Japanese international marketing strategy | Strategic Management | Competition

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MARKETING INTELLIGENCE & PLANNING 13,11

Japanese international marketing strategy
Alain Genestre, Paul Herbig and Alan T. Shao The Japanese choose and sequence the markets they decide to enter, the products they decide to produce and the marketing tactics they decide to adopt

Introduction
After the Second World War the country of Japan was devastated and nearly destroyed. Within the last 40 years, Japan has evolved into a strong competitive force in world markets and now has the second largest economy in the world. Although it is the size of Montana and has only one-half the population of the USA, Japan may have the number one economy in the world by the year 2010 (Kirkland, 1992, p. 60). During the 1980s, Japan emerged as a powerful international force that capitalized on global marketing opportunities. This has resulted in unprecedented growth for the country. In a recent Fortune article, author Richard Kirkland (1992) describes where Japan is in the early 1990s:
Japan’s economy was less than 10 per cent the size of America’s in 1960 and it is now over 60 per cent; their trade surplus has doubled in seven years despite a SO~ increase in the value of its currency; it habitually spends 70 per cent to 100 per cent more of its gross domestic product on capital investment than the US and 33 per cent more on nonmilitary R&D; its household savings rate is more than three times that of America’s; and when compared to the US employs 70,000 more scientists and engineers on R&D in its labs, and ten times the number of robots on its assembly lines (p. 60).

Japan also has a unique partnership between its government and businesses. The businesses in Japan have benefited from the role of supportive government policies and subsidies. Japan’s powerful trading companies and its businesses’ access to low cost financing from its banks further help to explain some of Japan’s global success. Other business factors have greatly influenced its success within global markets, Japan’s low wage rates for its workers, its unfair dumping practices within different countries, its protected markets (which are extremely difficult to penetrate) and its almost zero industry cost for defence have contributed further to the ability of Japan to become the highly successful global competitor it is today. However, an extremely important factor in Japan’s global success is its skill in sound marketing strategy formulation and implementation. What are the keys to Japan’s marketing success in the international markets? lt has been stated that Japan came to the USA to study marketing principles and philosophy and then applied the textbook principles with unparalleled success. The Japanese carefully “decide which industries to enter, which market segments to serve and the appropriate approach to penetrate those markets” (Kotler and Fahey, 1982, p. 4). The Japanese marketing strategy revolves around the management of product market evolution. They choose and sequence the markets they decide to enter, the products they decide to produce and the marketing tactics they decide to adopt for the market segment. However, the most important factors in their international marketing success are their acceptance, understanding and application of marketing principles to the markets they decide to enter.

During the first six months of 1992, Japan’s trade surplus, which is measured as goods pass through customs, stood at US$49.03 billion, up 52 per cent from a year earlier (Rosenberger, 1992). Japan’s trade surplus rose in June for the 18th consecutive month and its exports have increased for the 25th consecutive month (Rosenberger, 1993). A combination of many different factors play a role in Japan’s global success. Japan has unique business practices that are not found in many other countries. Its just-in-time (JIT) production techniques, quality circles (QCs), ringi and nenko are business practices that are deeply rooted in its business culture and have helped to shape the country’s strong competitive presence in the global marketplace.

Cultural aspects
The conceptual basis for the Japanese international marketing strategy can be traced back to its origin in the Samurai. The Japanese are adept at market flexibility. Cultural Buddhist thinking emphasizes that nothing is

Marketing Intelligence & Planning, Vol. 13 No. 11, 1995, pp. 36-46 © MCB University Press Limited, 0263-4503

