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MARKETING WOMEN'S JEANS TO JAPAN.
Term Paper ID:19907
Essay Subject:
Potential returns & pitfalls, product choice, points of sale, consumers, manufacture, advertising, management.... More...
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Paper Abstract:
Potential returns & pitfalls, product choice, points of sale, consumers, manufacture, advertising, management.
Paper Introduction:
Today's manufacturers are no longer able to concentrate on a single nation's markets for success. The vagaries of any individual nation's political climate and economy make the risks to significant. A single downturn can mean disaster for an otherwise successful and profitable enterprise. Instead, manufacturers are recognizing that by expanding their markets outside a single geographic region, and, in many cases, outside the American market, they minimize the effect that any one economic or political event can have on their business. Increased market share among diversified markets can help companies reach and maintain success. The most obvious markets for expansion are those that are strong economically. Trading partners such as Europe and Canada are being supplemented by trade with Asia and the Middle East. This research focuses on
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Japanese advertising agencies, like other Japanese businesses,operate on relationships that have been built over many years. These unions, in turn,belong to one of four larger labor groups. Forexamples, home stereo systems, when first introduced, required thatconsumers be convinced that they were items that the consumers needed.Consumers first had to be sold on the idea of home stereos, then on theparticular brands and feature sets. Here, the consumers only need to be convinced of thestyle and brand. This hurdle can be overcome by jointventures, but the effect to the overall profitability of the enterprise canbe significant. There is another factor which can influence the success of Americanproducts in Japan, and that is the ability of Japanese companies to imitatesuccessful products and bring them to market. Companies seeking to expand to the Japanese market must be willing tocommit resources over the long-term. US firms: Thumbs up at Osakashow. Whilethe boutiques offer greater autonomy to the company, some types of productswill have better success in the larger department stores. Companies which seek to manufacture goods in the United States andexport them to Japanese distributors (having little or no interest in theeventual point of sale) will find that the relationships are fickle andunlikely to be of the long-term nature necessary to success. Going in with a distinctly western product that already enjoysglobal recognition will help ensure success, but there is no replacementfor carefully forged partnerships with the various organizations with whichthe manufacturer will be working. (199 , October 17). To be successful, manufacturersmust be willing to invest time in building relationships with key Japaneseexecutives, and seek to understand the Japanese market and Japaneseconsumer. Any company planning to expand its market begins by understanding theproduct that it wants to export. The tailored look is popular for both menand women. Ideally, the company should relocate key project managers in Japanregardless of whether the company seeks to enter into a joint venture or gointo business alone. In this example, an American company will market denim jeans forwomen in Japan. This may mean being separated from their family, or, insome cases, moving their families with them. (1991, November 3). This makesnegotiations very different from those in the United States in that theadversary relationship that exists between management and labor in theUnited States is virtually nonexistent in Japan. Again, to some extent, this decision is basedon the type of clothing and its associated target market, but advertisingin Japan is distinctly unique from advertising in the United States. 9. Because the American company's experience in Japanese business islimited, and because it is seeking to ally itself with a Japanese partner,the relationship enjoyed with advertising agencies by potential Japanesepartners will be carefully considered. Jeffrey Morgan. Here, theselling techniques are less intense, but the American manufacturer willfind that the distribution and selling relationships are long-standing andvery effective among the Japanese owners. Trade journals and the popular press have recentlyhighlighted the import quotas and the many difficulties (beginning with thelanguage and currency differences) that importers encounter. A largeadvertising agency, such as Dentsu will be retained to direct theadvertising and promotional efforts. At the end of those five years, either party may buy out theother for a percentage of expected future revenues, or the partnership maybe completely dissolved and the American party may continue without thebenefit of the Japanese relationship. In Japan, the agencyand the television station work out when the advertisement will appear. 