Japan Inc’s Ultimate Challenge: Marketing Reasons why, what to do about it and how? Robert E. Peterson (Bob-san)
Japan Inc’s Ultimate Challenge:MarketingReasons why, what to do about it and how?
Robert E. Peterson(Bob-san)
Japan’s domestic market is unique. But non-Japanese companies have successfully beaten Japanese competitors on their home turfrecent examples: Starbucks, Apple iPhone, Dyson
Do Japanese companies know how to manage acquired foreign brands?recent examples: Suntory-Jim Beam; Dentsu-Aegis, Softbank-Sprint; Mizkan-Ragu/Bertolli
Inside Japan they don’t want to listen, but outside they will.The problem - Galápagos technology Japan Innovates for itself
At present marketing is one of Japan’s greatest weaknesses to succeeding in global business expansion.
Because the purpose of the business is to create a customer...the business enterprise has two and only two basic functions: marketing and innovation. All the rest are costs.
Marketing is the distinguishing unique function of the business.”
- Peter Drucker
The practices and approaches Japan pioneered in quality manufacturing changed competition forever throughout the world.
Today, Japan must move beyond just quality competition to competing on strategy and innovation.
Genuine innovation not only in products but also in approaches to competing will be required, e.g. Marketing
- Michael Porter
Professor Taro Kamioka Ph.D.Graduate School of Commerce and Management, Hitotsubashi University
“Marketing in Japan plays only a small role in corporate decision-making.”Marketing does not have a core function in the Japanese business model. An urgent danger and risk to competitiveness outside Japan.
Marketing Basic Matrixcompared to baseball
Great Product + Great Marketing =
Great Product + Mediocre Marketing =
Poor Product + Great Marketing =
Poor Product + Poor Marketing =
Home RunYou Win the game
Scoring RunWinning not sure
Base HitsNo scoring
Strike Out!Game Over
Reasons Japanese Companies Struggle with Marketing:
Language1.
4.
2.
5.
3.
6.
Culture History
Talent Management
Lack of Incentives
Education
Tactics vs.Strategy
No direct translation of word or concept, no kanji. Spelled via katakana:
= Mā-Ke-Te-N-Gu
1. Language
The Japanese ear hears only market, the ’ing’ does not register. A market is widely understood to be a place to sell or transact. Key reason why Sales & Marketing are represented as the same function.
Mono (thing) and zukuri (process of making) is a relatively new Japanese word
Monozukuri combines the desire to produce excellent products with the ability to constantly improve production systems and processes. This underpins the Japanese business economy.
The drivers of monozukuri and business direction are the product engineers.
Marketing staff have a lower status in the organization. The drivers of monozukuri are the product engineers.
2. Culture & History
Parallel to the Tokugawa governmental shinokosho social order during the Edo period (1603-1868), classes were arranged by what Confucian philosophers described as moral purity.
Tier 1: Samurai High moral example for others to follow
Tier 2: Farmers Providers of most basic necessity - food
Tier 3: Artisans & Craftsmen Producers of material goods
Tier 4: Merchants Wealth & power without producing goods
2. Culture & History
In today’s corporate Japan the caste system continues:
• Engineers are the Samurai
• Factory workers are the farmers
• Suppliers are the artisans and craftsmen
• Sales & Marketing staff are the merchants
2. Culture & History
• Marketing is poorly taught
• Not a major in universities, just courses
• Professors are not well educated in the subject nor have real world experiences
• No company training programs
3. Education
• Generalists & rotations – figure it out on the job
•Marketing not considered a professional skill or area of specialization
• Lack of knowledge or skill retention
• Lower company function, senior management not involved
4. Talent Management
• No reward or incentive to try something new or different
• Fear of change, better to imitate or continue with status quo
• Ringisho or nemawashi ensures bold strategies are rarely pursued
• Preference for consensus and harmony
• No sense of professionalism or pride in output
5. Lack of Incentives
Japanese Marketing Tactics
Growth at expense of profitability
Proliferation of products and features
Emulate competitive approaches
Understanding and articulation of brand a mystery
Continuous operational improvement confused with strategy
6. Tactics VS Strategy
Strategyis About:
Requires constant discipline and clear communication to guide the organization
Everything is measurable
Competing on a unique positioning involving a distinct product or service offering i.e. differentiation
Performing the same or similar activities better than competitors
6. Tactics VS Strategy
20 Years Later:Steve Jobs reinvents the
portable music player“iPod. One thousand songs in your pocket
If Apple were Japanese this is how they would have presented the iPod:“Today we are introducing a new, portable music player called the Easy-Carry XVZ-22R. It weighs a mere 6.5 ounces, is about the size of a shirt pocket, and boasts voluminous digital capacity, long battery life, and lightning-fast transfer speeds. We will be introducing many variations that incorporate different functions and feature different colors.”
