Presented by:
Mariani Kornain
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Table of Contents
Introduction
Environmental Analysis
Market Analysis, Competitors & Growth Prospect
Consumer Profile & Behavioural Segmentation
SWOT Analysis
Recommendation
INTRODUCTION
In Japan, mail-order business is defined as:
A system in which retailers:
advertise in various media (newspapers, magazines, radio, TV, catalogs
or direct mail
accept orders directly from customers via postcards, phone, or fax
deliver the goods by postal service/ home delivery to the customer’s
home or other designated location
ENVIRONMENTAL ANALYSIS ECONOMIC
Japan is the world’s 2nd largest economy & consumer market
Larger than UK, Germany and France combined
Japanese have the highest average per capita disposable income in the
world
US retailers have a large Japanese customer base
Japanese tourists and residents in the US have been visiting their
outlets
POLITICAL CLIMATE
Strong democracy & parliamentary government
Trade Barriers
Japan’s average tariff is one of the lowest in the world
Domestic retailers pay 5% consumption tax for all goods sold
No import duties/ consumption tax on import of less than 10,000 yen
(U$100) - except for leather & knit products
Non-tariff barriers are mainly caused by private business practices
(kireitsu)
LEGAL CLIMATE
Mail order & Internet shopping
Fit under Japan Association of Direct Marketing Guideline and personal
import regulation
In 1999, MITI required Internet vendors to display telephone number
& contact name on their online shop
In May 1997, MITI examined 1541 sites and 1036 sites were given warning
letters
Japan Marketing Association will issue “online seal” for qualified
online vendors
TECHNOLOGY
Japan’s is the world’s 2nd largest market for InfoTech equipment &
service
Government of Japan’s “Fibre to Home” project
Government is working with kiretsu (Mitsubishi & Fujitsu) to develop
the “next generation” Internet
MITI invests U$33 billion annually in infrastructure
Experimental secure gigabyte network in year 2000
MARKET ANALYSIS
Japan’s direct marketing boom began around 1980’s
Japan’s bubble economy burst decreased the spending
Despite recession, direct marketing is worth US$30 billion (JETRO,
1999)
A shift in sales trend from quantity-first to quality-first consumption
Average per household disposable income is U$45,500 (JMA, 1995)
Growth Prospect
Mail order will expand 2-3% of the retail market, obtaining over ¥3
trillion in sales
MARKETS IN FIVE COUNTRIES
Japan US UK
France Germany
Share of mail order in total 1.4
4.0 3.7
2.4 5.6
retail sales (%)
Total mail order sales
20,000 169,500 11,200 8,500
7,400
Per-capita mail order sales 158
624 190
145 285
Source: Ministry of International Trade & Industry, JADMA,
and European DMA, Marketing Logistics Inc.
COMPETITORS
Domestic mail-order companies
Strong distribution, but high costs
Satellite TV is more popular in Japan
10.4 billion Japanese households have a broadcast satellite (Dentsu
Institute, 1999)
Suburban shopping malls are becoming places for family outings
Very convenient, but expensive
CONSUMER PROFILE
Japanese mail-order (except via Internet) are driven by women in their
20’s, 30’s and 40’s (Japan MarkeTracker, 1999)
Sources of purchase: 49.3% catalog, 21.1% TV, and 18.6 magazine ad
The average number of sales per person is 4 orders (JETRO, 1999)
Average money spent is ¥47,000
BEHAVIORAL SEGMENTATION
13% of Japanese household have access to the Internet
via PC, cell phone, PDA, or home video game (Dreamcast)
(Access Media, 1999)
Japan’s Internet users are segmented according to
purpose of use (work vs. entertainment), &
active/passive orientation (browsing vs. building personal pages)
There are four user types:
Information Elite, Model Japanese Businessman, Internet Enthusiast,
& Future Mass Market
BEHAVIOURAL SEGMENTATION MAP
|
Online Demographic
Dominated by 23-34 age group (JIR, 1999)
Internet users are mainly males
Tend to purchase computer related goods
Purchase value is high, less frequent
Female buy more frequent, but the purchase value is lower
Mainly buy clothes, food, books, and CDs
Online Trends
Female users are increasing (18% of them are full-time housewives)
Increase in Internet shopping
E-commerce Japanese style (JV with convenience stores: order online,
pick up at the nearest CV)
Softbank teams up with Tohan & 711 to sell books, videos, CDs online
Digital Garage (Disney’s) joins Lawson (711 rival) to sell music online
SWOT ANALYSIS
Strengths
Positive country-of-origin perception
Strong brand image
In 1996, the top 20 brands in Japan included 13 imports with top 6
position held by Gucci, Agnes B, DKNY, Ralph Lauren & Prada
US products are associated with quality and value for money
Delivery: DHL, FedEx and UPS have strong presence in Japan
US mailing cost is lower than than Japan’s rate
Japan’s domestic postage for a letter costs U$0.63
Weaknesses
Online costs to consumers is high
Telephone is charged per minute and ISP fees are expensive
Browsing-only customers
An online visitor stays for 10-15 minutes and only browse 10 pages
of the 1300-page site
Unbalanced demography of Internet users
Internet shopping in Japan is highly dependent on repeat users, predominantly
males
Technology
PC monitor projection can’t compete with high quality photos in printed
catalogs
General consumers have no expensive equipment to improve the
picture & colour
Japan’s transmission speed is slower than that in the US
Opportunities
Japan has the 2nd largest Internet host computer in the world
Yen is strong enough to keep US prices competitive
Attitude toward Internet shopping is positive
Products bought by international mail order is excluded from strict
testing regulations
Japan Post unable to handle import duties/ taxes on thousands of parcel
deliveries
Threats
Government legislation
GOJ’s joint venture with the kireitsu may limit foreign firms to recoup
their R&D costs
Security
The absence of common legal definition for enforcing electronic contracts
Addressing errors
Competition from European firms
European products are associated with prestige and luxury
Low-cost import from Asian countries
RECOMMENDATION FOR MARKETING MIX
Product
Offer unique selling proposition & avoid Self Reference Criterion
WYSIWYG principal
Online shoppers are looking for quality products that
unavailable in Japan
Offer convenience & value for money
Price: Competitive
Consumers tend to buy from overseas when there is large differential
between domestic & foreign prices (JDB, 1999)
Place
Open a wholly owned website: L.L. Bean & Neiman Marcus
Rent a space on online Japanese shopping mall
Join hot links of American-based malls, e.g. Bargain America
Promotion
JDP 1997 survey: many consumers obtain information about online shopping
from TV
Those who own computers are relying on computer magazine (60%) and
books (47%)
Proactive consumers also use search engines, e-mail newsletter service,
and site links