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?

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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  • 1. An introduction to building consumer goods businesses in Japan rupert@exigomarketing.com +81 80 5630 9805 8
  • 2. An Introduction to Building Consumer Goods Brands in Japan Interferogram of Mt. Fuji, Japan © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 3. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 4. 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. © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 5. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 6. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 7. • 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 8. Japan’s population is 126.5m •  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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 9. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 10. Many foreign brands enjoy a premium image in Japan © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 11. Retail Channel Structure GMS Dept Store Super market Impulse Import CVS Railway Specialist Vending Drug Liquor shop Online Discount Home 100 Yen Centre shop Agricultural Product Range Fresh to ambient to frozen, take home items Limited. Top brands. Immediate consumption Pricing Examples of chains Examples of Channels Grocery Premium to economy. Monthly and weekly bargains common List prices, almost no discounts © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved Wide range within a given category Standard to premium Limited, Take Home Discount
  • 12. FoodService Channels Examples of Channels Travel Airlines 5 Star Hotels Leisure Inns Fast Food Top Restaurants Coffee Shops Hospitals B2B Offices Schools factories Home delivery Pricing Product Range Examples of Chains Parlours Bars Industrial Wide. Fresh to ambient to frozen. Branded and generic Limited. Branded items with proven history. Ingredients/commodity Premium - Standard Premium - Standard Economy © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 13. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 14. There is a whole retail channel selling imported goods in Japan Examples 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 15. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 16. 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 •  Most advanced market in the world for mobile technology •  High broadband penetration and highest level of fibre in OECD © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved 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. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved Negotiations take time. Many people are involved. Patience and resilience is required!
  • 18. 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 –  Products, retail channels… –  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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 19. 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 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved
  • 20. An introduction to building consumer goods businesses in Japan rupert@exigomarketing.com +81 80 5630 9805 © 2014 Exigo Marketing (S) Pte Ltd. All rights reserved 29