The Journal The Authority on Global Business in Japan

From a distance, Japan appears to be a slow-moving, homogenous market, largely impervious to change. But don’t tell the locals.

“Back in the mid-1990s, a well-known brand of hair coloring sent their people to Tokyo to investigate the local market. After much research, they concluded there’s no market here for their product because the only reason Japanese women would dye their hair was to cover up gray,” says Koichi Hama of Koichi Hama & Company.

“That was true at the time, but two years later it was hard to spot a young Japanese woman with natural black hair. The lesson—this is a fast-changing market.”

Japan got its groove back in 2015, as evidenced by the flood of foreign visitors and the nation’s top ranking in a global poll of leading nation brands. Marketing experts surveyed by The Journal expect plenty more changes ahead in 2016, capitalizing on the fast adaptation of new technology in Asia’s second-biggest economy.

Virtual reality
The Year of the Monkey could be the year virtual reality (VR) goes from the realm of science fiction to becoming a multi-billion dollar industry, according to experts.

Japanese companies are moving relatively fast to get ahead of the competition, with leading game developers Gumi and Gree already having invested an estimated $1 billion in VR, along with new products by headset maker Fove and Sony Corp. Add to that a $50 million fund, for VR developers, recently launched by entertainment and app developer Colopol, and the future looks bright.

It has been estimated that the size of the new VR market will be anywhere from $30 billion to $150 billion by 2020. With newspapers like the New York Times jumping onboard by recently distributing more than one million Google Cardboard VR viewers to subscribers, it cannot be long before Japan’s media giants start paying more attention.

“Virtual reality has been around for a while, but this is the first year where consumers can really access it,” says Rod Findley, C2K Communications’ executive creative director.

Findley points to the upcoming release of new headset technology including the Occulus Rift and HTC Vive, as well as the increased market penetration of Google Cardboard and the pending launch of Sony’s PlayStation VR (previously codenamed Project Morpheus).

According to media reports, Facebook CEO Mark Zuckerberg said on February 21, at an event hosted by partner firm Samsung Electronics: “VR is the next platform, where anyone can create and experience anything they want. For right now, it’s mostly used for gaming. That’s quickly evolving.” He said VR could provide, for example, a virtual campfire for friends’ spontaneous meetings. “That’s why Facebook is investing so much in VR, so we can deliver these new social experiences. VR is going to be the next social platform. And that’s why we’re working with Samsung.”

For marketers, VR provides opportunities to reach potential customers with a diverse range of experiences, from holiday trips and test-drives to education and recruitment.

ANA launched a Star Wars campaign to raise brand awareness in the US.

ANA launched a Star Wars campaign to raise brand awareness in the US.

“We created an experience for a motor show with a car and a crash test dummy for the ‘Toyota Safety Sense.’ This has features, for example, where the car senses a pedestrian walking across the road and puts the brakes on for you. Users were ushered into the passenger seat, given an Occulus headset, and when it was activated, instead of being at the show they were suddenly on a street,” Findley says.

“What’s interesting is that you’re in this world and you feel the brakes being put on, your body braces itself for the car slowing and it becomes a very visceral experience.”

The Japanese automaker also used VR for the launch of the Lexus NX. In this case, customers were given the chance to configure the car to their own needs and take it for a test drive without leaving the showroom.

Findley also highlights tourism campaigns by Marriott Hotels and Destination British Colombia as successful VR case studies for marketers. Other industries ripe for VR include real estate, with virtual building tours; professional sports, for groups such as the National Basketball Association; education and training; and the music business, by streaming live concerts worldwide. Online retailers such as Rakuten might consider creating a virtual store.

“You could just put on your headset and go to the store, as opposed to clicking through it … if your measurements were in the app already, you could try on clothes virtually without leaving your home,” he says.

For Japan, the organizer of the Tokyo Olympic and Paralympic Games could look at providing a VR experience for the millions of sports fans unable to attend the 2020 Games. Alternatively, the Japan National Tourism Organization might use the technology to take potential visitors on a virtual tour, as already undertaken by regional competitors including China and Australia.

Another trend is the re-emergence of augmented reality (AR), which Findley says could get a jumpstart on the back of efforts by Microsoft, along with the growth of wearable technology such as clothing and watches.

Japan should be in pole position to drive VR, given its rapid acceptance of new technologies and its large gaming industry, Findley says.

The PARO interactive robot was developed in Japan in 2003.

The PARO interactive robot was developed in Japan in 2003.

