The Team

Chris Brown, Retail SpecialistTHUNDERBIRD

Cassey Ho, Marketing DirectorWHARTON

Nadia Medina, VP of MarketingMARSHALL SCHOOL OF BUSINESS

Manny SanchezResident InternWHITTIER COLLEGE

Kimberly FattoriniResearch AnalystUCLA

Now presenting…

• Japanese guitarist, producer, arranger, composer and songwriter.

• Guitarist and lead arranger for the hard rock band B'z.

• Virtuoso

• One of the best guitar players in the world…

Celebrity Guest

Tak Matsumoto

(Phil Sun)

Today’s Agenda

– Japan Country Overview– The Gibson Experience– Current and potential market for guitars– Competition– Pricing Strategy– Promotional Program– Distribution– Our overall outlook on

1. The country situation2. The company situation3. The market situation

– Why this will work

CASSEY

Who is ?

We are a USA based company dedicated to making the best

quality musical instruments for our customers. We specialize in acoustic and electric guitar

manufacturing.

KIMBERLY

Gibson’s Product Values

• “The American Dream”

• The Gibson Culture• Freedom of

expression• The Artist• Creativity• Unique Quality• Innovation

MANNY

Japan Quick Overview• Ethnically homogeneous• Religion does not play as big a part in the lives of

Japanese – Majority = Shinto and Buddhist religions– Middle class respect these as traditions rather than as

a way of life• English is rarely spoken

– Esp. in the higher levels of organizations• Literacy is almost universal

– Less income differentials b/t provincial Japan and the capital cities (Tokyo and Osaka)

• Overcrowding – Accounts for Japanese tourist's love of wide open

spaces when they travel– Adapted by the efficient use of space

• Culture concerned with making things smaller– E.g. Bonsai, Sushi

• Japan great in manufacturing– Can put things together efficiently and to high quality

standards (TQM). – Limited natural resources, so depends on importing raw

materials and fuel• Culture is one of the most inaccessible to the

foreigner– The Japanese respect experience, wisdom, age and

status– Substantive business relationships built over many

years

CASSEY

Socio-demographics

NADIA

• Decline in the birth rate – average age rose from 25.6

years in 1970 to 29.2 in 2006 • Shrinking younger population

– lowest level on record since the Population Estimate began.

• Increase in aging population• Changes in the demographic

structure have created a number of social issues

• Immigration and birth incentives are sometimes suggested as a solution to provide younger workers to support the nation's aging population.

Socio-demographics cont’d• Population

– 0-14 years: 13.8%– 15-64 years: 65.2%– 65 years and over: 21%

• Ethnic Groups– Japanese 98.5%, Koreans

0.5%, Chinese 0.4%, other 0.7%

• Primary Language– Japanese

• Aging Population– Youth: 13.6 %– Elderly: 20.8%– Highest Life Expectancy

• Declining Population – -0.088%

NADIA

Current & Potential Market• Increase in leisure activities -

Market Growing– 2nd largest market for musical

instruments in the world– Japan is Gibson's biggest market

outside the United States– Gibson Guitar: biggest competitor in

Japan• Baby Boomers

– Grew up on 1970s music. Now have money to spend on guitars.

– Currently ages 50-60– Will peak in the next 20 years

• Collectors– Some own 5, 10, 20 guitars– Middle aged guys, professional career– Just buying a dream

KIMBERLY

Current & Potential Cont’d

• Limited Edition in Japan only– Rocker Tak Matsumoto

• Young Aspiring Rockers– Often buy on credit if parents don’t buy for them.

• Pricing– Average Gibson guitar 300,000 yen. $2,865.30 USD– Avg. Gibson in US about $1,500– 620,000 yen Tak Matsumoto guitar. 5,918.67 USD

KIMBERLY

Market Leaders

TAK (PHIL)

Gibson (Japan)– Gibson life style

• Product spot light, latest product• Artists & events• Lessons & Gibson recommendations

– Fan club• News, Blogs, Videos

– Tak Matsumoto (B’z)• First Asian artist to design own Gibson signature guitar (1999)

ESP (Electric Sound Production)– Custom Order

• Allowing customers to customize their guitar in detail• Shape, wood, number of frets (22/24), Order of Pickups and more..

