Japan Market Analysis

1. Japan Market Analysis Chrissy Janssen Edward Kapoor Michael Shuller Brad Stollberg Skippy Peanut Butter スキップピーナツバター

2. Current Marketing Strategy

3. Significant Facts About Japan • Japan is the seventh most populous country in the world indicating that if appropriate targeting is successful, Unilever stands to penetrate a huge market. • The Japanese population enjoys very good health mostly due to diet. They pride themselves on eating small and nutritious meals with an emphasis on their domestic products like rice and seafood. Peanut butter, with peanuts being grown domestically is a low fat, low carb and high protein food. It could fit right into a healthy Japanese diet.

4. Significant Facts About Japan • The Japanese also boast the world’s highest longevity statistics with males living an average of 79 years to the females 84. If caught early enough, a very large and very loyal market could be acquired. • The market for “Functional Foods” or energy foods is booming in Japan due to Japanese desire to eat healthy. The sports drink market is gaining massive momentum and has become a multi billion dollar industry. Japanese also shun health “supplements” like pills and powders. If executed correctly, peanut butter energy bars and related items could become very popular.

5. History of Peanut Butter in Japan • During the early 1920’s Japan was recognized for producing some of the best peanut butter in the world. They also exported a large number of domestically grown peanuts to other countries. • During WWII the U.S. made the peanut butter factories a prime target and decimated the industry which still hasn’t regained its former vigor. • Currently, Japan produces what they call “Peanut Cream” which is their version of peanut butter. Despite similar ingredients, American consumers claim it tastes different from the peanut butter they are used to.

6. History of Peanut Butter in Japan • Peanut butter is used in many traditional dishes in Japan. • Mochi ñ A dumpling dessert made with starchy and sticky short grain rice is often mixed with peanut butter. • Also traditional noodles, soups and fish dishes are made with peanut butter • Currently, American peanut butter is very hard to come by and is very expensive. Jif is the only American brand we could find that is exported to Japan and despite coming in very small containers, it costs significantly more than in the United States.

7. Japanese Product • Packaging • Prefer small packaging • Since peanut butter is viscous, container size can be changed easily to be stored in any type of retail store and any Japanese home. • Currently available in 6oz., 12oz., 18oz., 28oz., 40oz., and 64oz. jars • Focus on imagery relevance and innovation • Color: Skippy comes in a predominantly blue container which may be cause for concern. In Japan, blue represents the unknown including ghosts and the supernatural.

8. Japanese Product • ”Skippy” means absolutely nothing in Japanese. Significant costs will not have to be undertaken to revise the name. Also, unusual product names are easily remembered. • Peanut butter is used in many traditional dishes • Mochi – Dessert • Noodles, Soups, Chicken and Fish dishes • Consumption • Convenient on-the-go • Texture • Enjoys similar spread foods including honey and jams. • Flavor • Enjoy spicy and herb based foods

9. Japanese Product • Nutrition • Concerned with: Reducing risk of heart disease, maintaining weight lose, low sugar, organic variance, vitamins A, B1, D3, E. • Concerns: Need to develop the quality of local peanuts because of high moisture content in the environment which causes mold. • Emphasizing protein benefits of peanut butter may prove ineffective. Since seafood is a staple in the Japanese diet, there is no need for additional high protein content foods

10. Japanese Distribution Knowledge of how to deliver your products to your customers in an efficient and timely manner is essential to your business success in Japan. Unilever currently has products in the Japanese market. Beginning in 2003 Unilever acquired Japan’s Ajinomoto Company. "The full integration of the acquired business into our Unilever Bestfoods Asia operations will give it total access to our innovation capabilities and distribution network strength, and will provide the fuel for higher investment behind our brands" – Patrick Cescau, Director of Unilever Foods

11. “Venture Japan” Suggests: • Examine each entity's administrative requirements and tax structure characteristics. • Consider the statutory paid-in capital requirements for starting a Japanese company. • Investigate how the tax authority in your head-office country treats income from each entity. • Estimate the overhead costs each entity will incur to support your projected revenue. • Compare each entity's fiscal efficiency measured as the percentage of gross income received by the parent during the first 5 years.