215). only 30 to 35 per cent of Japanese workers are under this system (Yunker.8 per cent) in the entire world (Yunker. of child to parent. The collectivist orientation of the people transcends into all facets of Japanese organizations and remains a strong part of their culture. regimented style and a lack of individualism. developing products incorporating desired features and putting effective marketing programmes in place to support them (Lazer et al. group-oriented and cohesive workforce at their disposal to accomplish the organization’s goals and effectively design and produce the products needed for their global markets. collective teamwork that is a hallmark of Japanese organizations (Yunker. The Japanese emphasize the need for group loyalty and co-operation to achieve a common cause for the collective good of the entire group. p. age and education combine to form and determine an individual’s status within Japanese society. The Japanese people traditionally have shown a willingness for discipline. Japanese children are taught that they are to serve the good of the larger group. work group and in the formal education system in Japan. It continues to be stressed strongly within the family. The cultural aspects the Japanese have shaped are a strong part of organizations within Japan. of brother to brother. 1990. Samurai warriors in Japan learned several martial arts.JAPANESE INTERNATIONAL MARKETING STRATEGY 37 permanent. The Japanese culture developed in relative isolation from other countries and different cultures. p. The Japanese use a group-oriented consensual process of decision making called ringi within their organizations. that life is ever-changing. In addition to loyalty to the company. because it will allow an individual eventually to enter positions in larger organizations with higher status and power (Yunker. p. If it is approved by all affected units. Their emphasis on education. it is not only the cultural aspects within organizations. p. collectivism and loyalty allow the management of Japanese organizations to have a highly literate. lifestyle and culture” for the Japanese people (Yunker. 217). always choosing the best means to attack or defend (Kotler and Fahey. This “isolationist development led to a homogeneity in race. language. 1990. acceptance and effective application of the principles of marketing that have made the Japanese so effective and successful in the international markets. a respect for discipline and training. to some of their employees. 71 ). p.. 1990. 1982). The factors of sex. The Japanese identify themselves by “organizations. their strong sense of loyalty also extends to family. These employees are generalist in nature and move laterally rather than vertically within the organization. The Japanese identify themselves by organizations The Japanese have a vertical and group-oriented society. The nenko system involves the strategy of offering low salary to junior employees of the organization and forcing early retirement at the age of 55 to the senior employees. but the understanding. or lifetime employment. p. such as section division. conditioning and concentration. p. 1985. (Cateora. 213). However. From their very first day in school. 1990. 1990. subject to Lord” and this philosophy has been taught to the Japanese throughout their history . p. p.. This system came into use after the Second World War as a stabilization method to reduce the high employee turnover among Japanese skilled workers. a company or company group (vertical structure) or by groups to which they belong (group structure)” (Lazer et al. 225). 1990. The Japanese’s traditional beliefs in Confuscian philosophy emphasize the virtues of loyalty “of friend to friend. 71). The larger companies of Japan offer nenko. However. p. they have ingrained in their teachings and beliefs a need for stability and order – that occurs through a sense of responsibility. The concept of loyalty is also part of Japanese culture that has been ingrained in Japanese people for hundreds of years. 221). but above all. 1990. of wife to husband. The Japanese apply textbook principles of marketing philosophy by carefully studying consumer needs and wants in international markets. They still believe that an individual’s sacrifice for the good of the group is one of the greatest virtues an individual can possess (Yunker. Education is considered to be the pathway to achieving a secure life. 213). country and social groups. 1990. This process of slow promotion and the formation of “close bonds among managers of the same seniority” helps to form strong cohesiveness among managers and results in the group-oriented. and a part of their culture for hundreds of years. 213). 236). The collectivist orientation of Japanese society has been deeply ingrained. The Japanese have the highest literacy rate (99. Also. the ringi is returned to the original drafter of the proposed decision for implementation. This process involves the original draft of the decision proposal started at the “lower level of management and then the circulation of these proposals to various horizontal and higher units for inspection and approval” to those units that will be affected and required to cooperate in the implementation of the proposed decision (Yunker. The way of the samurai is characterized by total dedication to the objective of victory with every waking moment dedicated to training.

market domination strategies. They pursue a follower not a leader strategy. Redesign. Western managers. however. The Japanese typically do not see profit as the central objective but rather the result of satisfying the aspirations of customers and achieving market share. which permits the ability to change and to be flexible and adaptable within the markets. q q q q q Cross-cultural analyses In several cross-cultural marketing strategy analyses between Japanese and Western firms (Abegglen and Stalk. more technical and training support to dealers and frequent underwriting of promotional and advertising spending by dealers. p. They believe in a high level of dealer support as manifested in ample stock for immediate delivery.. The need for human harmony within decisions is also emphasized by the concept of eclecticism but it “underscores the ever implied trade-off of economic costs” (Lazer et al. They prefer volume to stimulate primary demand. are usually oriented towards short-term profits and productivity improvements and are often willing to lose market share to boost profit performance.e.They perceive superior quality and reliability as key competitive advantages. 1987) the Japanese marketing and business practices tend towards the following characteristics: q A stronger competitive drive than most Western companies. They concentrate on long-term profits and market share.. 71). Overseas moves are part of a planned global expansion. ideas and practices that apply to the market they are considering. Kotabe and Okoroafo. Their principal means of expanding volume is by entering newly emerging market segments (niches). They pursue more aggressive marketing mix tactics. The concept of pseudo-harmonism stresses the importance of “maintaining harmony while at the same time acknowledging the existence of an underlying current of discord and disagreement” (Lazer et al. They search for new or emerging market niches and do not attack the market leaders head on but rather q q q q q q q spot emerging segments not yet prioritized. upgrading and rapid commercialization of innovations made elsewhere appears to be a common priority. q They are more adept at exploiting strategic windows – opportunities created by new market segments. 1985. 71).. Japanese subsidiaries have extremely high market share objectives and they are willing to make longterm sacrifices to achieve their objectives. Doyle et al. They tend to spend more heavily on promotions than personal service. 1985. They are more professional and clearer in their objectives. q They prefer market adaptation rather than innovation.11 The Japanese have four concepts that are rooted in the social-cultural nature of this group-oriented. Their product policy emphasizes superior quality over their competition. rapid product line extensions and high expenditures on advertising. They increase market share by winning over competitors’ customers. This usually involves low prices.These continuing adjustments to American marketing principles have resulted in a Japanese marketing approach that incorporates the marketing concepts. or new distribution channels. 1985).. on the quality value added high end). The concepts of pseudoharmonism. Economic nonfunctionality stresses that Japanese marketing activities “consider human factors rather than merely economic efficiency and business profits”. changes in technology. even though they acknowledge the importance of the economic factors in the long run (Lazer et al. exceptionism and nonfunctionality help the Japanese to adjust American marketing principles to their own culture. Their level of product adaption is less while sales volume is more important. 1988. 1990. Doyle et al. eclecticism.38 MARKETING INTELLIGENCE & PLANNING 13. collectivist society that are always at work in their marketing approaches and practices. p. The Japanese view customer service as their major differential advantage.. They concentrate marketing resources and efforts on the high potential segments (i. A Japanese firm’s emphasis on product quality and manufacturing process innovations encourage them to pursue customer satisfaction by way of . or of which they are already a part.. promotion and dealer incentives. Exceptionism stresses the exceptions of policies and procedures that have been established. Wong et al. They are not technological pioneers and are a risk-averse culture. 1991. Theirs is an extensive co-ordination of networks of sourcing activities on a global scale to reap economies of scale. q Japanese pursue market share. aggressive growth. Japanese firms are most concerned about new products and the quality levels being developed by their competition. 1987). They are market focused rather than functional organizational structures. They are encouraged by the Ministry for International Trade and Industry (MITI) and enthusiastically endorsed by many Japanese companies (Wong et al.

