Monday, July 16, 2012

No. 29: Focusing on growing markets with a strategy suitable to each market (July 17, 2012)

Unicharm, Japan’s leading maker of paper diapers and sanitary products, is busily occupied with expanding the market in Southeast Asia. It will build the third plant in Indonesia and the second plant in India in 2013 with an investment of 2.5 billion yen to cope with rapidly growing demand in Southeast Asia, while closing the plant in Australia. Actually, the existing two plants in Indonesia cannot satisfy the rapidly growing demand at present. Paper diapers, in particular, are enjoying great demand. According to the company, the market of paper diapers and sanitary products combined is 72 billion yen in 2012 and expected to double in 2020. The company achieved sales of about 150 billion yen from the Asian market in fiscal ending March 31, 2012, increasing the sales two times in four years.

Japanese companies that focused on growing markets with a strategy suitable to each market are successfully expanding business in the Asian region. They mainly aim at the low-income class called Base of Pyramid (BOP) whose annual income is less than 430,000 yen. Mandom, one of Japan’s leading cosmetics maker, has 70-80% share in the hair dressing market in Indonesia. It sells its products in a small package with only 3-6 gram content. Ajinomoto, worldwide famous for its seasoning Ajinomoto, sells its products in a small package with 0.09 gram content, whereas a bottle with 75 gram content is standard in Japan. Each package is sold for 0.42 yen. Yakult, Japan’s leading lactic acid bacteria beverage market, is successful with a sales network supported by 27,000 Yakult door-to-door sales ladies in China and Indonesia where the door-to-door sales method was not popular before the arrival of Yakult.

The above stories give various lessons. Focus on growing markets. Do not hesitate to scrap unnecessary bases and build necessary bases for business expansion. Be specific to each market. Ultimately, business is communications between marketers and consumers regardless of the sales method selected.  

 A Yakult door-to-door sales lady and her customer