An Introduction to marketing FMCG brands in Japan

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Want to enter the Japanese market? Isn't it too difficult for foreign companies? Actually many have succeeded and it's one of the most profitable in the world. Perhaps you should reconsider?

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An Introduction to marketing FMCG brands in Japan

  1. 1. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   1   Export  &  Expand  with  Exigo   An introduction to building consumer goods businesses in Japan rupert@exigomarketing.com   1   www.exigomarke-ng.com   /exigomarke-ng  
  2. 2. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Topics •  Health warning! •  Japan overview •  History & Language •  Consumers •  Why Japan is attractive to FMCGs •  Trade structure •  Product adaptation •  Inside a Japanese company •  Thought starters for launching in Japan
  3. 3. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Health warning! This presentation is designed as a short introduction to the marketing and sale of consumer products in Japan. We have written this for those individuals and companies who have limited experience of this market. The focus of the presentation is the packaged food & beverage categories. We welcome your comments and suggestions and encourage you to contact us should you have any questions.
  4. 4. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Japan is an island nation with an island mentality •  4 main islands –  Honshu is the largest •  Mountainous –  60 active volcanoes •  Urban –  Greater Tokyo has a population exceeding 30 million Largest metropolitan area in the world •  Wide variations in climate between the regions –  Large snowfalls in Hokkaido –  sub-tropical in the South
  5. 5. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Japan’s history dates back to 10000bc •  Early Chinese influence •  16th Century first contact with western world •  Closed to outsiders until 1853 •  Meiji era: a period of enlightenment •  Pacific war •  Rapid post-war growth –  World class infrastructure & public transport
  6. 6. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Japanese is a difficult language for foreigners •  3 different character sets –  Katakana, Hiragana and Kanji •  Over 10,000 Kanji •  Kei-go –  “Queen’s English” •  Most Japanese are unable to speak English, or any other language
  7. 7. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Japan’s population is 127m •  Consumers are notoriously fickle –  More demanding than most other developed countries –  Quality and attention to detail is critical •  Aging population –  Growing demand for products & services for elder people •  Consumer preferences can vary between regions •  Increasing polarisation between premium and economy brands
  8. 8. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Why Japan is attractive to FMCGs •  3rd biggest economy in the world. High GDP/capita •  Can be very large & profitable –  Coca Cola •  No 2 market worldwide. High retail price/litre –  Nestlé •  One of the most profitable markets –  Haagen Dazs •  US$300m sales. Biggest market after the US •  Japanese consumers love brands –  Louis Vuitton: Japan 35% of worldwide sales •  Source of global innovation •  An opinion leader for Asia –  Japanese goods have credibility across the region –  20m+ tourists
  9. 9. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Many foreign brands enjoy a premium image in Japan
  10. 10. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Retail channel structure CVS   Super   market   Dept     Store   Home   Centre   GMS   Drug  Import   Vending   Liquor     shop   Railway   Online   Grocery Impulse Specialist Discount ChannelsExamplesof chains Product Range Pricing 100  Yen     shop   Agricultural   Fresh to ambient to frozen, “take home” items Limited. Top brands. Immediate consumption Wide range within a given category Limited, Take Home Premium to economy. Monthly and weekly bargains common List prices, almost no discounts Standard to premium Discount
  11. 11. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Food Service channel structure 5  Star   Hotels   Fast     Food   Bars   Top   Restaurants   Airlines   Coffee   Shops   B2B   Offices   factories   Schools  Hospitals   Home   delivery   Parlours   Travel Leisure Industrial Inns   Wide. Fresh to ambient to frozen. Branded and generic Limited. Branded items with proven history Ingredients/commodity Premium - Standard Premium - Standard Economy ChannelsExamplesof chains Product Range Pricing
  12. 12. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Understanding the trade structure takes time •  Fragmented –  Largest retail groups (Aeon, 7&I holdings, Daiei) account for less than 10% of sales combined –  Most manufacturers have large sales teams •  Many chains are regional •  Supply is typically through a plethora of wholesalers –  Some moves to direct trading in recent years •  Many manufacturers invoice through Shosha (trading houses) Careful selection of which trade channels to launch in is a key success factor
  13. 13. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Japan Trade, Route to Market Structure & Cost of Business We  conduct  tailormade  analyses  for  clients  on   channel  &  route  to  market  structure  in  Japan,   these  include:-­‐     •  Researching  and  profiling  new  distribu-on   partners   •  Benchmarking  compe--on   •  Channel  coverage  and  partner  capability   assessments   •  Trading  terms,  margins  and  costs  of  doing   business  
  14. 14. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   There is a whole retail channel selling imported goods Retailers include:- •  Seijyo Ishii •  Ikari Super •  Daimaru Peacock •  Pantry •  Sony Plaza •  Most department stores •  Catalogue/internet sites Generally speaking less product and packaging adaptation is required
  15. 15. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   To become a “mass market” brand in Japan, local adaptation is often necessary •  “Georgia” is Coca Cola’s biggest brand –  This brand is unknown outside Japan •  Haagen Dazs has a Japan R&D centre –  Developed best selling Green Tea, Royal Milk tea and Azuki flavours •  Taste preferences quite different from Western palate –  Less sweet –  Few additives or colourings •  Local packaging –  Smaller pack sizes –  Labelling and claims New entrants must have a very strong understanding of their competitors Image:  workingwithgrace.wordpress  
  16. 16. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Features involving food and drink are common in the media •  6 main TV stations –  Chat shows dominate –  High media costs •  Large range of newspapers and weekly and monthly magazines •  High broadband & mobile penetration and highest level of fibre in OECD Mainstream media is not a realistic option for small brands. Instead more targeted marketing like in-store demos and events is often more effective
  17. 17. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Inside a Japanese company… •  Focus on customer service •  Little attention given to shareholders’ interests •  Structure can be different from Western companies –  Many Japanese companies don’t have a “Marketing Department” •  Initiatives often start from the “bottom” •  Group decision making –  Consensus is crucial –  “nemawashi” Negotiations take time. Many people are involved. Patience and resilience is required!
  18. 18. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Thought starters for launching in Japan •  Gather a team which includes people who have relevant experience and contacts in the market •  Research the market thoroughly –  Consumers, category, channels, competition, routes to market –  Understand the key success factors in your category •  Be very clear about what you are bringing new to the market –  Product, brand, positioning, technology… •  Test market before full-scale launch •  If importing pay very close attention to quality –  Most retailers will delist quickly if there are problems •  Stay focused
  19. 19. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   Examples of FMCG categories where foreign brands have succeeded… •  Pet Care •  Coffee •  Ice Cream •  Confectionery & gum •  Vitamins, Minerals, Supplements •  Toiletry •  Home Care •  Mexican sauces •  Canned goods •  Yogurt •  Meats •  Wines & liquor •  McDonalds, Pizza Hut
  20. 20. ©  Exigo  Marke-ng  (S)  Pte  Ltd,  all  rights  reserved.  www.exigomarke-ng.com   20   Export  &  Expand  with  Exigo   An introduction to building consumer goods businesses in Japan rupert@exigomarketing.com   www.exigomarke-ng.com   /exigomarke-ng  

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