Successful Marketing in Japan - Essay Example

? MARKETING Successful marketing in Japan …………………. and Number …………….. …………. Words-count: 2053 Table of Contents Table of Contents 2 Introduction 3 Mastering the marketing in Japan 3 Factors to be considered by foreign corporations to conduct business in Japan 4 Cost element 4 Knowing the Market 5 Pricing and Inflation 5 Qualified Employees 5 Industry-related factors 5 Country-related factors 6 Product Testing Formalities 6 Cultural myopia 7 How to eliminate cultural myopia? 7 Cultural Adaptation 8 Global Awareness 9 Better Approach to Staffing 10 Example: 10 References 11 Introduction Japan takes dominant place in the worldwide market as well as it provides greater marketing opportunities for businesses from outside the country. This piece of paper addresses major factors that are to be considered by foreign businesses that intend to launch their lucrative business in Japan and explain what they should do to respond to the cultural myopia that prevails in Japan. Mastering the marketing in Japan Japan, being the second largest economy of the world, occupies a significant position in almost all industries and business activities worldwide. From the 1940s onwards, the country has been able to build a dominant, modern and internationally-oriented industrial economy which was based on innovative product designs, high quality production, advanced services, increased domestic consumption etc (Genzberger, 1994, p. 1). Japan is not only a strong economy in terms of production, exports, innovation, advanced services etc, but also a powerful market that large numbers of businesses from other countries seek opportunities in Japan. But, administering and mastering the marketing in Japan is considered to be a difficult task. There are different barriers to marketing in Japan. Some of the major barriers to selling to Japan are import barriers, obstructive bureaucrats, non-transparent regulations, huge language barrier, conglomerate monopolies etc (Genzberger, 1994, p. 175). For any businessman from other countries to launch, run, operate and succeed in Japan’s market is therefore a difficult task, but there are many lucrative businesses that have strategically approached the market and found success in its path. As Reid (1999, p. 41) observed, even though Japanese market has long been considered to be obstructive to penetrate, experts on business in Japan have found that this is quite misleading. Various business strategies have been found to have helped foreign businesses in Japan’s market. Goodnow and Kosenko (1993) identified key strategies that North American companies used for marketing in Japan. Management philosophy, high technological capability, acceptance of Japanese subsidiary etc are some of such effective strategies. Reid (1999, p. 41) pointed that foreign companies have not only succeeded in marketing in Japan, but also established leadership positions mainly in Japanese consumer products market. Many foreign players have turned to be established leaders in the Japanese market. For instance, Coca-Cola generates around 30 percent of its total profits from Japan, 70 percent of Dunhill’s sales are from Japanese people and IBM employs around 20,000 Japanese people. Factors to be considered by foreign corporations to conduct business in Japan Cost element While comparing the relative costs that may incur in marketing in different countries, it can be found that marketing in Japan is more costly than marketing in many other countries (Genzberger, 1994, p. 175). When it comes to various business expenditures, almost every thing including rent, salary, transportation, advertising, banking etc are highly expensive than that of other countries. Cost has been accounted to be 50 percent of all the reasons behind the failure of companies in marketing in Japan. For those corporate who have a quality product, advanced technology, innovations and more importantly those who are willing to undertake the high initial costs for market entry in the world’s most expensive country, Japan may be a marketing opportunity to achieve substantial market share (Kennedy, 1994, p. 3). Knowing the Market Allen (1994) pointed that if a company can understand the marketing environments of Japan and play by the rules, the company is more likely to succeed in Japan since the understanding of the market conditions is central key factor to marketing success. Genzberger, (1994, p. 175) also asserted the same view that foreign companies often don’t understand Japanese marketing environments and they thus take it for granted that marketing in Japan is a difficult task. Pricing and Inflation In Japan, most pricing practices ignore prevailing market conditions and thus inflate the prices. In countries like US and Germany, the wholesale prices are slightly more than 1.5 times of the retail sales, the ration in Japan is 4 to 1 mainly because of that there can be many middlemen and that impact the profit and margin elements of channels (Genzberger, 1994, p. 175). Qualified Employees For large corporate that intend to start their