and allowed them to create a base from which they can move up into the niches. q Japanese firms follow strategies which may be suboptimal to the members of the group in the short run but optimize the group performance in the long run. to generate the resources to sustain product development and to control their distribution channels in the future. q They have a preoccupation with competitors. reliability. they manage to expand largely by driving weaker local firms out of the market altogether. This knowledge is usually acquired from abroad. to them. The Japanese have smaller. simpler business units focused around a single product line or market and with clear marketing plans aimed at building long-term market positions. By withdrawing. The Japanese approach a research project from the point of view of multiple applications. but because it may contribute to solving a number of seemingly unrelated problems. especially other Japanese competitors. The company must then reconcile costs with selling price. Management must first set the price and then see how costs can be brought into line. Japanese managers believe profit performance in the long run is assured by a focus on volume – expanding into new market segments or aggressive market penetration. Economic rationale The Japanese have built and are running exceedingly successful businesses. the Westerners have provided the Japanese with a foothold into the market with which to build experience. Nonetheless. service and support. Cost plus profit equals price is not the recognized price setting formula for the typical Japanese company. yet their basic business strategy not only violates everything a Western executive knows but it is incompatible with the economists’ theories of economic behaviour and microeconomics. q They believe in the creation and ruthless exploitation of competitive advantage. It is undertaken. service and continuous incremental innovation. Information is quick to pass among members of a group but slow to leak outside. the business strategy of a Japanese enterprise while indeed different is not irrational. Japanese firms and their managers are more committed to a market than Western managers. Americans are typically more narrowly focused. innovation. much of the actual competition results from the bitter rivalry between Japanese companies which fight one another for market share. Without really knowing it or intending it. By way of contrast. Technological self-sufficiency appears to be the keyword Technological self-sufficiency appears to be the keyword for the Japanese. Typically: q The Japanese have marketing performed by a local not a Japanese director. not because it will solve a particular problem. It optimizes in perfectly rational fashion the specific structural realities in which . The Japanese end up capturing the mass market and moving upwards into the premium segments. The question. cash flow and distribution capabilities. They tend to look at an emerging technology or market area from the perspective of vulnerability rather than risk. becomes how vulnerable a firm is if it does not enter a new technology rather than what are the risks of entering it. q Japanese firms succeed by pushing the fundamentals to the extreme. In fact. q Theirs is a bias towards growth. They believe competitive strengths lie in quality. Japanese primary vision has been the civilian application of technology. focusing on quality. The main weapon of the marketing/sales department is low price: a strategy of aggressively setting low prices to win domination of a market and then rapidly improving production to bring costs in line with prices. is that US companies retreat into the small high-tech premium niche markets while the British stick with the low value added bottom end of market. Japanese often only view other Japanese companies as their major competitors. This is similar to the learning curve approach. What usually occurs in the West. Market dominance is characteristically their central objective.JAPANESE INTERNATIONAL MARKETING STRATEGY 39 continual improvement in the product line to meet customer needs and/or exceed them. The selling price is dictated by competition with other companies in the same industry. Its system of decision making imposes a predisposition to enter a new technology to keep up or gain an advantage on competitors. Improving the methods of production and process innovation are dominant. A focus on increased volume now would enable them to build competitive cost structures. q They are likely to market simultaneously in all the triad regions. Companies have been encouraged by the government to place emphasis on finding ways to absorb and add to the imported technological knowledge more rapidly so as to improve efficiency and product quality.

