The Journal The Authority on Global Business in Japan

SoftBank’s Pepper robot has created buzz and cut costs.

SoftBank’s Pepper robot has created buzz and cut costs.

“Digitize or die.” Philip Kotler, distinguished marketing professor at the Kellogg School of Management, could not have been clearer in his message.

At the World Marketing Summit Japan 2015, which was held in the fall, experts agreed that increasing connectivity means that companies adhering to “traditional” marketing concepts face huge disruptions.

Modern, connected consumers are no longer content to simply buy products because they have seen them advertised.

They demand higher quality, more engagement from companies, and a level of product customization that was unimaginable just a few years earlier.

“We used to focus on how many people we exposed to our marketing,” said Professor Mohan Sawhney, also of the Kellogg School.

“But now customers are asking how relevant [the marketing] was. It is not enough to communicate information about product features. The real opportunity now is through connecting with emotions and telling a story.”

This has led to challenges for businesses. “Every brand will have to figure out its story, mission and purpose,” Sawhney said. “And then they will need to tell that to create engagement and bring about advocacy.”

Where, in the old days, companies simply placed advertisements in newspapers or bought 30 seconds of ad time on television, today that isn’t enough.

SMART CONSUMPTION
In Japan, smartphone penetration has reached over 75 percent, according to the Communications and Information Network Association of Japan.

Karim Temsamani, president of Asia–Pacific operations at Google, believes this has changed behavior. “Those consumers [who use smartphones] have very different habits than those who do not,” he said.

“They watch more media, they rate services, and they consume a lot more on smartphones and other devices than in the West.”

Temsamani cautioned, however, that such consumers are today being ignored.

“The world’s future mainstream behaviors can be seen through a Japanese smartphone user. But if you look at Japanese companies, they are not really adapting to changes in smartphone user behavior.”

ADAPT TO THE TIMES
As technological advances change behavior, opportunities are growing in Japan for both domestic and foreign companies. Growing connectivity and marketing innovations mean that companies today can capture large parts of markets that simply did not exist a few years ago.

“Breakthroughs will happen because what we are doing [now] was hitherto impossible,” said Robert Walcott, head of the Kellogg Innovation Network. Some of those breakthroughs are happening in Japan today.

Pepper the robot, designed by SoftBank, is one such example. It is a part of the ever-expanding Internet of Things, as products with online connections have become known.

“The Internet of Things has been elevated to the next stage with Pepper,” said Tatsuro Kurisaka, vice president, Product & Marketing Unit, Advertisement Division Head, SoftBank Mobile Corp.

“It is still a work in progress, but it is quite unique. Pepper has two major features: an emotional engine and cloud connectivity. All the Peppers collect information for analysis.”

While it is early days, the robot has so far delivered two benefits to customers: it creates buzz and reduces costs. Staff are no longer needed for some simpler tasks, such as understanding the reason a customer is visiting a bank, or for offering samples in a supermarket.

And because the robot is still a novelty, those brands using its services are likely to attract crowds and possibly media reports. “How long these effects will be sustained is a good question,” Kawasaki said.

But for now, companies such as Mizuho Bank can expect media reports when the robot serves their customers.

Over the longer term, the robot’s uses for marketers are likely to increase drastically. Its emotion-reading engine will over time be able to tell companies how consumers are reacting to their products emotionally, as well as dividing them according to gender, demographics, and a wide range of other categories.

And if households take to the robot, the big data it generates could be used in ways as yet unimaginable. Does that sound creepy? Probably. But Kawasaki thinks it is all a question of how the robot is marketed.

“For consumers to fully accept the Internet of Things, they need to see its benefits,” he said. “I’m sure consumers will welcome it if they are comfortable with the way it’s used.”

From left, Karim Temsamani, Google, Asia Pacific operations president; Linden Brown, chairman of MarketCulture and Marijn van Tiggelen, executive vice president, Unilever North Asia

From left, Karim Temsamani, Google, Asia Pacific operations president; Linden Brown, chairman of MarketCulture and Marijn van Tiggelen, executive vice president, Unilever North Asia

EFFECTIVE MARKETING
Ensuring stories connect with consumers is essential. Pepper quickly joined the SoftBank “family” from its commercials after launch.

Unilever, a consumer goods company, is working toward sustainability for its businesses.

“We do not believe there is a tradeoff between economic growth and having a positive impact on society,” according to Marijn van Tiggelen, executive vice president of Unilever North Asia.

Shoichiro Iwata, CEO of e-commerce site Askul Corporation, said his company focuses on how its service—Lohaco.jp—delivers things quickly, allowing consumers to live a better life.

“The final goal of e-commerce should be to create good neighbors,” he said. Lohaco offers around 70,000 products on its site.

Nestlé S.A., meanwhile, has seen success with its Nescafé Ambassador program. This low-tech innovation allows the company to increase sales and brand awareness with little need for advertising in the traditional sense.

“Normally, office workers do not see the lack of availability of coffee as a problem, so they go to convenience stores and pay ¥120 or ¥130,” said Kozoh Takaoka, president of Nestlé Japan. “We can sell it for about ¥30.”

So we went to companies and recruited Nestlé ambassadors. They collect money in a box at work and then pay us by credit card.

“We do not pay any money to those people, but 200,000 became ambassadors. Over the last three years, one billion cups of Nestlé coffee have been drunk through the program.”

According to Takaoka, plenty are willing to do the job because it improves the atmosphere at the office. And the data they receive from such ambassadors helps the company adapt its product offerings.

It also has another, uniquely Japanese, benefit. “In rural areas, in the afternoon the elderly will meet [for a drink],” Takaoka said.

“So we were able to get ambassadors among the elderly. If members do not come to the gatherings, [someone will then confirm they are safe], offering a solution [to isolation] in an aging society.”

Strategies such as the Nescafé Ambassador program put the customer first.

Another conference speaker, Linden Brown, chairman of Australian company MarketCulture, has done research that shows businesses putting customers first significantly outperform their rivals.

“There are very few customer-centric companies,” he told The Journal. “Japan should look outside the country at other [nations’] successful companies in their industry.”

Brown has devised a method of measuring how customer focused businesses are, which, he said, “is the best way” of improving services for consumers.

Perhaps the conference itself was the best way of indicating how Japan could improve. While it focused on digital innovation, it provided no Wi-Fi for attendees.

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Richard Smart has been living and writing in Japan since 2002..

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