12. Disadvantages of Distribution • "In the past 13 years I have not met any foreign company executive who said that his/her distributor was amazing." • A lot of times companies selling products to Japan are unaware of the value of their product while Japan has the upper hand because Japanese distributors will have knowledge of the value. • Japan has to import all raw materials.

13. More Disadvantages • Initially it may appear to be a good idea to negotiate with the Japanese, but it is not uncommon for a company to receive much less than the anticipated percentage of the price its products are being sold for in the market. • Why? • Channel conflicts • Non-performance of distributor • This does not just happen in Japan

14. How to distribute in Japan? • A good idea is to first set up an office in Japan to make direct sales • It is vital to the organization to know the exact value of the product prior to negotiation • Conduct market research to create revenue forecasts • The relationship must be tightly monitored

15. Logistics

16. Land and Office Prices Source :Japan Real Estate Institute Source :White Paper on Real Estate (K.K. Ikoma Data Service System) Therefore it is evident that office space may be rented for lower costs

17. Regulations • In Japan, the following two groups are responsible for the implementation of transport regulations: • Ministry Of Transport (JMOT) • Science and Technology Agency (STA)

18. Means of Transportation • Air Freight – International Freight Forwarders Directory • Maersk Logistics • Air/Ocean exporting and importing

19. Maersk’s Warehousing and Distribution Services • Automated Sorting • Transloading • Cross – Docking • Humidified Warehouse • Haulage/Trucking • On-carriage • Disassembly • Transit Cargo

20. Cost of Logistics • Extremely high costs of entry into the country especially dealing with the utilization of: • Airports • Sea ports. • Lead time is extremely long because of the short working hours of the Japanese customs.

21. Where to sell peanut butter? • There are around 35,000 convenience stores • A 15% increase from 2003 • The number of grocery stores fell from 3641 to 3250

22. Japanese Promotion Pros: • The Skippy logo is in red which is a superstitiously positive color that means life and opportunity. • Japanese are embracing western pop culture which may be a marketing opportunity. In 1998, New York Yankees short stop Derek Jeter was signed on as the first major league player to endorse Skippy Peanut butter. Jeter also endorses Gatorade, a popular sports drink. This marketing strategy could work in Japan. • Unilever is expanding in Japan with moderate success. With this new found presence, the company’s brand names and products stand to benefit, including peanut butter.

23. Japanese Promotion Unilever, which currently targets children in the U.S. will not be able to do so in Japan. Children make up only 14% of Japan’s population. Furthermore, children do not have as much influential power over parents in Japan as they do here in the United States. • 0-14 years: 14.3% (male 9,337,867; female 8,876,996) • 15-64 years: 66.7% (male 42,697,264; female 42,196,835) • 65 years and over: 19% (male 10,169,190; female 14,054,850) (2004 est.)

24. Promotion Notes • Say for example that my wife and I go to a local restaurant and see a cockroach crawling around the floor - we leave the restaurant and walk to my wife's parents (just 5 minutes or 250m away) and pass maybe 20 - 30 people we know on the way. We mention our restaurant experience to each of those people and they in turn within 20 minutes have each probably told another 20 - 30 people. Within a day the entire neighborhood knows and I probably get an apologetic call from the restaurant owner! That is another aspect of the Japanese market - especially in the major cities - most people travel by foot and train and rumors fly by being overheard. If you think I am exaggerating then consider this - a very small upmarket (at least for our neighborhood) Italian restaurant recently opened literally just 20 paces from our apartment. 15 minutes ago my wife told me that while she was walking home from the supermarket (only 1 minute from our apartment) she heard a couple of women walking along the street complaining that they had just been ripped off at that Italian restaurant - my wife just cancelled our Saturday night date there and instead will be going to an Italian restaurant at the next station "...because we have been there before and it was OK.".

26. Gross National Income (Top 10 Countries) Per capita  Per $ GDP   • 1. United States $9780 billion (2001) • 2. Japan $4520 billion (2001) • 3. Germany $1940 billion (2001) • 4. United Kingdom $1480 billion (2001) • 5. France $1380 billion (2001) • 6. China $1130 billion (2001) • 7. Italy $1120 billion (2001) • 8. Canada $682 billion (2001) • 9. Spain $588 billion (2001) • 10. Mexico $550 billion (2001)