Return to Home Page September 15, 1997 Market Research—Japanese Style By Drew martin, Carol Howard* and Paul Herbig** * Department of Marketing College of Business Administration University of Hawaii-Manoa Honolulu, Hawaii 96822 and **Graduate School of International Trade and Business Administration Texas A&M International University Laredo, Texas 78040 for submittal to: send all correspondence to HERBIG. Abstract: We review the Japanese art of Marketing Research. Introduction Thirty years ago, the practices of Japanese marketing research firms lagged considerably behind those in the United States because of the recency of introduction such practices and Japanese business tradition. Even with the passage of time and the growing sophistication and economic power that has occurred over that period of time, Japanese firms tend to be skeptical about the Western style of market research. The Japanese approach is more intuitive. Japanese clients spend more time observing rather than number crunching. Japanese style market research relies heavily on soft data obtained from visits to dealers and other channel members and hard data about shipments, inventory levels and retail sales. Japanese put greater faith in the information they get from channel members. They want information that is context specific and make greater use of “hands-on” and “soft” data gathering approaches. What “hard” data used, is generated typically from channel sources. Japanese market research is different from that done in the West, especially in the United States. Americans collect data; Japanese try to identify future trends. In Japan, this is often a matter of watching trend setters in Tokyo, since Japanese consumers tend to follow the leader. Japanese companies will sell several variations of a new product to satisfy customers. Americans are more cost conscious and stick with a uniform product. Thus Japanese marketers, lacking statistics and focus group results that tell them what consumers want, vary product characteristics instead and learn what to drop or retain from sales. Having learned beforehand, Americans can be more targeted. Where Japanese cover business risks by expanding product variety, Americans expand market research. While learning from mistakes in manufacturing can be admirable, it can be folly in marketing if less expensive research techniques exist. Levi Strauss attributes much of the company’s success in Japan to its all Japanese research and design department which tracks consumer trends and then adds new designs to a continually expanding line; about 90 percent of the product line in Japan is also manufactured there. Japanese Marketing Research The two most important categories of market research in Japan are those concerned with product research and research of potential markets. The rank order for product research are: comparison of competing products, new product feasibility studies, new product concept testing, consumer panels, brand name evaluation and package design. Japanese market researchers tend to conduct consumer sales promotion studies, sales analyses, sales territories research and sales compensation studies with greater frequency than did those in the United States. In addition, also greater than that of the United States was found the propensity of research by Japanese firms for long-range forecasting, short-range forecasting, design of marketing information systems, development of export strategies and development of import strategies. As concerns distribution research, Japanese firms had greater frequencies for channel relationships studies, selection of wholesalers/retailers, and distribution cost studies (Naumann, 1994). Japanese research firms tend to have greater numbers of full-time personnel with undergraduate degrees, particularly economics. Thus, true per the stereotypes, Japanese firms tend to be more long-term oriented and aggressive in global trade. Since Japanese distribution channels tend to be longer and more complex than channels in the United States, the greater emphasis on distribution research confirms that Japanese channels tend to be more stable and more vertically integrated than in the United States. Japanese market research tends to be personal interview oriented. Japanese managers believe that soft data obtained from visits to dealers and other channel members reflect the behavior and intentions of real consumers. The hard data (about shipments, inventory levels and retail sales) is used to compare their products to competitors. Then they visit channel members at both the retail and wholesale levels to analyze sales and distribution coverage reports, monthly product movement records (weekly for some key stores) plant-to-wholesaler shipment figures and syndicated turnover and shipment statistics on competitor. Hence, Japanese companies rely heavily on personal observation as means of obtaining information. When Canon cameras was losing ground to Minolta, Canon decided that its distributor was not giving adequate support. Canon did not use data from a broad survey of consumers or retailers to make the decision. It did, however, send three managers to look into the problem. Acting like customers, they would note how the cameras were displayed, how the clerks served customers, and concluded that the dealers were not enthusiastic about Canon cameras. Another reason for the preference for personal observation and interviews over preferred Western methods such as phone or mail could be as a result of the lack of usage of telephone for socializing in Japan. Cultural acceptability of the telephone is not the same in Japan as in the United States. Even among the youth, the phone is not used to chat with friends