business in Japan being well equipped with technology, innovation and are rich in wealth and resources may often find it difficult to get qualified employees. It is not because of the shortage of qualified employees, but due to that Japan’s nationalism denigrates employment by foreign firms and that foreign firms have acquired bad reputation as getting in to and out of market in shorter period (Genzberger, 1994, p. 175). Industry-related factors Japan has large numbers of local companies that are highly expertise in the construction and power sectors. Though there were limited numbers of contracts, there is high level of competition from local players meaning that there seems to have little room for foreign companies to get involved. Overseas construction players face difficulty to enter Japan due to the stringent regulatory system. Those who intend to launch their lucrative business in Japan are to consider these factors since they can greatly impact the business success (Business Monitor International, 2011, p. 58) Country-related factors Japan is not rich in natural as well as oil resources and hence global oil prices movements can affect business potential within Japan’s business environments. Japan is heavily dependant on China for exports, recent hitches experienced by China have adverse consequences on Japanese economy as well (Business Monitor International, 2011, p. 58). Japan’s economy is characterized by protectionism, mainly tariff and quota and state intervention with special interest of protecting politically influential groups (Kennedy, 1994, p. 3). Product Testing Formalities For a new firm that intends to launch new product in Japan market is required to undergo a number of formal product testing steps and they are somewhat time consuming procedures. These product testing procedures are not found to be standardized as of other countries. These are some of the main factors that business corporate who intend to start marketing in Japan are required to consider in order to succeed in the marketing. Cultural myopia Religion, belief and culture are some of the highly critical factors that may influence the business environment in any country. When it comes to Japan’s market, culture is an extremely important element that global marketers are to consider the Japanese cultural aspects in respect to effectively market the products or services to the customers and to maintain better relation with the employees. When it comes to marketing perspectives, a person’s perception about the market needs is framed and structured by his own cultural experiences. Foreign business managers are required to study the cultural and social backgrounds of the consumers and employees in host country with a view to maintain relationship management. As Ball, McCulloch and Frantz (2005, p. 22) found that self-reference criterion or commonly referred as cultural myopia is perhaps one of the most blunders many managers in global operation make. Manager’s unfamiliarity of the cultures of the host country add greater complexity to successful marketing. They ascribe to others their own preferences and reactions and this makes things worse. Cultural myopia is, as described by Lee in 1960s, the unconscious reference to one’s own cultural values (Reuvid, 2005, p. 259). How to eliminate cultural myopia? In order to reduce the risks associated with cultural myopia and self-reference criterion, the global marketing operator is required to eliminate cultural myopia. Lee in 1960s described a four-step system approach to eliminate the cultural myopia. The systematic framework for reducing the cultural myopia include: 1- Defining the problem in terms of home country cultural traits, beliefs, habits and norms, 2- Defining the problem in terms of the host cultural traits, beliefs, approaches and norms. 3- Isolating the self reference criterion and examining it with a view to see how the cultural myopia complicates the problem, and 4- Redefining the problem without self reference criterion and solving the situation for the host-country market situations (Warren, 1995, p. 92). To be more specific, the businessman who intends to operate business in Japan or any other country is generally required to reduce to cultural myopia in order for the marketing to be successful. For this, he has to understand the traits, beliefs and backgrounds of the cultures prevailing in the host country. Since the business is directly interfering with the customers of the host country and it is critically important to maintain a long term relationship with the customers of that country, the manager or businessman should reduce the self-reference criterion. Cultural Adaptation In global operation and marketing, the manager must have vital and critical skill of the global marketer with an ability to see what is about the cultures prevailing in the host market. Johansson (2009, p. 60) identified cultural adaptation as a strategic tool and as a skill that is to be considered as high priority for managers in order to reduce the cultural myopia. When a marketer goes global, the main two segments