sales promotion and product policy. The Japanese business executive has high capital costs and his most rational business objective is to minimize these. As for non-family outsiders holding shares. (2) marketing awareness and interest. lowest . Therefore. and (5) global marketing.11 Japanese businesses operate. had embarked on establishing its first university marketing course (Lazer et al. Therefore the rationale for Japanese strategy is to encourage volume which leads to market share and a deemphasis on profitability (Drucker. then raising volume is the only way to increase productivity rapidly. which affords automatic increases with seniority and job security until retirement. perform at a much lower rate of profitability than Western enterprises in similar lines of business. the bank is satisfied. marketing research and surveys were introduced by Dr Edward Deming during this period. Business earnings over and above what is needed to cover the interest charge are of no benefit to the bank. an enterprise has to be completely controlled by one man. market reaction time and pricing sensitivity. research. p. not a variable one as in the West. no benefit personally to the manager). (4) marketing expansion. Oligopolistic industries in the USA are (and always have been) particularly popular targets due to size of market. The business that can expand faster than its competitors has a tremendous advantage in labour costs (since all marginal labour will be at the entry level. 1985. Japan’s economic climate began to expand rapidly: it saw its first consumption revolution and it increased its liberalization of trade. Profit in reality does not matter much to the business enterprise. Statistical processes.. Raising volume is the only way to increase productivity Another rationale for the strategy is seen in the wage system. 72). in the form of short-term indebtedness. Incorporation is grudgingly accepted but control remains vested totally in the family head.40 MARKETING INTELLIGENCE & PLANNING 13. especially large businesses. This was a pre-marketing phase (1946-1953) for Japan when it began to transfer technology from developed countries and focus its efforts on improving the poor image of its own products. A Japanese business must earn enough money to pay the interest on the bank loan (but economically it is an equity investment in the business and industry). The shares owned by other members of the family would be held in what in effect was a family voting trust. Maximizing profit makes no sense to him. During this phase. management is impossible for them. They can and do accept losses in early years.. salary level). principles. The profit that matters to the economy is what the banks return. the business that cannot increase its volume sufficiently finds itself losing productivity. Failing to do so leads to loss of competitive position. 1995. The typical pattern in Japan is that it is unsound to sell shares of enterprises to the general public. As long as the interest on these loans is secure. p. The profitability of the average Japanese business enterprise appears low. Therefore. and the first marketing research agency and periodical appeared (Lazer et al. (1985) list and explain the five stages in the evolution and development of Japanese marketing as: (1) premarketing. If wages go up automatically with length of service and independently of job or skill and if employees have to be kept on the payroll until retirement. Marketing strategies development How did Japan’s marketing strategies develop? Lazer et al. Japan had its first Japanese marketing book published by Tsuyoshi Hamano and. Japan translated several American marketing books and summarized the sections on marketing management. However.72). Measured as a percentage of sales. The Japanese exploit markets by using market share pricing strategy. especially banking and capital markets and wage system and wage structure. This they can accomplish because Japanese industry is supported or owned by banks or other financial institutions with much lower capital costs. low entry price to build up market share and establish a long-run dominant market position. Japan’s executives and academicians began to use marketing and management approaches as a discipline. 1975). Japanese business enterprises. (3) marketing acceptance. The Japan Productivity Centre and the Japan Marketing Association were established. Japan’s main focus was on creating adequate supplies to satisfy its consumers’ needs. sluggishness of competitive response. After the Second World War. In 1953. Japanese industry is financed primarily by what (legally) are bank loans. as to the Japanese this is seen as an investment in long-run market development. in 1963. The next period occurred during 1953-1964 and began Japan’s marketing awareness and interest phase. Japanese firms become the price quality leader and then squeeze competitors’ profit margins through low-cost pricing. Japanese business strategy focuses on profit only to the extent to which it represents a minimum requirement. Thus labour for the Japanese becomes a fixed expense. there is no benefit to his company (and with stock options virtually unknown to Japanese management.

The period from 1974 to the present is the phase of global marketing. copiers and earth-moving equipment. Rollei and Leica. The objective is to create competitive gaps through strategies that will either cause brand switching to occur. When the Japanese enter a market behind the innovators. One main element in Japan’s industrial strategy is the selection of a “targeted” industry. These firms look for industries where market leaders are underfinanced or complacent and their served customers are dissatisfied. Their strategy is to enter this market segment with a lower priced product that has improved features. 71). selection and planning phase. Japanese manufacturers began to cultivate international markets and diversify their domestic product lines. 14). The objective is to create competitive gaps During this industry analysis. The major strategic advantage is in knowing the environment thoroughly. gain experience in competing within international markets. The Japanese began to place emphasis on productivity and efficiency among their manufacturers and continued the effort to expand their markets by exports from these manufacturers. but to spot emerging segments not yet prioritized by the leaders” (Doyle et al. process them and export finished products” (Lazer et al. This international focus has become one of the most important factors to shape Japan’s marketing mix and has prepared it to become a strong global force within the world markets.. This is the primary reason that Japanese marketing is oriented towards selling within international markets. One particularly popular samurai tactic was to “injure the corners” (strike at the corners: if corners are overthrown the spirit of the whole body will be overthrown) and then to follow up the attack when the corners have fallen. 424). high labor intensity and only small quantities of natural resources” (Kotler et al. As a result. Japan saw market expansion and the extension of its marketing domain. These factors have forced the Japanese to seek and penetrate international market segments for their own survival. Since Japan lacks natural resources. 1982. technology development and export trade” (Kotler and Fahey. it favours and “targets” industries that require “high skills. 1985. The Japanese are masters of this continuous policy of looking for differences. They work together to identify attractive global market opportunities that may exist for a company. 6). During this period. 1982. p. This strategy has been played out continuously in industry after industry: automobiles. seeking to achieve a solid market share with those products and continuing to . p. consumer electronics.. 6). p. Japanese firms look carefully at the “targeted” industry’s evolution. Japan had spreading affluence and mass consumption among its consumers. The Japanese have focused many of their efforts on seeking international product acceptance. The government and companies work together as a partnership with respect to “industry direction. Japan began to focus its marketing strategies and strategic planning on international markets. The MITI is responsible for the selection and support mobilization of the “targeted” industry. 6). The Japanese did not enter Selecting industries and markets Japanese government and companies both play a large role in selecting the markets that Japanese companies will enter. 1982. their strategy has not been to “attack the leader head on. p. geographical or otherwise. seizing the initiative and forestalling the enemy at every point (Sims. 1985.JAPANESE INTERNATIONAL MARKETING STRATEGY 41 During 1964 to 1969 Japan’s phase of marketing acceptance and diffusion occurred. 1991. it must “import almost all of its raw materials.. In order for Japan to survive. 1986). in the total market and the exploitation of these differences once found. which further emphasized the need for and acceptance of marketing approaches. The Japanese analyse the industry’s market segments and search for “market segments that exhibit strong economies of scale and strong experience curve effects” (Kotler and Fahey. The Japanese have been highly successful at developing new product concepts and then modifying the existing products that are “matched to substantial pockets of unmet demand” (Kotler and Fahey. has a scarce land supply and has a labour force that is skilled and loyal. semiconductors. Japan has become a global marketing success. or increase market potential in industries with untapped growth opportunities. From 1970 to 1973. especially in non-growth markets. p. capture a market share and during this process lower their manufacturing costs. p. the Japanese look for product market sectors that will allow product market development and not just the capture of the existing market share. The 35mm camera is an excellent example of this type of market strategy. motorcycles. p. Many factors help to shape and influence this selection process. 1982. Japanese marketing thought became concerned with social issues and responsibilities during this period of market expansion. because it will be a high priority area for Japan’s national resource commitment (Kotler and Fahey. The market for the camera was dominated by two German companies. 6).

