cultural, social, and/or economic) at the MnE. The variability of commercial orientation manifests itself more explicitly as space and resource allocation for each domain of exchange in the MnE service infrastructure, facilities and system. Similarly, a varying extent of the targeted trans- and intra-community visitor mix and the extent of community member involvement with the MnE program as a community entrepreneur determines the quality of experience, services and products offered to visitors. Among others, MnE Galleria Kameoka in Kyoto and the aforementioned MnE Kunma Suisha-no-Sato in Shizuoka illustrate these features. The former, which a local social enterprise in education business manages in partnership with the municipality, defines intra- community visitors as its target market and strives to function as a centre for education- related services and information (including a fee-paid day care centre service and culture classes) for the community (The Road Bureau, n.d.c ). The latter, which is managed by a local community cooperative with the backing of the local municipality, caters for the distinctive needs of both intra-community and trans-community visitors through an interpersonal visitor-community interface system; it promotes economic and cultural exchange between the community and trans-community visitors through continuous product and process innovations, and delivers public services to the community members (e.g., community support for the aged). This MnE is noteworthy for its inclusive, community-wide engagement. In this venture, every household in the community is a member of the cooperative and, thus, all the community members are expected to think and act as a community entrepreneur. This makes a significant contrast to many other MnE ventures where the staff of the managing organisation all too often dominate the community’s pursuit of innovation, generation of marketing intelligence, and community-visitor interactions. Conclusion This paper has presented a unique Japanese community-driven development program, Michi- no-Eki, and discussed the critical role of strategic marketing management in its successful planning and operation. The paper has also proposed an analytic framework for the study of strategic marketing management of the MnE. Although the model itself needs to be validated empirically through rigorous field research, we believe it will provide a useful framework for the study and practice of strategic marketing management of the MnE. ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 161
  6. 6. References Barrett, B.F.D., 2000. Decentralization in Japan: Negotiating the transfer of authority. Japanese Studies 20 (1), 33-48. Christensen, C.M. 2000. The Innovator’s Dilemma: The revolutionary national bestseller that changed the way we do business. HarperCollins Publisher, New York. Christopher, M., Payne, A., Ballantyne, D., 1991. Relationship Marketing Bringing Quality, Customer Service and Marketing Together, Butterworht-Heinemann Ltd., Oxford. Cova, B., 2002. Tribal marketing: The tribalisation of society and its impact on the conduct of marketing. European Journal of Marketing 36 (5/6), 595-620. Deshpandé, R., Farley, J.U., Webster, F.E. Jr. 1993. Corporate culture, customer orientation, and innovativeness in Japanese firms, Journal of Marketing. 57 (1): 23–27. Drucker, P.E. 1955. The Practice of Management, Heinemann, London. Green, G.P., Haines, A., 2002. Asset Building & Community Development, Sage Publications, Housand Oasks, California. Kim, W. C., Mauborgne, R. 1999. Strategy, value innovation, and the knowledge economy, Sloan Management Review 40 (3), 41-54. Kohli, A.K., Jaworski, B.J., 1990. Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing 54 (2), 1–18. The Ministry of Land, Infrastructure and Transport, MLIT, 2001, ‘Michi no Eki’ Study Group Report, Retrieved: June 6, 2005, from Normann, R., 1991. Service Management: Strategy and leadership in service business (Second Ed.), Wiley, Chichester, U.K. Pine, B.J. II, Peppers, D., Rogers, M. 1995. Do you want to keep your customers forever?, Harvard Business Review 75 (2), 103-114. Pine, B.J.II., Gilmore, J.H., 1999. The Experience Economy: Work is theatre & every business a stage, Harvard Business School Press, Boston. Prahalad, C.K., Ramaswamy, V., 2004. The Future of Competition: Co-creating unique value with Customers, Harvard Business School Publishing, Boston, Massachusetts. The Ministry of Health, Labour, and Welfare, 2002. White Paper on Welfare and Labour, Gyosei Inc., Tokyo, Japan. The Shizuoka Chamber of Commerce, 2004. A study report on support for enhanced sales function of small businesses, Shizuoka Chamber of Commerce, Shizuoka, Japan. ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 162
  7. 7. The Road Bureau, MLIT, n.d.a, Road Station: History, Retrieved: June 1, 2005, from The Road Bureau, MLIT, n.d.b, Michi no Eki: Outline, Retrieved: June 1, 2005, from The Road Bureau, MLIT, n.d.c, Michi no Eki, Galleria Kameoka, Retrieved: June 7, 2005, from The Road Management Technology Centre, 1993. Michi-no-Eki no hon: kosei yutakana nigiwai-no bazukuri, 2nd eds., Gyosei Inc., Tokyo, Japan. The Road Management Technology Centre, n.d., Michi-no-Eki List, Retrieved: September 3, 2005, from The World Bank Group, 2004, Guidelines for Road Stations “Michinoeki”, Retrieved: June 6, 2005, from Vandermerwe, S., Rada, J., 1988. Servitization of businesses: Adding value by adding service, European Management Journal 6 (4), 314-24. ANZMAC 2005 Conference: Social, Not-for-Profit and Political Marketing 163