but to arrange meetings to get together face-to-face and converse. Interpersonal sensitivity is higher in Japan as well. A greater emphasis is placed on direct, interpersonal relationship and as a result the Japanese are usually hesitant to give a direct “no” to a personal request. Japanese companies want accurate and useful information about their markets as much as American, and Europeans companies do; they just go about it differently. Japanese executives put more faith in information they get directly from wholesalers and retailers in the distribution channels. They also track what is happening among channel members on a monthly, weekly, and sometimes even daily basis. Detailed and timely information collection and analysis is the hallmark of Japanese competition. JETRO was initially established for the purpose of providing Japanese companies market research information. The sogo shosha provide world market intelligence sources for Japanese competitors. In Japan, tremendous attention is paid to research on what customers want. Japanese firms collect extensive market data on consumers’ quality preferences, expectations of product life, changing attitudes towards breakdowns and reliability rates, perceptions of product performance and relied heavily on this information when redesigning old models and creating new products. Japanese manufacturers tend to be well attuned to their own customers' particular needs. For instance, Japanese machine-tool producers found that their American customers use the machines more than their Japanese customers. Due to higher labor costs, American firms used the machines more intensively and could not afford down time for maintenance. Japanese producers modified both their products and service programs to sell to the American market. Service is the name of the game. Japanese companies do use the tools and techniques popular in the United States, but they trust their instincts first. The Japanese tend to utilize two kinds of marketing data. Soft data is obtained form visits to dealers and retailers and hard data is generated from company records of shipments, inventories, and sales. Even when attitude surveys are conducted, the goal is to obtain data abut the experience of actual consumers of the product and not about the attitudes of the general public. Zen engendered distrust of the overly rational which resulted in the development of the intuitive. The press-the-flesh or human contact approach to obtaining marketing data, compared to the more scientific dry approach popular in the United States is what one would expect from the Japanese. In contrast to Western practice, Japanese executives do not give managers sole responsibility for market research. They conduct research and make decisions by consensus and they lean towards intuitive judgment. Rarely do Japanese executives call in an outside professional, and when they do, they often disregard the consultant’s report if it goes against their instincts about the best course of action. Japanese research companies use “group think” techniques to develop accurate market share estimates and competitive assessment information. Japanese companies learn by observation. They expect their personnel to spend time in the field talking to customers in order to keep up to date on needs. They are also expected to learn about the market first hand and not just from some research report or sales analysis. Seiko has its watch designers spend up to half their time outside of Japan talking with distributors, retailers and consumers. The purpose is to keep the designers’ fingers on the pulse of changing consumer preferences. Watching or imitating their competitors is another source of learning. If a competitor introduces a new consumer appliance, the retailers affiliated with other competitors with clamor for the same product in order not to lose ground to their retail competitors. The fear of losing ground or yielding advantage to a competitor spurs copying and the Japanese tendency to play “follow the leader.” Japanese companies want information that is context specific rather than context free—that is data directly relevant to consumer attitudes about the product, or to the way buyers have used or will use specific products rather than research results that are too remote form actual consumer behavior to be useful. When Japanese companies do conduct surveys, they interview consumers who have actually bought or used a product. KFC (Japan) customized its American product and strategy to suit the tastes of the Japanese consumer. By using indirect Japanese market research techniques, it positioned the stores as trendy and high class, not as fast-food stores. After consulting directly with customers, French fries were substituted for mashed potatoes, the sugar content in the coleslaw reduced and fried fish and smoked chicken was introduced. Domino’s initial market research in Japan indicate that home delivery of Pizza was not feasible. Japanese diets emphasized such food as raw fish, rice, and seaweed and dislike such pizza staples as tomato and cheese. Pizza is considered a snack food rather than a meal which makes it difficult to justify the high prices necessary to make the home delivery business profitable. The consumers who like pizza the most are teenage girls, the segment with the least disposable income. Those most likely to pay a premium for a meal would prefer to eat out in a spacious restaurant than in their own cramped residence. Finally, Domino’s guarantee of speedy delivery was perceived to be impossible in trafficked Tokyo. Domino’s did not give up. They made the pizzas smaller (10 and 14 inch pies rather than 12 and 16 inch versions favored in the United