It is often said that the worldwide economic recession has made worldwide consumers smart, who have become severe on price, prefer valued brand and switch channels of purchasing products and services as appropriate.
In a similar manner, the Japan earthquake and tsunami disaster that occurred on March 11, 2011 is assumed to change the consumers in Japan. For this reason, Boston Consulting Group (BDG) in Japan executed a survey to approximately 3,000 consumers in Japan 1 month after the earthquake and tsunami disaster.
Their conclusion was that the companies need to know “how consumers in Japan are to change in the future” rather than “when consumers will start to proactively spend their money”.
In this article, the author would like to introduce the essence of the survey and some possible insights at the end.
1. How was the survey planned and executed?
The outline of the survey by BCG in Japan is as below.
Period: April 8, 2011 (Fri) – April 10, 2011(Sun)
Methodology: online survey
Number of respondents: 3,091 in total
Information about the respondents:
Region: Toyoku (Akita/Yamagata):103, Kanto (excluding Ibaragi):2,060, Midland/Kinki:618, Other Western Japan: 310
Age/Gender: male and female of 20 – 69 years old, same constituent as that of population in Japan
1) Consumers are becoming smart in the long-term
(1) Background to Japanese consumers becoming smart is long-lasting stress
The background of “consumers becoming even much smarter” is the stress from the disaster which can be seen nationwide, attributing to “anxiety to the future”. It is possible that the stress proliferates for a long time because 60% of the respondents said that the stress will not eliminate/will remain for a long time. In the case of Kanto (eastern Japan), much of the stress attributes to “anxiety of radiation”, “fear from the disaster” and “anxiety of black out”.
(2) 6 consumer trends making consumers smart
6 consumer trends are revealed from the survey, which are “economy and saving”, “staying at home”, “risk diversification/evasion”, “healing”, “energy-saving” and “safe/security”. The first two “economy and saving”and “staying at home” are the short-term trend.
As in one of the previous article Impact of “Jishuku” (Self-Restraint) in the Japan Disaster Aftermath many people in Japan has been restraining from spending their money and was evident from the survey result as well; 40% of Kanto consumers replied that “consumer spending should be restrained” and “actually restraining from spending”. This trend is prominent among people above 60 years old (i.e. with relatively large disposable income); 50% of them answered that they are to cut spending on travelling/trip. Indeed, spending on travelling, entertainment and eating out has been cut when online shopping has been decreasing a little.
In addition, approximately 50% of Kanto respondents answered that they now spend more time at home. This trend is evident among females; 60% of them answered so. From the survey results, people spending their time at home enjoy their hobby, watching TV, reading and online shopping.
The remaining 4 trends “risk diversification/evasion”, “healing”, “energy-saving” and “safe/security” are regarded to be of long-term trend; 50-60% of respondents answered so. Regarding “energy-saving” already over 90% of Kanto residents and over 80% nationwide have been saving energy in some way or other and majority of them are to continue saving energy in the future. Regarding “safety/security”, approximately 60% answered that now they value food safety than they used to and more than 50% do not intend to change their stance at least for a while after the radiation/contamination issue is solved.
2) Social media (twitter, YouTube) is gaining more popularity especially among people in 50s and 60s
Twitter broke out in 2010 mostly among early adaptors of younger generation. And with the Japan disaster, Japanese people on twitter increased from 5.6 million to 7.5 million. This attributes to the fact that people online realized anew that the Internet is a valuable infrastructure, and that the Japanese government recommended public sectors to leverage social media.
In fact, 10% of the respondents answered that “they started using twitter” or “they would like to start using twitter”. This trend is conspicuous among people in 50s and 60s; 13% of them answered so. Similar trend can be seen for video such as YouTube.
3) More consumers have more social mindset
30% of the respondents answered that “they love their country more than they used to” when only 7% answered that “the hate their country than they used to”. 32% answered that they are determined to proactively donate and 16% answered that they will get involved in volunteer activities. In addition, 80% answered that they would like to help Tohoku (the hard-hit region) by proactively purchasing Tohoku products and services.
3. The author’s final thoughts
Although one of the consumer trends is spending less, the change in Japanese consumers can be a good opportunity for companies to exploit new market and create a new business model.
In fact, there have been some products and services that started to draw attention from consumers such as car sharing, cloud services and renting a house instead of owning a house because consumers realized “risk of owning something” from the disaster. Also, more people are now willing to pay for products and services of power generation and energy saving.
Online shopping has been one of the industries that were not negatively impacted by the worldwide recession and it is possible that this industry plus social media can be a source of a new business model as well. At least companies need to review and change their marketing mix considering the trend of increasing use of the Internet and social media.
Talking about marketing, with more consumers with social minds, it is possible that it is more effective to deliver the stance and philosophy of the company and safety/security of the products and services rather than functions of the products. Moreover, even though social marketing, very often collaborating with NPO and NGO, has been unpopular in Japan, with rise in social minds, social marketing may start to come in and spread also in Japan.
Thus, the disaster can trigger a positive change, an opportunity for companies to gain competitiveness, by being creative and innovative.