1991. products and services that will suit that chosen market. cashflow and distribution capabilities” that were then utilized to penetrate the “niches” held by the American companies (Doyle et al. higher margin segments” they found that these were not sustainable for a long period of time against the Japanese competitors. They will choose to market to product sectors where they feel that the existing industries are unable or unwilling to respond vigorously to their market entry. Since the Japanese use more “automated production methods and implement more quality assurance systems” this is an extremely strong marketing strategy and tool (Kotler and Fahey. 8). 15).. Another market entry strategy is to sell their own product to a private brander and after it has achieved a market share. Xerox saw its share of the US copier market drop from “80 per cent in 1976 to 13 per cent by 1982” because of a smaller version of its copier offered by the Japanese (Dumaine. more features and a better design. p. When entering a new market. 8). lowered the price and rapidly took the growing amateur camera market (Doyle et al. 15). When attacked by Japanese competitors. 1982.. p. The Japanese organizations are highly committed to success within those markets and this transcends into “perceived security and confidence among their employees” (Doyle et al. One common market entry strategy is to bring out a smaller version of an existing product. accelerate the rate of product introductions and match the quality and features of the products of their smaller competitors (Kotler and Fahey. p. Skilful competitors with substantial resources and scale economies built on mass market dominance. 1991. the American and British companies frequently withdrew from the mass. The Japanese place a high emphasis on quality and service. They offer new product features on existing products within the market segment and sometimes offer fewer product features at a substantial cost saving to the consumer to gain market share. The Japanese also look for existing industries that will withdraw their entire market sectors if they enter. Often it will be a product that will have higher quality. industry specialists) to help determine the appropriate market entry strategy. high quality and reliable products became a marketing tool that they have used successfully in the international markets since 1980. Their study teams evaluate the market and then determine an appropriate strategy for market entry. volume market. 24). The American companies defended their withdrawal from these markets by focusing on “niche strategies”. 1982. When they enter a “niche” market they upgrade their products from the “low end to stretch their product to the upper end of the market” while not abandoning the low end of the market (Kotler and Fahey. They create highly flexible organizations.. When entering an American market. p. 12). they rolled back into the professional market segment and then used their “newly won scale and experience advantage to sweep aside their German competitor” (Doyle et al. they will introduce their own brand of the same product. the Japanese locate service centres within the markets they enter so that their Entering a market When the Japanese decide to enter a market.42 MARKETING INTELLIGENCE & PLANNING 13. 1991. Frequently the Japanese will simply price the same product lower than the private brand. the Japanese will hire American professionals (consultants. because their profits are greater on larger-sized products. After the Japanese were successful in capturing this market.. While many American and British companies focused on “small volume. Their emphasis on and reputation for. 7). Within any market they enter. p. 1982. 1986. They are oriented towards long-term market objectives and strongly commit their efforts to success within that market. The Japanese focus remains on efforts. The results of the comparison study between the different firms showed the Japanese strategy in this area was built on their previous market experience. they spend several months analysing the feasibility of that market. The Japanese do not target industries that are strong and serving their existing market segment well. p. they provide excellent service centres for their products to help ensure customer satisfaction. 162). American manufacturers traditionally tend to encourage larger products. but simplified the product. teamwork and mutual problem solving” (Doyle et al. the Japanese frequently choose a “local” to help develop and oversee their marketing effort. p. executives and . can move into the niches using their advantages to lower cost. After a market entry strategy has been determined. Japan’s attack strategy on “niche” markets has proved to be very successful. p. This is a strong competitive strategy they use to their advantage. The Japanese used the volume markets they withdrew from to “build experience. Even though the Japanese produce a high quality product. 1991. rather than a Japanese director. If a problem arises with their products.15). p. Japanese companies also enter market segments at the “low price end and then move upwards into the higher value added segments” as was discussed earlier (Doyle et al. Japanese and British companies. 24). they can capitalize on this reputation and actually produce a higher quality product than is being produced for the market. the Japanese focus on clear objectives and plans for that market segment.11 the professional market these two companies were serving. 1991... which provide a framework for “innovation. (1991) on the different international marketing strategies of US. The frequent withdrawal (and resulting effect) from the market segments was evident in a comparative study by Doyle et al. 1986. p.