164). They should be familiar with the Japanese culture;some knowledge of the language and customs prior to arrival would behelpful. Because of the short-term advantages that a strategic alliance with aJapanese venture can bring, and because the Japanese government looks morefavorably on organizations which are not wholly Western-owned, the jeanswill be marketed by a limited partnership which will exist for a period offive years. Both Barney's andCharivari already have boutiques open in Tokyo. and J. Manufacturers are likely to realize lower costs if they are able tocombine their manufacturing efforts into a single plant (or a few plants)for all of their markets. McDonald's providesan example of a company which exported American food (albeit with slightmodifications) and American marketing to Japan with success. European designers andclothing have a higher profile in Japan than do American designers, andthat is where the challenge to American companies looking to export toJapan comes in. New York: Macmillan, Inc. Look for new fashion sales. If anAmerican manufacturer of ready-to-wear apparel is interested in exportingthat apparel to Japan, the best method of distribution may be throughwholly-owned boutiques, or selling outright to distributors who then sellthe goods to department stores. However, extensive consumer research and careful marketingis necessary for success. Ease of distribution was also a consideration when making thedecision as to what product should be exported. These consumers are alsogenerally more open to the idea of purchasing Western-produced goods. (199 , May 18). This trend has changed recently as boutiques have become morepopular in the United States and generalized stores (such as the Limitedand Esprit) have opened in Europe. Theindividuals selected should be knowledgeable about doing business with theJapanese, and should have some relationships already established beforeleaving the United States. Much of Japan's ready-to-wear apparel is purchased in largedepartment stores. 2 4). The 197 s and 198 s also saw the introduction of a large number ofspecialty magazines, generally aimed at younger Japanese consumers, whichprovide a good forum for advertising clothing. Brandrecognition (in the case of the conglomerates which dominate the Japaneseeconomy) may attract consumers, and such companies already enjoy therelationships necessary to complete distribution and point of salecontracts (Morgan & Morgan, 1991, p. Such stores are frequented by the younger Japanese consumer,and aggressive selling techniques can be used. Communications become subject to severe logistical constraints,including the difference in time zones, and there will be corporate andindividual culture shock felt throughout the organization. This strategy gives the company control over the initial phaseof production, but enables the company to take advantage of lower laborcosts in other labor markets (Rachid, 199 , p. However, these individuals must be selectedwith extreme caution. The Wall Street Journal, p. Ono, Yumiko. Japanesedistributors in this situation owe their loyalty to their end customers,not to the western supplier. A mix of Japanese andWestern-based retailers (such as the Limited) will be used to market theclothing. Nabisco,Del Monte and CocaCola have also done well in Japan. More US product travels to Asiafor finishing. In addition to line personnel,some first- and second-line managers also belong to the unions. They must be willing to live in a foreign country for an extendedperiod of time. (1991). Such would not be the case with some other types of products. Using plants in the western United States, or inAsia itself, will reduce the cost of transportation and will enable thecompanies to realize economies of scale with regard to fabrics and labor.Some companies have opted to begin products in the United States, then havethe garments completed in the Far East, close to where the distributionwill occur. Because of the extensive resource commitment required to succeed inthe Japanese market, any decision to enter that market must be endorsed atall levels of the organization. Entering into a joint venture can be the mostexpedient route, especially for smaller companies, but there are drawbacksto this option. American consumers arefamiliar with having several designers featured in a single departmentstore; European consumers are used to a single designer in a singleboutique. Instead, manufacturers are recognizing that by expanding theirmarkets outside a single geographic region, and, in many cases, outside theAmerican market, they minimize the effect that any one economic orpolitical event can have on their business. Similarly, companies in Japan which enter into joint ventures areinterested in new technology or new production methods more than they areinterested in forging long-term alliances with Western businesses. Instead, agencies specialize in a particular medium (newspapers,radio and television, for example). Key American personnel andtheir families will be given training in Japanese culture and language andwill relocate to Japan. Unlike traditionalwestern advertising agencies, Dentsu provides its clients with a host ofmarketing related activities, including extensive market research and thevital introductions so necessary to business success in Japan. Increased market share amongdiversified markets can help companies reach and maintain success. Joint ventures are not generally supported by the Japanesegovernment: the Ministry of International Trade and Industry (MITI) and theFinance Ministry generally seek to prevent the flow of foreign capital intoJapan. Attempting to market western products withoutthese relationships and without relocating personnel to Japan increasessignificantly the likelihood that the venture will fail. Japanese men are wearing the traditional European suit, andJapanese women are wearing skirts and dresses similar to those found inAmerican and European stores. This difference inmarketing at the point of sale generally cuts along generational lines,with older consumers preferring the traditional method that departmentstores offer, and younger consumers preferring the more expedient specialtystore approach (DeMente, 1989, p. How to do business with the Japanese.Lincolnwood, IL: NTC Business Books. The last area that should concern western manufacturers is theintricate distribution system within Japan. Themost obvious markets for expansion are those that are strong economically.Trading partners such as Europe and Canada are being supplemented by tradewith Asia and the Middle East. Daily News Record 2 , p. Fashion designershave recently begun to spread to the Japanese