Data power
From department store greeters like Toshiba’s kimono-clad “Aiko Chihira” to Mitsubishi Tokyo UFJ bank’s robot assistant and the PARO baby seal robot, Japan has already given marketers plenty of shiny new toys.

Robots have even featured on planes, with marketers pointing to the Star Wars campaign by All Nippon Airways Co. (ANA) as one of the nation’s best recent examples of integrated marketing communications.

ANA planes serving North America were decked out in movie characters such as the R2-D2 robot, forming part of a campaign that extended to cosplay contests involving passengers wearing Star Wars costumes.

“[Star Wars] inspires whether one is old or young, or man or woman,” ANA’s Hideki Kunugi recently told the Kyodo news service. “We are hoping a tie-up with Star Wars will play a major role in letting people in North America know about us.”

A larger trend hitting the marketing world is the use of big data to help marketers personalize their approach, as well as identify which content, channel, or platform works best as part of an integrated strategy.

Ruth Stevens, president of eMarketing Strategy and author of B2B Data-Driven Marketing: Sources, Uses, Results, highlights the efforts of the US division of Japan’s machine tool maker Makino Milling Machine Co.

“About 10 years ago, Makino America realized that they needed to get much more targeted with their marketing to machine tools buyers, because they are the top-of-the-line premium supplier, and not all tool buyers are realistic prospects,” she says.

“So, moving away from trade shows and trade advertising, they built a marketing database and developed a library of content assets, with a focus on educational webinars, which are distributed by social media, email, and their own website. The result? Sustained revenue growth, and a continuous improvement in marketing expense-to-revenue ratios.”

Daniel Fath of Tokyo-based Ashton Consulting says Japanese companies have finally started embracing social media, as well as taking strategic communications “far more seriously.”

“Some of our largest Japanese clients have never had an integrated global comms structure, but now they are resourcing teams and building infrastructure to manage reputational issues globally. And it’s not only about being able to handle a crisis—they need to compete as equals with their peers in the international marketplace of ideas,” he says.

The Carter Group’s Susanne Walloscheck says Japanese companies are also employing Western marketing and market research techniques, partly due to the growing segmentation of society.

For foreign firms attempting to enter Japan, failures by some of the world’s biggest brands including eBay, Ford, and Vodafone should highlight the need to adapt to local conditions, or pay the price.

For Vodafone, its decision to re-brand and recycle its European marketing strategies appears to have alienated its customer base, failed to build trust with its new market, and been insensitive to Japanese tastes and culture. This included replacing Japanese actress Norika Fujiwara with English soccer star David Beckham, introducing a new pricing plan “by stealth” and importing “outdated and clunky” handsets straight from Europe, Walloscheck contends.

In contrast, she suggests applying the “less is more” principle in consumer and financial products, as Japan is generally seen as a risk-averse culture. Successes in this area include insurance giant Aflac, the Starbucks café chain, and Swedish furniture maker Ikea, which recently re-entered Japan “with a bang” after earlier attempts failed.

“The [IKEA] re-entry strategy started off with a five-year preparation period, including visits to more than 100 Japanese residences, making note of their home lifestyles,” she says.

“Ikea started off its re-entry [into Japan] with 15 box structures mimicking typical Japanese rooms displayed along the trendy gingko tree-lined Aoyama-dori [in Tokyo]. If making such an entrance wasn’t enough, the Japanese were further wowed by the opening of the actual store: a five-story, 3,716m2 store boasting 70 mini-showrooms.”

Ikea has since grown its Japan chain to eight stores, with plans to build new outlets in Kumamoto City in Kumamoto Prefecture, and Nagakute in Aichi Prefecture in fiscal 2016. This will be part of its continued growth in Japan and Asia.

But for those proverbial hair-coloring sellers entering Japan, prepare for more changes ahead, Hama says.

“The transformations that have roiled the advertising industry in the West will start to affect the Japanese advertising industry as the older demographic dies or retires from ad-buying positions. The next generation is not so tied to traditional media,” he says.
As Japan marketers might acknowledge, the future has already arrived—it’s just not evenly distributed.

IKEA Business Country Manager Alan McKenzie; the furniture maker staged a successful re-entry into Japan with a 3,716m2 store boasting 70 mini-showrooms.

IKEA Business Country Manager Alan McKenzie; the furniture maker staged a successful re-entry into Japan with a 3,716m2 store boasting 70 mini-showrooms.

Anthony Fensom is an experienced business writer and communication consultant with more than a decade’s experience in the financial and media industries of Australia and Asia.
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