Even though the Japanese are aware that product innovation is their key for long-term survival and profitability within their market segment. This allows the Japanese to be able to offer their customers newer and better products than their competition is able to offer. as was discussed by Michiyuki Venohara in the Fortune article. p. The Japanese are known for their commitment to “gaining. The Japanese use pricing to penetrate. The Japanese are “patient capitalists who will wait a decade before realizing their profits” within a market (Kotler et al. 88). 1982. They search for ways to upgrade and improve continuously their product’s performance. Price is a key element in the Japanese marketing mix When innovating and developing new products. p. 9).JAPANESE INTERNATIONAL MARKETING STRATEGY 43 products can be repaired quickly to ensure that their reputation for quality and exceptional customer service remains intact. The Japanese establish themselves in a market. Price is a key element in the Japanese marketing mix and in the expansion of their market share strategy. The Japanese focus on customer satisfaction is also evident in their search for product improvement and development.. When their product is not clearly superior to the existing product in the market they “buy time” by the use of a lower pricing strategy to gain market share as they develop and begin to market a product that is superior to that of their competitors. After they develop an excellent product and establish service centres. 57). 10). The Japanese are masters of the marketing mix. 59). Along with strong distribution they back their products with strong advertising and promotions to help bring their products to the consumers’ attention and differentiate their products from those of their competitors. quality and features. 1990. Their main strategy in the entering of a new market is to build and secure market share rather than early profits. “Why Japan keeps on winning”: “R & D resources in the world are scarce: even big companies scream for these resources. The Japanese also have co-ordination from the MITI among Kiretsu members to help on the research and development of products for global markets. 22). Since 1983 Japan has gained shares in total patents issued in 38 out of 48 product categories (Dumaine. p. When they first enter a market segment. p. They continually survey their product users to help target problems or newer features their customers want. MITI is the third party needed to coordinate industry” (Rapoport. Japanese organizations use crosssubsidization of their home markets as a part of their marketing strategy for their products in international markets. The Japanese are willing to take substantial cuts in profitability to build or maintain market share within those international markets. p. The MITI influence and industry alliance continues. 1991. Japanese organizations must pay for 98 per cent of their research from their own revenues (Moffat. 1985. we can’t advance. p. 1991. 1990. the Japanese receive 44 per cent (versus 28 per cent in the USA) of revenue for their new products. the Japanese spend 40 per cent (versus 25 in the USA) of their time planning the product and suffer 28 per cent (versus 49 per cent in the USA) development setbacks in a smaller proportion of their products (Dumaine. their price starts low and then remains lower than their competitors to gain market share. and then begin to focus their attention on market and product development. 57). which have been developed region by region. p. 1991. 1991. The Japanese are very aggressive in pursuing long-term market share. maintaining and expanding market share around the world through the use of product innovation strategies” that challenge their resources and technology (Coe. If we don’t collaborate. p. 1991. having strong distributors located in each market segment. gain and secure market share. p. This strategy allows them to achieve competitive leadership within the market. they place a tremendous emphasis on “integrating distribution into the marketing mix” (Kotler and Fahey. 85). They invest heavily in research and development – spending 3 per cent of their gross national product to create and develop products that are nondefence related (Dumaine. initially they use aggressive pricing strategies to help secure their market share. p. 73). style. The target cost of the product is what the market is most likely to accept. The Japanese also test their products on potential adoptors to evaluate what is needed from the customer’s . 7). Building and protecting market share For the Japanese. p. Their distribution system is designed with their markets. 1991. As a result. 425). The Japanese research into products is market driven. 1990. Their concept of pricing a product is to decide first how much consumers will be prepared to pay for the product and then direct engineers and designers to meet that price (Worthy. their rule seems to be “market share or die” (Coe. Even when the Japanese have experienced periods of currency fluctuation they “cling to their hard won market shares and do not raise dollar prices very much” (Coe.

