The Japanese market: Prompting wonder and inspiration worldwide


May 30, 2014

What does Japan look like from overseas? We asked Mr. Gary Klugman of TBWA\HAKUHODO, a global advertising company operating in Japan, about recent trends among global companies. Mr. Klugman has lived in Japan for over 17 years and is in charge of brand and communications strategy for global clients.

Total brand experience brought to the Japan market is a major hit

—Could you tell us about recent trends in foreign companies entering the Japanese market?

Gary Klugman

Gary Klugman

One trend I’ve seen over the last few years is the evolution from foreign companies re-packaging products to sell well in Japan to bringing authentic brand experiences that successfully capture the hearts and minds of consumers, often with little localization in concept. This can be seen at retailers such as Costco, IKEA, Forever 21, or premium household goods like Laundress or John Masters Organics, as well as in food services. These brands have deliberately, and successfully, brought their unique worldview – including sense of style or even physical size – into what is traditionally viewed as a closed, insular market.

—Compared to other countries, what characterizes the Japanese market and Japanese consumers?

Both the market and consumers are highly advanced, and when it comes to quality, whether in manufacturing or in services, Japanese consumers are the most demanding in the world. The Japanese concept of ‘value’ takes quality for granted, not low price. Quality is table stakes, not a luxury. The dedication to quality runs through all categories and segments – even 100 Yen shops have amazingly good stuff! The payoff is that when you get it right, consumers reward you – even line up for you – regardless of the price. While luxury brands have historically sold well, more recently premium goods in more mundane categories like detergents, shampoos, and even pancakes, are gaining popularity.

—Where in the global market do companies position Japan?

In addition to being a core market or revenue source for many global brands, Japan is a market that inspires. I often take clients to visit Japanese retail and innovation centers, where they can experience the high quality of Japanese products and famous Japanese service. These include places like Ginza department stores, 100 Yen shops, TSUTAYA Daikanyama T-site, Akihabara, etc. Technology and gadgetry have always been a strong point for Japan, but lately global marketers are taking notice of attention to quality and detail even at the lowest available price ranges. They are also surprised to see that, in Japan, 100 Yen shops are not necessarily for the lower income demographics – even well to do consumers enjoy high-quality bargains!

Consumer insight is often global, but Japanese consumers require a special focus on added value.

—What things should global companies keep in mind when promoting their business in Japan?

Here in Japan, companies need to really pay attention to detail to satisfy the Japanese consumer. Just being ‘foreign’ is not an excuse for skimping on Japanese expectations of quality. They expect the same level of service they get from Japanese firms like after-sales service and personal care. If you compare, for example, a QSR experience in the US versus Japan at a Starbucks, Krispy Kreme, etc., they sell the same products with the same concept, but in Japan they place a greater emphasis on store cleanliness, customer service, and packaging quality. Failing these kinds of details can kill a brand’s prospects in Japan, but it’s a market where effort pays off.

—Are there any characteristics peculiar to Japan as far as developing advertisements?

Gary Klugman

Japanese people tend to emphasize how different they are from other people: “We’re so hard to understand!” It strikes me that this claim itself is peculiar to the Japanese. [laughs] I’ve lived in Japan for 17 years, and during these years, overseas travel and information technology have gradually narrowed the cultural gaps between Japan and the rest of the world. I feel the walls separating Japan from the rest of the world have shrunk significantly, though language continues to be barrier – for both sides of the border.

When developing ad campaigns for foreign brands in Japan, we are often first met with those differences, and it can create an air of resistance to moving forward.
One approach I try is to start with points of commonality with global strategies. You may find you are aligned strategically and only need to localize execution – a realization that is often clouded by reactions of “it can’t work here because it’s Japan.”

For example, whether you sell vacuum cleaners or detergents, the desire to keep a clean and orderly home is a consumer need shared around the world. But there are physical and cultural contexts – like the size of Japanese homes or the daily rhythm of Japanese family life – that can inform how you execute a global strategy.

I still think the biggest barrier is language - the Japanese language is so beset with ambiguities that effective communication here requires more than simple translation, but copywriters and skilled ad agencies who can trans-create ideas in line with Japanese culture and communications.

—What differentiates Japan from other countries in terms of the media environment?

Like everywhere else, digital media is evolving fast and becoming a force in advertising – now the second largest in terms of spend. But so-called traditional media thrives in Japan. For example, in most developed nations, newspaper circulation is falling dramatically. But in Japan, it is still surviving as a trusted media. Most adults over 40 still subscribe to daily newspapers, which are distributed nationally to tens of millions of households. Japanese magazines are struggling, like magazines in any other country, but the Japanese market features many finely segmented magazines sectors that let you pinpoint your target audience. Television remains a strong presence here. Cable is less popular, and in the Tokyo metropolitan area the seven major digital terrestrial television stations play central roles. Finally, transit media – especially trains – are also a popular reach media, as Japan has the most train commuters in the world.

—Japanese companies are currently ramping up their overseas operations. What points would you emphasize to promote effective communication abroad?

For the last 10 years or so, Japanese companies have been developing branding strategies to target the global markets, like the creation of English tag lines. However, seen from an overseas perspective, these efforts can seem somewhat makeshift. What they’re doing works well in Japan because they’ve already established their brands inside Japan, but the same strategies do not necessarily work abroad. They need to look at their brands from a global perspective, and not simply stick an English tagline on it. The image of many Japanese brands feels incomplete in other markets – since often branding has been done on a market level rather than global. This is gradually changing, but I’d like to see Japanese companies be more aggressive in defining, communicating, and growing their brands abroad.

Gary Klugman Group Planning Director
Disruption Lab Planning Team, TBWA\HAKUHODO
Mr. Klugman has a Master’s Degree in International Management from the University of California, San Diego. He has spent the last 17 years in Japan in Strategic Planning, Market Research, and Brand Consulting roles. He joined TBWA\HAKUHODO in 2010, and is now head of planning for global brands, working with clients such as P&G, Häagen-Dazs, IKEA, GlaxoSmithKline, adidas, and Perfetti.