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Your product is considered a luxury product, but just because your product is a luxury brand does not guarantee it will sell well in Asian markets. Despite this obvious fact, many companies launch products into market with fallacious conclusions and skewed strategic plans and often fail in executing their business objectives. These companies develop broad conclusions on how they should approach economies on the macro-level but fail to execute the results because they do not see the details in the micro-level. Many leaders may even suffer from “change blindness” because they focus on one aspect of the business and all its players, yet miss the 800 pound gorilla in the room. In order to avoid these obstacles, leaders must develop an objective approach to a more analytical perception of reality and all its intricacies. This article is the spectacles that will clarify and break down the important details of consumer behaviors in Asia’s largest markets: China and Japan. Although these two countries have different tastes they both have an increasing demand for luxury goods. Companies that make luxury brands are increasing their investments and gaining market share despite a world that is in an economic downturn. It is therefore, imperative for companies to penetrate these emerging markets to gain their own market share and have a planned strategy to execute clear strategic vision.
In marketing, the goal is to find what people want and what people are buying and develop a strategy to deliver results to consumers and increase market share. The Asian market can be complex; however, there are similarities and trends one can identify to capitalize on a growing consumer segment. The challenge is that many US companies miss the mark in attempting to penetrate Asian markets because they approach the market with a broad brush hoping that some good ideas will stick. One major fallacy is that US companies group all three countries together and assume that they all have similar tastes and preferences, moderated by different income levels. The solution, therefore, is to perform a comparative analysis of consumer behaviors can help companies identify effective marketing strategies, and enable them to successfully penetrate these Asian markets.
To ensure success, companies must set aside narrow and risky assumptions, and tailor country specific strategies to target these consumers. The two major countries to target for luxury brands are Japan and China. Both countries have unique mechanisms that correlate to buying behaviors such as:
(1) brand orientation
(2) aspects dealing with domestic vs. foreign
(3) quality and price.
Brand Orientation
First, Japan of all the developed countries, this is the most brand-conscious and status-conscious. It is also intensely style-conscious: Consumers love high-end luxury goods (especially products from France and Italy), purchasing items such as designer handbags, shoes, and jewelry. It seems that a slumping economy has not inhibited its consumers. Japan has a highly group-oriented consumers are apt to select prestigious merchandise based on social class standards, and prefer products that enhance their status. Accordingly, they attach more importance to the reputation of the merchandise than to their personal social classes. Japan’s influence has spread to surrounding countries such as China and Korea. In Shanghai or Seoul, you can see the influence of Japan’s fashion trends and products (Jiang, Crystal and Kotabe, Masaaki, 2006).
China, roughly 10 million – 13 million Chinese consumers prefer luxury goods. The majority of them are entrepreneurs or young professionals working for foreign multinational firms. Recent studies found that 24% of the population, mostly in their 20s and 30s, prefer new products and considers technology important part of life. With higher education and purchasing power, this generation in brand and status conscious. It considers luxury goods to be personal achievements, bring higher social status. In China, purchasing behavior tends to vary regionally. Consumers in metropolitan areas follow fashions/trends/styles, prefer novelty items, and are aware of brand image and product quality. These consumers live on the eastern coast-in major cities such as Shanghai, Beijing, Shenzhen, and Dalian.
Domestic vs. Foreign
Second, Japan, although is mostly dominated by local companies that are well established such as Canon, Sony, and Toyota, many global companies have managed to gain market share. In this market, Haagan Dazs Japan Inc succeeded the exit of Ben and Jerry’s, dominating the premium ice cream market with a 90% market share. It has successfully delivered the message of a “lifestyle-enhanced product” with word-of-mouth advertizing. The company flourished by promoting high quality with local appeal (Jiang, Crystal and Kotabe, Masaaki, 2006). Chinese companies can no longer view this country’s youth through the lens of traditional cultural values’ this generation considers international taste a key factor in making decisions (Jiang, Crystal and Kotabe, Masaaki, 2006).
Quality and Price
Thirdly, Japan compared with the Chinese and Korean consumers, have much higher expectations for products-and are willing to pay premium prices for them. Slogan such as Walmart’s “everyday low price” philosophy doesn’t seem to attract Japanese consumers, because they offer associate low price to low quality: yasu-karou, warukarou-cheap price, cheap product. Case study – McDonalds although McDonalds is known as a low cost food in the US. McDonlads in Japan has positioned itself a luxury item. Today, McDonalds Japan has grown to become the country’s largest fast-food chain (Jiang, Crystal and Kotabe, Masaaki, 2006).
Business leaders need to embrace three important concepts in order to have a successful marketing campaign.
• Successful products must be FBI: Functional Design – Beautiful Results — Imaginative Style
• Sticking to your strategy and values in an economic recession
• Be a thinking leader – Stick to your values and redirect marketing strategy focus.
In the mist of the global recession, companies are focusing on the emerging Asian markets, focusing on customer loyalty through mind-care marketing that focuses on building trust with their current customer base. For many companies, turning to Asia for growth has also paid off. Many companies are investing more than 60 percent of their investments in Asia Pacific.
In conclusion, company executives must remember that not all countries are created equally. By understanding and learning to appreciate the differences and the similarities between these three Asian purchasing giants, companies from other countries can immerse their organizations seamlessly.
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Source by Joshua Cook