Japan lost leadership of the electronic’s category: once a national symbolThe Japanese consumer electronics industry was out-innovated and out-marketed by Silicon Valley and the Koreans (e.g. Apple, Samsung, LG, etc)
American Position Will Not Work in Japan
•Lackofcompetencytoassumethepositionfrom with-in, no training support
•CEOdoesnotthinkimportantorseenasathreat
•Notaboardlevelfunction
•Dangeroustobeasupermaninagroupand consensus oriented culture
Refine the CMO for the Japanese Company as the Customer Marketing Office•Voiceandrepresentativeofthecustomerinsidethecompany
•Teamofexecutivesworkingcollaborativelywithoutsideagencies
•Flexibletorespondtorapidlychangingcompetitiveenvironmentandtrends
•Rotationsforconstantmixofnewthinkingwhileretainingwisdomandexperience
•Integratesmarketingcrossfunctionallyintoallcompanyoperations
•EvaluateROIviaKPI’s
•BoardlevelfunctionactivelyinvolvingCEO
President/CEO Legal
Board of Directors
ProductDevelopment
Manufacturing
Quality Control
Shipping
ProductInnovation
NewTechnologies
Marketing Plan & Strategy
BrandManagement
CommunicationsLogistics
MarketResearch
MarketingTraining
Sales Targets
Distribution
Sales Force /Network
Sales Training
MarketFeedback
CFO
Budget
P&L
Admin
HR
Recruitment
CareerManagement
Compensation
PersonnelFinanceSalesR&DEngineering &
ProductionCustomer
(CMO)
Safety & Regulations Compliance
Testing &Evaluation
Accounting
Basic Organizational Structure Wickaboag Consulting Group Inc. 2014
IT
PersonnelFinanceSalesR&DEngineering & Production
Customer
(CMO)
CONSUMERCompetitiveFriends, Family &
Social Media
“Word of Mouth”
Awareness Trial Repeat
Marketing Outcomes
market actions
design
product planning
measurement / KPIs / ROI
Advocacy
Cross Organizational Functions Wickaboag Consulting Group Inc. 2014
Customer Marketing Office / CMOThe Customer Marketing Office / CMO will benefit a Japanese company’s global (and domestic) business in the following ways:
1 . Maintain or regain innovation leadership
2. Hit sales goals and build market share with better margins
3. Increase the value of your brand(s) in the mind of the consumer and within the financial community
4. Have a motivated and focused company organization aligned behind a clear marketing & communications plan & strategy
5. Better chance of achieving the four outcomes of marketing: (1) Awareness; (2) Trial; (3) Repeat; (4) Advocacy
Recommendations to Japanese CEOsImplement marketing as a core function of the company’s business to succeed in global markets:
1. Separate sales and marketing into two distinct functions and clarify their role or mission
2. Create a Customer Marketing Office (CMO) function reporting directly to the CEO, elevate to board level function. The CEO must be directly involved!
3. Re-arrange the company’s organization and working processes to build in the Customer Marketing Office (CMO) function
4. Elevate the status of marketing in the company, allow employees to specialize or develop a career in marketing as a skilled profession
Recommendations to Japanese CEOsImplement marketing as a core function of the company’s business to succeed in global markets:
5. Institute an ongoing marketing recruitment (internal and external) and training program with outside help
6. Treat your outside agencies as partners, not suppliers. They advise, you decide!
7. Implement a process to measure the ROI, effectiveness, efficiency, consistency and continuity of marketing investments and kaizen everything through defining your KPI’s
8. Build in incentives and rewards for the Customer Marketing Office (CMO) team and outside partners
Questions to Ask Before Investing in Japanese Companies
1. How is marketing currently handled in the company and by whom?
2. Who do they report to and what are their qualifications?
3. Is marketing represented on the board and in decision making?
4. Can we examine the marketing plan and supporting strategy?
5. Can you articulate your brand’s value proposition?
6. What are your marketing KPIs?
7. M&A - have you assessed brand equity value and it’s implications on customer, brand and portfolio integration?
Who’s Doing it Right?Toyota Motor Corporation • AkioToyodaCEO
• GlobalizationofLexusasChiefBrandingOfficer
Soft Bank • MasayoshiSonCEO
• AdoptionofiPhone
Who’s Doing it Right?Uniqlo | Muji • TadashiYanaiCEO|SatoruMatsuzakiCEO
• GlobalizationofJapanesefashion&designtothemasses
Rakuten • HiroshiMikitaniCEO
• AteAmazon’slunchinAsia
Who’s Doing it Right?Lixil • YoshiakiFujimoriCEO
• Brandacquisitionandintegrationtobecomeaglobalhousing and building materials company
Itoen • YosukeHonjoCEO
• ExportingJapaneseteaculturetotheU.S.
The Common Elements of Success
1. Clear leadership and vision CEO as brand champion
2. Recognition of the power of marketing
3. Outwardly focused committed to global growth
4. Guts to change company culture & people