States) , added optional toppings preferred by the Japanese (corn, squid, and tuna), and used motor-scooters (with customized roof design and Domino’s logo) instead of cars to move around Tokyo. In addition, they retained the thirty minute delivery promise by concentrating on populous, affluent neighborhood of big cities and limited delivery radius to two kilometers. Senior as well as mid-level Japanese managers get involved in gathering soft data because they see the information as critical for market entry and for maintaining good relationships afterwards. This hands-on data give the managers a distinctive feel for the market, something they believe surveys or quantitative research methods can’t supply. This soft data approach appears to lack the methodological rigor of scientific market research but it is by no means haphazard or careless. Results can be more meaningful because managers actually observe how consumers behave in buying situations and how salespeople actually responded. The soft data approach is popular even after a Japanese company has penetrated the channel. Frequent visits to people in the distribution channel help manufacturers resolve problems before they escalate and damage sales or relationships. When Japanese managers want hard data, they look at inventory, sales and other information that show the items’ actual movement through the channels. Then they visit the channel members at both the retail and wholesale levels to analyze sales and distribution coverage reports, monthly product movement records, plant to wholesaler shipment figures and turnover and shipment statistics on competitors. Japanese managers try to track changing customer tastes closely and quickly. After analyzing both hard and soft data on their channels, they make incremental changes as necessary. This understanding provides them a deep and focused understanding of the marketplace and enables them to fine tune their marketing rapidly. Many companies occasionally use consumer surveys and other quantitative research tools but executives never base marketing decisions primarily on he information gathered from them. These findings merely trigger more thorough audits of the channels using soft and hard data gathering. When Japanese consumers are asked directly for their opinions about a new product under test, they are much more reluctant to criticize the new product than in the West. To the Japanese, right and wrong are relative values. A tradition of courtesy makes for cooperative respondents, but they say things that will please the interviewer, even if the statements don’t give an accurate account of the subject being investigated. Market research for Japanese product development frequently begins in their home market. Their experience within this market provides insight into customer preferences, product deficiencies, and effective marketing strategies. Japanese firms collect extensive market data on consumers’ quality preferences, expectations of product life, changing attitudes towards breakdowns and reliability rates, perceptions of product performance and relied heavily on this information when redesigning old models and creating new products. However, the Japanese routinely export their highest quality products to other markets, and keep many of their lower quality products for their own home market. The Japanese also export many of their lower quality products to developing nations. Pre-competitive research is achieved through research associations in which the goal is to create an engineering infrastructure as the basis for competition. Cooperation among rival firms requires that the subject for research is fundamental and of common interest to all participants. The resulting research efforts emphasizes development of a prototype. Knowing what to make and finding out how to make it, articulate needs of the marketplace is shared by association members. Afterwards, each competing company is on its own. Focus Groups Focus group market research—interviewing a group rather than individuals—is a well acknowledged source of market information. The main advantage of the focus group method is that it engages respondents interactively: One respondent’s remark stimulates another’s thought. In the United States, focus groups are primarily composed of strangers, Americans do not hesitate to speak their minds when they do not know others and will probably never see them again. Conversely, in Japan, in a room full of strangers, Japanese will not speak up; instead they tend to follow more strict rules concerning when to be quiet and when to be talkative. Japanese do not either care to embarrass the presenter if they don’t know the answer or if the question is of less value to the other participants, therefore few questions are ever raised by them when invited to do so. Instead, a successful Japanese focus group consists of friends, relatives, or a similar in-group (demographic homogeneity; equal status; those who know well each other); Japanese are more likely to speak their real feelings to those they know. In such a grouping, there will be more responses, less superficial agreement and more healthy differentiation. Mixing users and no-users is not recommended when there is a social judgment attached to the art of using or not using the product. Japanese pay close attention to the relationship between people and inanimate objects. The Japanese are concerned with who owns it or what interest people have in it, rather than with the thing itself. Therefore, negative comments must be not only encouraged but pulled out by the facilitator. Japanese do not want to upset the people who are attached to the object. They will not comment negatively if they think