1985. 25). Japan has witnessed an economic slowdown and a collapse of its “bubble economy”. Japan is expected to emerge even stronger after this recession. This “zero feedback time” allows the Japanese to determine customer satisfaction with their products and act on the improvements suggested by the feedback. Drucker (1989) explains the concept of adversarial trade: …the aim is to gain market control by destroying the enemy or to obtain such predominance in a market that it is almost impossible for newcomers to challenge the market leader (p. Japan has seen the Third World countries become tough and aggressive competitors. Market research for Japanese product development frequently begins in their home market. 1982. 425). 1985.44 MARKETING INTELLIGENCE & PLANNING 13. For the Japanese. product deficiencies and effective marketing strategies” (Kotler and Fahey. and a stock market collapse during late 1991. 1992. 9). This has occurred many times in the market segments . so their products will remain the leaders in the given market segment (Kotler et al. p. p. 46). 1989. The Japanese continually refine their market segmentations to take advantage of any weakness their competitor might display within the market. Their position as a defender within a market is basically to act offensively. service. 1982. Japan’s swift response of building factories in the USA and Europe will allow it to keep goods within those markets and provide employment to some workers who have been displaced by Japanese imports (Kotler and Fahey. As a result of this recession. p. p. The Japanese also use “zero improvement time”. p. p.. They create an excellent defence by continuing their product development and innovation and further refining their market segmentation. If the protectionist trend continued and if Japan had not responded with factories being built within those market segments. 11). Their experience within this market provides “insight into customer preferences. 1982. They continue to produce more and different versions of a product to appeal to all endusers at various income levels within their market segment. 1992a. 11 ). With the imbalance of trade. Adversarial trade is one strong competitive weapon the Japanese use against their competitors within a market segment.563 plants in the USA which employ approximately 350. the Japanese export their highest quality products to other markets and keep many of their lower quality products for their own home market. product quality. Japan will see many factors that will influence its position and stability within its markets. The protectionist trend in the USA and Europe that will protect local industries by import quotas and non-tariff barriers. p. This will be accomplished with Japan still having an unemployment rate under 3 per cent and its number of job offers still outnumber the number of job seekers by 25 per cent (Curran. which allows them to improve their products on a continuous basis. The Japanese also export many of their lower quality products to developing nations. improved the quality of its workers’ lives” and will see its real estate prices brought closer to a level that Japanese people can afford (Curran. 49). They spot their new market opportunities through the sequencing and segmentation across a large number of countries. The Japanese saturate the market with their products and subsequently tie up distribution within those markets. 26) and industries which the Japanese have pursued aggressively. p. The particular evolving market in which they are trying to increase market share serves as the focus for the development of their products. 8). 9). which will allow them eventually to build a “network of world markets and production locations” (Kotler et al. In addition to market segmentation and sequencing. Japan will have vanquished its growing inflation rate. 425). In 1991. p. The evolution of the market helps to determine to what degree they will use “price. Japan’s future What will Japan’s future hold in the highly competitive world market? As the emerging world market continues to become more competitive. However. “market segmentation and market sequencing provide the impetus for and the direction for product development” (Kotler and Fahey. Japan also must contend with the growing pressure from the USA to conform to the Structural Impediments Initiative. The Japanese are masters at using a product proliferation strategy. their companies could have been shut out of certain markets. has Japan implementing more expansion moves within those countries. 1992. 1982. This is a three-year effort to allow an easing of Japan’s barriers for importers. However even with its economic troubles.. “doused a speculative fever in its financial markets. Japan’s building or buying of plants in the USA was up by 9 per cent from 1990.000 people (Solo.11 point of view. These countries are copying Japan’s approach to invading new markets and are now offering high quality products at a lower cost than the Japanese (Kotler and Fahey. p. 1982. p. promotion. it was hoped The Japanese intend to drive the competitor out of the market segment or industry they are pursuing by “destroying their capacity to fight” (Drucker. It has a total of 1. product features. distribution. the Japanese are flexible in choosing what competitive attack or weapon to use against their competitors. 16). product line stretches” to penetrate and gain larger shares of the market (Kotler and Fahey.

and Saunders. May. “A comparative study of British. but it will continue to grow stronger as a result of its world-class marketing and export status. J. P. Even with the collapse of its “bubble economy” and other economic problems. 18 No. L. NY. 46-56. E. live it in everything. Fortune. Vol. “Marketing strategy: the Japanese approach”. (1986).. Japanese marketing activities are still goal-oriented. The Japanese constant acceptance. labour and education all working together for an understood objective. Irwin. Vol. J. the products they decide to produce and the marketing tactics they decide to adopt for that market segment. Doyle. directed and co-ordinated and able to move swiftly towards their understood objectives. Kaisha. If one were to single out a particular factor to point to. CA. The cultural aspects of the Japanese. University of California Press. Japanese leaders are now discussing and planning how to contain the growing conflict that is occurring between different interest groups. one could focus on the philosophy of maximizing resources. pp. The Japanese strategy revolves around their management of product market evolution. References and further reading Abegglen. Modern Japanese Organizations and Decision Making. (1975). pp. Japanese companies place less reliance on the formal and conceptual aspects of formulating marketing goals and strategies and more emphasis on the implementation and human relations aspect than do American companies. The Japanese strengths lie in implementing not formulating marketing strategies. responsibility for marketing is in the hand of a broader less sophisticated and less technically trained group. Coe. It is a group responsibility with a group approach for the performance of marketing activities. Saunders. understanding and application of marketing principles to the specific market they decide to enter. 239-44. combined with its high savings rate and its ablity to adapt and respond quickly to the changing world marketplace. (1990). 1. “How to win a quality war with Japan”. Japanese and British companies”. their unique business practices and the supportive role of government policies and subsidies. Summary and conclusion No doubt exists that the Japanese have performed an “economic miracle” within their country in a relatively short period. V. Vol. and Stalk. paper presented at the 1991 Colloquium on Selected Issues in International Business. Doyle. only limited progress has been made with this agreement and the Japanese face growing dissatisfaction among the USA and other countries – while a trade surplus in their favour continues to escalate. pp.. Marketing and Research Today. It is a cohesion of numerous elements into one direction and one force. “Japanese marketing strategies in the UK”. They are typically strong in accumulating knowledge about US markets. J. government. G. The now famous “just-in-time” technique of manufacturing is a direct spin-off of maximizing resources. pp. New York. B. This philosophy is multiplied over and over in successful companies that have made their mark in Europe and the USA. business. “Strategy in retreat: pricing drops out”. “Economic realities and enterprise strategies”. Journal of International Business Studies. Vol. the Japanese Corporation. The Japanese .F. McGraw-Hill. 162.JAPANESE INTERNATIONAL MARKETING STRATEGY 45 the economic and trade practices that led to such large trade imbalances would be altered. a lack of fragmentation. D. The New Realities. Wong.. Hawaii. J. and Wright. P. However. Drucker. P. US and Japanese marketing strategies in the British market”. Doyle. in Vogel. (Ed. International Journal of Research in Marketing. 3. (1989).F. Drucker. Wong.J. P. 171-84. different radical groups are challenging the economic and social arrangements in Japan. 17 No. (1992b). Fortune. choose and sequence the markets they decide to enter. 5-25. 1. (1985). and Saunders. p.). (1992a). At this point. 7th edition. It is a total system of people. The Japanese and Japanese firms in particular. “A comparative study of the international marketing strategies of US. Heinemann. Berkeley. Cateora. J. They are global market leaders in many industries and are continuing to become a stronger competitive force as they penetrate more global markets.N. (1991). (1990). are a few of the factors that have made the “economic miracle” and resulting global leadership happen in Japan.C. MA. J. marketing discipline and marketing practices. it is the Japanese skill in marketing strategy formulation and implementation that has resulted in much of their success within global markets. July. Aldridge. Journal of Business and Industrial Marketing. PAMI. Japan’s future and economy is changing. International Marketing. In Japan. has resulted in an extremely successful and powerful global leadership position. Boston. Oxford. (1990). Curran. 4. 5 No. (1988). Curran. Within Japan. The quest for the secret of Japan’s success has no simple single answer. V. the emotional ingredient that is so thick one can cut it with a knife. 27-46. It is a common goal and gambaro. competition from Third World countries and internal conflict from different interest groups. pp. This may present a significant problem in Japan’s future. P. 5 No. Japan will continue to become stronger – but at a slower rate. P. “Why Japan will emerge stronger”.

