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

The question you should be asking when evaluating Japanese companies:

What role does marketing play in order to build their business outside Japan?

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

Many Japanese CEO’s & Managers will replace Marketing with the words Engineering & Manufacturing.

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

Once upon a time Sony was Apple

Changed the way we listen to music

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)

How can Japanese Companies Regain Relevance?

Introduce the CMO Function into Japanese business practices

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

Marketing presents a unique opportunity for Japanese women to shine.supporting Womenomics

Abenomics Marketing should be adopted as a key pillar to boost Japan Inc’s global competitiveness

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

Commodore Bob-san’s fleet of Marketing Black Ships have anchored in Japan!

MAKE IT HAPPEN!Japanese Companies Need To Elevate Marketing As A Core Function In Order To Succeed Outside Japan

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