Your product is considered a luxury product, but the fact that your product is a luxury brand does not guarantee that it will sell well in Asian markets. Despite this obvious fact, many companies launch products with fallacious conclusions and skewed strategic plans and often fail to execute on their business objectives. These companies develop general conclusions about how they should approach economies at the macro level, but fail to execute the results because they do not see the details at the micro level. Many leaders may even suffer from “change blindness” because they focus on one aspect of the business and all of its actors, but miss the 800-pound gorilla in the room. To avoid these obstacles, leaders must develop an objective approach to a more analytical perception of reality and all its complexities. This article is the programs that will clarify and break down the important details of consumer behavior in the largest markets in Asia: China and Japan. Although these two countries have different tastes, they both have a growing demand for luxury items. Companies that make luxury brands are increasing their investments and gaining market share despite a world going through an economic recession. Therefore, it is imperative for companies to penetrate these emerging markets to gain their own market share and have a planned strategy to execute a 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 that can be identified to capitalize on a growing consumer segment. The challenge is that many American companies miss the mark trying to penetrate Asian markets because they approach the market with a broad brush in the hope that some good ideas will stick. An important fallacy is that American companies group the 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 behavior that can help companies identify effective marketing strategies, and allow them to successfully penetrate these Asian markets.
To ensure success, companies must put aside narrow and risky assumptions and tailor country-specific strategies to target these consumers. The two main countries that luxury brands will target are Japan and China. Both countries have unique mechanisms that correlate with purchasing behaviors such as:
(1) brand orientation
(2) aspects related to the domestic environment vs. Foreign
(3) quality and price.
Brand orientation
First, Japan of all developed countries, this is the most brand and status conscious. She is also intensely style conscious: Consumers love high-end luxury items (especially goods from France and Italy), and they shop for items like designer handbags, shoes, and jewelry. It seems that an economy in recession has not inhibited its consumers. Japan has a group of consumers highly oriented to select prestigious merchandise based on social class standards, preferring products that enhance their status. Consequently, they give more importance to the reputation of the merchandise than to their personal social class. Japan’s influence has spread to neighboring countries such as China and Korea. In Shanghai or Seoul, the influence of fashion trends and products from Japan can be seen (Jiang, Crystal and Kotabe, Masaaki, 2006).
China, approximately 10-13 million Chinese consumers prefer luxury goods. Most of them are entrepreneurs or young professionals working for foreign multinational companies. Recent studies found that 24% of the population, mostly in their 20s and 30s, prefer new products and consider technology to be an important part of life. With higher education and purchasing power, this generation is brand and state conscious. Consider that luxury items are personal achievements, they bring a higher social status. In China, buying behavior tends to vary regionally. Consumers in metropolitan areas follow fashions / trends / styles, prefer novelty items, and are conscious of brand image and product quality. These consumers live on the east coast, in major cities such as Shanghai, Beijing, Shenzhen, and Dalian.
National vs. Foreign
Second, Japan, although dominated mainly by well-established local companies such as Canon, Sony and Toyota, many global companies have managed to gain market share. In this market, Haagan Dazs Japan Inc managed to exit Ben and Jerry’s, dominating the premium ice cream market with a 90% market share. It has successfully conveyed the message of an “enhanced lifestyle product” with word of mouth advertising. The company prospered by promoting high quality with local appeal (Jiang, Crystal and Kotabe, Masaaki, 2006). Chinese companies can no longer see the youth of this country through the lens of traditional cultural values. This generation considers international taste to be a key factor in decision-making (Jiang, Crystal and Kotabe, Masaaki, 2006).
Quality and price
Third, Japan, compared to Chinese and Korean consumers, has much higher expectations for products and is willing to pay higher prices for them. The slogan like Walmart’s “low price every day” philosophy does not seem to appeal to Japanese consumers, because they offer a low to low quality associated price: 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 as a luxury item. Today, McDonalds Japan has grown to become the largest fast food chain in the country (Jiang, Crystal and Kotabe, Masaaki, 2006).
Business leaders must adopt three important concepts to have a successful marketing campaign.
• Successful products must be from the FBI: functional design – beautiful results – imaginative style
• Stick with your strategy and values in an economic downturn.
• Be a thinking leader – Stick to your values and redirect the focus of your marketing strategy.
In the midst of the global recession, companies are targeting emerging Asian markets, targeting customer loyalty through mindfulness 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 similarities between these three Asian purchasing giants, companies from other countries can seamlessly submerge their organizations.