– Artists influence• A lot of famous guitarists in Japan use ESP custom guitars

Other Leading brands– Fender, Ibanez, Schecter, Peavy

Pricing Strategy

• Four Pricing Models:– Cost-Plus Pricing– Target-Return Pricing– Value-Based Pricing– Psychological Pricing

CHRIS

Pricing Model most appropriate:

Psychological Pricing

Pricing Strategy cont’d• Pricing should be high• Gibson Guitars are a luxury, not a

necessity• The Gibson brand is associated with

exceptional quality– High prices will help keep it exclusive

• The Japanese market is large and prosperous– There will always be demand and

corresponding sales even if pricing is placed at a premium

• Lower-cost and higher quantity sales should be reserved for Gibson’s lower-quality Epiphone brand

CHRIS

The Gibson Experience

• Provide customers with personal, intimate, face-to-face interaction

• After sales support– Customer Call Center– Personalized/Hands On

support• Apple Stores

• Unique packaging– Trovata hang-tags and

stitched fabrics tell a unique story

• Relationship continues after purchase– Emphasis on Experience– Membership

• Harley Davidson

NADIA

The Retail Store

• Compare to the Apple Store

• Supportive in-store customer service

• Recording studio• Sound proof room to jam• “Playground”

– Set atmosphere: Dark and Cool

• Professional Guitar Lessons– “Gibson certified”

professional guitar instructors

NADIA

Playing a “story”• Each guitar will have a special identity

– Les Paul: classic rocker/Blues player– SG: young generation/young rock bands.

• Sharp edges– V series: collector edition/real performance guitar for shape (add

pic)– Special series: made for performers

• Signature guitars by artists

TAK (PHIL)

Community

• If you buy one, you are a member of the Gibson community– Buy into Culture, lifestyle, and

community– Karaoke for Gibson guitar

players• Invite local Gibson members

– Host competitions • “Next Lead Guitarist” (like AI) • Prizes: Custom Gibson guitar,

amp, home theater system, make own signature model

– You get special invitations, promos, offers etc.

KIMBERLY

Multimedia Lifestyle Integration• Sell Gibsons along

with– Home theatre systems

• Huge amps• Plasma screen• Core system

– Virtual instruments– Recording interface

CHRIS

Promotional Program

• HUGE PHENOMENAL SPLASH– Mega events – Rock concerts– Big flashing lights– Cool/Futuristic packaging– High end media/imagery –

billboards, TV– Print Media

• Musician Magazines• Japanese Comics • Main Transportation

• PSYCHOLOGICAL – Make it “seem big” and it will

sell big!

CASSEY

Can you spot our ads?

Distribution StrategyU.S. Manufacturer

Freight Shipment

Wholesaler

Japanese

Customer

Retail Shop (Tokyo)

MANNY

Estimate of the Situation• Company situation:

– Strong brand image and loyal following• Innovation

– High price might drive away customers• Country situation:

– Increase in discretionary income • Saving economy

– Threat of declining economy• Recession

• Market situation:– Group of people with money to spend who are craving for American

made products.– Extensively IT savvy

• More open to try new products and technologies

– Competitors trying to capture the younger audience with more affordable well-made guitars

• Potential to establish strong foothold with brand loyalty

MANNY & TAK (PHIL)

Why we should proceed?

• This will work!– Japan idolizes music, art, creativity, and the future.– They also embrace the American Dream– GIBSON GUITARS is the perfect integration

CASSEY

Works Cited• Associated Press, Japanese Embrace Music Legend.

http://www.thestandard.com.hk/news_detail.asp?pp_cat=18&art_id=25272&sid=9354878&con_type=1

• CIA World Factbook. Japan Country Profile. 23 Mar. https://www.cia.gov/library/publications/the-world-factbook/geos/ja.html

• JGuide: Stanford Guide to Japan Information Resources. Demographics. Copyright © 1994 - 2008 The board of Trustees of the Leland Stanford Junior University. 22 Mar. http://jguide.stanford.edu/site/demographics_2145.html

• Wikipedia. Demographics of Japan. 24 Mar. http://en.wikipedia.org/wiki/Demographics_of_Japan

• Helms, Marilyn M. “Challenge of Entrepreneurship in a Developed Economy: The Problematic Case of Japan.” BNet. 29 Apr. http://findarticles.com/p/articles/mi_qa3906/is_200312/ai_n9312253

• Business Design. “Posts Under ‘Experience Enhancement’.” http://designbizrx.wordpress.com/category/experience-enhancement/

• Apple Retail Store. Genius Bar. http://images.apple.com/uk/retail/geniusbar/images/top-geniusbar081407.png

• Harley Davidson Official Website. Experience. http://www.harley-davidson.com/wcm/Content/Pages/Experience/experience.jsp?locale=en_US