August. Issues in the Management of Human Behavior: Analyses. L. G. pp. L. (1984). 54-63. J. (1991). (1990). Woronoff. “Japan’s surplus in trade grew by 24 per cent in June”. 84-96. Japan’s Commercial Empire. Summer. (1991). pp.C. Kelley. pp. Worthy. J. Murata. 11-20. USA. Sales and Marketing Management. Shao is Assistant Professor in the Department of Marketing.J. Vol. and Kosaka. NY.. NY. (1991). JAI. (1992). and Jatusriptak. (1991). Kotler. March. “What if Japan triumphs?”.T. and Fahey. Long Range Planning. 19. Kotabe. Vol. Vol. “Japan’s US plants up 9 per cent in 1991”. 60-7. 76-85. Vol. C. 56-62. (1987). 21-32. M. 353-70. Englewood Cliffs. 30 No. Vol.46 MARKETING INTELLIGENCE & PLANNING 13. and Singh. “Culture clash: West meets East”. Fortune. S. “The world’s champion marketers: the Japanese”. Management International Review. pp. July. Vol. New York. Belk College of Business Administration. S. (1988). J. W. S. Doyle. J. P. July. Fortune. 49. December. pp. G. and Morgan. “Closing the innovation gap”. pp. 411-32. 3. B. Fortune. April. Cracking the Japanese Market. Spring.. Texas. p. Charlotte. Vol. (1991). Journal of Marketing. and Okoroafo. “Japan’s smart secret weapon”. Rapoport. North Carolina. L. Fahey. pp. Alain Genestre and Paul Herbig are Assistant Professors in the Department of Management and Marketing. Fortune. “Picking Japan’s research brains”. 6. D. Journal of Business Strategy. 2. Methe. pp. Prentice-Hall. 72-5. V. Vol. 68-81. M. and Insights. Quorum. “The effect of national culture on the choice of entry mode”. Tokyo. 8 No. (1971). H. and Doyle. Wright. F. NJ. Fall. Journal of International Business Studies. S. pp. 16-20. Autumn.. 120. 28-34. “Why Japan keeps on winning”.C. Solo. pp. Moffat. 113-30. (1985). International Marketing Review. University of North Carolina at Charlotte. and Alan T. 3-13. “Japanese market entry strategy at work: Komatsu versus Caterpillar”. 1. (1992). (1990). Rosenberger. J. The Free Press. Yunker.T. 14 July. (1991). Morgan. Laredo. “Japanese marketing: towards a better understanding”. Lazer. Wong. P. 20 No. Kotabe. “Japanese markeing strategies in their UK subsidiaries”. “A comparative study of European and Japanese multinational firms’ marketing strategies and performance in the United States”. Fortune. (1990). B. The Wall Street Journal. (1989). New York. Fortune. pp. P. (1982). pp. J. CT. pp. and Maseki.11 Dumaine. Kogut. and Saunders. Sims. Spring. “Japanese marketing strategies in the United Kingdom”. pp. Kirkland. The New Competition. H. Lotus Press. Technological Competition in Global Industries. (1992).. (1986). A13. Connecticut. . pp. P. “Sourcing strategies of European and Japanese multinationals: a comparison”. S. Journal of International Business Studies. Kotler. Saunders. Explorations. R. B. (1985). Texas A&M International University. 4. May. Graduate School of International Trade and Business Administration. J. Marketing Intelligence & Planning.

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