References:-
Ohtani, Naoki and Saito, Naoto from Boston Consulting Group in Japan (April 28, 2011), The Japan Disaster is to Change Japanese Companies – Do Not Miss the 3 New Trends (in Japanese)
http://business.nikkeibp.co.jp/article/topics/20110426/219657/
Resources:-
The Japan disaster is changing consumers in Japan in 3 ways; making them smarter, making them leverage social media, and making them with more social mindset. By understanding such changes in consumers, it is possible for companies to create new market and develop new business model by being creative and innovative, thus gaining competitiveness.
2011年4月30日土曜日
2010年8月10日火曜日
How to Make Smart Japanese Eco-Consumers Buy
Osaka – Tuesday, August 10, 2010
Nikkei, Japanese newspaper specialized in business and economy, reported on August 7 on how “eco-consumption (economic and ecological consumption)” is proliferating among Japanese customers, and how companies are trying to adapt to such customer needs. Japanese customers today seek to gain maximum satisfaction with minimum spending for maximum ROI of their spending. Such trend attributes to deflation, making consumers becoming smarter and smarter, to set extremely high standard in selecting which products and services to buy. In order to make smart consumers buy、 companies are forced to review their business strategy.
1. Why Japanese consumers are so keen on value of “low price plus something”?
It is because of their annually income when deflation is proceeding as mentioned in the previous article How Japan Can Get Out From 10 Year Deflation?. According to the survey executed by MLHW (Ministry of Health, Labour and Welfare), average income of household with children in 2008 was only 6.88 million yen, a decrease by 12% from the peak in 1996. It is estimated that the average income has decreased further in 2009 due to the worldwide economic recession.
2. How companies are trying to convince smart Japanese consumers to buy?
There are mainly 2 ways in which Japanese companies are trying to convince smart Japanese consumers to buy their products and services.
1) “Trial” campaign
This helps and encourages customers, who evaluate and select products and services severely based on their values, to judge ROI (return on investment) and convince that the products and services is pays and match their value.
Tryfeel Collection http://www.tryfeel.jp is a website that provides services that lets its customers try for the first time with average of 30% discount services hotels, restaurants and hair dressers, of total of 2800 nationwide. Its membership increased tenfold to reach 120,000 in only a year. The business owner of Tryfeel comments that women who want to confirm if they can really be satisfied with the products and services with discount rate by trial have increased in particular.
Companies have also been attentive to this strategy as an effective way of acquiring new customers. Many companies including high class hotels have already joined this campaign and the membership hotels and shops quintupled in a year. The Ritz Carton Osaka spokesperson says it pays as long as the new customers are converted into repeaters.
2) Low price plus appealing value/benefit(s)
Low price alone does not appeal to smart customers today; appealing value/benefit(s) to consumers in addition is also crucial. Defining the additional value/benefit(s) appropriately is the key for this strategy.
A good example is laundry detergent, “Attack NEO”, Kao’s best selling brand that recorded sales of 20 billion yen in a year. What attracted consumers is the product concept of “minimizing the number of rinsing in addition to its strong detergency. The concept leads to not only saving water and electricity but also wash time by 13 – 16 minutes in the case of drum-type washer-dryers. Decrease in wash time is supported by housewives, who are happy that that the product saved their house work time.
3. What new trend of customer and company relationship is emerging?
A few new trends of relationship between customer and company are emerging, that was not seen in the old economy. Underlying issue of this new trends is “who decides price = reflecting the value of products and services”.
1) Joint purchase
This is a system in which individuals (not acquaintances) connected on the Internet get together and seek to buy the products they want with low price. In this system, the more individual buyers get together, the lower the price it gets, sometimes as low as the price of major customers.
A good example is the recent case of a leading website called “netprice” http://www.netprice.co.jp/. The website attracted nearly 100 people who wanted to buy Adidas sports shoes in the beginning of this month. As a result, the price dropped from the original recommended retail price of 9,450 yen to 4,700 yen.
2) New pricing restaurant
In this new system, it is the customers that decide the price they pay for the foods they enjoyed.
The event of this new system is held by an organization that supports opening of restaurants in Yokohama. On average 3 events are held monthly and 40 reserved seats are always fully booked. The chef monthly serves cuisines full of originality. There is a rule that each customer needs to pay an admission fee of 1,500 yen and additional fee of the cuisine, maximum being 15,000 yen; however, the final decision of how much to pay is made by the customers who have enjoyed the cuisine.
4. What is the assumed future trend?
The eco-consumption style for lean and streamlined household spending is assumed to accelerate. It is companies and business owners that can catch up with such change and trend that is to open the new door to the new market. There are 3 points that support this assumption.
1) Result of recent household budget survey
A private financial institute recently executed household budget survey, to which 78% respondents answered that they want to review their household budget to make it lean and streamlined. Citizens just need to cut spending when their income decreases. In such a situation, if they want to maintain pleasure of living, they would need to focus more than they used to on spending performance in addition to low price.
2) Further downsizing in household budget
Household budget, that supports consumption, is estimated to further downsize in number of household as well as amount per household (= income). Due to low birthrate, the growth in the number of household in Japan is estimated to become negative in 2016 and by 2030 it will become 48.8 million households, which is decrease by 4% from today.
