An Introduction to marketing FMCG brands in Japan

20
An introduction to building consumer goods businesses in Japan [email protected] +81 80 5630 9805 8

description

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?

Transcript of An Introduction to marketing FMCG brands in Japan

Page 1: An Introduction to marketing FMCG brands in Japan

An introduction to building consumer goods businesses

in Japan

[email protected]

+81 80 5630 9805

8

Page 2: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

An Introduction to Building Consumer

Goods Brands in

Japan Interferogram of Mt. Fuji, Japan

Page 3: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 4: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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.

Page 5: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 6: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 7: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

• 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

Page 8: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 9: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 10: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

Many foreign brands enjoy a premium image in Japan

Page 11: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

Retail Channel Structure

CVS Super market

Dept Store

Home Centre GMS Drug Import Vending Liquor

shop Railway Online

Grocery Impulse Specialist Discount E

xam

ples

of

Cha

nnel

s E

xam

ples

of

chai

ns

Pro

duct

R

ange

P

ricin

g

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

Page 12: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

FoodService Channels

5 Star Hotels

Fast Food Bars Top

Restaurants Airlines Coffee Shops

B2B Offices factories Schools Hospitals

Home delivery Parlours

Travel E

xam

ples

of

Cha

nnel

s E

xam

ples

of

Cha

ins

Pro

duct

R

ange

P

ricin

g 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

Page 13: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 14: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 15: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 16: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Mainstream media is not a realistic option for small brands. Instead more targeted marketing like in-store demos and events is often more effective

Page 17: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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!

Page 18: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 19: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

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

Page 20: An Introduction to marketing FMCG brands in Japan

© 2014 Exigo Marketing (S) Pte Ltd. All rights reserved

An introduction to building consumer goods businesses in

Japan

[email protected]

+81 80 5630 9805

29