market. Similarly,the Walt Disney Company was able to open Tokyo Disneyland and exportDisney's version of Americana in the form of an amusement park. By building onrelationships that already exist in the West, greater success isanticipated. Rachid, Rosalind. References DeMente, Boye. Outdoors look becomes urban fashiontrends. Thus onlythe largest and most influential of agencies can place ads in newspapers,where space is at a premium. In this way, it is not only possible,but common, for one agency to carry competing products. Aside from differences at the point of sale, an American manufacturerseeking to export product to Japan may be put off by the intricate,difficult to understand rules of business. Arrangements will be made to enroll theseexecutives in Japanese culture and language classes; their families willalso be included in these arrangements. What American manufacturers arenot familiar with is the selling technique employed in department stores.Shopping in Japan can be a leisure activity that does not involve actuallymaking a purchase. The largest of these, Dentsu, is responsible for one-fourth of all advertising expenditures in Japan. 5A. Distribution relationships go back forgenerations, and it can be very difficult for new companies to successfullybreak into the distribution channel. Whether the company intends to enterinto a joint venture, or whether it works independently, there will beextensive travel involved, and preferably relocation for key executives.The company itself will experience culture shock as it deals with Japaneseexecutives, and individual employees who either move to Japan or who travelthere often may also expect to experience severe culture shock. Because denim jeans are targeted at younger consumers, the primarypoint of sale outlets will be small retailers. This is not a new type of product; ready-to-wear clothing has beenavailable in Japan for some time, but the introduction of Western-styledand Western manufactured clothing is a relatively recent event. For example, while advertising agencies are used extensively, the one-product one-agency approach that dominates the American market is not usedin Japan. Of course, trends in the fashion industry change quickly, andit is important that any enterprise seeking to export apparel to Japaninclude a long-term commitment to the market and to keep pace with markettrends in Japan. A company seeking to export to Japan must determine whether it wantsits product sold through department stores or individual boutiques. If thetargeted consumer is younger, the boutiques offer an attractivealternative. In choosing denim jeans for women, the American company recognizesthat Japanese consumers have already demonstrated strong demand for similarproducts, and the ready-to-wear casual apparel market for Japanese women israpidly expanding (p. In the United States, an advertiser wouldseek to purchase 3 seconds on prime time television. 1, p. Living in Japan will give these executives easier andbetter access to the Japanese businessmen with whom they must buildrelationships, and it is also more likely to help them be attuned to trendsand movement in the market. Having determined the type of product, where it will be produced, thetype of advertising agency that will be used and how advertising money willbe spent, western companies must determine the type of organization thatthey will put in place in Japan. Such imitations are notsubject to import restrictions, and would not have the increaseddistribution costs that foreign-made products must overcome. Pre- and post-marketing research is one of Dentsu's strong points,with audience surveys, test markets and special facilities all included inthe package which is offered to clients. Deciding to export to an overseas marketis only the beginning; investing the necessary time and effort required tosuccessfully market to the Japanese is a significant strategic decision. Entering the Japanese market can be a lucrative decision for westernmanufacturers. These are similar to the department stores whichpopulate the American market, but are in marked contrast to the smallerboutiques which are prominent throughout Europe. Finally relationships will be built in order toensure the long-term success of the project. Furukawa, Tsukasa. A decision to export any product to Japan is not one that should beundertaken lightly. Morgan, James C. Distribution systems inJapan are composed of companies which have longstanding and complexrelationships, and trying to break into those distribution networks can bedifficult for Western firms. Cracking theJapanese market. The capital outlay and the commitment requiredby key personnel can be significant, and returns on the initial investmentmay not be realized over the short-term. 11). In addition, the logisticsconnected with getting the jeans to the point of sale are reducedconsiderably if they are manufactured close to the final selling point. Women's ready-to-wear clothing is a goodproduct for the Japanese market because there is a trend away from Japanesewomen making their own clothing, and because there is a certain statusassociated with American or European designed clothing (Furikawa, 199 , p.9). Today's manufacturers are no longer able to concentrate on a singlenation's markets for success. B1. However, some Western retailers, includingthe Limited, have opened stores in Japan and have already established thenecessary relationships for successful marketing. New York Times, sec. For this reason, clerks in large departments storesgenerally wait for customers to approach them rather than approachingpotential customers. Onthe other hand, if the manufacturer intends to target older consumers, thedepartment stores are a better way to go (Schiro, 1991, p. The largest of the advertising agencies in Japan do place ads in morethan one medium. Specialty stores, on the other hand, arecharacterized by more aggressive sales techniques. This will help all parties gain a better understanding ofthe other and will also build the relationship and trust that is vital tothe success of the enterprise. 