the facilitator represents the company making the product. Increasing the distance between the speaker and the issue helps get varied opinions from Japanese respondents. Status is important in Japan. The oldest person (male if in a mixed group) with higher social status has the authority to speak first and more than others. Having social equals in the focus group eliminates the status problem. Unlike the format of an American focus group, where one question posed by the facilitator is followed by an average of three to five comments by different respondents, a Japanese focus group facilitator’s utterances is typically followed by only one or two respondent statements. In Japan, the facilitator stands in the middle and after one respondent has answered, the facilitator must take control and ask another respondent for his or her opinion to the first. The Japanese respect the group leader and place on him or her all the responsibility for directing the discussion. Often, the facilitator will hear short answers, superficial and tentative nods of the heads or simply guttural noises from the respondents, indicating that they have understood the question but have no particular follow-up answer to present. This is because the facilitator has posed the question in a way that is incompatible with the Japanese. The facilitator must not use an aggressive communication style. A challenge will be perceived as rude, manipulative, insincere, or simply stubborn and ignorant. Educating the facilitator, inviting them to express their opinions, faking as an naive facilitator, helps solicit comments and feedback in a Japanese focus group. A tendency to conform among Japanese group members tends initially to suppress varying opinions. The Japanese need to be coaxed slowly to express opinions that differ from others in the group. The non-verbal must be carefully observed since just 7 percent of the total impact of a message is conveyed verbally, 38 percent paralinguistically (voice tone, pitch, amplitude, inflection) and 55 percent is conveyed through body language. Surprisingly, Japanese are better respondents in a group than in a one-to-one interview. No matter how skillful the interviewer, he or she is still a stranger and the Japanese are not prone to open their hearts to a stranger. On their other hand, in a group situation they are with others like themselves. A great amount of interpersonal trust and very candid views are exchange without any animosity. That is why those with similar life-styles and backgrounds and ages must be chosen. The Japanese are great in groups because they are attentive and interested in what others have to say. Since opinions are not immediately expressed, the opening part of a session is typically slow. When an idea is introduced, typically a respondent expresses a very tentative reaction. However, another respondent picks up on some nuances of the comments and adds some of his or her own. Gradually the idea will be positioned and a consensus formed. Betty Crocker attempted to market its cake mixes in Japan only to find customer obstacles. After numerous focus groups, it was found that the essential problem was that whether or not it was physically being done, psychologically, the cake mix being made in the rice cooker ran the danger of contaminating the rice and hence housewives hesitated to use the product. Future Implications for Marketing Research in Japan One of the major changes occurring in Japan is a deceasing accessibility to interviewees at home. Japanese women are rapidly joining the work force and fewer housewives remain at home during the day. There is an increased usage of door phones or intercoms as fewer people open the door (Katori, 1990). The increasingly higher cost of marketing research is attributed mostly to the increased cost of interviewees. There is also severe difficulties in recruiting high quality interviewers as the labor market is tight and more opportunities exist for the best and brightest in Japan. The increasing difficulty of applying sampling theory in the real-world situation is also a big change due to the increasing number of unlisted subscribers. Marketing research clients are also more sensitive to cost efficiency. They want to obtain the result as soon as possible. They tend to be less concerned with accuracy in terms of traditional sampling theory. There is more emphasis on qualitative than quantitative analysis in Japan. There is also higher expectations of market research firms to provide them with value added services rather than simply gathering data and statistics. One danger the Japanese market research strategy has been their reluctance to hire non-Japanese executives. Due to this tendency, management attention is typically focused on products and markets that the company already knows well rather than on potential markets and industries. In their intensive channel monitoring, Japanese executives may see the narrow not the big picture; hence a broader perspective may be necessary. Japanese market research tends to be heavily weighted towards after-the-fact data, such as market share figures and audience ratings. The industry tens to be weak on the systematic testing of concepts before the product is introduced and they have the tendency to feel that they should follow instinct. In Japan, they don’t test market. The tendency is to stick the new product on the market and if it doesn’t sell, it is withdrawn. When Sony researched the market for a lightweight portable cassette player, results showed that consumers would not buy a tape player that did not record. Company Chairman Akio Morita decided to introduce the Walkman anyway. 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