of people that the business needs to interact and communicate are consumers and employees. Cultural adaptation is basically related to knowing the cultural dimensions and backgrounds that are prevailing in the host country and restructuring almost all critical business operations according to the traits, beliefs and norms of its cultures. It starts from the planning and ends with ensuring of the customer satisfaction. Designing and developing of the products as well as services must be carried out by considering the cultures in host country so that the business will be able to meet the specific requirements of the consumers it targets. If managers don’t consider the cultures in the host country and design and develop the products without looking at the cultural aspects, the business efforts will become worthless. As Cateora and Graham (2007, p. 15) noted, adaptation to the environmental differences from one markets to another is the hey to successful international marketing. Cultural adaptation is conscious efforts from the part of global marketer to anticipate the influence of both the foreign as well as domestic uncontrollable factors on the marketing mix and thus to adjusting the marketing mix to minimize the effects. Global Awareness Cateora and Graham (2007, p. 15) emphasized that global awareness will be an essentially important skill and ability for a marketer who intends to operate successful marketing going beyond the boundaries of region or his country. Being globally aware means a frame of reference that goes beyond a region or even a country and encompasses the world. He doesn’t look at national culture, but is broadly thinking of world cultures. A business man with globally awareness ability will have to 1) tolerate cultural differences and 2) know in detail of the cultures, history and world market potential as well as global economic and political trends. Being globally aware is the ability of o business man to 1) accept cultural variances, 2) show respect and dignity of other cultures, 3) motivate or allow other people to get involved in their cultural programs and 4) do business activities to the customers in accordance with their own cultures. Better Approach to Staffing There are different approaches to staffing in the global operation. They are ethnocentric, polycentric, region-centric approaches. Out of these approaches, polycentric approach seems to be a better way to reduce cultural myopia among the staff of the business firm. In ethnocentric approach, companies hire expatriates to staff the higher-level foreign positions. The company focuses on using home-country people for staffing most of its senior managerial positions (Steers and Nardon, 2006, p. 277).. This approach doesn’t help the firm to reduce cultural myopia, but instead, polycentric approach to staffing has been found to help the firm reduce cultural myopia since it focuses on staffing the global operation with local talented staff (Deresky, 2011, p. 329). Example: When a US based company intends to start marketing in Japan, its business operation will greatly be impacted by the self-reference criterion of its managers. If the managers are able to adapt to the cultures prevailing in Japan and are aware of global cultures in a way they accept the cultural differences, the marketing will be successful since they can maintain better customer relationship. Apart from customer relationship, if they considers polycentric approach to staffing rather than ethnocentric, they can eliminate cultural myopia and thus to lead the business to succeed in marketing. References Allen, M.G. 1994, "Succeeding in Japan," Vital Speeches of the Day, 60 (14), 429-32 Ball, D.A, McCulloch, W.H.M and Frantz PL, 2005, International Business, the challenge of Global competition, Tenth Edition, McGraw Hill Companies Business Monitor International, 2011, Japan Business Environment, Japan Infrastructure Report Q4 2011 Cateora, P.R and Graham, J.L, 2007, International Marketing, Thirteenth Edition, McGraw Hill Companies Deresky, H (2011), International Management: Managing Across Borders and Cultures: Text and Cases, Seventh Edition, Prentice Hall, Pearson Education.inc Genzberger, C, 1994, Japan business: the portable encyclopedia for doing business with Japan, World Trade Press Goodnow, J.D. and R. Kosenko (1993), Strategies for Successful Penetration of the Japanese Market or How to Beat Japan at Its Own Game, Journal of Business and Industrial Marketing, p. 41- 49 Johansson, JK, 2009, Global Marketing, Foreign Entry, Local marketing and Global management, Fifth Edition, McGraw Hill Companies. Kennedy, E, 1994, Destination Japan: A Business Guide for the 90s, DIANE Publishing Reid, D.M, 1999, Changes in Japan's Post-Bubble Business Environment: Implications for Foreign-Affiliated Companies, Journal of International Marketing Reuvid, J, 2005, Doing business with China, GMB Publishing Ltd Steers, R.M and Nardon, L (2006), Managing in the global economy, Illustrated edition, M.E. Sharpe Warren, J, 1995, Global Marketing Management, Fifth edition, Pearson Education, Read More