11.----------------------- 6 The Japanese market is still dominatedby the department store, with highly personalized service, a method ofdistribution with which American manufacturers are familiar. Despite this,American companies have enjoyed some success in Japan. Unions in Japan are organized notby trade, as in the United States, but by company. Relocating individuals to Japan, or evenrequiring extensive travel, will affect morale and productivity among allemployees. (1992, April 21). A singledownturn can mean disaster for an otherwise successful and profitableenterprise. Small retailers will be selected overlarge department stores as the point of sale. Because it is the strategy of the American company to build arelationship with a Japanese venture, manufacturing the denim jeans inJapan offers an attractive option. Items which enjoy a certain status associated with their name (suchas designer clothes or denim jeans) are somewhat insulated from suchimitations, but without close relationships, or Japan-based manufacturing,American manufacturers can find their products imitated and in storesquickly. It is expected that the Americanparty will have gained significant inroads by that time to successfullynegotiate the necessary contracts with Japanese suppliers, distributors andretailers. Ready-to-wear clothing does not facethat initial hurdle. (1989). This research focuses on marketing women'sdenim jeans ready-to-wear apparel in Japan, with an emphasis on thepotential returns and pitfalls. For example, some Japanese companies (including largeradvertising agencies) will not do business with companies that are not atleast 5 percent Japanese owned. Doing so requires extensiverelationship building, and is made easier by association with other, moreestablished organizations. Some resistance can be overcome by moving production, or at leastpart of the production, to Japan. However, this brings with it a new setof problems, beginning with the unions. In thiscase, the goal will be to sell Japanese consumers on the article ofclothing in question, not on the issue of purchasing clothing to beginwith. This may require months or even years ofbuilding relationships before the first product is shipped. In the short-term, key staffmembers will be relocated to Japan where they will work closely withJapanese managers. Ideally, the Americans will use this time to buildtheir own relationships with the vendors and distributors necessary to long-term success so that when the joint venture is ended, the business cancontinue successfully. 147). An American businessman isunable to do business in Japan without first establishing his ownrelationships and connections. The American company will also begin interviewing executives todetermine which are best suited and willing to relocate to Japan during thefirst formative years. There is also the question of the type of organization that should beestablished in Japan. The vagaries of any individual nation'spolitical climate and economy make the risks to significant. In themeantime, joint ventures and the use of Japanese companies to marketAmerican goods provide ways of getting the product to market. B1). Journal of Commerce and Commercial 384 p. Most sales are made onconsignment and unsold merchandise is returned to wholesalers, who mayreturn it to the manufacturer. In this latter case, allfamily members must be equally enthusiastic about the move. In order to maximize the benefit of doing business in Japan, butminimize the cultural shock which will inevitably be encountered, theAmerican company must carefully select its partner in the joint venture.Several trips by key personnel of both companies should be made to theother country. B1). A limited-term joint venture will be set up with aJapanese company and manufacturing will be done in Japan. Since the largest agencies offer avariety of services (such as research) that will directly benefit thecompany, an agency such as Dentsu will be sought. As a result of its presence andinfluence, Dentsu has built close relationships with the leadinguniversities in Japan, as well, and regularly attracts the best graduates.Such business-academic relationships are common in Japan among the largestand most influential companies, and building a relationship with suchcompanies ensures that western organizations have access to Japan's futureinfluential executives (DeMente, 1989, p. There is also a tendency toretain Western brands and slogans within Japanese advertising, in partbecause the practice helps maintain the status associated with the brand,but also because the Japanese language does not lend itself to translatingcrisp Western-style slogans (Morgan and Morgan, 1991, p. Having determined the type of clothing to manufacture and theultimate point of sale method, the manufacturer is faced with the problemof advertising the product. Such a move would provide the basis foran ideal partnership, and would encourage favorable rulings (wherenecessary) by the Japanese government. Western style clothing, ranging from the "outdoors look" tofashionable European styles, are enjoying popularity in Japan (Ono, 1992,p. Such techniques can minimize or eliminate any advantageassociated with the American brand. 16 ). Itsrelationships with the Japanese media are long-standing and influential,and the agency also maintains close relations with key advertisingcompanies in the United States and Europe. This decision isbased to some degree on the market the company opts to target. Schiro, Anne-Marie. Because ofthis, companies should not seek to enter the Japanese market in order tomake a quick strike, for example, to sell only a few seasons' worth ofclothing. 5A).
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