3) Shift in main players of consumption market
The main players of consumption market will shift to people in 20s and 30s, who have been brought up in “2 decades of deflation” when household budget has been downsizing. This is assumed to accelerate the trend of eco-consumption.
Nikkei, Japanese newspaper specialized in business and economy, reported on August 7 on how “eco-consumption (economic and ecological consumption)” is proliferating among Japanese customers, and how companies are trying to adapt to such customer needs. Japanese customers today seek to gain maximum satisfaction with minimum spending for maximum ROI of their spending. Such trend attributes to deflation, making consumers becoming smarter and smarter, to set extremely high standard in selecting which products and services to buy. In order to make smart consumers buy、 companies are forced to review their business strategy.
1. Why Japanese consumers are so keen on value of “low price plus something”?
It is because of their annually income when deflation is proceeding as mentioned in the previous article How Japan Can Get Out From 10 Year Deflation?. According to the survey executed by MLHW (Ministry of Health, Labour and Welfare), average income of household with children in 2008 was only 6.88 million yen, a decrease by 12% from the peak in 1996. It is estimated that the average income has decreased further in 2009 due to the worldwide economic recession.
2. How companies are trying to convince smart Japanese consumers to buy?
There are mainly 2 ways in which Japanese companies are trying to convince smart Japanese consumers to buy their products and services.
1) “Trial” campaign
This helps and encourages customers, who evaluate and select products and services severely based on their values, to judge ROI (return on investment) and convince that the products and services is pays and match their value.
Tryfeel Collection http://www.tryfeel.jp is a website that provides services that lets its customers try for the first time with average of 30% discount services hotels, restaurants and hair dressers, of total of 2800 nationwide. Its membership increased tenfold to reach 120,000 in only a year. The business owner of Tryfeel comments that women who want to confirm if they can really be satisfied with the products and services with discount rate by trial have increased in particular.
Companies have also been attentive to this strategy as an effective way of acquiring new customers. Many companies including high class hotels have already joined this campaign and the membership hotels and shops quintupled in a year. The Ritz Carton Osaka spokesperson says it pays as long as the new customers are converted into repeaters.
2) Low price plus appealing value/benefit(s)
Low price alone does not appeal to smart customers today; appealing value/benefit(s) to consumers in addition is also crucial. Defining the additional value/benefit(s) appropriately is the key for this strategy.
A good example is laundry detergent, “Attack NEO”, Kao’s best selling brand that recorded sales of 20 billion yen in a year. What attracted consumers is the product concept of “minimizing the number of rinsing in addition to its strong detergency. The concept leads to not only saving water and electricity but also wash time by 13 – 16 minutes in the case of drum-type washer-dryers. Decrease in wash time is supported by housewives, who are happy that that the product saved their house work time.
3. What new trend of customer and company relationship is emerging?
A few new trends of relationship between customer and company are emerging, that was not seen in the old economy. Underlying issue of this new trends is “who decides price = reflecting the value of products and services”.
1) Joint purchase
This is a system in which individuals (not acquaintances) connected on the Internet get together and seek to buy the products they want with low price. In this system, the more individual buyers get together, the lower the price it gets, sometimes as low as the price of major customers.
A good example is the recent case of a leading website called “netprice” http://www.netprice.co.jp/. The website attracted nearly 100 people who wanted to buy Adidas sports shoes in the beginning of this month. As a result, the price dropped from the original recommended retail price of 9,450 yen to 4,700 yen.
2) New pricing restaurant
In this new system, it is the customers that decide the price they pay for the foods they enjoyed.
The event of this new system is held by an organization that supports opening of restaurants in Yokohama. On average 3 events are held monthly and 40 reserved seats are always fully booked. The chef monthly serves cuisines full of originality. There is a rule that each customer needs to pay an admission fee of 1,500 yen and additional fee of the cuisine, maximum being 15,000 yen; however, the final decision of how much to pay is made by the customers who have enjoyed the cuisine.
4. What is the assumed future trend?
The eco-consumption style for lean and streamlined household spending is assumed to accelerate. It is companies and business owners that can catch up with such change and trend that is to open the new door to the new market. There are 3 points that support this assumption.
1) Result of recent household budget survey
A private financial institute recently executed household budget survey, to which 78% respondents answered that they want to review their household budget to make it lean and streamlined. Citizens just need to cut spending when their income decreases. In such a situation, if they want to maintain pleasure of living, they would need to focus more than they used to on spending performance in addition to low price.
2) Further downsizing in household budget
Household budget, that supports consumption, is estimated to further downsize in number of household as well as amount per household (= income). Due to low birthrate, the growth in the number of household in Japan is estimated to become negative in 2016 and by 2030 it will become 48.8 million households, which is decrease by 4% from today.
3) Shift in main players of consumption market
The main players of consumption market will shift to people in 20s and 30s, who have been brought up in “2 decades of deflation” when household budget has been downsizing. This is assumed to accelerate the trend of eco-consumption.
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