The Japanese Market: Consumer Behavior

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The Japanese Market: Consumer Behavior

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Professor, University of Marketing & Distribution Sciences, Kobe, Japan. 5/29/09 ... Sephora, Gap, Starbucks, Carrefour. 5/29/09. ETP, 2001: (c) Roy Larke, 2001. 17 ... – PowerPoint PPT presentation

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Title: The Japanese Market: Consumer Behavior


1
The Japanese Market Consumer Behavior
  • Roy Larke, PhD.
  • Editor JapanConsuming.com
  • Professor, University of Marketing Distribution
    Sciences, Kobe, Japan

2
Understanding Japan
  • Who are Japanese Consumers?
  • Is Japan still worth it?
  • How have retailers reacted?
  • What can we expect in the future?

3
Population Issues
  • Very, very crowded
  • 1,000 people per km2 on average
  • Tokyo vitally important
  • Kansai, Nagoya secondary, but growing
  • Generation Markets
  • aging population (25 over 65 by 2025)
  • baby-boom markets (22 of total population)
  • Sex differentials marked
  • 1.3 million more men than women between 0 and 34

4
Tokyo The Centre of Japan
5
Who are the consumers?
  • Pre-college
  • 20m low income, but active consumers
  • College
  • 4m small group, but high disposable income
  • Office Ladies (young working women)
  • 10m avid consumers, high income, no career
  • Salarymen
  • 45m limited consumption, almost never shop
  • Housewives
  • 45m shop to live, control household budgets

6
Is Japan still worth it?
  • What the newspapers are saying
  • Japanese economy is in crisis
  • Deflation
  • Retail sales are falling fast
  • Consumer confidence is low

7
Hidden beyond the headlines
  • Japan is the second largest economy in the world
  • Japan has very high income per head
  • Still low penetration by non-Japanese firms and
    brands
  • Rich consumers with money to spend

8
Just the facts
  • 1 in 6 Japanese (20 million people) own a Louis
    Vuitton accessory
  • 1822 year olds 170,000 (1,550) a month for
    non-essentials
  • The average savings per working household is 10
    million (90,000), 15 million overall

9
Income Expenditure Flat in 1990s
10
Monthly Savings increase 21
Monthly savings per working household 1990
11
Consumer worry Labor market Reform
  • End of lifetime employment
  • Personal abilities important
  • Fast track employees (MBAs)
  • More job hopping
  • Skilled employees gaining personal value and
    seeking careers in many companies
  • Fewer jobs for graduates
  • Acceptance of jobs abroad and with foreign
    companies

12
Consumer worryHigh Prices
  • Most expensive country in the world
  • Prices 35 times (food highest)
  • Demand for discounting
  • Hindered by high distribution costs low
    margins
  • Move away from price quality
  • Specialist retailers overseas companies

13
Retailers unable to cope
  • Retail problems are largely their own making
  • Lack of strategic direction
  • Overly inflated prices, high costs
  • Polite, but standardised, boring service
  • Too much empire building by big retailers
  • High debts, cant take advantage of lower land
    prices
  • Slow to react to consumption changes

14
Japanese retailers the lost decade
15
Consumers are worried
  • End of life-time employment
  • Worry about jobs, income
  • Save more and more
  • Worsening of position of women in the workforce
  • Movement of students and workers overseas when
    possible
  • But

16
Consumers are also bored
  • Consumer confidence hasnt hurt some retailers at
    all!
  • Japanese firms (2000-01)
  • Fast Retailing (Uniqlo) Sales up 106.1
  • Five Foxes (Comme Ca) Sales up 17.1
  • Overseas firms
  • Louis Vuitton, Prada, Hermes etc..
  • Sephora, Gap, Starbucks, Carrefour

17
What do consumers want?
  • Consumers want what they are told they cant
    have
  • Lower prices
  • Well supported brands
  • Genuine, friendly, outgoing service
  • Imaginationfrom products and stores
  • Value for money

18
The Future
  • Further internationalisation
  • Internet
  • But through mobile phones not land lines
  • Increased demand for imports
  • Reduced prices through competition
  • Distribution concentration, fewer big firms
  • Distribution channel cost control
  • Consumer orientated marketing

19
Huge opportunities for overseas firms
  • Land prices low, demand high
  • Great pool of workers looking for new, exciting
    jobs
  • Big demand for imagination and originality
  • Ikea by 2005, Tesco sooner, Wal-Mart sooner
    still
  • The time has come to be in Japan and stay
    long-term

20
If youre not in Japan
  • Youre not in the game
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